Unstructured Finance

Calendar

Some important tax and accounting events in the week ahead.

Monday, May 13 – Thursday, May 16

* Government and private sector attorneys and accountants speak to Practicing Law Institute program, Basics of Accounting for Lawyers. New York.

* Federation of Tax Administrators electronic filing symposium. New Orleans.

Tuesday, May 14

Voters in south Florida’s Miami-Dade County go to polls to decide whether to increase local hotel taxes to help pay for a $350 million upgrade to the Miami Dolphins stadium.

Wednesday, May 15

Financial Accounting Standards Board meeting on not-for-profit financial reporting. 1300ET, Norwalk, Connecticut.

Wednesday, May 15 – Thursday, May 16

Public Company Accounting Oversight Board (PCAOB) Standing Advisory Group meeting. Washington, D.C.

Wednesday, May 15 – Friday, May 17

AICPA conference on tax planning, compliance and controversy. Las Vegas.

Thursday, May 16 – Friday, May 17

* Speakers from the Congressional Budget Office, Joint Committee on Taxation, International Monetary Fund, and Treasury Department are among those speaking to the National Tax Association and American Tax Policy Institute spring symposium and state and local tax program. Washington.

Essential reading: Falling deficit alters budget debate, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Falling deficit alters debate. Damian Palleta – The Wall Street Journal. Rising government revenue from tax collections and bailout paybacks are shrinking the federal deficit faster than expected, delaying the point when the government will reach the so-called debt ceiling and altering the budget debate in Washington. Link    

* Who would win or lose on online sales tax. Jayne O’Donnell and Hadley Malcolm – USA Today. Major retailers and local stores will be the big winners if the House follows the Senate and requires Internet retailers to collect sales taxes on online purchases. Link    

* Weigh taxes when picking a state for retirement. Arden Dale – The Wall Street Journal. When it comes to choosing the best state in which to retire, some people look beyond traditional needs like nice weather and recreational opportunities. Link    

Essential reading: Tax collections from wealthy are saving government, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Swiss bank tied to indictment ponders U.S. registration -sources. John Letzing – The Wall Street Journal. A Swiss private bank that recently suspended an executive who allegedly helped U.S. taxpayers evade obligations is considering opening a U.S. branch, two people familiar with the matter said Wednesday, a step intended to help it comply with U.S. regulations. Link 

* Tax collections from wealthy are saving government. Robert Frank – CNBC. Call it proof that the system is working—or proof that the system is broken—but taxes paid by the nation’s top earners are putting government back in the black. Link 

* Economists see deficit emphasis as impeding recovery. Jackie Calmes – The New York Times. The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists. Link

Essential reading: Airline industry’s tax troubles, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Tax proposals open a debate on airline industry’s troubles. Susan Stellin – The New York Times. A $300 domestic airline ticket now includes about $60 in taxes — or 20 percent of the total fare — which pays for things like air traffic controllers, airport improvements, customs and immigration inspections and checkpoint screening. Link     

* Indefinitely reinvested foreign earnings on the rise. Maxwell Murphy – The Wall Street Journal. Foreign profits at U.S.-based multinational companies will soon top $2 trillion. But much of that sum is unlikely to return to the U.S., regardless of the status of U.S. tax rules, as it already has been spent abroad. Link   

* A strategy for business owners to avoid investment tax. Arden Dale – The Wall Street Journal. Before the tax strategy can be employed, advisers need to examine their business-owning clients’ Forms K-1 to determine if they are actively involved or whether they only have a passive role like an investor. Link    

Essential reading: Tax rewrite favored by Republicans, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Tax rewrite in play on Capitol. John McKinnon – The Wall Street Journal. Talk about overhauling the tax code is picking up across Capitol Hill this spring, with lawmakers of both parties agreeing on the need to simplify the system but remaining far apart on the details of how to do it. Link    

* In Commerce pick’s ’08 answers on finances, possible hints at road ahead. Charles Savage – The New York Times. Republican senators are likely to be interested in the Pritzker family’s reputation as innovators in the use of offshore trusts and foreign bank secrecy laws to shelter their wealth from income, capital gains and inheritance taxes. Link    

* Leniency for offshore cheats. Laura Saunders – The Wall Street Journal. Despite a high-profile government crackdown on secret offshore financial accounts since 2009, the average sentence in those cases has been about half as long as in some other types of tax cases. Link    

Spinning single-family home investments into mortgage-backed securities

It’s generally been thought the main exit strategy for Wall Street-backed firms that are buying distressed homes to rent them out, is to convert to a REIT and file for an IPO. That attempt to cash-out on the single-family home trade has obvious benefits for the big institutional buyers but risks for retail investors as the math behind the buy-to-rent model becomes increasingly suspect.

But there’s another potential exit strategy for the institutional buyers beyond converting to a REIT or flipping homes earlier than anticipated and that’s becoming a home lender.

In Las Vegas, where the institutional buyers have been quite active the past six months, there’s talk about firms like Blackstone Group eventually providing financing to prospective buyers looking to acquire one of their single family homes. Buyers like Blackstone won’t comment on speculation about their single-family home management subsidiaries becoming defacto mortgage lenders. But it makes sense, especially in the case of Blackstone, which now owns more than 25,000 homes nationwide and says it intends to hold onto the homes and rent them out for several years.

Calendar

Some important events in the week ahead:

Sunday, May 5 – Tuesday, May 7

Offshore investigators, service providers and clients attend the Offshore Alert Conference. The Ritz-Carlton South Beach. Miami.

Tuesday, May 7

* Financial Accounting Standards Board’s Private Company Council meeting. 8:30 a.m. – 3 p.m. ET. Norwalk, Connecticut.

* Public Company Accounting Oversight Board open board meeting covering auditing standards and other proposals. 9:30 a.m. – 11:30 a.m. ET, PCAOB offices. Washington.

Wall Street’s trading businesses turn to survival of the least dead

Darwin theorized that peacocks’ colorful plumage was a sign of        their evolutionary strength.

Wall Street has always been known as a cutthroat kind of place, but lately it seems big investment banks are just mulling around, hoping their competitors die first.

A report on Friday by Goldman Sachs bank analysts said that the industry has entered what they called a state of “reverse Darwinism,” in which banks are betting their long-suffering trading operations can increase revenue not by stealing business from rivals on a competitive basis, but by waiting for rivals to call it quits – leaving their clients with no choice but to move business elsewhere.

Essential reading: Corporate taxes come up for review, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* The corporate tax game. Graham Bowley – The New York Times
. Despite the widespread support, the campaign for a tax reform overhaul is exposing deep fault lines within the business world that suggest it may fall apart. Link

* Senate considering bill to ban tax scofflaw contractors. Tom Vanden Brook – The USA Today. The Senate is considering a bill the House unanimously passed last month that would prevent contractors with tax debts from doing business with the federal government. Link

* California tax revenue yields multibillion-dollar surplus. Chris Megerian – The Los Angeles Times. California has been flooded with revenue this tax season and is on track to finish the fiscal year with a surplus of billions of dollars, according to officials. Link

The sultans of swing

Although most investors have been pleased with the steadily rising U.S stock market over the past six months, funds that profit when markets are convulsing are licking their wounds.

With market stress at multi-year lows, volatility hedge funds returned just 1.16 percent in the first quarter, compared with 3.7 percent for the broader hedge fund group.

Some of the volatility specialists are doing better than others by capitalizing on major market moves in Japan, for example. And some are doing better simply because they are ‘short’ volatility funds – they tend to perform better when markets are calmer. But those funds are now few and far between.

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