Business Frame Weekly - U.S. Labor Participation Rate Fell to 62.1% / FASB Issues Accounting Standards Update / Intuit Small Business Revenue Up 38%

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Now, the news…

Businesses are continuing to struggle to find enough workers as the U.S. labor force participation rate fell to 62.1%, according to government data released last week. The rate for workers aged 25 to 54, specifically, dropped from 82.5% to 82.4%.

In a proposed Accounting Standards Update, the Financial Accounting Standards Board (FASB) is now accepting comments by next month from stakeholders to determine ways to improve accounting guidance for arrangements between entities under common control.

In a financial report for the first fiscal quarter of 2023, Intuit Inc. saw strong financial results, growing total revenue to $2.6 billion, up 29%. Small Business and Self-Employed Group revenue also increased 38% to $2.0 billion.

In this newsletter:

• FASB Seeks Input on Proposed Improvements to Leases Guidance on Related Party Arrangements Between Entities Under Common Control
• Improperly Forgiven PPP Loans Must be Included in Income
• Clean Energy Product Prevailing Wage Rate and Apprenticeship Requirements Issued
• Americans are Still Leaving the Workforce
• Intuit Accountants Announces New Product and Service Updates for Tax Year 2022
• Intuit Reports Strong First Quarter Results and Reiterates Full Year Operating Income and Earnings Per Share Guidance
• Financial Accounting Foundation Appoints Nine New Members to the Financial Accounting Standards Advisory Council

December 6, 2022

FASB Seeks Input on Proposed Improvements to Leases Guidance on Related Party Arrangements Between Entities Under Common Control

The Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) intended to improve accounting guidance for arrangements between entities under common control. Stakeholders are asked to review and provide comments by January 16, 2023. The proposed ASU would provide private companies and not-for-profit organizations that are not conduit bond obligors with a practical expedient that would allow those entities to use the written terms and conditions of an arrangement between entities under common control to determine whether a lease exists and, if so, the classification of and accounting for that lease.

Improperly Forgiven PPP Loans Must be Included in Income

Taxpayers whose Paycheck Protection Program (PPP) loans are forgiven under the program but who are ineligible for that forgiveness may not exclude the forgiven loan amount from gross income for federal tax purposes, the IRS Office of Chief Counsel stated. The Chief Counsel Office’s position and reasoning were outlined in Chief Counsel Advice (CCA) 202237010 released Sept. 16. In an accompanying news release, the IRS said it was aware that some taxpayers’ PPP loans have been inappropriately forgiven. These taxpayers should take steps to come into tax compliance, such as by filing amended returns that include the forgiven loan proceeds in income, the IRS advised.

Clean Energy Product Prevailing Wage Rate and Apprenticeship Requirements Issued

In Notice 2022-61, published Wednesday in the Federal Register, taxpayers received guidance from the IRS on how to satisfy the prevailing wage rate and apprenticeship requirements added in the Inflation Reduction Act to certain clean energy credit and deduction provisions. An increased credit amount and increased deduction are available to taxpayers that satisfy certain requirements. The determination of the prevailing wage rate is generally made by the secretary of Labor. Requirements will only apply to facilities on which construction began, or certain property the installation of which began, on or after Jan. 30, 2023.

Americans are Still Leaving the Workforce

The U.S. labor force participation rate fell for a third straight month in November, underscoring businesses' ongoing struggle to find enough workers. The share of Americans either working or actively looking for a job fell to 62.1%, according to government data released Friday. The rate had risen to 62.4% in August, matching a post-pandemic high reached in March, but remains significantly below where it was before the pandemic. The participation rate for so-called prime-aged workers, those aged 25 to 54, also dropped, to 82.4% from 82.5%. While participation declined for both men and women, a larger share of female workers left the labor force last month.

Intuit Accountants Announces New Product and Service Updates for Tax Year 2022

Intuit has launched the latest updates to products and services including Intuit Tax Advisor, Intuit ProConnect Tax, Intuit Link, Intuit ProSeries Tax, and Intuit Lacerte Tax for the upcoming tax year. Intuit offers a variety of tools and services for tax professionals to take the next steps in their businesses and with their clients to move toward advisory services, including the Path to Advisory Guide, the AccounTrends podcast, and the Tax Pro Center.

Intuit Reports Strong First Quarter Results and Reiterates Full Year Operating Income and Earnings Per Share Guidance

Intuit Inc. announced financial results for the first quarter of fiscal 2023, which ended October 31. “We had a strong first quarter as we innovated and delivered on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses,” said Sasan Goodarzi, Intuit's chief executive officer. Some financial highlights include: Grew total revenue to $2.6 billion, up 29 percent. Increased Small Business and Self-Employed Group revenue 38 percent to $2.0 billion. Grew Online Ecosystem revenue 60 percent to $1.3 billion. Increased Credit Karma revenue 2 percent to $425 million. Grew Consumer Group revenue to $150 million, up from $120 million the prior year. Increased ProTax Group revenue to $34 million, up from $26 million the prior year.

Financial Accounting Foundation Appoints Nine New Members to the Financial Accounting Standards Advisory Council

The Board of Trustees of the Financial Accounting Foundation (FAF) announced the appointment of nine new members to the Financial Accounting Standards Advisory Council (FASAC). The FASAC advises the Financial Accounting Standards Board (FASB) on strategic and technical issues, project priorities, and other matters that affect standard setting. The new FASAC members will serve a one-year term that begins on January 1, 2023, and may be reappointed for additional terms.

Random Ramblings

• How to develop and implement a powerful employer brand.
• Year-end tax strategies acquire a twist.
• How to decide on your company’s fiscal year.
• Pockets of optimism — why there’s hope amidst ‘doom and gloom’.
• How to create a culture of gentle accountability in 3 steps.