Sam Hobbs, CPA
Product Lead
Sam ensures the Clearwater solution is in compliance with applicable regulatory guidelines. Since joining Clearwater in 2013, Sam has worked closely with industry experts, client services team leads, and the Clearwater development team to implement enhancements and new features to ensure the Clearwater system remains best-in-class.
Prior to joining Clearwater, Sam was an audit manager at PwC in Atlanta. He worked closely with clients in the insurance, investment management, and real estate industries as a member of the financial services group.
Sam is a certified public accountant and has a bachelor’s in accounting from Brigham Young University.
Sam is an avid golfer. He especially enjoys the outdoors and spending time with his wife and four boys.
Investment professionals are just one group seeking to understand the wide-ranging impacts the Tax Cuts and Jobs Act of 2017 will have on their operations. As an investment accounting and reporting provider, Clearwater received a number of questions recently about investment accounting best practices regarding updates to US tax policy. One major topic of discussion is foreign asset repatriation.
Repatriation Basics
Many companies with overseas assets are considering taking advantage of the one-time low repatriation tax rate included in the reform act.
The legislation deems repatriation is achieved through a participation exemption system, meaning companies with dividends distributed by a controlled foreign corporation (CFC) can transfer untaxed earnings to their domestic entities at a lower tax rate. This rate is achieved through a 100% dividend received deduction. Ultimately, cash or cash equivalents are taxed at a net 15.5%, while all other earnings are taxed at a net 8%.
Consolidated GAAP: What is it and why is it important?
Because companies are bringing foreign-held earnings back to the US, investment accountants and treasurers might wonder how to properly view these asset transfers from a parent company perspective. Many companies track and report both entity and consolidated financial results. Previously, transfers and resulting inter-company elimination entries may not have been common practice. Because of this, it was manageable to track this manually. However, transfers will likely increase due to the new rules around repatriation, which may make this manual process unmanageable.
Clearwater offers both entity-level and consolidated GAAP in its automated investment accounting and reporting software. This enables users to view standalone financial reporting and consolidated reporting at cost basis. An automated system like Clearwater enables organizations to eliminate tedious manual processes associated with consolidated GAAP.
Consolidated GAAP is the best way to track your organization’s investments when there are inter-company transfers, so it is important to speak with your investment accounting provider about the available options if you intend to repatriate earnings from a CFC.
Many of Clearwater’s investment accounting experts are closely watching as the IRS works to implement this major reform to US tax policy and preparing for any impacts it may have on institutional investors.