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IRS Proposes Filing of “Uncertain Tax Position Statment” by Certain Companies

As if the previous requirements for analyzing and documenting the nature of possible uncertain tax positions for filers of Forms 1120, 1120-F, 1120-L and 1120-C was not enough, the IRS is now proposing the filing of a schedule UTP (Uncertain Tax Position Statement) by companies with total assets of more than $10 million beginning in the 2010 tax year.  Schedule UTP will require disclosures entailing each uncertain tax position noted by a taxpayer, whether it be adequately reserved or not, and the disclosure of the maximum potential liability relating to each tax position.

In many cases, this requirement will result in un-warranted additional procedures for taxpayers and their advisers. Unfortunately, this will often result in increased service fees with little added benefit to the IRS.  The AICPA’s proposed change serves as the first attempt to limit these proposed requirements of the IRS.  If implemented, these changes if implemented will substantially reduce the number of companies required to file the schedule UTP and will also require the IRS to substantially rely support provided by taxpayers during the 2009 tax year.

With the end of the 2010 calendar tax year fast approaching, we can only hope that the IRS considers the AICPA proposed changes before signing off on the new pronouncement.

IASB Proposes Changes to Liability Rule

In an effort to prevent banks from booking a profit and confusing investors after a ratings downgrade, the International Accounting Standards Board has proposed changing the way banks measure liabilities.  Currently, a ratings downgrade pushes down the value of a liability priced at the going rate and the amount of the fall in value can be recorded as profit.

After extensive consultation, the IASB drafted a proposal to change the way this is done. The proposal is part of their overall revamping of fair value or mark to market rule which they hope to finalize and put into effect by the end of the year.

We Must be Near the Bottom – Weekly Market Watch

I received a call from Bruce, one of my investment clients last Tuesday morning, June 8th.  He informed me that he had suffered enough pain and that he was ready to bail out of the market and to sell everything. The S&P 500 Index was at 1042 at that moment.  I informed him that his account was only 50-50 stocks versus bonds to begin with and that we had sold some positions in mid April and raised some cash so that he was only about 30% in equities.  He said that the market is about to crash.

Bruce also called me on two other occasions; October 4, 2002, when the S&P 500 was at 800.  The market bottom at the end of the 2002 downturn was on October 9th at 776 so he only missed the bottom by 3%.  He also called me on March 5, 2009, when the S&P 500 was at 682 and the bottom ended up being on March 9th at 676, so on this occasion he only missed the market bottom by 1%.  On each call Bruce was ready to bail out but I talked him into staying in.

If the Bruce barometer is correct, our June 8th S&P 500 index of 1042 should be within 2% or 3% of the market bottom for this cycle.  I think that we will take this as a reliable technical indicator and begin to reinvest cash into our client accounts.  It has been very reliable so far so it must be as good of an indicator as any other expert’s opinion.

Let’s hope that the Bruce barometer is correct and that we are near a temporary bottom.

For additional information contact Richard Taylor.

Fear and Panic Returns – Weekly Market Watch

The last few weeks reflect a steadily declining market.  Investors become worried and usually bail at the worst time possible.  The news is confusing.  First we hear from the first quarter that GDP growth was 3.0%, consumer confidence is on the rise, labor markets are improving and the economy is improving.  Then we hear that the economies of Europe are falling apart, Greece has been bailed out and other countries debt has been down graded, there is conflict in the Middle East, North Korea and who knows where else, and BP cannot plug up their hole in the gulf.

This is all confusing.  This is causing the markets to be extremely volatile.  One day the market is up 2%, then the next three days are down.  Individual investors tend to make quick decisions and usually they are bad decisions, bailing out at exactly the lowest moment.  When one makes a decision to totally go into or out of the market, one is attempting to time the market which is very difficult to do.

What is the best thing to do?  If you are tempted to just bail, perhaps you should just go have a cup of coffee.  The best thing to do is usually to carefully evaluate where you are, evaluate your holdings, reassess your risk tolerance and think through any moves that you are about to make.  Markets fluctuations are normal, and even though when markets decline, we all lose money, these fluctuations also present opportunities.

Sometimes the best thing to do is relax and have a cup of coffee.  We remain confident that the overall economy is improving and that ultimately the markets will reflect this improvement as well.

For additional information contact Richard Taylor.

HLBGC Named One of Cobb County’s Top 25 Small Businesses of 2010

HLB Gross Collins, P.C. is honored to be named one of Cobb County’s Top 25 Small Businesses of 2010 by the Cobb County Chamber of Commerce. Being included among the list of successful and highly reputable businesses is an honor and a goal we strive to attain each year. Such recognition is an indication that we, as a firm, are demonstrating our commitment to excellence in all aspects of client relations and business operations.  We are proud of this accomplishment and we will continue to provide the highest level of customer service which we believe is a key to attaining such a highly regarded recognition. We thank all of our loyal clients and friends of the firm who allow us to assist them in adhering to our mission, “to increase and preserve the financial net worth of our clients.”

You can visit the Cobb Chamber of Commerce for a complete listing of the Top 25 Small Businesses of 2010.cobbtop25

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