Tax Implications of the Supreme Court's DOMA Ruling

On Wednesday, the U.S. Supreme Court struck down the Defense of Marriage Act (DOMA) and California's Proposition 8, two major victories for supporters of same-sex marriage. The rulings have major tax implications for same-sex couples.

The DOMA ruling came in U.S. v. Windsor and invalidated Section 3 of the law, which defined "marriage" as a union between one man and one woman and "spouse" as a person of the opposite sex who is a husband or wife. The case was brought by Edith Windsor, who married Thea Speyer in Canada in 2007. When Speyer died in 2009, New York, where the couple lived, recognized same-sex marriages from other jurisdictions.

Because Windsor was not covered by the federal spousal deduction, she owed more than $363,000 in federal estate tax on Speyer's estate. With the benefit of that deduction, she would not have owed any estate tax.

Daily Finance has an overview of the other tax and financial implications of the ruling. Changes for same-sex couples include:

• The ability to file federal income taxes jointly
• Exemption from the gift tax when transferring assets to each other
• Spousal benefits and tax breaks (in some cases) on health insurance
• The same federal tax treatment and Social Security benefits as opposite-sex couples upon one spouse's death

We'll add more resources as we come across them.

UPDATES:

• Article from CPA Practice Advisor on tax implications
• Tax briefing (PDF) from CCH
• And an interview with VSCPA member Art Auerbach, CPA, via gayrva.com

NACE: Internships, Co-ops Important for 2013 Seniors

According to a new survey of students from the National Association of Colleges and Employers (NACE), nearly two-thirds (63.2 percent) of graduating seniors from the Class of 2013 took part in an internship or cooperative education assignment during their time spent pursuing a bachelor's degree, the highest percentage since NACE began surveying the subject in 2007.

The highest previous rate was 57 percent, reported for the Class of 2008. Pay categories for the 2013 survey split nearly down the middle, with 52.2 percent reporting paid internships and 47.8 reporting unpaid internships.

The Latest From the IRS Film Studio: 'Mad Men'

Earlier this year, we brought you news of the U.S. Internal Revenue Service's (IRS) video parodies of Star Trek and Gilligan's Island. Turns out the employees who planned the video have watched some more recent TV shows as well.

The IRS also filmed a Mad Men-themed CPE video — and you can watch this one. Actor Michael Davis, who played the Don Draper-esque main character in the video, uploaded it to his YouTube channel. Watch it below (assuming it's still up when you read this).



The video appears to have been edited to showcase Davis, who introduces the director of IRS Field Assistance. The director does not appear in this version of the video.

Newly appointed IRS acting commissioner Danny Werfel (not the Heisman Trophy winner) has promised not to spend agency money on producing such videos in the future.

The Student's Perspective: Tax, Audit...or Other?

By Samantha Burch
Social Coordinator, Beta Alpha Psi, James Madison University

Editor's note: This is part of a series of guest posts from members of the James Madison University (JMU) chapter of Beta Alpha Psi, an honors fraternity for accounting students. These posts will cover topics of interest to accounting students. If you have a question you'd like a Beta Alpha Psi member to cover, please email VSCPA Communications Specialist Chip Knighton.

“Oh, you’re an Accounting major? Are you interested in tax or audit?”

This question is one that every accounting student has encountered multiple times during his or her time in college.  During the first two or three years of school, the answer is likely, “I’m not sure yet”, but by the time senior year rolls around, most of us have discovered which sector of accounting we fit into.  Taking classes, participating in externships and internships, and talking with professionals in various lines of service provide valuable exposure to the sectors and can help you make the decision.  However, an easy mistake for students to make is to believe that they are limited in choosing between audit and tax because these are usually the two most highlighted sectors.  Students are presented with two general stereotypes:  Tax professionals travel less, have less client interaction and have an intense busy season from January to April while audit professionals travel more frequently and have more extensive client interaction. Most people can easily identify with one of those descriptions over the other; but what happens if you are like me, and unable to imagine yourself in either line of service?  What happens if you do not “fit”?

When someone asks me that question, I smile and reply, “Neither”.  I will not yet say for certain what I am interested in, but I feel that neither tax nor audit is the right field for me.  At first, this was concerning, and I wondered if I had chosen the right major at all. But with some research and the help of mentors, I discovered that there are a multitude of other opportunities to pursue, such as forensic accounting, accounting outsourcing, and consulting.

Fellow students, if you find yourself feeling less than enthusiastic about tax and audit, do not be discouraged. There are several steps you can take to conduct your own research and find your own perfect fit.

• Talk to your professors. They are knowledgeable about different careers that you can access with an accounting degree. They also have contacts that can give you more information about areas that interest you.
• Know what concentrations or upper level classes universities offer before you choose which to attend for a graduate degree.  Look for a place that offers a variety of courses unrelated to tax or audit so that you can sample them before you decide.
• Research accounting firms in your area that have service lines other than tax and audit. Apply for an externship program if they have one; chances are they will spend a portion of that time introducing you to the service lines you may not be familiar with.  I recently participated in such an externship, where I discovered that accounting outsourcing greatly appeals to me.
• Look for firms that do rotational internships.  This means that you will get to work in each of their lines of service during your internship.  Real world experience is the best way for you to know whether you enjoy something or not because you will be doing it all day long, five days per week. Even if you do not fall in love with any particular service line, you may be able to rule one out.

These steps may take a bit of extra effort, and additional time to explore everything that the accounting world has to offer. You may even feel downright maverick when someone asks you the dreaded audit/tax question. But it will have been worth it when you find your own personal niche.

Samantha Burch is a rising senior at JMU seeking a master's degree in forensic accounting. She is the social coordinator of the Eta Delta chapter of Beta Alpha Psi, as well as a student member of the VSCPA and a 2012 Leaders' Institute attendee. She works in JMU's financial reporting department and is currently interning with Robinson, Farmer, Cox Associates.

Young Professionals Corner: Work-Life Balance and My Experience as a Working Mother

By Marian Millikan, CPA
Senior Tax Accountant, Cherry Bekaert LLP

Editor's note: This is the first in a series of guest posts from young VSCPA members dealing with topics of interest to young professionals. If you have a topic you'd like a future blogger to cover, please email VSCPA Academic & Career Development Coordinator Tracey Zink.

At the start of my public accountant career, I remember learning in an orientation class how important a “work-life balance” was in allowing an individual to experience perfect harmony between their work and home lives. This lasting impression left me eager to figure out the secret formula so I could obtain the perfect balance of happiness.

Two years later, I was happy with my job and home life, but moments that I felt completely balanced were rare. I had considered giving up on my search for the secret formula, but then I realized how you interpret “balance” is essential. There doesn’t have to be a 50/50 split all the time. Sometimes work can take priority (tax season comes to mind), and other times, like vacations, family and friends should be your main focus. The perfect work-life formula is never constant, and will almost never be balanced 50/50.

Although balance can be different for each individual, the key to my work-life “balance” formula is two things: organization and prioritization. For instance, I need a calendar to track my work projects, social events, family appointments, and everything else. Once everything is on the calendar, I prioritize conflicting tasks to determine which is most important and must be accomplished at the expense of the other. Proactively making this choice helps me avoid making last-minute decisions that cause tons of stress, regardless of whether or not the “correct” choice was made. Any working parent can relate to a time when they found out about a party at their child’s school (or God forbid an early release from school) the day before, and had already scheduled an important client meeting for that afternoon. Whenever double bookings occur, it always seems Murphy’s Law is in full effect, and your spouse is out of town or the babysitter is sick. It only took a few instances for me to learn to put my child’s monthly “schedule of events” on the calendar as soon as I got it. Prioritizing these events has saved countless hours of guilt and apologies.

If you have a smartphone, a great resource is using a calendar app that allows you to share calendar updates with family members the instant they’re added. I can see all of my husband’s events, and he can see mine. This has proven to be a great tool for my family, as everyone knows when events are planned, when critical personnel are out of town, and who has been assigned to pick up which kid at what time.  I use Cozi (www.cozi.com), but there other great tools out there, too.

Another valuable lesson I learned about prioritizing work and life tasks happened in my first few months as a working mother. I had just committed to completing a tax research and analysis project by the week’s end when I got the dreaded call from daycare: my daughter had a fever. Not only did she need to come home immediately, but my daughter wasn’t allowed back at school for a minimum of 24 hours! Even though this meant two work days turned into two unexpected days out of the office, I was determined to complete that project as promised. I worked through the night and every second she napped. Despite feeling exhausted, I turned the project in on Friday, and was proud of myself for doing it all! I felt like super woman, super employee, and super mom all wrapped up into one. When I gloated about my time management skills to my manager and how I accomplished this herculean task despite the odds. He looked at me a little puzzled and simply replied that I could have had another week to complete the project without a problem. Apparently, all I had to do was ask. So I learned another important work-life balance lesson: if you feel overwhelmed with either work or family, get yourself out of the “I can do it all” mindset and ask for help. More often than not, work and life can be flexible!

There will be times where you have to increase your effort towards family, and there are times that extra effort goes towards your job. It isn’t sacrificing one for the other, but managing the priorities of everything simultaneously. This approach makes me happy, fulfilled, and most importantly, keeps me sane. I feel like a better employee, coworker, wife, and mom. Work-life balance can’t get any better than that.