JP Morgan’ $2 Billion Loss

jpmorgan 2 billion dollar loss

When making an investment, we all know they carry some risk of loss. The general rule is: The more you are set to gain, the more you are set to lose, and generally the more risky the transaction may be. People and companies make trades on a near 24 hour scale now, but what is one to do when the transaction results in a $2 billion loss?

 

JPMorgan, a long standing financial giant took a risk and it ultimately failed and cost them $2 billion. It has been just days since the loss and people are calling for action as a response. Investing in a company though does carry risks, which includes the risks that come from their own investments, so should any further action be taken?

 

JPMorgan personnel associated with the deal have already took responsibility for the large investment loss. Chief Executive Jamie Dimon is ready to accept resignations of Ina Drew and at least 2 other traders that worked for her. Ina Drew has been with the company for decades and previous resignation attempts had been declined, but as the government begins investigations and seek to add more harmful regulations to an already damaged industry that has been hurt through previous regulations, people are trying to limit the damage any further by resigning explaining what happened.

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The River Season 2

the river season 2

The River television show found itself as a midseason replacement on ABC in February and instantly began getting noticed by viewers. The show focused on elements of fear and wonder to captivate viewers and push them on to each week.

 Will There Be a Season 2 for The River

Following the premise of a show within a show, in the sense that the storyline revolved around the filming of a tv show as they searched for long time nature show host Dr. Emmet Cole. After going missing 6 months ago in the depths of the Amazon, his family and loyal viewers had given up on his safe return and presumed dead. As everyone began to move on, his distress beacon went off in the Amazon River, launching a brand new search effort by the family and his television crew. What starts off as a routine search quickly escalates into a race for survival as they learn that magic is out there in the Amazon and the local legends are based in reality, pushing everyone to the brink of their nerves and forcing cooperation to stay alive and return home safely with Emmet.

 

Each week’s episodes pushed the limit on what viewers believed and incorporated terror with awe, while all pushing towards a common goal of survival and a happy ending. In the season finale the crew of the Magus had found the beloved Doctor Cole, but found themselves trapped with no way out, leaving a cliff hanger ending.

 

Despite a very committed group of loyal viewers, each week saw a decrease in viewers on the ABC network, leading to lower than desired ratings. As of yet a Season 2 have not been authorized.

 

With many fans seeking a second season and the cast wanting to continue on, The River may need to find a new network. ABC has been said to be unlikely to renew the show, but it may find a haven on Netflix. DVR ratings were high and put the show on a good track for being picked up by a source that depends on streaming for viewers. It had one of the highest ratings on Live+7, making it highly possible to be picked up.

 

The River does cost money to make though, and at competition is Terra Nova, another series with a similar fate. Viewers are still waiting on the final word from ABC and Netflix to see if The River Season 2 will be happening.

 

the river season 2

Yard House Opening in Cincinnati

Yard House Cincinnati

Cincinnati is about to gain new businesses to its cityscape. As part of the ongoing Banks project many restaurants have begun developing new locations and moving into the city. Just announced is the plan for another high-end restaurant to join the city.

 

Yard House, which is a chain of high-end and fancy restaurants based in Los Angeles, chose to build a new location near the Underground Railroad Freedom Center. This will make it the 38th addition to the franchise that is steadily expanding nationwide.

 

Its release date has been pinned for late this year, which will put it across from Ruth’s Chris Steakhouse on an 11,000 square feet piece of property. Included in its one story building will be patios and decks which overlook the Ohio River, giving diners and guests a beautiful scene to enjoy their dinner with.

Yard  House is known for its steaks, pizzas, tacos and even its salads. Also on their menus are typical classics such as pasta and hamburgers. As part of the entertainment push in Cincinnati, it will include around 200 taps of beers, a keg room and an island bar in the middle.

 

Its name actually comes from three foot glass containers that are known as yards. These were originally designed in Great Britain during the 1700’s and were traditionally given to stagecoach drivers after their long journeys. Regardless of where it got its name, this Cincinnati business deal is worth paying attention to. The Yard House is expanding all over the nation and is being heavily sought by many other cities.

 Yard House Cincinnati

Before Cincinnati’s business deal with the Yard House, which was pushedYard House Cincinnati heavily by Mark Fallon, a broker with Anderson Real Estate, the closest location was in Chicago, Illinois. More importantly with this business deal, now the Banks retail space is closer to capacity with 87% of the land having already been leased.

 

Other business deals struck in Cincinnati for the Banks project includes the opening of The Wine Guy, Crave, Mahogany’s, and Tin Roof. Harald Herrmann, the company’s president and CEO stated his excitement for bringing his classic style to Cincinnati that includes fusion cuisine, rock music, and of course its large bar and brew selection.

 

 

 

 

Student Debt Rising | Student Interest Rates Going Up

Student Interest Rates Going Up

The price of college tuition has been rising dramatically over the past few years. A poor economy has only made the problem worse. Schools are seeing their funding dry up as people have less money to contribute. This causes tuition to rise even faster. Student loans are then made harder to repay due to a lack of available job, making debt help even more difficult to obtain.

Student Loans Create an Undue Hardship on Borrowers

People who have student loans have limited options when it comes to getting debt help. Student loans are not eligible for discharge through bankruptcy. Private student loan lenders rarely agree to settle any outstanding debt, while federal loan payments are based on your income. This makes it highly unlikely the government would agree to settle. Another disadvantage new graduates face is a lack of income. Entry-level positions tend to pay far less than other positions.

High Debt Makes It Hard to Invest in Your Future

New graduates generally cannot afford to purchase new homes or cars because of their debt. The average graduate has $50,000 in student loan debt. Some students have debts as high as $100,000. This number skyrockets because graduate school is included. Money spent on student loan payments could be spent on a mortgage instead. Reduced student spending puts a drag on the economy as a whole.

Credit Card Debt Is Also Rising

Continue reading “Student Debt Rising | Student Interest Rates Going Up” »

The Avengers Hits the Box Office

avenegers box office sales

Walt Disney saw a few blockbuster flops in 2011, but early into 2012 it has already struck gold with the release of “The Avengers.” Record breaking sales globally and in the US market, the movie that released to months of heavy hype and a large fanbase is still filling up theaters.

 

“The Avengers” features five superheroes, ranging from Downey Jr’s Iron Man, the Hulk and Thor, but gives all of them enough air time and action to satisfy fans of all series, while also bringing together the arching plotline and focusing on their efforts together as a team.  Disney and comic book fans are not the only ones looking to have a good time with this film’s release. Paramount Pictures will be hauling in millions of dollars, without having ever spent a cent to market or produce the film.

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How to Use Pinterest

Pinterest SEO

Pinterest is an interesting new social media website that allows users to create virtual pin boards and then “pin” their favorite pictures to their pin boards. Each board can be categorized based on what kind of pictures you have the intention of “pinning” to it, just like a real-life pin board.

 

The popular topics on Pinterest is food and drink , clothing/fashion, inspirational pictures, weddings, travel, and DIY Home. Some have even gone as far as using Pinterest to plan their own wedding.

 

In short, Pinterest offers a unique opportunity to get exposure and to actually be useful. Unlike other social media websites such as Facebook, where it gives users near no reason to actually want to “like” the page other than to like it and never return, Pinterest is graphics based, giving users something to actually look at that is graphically pleasing, and to even interact with. When on someone else’s Pinterest account, if pinned images are came across that catches your eye, you can also “repin” it to your own board. The original backlink and source is maintained, but it lets an image reach an even larger audience and even potentially “go viral.”

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Section 351 Notes

economics exam answers

Section 351 transferors covered

Non-recognition section

Allows transferors to not recognize gain or loss realized

 

 

 

 

Section 357

 

Transferee assumes liabilities of transferor

Example: mortgage

 

None of the liabilities will be treated as “boot”

If transferee assumes transfer of transferor, it does not become boot

At time of transfer

FMV of building is 100,000

Adjusted basis (cost + improvements – depreciation) $40,000

Owns bank 30,000 on mortgage

Gets stock in return of a 60,000 gain

Continue reading “Section 351 Notes” »

Corporate Tax Rules

economics exam answers

Title 26 in USC

-internal revenue code

 

IRS enforces the code, does not make it

-Congress makes the code

IRS under executive branch

 

3 types of treasury regulations that interpret IRC

Interpretative

-Treasury dpt’s interpretation of what the tax law says

-not enforceable and is not law

Procedural

-how you have to do something

-should follow these

Legislative

-the secretary of the treasury shall regulate as needed to enforce parts of code

 

 

All tax laws start in the House of Reps

House ways and means committee

-Always invite IRS and Treasury people to hear committee

Bill is vote don by committee and then taken to House floor

If approved by 2/3rds of House it goes to Senate

Finance Committee

If approved by senate it gets sent to Conference Committee

-adjust differences in senate and House Bills

Sent to president

Very first income tax came from Lincoln

 

Tax Court

Civil tax cases

Judges from Treasury…

No juries

5 years at most in jail for taxes

Beyond a reasonable doubt

Preponderance of evidence

–          To convince the govt they are wrong

 

United States District court

Federal District Court

 

Choice of Entity

Sole Proprietorship

Schedule C form 1040

Must use calendar year end

Cash method of counting

Sub section A

–          General Rule

  • Always an exception
  • Cash method is mandatory unless inventories are a material income producing factor

Liability is personal and unlimited

 

Partnership- 2 + individuals

File 1065

No income taxes

Flow through entity

Reported to personal income tax forms

General Partnership

-All partners are personally liable for debts

Partners end up suing each other

Limited Partnership

Limited partners not liable for debts

 

LLC

Taxed as a partnership

1065

Can have one partner LLC (SMLLC)

 

Corporations

2 types

C corp

S corp

Corporations are Taxed under sub chapter c (where c corp comes from)

S corp under sub section S

 

C corp

File annual tax return

Rate starts at 15% and goes up to 35%

Dividends are not deductible by corporation

 

S corp

No income taxes

Flow through entity

Shareholders pay their ownership % and pay it on income tax

 

Payroll taxes

 

Class 2

 

G7 Nations

Canada, Germany, France, Italy, UK, USA, Japan

 

How to incorporate?

Filed in state of incorporation

Secretary of State

In Ohio 2 pieces are filed

  1. Articles of Incorporation
    1. Name of the corporation
    2. Address of offices
    3. Purpose clause

i.      Why are they incorporated

  1. Number of shares of stock authorized to issue
  2. Name of the directors of the corporation
  3. Appointment of Agent
    1. Be able to serve as statutory agent

i.      Able to receive legal documents

  1. Name agent
  2. Address of agent
  3. Phone number of agent

 

SoS will send confirmation letter along with charter corporate number to identify

 

All information is available online

 

Now the corporation exists

 

Corporation -à stock certificate | shareholder

Shareholder à $ | Corporation

 

The Majority Shareholder votes controls what the corporation does

 

Shareholders appoint directors

Directors appoint officers

Secretary, president, VP

 

By Laws of a Corporation

–          Functions for all of the officers

 

IRS gives federal ID number for filing taxes

 

Ohio withholding tax and vendor licenses

 

If shareholder contributes property instead of cash, the shareholder has a tax consequence

Section 351 of Internal Revenue Code

 

Shareholder that transfers something of value transferor

Corporation that receives the value is the transferee

ee- receiving something

 

Payment to shareholder is a dividend

 

If shareholder receives salary or bonus from corporation, it is subjected to a limitation

–           Reasonable and Necessary Compensation is deductible from corporation

–          Section 162

–          Extreme third party arm’s length business terms

 

Risk capital – may lose the money

No guarantee that the money will come back from the stocks

 

Loan to corporation

Debit cash

Credit Loan payable to shareholder

 

Secured creditors get paid first in the case of a bankruptcy

Shareholders get paid last

Loans receive promissory note

 

Companies that have to be a corporation

-insurance company

-Federal organized companies

– Publically traded partnership

– entity owned by state or subdivision of state

– if for profit

-Business entity wholly owned by foreign government

1120 is the form filed as a corporation for taxes

 

Corporations that receive dividends from other corporations can exclude 100% of income received from the dividends from income

Fines and penalties not deductible by a corporation

 

Charity deductions up to 50% of income

 

Effective tax rate: Payment/ taxable income

 

 

 

 

 

 

 

 

Personal Service Corporations

Automatic 35% tax rate

448 (d) in IRC

If it meets 2 tests it is a PSC

Substantially all activities involve performing services

–          Health, engineering, architects, accountants, actuaries, performing arts, consultants

Substantially all stock owned by employees performing those services

Code section 7701 has definitions

95% or more of stock is owned by shareholders performing services

By not checking the box on tax form it extends the limitation by 1 year to 4 years

 

—- Slovenia, Greece, Iceland… 20% corporate tax

Canada 15%

 

C corp form 11-20 has to be filed with IRS campuses on the 15th day of the 3rd month at the end of its tax year

–          Can file a form 7004 for an extension, 6 months

–          All domestic corporations have to file regardless of taxable income

 

S corp must file 11 20 s on the 15th day of the 3rd month after end of tax year

-7004 gives 6 month extension

 

Partnership or LLC files 1065 on 15th day of 4th month at end of tax year

-no income means no filing

 

1040’s/individuals file on 15th day on 4th month

4868 form gives 6 month extension

If you are single and under 65 before jan 1st, 2012 and gross 2011 income is 9,500 dollars or less, no 1040 required

-null if self-employment tax liability is 400 dollars and up

65 or older and single has to have 10950 dollars

1041 required if trustee of the trust or executor of state files due on 15th of 4th month

-if 600 dollars or more of gross income

– OR beneficiary is a non-resident alien

 

Controlled Group

Parent c corporation has shareholders of the parent corporation

Parent c corporation may have subsidiary corporations that are separate corporations

Parent corporation owns stock in subsidiary corporation

Wholly owned

 

If parent corporation divided itself up into smaller corporations, the tax liability is divided

Puts you in lower tax brackets

Commonly controlled group as defined by 1563

2 or more corporations owned directly or indirectly by the same shareholders or groups

 

 

3 types of controlled groups (section 1563)

 

Parent-subsidiary group- connected by at least 80% ownership in one or more corporations

Example: parent corporation owning 80% + of subsidiary corporation

First 50,000 of taxable income is taxed at 15% , allocated among group.

Example 2: Parent owns 85% of stock of subsidiary corporation and also owns another parent subsidiary in which it owns 100%

 

Parent owns 85% of stock of subsidiary corporation 1 and also owns another parent subsidiary 1 in which it owns 100%. Sub 2 owns 30% of sub 3. Sub 1 owns 40% of sub 3

Sub 3 is not part of parent-subsidiary group

 

Brother sister control group

2 or more corporations

5 or less individuals, trusts or estates own 80% or more of the stock of each corporation

Same 5 own More than 50% of the stock of each corporation, taking into account commonly owned stock, to each corporation

Example:

 

Shareholders                            North C Corp               South C Corp                   common

______________——————————— —————————————————–

 

Will                                    30%                                        70%                                30%

Gale                                      70%                                      30%                                30%

 

 

Combined control group

3 or more corporations in which each corporation is a member of a parent sub group or a brother sister group

And, one or more of the corporations is both the parent and a member of a brother sister group

 

 

Shareholders      A corp    C corp     B corp

 

Amy                     50%             50%    0%

Ben                      50%               50%    0%

A corp                 0%                 0%      100%

 

 

Consolidated Return: Common parent corp that owns at least 80% of another corp, and one or more of the members owns at least 80% of each other corporation included in the group

 

 

Transferor sends assets to transferee

Stock is sent from transferee to transferor

 

Non-recognition section

Section 351

Even if there is a gain, it is not recognized for tax purposes

 

FMV of building at appraised amount is $100,000

Adjusted basis= cost – depreciation  =  10,000

Realized gain is $90,000

Recognized gain (goes on tax return):

Section 351: if one or more persons transfer property to a corporation and solely in the exchange receive stock from the corporation, no gain or loss shall be recognized by the transferor

Quid pro quot must say basis is 10,000, not 100,000

 

Section 7701 defines a person as individuals, corps, partnerships, trusts…

 

IRS Regulations

economics tutorials

Intro to tax practice

 

Tax avoidance ———————————————————–tax evasion

 

Tax avoidance- paying minimum amount of tax legally owed by arranging transactions in a certain way

 

Tax evasion- intentional underpayment of a tax that is owed

–          Criminal and subject to fines/jail

–          Punished by regulatory bodies

  • Board of accountancy
  • Courts

–          Evidence can be used for malpractice cases

 

Source of rules and ethics for tax practitioners

EX.      ABA Model Code of professional responsibility

Issued by ABA

Binding upon Attorneys

 

Internal Revenue Code

US Congress

Tax preparers

 

IRS Regulations

Circular 230 – collection of IRS regulations

Issued by Internal Revenue Service

Binding upon those that practice before the IRS

 

Industry Organizations do not have law enforcing abilities and are just standards

–          Punishment is removal from organization

–          Evidence can be used for malpractice lawsuits

 

Enrolled IRS agent can represent tax payers

CPA can represent taxpayer through audit a trial

–          Tax preparers in general cannot

–          They are not authorized to practice before the IRS

 

Tax preparers as of Jan 1, 2011 are now registered

-fired revenue agents are no longer eligible

-all preparers must use ID number given by IRS

 

 

 

 

 

Tax return preparer- any person who prepares for compensation or employs one or more persons to prepare for compensation, any return of tax imposed by this title or any claim for refund of tax imposed by this title…

S7701 CA3(36)

Also includes those that contributed to substantial portion of a return

-Does not have to sign

 

Internal Revenue Code Section

IRS Rulings

Cases

-Answer

-Authoritative Source

-How we found answer

Pg 196

Check third box

 

Practice before the IRS- representation of clients during audit procedures such as a meeting with a revenue agent on behalf of a client to establish the correctness of a taxpayer’s return

-best if taxpayer is not with you when representing you to revenue agent

 

Who can practice before service:

  1. Enrolled agents
  2. Enrolled actuaries
  3. Attorneys
  4. CPA’s

 

Form 2848 must be filed for taxpayer to authorize representation

 

Proposed requirements for tax return preparers

  1. Require all preparers to register with IRS and get an ID
    1. Now enacted
    2. Competency test
    3. Continuing education
      1. 15 hours
      2. Compliance check
      3. Extending circular 230 ethics standards to all preparers

 

Rules of Conduct when practicing before IRS

1. Tax practitioner must furnish information to any agent of the IRS

2. Provide director of practice of the IRS information regarding any violation

Pg. 10

 

Due Diligence- Circular 230 S 10.22

 

 

Sec. 6694 Understatement of Liability by Tax Return Preparer

Understatement due to Unreasonable positions

  1. General

If tax preparer

  1. Prepares any return or claim of refund with any respect to any part of where understatement exists or knew/should have  known of the position

The preparer pays greater of $1,000 or 50% of the income derived from preparing the statement

  1. Unless there was a substantial authority for the position
  2. Authority not needed if questionable position is disclosed
    1. Must fill out Disclosure form

Substantial Authority

 

Class 2

———————————————————————————————————–

Registered Tax Preparers Limitations

 

Actions to be taken on                   Registered Tax Preparer                    Practitioner

behalf of the client                                                                                 (cpa/lawyer/ea)

 

Prepare a tax return                        yes                                                          yes

Represent in audit                            yes                                                         yes

Represent in appeals                       no                                                            yes

Provide tax advice                         no                                                            yes

Section 7525 protection                 no                                                            yes

 

—————————————— —————————————————————–

 

Tax preparer can represent a client before the service in an audit, provided the registered tax preparer signed the tax return. Tax advice can be given only relating to matters contained on that tax return they prepared.

 

Section 7525 – extends privileges of confidentiality between tax payer and lawyer to tax payer and practitioner

 

 

Tax Return Positions

 

6694 imposes penalties upon tax preparers and established substantial authority standard

  • Preparer gets penalized unless position has substantial authority
    • Circular 230. S 10.34
    • If it does not have substantial authority you can be suspended as a registered tax preparer
    • Loss of license at state level as practitioner

 

 

Covered opinions    Circular 230 S 10.35

–          Covered opinions meant to protect “shelters”

–          disclaimer states that unless stated otherwise, any tax advice is not intended to suggest tax avoidance

  • protects from S 10.35

 

Statement 5: Department from position previously concluded

–          binding upon members of the AICPA

–          A treatment of a similar item on a tax return should be treated in its own way each year, and is not bound by previous  year’s recommendations, unless bound by the IRS by a Closing Agreement

 

Statement 6: Knowledge of error: return preparation and administrative proceedings

 

The member must advise the taxpayer in a prompt manner of error, regardless of whether the member prepared or signed the return

 

 

 

 

Geothermal Power in the United States

Geothermal Power in the United States

In an election year, most news relating to the government concerns who is winning delegates or what the candidates are saying about one another, but behind the scenes most departments continue their work like clockwork. The United States Geothermal Energy Association is one such consistent group.

Geothermal Power in the United States

U.S. Geothermal Power Production and Development Report

For its annual “”U.S. Geothermal Power Production and Development Report”, released yesterday, April 3rd, the association detailed the current development of geothermal energy systems in the United States. One of the most encouraging details was the fact that 91 MW of geothermal power generation was added to the United State’s power grid last year.

 

Despite these gains, geothermal power generation is only taking place actively in eight out of the fifty states in the union. Wyoming, Alaska, Idaho, California, Oregon, Utah and Nevada are among the exclusive company to have current power being generated. Seven other states that consist of Colorado, Arizona, New Mexico, Louisiana, Texas, North Dakota and Washington are in progress of developing geothermal systems. The leader overall in production at this time is California with 2000 MW in development, in addition to the 2615 MW already online. Not to be outdone though, Nevada leads the way with 59 projects in development.

 

Federal tax credits have been a driving force behind these additions and the geothermal development in these states. Development generally takes four to eight years to get the geothermal resource live to be tapped, but the tax credits expire upon the closing of 2013, putting some projects at risk. The tax credits have been offered due to states and the federal government seeking renewable energy sources and a reliable energy source. Geothermal has provided the solution on both accounts, but has come at a price. Despite these potential setbacks, it is expected that an additional 100 MW will come online this year, worth an estimated one billion dollars.

 

The addition of such facilities has also led to an increase in the consumer market for geothermal heating systems. Companies have begun offering these systems which in many cases can save customers up to 70% on their energy costs, making these geothermal development projects sought after in many states.