The IRS recently issued regulations (T.D. 9630) affecting how the differential income stream approach applies to cost-sharing agreements. Nearly two years ago, “final” cost-sharing rules were published under Sec. 482. This newer round of regulations is intended to ensure that cost-sharing agreements are in line with Sec. 482’s commensurate-with-income principle. In its earlier attempt to guarantee pricing practice in all cost-sharing agreements, the IRS instituted the income, acquisition price, and market capitalization methods. The motives of the IRS and a summary of the new regulations are provided by Sally Schreiber, senior editor at the Journal of Accountancy, along with links…
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New Jersey Governor, Chris Christie recently vetoed legislation that would have given greater authority to the state’s real estate professionals to provide broker price opinion (BPO) and comparative market analysis services. Citing “consumer confusion” Christie vetoed bill S.2551 that some said would provide additional business opportunities for real estate licensees within the state. Passed by the New Jersey legislature in June, the bill would have given real estate brokers, broker-salespersons and other sales personnel the power to perform BPOs for any purpose, except for use in the New Jersey Tax Court and eminent domain proceedings. The Appraisal Institute, which strongly…
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In a recent presentation to donors and alumni, University of Louisville president and economist, Dr. James Ramsey gave what most thought would be a gloom and doom “state of the university” address. While government funding and support from the State of Kentucky are certainly in decline, Ramsey’s presentation was surprisingly upbeat. Freshmen test scores were up dramatically. The graduation rate was stronger than ever, and the research budget had quintupled since 1998. As if that weren’t enough good news, the university was recently invited to join the Atlantic Coast Conference, and the football team scored a victory in the Sugar…
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In response to having their E-mail addresses constantly traded and sold only to end up being bombarded by spam, consumers have struck back at retailers and corporations. They’ve pulled the plug on the unwanted online marketing mayhem with what’s known as disposable E-mail addresses (DEA). Accounts don’t require any personal registration information like a name, birthday or location. They’re also not activated until an E-mail is received. The only thing needed to confirm a purchase or authorize a financial transaction is knowledge of the E-mail address itself. The most common extensions for DEAs tend to be .com, .net, .org and…
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With the kickoff of the new football season, Forbes has once again, released its much anticipated valuation list of Most Valuable NFL Teams. How the numbers stack up gives a very interesting view inside the most valuable professional sports league on earth. According to the Forbes data as reported by Pressboxonline.com, the average NFL team increased in value by 5 percent. Interestingly, winning the Super Bowl only adds about an additional 1 percent to a team’s value. This is largely due to the operating structure of the NFL, the variance of national revenues and the sometimes limited revenue from local…
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Sun Capital Partners court found that the private equity fund actively participated in the management of its portfolio company In a recent and significant ruling from the First Circuit, Sun Capital Partners III, L.P. et al. v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312, 2013 WL 3814985 (1st Cir. July 24, 2013,) the court has determined that private equity funds can be held liable for its bankrupt portfolio company’s withdrawal obligation, as imposed under the Employment Retirement Income Security Act (ERISA). As reported by The National Law Review, the ruling was made on the basis that a…
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It’s No Surprise Mobile User Behavior Is Evolving As digital media technology evolves at an ever-increasing pace, so does the user habits of consumers. In their new report: “iConsumer: Digital Consumers Altering the Value Chain,” McKinsey & Company describe six over-arching trends in digital usage behavior that they believe will significantly impact the industry value chain. These include shifts in device usage, communication style preference, communication content, social emphasis, user-controlled video and retail experience. Originally launched in 2008, the study includes longitudinal data from over 200,000 detailed surveys from clickstream web log data and in-home/in-store analysis, for a highly-detailed picture…
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I built an Excel file with a valuation model using Warren Buffett’s measure of “owner’s earnings.” In an interesting spin on valuation, analysts at AquaResearch applied what they call “Buffett-style, owner’s earnings” valuation calculations to the US Bancorp (USB) company stock in a DCF style approach. The author supports his review with a link to an excel file which completely lays out Warren Buffett’s valuation theory, that eschews traditional models relying on GAAP and/or price-to-earnings ratios. The analysis does require viewers to “register” at the site, but it’s free and absolutely worth a look at how the number shake out.…
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The states, in an amended complaint, challenged only the portion of Dodd-Frank that empowers the Treasury secretary to order a liquidation of a financial company whose collapse may threaten the stability of the banking system. U.S. District Judge, Ellen Segal Huvelle recently dismissed a lawsuit brought by 11 states and a Texas-based bank, challenging Dodd-Frank’s financial regulations, specifically those that create the Consumer Financial Protection Bureau. According to Bloomberg, the plaintiffs claimed that establishing such an agency violated the U.S. Constitution because Congress does not appropriate its budget, the president has limited powers to remove its director and the courts are restricted…
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In early 2009, Carl Pohlad, investor and principle owner of the Minnesota Twins, passed away, leaving controlling ownership of the team to his sons. In settling the estate, the new owners now find themselves embroiled in a tax tangle with the IRS. The primary point of contention exists with what Pohlad’s share in the team was actually worth at the time of death. According to the IRS, Pohlad’s ownership is valued at $293 million and is demanding $121 million in additional estate taxes. The estate contests that upon Pohlad’s death, which was shortly after the economic crisis of 2008, the…
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According to The Hill, Senate Finance Committee Chairman, Max Baucus (D-Mont) has put the committee on notice to expect a comprehensive tax reform overhaul this fall. While not committing to a specific start date, Baucus has promised a thorough rewrite of the tax code sometime after August. Frenzied lobbying has already begun on which allowances should stay and which should go. The move to draft and debate legislation on the Finance Committee — a daunting task that could take weeks of work — is just the latest sign that Baucus is serious about passing the first overhaul of the tax…
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The value of California-based electric automaker, Tesla Motors’ earning potential and share price are analyzed after a triple-fold increase from earlier this year. Roben Farzad of Bloomberg Businessweek takes a closer look at attempts by Goldman Sachs to dampen optimism surrounding Tesla’s increasing profit margins. Do the numbers really show Tesla has power to remain consistent with this kind of growth? The very next day, Andrea James of Minneapolis-based Dougherty & Co. stepped up to the mic to counter the Wall Street giant. She wrote: “We ultimately believe that Tesla is a $300 stock at the factory’s maximum capacity, which…
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In a fast and concise analysis, Bill Conerly of Forbes.com examines whether the rise in interest rates, particularly with commercial mortgages, automatically translates into a drop in commercial property value. Conerly explains that your decision-making all depends on whether you take an internal or external view of the process. How can this logic be wrong? Why doesn’t the table show clear real estate losses when interest rates rise? Interest rates on mortgages, bonds, and other long-term debt are not set by the whims of fairies. They are determined by two factors: inflation expectations and economic growth, which combine to…
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On June 4, 2013, Florida Governor, Rick Scott signed HB 7015, joining the Federal Courts and other jurisdictions in adopting the Daubert test for admission of expert testimony. Just weeks ago, Florida followed the Frye Standard which allowed experts to testify if their expertise was “generally accepted” in the field in which it belongs. Many had felt that is allowed “phony science” or strange testimony from so-called “experts to be permitted. It also limited a judge’s ability to act as a gatekeeper to exclude unqualified experts. It may have taken 20 years, but since July 1st, testimony in Florida courts…
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According to Bloomberg News, financial regulators have reported that new measures on the Dodd-Frank Act should be mostly complete by the end of 2013. The law, created in 2010, was designed to prevent a repeat of the 2008 worldwide credit crisis. Among the new rules are tougher leverage requirements for eight of the nation’s largest banks, a risk-based capital surcharge for systemically important banks and the Volcker rule to ban proprietary trading by banks. FDIC Chairman, Martin Gruenberg has stated that he’s seeking a Volcker rule that ensures the banks’ ability to perform underwriting “market-making” functions in less liquid markets.…
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Senators, Bob Corker (R-TN) and Mark Warner (D-VA) introduced a bill on June 25th that would eliminate government-sponsored Freddie Mac and Fannie Mae. Over a five-year phase out, the institutions would be replaced by a new government reinsurer, a Federal Mortgage Insurance Corp (FMIC). Originally reported by National Mortgage News, the structure of the FMIC would be similar to the Federal Deposit Insurance Corp, collecting premiums from industry participants and maintaining an insurance fund. Only after a “substantial amount” of private capital had been exhausted would its backing kick in. FMIC would cover a greater share of losses during “unusual…
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REIT stocks fell sharply in the second quarter, ranging between 11 and 15 percent. Originally reported by the Wall Street Journal, the Dow Jones Equity All REIT index posted a 2 percent negative return in the second quarter. The index hasn’t reported a performance that weak since the third quarter of 2011. Analysts are saying REITs took a dive because investors are nervous about rising interest rates stalling a potential recovery in the commercial real estate sector. Even so, they’re hopeful that REITs will make a comeback by the end of the year. For more details please visit the Appraisal…
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“Bank of America spokesman Terry Francisco told Bloomberg that the lender’s program prevents paperwork errors from delaying loan applications and that the overseas completeness checks don’t replace in-depth reviews done by licensed U.S. staff.” According to the Appraisal Institute and Bloomberg, Bank of America (BofA) has opened an office in Bangalore, India to deal specifically with reviewing valuation reports. It’s been said that the move is part of an effort by BofA to increase its share of the mortgage market and lower costs. Earlier this year, BofA eliminated nearly 5 percent of all positions at its Plano, Texas LandSafe appraisal…
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Should life insurance be considered a repurchase funding asset or a corporate non-operating asset and in what situations?
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Owners Looking to Protect Home Views Buy “Air Rights” to Stop Further Development. See the Video to Find What One Homeowner Paid $600,000 to Preserve. The latest trend in Seattle’s real estate market has homeowners looking up for some quick cash, reports Heather Graf at King 5 News (KVUE, an ABC affiliate) in Seattle. Depending on where you live, the air above your roof could be worth a lot of money. Here’s more: