Tax Effects of the Unemployment Benefits Extension

The House of Representatives, not surprisingly and with a vote more or less along party lines, which would extend added unemployment benefits to chronically unemployed workers to November. There are a number of tax provisions associated with the bill--some helping selected taxpayers while others increase taxes or reduce availability of tax credits.

Bill provisions favoring taxpayers included extension of the R&D credit, school teacher supplies deduction and extension of the option of taking sales taxes in lieu of state income taxes. Other provisions included tax breaks for businesses in low-income areas, near Native American reservations and whose who hire active military reservists. By way of counter, hedge fund managers are potentially subject to higher taxation and certain multinational corporations will find a harder road using the foreign tax credit. Somewhat surprising, it does not appear that the "annual" AMT patch was included. Fox News estimated a net $30 billion addition to the deficit.

This one is pretty much a "taste and preferences" bill; advocates of the unemployed will cheer; tea partiers, not so much. One thing appears to be certain; simplification of the tax code was not a priority of the bill's crafters.

PCAOB Access to Foreign-Based Firms Appears Limited

Legal obstacles are preventing the Public Companies Accounting Oversight Board from auditing foreigh-based firms using foreigh auditors (even if the firm has a U. S. counterpart) which are listed on U. S. stock exchanges. Over 400 firms from 21 countries are affected; two leading examples are Alcatel Lucent of France (telecommunications) and British Sky Broadcasting (related to the Fox network, including Fox Business and Fox News Channels in the U. S.).

U. S. auditors of SEC clients and CFOs of companies subject to the PCAOB could be understood if they were less than thrilled that some U. S. stock exchange members did not face the same financial reporting scrutiny which they face. A reasonable solution: use something akin to the tax treaties used by IRS and foreigh tax authorities to resolve which country gets to tax specific business income.

Some Good News from "Obamacare" for Small Businesses

The Internal Revenue Service recently announced that both state and federal tax credits can be taken on qualifying health insurance expenditures and that these credits extend to dental and visual insurance. Small businesses can claim up to 35% of premiums while small nonprofits can claim up to 25%. Both businesses and nonprofits must cover at least half the employee's cost to be eligible.

The provision looks more likely to keep small employers from dropping health insurance benefits compared to promoting new employers to newly offer coverage. Nevertheless, any good news for small businesses from this legislation should be celebrated.

More Modulating

Still in a somewhat in flux situation with minor health problems and significant home computer problems but hope to be back to posting by the middle of next week.

The Oil Slick and Middle TN Floods

NOTE: I hope to be making substantiative accounting posts in the near future--perhaps as soon as later this week.

Much of western and middle Tennessee was deluged with 4 to 15 inches of rain this weekend and even though it previously been a fairly dry spring, flooding is everywhere--especially in the southern two-thirds of this area which includes Memphis and Nashville. Nashville TV caught the horror of a semi-driver being pulled to safety by a boat Saturday and yesterday may have been worse. Clarksville has also been affected--3 of 4 bridges over the Red River (our secondary river) have been overtopped and only I-24 allows crossing at faster than a snail's pace. Additionally, APSU classes were cancelled; as best as I can remember the first time in my nearly 30 years of teaching that classes were cancelled during finals.

All this said, an even greater natural tragedy is playing out in the Gulf of Mexico, where a oil rig exploded and spewed millions of barrels of oil into the Gulf, with doubtlessly massive negative impact on the fishing and tourism industry. As one who favors offshore drilling, I can only find small fault with the Obama administration here (perhaps too willing to lay all the blame at the feet of BP, when unfortunate weather conditions (strong southernly winds) clearly contributed to the problem. I have no idea how to rate the Coast Guard's performance). The slick brings up an example of the tough choices ahead for a country not used to being forced to make them--protect the environment and risk even higher unemployment as well as possibly $5-6 a gallon gasoline or continue and probably expand offshore drilling at the now very real risk of periodic crises such as the present oil slick.