Or ones that soon will be:
Look at the bright side, you were on the front page of the Post!
[via Gawker]
Or ones that soon will be:
Look at the bright side, you were on the front page of the Post!
[via Gawker]
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
The Obama administration is slowly starting to pick its battles; starting with taxes on corporations’ foreign earnings.
The administration has abandoned its proposal to eliminate U.S.-based multinationals’ ability to defer tax on income by shifting assets to foreign subsidiaries, according to a published report.
While details are sketchy, Bloomberg reported on Tuesday that the administration’s proposed budget for fiscal 2011 shows that it has abandoned its plan to eliminate the so-called “check the box” system under which U.S. companies can defer U.S. tax on income by shifting income-generating assets to foreign subsidiaries without recognizing gains on the transfer.
The proposal would have eliminated companies’ ability to avoid tax on such transfers and forced the repatriation of earnings shifted in this way.
According to Bloomberg, the administration backed down in the face of intense opposition from multinationals. Observers note that Congress has tried to squelch the efforts of the Internal Revenue Service to clamp down on U.S. companies getting foreign tax breaks at the same time as U.S. tax breaks, although many of those breaks are facilitated by the check the box system.
“Maybe the administration figured this was one it did not need to pick a fight on,” Jasper Cummings, a partner in the Raleigh, N.C., office of Alston & Bird and a former associate chief counsel of the IRS, said in an email to CFOZone Tuesday. “They have enough fights as it is.”
Still, Cummings noted that the administration still has “a pretty long list of other changes” in international taxation that it is pursuing. Chief among them is a plan to tighten the pricing rules for transfers of intangible assets.
As CFOZone reported last fall, one such proposal would crack down on asset transfers of employee compensation. In a paper released in May outlining its budget for the last fiscal year, the administration said it would “clarify” the treatment of transfers of intangible assets to include shifts of such expenses.
At present, many companies avoid paying tax on gains resulting from transfers of so-called “workforce in place” under rules that also allow goodwill and “going concern” to go untaxed. In early 2007, however, the IRS issued a staff directive and audit guidelines warning that it was “improper” for taxpayers to classify workforce in place as goodwill and going concern. And an IRS official in September indicated that transfers of workforce in place should include the value of products or services the employees create if much of the work is complete at the time of the transfer.
According to Bloomberg, the administration’s proposals to toughen the rules on transfer pricing would generate $15.5 billion in tax revenues for the coming year and along with other international tax changes produce $122.2 billion over a decade.
Warren Buffett’s Berkshire Hathaway Inc. (BRKA, BRKB) took an accounting charge to reflect the declines of three stocks in its investment portfolio after regulators asked about the company’s policy for writing down investment losses. But Berkshire Chief Financial Officer Marc Hamburg complained that the current stock prices don’t reflect the worth of the shares, and predicted in a letter to the U.S. Securities and Exchange Commission that “each security’s market price will grow to at least the intrinsic value that existed” when Berkshire made the investments. [Dow Jones]
Editor’s Note: Chad Cohen is a licensed CPA in California and currently serves as a Senior Director of Finance and Corporate Controller for Zillow.com in Seattle, WA. He has over 13 years of experience in corporate finance, audit and accounting; primarily in the technology and entertainment sectors. He has also functioned in financial planning and Sarbanes Oxley compliance efforts. Previously he also worked as a Big 4 auditor of high technology clients both domestically and abroad. Chad spent the first 12 years of his life in Hong Kong and as such enjoys eating dimsum in Chinatown and practicing Kung Fu in his free time. You can follow him on Twitter @cfolounge.
Unemployment is over 10%, the US dollar is going through the floor as interest rates continue to tank and Congress wants to push through a 2,000 page, $1 trillion health care bill. It might appear that our country is coming apart at the seams but if you are riding out this tidal wave, now is the perfect time to take advantage of the crappy macro conditions and start turning the screws to your vendors.
I don’t care if you’re an accounting manager, a senior buyer, AP clerk or CFO; everyone in the finance department should have a part in looking for ways to save the company some coin and NOW is the perfect time.
Here are a few ideas off the top of my head:
Commercial real estate is in the crapper &mdash Talk to your landlord about extending your lease and locking in or lowering your rents for the next 3 to 5 years. Get concessions, push for free TIs, get a couple more parking spaces, etc.
Strong Arm Your Outside Accountants &mdash Accounting firms have been laying off employees left, right, and center so lock in a long term contract and negotiate a steep discount on standard audit rates and other services like taxes. OR have a bake off with other accounting firms. This will get your auditors attention and encourage them to drop their rates to be competitive with these other firms. BDO, Moss Adams, RSM, etc. also audit public clients (it’s not just the Big 4 firms, folks) and their fee structure is 20 – 30% less than the Big 4. Don’t be afraid to switch firms or give parts of your accounting business (tax compliance, SALT, audit, etc.) to other firms.
Contracts &mdash If you find yourself in the middle to end of a contract term, try to extend your subscription, maintenance or service contract for multiple years in exchange for steeply dropping prices. Mandate that your IT, sales or marketing departments bid out services to multiple businesses when deciding who to give your precious business to. Find a free service that can do what your paid service does &mdash these do exist (they’re usually crappier but you may not need the “Cadillac”).
Price out hardware purchase orders with new vendors &mdash You’ll be surprised what others are willing to do now to get your business. You can usually negotiate better at quarter-ends as sales departments have quotas and targets to meet.
I could go on and on but I think you catch the drift.
I read a book on negotiations a couple years ago that encouraged its readers to negotiate “fearlessly”. I couldn’t agree more.
Thoughts?