Though we can’t clog the hole, and the leak doesn’t seem to be slowing down, I’ve been researching ways in which we could at least clean off the surface of the Gulf of Mexico inexpensively. One answer, one that seems to be ignored, is the use of hay to remove surface oil. BP stock may be destroyed, but the ocean doesn’t have to be. Read more…
Just five years the Toys R Us brand was taken off the market by a collection of private equity firms. With the brand refreshed, the operations streamlined, and the company ready again to take on the deep discounters, this one is interesting. Read more…
Despite a colossal oil spill that has the world glued to their televisions, British Petroleum stock looks like an excellent buy at this price. Now down 33% from its recent peak, more than twice the decline of Exxon Mobil during the same time, I’d be a net buyer on BP’s devalued stock. Read more…
Every company has its pot of gold, that one product that absolutely decimates the competition and brings in most of its profit. For Google, that one product is Adsense, a contextual advertising product that allows businesses to advertise both on Google’s search results and millions of different websites around the world. Read more…
The SEC has proposed a new circuit breaker system that would first go into effect on a “trial” basis with S&P 500 stocks. The circuit breaker system would come into place after a 10% drop in any S&P500 stock within any 5 minute trading period. Immediately after the stock would cease trading for five minutes before starting again. Sounds great…until you really start thinking about it. Read more…
As you’re probably already aware, the worst has still yet to come to the residential real estate market in the United States. To date, only $400 billion of housing bubble loans have yet to be reset, and another $900 billion are to come down the pipeline by the close of 2012. Read more…
The administration is arguing for greater transparency in the financial markets, and I couldn’t agree more. These bankers on Wall Street need a new PR person. They need to come around and realize that even a little transparency would go a long way in improving their image. Read more…
I’m a big believer in dividend investing. Stocks that can bring your the best of both worlds, income and growth should be embraced in everyone’s portfolio. But dividends also bring another benefit, they help keep stock prices up when others are suffering. Read more…
We all know that economic uncertainty sends money into Treasuries and another forms of government debt, but I’ve been wondering, what does it do to our trade balance. Recessions reduce our consumption, and naturally our imports, but I’m thinking now that post-recession bankers and institutions own more treasuries as a percentage and by dollar than foreign nations. Read more…
I’m not too surprised to see the mainstream media quick to call out “program trading” as the cause of the Dow’s temporary 1000 point fall. Their weakest claim is that computers, unlike humans, have no emotion and no way to actually know what stock prices should be. Um, duh? Read more…
Though the economy may add hundreds of thousands of jobs in the next few months, expect the unemployment rate, as a percentage, to rise, not fall. Thanks to the methods used to calculated the number of unemployed Americans, the unemployment rate will rise as job seekers return to the job market. Read more…
I’ve had a number of people recently ask me why gas prices go up quickly and come down slowly. While we’d all like to say its just simple profits, the more logical answer is that it isn’t just greed. Nope, it’s actually a factor of the supply chain and the franchise setup of gas station chains. Read more…
In the modern economy, bankruptcy should be embraced, not diverted. As Greece and Spain plunge into insolvency, the world should know that bankruptcy is not an end, but merely a means to an end. Here’s my view on bankruptcy, and why it should be embraced. Read more…
The 1099 is a form most commonly associated with freelancers and consultants, not businesses and employees, however that could soon all change.
With just a few short sentences in the 2010 health care act, the IRS form 1099-Misc just became the most important tax form in existence.
The 1099 has practically been re-purposed from top to bottom thanks to health care reform legislation.
Starting after December 31, 2011, the 1099 will function as a tax form for ALL business to business transactions of over $600.
Yes, for each and every b2b sale or combination of sales worth more than $600, each party will have to collect information about the other and submit a 1099 to both the parties involved and the IRS.
So, if your business were to purchase a laptop from WalMart for $600, you would have to fill out a 1099 form.
One of my greatest fears extends from the risk of identity theft, particularly for sole proprietors and owners of other small businesses who, unlike their larger competitors, use their own personal tax identification number (their social security number) for the business.
Unfortunately, these sole proprietors will have to give their social security number to most every one in order to comply with the law. Who wants to bet we see a huge number of DBA applications next year? 
One industry was quick to turn against the new 1099 provision, the physical gold bullion dealers. And while they may have been very loud, and very “extreme” about the law and its effects, they did have a very good point: this law affects individuals as well.
You see, any and all transactions with a business are to be documented with a 1099-Misc form. Thus, if I were to walk into a coin shop after the law takes effect, it would be required of me to fill out a 1099-Misc and leave my tax identification number (my social security number) to sell the proprietor a single Krugerrand.
And while it is easy to defend the law on the basis that many companies and sole proprietors do have a “DBA” (Doing Business As) tax identification number, individuals are almost always dependent on their social security number.
To further drive the point: a number of states and municipalities require gold dealers and coin shops to copy the license of anyone selling gold or silver of a certain threshold value.
Consider, for just one moment, the possible dangers of giving someone your license (which has your address) and on a 1099 your social security number. Sounds like identity theft.
Let’s try to put this new law into perspective. Let’s say you own a hair salon in which you vend both services and products. In this hair salon you have probably 500 different hair, nail, and skin products, from 50+ different vendors. For each vender that sells you more than $600 of merchandise you’ll have to fill out a 1099.
Should you advertise your location and spend more than $600, you’ll have to fill out another. Should you buy ink, staples, pens, paper, etc to stock your business you’ll fill out even more 1099s. Then, when paying rent to your landlord, you’ll have to give them another 1099.
Not only will businesses have to fill out these 1099s, they’ll also have to keep track of each vendor to see when/if a 1099 is necessary. Remember, $600 or more in transactions with one vendor, service provider or business means a 1099 must be filed. However, the $599 in transactions before this $600 threshold need not be filed.
If one fails to file for transactions greater than $600, then the other party is expected to, by law, withhold 28% from the amount and forward it to the IRS. In order to receive full payment, the other party must submit a 1099.
There have been several legislative attempts to end the new 1099 reporting requirements, but each has failed.
The process for repeal began in summer 2010 after a number of business groups led the charge for its removal from the 2009 Health Care Reform bill.
Since that time lawmakers in favor of overturning the provision have attempted to include it in a number of bills including the Food Safety Bill, Bush Tax Cut Extensions, and individually.
Advocates of the provision, however, have blocked the process, citing the $1.9 billion in new revenue the IRS/Congressional Budget Office expects from its passage. That $1.9 billion annually, or $19 billion over the ten year term, is to flow into a fund where it will provide for anti-tobacco, obesity, and other public health programs.
Maybe at the very least they could extend the January 31 deadline for sending the forms to those with whom you’ve worked. How about February 28?
You own a small business and are looking for a few thousand promotional pens. You could purchase from your usual supplier for $700, and you wouldn’t face any additional paperwork since you buy from them already. Or you could purchase from a new vendor for $690.
$10 to save yourself an accounting headache seems like a good deal. You avoid the necessity to spread your tax identification number to more people, and protect what should be private information from other parties.
Brutal honesty: it won’t be the most trusted, nor the highest paid people who will be collecting social security and tax identification numbers. It will be the people manning the front-lines of retail, service, and b2b account receivable departments who are in contact with your personal information.
Off the top of my head, here are a few expenses for which I imagine most every business will have to file a 1099 in 2012:
This didn’t happen overnight. The tax code doesn’t grow to more than 2.5 million pages (including accompanying regulations) in one day.
These regulations are not pro-growth, they are not sustainable, and they do create very important barriers to entry that tend to stiffle small business development and exploration.
Look at any of the recent highflyers: Zuckerburg and Facebook, or Andrew Mason at Groupon. Do you think either of these people had a clue about the tax code when they started? Do you think they needed to?
And would anyone want to answer as to why–if expansion of the tax/securities/regulatory code is good for business and the country–that the two businesses above (Facebook and Groupon) are doing everything they can to stay private and avoid going public to avoid more stringent accounting procedures?
I would imagine that this new law is eventually defeated before January 1, 2012, but at the rate Congress is headed, I’m not putting much stock in that prediction.
Notes: Actually starts December 31, 2011, so basically 2012.
I was recently made aware that business transactions of more than $600 paid for via credit or debit card would not require a 1099 since, as part of this HR 3221 bill, the transaction would already be recorded.
Changes to the IRS Cost Basis for 2011, 2012, 2013
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I can’t figure out what I can see and what government can’t see. A regulated derivatives market will absolutely reek havoc on the financial markets as a whole. Here is why… Read more…
