WEBTAXCPA

The Department of Health and Human Services [HHS] has released the amounts below, which are non-elective employer contributions for employee health insurance premiums in order to serve as the amount for computing the 35% tax credit under Internal Revenue Code Section [IRC] 45R of the newly enacted Patient Protection and Affordable Care Act.

The credit is part of IRC Section 38, which is the general business credit. Small businesses are defined as those with 25 or less employees and in which average annual wages are less than $50,000. [IRC § 45R(d)(1), (d)(3)(B)] If the amount of non-elective contributions paid by an employer is less than the HHS amounts above, then the credit is computed based upon the lesser amount. Also, the employer must have a contribution arrangement in effect. [IRC § 45R(d)(1), (4)]

Employers with 10 or less employees and average wages of less than $20,000 are entitled to receive 100% of the credit. The credit begins to be reduced for an employer with 10 employees and is completely phased out at the 25-employee level, and the credit will be available for tax years beginning January 1, 2011.

The credit under the new law offers an incentive to small businesses by essentially subsidizing employee coverage by way of the tax credit for purchasing health insurance. Read more on the Patient Protection and Affordable Care Act here at webtaxcpa.

Employee-only / Family Coverage
Alaska $6,204 / $13,723
Alabama $4,441 / $11,275
Arkansas $4,329 / $9,677
Arizona $4,495 / $10,239
California $4,628 / $10,957
Colorado $4,972 / $11,437
Connecticut $5,419 / $13,484
District of Columbia $5,355 / $12,823
Delaware $5,602 / $12,513
Florida $5,161 / $12,453
Georgia $4,612 / $10,598
Hawaii $4,228 / $10,508
Iowa $4,652 / $10,503
Idaho $4,215 / $9,365
Illinois $5,198 / $12,309
Indiana $4,775 / $11,222
Kansas $4,603 / $11,462
Kentucky $4,287 / $10,434
Louisiana $4,829 / $11,074
Massachusetts $5,700 / $14,138
Maryland $4,837 / $11,939
Maine $5,215 / $11,887
Michigan $5,098 / $12,364
Minnesota $4,704 / $11,938
Missouri $4,663 / $10,681
Mississippi $4,533 / $10,501
Montana $4,772 / $10,212
North Carolina $4,920 / $11,583
North Dakota $4,469 / $10,506
Nebraska $4,715 / $11,169
New Hampshire $5,519 / $13,624
New Jersey $5,607 / $13,521
New Mexico $4,754 / $11,404
Nevada $4,553 / $10,297
New York $5,442 / $12,867
Ohio $4,667 / $11,293
Oklahoma $4,838 / $11,002
Oregon $4,681 / $10,890
Pennsylvania $5,039 / $12,471
Rhode Island $5,887 / $13,786
South Carolina $4,899 / $11,780
South Dakota $4,497 / $11,483
Tennessee $4,611 / $10,369
Texas $5,140 / $11,972
Utah $4,238 / $10,935
Virginia $4,890 / $11,338

May 4th, 2010 | Category: CPA Stuff | Leave a comment

April 23rd, 2010 | Category: CPA Stuff | Leave a comment

The new global accounting rules are now upon us. The so-called “New World Order” is effectively now spoken about in the present tense. The Financial Accounting Standards Board [FASB] and the International Accounting Standards Board [IASB] have joined forces to present a handful of international accounting standards, which technically means that rules are being crafted as we speak to manage the new financial world order. Called the International Accounting Standards [IAS], the most prominent of these new global accounting rules is perhaps IAS 39 on “derecognition”.

The management of debt-based assets is upon us, and the so-called ‘globalists’ and the ‘oligarchs’ square off. The G2 is now official jargon of the accounting “community”, as it were. At stake are trillions of dollars of debt-based capital. Assets always equaling liabilities and equity, the winner in any economic stand-off is the one who holds either the assets, the debt, or the equity, the latter being at war vying for the assets.

The players in this game are an odd mixture of economists, financiers, and accounting and taxation theorists, together with political strategists and media experts who generally view the world within the context of the emergence of China as an economic powerhouse and veto power in the UN Security Council. Historically, the precedent for national mergers and acquisitions if you will is set against the rise of an economic power that stands to rival those which preceded it.

Perhaps from the point of view that the irrelevance of that which was formerly was relevant is most noteworthy in terms of understanding where the new rules are taking us. In short, welcome to the debt-based economy. Laying aside assets for a moment, the supply of debt is being viewed as determining fair value, with demand being easily measurable. In this model, demand, or assets, is predetermined, and supply, or debt, is just a simple mathematical measurement. Tastes which drive markets are found to be easily molded, and, according to the “experts”, debt is simply a measurement of the allocation of these assets. Thus, at least according to the new global rules, how one goes about classifying debt becomes tantamount to expressing value. The other side of the equation is easily measurable, i.e., controllable.

Behold some of the new language being employed in the IFRS: “In-substance loan defeasance”, which technically means that those who are the owners of income-producing property will, under these rules, have the ability to unlink property from debt on a balance sheet, which technically is already being done with toxic mortgage-backed assets. Let’s say Mr. A owns a commercial building and the debt for the building is shown on his balance sheet as being tied to the building. According to the IFRS, Mr. A has the ability under the IFRS to classify another liability or perhaps no liability at all in some circumstances as an “in-substance loan defeasance”, and thus there is no “linkage” of the asset to the original underlying liability. In short, debt and assets can be freed up and interchanged or swapped, thus giving rise to a host of differing financial reporting results.

Could a more easily adaptable approach toward substituting assets and liabilities on the reporting level be the best approach toward managing the seamless global financial behemoth of the not-too-distant future, er, present? Perhaps. Yet, whatever the presumed outcome may be, the simple preponderance of this mode of thinking is now not outside the reach of theoretical minds. The pros and cons of shifting toward a new and more efficient definition of a balance sheet has been forever on strategists’ minds. One can see it clearly see it here taking shape on the IASB agenda.

Looking back, the notion of “variable interest entities” may have seemed foreign until Andrew Fastow created many off-balance sheet entities for Enron in coordination with the “controlling financial interest” doctrine of ARB 51. Now, with the new global initiate well under way, the concept of tweaking balance sheets doesn’t seem so unrealistic, especially since the Federal Reserve resorted to it in full force after the meltdown of the securitized, aka debt-based, equity model. In accounting, there is no getting away from it though, debt and equity will always be in a tug of war for control of assets. With the advent of a new world financial imperative, or order if you will, the question of how to report the value of each has perhaps never been more in the forefront of international economic thought and practice.

April 17th, 2010 | Category: CPA Stuff | Leave a comment

The banks that were closed overnight were:

City Bank of Lynnwood, Washington
Tamalpais Bank, San Rafael, California
First Federal Bank of North Flordia, Palatka, Florida
AmericanFirst Bank, Clermont, Florida
Riverside National Bank, Florida
Butler Bank, Lowell, Massachusetts
Lakeside Community Bank, Sterling Heights, Michigan
Innovative Bank, Oakland, California

City Bank will be picked up by Whidbey Island Bank of Oak Harbor, Washington. Union Bank of San Francisco will pick up Tamalpais Bank. Canada’s TD Bank Financial Group will acquire AmercanFirst Bank, Riverside National Bank, and First Federal Bank of North Flordia. People’s United Bank will acquire Butler Bank. First Michigan Bank will take over Lakeside Community Bank. And Center Bank will take over Innovative Bank.

Regardless of which bank is taken over by whom, the FDIC estimates that the total bill for bank failures will come to $100 billion from 2009 through 2013.

Meanwhile, bankrupt Iceland’s last wish: to have its ashes scattered all over Europe…

And another quotable quote: Silence is Goldman…

April 17th, 2010 | Category: CPA Stuff | Leave a comment

Soon, webtaxcpa will be featuring articles which attempt to explain the new global accounting standards. Here is a preview of things to come.

April 15th, 2010 | Category: CPA Stuff | Leave a comment

Here are the key provisions of the Patient Protection and Affordable Care Act:

40-percent surtax on high-end employer-sponsored health plans
If your company has an insurance plan that pays premiums in excess of $10,200 for individual coverage and $27,500 for family coverage, then beginning in 2018 there will be imposed a 40% nonrefundable excise tax.

Increases the Medicare tax to 2.35 percent for couples with adjusted gross incomes (AGI) over $250,000 a year and individuals with AGI over $200,000
Instead of the current 1.45% Medicare tax on W-2 wages and net income from self-employment, this will rise to 2.35%. Double that because employers have to match that 2.35%, and if you are self-employed the total tab goes from 2.9% to 4.7% of self-employment net income. This is a 62% tax increase!

Imposes new fees on certain health-related industries
Tanning salons have to pay a 10% tax beginning July 1 of this year. And there are going to be “fees” levied on brand name pharmaceutical sales, which will be based on “market share”. This will begin in 2011.

Increases the threshold for the deduction of eligible unreimbursed medical expenses from 7.5% to 10% of AGI starting in 2013
Instead of the current 7.5% of adjusted gross income threshold (floor) that one must hurdle in order to begin deducting medical care and insurance costs, this will rise to 10%. In other words, ones ability to deduct out-of-pocket medical costs is lowered by a third.

And in summary, according to the experts, the above translates into $400 billion in additional taxes. And if you happen to make over $250K per year, then you will be severely punished. Read this summary here from the Cato Institute.

March 22nd, 2010 | Category: CPA Stuff | Comments (1)

You can go here to find out more about IRS Commissioner Doug Shulman’s remarks at the annual meeting of the New York State Bar Association Taxation Section on January 26, 2010. Shulman lays out how the issue of “complexity” is being managed by the IRS. One of the most revealing statements made by Shulman has to do with the posture the IRS will be taking with respect to high net worth individuals. The focus will no longer be solely upon income, but rather will include taxpayer assets as well.

“This is a game-changing strategy for the IRS. Initially, we will be focusing on individuals with tens of millions of dollars of assets or income. Going forward, we will take a unified look at the entire complex web of business entities controlled by a high wealth individual, which will enable us to better assess the risk such arrangements pose to tax compliance.

We want to better understand the entire complex economic picture of the enterprise controlled by the wealthy individual and to assess the tax compliance of that overall enterprise. We cannot do this by continuing to approach each tax return in the enterprise as a single and separate entity. We must understand and analyze the entire picture.”

Although individuals generally do not file balance sheets with their tax returns, their names and social security numbers are often linked to various business tax returns if they are partners or shareholders. In which case, balance sheets are generally presented, however, business assets are not necessarily those which are considered personal assets of the principals. The only exception is that of stock, the ownership of which is easily determinable through stock prices if it is a publicly held company. However, if the company is privately owned then the task of assessing value becomes far more complex.

We could not agree more wholeheartedly that complexity is the central focus of an IRS effort to examine individuals based upon net worth. Given the current format of reporting, there are few other options for guiding one toward a reasonable understanding of ones net worth. Social security numbers and employer identification numbers are tied to bank accounts, which brings up a whole new issue of privacy. And stock transactions are similarly traceable, however, the question that doesn’t seem to be answered by Shulman has more to do perhaps by the reasons for examinations based upon net worth.

Shulman talks about “control” being the guiding factor behind these examinations, however, control and net worth are two very distinct and separate concepts. One can have control without having any economic interest whatsoever. And with respect to trusts, actually giving up control to a trustee in an irrevocable trust allows for greater flexibility in meeting difficult challenges in areas such as estate planning in particular. Why then would a tax position that is often adverse to the taxpayer in which control is retained become a focal point of tax abuse?

There are, however, instances which experienced tax professionals understand well how economic risk is tied to control by certain individuals. In plain English, the mortgage meltdown was a prime example of how shady operations can be linked to those who control them. The inherent risk is that a corrupt business often leads to corrupt individuals. This awareness has often been employed in audits, however, in such cases the taxpayer has the right to be represented.

The comments by Commissioner Shulman raises more questions than it answers. It will be interesting to see if this story has legs and becomes the focus of the media and how this new posture translates itself in the ordinary interaction one has with the IRS. However, given the current climate at the IRS, high net worth individuals or those who simply exercise control in other entities and are not necessarily wealthy should be warned to be prepared for all possible questions concerning their financial affairs.

January 27th, 2010 | Category: CPA Stuff | Leave a comment

Once again, the pundits got it wrong. Or perhaps even better yet, they got it right by persuading people to invest in gold. Thus, the old media paradigm switches into high gear in order to protect the status quo. In the final analysis, vertical integration will not help the investment world. The melding of media conglomerates with industrial giants has proven to be a catastrophic failure to the notion that strong banks can conquer the world through effective advertising.

Much is being said about the power of the new media. One of the reasons why webtaxcpa.com became a blog is to get away from the usual methodology of waiting until after trends have set in to recognize them. Strictly speaking, finance is front and center as it has never before been. With the money supply mushrooming to satisfy the hunger for “safety”, the government’s ability to borrow seems almost limitless. And with a overly friendly Federal Reserve, the multiplier effect could only become amplified.

Strictly speaking, gold is vanishing quickly as a safe haven. So many dollars are in play now, most of which are held institutionally, meaning the so-called ‘stimulus’ is being reserved for a while. Conservatism today means the wealthy are in hunker down mode. The market bubble they foisted upon investors in the name of a false sense of economic recovery is proving fruitless. It is the proverbial double whammy of investor shock: Loss of portfolio value while missing out on the new rising star, which is cash.

Cash positions will count for everything as dollars are unleashed on the economy and inflation sets in. The pecking order of this payout does not come in the form of capital gains or dividends, but rather the ones who will benefit the most are corporate bondholders. The debt of the major players will be wiped off the books, further devaluing key assets in return for cash. This means that for the shrewd investor hedging against inflation while maintaining equity will become tantamount to success.

This is the viewpoint of key economists, which we could cite, who specifically point to inflationary pressures coupled with devaluing asset values. The reason for the move at this time is key toward securing the financial structure of the big banks, who got handed bad assets in return for money from the government which they promised to pay back. To fill in the shortfall there will have to be a proverbial white knight, and this happens to be an abundance of cash from foreign central banks that the Federal Reserve doled out during the economic “crises” for precisely this kind of maneuver.

The Euro is falling against the dollar making European goods cheaper. Every good opportunity deserves a strategy, and regardless of the lullaby sung by the federal government to the Europeans and how wonderful their socialist system is, the bottom line is that the financial structure of the United States always comes out on top. Free markets allow for the building of vast economic empires. Contrary to what the pundits would have one believe, there is still money to be made in a world in which the commonly held politically correct version of the world is that of shrinking resources and too much competition from abroad. Nothing could be further from the truth as gold becomes tarnished and the dollar rises.

Chalk another one up to the genius of American finance, and investors everywhere will look back on these events as evidence that distractions from what goes on behind the scenes is almost without fail the worst path to take when wanting to hitch a ride on history. The joy of making good financial decisions does not necessarily spring from monetary gain but rather the wisdom gained from the experience. Think about this the next time you hear that the President or Congress is considering health care reform. Then ask yourself why anyone in Washington would be so dumb as to decimate one of the pillars of the financial empire of America, which is the insurance industry.

On the contrary, the old media paradigm has once again proven the WMD theory still works. If you repeat something long enough people will believe it. The all-consuming health care debate that wound up becoming nothing more than a faint whimper was the fitting exit for what was from the outset nothing more than political showmanship. Meanwhile, what was going on behind the scenes is the building of another epic leap forward for the U.S. financial juggernaut.

January 24th, 2010 | Category: CPA Stuff | Leave a comment

Here is a great article about The Ten Brands That Will Disappear In 2010. We found it interesting because the results of a study by the UCSD Global Information Industry Center were recently released, which cited some interesting statistics about information consumption in America.

The results found that the average annual growth rate of “bytes consumed” is 5.4%, and  the sample which was used was from 1980 to 2008. Interestingly, the UCSD study found that television accounted for 41% of information time, and the Internet accounted for 16%.  Yet, relative to the length of time television and its traditional “network” have been around, the Internet is still in relative infancy in terms of information consumption.Television was increasingly being consumed via mobile devices, which is indicative of a preference by consumers of cross-platform devices.

Interestingly, the ten brands cited as likely to disappear in 2010 include names like Motorola, Newsweek, Palm, Borders, Blockbuster, Fannie Mae and Freddie Mac, and other names in the old brick and mortar media and finance category. This supports the theory that information is increasingly being consumed via mobile devices and is indicative of a preference by consumers for devices that circumvent the firewall between television and the Internet. Brands which are not positioned adequately on the Internet will likely not survive, where demand for content development, storage, and distribution will likely rise greatly.

One can deduce that information production on the Internet is still relatively new and not as developed as television, however, the death of brick and mortar media and technology names will likely hasten the speed with which television and the Internet eventually meet one another in terms of information production and consumption. Gaming is another large component of the UCSD study which is slated to compete with space as it becomes more reliant upon web-based delivery.

The search for a reason for the demise of certain media brands is pointing to the fact that the demand for information is far greater than the ability to store or transmit it. The year 2010 will likely spell doom for certain old media staples, while new media production, storage, and delivery capabilities will leap ahead at a rapid growth rate.

December 10th, 2009 | Category: CPA Stuff | Leave a comment