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Accounting News Roundup: Tax Reform Is Not All It’s Cracked Up to Be; Being Tax-Exempt on the Other Hand…; Stanford Accountants Plead Dumb | 11.15.12

Tax Reform Won’t Save the World [Bloomberg]
Tax reform “will result in the additional revenue the president seeks,” said House Speaker John Boehner in his post- election news conference. “It will support economic growth, which means more revenue is generated for the Treasury. And it will improve the efficiency of the system, which means additional revenue as well.” He went on to quote former Treasury Secretary George P. Shultz, who said the 1986 tax reform was “the unsung hero of the very good economic times we had for a long time.” That’s the Washington consensus on tax reform: It slices, it dices, it cleans up after itself. But that’s not the economic profession’s consensus.

The big question: How, not whether, to raise taxes [Wonkblog/WaPo]
The White House’s position, in other words, is that if Republicans want to raise revenue while holding down rates by reforming the tax code, they have to show how they’re going to do it, prove that they’re willing to take the heat, and let it get scored by the Joint Tax Committee. If not, then tax rates are going up, either because Congress agrees to decouple the tax cuts for income under $250,000 from the tax cuts for income over $250,000, or because we’ve hit the deadline without an agreement and all the tax cuts have expired, raising taxes on everybody.

Departing IRS Chief Says Tax Code Ripe for Overhaul [WSJ]
Douglas Shulman, whose term ended Friday, said in an exit interview with The Wall Street Journal that there’s “broad bipartisan consensus that the tax code is too complex” and that “it would serve the American people better to have a tax code that has more certainty without as many expiring provisions.” He added that lawmakers have “loaded up” the current tax code with breaks, and “in some ways they’re the definition of complexity” and could be pared back.

Tax-Exempt Firm Gets $600 Million Profit Flying First Class [Bloomberg]
Since 1862, an obscure company called American Bureau of Shipping has been approving oceangoing vessels as seaworthy. The Houston-based firm reported $3.17 billion in revenue and just less than $600 million in profits from ship inspections from 2004 to 2010 and paid no U.S. income taxes on those earnings. […] ABS inspects 11,898 vessels annually. The IRS asks companies in its standard filing form to say why they are nonprofits. ABS answers that question every year with the following phrase: “To promote the security of life & property on the seas.”

Swizz Beats: ‘My tax payments are up to date’ [SFC]
Also: “I don’t have no tax issues." 

Diamond Foods restatement wipes out $56.5 million in profit [Reuters]

Diamond Foods Inc on Wednesday restated financial results for fiscal years 2010 and 2011, erasing $56.5 million in profit, and reported sharply lower earnings for the first three quarters of 2012, after an accounting scandal hurt its ability to do business. […] Diamond launched an internal probe after questions surfaced late last year about its accounting for payments to walnut growers. The probe found that it had accounted for certain payments in the wrong fiscal periods and that restatements were necessary. Diamond had missed its restatement deadline and has been fighting for months to stay listed on the Nasdaq after its shares tumbled more than 80 percent in the wake of the accounting scandal, which claimed the jobs of top executives and ruined its plan to buy Pringles potato chips. That purchase, for more than $2 billion, would have made Diamond the world's second-biggest snack food maker, behind PepsiCo's (PEP.N) Frito-Lay.
Stanford Accountants Helped Hide Ponzi Scheme, U.S. Argues [BBW]

The government asked jurors to reject claims by ex-Chief Accounting Officer Gilbert Lopez, 70, and former Global Controller Mark Kuhrt, 40, that they were duped by Stanford and his finance chief into creating false financial statements, which investors relied on to buy $7 billion of fraudulent certificates of deposit from Antigua-based Stanford International Bank Ltd. “Gil Lopez and Mark Kuhrt were faced with the same choice over and over again, to either help Allen Stanford lie to his customers and misuse their money or say ‘I don’t want to be part of it,’” prosecutor Jeffrey Goldberg said during closing arguments today. The men chose to “keep it secret and actively work to keep others from finding out about it.”
Armstrong The Good Giraffe speaks about his acts of kindness [BBC]

Twice a week Armstrong Baillie, 32, dons a furry suit his mother made him, before travelling to different places to do good deeds. He calls himself The Good Giraffe and lives in Dundee with his girlfriend and her daughter. […] During the past six months Armstrong has handed out free bananas and water to runners at the Edinburgh Half Marathon, cleaned up litter on Portobello Beach and given away £10 vouchers to mothers in hospitals. He has also been seen handing out free coffee to cold passers-by and cleaning cages at cat and dog homes.


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