...Severance as income? IRC § 61 defined Gross Income as “all income from whatever source derived,” to include “compensation for services, including fees, commissions, fringe benefits, and similar items.” The court in Glenshaw defined income as “an undeniable accession to wealth.” Moreover, Treas. Reg. § 1.61-2 included “termination or severance pay” as compensation for services. IRC § 102 states that gross income does not include the value of property acquired by gift, bequest, devise, or inheritance. However, a gift cannot be from an employer to an employee. Here, Ariel Asher (“AA”) was paid $1,000 a year for the 10 years that she was with the firm. The firm characterized the $10,000 payment as a “severance.” AA will argue that the amount was a gift, thus not taxable. The IRS will argue that § 61 includes severance pay in the language itself. Additionally, § 1.61 states that a gift cannot be from AA’s employer. Therefore, the severance pay will be included in gross income. Purchasing bargained work equipment income? In Pellar, the court established that bargain purchases generally do not constitute gross income. If property is transferred as compensation for services in the amount less than its fair market value, the difference between the fair market value and the amount paid is gross income. Here, the firm was downsizing and had excess furniture and invited only departing members to make an offer. The firm accepted AA’s offer of $1,700 for the furniture (FMV $4,800). AA received...
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...usually relating to taxation and government spending, with the goals of full employment, price stability, and economic growth” (“Fiscal policy“, 2010). Keynesian economic theory states that governments should influence macroeconomic productivity by adjusting tax levels and public spending to curb inflation, increase employment and maintain a healthy value of money. During these trying economic times, dubbed “The Great Recession,” there are differing opinions on how to mitigate the effects. The Debt Commission chairs (appointed by President Obama) have unveiled a sweeping proposal to jump-start an in-depth public discussion of the scale and scope of the federal government. Bowles and Simpson are aware that it would be impossible for the commission to agree on a package and then acquire the votes in Congress to pass it. Therefore, they have suggested fiscal policy that will invite a reexamination of the role and purpose of Social Security, Medicaid and Medicare. Instead of talking about services and clients, Bowles and Simpson want to tackle what the scopes of these programs mean to the scope and size of government, along with the deficits and escalating tax rates that accompany them. Aside from proposing hefty tax increases, they have proposed an “explicit and permanent limit on the total size of government through caps on spending and revenues (at 21 percent of GDP)” (Butler, 2010, p. 2). Without action, this number could reach 30% within a generation. Ben Bernanke has...
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...economist to the President of the United states, I’ve carefully reviewed the recommendations provided from my fellow colleagues and I’ve concluded that it’s my goal to get more people back to work and slow down the inflation rate. Kathy Lee believes that raising taxes and reducing government spending is the best solution, but I believe that this will result in tax avoidance and tax evasion; which will deepen the recession in the United States. Patricia Lopez recommends that the Feds should leave interest rates alone and too strongly sell bonds and raise the bank reserve requirement. Although this is an interesting idea, raising the reserve requirements forces banks to withhold a larger portion of their funds, therefore reducing the money supply. It will ultimately restrict the bankers’ ability to make more loans, and those banks that were already operating just barely above the old reserve requirement will be forced to re-work their existing loans to meet the new restrictions, which will lead to raising interest rates. Allison Tanney believes that you should focus on increasing government spending and lower taxes and have the Feds work on buying bonds, raising interest rates, and if only necessary, raising the reserve requirement. Unfortunately, I do not believe that raising the reserve requirement is a good recommendation due to the fact that this could cause the banks to lessen their loan capabilities due to less money being available to loan to consumers. Furthermore, this will...
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...Our country has Budget deficits and government debt have significantly increased in many countries around the globe over the past 20 years, and almost all these countries are now faced with the challenge of building back up, their economy. The current problem of budget deficits and public debt has come about mainly because the growth in government spending has exceeded the growth of goods and services. “While the average ratio of tax revenue to GDP in industrial countries increased from 28 percent in 1960 to 44 percent in 1994, the corresponding ratio for government expenditures rose from 28 percent to 50 percent.” (McDermott & Wescott, 1997). Given the high levels to which taxes have risen and the danger of stunting growth by raising taxes further, to say nothing of the political consequences of trying to do so, it is reasonable to say that reducing government spending offers the best means, if not the only means, of eliminating these fiscal monetary inequalities. Reducing government spending is not as easy as it may sound. According to traditional Keynesian theory, if you manage to reduce the government deficit, you run into another problem: the country might slide into recession. Why is this? Budget deficits, despite their unfavorable reputation, are not always bad. They at sometimes can indicate the government is buying goods and services, is paying wages to its employees, and is making transfers of money to its needy citizens. In doing so, it is putting money into...
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...FT SPECIAL REPORT World Economy Friday October 12 2012 www.ft.com/reports | twitter.com/ftreports Hopes turn to fear and uncertainty Answers to the big issues facing the global economy depend mainly on events in the US and eurozone, writes Chris Giles Meeting of minds: logo for the IMFWorld bank events beginning in Tokyo today Bloomberg Inside » Growth glitches FT specialists report from the eurozone, China, the US and the UK Pages 2, 3 If Obama wins . . . or Romney Some differences seem more symbolic than real Page 4 Cash conundrum The IMF and World Bank have plenty of money but face new challenges Page 5 A threat of double-dip recession is stalking the world economy. Advanced economies are struggling to raise insipid growth rates, while the fast-growing emerging economies cannot maintain their previous momentum. If anything goes wrong – and there are known potential shocks in the coming months – the risk is rising of a dangerous economic slide. The Brookings Institution-Financial Times Tracking Indices for the Global Economic Recovery shows a steep drop in 2012 so far, leading professor Eswar Prasad of Brookings to describe the global economy as “on the ropes”. In the International Monetary Fund’s twice-yearly World Economic Outlook, published this week, Olivier Blanchard, the fund’s chief economist, said the world economy was hamstrung by uncertainty, which was pre- venting companies from investing and households from spending. “Worries about...
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...President I think you should cut taxes, initiate a stimulus, and increase the Federal Reserve action. I say cut taxes because it’s a sure way to put more money in the hands of consumers and companies. Tax cuts, when used properly, have stimulated the economy. Former President George W. Bush got a lot of credit for moving the economy out of a recession with his tax cuts. The biggest problem that arises from this is that it reduces government revenues, which creates a budget deficit. All we have to do to counter this deficit is to cut government spending. When spending by consumers and companies shrinks, the economy contracts, but the government can fill the gap with a stimulus. The extra spending that we anticipate is meant to stimulate the spending of households and firms until the economy is expanding without need for outside help. We would have to address the problem that the stimulus adds to debt and many not fix the worst of the leftover finance problems. Last but certainly not least the increase of the Federal Reserve action can keep short-term rates low and push down the value of the U. S. dollar. Experts say a weaker dollar has been good for American exports and job growth. Our biggest point of worry here is that when and or if the economy rebounds then the Fed may have just set the stage for a runaway inflation. I feel that these suggestions are in the best interest of our...
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...states that virtually all of its funds are in the form of short-term deposits. This should present uncertain movements for their floating rate liabilities. The other 50% is in long-term fixed-rate mortgages making the SI susceptible to any rise in interest rates. If interest rates started rising it would reduce it’s net interest margin. The risk will be further realized because interest rates have already declined to their lowest levels in a decade. More important it is almost a guarantee that interest rates will start to rise due to a weakened dollar and the recent tax break issued by the fed gov. This will start an economic recovery for making our goods more attractive around the world due to the weakened dollar, and the federal government will need more money because their inflows will decrease from the across the board tax breaks. The result should put more of a demand on funds which could spring the Fed Reserve into action by raising rates by controlling the yield curve to prevent/slow down inflation if the economy starts overheating. 2. Remain unhedged Given that the economy has been undergoing a mild recession in the past few years. We can expect that U.S. Stocks witnessed declines for a couple of reasons: Top Line growth tends to decline during a mild recession which strains earnings and will force corporations to focus on the bottom line resulting in less expansion, job cuts etc. It will also affect the consumer because corporations will be cutting jobs...
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...Statement of problem: John and Susan plan to marry December 12, 2012, and want to maximize their tax returns for the year 2012 however tax concerns came along such as effect on tax liabilities and marriage penalty tax. Following calculation of taxes owed for the current year a higher tax penalty was determined. It was suggested by the clients that they individually file single until the day before they married, terminate their tax years and subsequently file a “short period” joint tax return for the time that they are married. Conclusion: On the Donald R. Pierce, TC Memo 1980 - 563. , Code Sec(s) 143 it states how “no matter what is the taxpayer’s status during the year, the law will only use taxpayer’s status on the last day of the year December 31.” The approach that the couple wants to take is illegal according due to the fact that once a “man and woman are legally married they are considered married for the entire year” per IRS Sec 7703-1. Furthermore, John and Susan will not be able to file as they suggested, and will have to accept the “marriage penalty tax.” Ultimately they could face severe penalty taxes by the IRS either for negligence at the time of filing their return or any other applicable reason. Supporting Evidence: As evidence to my conclusion, to determine the situation of the couple and if they could file their return as they suggested I used Donald R. Pierce, TC Memo 1980-563. , Code Sec(s) 143. On it is clearly stated the situation of marital status...
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...The question to be resolved is whether Seaweed’s asbestos removal and replacement program adds value or substantially prolongs the useful life of the property (capital expenditure) or merely keeps it in an ordinary efficient operating condition (current period repair expense). In Indopco, the Supreme Court held that a corporate taxpayer was required to capitalize certain fees and other acquisition related expenses it incurred in connection with a friendly takeover by another company, where the transaction produced significant benefits to the taxpayer that extended beyond the tax year at issue. The Supreme Court stated that “... although the mere presence of an incidental future benefit —some future aspect— may not warrant capitalization, a taxpayer’s realization of benefits beyond the year in which the expenditure is incurred is undeniably important in determining whether the appropriate tax treatment is immediate deduction or capitalization.” In LTR 9240004, on facts similar to Seaweed’s, the IRS ruled that the replacement of asbestos insulation in manufacturing equipment with something less toxic to comply with an OSHA standard is a capital expenditure. In its ruling, the IRS used the following rationale: 1. The replacement of the asbestos made the property more valuable than it had been: a. because of the elimination of the health risk posed by the asbestos. b. modifications to bring property into compliance...
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...50P Tax Hike Analysis Econ201 2/12/14 50P The 50P tax was a brilliant idea at one point or another. However in this current economy and the market failure this, in my opinion, this is not a piece of legislature that will help anything. The tax was made to help bring in revenue and to make the higher income people to pay their fair share. This seems to be a popular idea that the wealthier individuals aren’t paying their fair share of taxes although the wealthy pay the largest amount of taxes. Majority tax The 50P tax is no different; it raises taxes in a tough economic time and that is always a bad idea it doesn’t matter who the tax is on. When you raise taxes you actually decrease revenue and hurt the economy. To strengthen a stalling economy the “Fed” should pull back as much as possible without causing too many ripples. This would let the free market have reign and give a steady boost to the economy. The 50p plan is one that I like to call simple complex simple or a Majority tax. £35,000 should pay tax around 20%. Income up to £150,000 you will pay tax at 40%, and any income you get above £150,000 you will pay tax at 50% which is where the 50p rate comes from. Great Britain had done away with that policy earlier, but it looks like it is back and here to stay. The total needed to handle Great Britain’s national debt is pitiful compared to America’s but they are two different countries and can’t be compared on that basis. Pros There are some good things to the 50P...
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...contained in the Arbitration Agreement conflict with terms contained in a valid collective bargaining agreement covering a Securitas USA employee, the terms of the valid collective bargaining agreement applicable to such employee shall apply to the employee. Information regarding this policy has been forwarded to all employees. If you have not received a copy of the Arbitration Agreement, please contact your Branch HR Representative. Thank you. Please open this link to view the: Values and Ethics Code. Earnings ST TOTAL HOURS AND EARNINGS: PRE-TAX DEDUCTIONS TOTAL PRE-TAX DEDUCTIONS: TAX DEDUCTIONS FICA-Social Security FICA-Medicare FED - Withholding OH - Withholding OH COLUMBUS - Withholding TOTAL TAX DEDUCTIONS: AFTER-TAX DEDUCTIONS TOTAL AFTER-TAX DEDUCTIONS: Net Pay Total Net Pay : Pay Summary Earnings Pre-Tax Deductions Federal Taxable Wages Social Security Taxable Wages Medicare (HI) Taxable Wages State Taxable Wages Total Taxes After-Tax Deductions Net Pay Pay Distribution List Description Account...
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...How to analyse a market for investment point of view ? * The most important point is the govt incentives. Theses may include- 1. FiTs- Feed-in-Trade If you are eligible to receive FITs you will benefit in three ways: * Generation tariff: your energy supplier will pay you a set rate for each unit (or kWh) of electricity you generate. Once your system has been registered, the tariff levels are guaranteed for the period of the tariff (up to 20 years) and are index-linked. * Export tariff: you will get a further 4.77p/kWh from your energy supplier for each unit you export back to the electricity grid, so you can sell any electricity you generate but don't use yourself. This rate is the same for all technologies. At some stage smart meters will be installed to measure what you export, but until then it is estimated as being 50 per cent of the electricity you generate (only systems above 30kWp need to have an export meter fitted, and a domestic system is unlikely to be that big). * Energy bill savings: you will be making savings on your electricity bills because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site. 2. VGF- Viability Gap funding VGF is typically provided in competitively bid projects. Under VGF, the central government meets up to 20% of capital cost of a project being implemented in public private...
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... L , G , and T . Suppose that the money demand function is [M/P]^d = 1000-100r where r is the interest rate in percent.? The money supply M is 1000 and the price level P is 2. What is the equilibrium interest rate? Assume that the price level is fixed. What happens to the equilibrium interest rate if the supply of money israised from 1000 to 1200? If the authority wished to raise the interest rate to 1 percent, what money supply should it set? a) M/P=1000-100r M=1000 & P=2 1000/2 = 1000-100r 500=1000-100r 100r=500 r=500/100=5 b) M=1200 & P=2 1200/2 = 1000-100r 600=1000-100r 100r=400 r=400/100=4 Thus interest rate falls from r=5 to r=4 c) r=1 & P=2 M/P=1000-100r M/2=1000-100•1 M/2=900 M=1800 Fed should set M=1800 Suppose we have an economy described by the following functions: C= 50+.8YD I bar= 70 G bar= 200 TR bar= 100 t= .20 (a)(i) Calculate the equilibrium level of income and (ii)the multiplier in this model. (b) Calculate the budget surplus, BS. (c) Suppose that t increases to .25. (i)What is the new equilibrium income? (ii)And the new multiplier? (d) (i)Calculate the change in budget surplus. (ii)Would you expect the changes in the surplus to be more or less if C= .9 rather than .8? (e) Can you explain why the multiplier is 1 when t=1? A. Y=C+I+G, government transfer payment is not included in GDP. Y=50+.8(Y-T)+70+200. Y=50+.8Y-.20Y+70+200 (1-.8+.20)Y=50+70+200 Y=320/.40=800.,multiplier=1/0.4=2.5 B. G-T=200-...
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...Chinese are somehow managing their economy to grow because they are far poor than the Americans and therefore able to sell cheap to other countries by exploiting their labour which is abundantly available: in the US he will have difficulty in bringing down wages to Chinese levels and still manage to remain President. If he wants not to lose his job by turning USA into a non-market, Government controlled economy, he should allow the Federal Reserve Board to deal with interest rates: whether or not the Fed succeeds in increasing employment by reducing interest rates is not the President's concern. 2. President's focus should be on how by the Government's legitimate actions, the spending power of the households and businesses can be increased. It seems that he has no choice but to continue the stimulus spending for another year. But that alone may not help sustain fall in unemployment rate. He must reduce taxes at the lower levels of income drastically and reduce the corporate tax rates for the next two years so that their effective disposal income increases and they buy more locally produced goods and invest in capacity to produce more. Of course, reducing taxes would mean, the Government will have a larger deficit and high deficit can cause problem of inflation later besides making it costlier for private firms to borrow for their capital projects that create employment. Therefore President should do well to cut certain...
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...Did the Stimulus Work? Mehrdad Namazi Angela Agboli Ph.D Pad520 Apr 9, 2012 The Stimulus Analysis In this research I am trying to explain why the stimulus packages did not stimulate the economy that much, where the money is gone and also evaluate some alternatives. Congress has enacted two huge stimulus programs since the recent recession started in 2008. The first one was under President Bush for $152 billion and the second one was under President Obama totaled $863 billion. After more than three years since the recession emerged, still the unemployment is through the roof and the economic growth is sluggish. Why? In order to shed a light on this problem, first we have to know where the billions have gone and how they have been used. There are three kinds of Keynesian stimulus packages (1) the government gives money to people directly, in hopes that they would buy more stuffs and services. (2) The government directly buys goods and services (3) the government sends the check to state and local governments to spend it. In either one, the philosophy is that the increase in buying would result more activity and eventually will boost the economy. The 2008 stimulus was the first kind and the 2009 was almost a mix of all three. In 2008 the U.S Treasury started sending checks to households in the summer. It was supposed to put more money into the hands of people to buy additional goods and services and thereby stimulate production...
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