Receipts 1 9 1

View 9.5.1CashReceiptsJournal-1.xls from GEO 3 at South Central High School. CASH RECEIPTS JOURNAL 1 2 3 PAGE 4 5 6 ACCOUNTS DATE ACCOUNT.

1. Receipts 1 9 12
2. Receipts 1 9 14

1. 2.1.1 RECEIPTS If the employee presents an acceptable receipt for Form I-9 showing that he or she applied to replace a document that was lost, stolen or damaged, the employer must set aside this employee's Form I-9 and wait to create a case in E-Verify.
2. You must accept a receipt in place of a List A, B, or C document if the employee presents one, unless employment will last less than three business days. New employees who choose to present a receipt must do so within three business days of their first day of employment. Table 1 provides a list of acceptable receipts an employee can show.

Editor: Anthony S. Bakale, CPA

Various exceptions are available to small business taxpayers to help them avoid some of the Internal Revenue Code's more burdensome and complex requirements. Although these exceptions are meant to simplify tax law implementation, the rules for evaluating whether a business qualifies for the exceptions can be convoluted and highly computational. Although small taxpayer testing may be time-consuming, the tax and time benefits of a small taxpayer classification may be critical to certain taxpayers.

Summary of small taxpayer exceptions

The exceptions are meant more to reduce compliance costs rather than to reduce taxes, but they often do both. Small business taxpayer exceptions include:

Cash-basis accounting method: Although the cash method of accounting is considered a permissible method under Sec. 446(c)(1), Sec. 448 disallows a C corporation or a partnership that has a C corporation as a partner from using it. In addition, if the purchase, production, or sale of merchandise is an income-producing factor, the taxpayer cannot use the cash method of accounting. Sec. 448(b) provides exceptions to this limitation for farming businesses, qualified personal service corporations, and entities that meet the gross receipts test under Sec. 448(c) (commonly known as the small taxpayer gross receipts test).

Exception from Sec. 263A: Newly established under the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, Sec. 263A(i) allows an exemption from the capitalization requirements of Sec. 263A for any taxpayer that meets the gross receipts test of Sec. 448(c).

Exception from the requirement to account for inventories: Sec. 471(c) exempts certain small businesses from the general inventory accounting requirements. These small business taxpayers may either:

• Treat inventory as nonincidental materials and supplies under Regs. Sec. 1.162-3(a)(1) that are eligible to be deducted in the tax year in which the materials and supplies are first used in the taxpayer's operations; or
• Use a method that conforms to the taxpayer's method of accounting for inventories, as reflected in the taxpayer's applicable financial statement or, lacking one, in its books and records.

Exclusion from the Sec. 163(j) limitation: The TCJA's new business interest expense limitation allows an exception in Sec. 163(j)(3) for certain small businesses that meet the gross receipts test of Sec. 448(c).

Completed-contract accounting method: Generally, a taxpayer must use the percentage-of-completion method for long-term contracts, which recognizes revenue as production occurs. Sec. 460(e)(1)(B), however, allows taxpayers that meet the gross receipts test of Sec. 448(c) to account for long-term contracts by the completed-contract accounting method for any contracts estimated to be completed within two years.

Small taxpayer/business determination

Step 1: Tax shelter analysis: All the small taxpayer exceptions described above require a taxpayer to meet the gross receipts test under Sec. 448(c). However, any taxpayer considered a tax shelter under Sec. 461(i)(3) is ineligible to be considered a small taxpayer, regardless of its amount of gross receipts. A tax shelter includes any of the following:

• Any enterprise for which interests in the enterprise have been offered for sale in an offering required to be registered with any federal or state agency with the authority to regulate the offering of securities for sale (excluding C corporations);
• Any syndicate within the meaning of Sec. 1256(e)(3)(B); or
• Any tax shelter defined in Sec. 6662(d)(2)(C)(ii).

The definition of a syndicate under Sec. 1256(e)(3)(B) can prove to be particularly restrictive for limited liability companies, limited partnerships, and S corporations attempting to qualify for the small taxpayer exceptions. Sec. 1256(e)(3)(B) considers the term 'syndicate' to include a partnership or other entity (excluding corporations that are not S corporations) where more than 35% of the entity's losses during the tax year are allocable to limited partners or limited entrepreneurs. A limited entrepreneur is a person who has an interest in an enterprise other than as a limited partner and who does not actively participate in the management of the enterprise (Sec. 461(k)(4)). An exception for holdings attributable to active management expands to family members of those in active management as well as to those previously involved in management for a period of at least five years (Sec. 1256(e)(3)(C)).

Temp. Regs. Sec. 1.448-1T(b)(3) states that an entity is considered a syndicate if more than 35% of losses in a tax year are allocated to limited partners or entrepreneurs. This can be interpreted as saying that an entity can be considered a syndicate only in a year in which it incurs or allocates taxable losses — exempting entities from syndicate classification in years in which they have taxable income rather than losses. Note that for this purpose, gains or losses from the sale of capital assets or Sec. 1221(a)(2) assets (property subject to depreciation used in a trade or business) are not taken into account. Treasury has been asked for clarification on the syndicate classification and to make certain small taxpayer exceptions available to syndicates.

Step 2: Gross receipts test: If a taxpayer is not considered a tax shelter, it is eligible to be considered a small taxpayer if it meets the gross receipts test of Sec 448(c). The term 'gross receipts' is defined under Temp. Regs. Sec. 1.448-1T(f)(2)(iv) and includes sales net of returns and allowances and all amounts received for services. In addition, gross receipts include interest, original issue discount, tax-exempt interest, dividends, rents, royalties, and annuities, regardless of whether those amounts are derived in the ordinary course of business. For capital asset transactions, gross receipts include proceeds less the adjusted basis in the property. To pass this test, a taxpayer's average gross receipts for the previous three years must not exceed $25 million ($5 million prior to enactment of the TCJA). Gross receipts for tax years of less than 12 months are annualized, and if a taxpayer was not in existence for the entire three years prior, then gross receipts are tested over the period of existence.

While the gross receipts test is fairly straightforward, Sec. 448(c)(2) requires all persons treated as a single employer under Sec. 52(a) or (b) or Sec. 414(m) or (o) to be treated as one person for purposes of the gross receipts test; this potentially requires aggregating the gross receipts of multiple taxpayers. Sec. 52(a) refers to Sec. 1563(a), which provides definitions and special rules related to a controlled group of corporations. Sec. 52(b) pulls in all other types of entities, such as partnerships and proprietorships, that are under common control. Sec. 52(b) states that regulations prescribed under Sec. 52(b) shall be based on principles similar to those under Sec. 52(a) dealing with corporations. Secs. 414(m) and (o) define an affiliated service group, which requires combining multiple service organizations under a single umbrella. These aggregation and attribution tests encompass a wide range of relationships and common ownership concepts that must be understood before completing the gross receipts test of Sec. 448(c).

Aggregation

As stated above, any taxpayers considered to be a common employer under Sec. 52 or 414 must be combined for purposes of the gross receipts test. Sec. 52(a) provides that a common employer is considered the same as a controlled group of corporations under Sec. 1563(a). Sec. 1563(a) provides three potential controlled group scenarios:

Parent-subsidiary controlled group: In this type of controlled group, a common parent corporation owns stock that possesses more than 50% of the total combined voting power, or more than 50% of the value, of a subsidiary. Note that Sec. 1563(a)(1)(A) states the applicable percentage is 'at least 80%' but Sec. 52(a)(1) modifies this to be 'more than 50%.'

Brother-sister controlled group: In this type of controlled group, two or more corporations have five or fewer persons (individuals, estates, or trusts) that have both of the following:

• A combined controlling interest of all corporations, which is considered at least 80% of either the combined voting power or the combined value of all corporations' stock. Each person in the group of five or fewer persons must own an interest in every entity being tested as a potential brother-sister controlled group; otherwise, that person's interest is excluded for the purposes of the group (Vogel Fertilizer Co., 634 F.2d 497 (Ct. Cl. 1980)).
• Effective control of all corporations, which is considered more than 50% of either the combined voting power or the combined value of all corporations. For purposes of calculating effective control, each owner's minimum common ownership in all corporations considered is counted. Under this rule, if A owns 20% of Corporation 1 and 50% of Corporation 2, A's minimum common ownership in both corporations would be 20%. This would be the amount counted toward meeting the more-than-50%-effective-control test.

Note on the application of the 80% and 50% tests to brother-sister combined groups: Although Sec. 1563(a)(2) does not mention the 80% threshold related to brother-sister combined groups, Sec. 1563(f)(5) provides the rules applicable to brother-sister combined groups for any provisions other than Sec. 1563. The 80% and 50% thresholds are presented in Sec. 1563(f)(5)(A)(2). Per Sec. 1563(f)(5)(B), these adjusted testing thresholds apply to any provision of law that incorporates the definition of a controlled group of corporations under Sec. 1563(a), such as the inclusion of Sec. 1563(a) in Sec. 52(a).

Combined group: This type of controlled group occurs when one corporation is considered both a parent corporation in a parent-subsidiary controlled group as well as a component member in a brother-sister corporation.

Receipts 1 9 12

Although the rules under Sec. 1563 apply to controlled groups of corporations, Regs. Sec. 1.52-1(b) provides the common-control rules for other types of entities, including partnerships and trusts. Regs. Sec. 1.52-1(c) applies to parent-subsidiary groups, while Regs. Sec. 1.52-1(d) applies to brother-sister combined groups. In general, the rules under Regs. Secs. 1.52-1(c) and (d) closely reflect the combined-group rules under Sec. 1563(a); however, the terms 'voting power' and 'value' are replaced with 'profit interest' and 'capital interest' for partnerships and 'actuarial interest' for trusts and estates.

Special aggregation rule related to Sec. 163(j) exclusion

The proposed regulations for the business interest expense limitation of Sec. 163(j) provide that in addition to aggregating the gross receipts of any commonly controlled groups of entities, a taxpayer must also include in its gross receipts the proportionate share of gross receipts from any partnerships it owns (Prop. Regs. Sec. 1.163(j)-2(d)(2)(iii)). Additionally, each shareholder in an S corporation includes a pro rata share of S corporation gross receipts. This inclusion of gross receipts not otherwise required to be aggregated is required only to qualify for the Sec. 163(j) small taxpayer exception.

Attribution rules related to aggregation

Receipts 1 9 14

In addition to direct ownership, ownership through attribution needs to also be considered when reviewing which entities may need to be considered in a combined group for gross receipt aggregation purposes. The attribution rules that apply for aggregation purposes can be found under Sec. 1563(e). Note that attribution for purposes of aggregation is not the same as the attribution rules under Sec. 267 (related-party Mirror for panasonic tv 3 0 1 download free. transactions) or Sec. 707 (transactions between partner and partnership). Attribution or constructive ownership rules that apply for aggregation rules include the following:

• Inclusion of options: If any person has an option to acquire stock, that stock is considered as owned by that person.
• Attribution from partnerships, estates, trusts, and corporations: In general, any taxpayer who owns 5% or more of a partnership, estate, trust, or corporation is deemed to own the same proportionate share of the partnership's, estate's, or trust's interest in any entities it owns.
• Spousal attribution: Generally, an individual is attributed the ownership interest of his or her spouse, but an exception to this general rule is available under Sec. 1563(e)(5) in certain circumstances.
• Attribution from children, grandchildren, parents, and grandparents: An individual is always attributed the ownership interest of any minor children, which includes children under the age of 21 (including adopted children). An individual also may be attributed the ownership interest of children 21 and over (including adopted children), parents, grandparents, and grandchildren if those individuals own more than 50% of the voting power or value of a corporation (profit interest or capital interest of a partnership).

Aggregation: Brother-sister combined group example

A, B, C, D, and E own the capital interests of various limited liability companies (LLCs) taxed as partnerships. The capital interest ownership in these LLCs is shown in the table 'LLC Members' Capital Interests' (below).

To be considered a brother-sister combined group, five or fewer persons must have both a controlling interest in, as well as effective control of, multiple entities.

Step 1. Controlling interest: A cumulative ownership interest of at least 80% is required for that interest to be classified as controlling. According to the interests shown in the table 'LLC Members' Capital Interests,' the group of A, B, C, D, and E is considered to have a controlling interest in ABC and JKL only. The group does not have a controlling interest in DEF, as members of the group own only 50%. GHI is owned 85% by A, D, and E, but B and C do not own any interest in this entity; therefore, B and C's ownership in other entities is not considered when reviewing common control related to GHI for the A, B, C, D, and E group. The group ofA, D, and E owns 70% of ABC, 85% of GHI, and 60% of JKL. Because only GHI is above 80%, there is a controlling interest in only one entity for the A, D, and E group, so the group cannot be in common control of two or more entities.

Step 2. Effective control: As ABC and JKL are the only two entities to pass Step 1 for the A, B, C, D, and E group, they are the only entities required to be analyzed for effective control. A summary of the minimum common ownership of these two entities is shown in the table 'Summary of Minimum Common Ownership' (below).

Because the combined minimum common ownership is at least 50% (70% in total among the five owners), this group is considered to have effective control of both ABC LLC and JKL LLC.

Results

Because the group of A, B, C, D, and E has a controlling interest (determined in Step 1) and effective control (determined in Step 2) in both ABC and JKL, these two entities are considered a brother-sister controlled group under Regs. Sec. 1.52-1(d) and are therefore considered a single employer under Sec. 52 and must aggregate gross receipts for purposes of the gross receipts test of Sec. 448(c).

EditorNotes

Anthony Bakale, CPA, is with Cohen & Company Ltd. in Cleveland.

For additional information about these items, contact Mr. Bakale at tbakale@cohencpa.com.

Unless otherwise noted, contributors are members of or associated with Cohen & Company Ltd.

Photoscape x 2 7 – photo editor photoshop. This chapter contains the following topics:

22.1 Understanding the Clearing Account Reconciliation Process (Release 9.1 Update)

Clearing account reconciliation is an automatic process for reconciling the offsetting debit and credit amounts in these accounts:

• Accounts payable trade account

  This account contains entries that are created by the G/L Post program (R09801) during the voucher and payment entry processes.

• Accounts receivable trade account

  This account contains entries that are created by the G/L Post program (R09801) during the invoice and receipt entry processes.

• Voucher logging account

  This account contains entries that are created by the G/L Post program (R09801) during the logged voucher and voucher journal entry redistribution processes.

• Received not vouchered (RNV) account

  This account contains entries that are created by the G/L Post program (R09801) during the process of receiving goods and creating a voucher match for the goods.

• Performance Liability accounts

  These accounts contains entries that are created by the G/L Post program (R09801) during the process of recognizing revenue.

The clearing account reconciliation process includes these steps:

1. Run the Refresh Reconciliation File program (R09130) with the Document Type Filter processing option set to include automatic entries (AEs). The R09130 program populates the WF – Account Ledger Reconciliation table (F0911R).

2. Run the G/L Account Reconciliation program (R09150) to mark transactions as reconciled.

3. Use the Manual Reconciliation program (P09131) or the Account Ledger Inquiry program (P09200) to manually reconcile any exceptions that were not reconciled by the R09150 program.

22.2 Prerequisites

Before you begin to reconcile clearing accounts, you must:

• Set up GLRCxx automatic accounting instructions (AAIs) to include the clearing accounts that you want to reconcile.

  See Chapter 6, 'Setting Up Account Reconciliation'

• Set the Intercompany Settlements field on the General Accounting Constants form to either 2 (Detailed Intercompany Settlements) or to 3 (Configured Hub Intercompany Settlements).

  The G.L Account Reconciliation program does not support the Hub method of intercompany settlements because the GL Post automatically creates AE entries using document company zero for the Hub method instead of the actual document company found on the A/P detail records.

  See Setting Up Constants for General Accounting

22.3 Automatically Reconciling Clearing Accounts (Release 9.1 Update)

This section provides an overview of the G/L Account Reconciliation program (R09150) and discusses:

• Running the G/L Account Reconciliation Program.

22.3.1 Understanding the G/L Account Reconciliation Program (R09150)

The R09150 program selects records from the F0911R table based on the processing options for the program and the data selection that you enter. You specify whether to reconcile accounts payable trade accounts, accounts receivable trade accounts, voucher logging accounts, RNV accounts, or Performance Liability accounts using the Type of Account to Reconcile processing option.

You then specify accounts within this type in the data selection for the program. The system uses a different algorithm for reconciling each type of account. Therefore, the account type that you specify in the processing options must match the account type of the accounts that you enter in the data selection. The system executes the reconciliation algorithm based on the account type that you enter and reconciles the accounts that you specify in the data selection.

Before reconciling transactions, the R09150 program first reviews the GLOFM (G/L offset method) field for transactions in the Account Ledger table (F0911). This field identifies which offset method is specified in the JD Edwards EnterpriseOne Accounts Payable and Accounts Receivable system constants. If the value in this field is B (one offset for each batch of transactions by account) for either Accounts Receivable or Accounts Payable, the system does not perform account reconciliation for the transactions for that system. You cannot use the R09150 program to reconcile transactions for which the value in the GLOFM field is B. The GLOFM field must contain a Y (offset by document) or S (offset by pay item).

Note:

1. 2.1.1 RECEIPTS If the employee presents an acceptable receipt for Form I-9 showing that he or she applied to replace a document that was lost, stolen or damaged, the employer must set aside this employee's Form I-9 and wait to create a case in E-Verify.
2. You must accept a receipt in place of a List A, B, or C document if the employee presents one, unless employment will last less than three business days. New employees who choose to present a receipt must do so within three business days of their first day of employment. Table 1 provides a list of acceptable receipts an employee can show.

Editor: Anthony S. Bakale, CPA

Various exceptions are available to small business taxpayers to help them avoid some of the Internal Revenue Code's more burdensome and complex requirements. Although these exceptions are meant to simplify tax law implementation, the rules for evaluating whether a business qualifies for the exceptions can be convoluted and highly computational. Although small taxpayer testing may be time-consuming, the tax and time benefits of a small taxpayer classification may be critical to certain taxpayers.

Summary of small taxpayer exceptions

The exceptions are meant more to reduce compliance costs rather than to reduce taxes, but they often do both. Small business taxpayer exceptions include:

Cash-basis accounting method: Although the cash method of accounting is considered a permissible method under Sec. 446(c)(1), Sec. 448 disallows a C corporation or a partnership that has a C corporation as a partner from using it. In addition, if the purchase, production, or sale of merchandise is an income-producing factor, the taxpayer cannot use the cash method of accounting. Sec. 448(b) provides exceptions to this limitation for farming businesses, qualified personal service corporations, and entities that meet the gross receipts test under Sec. 448(c) (commonly known as the small taxpayer gross receipts test).

Exception from Sec. 263A: Newly established under the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, Sec. 263A(i) allows an exemption from the capitalization requirements of Sec. 263A for any taxpayer that meets the gross receipts test of Sec. 448(c).

Exception from the requirement to account for inventories: Sec. 471(c) exempts certain small businesses from the general inventory accounting requirements. These small business taxpayers may either:

• Treat inventory as nonincidental materials and supplies under Regs. Sec. 1.162-3(a)(1) that are eligible to be deducted in the tax year in which the materials and supplies are first used in the taxpayer's operations; or
• Use a method that conforms to the taxpayer's method of accounting for inventories, as reflected in the taxpayer's applicable financial statement or, lacking one, in its books and records.

Exclusion from the Sec. 163(j) limitation: The TCJA's new business interest expense limitation allows an exception in Sec. 163(j)(3) for certain small businesses that meet the gross receipts test of Sec. 448(c).

Completed-contract accounting method: Generally, a taxpayer must use the percentage-of-completion method for long-term contracts, which recognizes revenue as production occurs. Sec. 460(e)(1)(B), however, allows taxpayers that meet the gross receipts test of Sec. 448(c) to account for long-term contracts by the completed-contract accounting method for any contracts estimated to be completed within two years.

Small taxpayer/business determination

Step 1: Tax shelter analysis: All the small taxpayer exceptions described above require a taxpayer to meet the gross receipts test under Sec. 448(c). However, any taxpayer considered a tax shelter under Sec. 461(i)(3) is ineligible to be considered a small taxpayer, regardless of its amount of gross receipts. A tax shelter includes any of the following:

• Any enterprise for which interests in the enterprise have been offered for sale in an offering required to be registered with any federal or state agency with the authority to regulate the offering of securities for sale (excluding C corporations);
• Any syndicate within the meaning of Sec. 1256(e)(3)(B); or
• Any tax shelter defined in Sec. 6662(d)(2)(C)(ii).

The definition of a syndicate under Sec. 1256(e)(3)(B) can prove to be particularly restrictive for limited liability companies, limited partnerships, and S corporations attempting to qualify for the small taxpayer exceptions. Sec. 1256(e)(3)(B) considers the term 'syndicate' to include a partnership or other entity (excluding corporations that are not S corporations) where more than 35% of the entity's losses during the tax year are allocable to limited partners or limited entrepreneurs. A limited entrepreneur is a person who has an interest in an enterprise other than as a limited partner and who does not actively participate in the management of the enterprise (Sec. 461(k)(4)). An exception for holdings attributable to active management expands to family members of those in active management as well as to those previously involved in management for a period of at least five years (Sec. 1256(e)(3)(C)).

Temp. Regs. Sec. 1.448-1T(b)(3) states that an entity is considered a syndicate if more than 35% of losses in a tax year are allocated to limited partners or entrepreneurs. This can be interpreted as saying that an entity can be considered a syndicate only in a year in which it incurs or allocates taxable losses — exempting entities from syndicate classification in years in which they have taxable income rather than losses. Note that for this purpose, gains or losses from the sale of capital assets or Sec. 1221(a)(2) assets (property subject to depreciation used in a trade or business) are not taken into account. Treasury has been asked for clarification on the syndicate classification and to make certain small taxpayer exceptions available to syndicates.

Step 2: Gross receipts test: If a taxpayer is not considered a tax shelter, it is eligible to be considered a small taxpayer if it meets the gross receipts test of Sec 448(c). The term 'gross receipts' is defined under Temp. Regs. Sec. 1.448-1T(f)(2)(iv) and includes sales net of returns and allowances and all amounts received for services. In addition, gross receipts include interest, original issue discount, tax-exempt interest, dividends, rents, royalties, and annuities, regardless of whether those amounts are derived in the ordinary course of business. For capital asset transactions, gross receipts include proceeds less the adjusted basis in the property. To pass this test, a taxpayer's average gross receipts for the previous three years must not exceed $25 million ($5 million prior to enactment of the TCJA). Gross receipts for tax years of less than 12 months are annualized, and if a taxpayer was not in existence for the entire three years prior, then gross receipts are tested over the period of existence.

While the gross receipts test is fairly straightforward, Sec. 448(c)(2) requires all persons treated as a single employer under Sec. 52(a) or (b) or Sec. 414(m) or (o) to be treated as one person for purposes of the gross receipts test; this potentially requires aggregating the gross receipts of multiple taxpayers. Sec. 52(a) refers to Sec. 1563(a), which provides definitions and special rules related to a controlled group of corporations. Sec. 52(b) pulls in all other types of entities, such as partnerships and proprietorships, that are under common control. Sec. 52(b) states that regulations prescribed under Sec. 52(b) shall be based on principles similar to those under Sec. 52(a) dealing with corporations. Secs. 414(m) and (o) define an affiliated service group, which requires combining multiple service organizations under a single umbrella. These aggregation and attribution tests encompass a wide range of relationships and common ownership concepts that must be understood before completing the gross receipts test of Sec. 448(c).

Aggregation

As stated above, any taxpayers considered to be a common employer under Sec. 52 or 414 must be combined for purposes of the gross receipts test. Sec. 52(a) provides that a common employer is considered the same as a controlled group of corporations under Sec. 1563(a). Sec. 1563(a) provides three potential controlled group scenarios:

Parent-subsidiary controlled group: In this type of controlled group, a common parent corporation owns stock that possesses more than 50% of the total combined voting power, or more than 50% of the value, of a subsidiary. Note that Sec. 1563(a)(1)(A) states the applicable percentage is 'at least 80%' but Sec. 52(a)(1) modifies this to be 'more than 50%.'

Brother-sister controlled group: In this type of controlled group, two or more corporations have five or fewer persons (individuals, estates, or trusts) that have both of the following:

• A combined controlling interest of all corporations, which is considered at least 80% of either the combined voting power or the combined value of all corporations' stock. Each person in the group of five or fewer persons must own an interest in every entity being tested as a potential brother-sister controlled group; otherwise, that person's interest is excluded for the purposes of the group (Vogel Fertilizer Co., 634 F.2d 497 (Ct. Cl. 1980)).
• Effective control of all corporations, which is considered more than 50% of either the combined voting power or the combined value of all corporations. For purposes of calculating effective control, each owner's minimum common ownership in all corporations considered is counted. Under this rule, if A owns 20% of Corporation 1 and 50% of Corporation 2, A's minimum common ownership in both corporations would be 20%. This would be the amount counted toward meeting the more-than-50%-effective-control test.

Note on the application of the 80% and 50% tests to brother-sister combined groups: Although Sec. 1563(a)(2) does not mention the 80% threshold related to brother-sister combined groups, Sec. 1563(f)(5) provides the rules applicable to brother-sister combined groups for any provisions other than Sec. 1563. The 80% and 50% thresholds are presented in Sec. 1563(f)(5)(A)(2). Per Sec. 1563(f)(5)(B), these adjusted testing thresholds apply to any provision of law that incorporates the definition of a controlled group of corporations under Sec. 1563(a), such as the inclusion of Sec. 1563(a) in Sec. 52(a).

Combined group: This type of controlled group occurs when one corporation is considered both a parent corporation in a parent-subsidiary controlled group as well as a component member in a brother-sister corporation.

Receipts 1 9 12

Although the rules under Sec. 1563 apply to controlled groups of corporations, Regs. Sec. 1.52-1(b) provides the common-control rules for other types of entities, including partnerships and trusts. Regs. Sec. 1.52-1(c) applies to parent-subsidiary groups, while Regs. Sec. 1.52-1(d) applies to brother-sister combined groups. In general, the rules under Regs. Secs. 1.52-1(c) and (d) closely reflect the combined-group rules under Sec. 1563(a); however, the terms 'voting power' and 'value' are replaced with 'profit interest' and 'capital interest' for partnerships and 'actuarial interest' for trusts and estates.

Special aggregation rule related to Sec. 163(j) exclusion

The proposed regulations for the business interest expense limitation of Sec. 163(j) provide that in addition to aggregating the gross receipts of any commonly controlled groups of entities, a taxpayer must also include in its gross receipts the proportionate share of gross receipts from any partnerships it owns (Prop. Regs. Sec. 1.163(j)-2(d)(2)(iii)). Additionally, each shareholder in an S corporation includes a pro rata share of S corporation gross receipts. This inclusion of gross receipts not otherwise required to be aggregated is required only to qualify for the Sec. 163(j) small taxpayer exception.

Attribution rules related to aggregation

Receipts 1 9 14

In addition to direct ownership, ownership through attribution needs to also be considered when reviewing which entities may need to be considered in a combined group for gross receipt aggregation purposes. The attribution rules that apply for aggregation purposes can be found under Sec. 1563(e). Note that attribution for purposes of aggregation is not the same as the attribution rules under Sec. 267 (related-party Mirror for panasonic tv 3 0 1 download free. transactions) or Sec. 707 (transactions between partner and partnership). Attribution or constructive ownership rules that apply for aggregation rules include the following:

• Inclusion of options: If any person has an option to acquire stock, that stock is considered as owned by that person.
• Attribution from partnerships, estates, trusts, and corporations: In general, any taxpayer who owns 5% or more of a partnership, estate, trust, or corporation is deemed to own the same proportionate share of the partnership's, estate's, or trust's interest in any entities it owns.
• Spousal attribution: Generally, an individual is attributed the ownership interest of his or her spouse, but an exception to this general rule is available under Sec. 1563(e)(5) in certain circumstances.
• Attribution from children, grandchildren, parents, and grandparents: An individual is always attributed the ownership interest of any minor children, which includes children under the age of 21 (including adopted children). An individual also may be attributed the ownership interest of children 21 and over (including adopted children), parents, grandparents, and grandchildren if those individuals own more than 50% of the voting power or value of a corporation (profit interest or capital interest of a partnership).

Aggregation: Brother-sister combined group example

A, B, C, D, and E own the capital interests of various limited liability companies (LLCs) taxed as partnerships. The capital interest ownership in these LLCs is shown in the table 'LLC Members' Capital Interests' (below).

To be considered a brother-sister combined group, five or fewer persons must have both a controlling interest in, as well as effective control of, multiple entities.

Step 1. Controlling interest: A cumulative ownership interest of at least 80% is required for that interest to be classified as controlling. According to the interests shown in the table 'LLC Members' Capital Interests,' the group of A, B, C, D, and E is considered to have a controlling interest in ABC and JKL only. The group does not have a controlling interest in DEF, as members of the group own only 50%. GHI is owned 85% by A, D, and E, but B and C do not own any interest in this entity; therefore, B and C's ownership in other entities is not considered when reviewing common control related to GHI for the A, B, C, D, and E group. The group ofA, D, and E owns 70% of ABC, 85% of GHI, and 60% of JKL. Because only GHI is above 80%, there is a controlling interest in only one entity for the A, D, and E group, so the group cannot be in common control of two or more entities.

Step 2. Effective control: As ABC and JKL are the only two entities to pass Step 1 for the A, B, C, D, and E group, they are the only entities required to be analyzed for effective control. A summary of the minimum common ownership of these two entities is shown in the table 'Summary of Minimum Common Ownership' (below).

Because the combined minimum common ownership is at least 50% (70% in total among the five owners), this group is considered to have effective control of both ABC LLC and JKL LLC.

Results

Because the group of A, B, C, D, and E has a controlling interest (determined in Step 1) and effective control (determined in Step 2) in both ABC and JKL, these two entities are considered a brother-sister controlled group under Regs. Sec. 1.52-1(d) and are therefore considered a single employer under Sec. 52 and must aggregate gross receipts for purposes of the gross receipts test of Sec. 448(c).

EditorNotes

Anthony Bakale, CPA, is with Cohen & Company Ltd. in Cleveland.

For additional information about these items, contact Mr. Bakale at tbakale@cohencpa.com.

Unless otherwise noted, contributors are members of or associated with Cohen & Company Ltd.

Photoscape x 2 7 – photo editor photoshop. This chapter contains the following topics:

22.1 Understanding the Clearing Account Reconciliation Process (Release 9.1 Update)

Clearing account reconciliation is an automatic process for reconciling the offsetting debit and credit amounts in these accounts:

• Accounts payable trade account

  This account contains entries that are created by the G/L Post program (R09801) during the voucher and payment entry processes.

• Accounts receivable trade account

  This account contains entries that are created by the G/L Post program (R09801) during the invoice and receipt entry processes.

• Voucher logging account

  This account contains entries that are created by the G/L Post program (R09801) during the logged voucher and voucher journal entry redistribution processes.

• Received not vouchered (RNV) account

  This account contains entries that are created by the G/L Post program (R09801) during the process of receiving goods and creating a voucher match for the goods.

• Performance Liability accounts

  These accounts contains entries that are created by the G/L Post program (R09801) during the process of recognizing revenue.

The clearing account reconciliation process includes these steps:

1. Run the Refresh Reconciliation File program (R09130) with the Document Type Filter processing option set to include automatic entries (AEs). The R09130 program populates the WF – Account Ledger Reconciliation table (F0911R).

2. Run the G/L Account Reconciliation program (R09150) to mark transactions as reconciled.

3. Use the Manual Reconciliation program (P09131) or the Account Ledger Inquiry program (P09200) to manually reconcile any exceptions that were not reconciled by the R09150 program.

22.2 Prerequisites

Before you begin to reconcile clearing accounts, you must:

• Set up GLRCxx automatic accounting instructions (AAIs) to include the clearing accounts that you want to reconcile.

  See Chapter 6, 'Setting Up Account Reconciliation'

• Set the Intercompany Settlements field on the General Accounting Constants form to either 2 (Detailed Intercompany Settlements) or to 3 (Configured Hub Intercompany Settlements).

  The G.L Account Reconciliation program does not support the Hub method of intercompany settlements because the GL Post automatically creates AE entries using document company zero for the Hub method instead of the actual document company found on the A/P detail records.

  See Setting Up Constants for General Accounting

22.3 Automatically Reconciling Clearing Accounts (Release 9.1 Update)

This section provides an overview of the G/L Account Reconciliation program (R09150) and discusses:

• Running the G/L Account Reconciliation Program.

22.3.1 Understanding the G/L Account Reconciliation Program (R09150)

The R09150 program selects records from the F0911R table based on the processing options for the program and the data selection that you enter. You specify whether to reconcile accounts payable trade accounts, accounts receivable trade accounts, voucher logging accounts, RNV accounts, or Performance Liability accounts using the Type of Account to Reconcile processing option.

You then specify accounts within this type in the data selection for the program. The system uses a different algorithm for reconciling each type of account. Therefore, the account type that you specify in the processing options must match the account type of the accounts that you enter in the data selection. The system executes the reconciliation algorithm based on the account type that you enter and reconciles the accounts that you specify in the data selection.

Before reconciling transactions, the R09150 program first reviews the GLOFM (G/L offset method) field for transactions in the Account Ledger table (F0911). This field identifies which offset method is specified in the JD Edwards EnterpriseOne Accounts Payable and Accounts Receivable system constants. If the value in this field is B (one offset for each batch of transactions by account) for either Accounts Receivable or Accounts Payable, the system does not perform account reconciliation for the transactions for that system. You cannot use the R09150 program to reconcile transactions for which the value in the GLOFM field is B. The GLOFM field must contain a Y (offset by document) or S (offset by pay item).

Note:

To indicate that transactions are reconciled, the system updates these fields in the F0911R table:

• Reconciled Code (RCND): the system updates this field with the reconciled code that you specify in the processing options for the R09150 program.

• Reference 3 (R3): the system updates this field with a reconciled identification (ID) number that contains leading zeros. The system uses the Reconciliation number in the General Accounting next numbers.

• Check Date (DKJ): the system updates this field with the most recent G/L date of the group of entries.

The following subtopics describe how the system determines whether transactions are reconciled.

22.3.1.1 Accounts Payable Trade Accounts

Depending on whether the payment fully pays the voucher, and whether the offset method is S or Y, the system reconciles entries differently. The system reconciles entries when:

• • The offset method is S and a pay item for a voucher is paid in full by one or more payments.

• • The offset method is Y and a voucher is paid in full by one or more payments where the total amount matches the voucher exactly.

  If a voucher is paid by multiple payments and the offset method is Y, the system reconciles the entries when a payment amount exactly matches the entire remaining amount of the voucher

This table provides examples of how the R09150 reconciles AE entries in the accounts payable trade accounts:

22.3.1.2 Accounts Receivable Trade Accounts

Depending on whether the receipt fully pays the invoice, and whether the offset method is S or Y, the system reconciles entries differently. The system reconciles entries when:

• • The offset method is S and a pay item for an invoice is paid in full by one or more receipts.

• • The offset method is Y and an invoice is paid in full by one or more receipts where the total amount matches the invoice exactly.

  If an invoice is paid by multiple receipts and the offset method is Y, the system reconciles the entries when a receipt amount exactly matches the entire remaining amount of the invoice.

This table provides examples of how the R09150 reconciles AE entries in the accounts receivable trade accounts:

22.3.1.3 Voucher Logging Accounts

If you have entered a logged voucher and then redistributed it to an expense account, the logged voucher suspense account contains two offsetting entries with the same document number. The system reconciles the two entries if they contain offsetting amounts and if the document information matches.

22.3.1.4 RNV Accounts

For AE entries in the RNV accounts, the system reconciles the entries if the receipt has been fully matched to the voucher. The system does not reconcile the entries if an open amount remains to be matched on the voucher.

If you have reversed the voucher, the system does not reconcile the entries.

22.3.1.5 Performance Liability Accounts (Release 9.1 Update)

For each transaction, i.e. for each document number and document type with a blank reconciliation code for a specific company combination in the F0911R table, the system accumulates amounts in the following accounts; PLA (performance liability account), PLA adjustment, PLA COGS, PLA COGS adjustment. The G/L date may be different between the original transaction and the clearing entry that the system creates when the revenue is recognized.

If the accumulated amount is 0, the system updates the Reconciled Code and Reference 3 fields in the F0911R table for PLA, PLA adjustment, PLA COGS, PLA COGS adjustment accounts for the selected document number, GL date, and document type.

See 'Understanding Performance Liability Accounting' in the JD Edwards EnterpriseOne Applications Accounts Receivable Implementation Guide.

See 'Setting Up AAIs for Revenue Recognition' in the JD Edwards EnterpriseOne Applications Accounts Receivable Implementation Guide.

22.3.2 Prerequisite

Before you run the G/L Account Reconciliation program, run the Refresh Reconciliation File program (R09310) with the processing option set to include AE entries and with data selection set to include the accounts that you want to reconcile.

See Refreshing Account Reconciliation Information

22.3.3 Setting Processing Options for the G/L Account Reconciliation Program (R09150) (Release 9.1 Update)

Processing options specify default processing information.

22.3.3.1 Process

Specify the type of account to process. Values are:

1: A/R Trade

2: A/P Trade

3: Voucher Logging Account

4: RNV Account (Received Not Vouchered)

5: Performance Liability

You must also enter data selection for the accounts that correspond to the account type that you select. Entering data selection for the corresponding accounts ensures that the system processes unreconciled records from the Account Reconciliation table (F0911R) for only the selected accounts related to this account type.

22.3.3.2 Options

Specify the report output. Values are:

1: No Reconciliation Detail

The system prints a list of accounts that were reconciled.

2: Summarized Report

The system prints a list of the reconciled identification numbers (R3 field) with the corresponding reconciled dates (DKC field) for each processed account.

3: Detailed Report

The system prints additional detail from the Account Ledger table (F0911) on each reconciled record for a processed account.

22.3.4 Running the G/L Account Reconciliation Program

Select Automated Reconciliation (G09205), Automated Account Reconciliation.