The Foreign Account Tax Compliance Act of 2009 (Rangel-Baucus Bill)

The Foreign Account Tax Compliance Act of 2009 (Rangel-Baucus Bill)



Recent Offshore Tax Haven Legislation

Since 2007, numerous attempts have been made at passing targeted tax haven legislation. Although none of these initiatives has progressed in any meaningful way thus far, under the Obama Administration there is a much higher likelihood that this type of legislation will be promoted.

SEE THE WHOLE STORY HERE

http://www.lexology.com/library/detail.aspx?g=0bab19ec-e537-4822-bf77-f67d6ebf0dcd&utm_source=Lexology%20Daily%20Newsfeed&utm_medium=Email&utm_campaign=Lexology%20subscriber%20daily%20feed&utm_content=Lexology%20Daily%20Newsfeed%202010-01-29&utm_term=

Life insurance proceeds received by limited partnership not included in gross estate of insured limited partner

In Private Letter Rulings 200947006 & 200948001, the IRS considered whether a series of transactions among a partnership, corporations and trusts which altered the ownership and beneficiary designations of two life insurance policies required inclusion of the policies in the insured's estate.

See the Whole Article here: http://tinyurl.com/y865vlp

MUNI BOND BOND EXPOSURE - WARNING

This article by investment expert Jeff Christenson was originally published in this month's issue of WORTH magazine. It sheds light on how the economy and depressed tax revenue threaten the value of Muni Bonds, what many consider to be the safest part of their portfolio. A must read for advisors, investors and CPAs. - Ike

As State Budgets Troubles Worsen, What’s Next for Muni’s?

A new crisis, that has not yet been addressed, exists within state and municipal
budgets. According to the Center on Budget and Policy Priorities in Washington, DC, an unprecedented level of state fiscal problems have been brought on by the worst decline in tax receipts in decades and these revenue declines show no signs of letting up.

The current recession is expected to be more severe than the last one, causing state fiscal problems to deepen and last longer than previous recessions. At least 48 states are addressing budget shortfalls for fiscal year 2010 totaling $168 billion and an unusual number of these states are still struggling to adopt a budget for fiscal year 2010, two months after the July 1st start date.

These fiscal problems are expected to continue into fiscal year 2011 and likely beyond. At least 36 states are anticipating significant deficits for fiscal year 2011, and these shortfalls are estimated at an additional $180 billion. Combine the shortfalls for the 2010 budget and those estimated for 2011, and the estimated total is at least $350 billion.

Unemployment, which peaked after the last recession at 6.3%, has already exceeded 10%, and many economists expect it to continue to rise. This continued rise in unemployment would further reduce state income tax receipts, thereby significantly increasing demand for Medicaid and other state-provided services. Also, sales tax receipts have fallen more severely than during the previous recession due to a reduction in the consumer’s access to sufficient lines of credit. This reduction in state revenue has forced states to implement a combination of spending cuts, withdrawals from reserves, and use of federal stimulus dollars. When combined with falling property tax receipts due to rising residential and commercial delinquencies and defaults, state and municipal revenues may continue to decline for some time.

Although we see a high level of risk in the municipal bond markets currently, with equity markets rallying, municipal bonds trading at premiums, and more cash moving off of the sidelines and into the markets each day, market conditions may stay positive through year-end or early next year before the sentiment reverses.

Investors who cannot afford to lose their current unrealized gains from the recent rally should be cautious and mindful of the increased risk to capital and strongly consider moving out of municipal bonds to protect capital.

During last year’s financial crisis, municipal bond prices fell by an average of 20%. The current rally has led to a recovery in pricing, with many municipal bonds again trading at premiums. This recovery in pricing is concerning, given the increasing budget shortfalls and the most extensive expense cuts by states and municipalities in history. Given the relatively low yield of most municipal bonds, the ratio of risk to reward seems out of balance. In fact, this may be one of the greatest selling opportunities in history.


Link to the article in WORTH: http://worth.com/index.php/advice?id=168&view=single

Disclaimer:

The views are those of Jeff Christenson and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Past performance does not guarantee future results.

Securities and Advisory Services are offered through Multi-Financial Securities Corporation, member FINRA, SIPC. Christenson Wealth Management is not affiliated with Multi-Financial Securities Corporation.

SCAM - “Brokers” and ‘Up Front Fees’ for Venture Capital

This is a guest column by Greg George, a professional due diligence expert that I use as a resource. There are a huge number of people looking for financing due to the current lending climate and the bad guys know it. Here's what one expert has to say.

Yours, Ike


Risk and Threat Management – Presented by Greg George

Posted in Awareness by gtiadvisors on January 7, 2010

I’ve been monitoring what appears to be the longest discussion string in LinkedIn history (up to 223 comments now) going on at the Private Equity and Venture Capital Group.

The discussion question is: What do you think about ‘up front’ fees..? (for funding a deal)

There has been very good information posted, there has been very bad information posted, smart ass comments and bullying here and there (yes, very professional), those postulating their own ‘expertise’ – “…this is how good I am, I’ve done these $20mm+ deals, and…” etc etc (never tout yourself as an expert, it diminishes your credibility – If you’re worth the recognition, others will do that for you), and I’ve even seen a few spamming in trying to sell their services/deals – astonishing…

A few thoughts on ‘brokers’ and other middle men/women requiring fees ‘up front’ – usually under the guise of due diligence work that needs to be done, we have to better position your business plan and pro-forma’s, along with all the assurances and window dressings of how they will get your deal funded – these are great sales people, and most are frauds.

You’ll never get to a closing, they will stall and stall and stall… for months – and you may never see the ‘up front’ fees you gave them again. If you think an alternative financing or equity funding program might be the right deal for you, at minimum, at least find out:

•Who these people really are
•Talk to several past success deal client references they ’should’ provide
•Who do they represent as potential investors on your behalf
•What are the sources of funds (don’t get sucked in to a money laundering or tax evasion racket)
See if the person and firm are even licensed in the U.S: do a FINRA broker check.

FSA (UK) – also provides alert lists of EU and other international players in the finance and equity funding game not registered or vetted.

Another growing dimension of these economic times, new groups and angel investors charging ‘up front’ fees just to hear your pitch – a good example of what’s going on with these guys see: VentureHype (a great resource for many VC, Angel, start-up and investing topics) – the article also links to a well done ‘rant’ by Jason Calacanis on these practices.

Bottom line 1: If you do not have the expertise and require consulting help to get your business plan, pro-forma’s, your perfect 7-slide ppt for your pitch, and everything else up to speed (and rehearsed many times) to be received as an attractive, fund-able opportunity – set a budget, hire a competent firm or person and pay them to help you accomplish this.

Consulting services to get this right the first time, has nothing to do with capital raise.

Bottom line 2: Assume any “up front ‘broker’ fees” to arrange funding are frauds. Period (I’ve been dealing with these kind of people for a long time).

$4mm in up front fee frauds have come across my desk the past many months, especially since the real financial crash began to fall in September, 2008. In some cases we have been able to get the “up front fees” back on behalf of clients, even those fee’s that were wired offshore before the ink on the check was dry. We continue to work on others (leveraging RICO is a wonderful thing).

I have participated as an advisor to investors and as a decision panel member riding shotgun over the due diligence drill on companies seeking funding… during the past 12 months, the several organizations, equity firms, angels, family offices and high net worth individuals I’ve worked with have funded more than $30mm in start-ups, acquisitions and expansions – not one dime of any ‘up front fee’ was involved.

_________________________________________________

Greg George is Managing Partner of GTI Advisors; Threat Management Practice Group. A senior advisor to executives, business owners, private equity investors, M&A teams and transaction lawyers, Greg provides guidance on matters of enhanced due diligence research, threat analysis, security issues, actionable intelligence, fraud avoidance, and corporate espionage realities. For further information please visit http://gti-advisors.com or contact Greg directly: greg@gti-advisors.com

What you must know about Selling a business in a depressed economy.

There are certain things we always warn our clients about when they are selling a business.

One of the issues we regularly address is making sure that the seller and their unrelated personal and business assets are adequately protected from any potential future litigation, including that often created by the buyer if he or she can't make the business work like you did and existing employees that may not be happy about the change or losing their jobs.

Our advice; plan for the worst (implement legal, proactive asset protection strategies) hope for the best, and have professional counsel in the sale and valuation of the business. For help in the valuation area I turned to our friend Sean Sheppard with Valcor, a professional business valuation company that works with clients nationwide.

Preparing a Business for Sale in a Depressed Economy
By Sean Shepherd

Economic tidal waves have crashed against the shores, affecting every business sector. Enterprises that have been in operation for 20, 30 and more years are now hanging on by a thread. In every sector you will find a business that faces an uncertain future, finding someone to buy the business and prepping the company for sale could be their best remaining option.

Like most economic crunches, cash is king. However, many business leaders do not have experience managing a business around cash flow. They have spent their entire careers focused on earnings and growth, and now find it hard to change their tact in such stormy seas.
Assess your financial condition. Is the company financially under performing or distressed? This assessment should show how much cash you need to generate and how quickly you need it.

Short-term cash requirements will trump a long-term strategy. In a less severe marketplace, it is smart to develop a sound long-term strategy and stay on course. If a short-term cash crisis drives a company out of business, your long-term strategy becomes irrelevant.

Cash flow wins vs. earnings per share. The key to survival is cash flow. That becomes an epic shift in mind-thought for most CFOs and managers. Since companies don’t normally focus on cash, that have troubles determining what their cash position is - or how long their cash will last. Distressed companies should track and forecast cash flow weekly, or even daily.

Attack from all angles. To build a war chest of cash, the company requires all of the leadership to be on the same page in making cash the top priority. All potential cash sources must be thoroughly examined over and over again. These sources include everything from uncovering price leakage to reducing cost and working capital to selling underutilized assets.

Build a portfolio. Develop a portfolio to generate cash. Focus on cost and working capital to generate an immediate liquidity cushion and to fund longer-term structural programs such as selling off business units or closing stores. A tactical combination of activities will strengthen the balance sheet and help to capitalize on the rebound.

Action speaks louder than analysis. Companies do not have time for detailed analysis or extended period of times pondering and thinking. The longer the company waits to choose a path, fewer options become viable.

Fire drill. Develop multiple downside financial scenarios for the business to learn what the key trigger points are, and more importantly, what specific actions you will immediately take to save cash.

Dig in and get back to growth a later date. Businesses focus on growth, except in the current economy. That usually means closing plants, laying off staff, liquidating underused assets, spinning off non-core businesses, and terminating unprofitable customer relationships. After digging in, there will be a reduction in cash erosion and new cash generated through asset sales.

Play for time, without stalling. Distressed sellers have only so much time available to arrange a sale. It depends upon liquidity: it’s a straight forward concept, the less capital you have, the less time you have to sell, and the lower the purchase price you’ll likely receive. The cost of accepting a new co-owner, or even taking on additional debt, may be worth it for the extra weeks or months to find the right buyer. Short-term cash infusions at this juncture also may provide you with an alternative to unappealing offers from opportunistic buyers. In this environment that sort of buyer will be the norm, and will seek out companies in desperate straits. The company will be so anxious to sell that it will accept a low price and unfavorable terms.

Court your buyer(s) and be flexible. The liquidity situation also will determine how to market a company to prospective buyers. From a tactical point of view, they may want to confine your efforts to a short list of prospective buyers that are willing to conduct abbreviated due diligence in exchange for pricing concessions or strong material adverse clause provisions that enable the buyer to pull out without repercussions.


Which type of acquisition makes the most sense for the company? If they have two or three distinct operations, it may be easier and more lucrative to sell each division to separate buyers. A buyer may anticipate synergies with one a certain product lines, but have no use for another part of your business. For example one of your divisions is in better financial condition than the others, meaning they may get a higher amount for that piece than if it were bundled with the-troubled segments.

Recognize the buyer’s needs in advance. Although due diligence often is considered the buyer’s responsibility, distressed sellers must perform their own due diligence. Buyers considering your company will expect to unearth some problems, but reduce the chance of future surprises. For example, that you should tell the buyer if you expect a further deterioration of your customer base or a lower growth rate going forward. Also, a seller’s representative will have compiled the following request for information from prospective buyers:

• Buyers historical and current financial performance numbers
• An accurate tally of assets
• Conservative future growth and performance forecasts
• Detailed analyses of all regulatory issues or outstanding litigation claims
• Provide up-to-date and detailed records of suppliers and customers
• If applicable, which third-party agreements would most benefit from such an alliance


Is short, different companies have different needs and there is no one solution to address how to prepare an enterprise for sale.

Now batten down the hatches, possible tidal waves ahead.

For help or more info, please contact:

Sean Shepherd sshepherd@valcoronline.com or 602.954.0010