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Local News & Opinion
Ref. : Local Newsbriefs Travel
Letters
Ref. : Letters to the editor Open Letters:
03.05 Open Letter to Congressman Bart Stupak Health & Environment
Video National Health Care Systems In Other Countries 03.20 The Death of American Populism 03.18 Pressure Drop: Brave Sir Dennis Ran Away 03.12 Slick Barry and the $100-Billion Medicaid/Medicare Fraud Claim 03.09 Kill Bill: Death to Obamacare! 03.09 Obama’s Rhetoric May Be “Fiery,” But His Health Care Reform Is Still Lukewarm Media Watching
03.17 CNN Scrapes Bottom of Right-Wing Barrel With Erickson Hire 03.16 WPost Blames Obama First, on Israel 03.16 Letter to the New York Times' Editor: Stovepiping To Persia 03.12 Cud and Complicity: Burying the Alternatives to Empire's Dominion 03.11 NYT and the ACORN Hoax 03.05 Sorry, Rove, Bush Did Lie About Iraq 03.03 It's Snow News 03.03 The Woeful Washington Post Ref. : The Daily Howler Legal Matters
02.26 America's Supremes: Court Over Constitution US Politics, Policy & Culture
03.11 Power Rangers: Policing the System With the "Fightin' Progressives" 03.09 Thinking About Countings 03.07 Unnatural Acts: Breaking the Fever of Militarism 02.25 Future Shock: A Better World Beyond the Imperium High Crimes?
03.19 Israel's Troubling Tilt Toward Apartheid 03.18 The Lawfare Project's Anti-Democratic Agenda 03.16 America's Secret Prisons 03.13 Palestinian Dispossession in East Jerusalem 03.12 Israeli Settlement Expansions Continue 03.11 Brutalizing Palestinian Children 03.08 The Russell Tribunal on Palestine: Barcelona Session 03.05 Targeting Israeli Apartheid 03.01 America's Permanent War Agenda 02.25 Global Sweatshop Wage Slavery Economics & Business Non/Mis/Malfeasance
03.19 The Growing Movement For Publicly-Owned Banks 03.19 America's "Houdini Recovery" under IMF-Type Austerity 03.14 The Crisis in America's Telecommunications Network 03.09 The Business of Water: Privatizing An Essential Resource 03.05 Is the Recovery Real? 03.04 IMF-Style Austerity Measures come to America: What “Fiscal Responsibility” Means To You 03.04 Barry C. Lynn's "Cornered: The New Monopoly Capitalism and Economics of Destruction" 03.01 Thinking About Fees International
03.15 Peace Process Hypocrisy: Stillborn from Inception 03.03 Muslim Disunity 03.02 Funding Israeli Militarism, Belligerence and Occupation 02.26 Iran Captures a 'Good' Terrorist We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.
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ECONOMIC ANALTSIS:Thinking About NumbersThe implications of potentially lost future tax revenues (not to mention digging into federal and state coffers to underwrite any refunds) of this Net Operating Losses consolidation time bomb are enormous.
I’ve been thinking about the numbers. Actually I’ve been thinking about taxes, the bailouts/ costs/ NOLs (Net Operating Losses), incentives, and refunds. We are in deep “do-do!” The numbers in the NEWS relating to the bailouts, financial and economic fixes, Net Operating Losses/ write offs, unemployment/ layoffs/ downsizings, and deficits are astronomical. Numbers - unless they have a dollar sign in front of them, they impact your immediate household (or business), or you are an accountant like me – might seem boring. ABSOLUTELY NOT TRUE... so please bear with me here.You see, it has been said the only two things in life that are certain are death and taxes! Because of original sin, you die. Because you must render onto Caesar that which is Caesar’s, you pay taxes. The stories on Page One and the network NEWS have been chronicling the business losses, failures, and takeovers. Uncle $ugar (via the US Treasury and the FED) has been attempting a fix and turnaround by bailouts, repurchase agreements to warehouse worth-less and worthless securities, guarantees, low cost loans, and out and out “gifts” of the people’s money. These are already running in the TRILLIONs! Yet, no one has zeroed in on the costs to the public purse by the impact of the merged NOLs on past and future business tax revenues. There haven’t been answers given, because nobody is asking the questions! TH*NK of this as the latest hybrid of “don’t ask, won’t tell” – so much for the promised transparency! When one business entity acquires/ mergers/ consolidates with another. This marriage of sorts is more than a combining of assets and liabilities - getting the assets, and assuming the liabilities. The tax implications both going backward and forward are tremendous. Depending on how the assumption agreements, the pre-deal determinations and structuring, and the post-deal tax filings are made; the acquiree’s business losses can shelter (as in make tax free) the acquirer’s business profits - dollar for dollar. In the current scenarios, we are talking about huge amounts of money running into the hundreds of BILLIONs (even possibly TRILLIONs). Each deal/ situation is different and requires the utmost in careful planning and structuring. The corporate tax attorneys and tax accountants will quarterback these plays to maximize the yardage (make that the cash flow) gains for their clients. In this environment, the tax professionals should literally become businesses most intimate and best friends. They will earn every penny of their salaries, fees, and billings by analyzing and maximizing by MEGA MULTIPLES the financial benefits of the consolidated tax return filings. To say the tax laws are complex is a gross understatement, and they keep changing! In my professional career, allowable carry back horizons have been 2, 3, 4, or 5 years while the carry forward horizons have been 7, 10, 15 or 20 years. I’d be willing to bet that the coming Obama Administration and the coming next Congress will change them again before this current calendar year’s business tax returns are due March 15th. The complexity of the acquiree’s NOLs consolidations with the acquirer’s operating taxable income is further complicated when you toss in tax considerations for the respective states. While a number piggy back off of Uncle $ugar’s rules, requirements, and guidelines; the majority of states set their own limitations and carry back/ carry forward horizons. States are hurting financially now and don’t have the luxury of deficit financing like Uncle. Almost all are required by their state constitutions to balance their budgets. Most don’t want to allow carry backs which would require them to refund taxes they have already collected (and spent) with money they don’t have. They also don’t cozy to the idea of limiting their future tax income streams by being overly generous with allowable NOL carry forwards. The implications of potentially lost future tax revenues (not to mention digging into federal and state coffers to underwrite any refunds) of this NOL consolidation time bomb are enormous. I wish I could give you a stadium figure as to how much is on the table with bailout merger/ takeovers already consummated, but I cannot. The information just is simply not publicly out there. (To be continued.) I’m Fred Cederholm and I’ve been thinking. You should be thinking, too. Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.
Copyright © 2008 The Baltimore News Network. All rights reserved.
Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent. Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own. This story was published on November 17, 2008. |
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