From the CPA Letter Daily
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§ S&P’s downgrade results in $1 trillion in stock losses |
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§ Buffett bets on Bank of America with $5 billion investment
§ Warren Buffett’s Berkshire Hathaway invested $5 billion in Bank of America, a major vote of confidence for the bank and its CEO, Brian Moynihan. "I am impressed with the profit-generating abilities of the franchise and that they are acting aggressively to put their challenges behind them," Buffett said. The Guardian (London) (8/25), Bloomberg (8/25), The New York Times (tiered subscription model) (8/25), The Wall Street Journal (tiered subscription model) (8/26), |
CNBC§ Treasury recovered $886M from TARP in the first half of the year
The Treasury Department said it recovered more than $886 million in the first half of 2011 through the sale of warrants taken in banks participating in the Troubled Asset Relief Program. "Although the central purpose of TARP was to help stabilize the financial markets during a time of severe crisis, the receipt of these funds is positive news for taxpayers," said Tim Massad, assistant Treasury secretary for financial stability. NPR.org/The Associated Press (8/25), Google/Agence France-Presse (8/25) 
§ Small businesses are more confident in the economy
Small businesses are more optimistic about the economy, according to a quarterly survey by Capital One Financial. About 44% of respondents said conditions are improving. "Our second-quarter survey results suggest that many small businesses are seeing sustained improvement in business performance, a trend we’ve seen developing over the last few quarters and, while the pace has been modest, it has been generally consistent and that’s definitely something we like to see," said Peter Appello of Capital One Bank. American City Business Journals/Phoenix (8/25)
§ Regulators and banks discuss swelling deposits
Banking regulators want some financial institutions to keep accepting deposits even if doing so is not profitable. The banks, in return, asked the regulators to lower insurance premiums and leverage ratios, sources said. Bloomberg (8/26), Credit Union Times (8/25)
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§ Sen. Sanders to propose payroll tax for incomes over $250,000
Sen. Bernie Sanders, I-Vt., plans to introduce legislation that would broaden the payroll tax. The bill would make individual incomes higher than $250,000 subject to the tax, which is applied to Social Security. The payroll tax is now levied on up to $106,800 in annual income. The Hill/On the Money blog (8/25)
§ Study says overseas tax profit holiday would yield $8.7 billion
A study by NDN, a Washington research group, concluded that a tax holiday for overseas profits repatriated to the U.S. would raise $8.7 billion over the next decade. The study challenges the congressional Joint Committee on Taxation, which has said such a holiday would yield $78.7 billion in that time. Bloomberg (8/25)
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§ LinkedIn responds to users’ privacy concerns
Until recently, LinkedIn has managed to stay out of the spotlight when it comes to privacy. In June, however, LinkedIn decided to opt in millions of users to a privacy setting, allowing their names and pictures to be used in social advertisements. It went relatively noticed for weeks … and then the firestorm. In early August, the blogosphere and news websites lit up with the information. LinkedIn users were not happy. AICPA Insights (8/26)
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From CCH Tracker News
The Tax Court’s decision that a married farmer was not entitled to Schedule F deductions for medical expense and health insurance premium reimbursements paid to his spouse under an employee benefit plan because the wife was not a bona fide employee was vacated and remanded for reconsideration.
The evidence showed that the wife documented her hours and testified with respect to the services she performed on the farm, and clearly established that the wife paid the health-related expenses, and that she was reimbursed for those payments. Since the couple claimed the health care reimbursements were compensation for personal services actually rendered under Code Sec. 162(a)(1), the Tax Court was required to determine whether the wife was a bona fide employee by applying the common law agency doctrine.
The IRS’s contention that the wife’s payment of medical expenses relieved the husband of his state (Kansas) law obligation to pay for his wife’s medical expenses under the doctrine of necessaries was rejected since the duty arose only when one of the spouses was unable to provide for their own medical expenses. Further, the Tax Court’s disqualification of the amounts received by the wife as compensation because they originated from the couple’s joint checking account was erroneous. The IRS’s argument that the wife owned half of the funds in the joint checking account was rejected because the account was the husband’s business account and the bank required the wife’s name to be on it. Additionally, the contention that the wife did not receive any economic benefit was contrary to the purpose of spousal employment, which is to avoid decreasing the couple’s income that would result from paying an unrelated hired hand.
Unpublished opinion vacating and remanding the Tax Court, 99 TCM 160, Dec. 58,148(M), TC Memo. 2010-41.
M.L. Shellito, CA-10, 2011-2 ustc ¶50,595
