Tax & Accounting Update

Biden Aministration Issues FY 2022 “Green Book”

The Department of the Treasury has issued detailed information about the Biden Administration’s tax proposals for fiscal year 2022 for its American Jobs Plan and American Families Plan. Traditionally, the tax community has referred to this annual publication as the “Green Book.”

Among the provisions in the Green Book are the following:

• Increasing income tax rates for those with the highest incomes;
• Eliminating the carried interest preference and the like-kind real estate preference for those with the highest incomes;
• Taxing capital income for high-income earners at ordinary rates to the extent income exceeds $1 million. The Green Book says that: “This proposal would be effective for gains required to be recognized after the date of announcement.”

Business Combination Rules Could Change

FASB is examining whether to change the rules regarding accounting for business combinations with respect to the subsequent reporting of contingent The board could potentially align the subsequent accounting for contingent considerations with the accounting for asset acquisitions—a better model, according to discussions held on May 26. No standards-setting decisions have been made yet.

SEC Removes Duhnke, Seeks to Fill All Board Positions.

The SEC said that William Duhnke was “removed” as chairman of the PCAOB, effective June 4. Board member Duane DesParte was designated to serve as acting chair. In addition, the SEC is seeking to replace and fill all five seats on the board. One seat has been vacant since late January when Jay Brown stepped down because his wife, SEC Commissioner Allison Herren Lee, became acting SEC chair (serving until Gary Gensler was sworn in as permanent chair on April 19). The SEC oversees the PCAOB; this includes appointments and removal of board members and approval of the PCAOB’s annual budget and audit standard changes.

The coming wholesale change follows heavy lobbying by progressive groups and senators who asked the SEC to replace all board members for a fresh start. They took particular aim at Duhnke, a former staffer to Republican Senator Richard Shelby, for bringing an industry-friendly approach to supervising auditing firms; the advocates stressed the PCAOB’s mission of protecting investors and furthering the public interest in the preparation of informative, accurate, and Independent audit reports.