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Accountancy Slice
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18th June 2026
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THE HOT STORY

FASB proposes updates to hedge accounting and cash balance plan guidance

The FASB has issued a proposed Accounting Standards Update (ASU) aimed at improving hedge accounting guidance for interest rate risk and net investment hedging, following stakeholder feedback seeking closer alignment between accounting treatment and risk management practices. The proposal would allow entities to hedge interest rate risk on held-to-maturity debt securities, permit the use of any tenor of the secured overnight financing rate (SOFR) in hedge designations, and expand eligible net investment hedging instruments to include certain float-to-float cross-currency swaps with different reset dates. Comments on the proposal are due by August 17. Separately, FASB has released a proposed ASU addressing accounting for certain market-return cash balance plans. The proposal would clarify the discount rate used to measure benefit obligations, responding to concerns that existing guidance does not fully reflect the economics of these plans. Comments on this proposal are due by August 10.

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TAX

Treasury reveals new details on federal school choice tax credit

The U.S. Treasury Department has provided new guidance on the federal Education Freedom Tax Credit, confirming that public, private, charter, and homeschool students may benefit from scholarships funded through tax-deductible donations, while fuller rules are expected by September 2026. The program, which begins in tax year 2027, allows taxpayers in participating states to claim a federal tax credit of up to $1,700 annually for donations to approved Scholarship Granting Organizations (SGOs). More than 30 states have opted into the initiative. Treasury officials clarified that scholarships may be used for a broad range of K-12 education expenses. While private school tuition will qualify, public school students will also be eligible for support, including academic tutoring and services for students with disabilities. Additional guidance on eligible expenses will be issued separately. The department also confirmed that homeschool students can qualify if homeschooling is recognized as a school under state law.

Illinois budget relies on new taxes, but offers relief too

Illinois Gov. JB Pritzker has signed a $55.9bn state budget that balances new spending initiatives with approximately $800m in new taxes and fees, including a controversial tax on social media companies that is expected to face legal challenges. A key revenue measure is a new fee on major social media platforms, including companies such as Facebook and TikTok, based on their number of Illinois users. Lawmakers expect the measure to generate about $200m annually, although similar taxes have already prompted lawsuits from technology companies. The budget also introduces a tax on daily fantasy sports operators, projected to raise about $5m. Additional taxes targeting digital advertising, prediction markets, and cryptocurrency markets were approved, although budget officials are not currently counting on revenue from those measures because they are likely to become tied up in court challenges. On the tax relief side, lawmakers suspended a scheduled increase in Illinois’ motor fuel tax for six months, preventing a rise of slightly more than one cent per gallon. The budget also creates a back-to-school sales tax holiday from August 7 to August 16, covering school supplies, clothing, and other qualifying purchases.

Los Angeles moves forward with proposal to exempt new apartment buildings from ‘mansion tax’

Los Angeles city leaders have advanced a proposal that would exempt newly constructed multifamily apartment buildings from Measure ULA, the city’s so-called “mansion tax,” amid concerns that the tax has discouraged housing development and worsened affordability challenges. The City Council voted 9-5 to direct the City Attorney to draft a ballot measure that would exempt apartment buildings sold within 10 years of construction from the tax, which currently imposes a 4% levy on most property sales above $5.3m and a 5.5% levy on sales of $10.6m or more. Supporters argue the change would encourage housing construction while preserving funding for affordable housing and homelessness programs, whereas opponents contend other factors, including high interest rates, are primarily responsible for declining development activity. The proposal must receive a second council approval before it can appear on the November ballot. Separately, the council unanimously backed drafting a ballot measure to temporarily exempt Pacific Palisades homeowners affected by the January 2025 wildfire from paying the tax for five years.

NYC tax settlement represents early milestone in multi-year effort

New York City is embarking on a property tax overhaul to resolve a lawsuit from the housing coalition, marking a significant milestone in a prolonged struggle. This initial step is expected to lead to a complex and politically charged process. The proposed changes, based on the 2021 Property Tax Reform Advisory Commission's recommendations, aim to create a new tax class for small residential properties and adjust the valuation of condominiums and cooperatives to better reflect market values. David C. Wilkes, a property tax and valuation strategy partner at Cullen and Dykman, notes that "owners of high-value condominiums, cooperatives, and appreciating residential properties are the most likely to face a substantially different tax environment." However, the success of these reforms hinges on navigating the diverse interests of stakeholders and securing cooperation from state lawmakers.

INDUSTRY

TXCPA fights IRS consolidation plan

The Texas Society of CPAs (TXCPA) has expressed strong opposition to the proposed consolidation of the Office of Professional Responsibility (OPR) and the Return Preparer Office (RPO) by the IRS. TXCPA argues that merging these offices would confuse taxpayers about the differences between credentialed and non-credentialed tax preparers, emphasizing that "maintaining separate oversight offices is essential to preserving the integrity of the regulatory process." TXCPA highlights the distinct roles and standards enforced by OPR and RPO, noting that licensed professionals are held to higher standards than unlicensed preparers. The organization urges the IRS to retain the current separation to ensure clarity and accountability in tax practice.

ECONOMY

Fed holds rates steady, signals rate hikes are now more likely

The Federal Reserve has left its benchmark interest rate unchanged at 3.5%–3.75%, but policymakers have signaled that their next move is increasingly likely to be a rate hike rather than a rate cut, marking a significant shift at Kevin Warsh’s first meeting as Fed chair. The clearest indication came from the Fed’s latest economic projections. Nine of 19 officials now expect at least one rate increase before the end of 2026, compared with none in March, while only one official expects a rate cut, down from 12 previously. The decision to hold rates steady was unanimous. The change reflects a stronger-than-expected U.S. economy. Inflation has accelerated this year, driven by higher energy prices following the Iran conflict and robust demand linked to artificial intelligence-related investment. Meanwhile, the labor market has remained resilient despite earlier concerns about slowing employment growth. Although the Fed’s policy statement offered little guidance on future moves, emphasizing only that it “will deliver price stability,” investors interpreted the projections as a more hawkish stance.  

Retail sales beat expectations in May as consumer spending remains resilient

U.S. retail sales rose 0.9% in May, the Commerce Department reported on Wednesday, accelerating from a revised 0.4% increase in April and comfortably exceeding expectations, highlighting the continued resilience of the American consumer despite elevated inflation and economic uncertainty. The broad-based increase was driven by stronger spending across clothing, accessory, and furniture stores, while online sales climbed 1.5%. Excluding gasoline stations, retail sales increased 0.7%, while the closely watched control group measure, which feeds directly into GDP calculations, also rose 0.7%, suggesting consumer spending remained a solid contributor to economic growth.

Pending home sales record strongest increase since September 2024

U.S. pending home sales rose 3.8% month-over-month in May to an index reading of 76.8, marking the strongest monthly increase since September 2024 and the fourth consecutive month of growth, according to the National Association of Realtors (NAR). The increase exceeded all economist forecasts and adds to evidence that the U.S. housing market is showing signs of recovery despite mortgage rates remaining elevated at around 6.6%, near nine-month highs. Pending sales, which track contract signings and are a leading indicator of future home closings, rose across all regions of the country, with the Northeast leading the gains at 8.7%. NAR chief economist Lawrence Yun said the latest data suggests pent-up demand is beginning to return to the market, with buyers increasingly accepting mortgage rates above 6% as the new normal. The improvement follows last week's report showing existing-home sales reached their fastest pace of 2026, indicating that housing activity may be gaining momentum after a prolonged period of weakness.

U.S. business inventories rise in April, supporting Q2 growth

U.S. business inventories increased 0.5% in April, in line with expectations, following a 1.0% rise in March, suggesting inventory investment could contribute to economic growth in the second quarter. Inventories were up 2.7% year-over-year, with retail inventories rising 0.7%, wholesale inventories increasing 0.6%, and manufacturers’ inventories advancing 0.3%. Business sales climbed 1.2% in April after a 2.2% increase in March, while the inventories-to-sales ratio improved to 1.31 months from 1.32 months, indicating businesses were selling stock more quickly.

LEGAL

President Trump settles lawsuit against niece over NYT tax records leak

President Donald Trump has reached a settlement with his niece, Mary Trump, in a $100m lawsuit alleging she participated in a scheme with The New York Times to disclose confidential tax and financial records used in the newspaper’s Pulitzer Prize-winning 2018 investigation into his finances. The parties informed the court that they have agreed to settle the case and expect to dismiss it with prejudice after completing certain conditions, preventing any future claims on the matter. Financial terms of the settlement were not disclosed. Trump originally sued Mary Trump, The New York Times, and three reporters in 2021, claiming they conspired to obtain and publish confidential records in violation of a 2001 confidentiality agreement. Claims against the newspaper and its journalists were dismissed in 2023, with Trump ordered to pay nearly $400,000 in legal costs.

NTEU challenges IRS in court

The National Treasury Employees Union (NTEU) has initiated a lawsuit against the IRS, alleging the agency has unlawfully removed union materials from common areas and employee workstations. The action follows the IRS's termination of a contract with NTEU, prompted by an executive order from President Trump that curtailed collective bargaining rights at over 20 federal agencies. NTEU President Doreen Greenwald stated: "NTEU will not stand for the Administration's effort to retaliate against us for our advocacy." The lawsuit highlights instances of IRS officials removing NTEU flyers, particularly at a Kansas City facility, where aggressive actions against union materials were reported. The IRS has faced staffing challenges, having reduced its workforce by about 28% due to cutbacks and buyouts.

REGULATORY

SEC poised to allow stock token trading

The Securities and Exchange Commission (SEC) is preparing a new policy that would allow crypto companies to offer blockchain-based ​stocks. Crypto sector advocates say blockchain-based instruments that track traditional equities have the potential to revolutionize stock markets by enabling shares to ‌be traded round the clock and settled instantly, boosting liquidity and reducing transaction costs. SEC chair, Paul Atkins, could announce an "innovation exemption" soon, Reuters reports. He has said this would allow companies to experiment with new digital asset business models without needing to comply with all of the SEC's disclosure and investor-protection rules.

PERSONAL FINANCE

Maximizing vacation home tax benefits

As summer approaches, many individuals spend time at their vacation homes, which can lead to tax deductions if itemized on tax returns. Ken Berry, JD, explains that rental income from these homes is taxable, but landlords can deduct expenses like utilities and mortgage interest. A special safe-harbor rule allows rental income to be exempt from tax if the rental lasts 14 days or less, though no expenses can be deducted. To qualify for tax losses, personal use must not exceed 14 days or 10% of rental days. Berry advises clients to understand these rules to maximize their tax benefits, especially as year-end approaches.

WORKFORCE

AI will lead to labor shortages, Bezos says

Amazon founder Jeff Bezos has told attendees at ​the VivaTech technology conference in Paris that artificial intelligence will not replace humans; rather, it will lead to labor shortages. "I ​know there's a lot of concern that many people have, including many smart people, that AI ​is going to make humans redundant and so on," Bezos said. "I totally disagree with this point of view. And I think, in fact, AI is going to create a labor shortage." Bezos observed that people have "endless" ‌things ⁠to do, and are currently limited by barriers that he said AI would lower.

MERGERS & ACQUISITIONS

Insurance M&A activity remains strong as AI reshapes industry strategies

Merger and acquisition activity in the insurance sector remains robust, with industry participants increasingly evaluating how artificial intelligence (AI) could reshape competitive dynamics, valuations, and future deal strategies, according to PwC. The sector recorded 191 disclosed transactions worth approximately $29.6bn between December 2025 and May 2026, slightly below the 207 deals valued at $31.8b in the previous six-month period. PwC said investor appetite remains strong, particularly for specialty insurers, managing general agents, fronting carriers, and excess and surplus lines businesses. Several major transactions highlighted continued consolidation across the industry, including the $22bn merger between Corebridge Financial and Equitable Holdings, Enstar Group’s $1.59bn acquisition of Accident Fund Holdings, and Willis Towers Watson’s $1.45bn purchase of insurance broker Newfront. PwC said AI is becoming a central consideration for investors and management teams as insurers and brokers assess whether new technology can lower operating costs, improve underwriting and claims processes, and create competitive advantages. The outcome could significantly influence future valuations, capital allocation decisions, and acquisition strategies.

INTERNATIONAL

Japan moves toward first-ever consumption tax cut as fiscal concerns grow

Japan’s ruling Liberal Democratic Party is advancing a proposal to cut the consumption tax on food from 8% to 1% for two years starting in April 2027, marking the country’s first effective reduction in consumption tax rates and adding pressure to already strained public finances. The plan, presented to a government panel by senior LDP lawmaker Itsunori Onodera, would be accompanied by targeted annual cash benefits of around ¥600bn($3.75bn) for low- and middle-income households, with the longer-term aim of effectively reducing the tax burden on food and beverages to zero. The proposal reflects growing political pressure on Prime Minister Sanae Takaichi to deliver on an election pledge to help households cope with rising living costs. Since its introduction in 1989, Japan’s consumption tax has only increased, reaching 10%, with a reduced 8% rate for food introduced in 2019 to help fund social welfare programs.

Australian court bans ex-Star CEO for six years over money laundering failures

A court in Australia has banned former Star Entertainment chief executive Matthias Bekier ​from managing companies for six years and fined him A$700,000 ($494,620) over failure to handle ‌money laundering risks at the casino operator. The judgment comes months after the Federal Court found Bekier and former chief legal and risk officer Paula Martin breached their duties ​by failing to sufficiently address risks at the company. Much of the judgment was devoted to the pair's self-serving statements which referred to the distress of the case but not the failings that brought it about. "Although both contraveners relied upon evidence of reputational harm, professional consequences and, in Ms Martin's case, physical and psychological conditions, there was very little evidence demonstrating developed insight into the seriousness of the contraventions themselves," Justice Lee said.
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