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Your go-to source for expert insights, industry updates, and exclusive CalCPA content. Stay ahead with practical guidance, pro tips, and must-know trends—all designed to fuel your success.

Stay ahead with essential CPA resources

Dividing Homes in Divorce

Even if you owned your house before marriage, California’s Moore/Marsden formula may grant your spouse a share of its equity. Learn how CPAs and courts untangle these complex financial interests.

International Tax Highlights of OBBBA

Learn how the One Big Beautiful Bill Act reshapes the rules for calculating and deducting Global Intangible Low-Taxed Income.

OBBBA Transition Rules

The One Big Beautiful Bill Act created opportunities for small businesses to fully deduct or amortize R&E costs earlier than expected. Here's how CPAs can help clients maximize refunds or streamline compliance.

OBBBA Transition Rules 

CPA Licensure Modernization Clears Legislature, Awaits Governor

AB 1175—legislation that provides aspiring CPAs with more flexible, affordable and accessible pathways into the profession—has passed the Legislature and now awaits the governor’s signature. 

AB 1175 Clears Legislature

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Looking for an old article or a past issue from California CPA magazine? You're in the right spot!

Part articles and archives

CPAs: Making Sense of What Comes Next campaign

It’s no secret that CPAs are called upon to perform a range of work for clients. While the tax work is still there, the profession has evolved to include areas like data analytics, risk management or even behavioral economics. The profession is more than simply a service provider; CPAs are trusted partners in decision-making.

And a growing area where people are turning to CPAs for guidance is life insurance settlements, the process of selling an existing life insurance policy to a third party for an immediate lump-sum payment.

In this Q&A with Lisa Rehburg, president of Rehburg Life Insurance Settlements, learn about what life insurance settlements are; their benefits and challenges; and factors to consider and questions to ask when helping clients.

Q: How long have life insurance settlements been evolving?

A: This has been legal since 1911. In a Supreme Court decision in 

 Justice Oliver Wendell Holmes deemed life insurance policies as an asset that one owns; as an asset, it can be transferred to anyone at any time. The market was fairly quiet and unregulated for decades, and in the 1990s, the Life Insurance Settlements Association was formed to work with government agencies, specifically insurance commissioners, the National Association of Insurance Commissioners and National Congress of Insurance Legislators. Today, as an industry, life settlements brokers and buyers are highly regulated by departments of insurance across the country. 

Q: When did you see this as a new benefit for your insurance clients? 

A: I was in corporate for a long time and had been working with insurance agents, financial advisers and advisers in general for my career. I realized that more than two million seniors a year will close their life insurance policies and more than $100 billion in benefits are lost by lapsing or surrendering policies. Perhaps they can't afford premiums, or they need to repurpose the policy. This option can help a huge number of people in a new way as the money received from selling a policy can be used for anything, including being a resource for clients that are recovering after the devastating fires in Los Angeles.

Q: I imagine there is amazing demand as the aging senior population is growing. 

A: Correct! This is a needed opportunity. For me, it's all about helping advisers and their clients. I'm passionate about letting people know that this is an option. If the situation is right, this can be a wonderful solution. Instead of walking away with little or nothing from their policies, they can be helped dramatically. 

Q: You mentioned that most people are older who consider this option. Are there other consideration when someone younger has a policy?

A: I always tell people to buy life insurance because they need it. We work with seniors, not always but typically, because buyers of these policies will pay premiums and become beneficiaries. They're not looking to wait 30 or 40 years. Bluntly, they're looking for people with 10 to 15 years life expectancy or less, sometimes 20 years. For a young couple in their 20s or 30s, we're not a consideration yet. If you're buying a term policy, know when the conversion option is ending. What's the conversion deadline? There's always a deadline as to when you can do that and it's convertible without health statements. If something does happen, let's say someone does get sick, they may want to convert that policy to a permanent policy, or a portion of it to continue to give their family protection past the level term period. So, it’s key to be aware of conversion deadlines on term policies. 

A: Media ads are raising visibility and public awareness for our market. People are living longer, having freer lives. Times have changed. The vast majority of our clients are not selling their policies to pay for medical bills. We work with clients that have much longer life expectancies now, which is great for them and their families.

Q: Does it take another level of sensitivity on the part of insurance agents, CPAs or lawyers? Who can help? Who's the most logical one for these conversations? 

A: Many times, clients aren't having these conversations with anybody. But it’s certainly an area where financial planners, insurance agents, trust attorney and CPAs can step in and have those conversations with clients. 

For CPAs especially, when they're looking at their client’s financial picture, questions may come up: Does this insurance policy need to be here? What happens if it's a business owner who is retiring from their business or selling their business? Do they need the key person policy anymore? If the answer is no, an option to letting those policies go may be to sell it with the client receiving the cash influx. And as I mentioned earlier, the funds a client receives can be used for anything—from medical costs to a bucket-list trip to college tuition for their kids, or to simple increase their retirement funds. 

Final note: There are many factors for CPAs and their clients to consider when discussing life insurance settlements and additional research from the tax perspective may be required. More information is also available through 

Life Settlements

A growing area where people are turning to CPAs for guidance is life insurance settlements. Learn about what they are; their benefits and challenges; and factors to consider and questions to ask when helping clients.

CPAs are often called upon to provide clarity and precision in financial situations that are anything but straightforward. One recurring challenge in California family law involves the division of a marital residence that is owned by one spouse, often before the marriage, and had the mortgage principal reduced or value-enhancing improvements made during the marriage using community funds. (Note that the real property is not limited to a residence. It encompasses all real estate whether it is the marital residence, rental property, or other commercial property.)

In this context, community funds typically mean earnings by either or both spouses during the marriage, or the net proceeds from the sale of community assets. In California, the 

 cases and their progeny provide the mathematical and logical framework for evaluating the respective community and separate property interests in such a home. 

CPAs specializing in family law matters routinely apply the simple formula—that quickly becomes complicated, nuanced and unclear when encountering certain common fact patterns—to real estate properties that are the separate property of one spouse.

This article provides an understanding of the 

 formula and identifies fact patterns that, when encountered, it is advised to seek help from a specialist. While the basic formula is mathematically simple, real-world fact patterns often introduce complications that require specialized expertise.

These decisions (and a line of about a dozen progeny cases) establish that if community property funds are used to reduce the principal of a loan on a separately owned home, the community gains a financial interest (not ownership interest) via a reimbursement of the principal reduction paid with community funds plus an apportionment of the appreciation of the fair market value of the house from date of marriage to the date of trial proportional to that principal reduction paid.

The formula considers three main elements:

: Community Share of Appreciation = (Principal Paid During Marriage from community funds / Total Principal Paid) × Appreciation 

Total Community Interest = Community Share of Appreciation + Principal Paid During Marriage from community funds

Fact Patterns That May Require Adjustments

 formula may not fit when any of the following occur:

 framework is conceptually straightforward, its real-world application can be highly fact specific. When unusual circumstances exist, consulting an attorney who is a Certified Family Law Specialist and an experienced family law forensic CPA is strongly recommended.

The international updates in the One Big Beautiful Bill Act are far less consequential than the Tax Cuts and Jobs Act in 2017 with the onset of the Section 965 Transition Tax and Global Intangible Low-Taxed Income (GILTI) regime.  

The most exciting news with OBBBA is that proposed Section 899—the so-called revenge tax—did not make it into the final act. Proposed Section 899 was meant as a retaliation against foreign countries for assessing what the U.S. considered to be unfair taxes, including the Pillar Two Corporate Minimum Tax and Digital Services Tax, on U.S.-based large multinational corporations.  

Proposed Section 899 would have had a broader reach, subjecting foreign investors and business owners of any size to U.S. tax rates up to 50 percent over time, simply for being from one of the countries that impose an unfair tax. With OBBBA, what we do see is fine tuning of certain provisions with a focus on GILTI, including how it is calculated, related deductions and rates, foreign tax credits, and definitional rules for CFCs including downward attribution.

GILTI was originally enacted as a formula: GILTI=Net CFC Tested Income (NTCI) less Deemed Tangible Income Return (DTIR).  In the recent update, DTIR has been eliminated from the calculation, effectively removing the carve out for the return that was deemed to be attributable to depreciable business assets.  

Without DTIR, GILTI=NCTI and GILTI as a formula is irrelevant. The deemed income reportable under Section 951A will simply be calculated as NCTI (Net CFC Tested Income). That said, many of us will likely still refer to Section 951A income as GILTI even though the formula has changed. 

Next, we have two changes to the Section 250 deduction: the deduction has been made permanent, and the deduction rates have decreased.  

The previous FDII deduction of 37.5 percent is now 33.34 percent and the previous GILTI deduction of 50 percent is now 40 percent. The net effect of these changes for taxation of GILTI is that there has been a slight increase from 10.5 percent to 12.6 percent. This is determined by the 21 percent corporate tax rate less a 50 percent GILTI deduction, compared to the 21 percent corporate tax rate less a 40 percent GILTI deduction.  

There have also been some definitional changes to FDII related to the removal of DTIR from the GILTI calculation, as well as exceptions for certain types of income received after June 16, 2025.  

As part of the IRC Section 250 deduction, only directly related expenses may be claimed and there is no longer an allowance for allocable deductions. FDII is also now FDDEI (Foreign Derived Deduction Eligible Income).  

With respect to the GILTI foreign tax credit, a corresponding change has been made so that deductions will no longer be allocable to GILTI. Instead, only directly related expenses will reduce GILTI income and allocable deductions will instead be applied to U.S. source income. The next change to GILTI foreign tax credits is that the 20 percent haircut on GILTI foreign tax credit will be changed to 10 percent.

Downward attribution rules have had a much-needed change for the better.  

The OBBBA has reinstated Section 958(b)(4) for tax years beginning after Dec. 31, 2025. This means that fewer entities will be considered CFCs and many of the minority U.S. shareholders who previously had GILTI inclusions under TCJA no longer do under the new rules.  

Reinstating Section 958(b)(4) unfortunately doesn’t mean that downward attribution is gone entirely. Instead, it has been recodified under Section 951B with new definitions and acronyms: Foreign Controlled U.S. Shareholder (FCUS) and Foreign Controlled Foreign Corporation (FCFC).  

In this limited scope, certain ownership structures will cause downward attribution treatment as U.S. shareholders and CFCs when there is ownership greater than 50 percent.  

Other miscellaneous CFC updates include a modification of the pro rata rules.  

Subpart F income and GILTI will apply to U.S. shareholders with ownership on any day during the tax year rather than only those with ownership on the last day of the year the corporation was a CFC. However, Section 956 is still only applicable for ownership on the last day as a CFC.  

The look-through rules for tiered CFCs have been made permanent and the tax year for Specified Foreign Corporations will no longer have a one-month deferral – the majority US shareholder tax year must be used beginning after Nov. 30, 2025.

Lastly, the tax rate for BEAT has been permanently increased from 10 percent to 12.5 percent and an excise tax of 1 percent has been enacted for certain remittances of cash and equivalents (money orders, cashier’s checks, etc.) sent abroad.  

The 1 percent excise tax does not apply to any electronic funds transfer, credit or debit transaction. Overall, the international tax changes in OBBBA are a minor revision compared to the sweeping changes TCJA, but it is worth reviewing how the updates impact your clients’ tax structures and planning.  

Many of the changes are in effect for tax years beginning after Dec. 31, 2025.

When OBBBA was passed many CPAs asked, “May my client take advantage of the law change on their originally filed 2024 tax returns?” The short answer is yes; therefore, this short article focuses on Sect. 174A elections available to eligible small-business taxpayers and how to make the elections (Rev. Proc. 2025-28 sections 3 and 7).

Note that eligible small-business taxpayers are not required to apply Sect. 174A retroactively; they can follow large businesses and elect to deduct 100 percent in 2025 or 50/50 over 2025 and 2026. The focus of this article is applying Sect. 174A retroactively.

Eligible small-business taxpayers may elect to retroactively apply Sect. 174A to R&E for years beginning after Dec. 31, 2021, in one of two ways.

For questions regarding the revenue procedure, contact the Office of the Associate Chief Counsel (Income Tax and Accounting), Branch 7, at (202) 317-7005.

To provide procedures for making certain elections under OBBBA Sect. 70302(f) Transition Rules from the prior Sect. 174 after the amendment of TCJA passed Dec. 22, 2017, and prior to the amendment by OBBBA Sect. 70302(b)(1) and the affected procedures under Sect. 446. It also provides procedures for making elections under Sect. 174A(c) to amortize R&E paid or incurred in years beginning after Dec. 31, 24.

This section provides the history of Seb-section 174, 174A and other code sections related to R&E. Generally, an election is effective for the year of election and all subsequent years unless approval to change is granted by the secretary. However, OBBA provides that eligible taxpayers, qualified small-business taxpayers, will be granted automatic change in method of accounting for tax years 2022-2024 if the election to change is made in accordance with the guidance of Revenue Procedure 2025-28 no later than July 6, 2026.

It addresses the treatment of foreign R&E which is outside the scope of this article.

It identifies the type of taxpayer returns that qualify to file amended returns and the timing and requirements for each type of return. The focus of this article is partnerships, S corporations and LLCs taxed as partnerships or S corporations, and taxpayers receiving amended K-1s.

SECTION 3–Small Business Election to Retroactively apply Sect. 174A

. An election under OBBBA Sect. 70302(f)(1)(A) may be made on a small-business taxpayer’s timely filed (including any extension) original federal income tax return for an applicable taxable year, or on an AAR or amended federal income tax return, as applicable, for an applicable taxable year, by attaching a statement to suchAAR or federal income tax return, as provided in section 3.03(2) of this revenue procedure (small business OBBBA election). Once an election under this section 3.03 has been made by a small-business taxpayer for an applicable taxable year, such taxpayer must carry out theelection under this section 3.03 for all applicable taxable years in which the taxpayer paid orincurred domestic research or experimental expenditures.

SECTION 4—Small Business Taxpayer Election Under Sect. 280C(c)(2)–Not discussed

SECTION 5— Small Business Taxpayer Revocation of Sect. 280C(c)(2) Election—Not discussed

SECTION 6—Election to Capitalize and Amortize Domestic Research or Experimental Expenditures (R&E) Under Sect. 174A(c)–Not discussed

SECTION 7—Modification of Section 7 of Rev. Proc. 2025-23

Section 7 of Rev. Proc. 2025-23 is modified to read as follows:

Change for Domestic Research or Experimental Expenditures under TCJA Sect. 174

 has officially passed the Legislature and now awaits the governor’s signature—a huge step forward for the CPA profession in California.

The bill has faced no opposition throughout the legislative process, and we are optimistic Gov. Newsom will sign it into law.

—is the culmination of years of work to modernize CPA licensure and ensure the profession remains well-positioned to meet the needs of Californians.

This critical legislation provides aspiring CPAs with more flexible, affordable and accessible pathways into the profession, while maintaining strong consumer protection standards. It also recognizes the many ways candidates gain the skills and experience needed to succeed.

With AB 1175, California continues to lead nationally in rethinking CPA licensure, strengthening the profession and expanding access for future CPAs. 

We’ll keep you updated as the governor considers the bill ahead of the Oct. 12 deadline.

Positive policy outcomes on critical issues—like AB 1175—are the direct result of leaders like you engaging with and supporting CalCPA’s advocacy efforts. Your membership makes a real difference in shaping the future of the CPA profession. Thank you for being part of it.

Stay ahead with essential CPA resources

Golden State wisdom straight from the experts

Dividing Homes in Divorce

International Tax Highlights of OBBBA

OBBBA Transition Rules

CPA Licensure Modernization Clears Legislature, Awaits Governor

Advertisement

Professional Interest Areas

Advertisement

Daily Clips newsletter

Advertisement

Listen and watch...

Rise & Stride Podcast

brainfood bytes

Part articles and archives

CPAs: Making Sense of What Comes Next campaign