More new regs… and faster delivery too!
Most corporate CFOs may disagree with SEC Chief Accountant, James Schnurr, when he publicly complained last month that the PCAOB’s pace in standard-setting is too slow. In his remarks at the AICPA convention, Schnurr said SEC chairs, commissioners, chief accountants, and others have publicly encouraged the PCAOB to accelerate the pace of its standard setting, citing that some of the most important projects to update auditing and quality-control standards are simply moving too slowly. Suggesting that there might be an underlying problem with the PCAOB’s standard-setting process, Schnurr said he has spoken with PCAOB Chief James Doty about taking a fresh look at the process with a focus on what improvements can be made to the timing of a project.
In his speech at the same conference, Doty responded by saying the PCAOB has been reviewing its processes to analyze the economic impact of their rule-making. “We should issue new rules only after thoughtful assessment of the need to improve audit quality and evaluating the economic impact of any rule-making,” he said.
Simply Stated: Created by the Sarbanes-Oxley Act of 2002, the PCAOB is a nonprofit corporation whose rules, standards and annual budget must be approved by the SEC. With a staff of nearly 800, it is run by a five member board appointed by the SEC.
IPOs – they’re baaack
275 companies went public last year on U.S. exchanges raising more than $85 billion, according to fund manager Renaissance Capital, making 2014 the biggest year for U.S.-listed IPOs in terms of numbers and money raised since 2000. Led by Chinese e-commerce company Alibaba Group Holdings ($25 billion), other big IPOs include: Antero Midstream Partners ($1.15 billion), and, coming in with the largest IPO-REIT, Paramount Group Inc. ($2.29 billion). According to the Wall Street Journal’s MoneyBeat, more than 100 companies seeking to raise more than $19 billion are already in the pipeline for 2015.
Simply Stated: Is something out of sync? 100 companies raising a total of $19 billion – big numbers indeed, but less than half the latest valuation of privately-held UBer Technologies Inc. which was last valued at $41 billion (and that valuation was a month ago).
Venture Capital fundraising
Venture-capital firms raised nearly $33 billion in 2014. That’s a 62 percent increase over 2013 and the highest total since 2007. According to Dow Jones VentureSource, 105 venture-backed companies went public last year – the highest since 2000. The breakdown: Early-stage investing increased 33.1%, late-stage, up 41.1% and multistage, up 157.2%, according to Dow Jones LP Source. In dollars: Multistage VCs raised the most, with $13.52 billion, followed closely by early stage at $13.04 billion.
Who says real estate investment is boring?
Real Estate Investment Trusts (REIT) produced a total return of over 32 percent (including dividends) in 2014 — their largest gains in almost a decade, according to the FTSE Nareit Equity REIT Index. That compares to the broader S&P 500 index which ended the year with about a 15 percent gain. REITs typically own a diverse portfolio of real estate properties and become more attractive when interest rates drop, as investors see REITs as an alternative to fixed-income investments like bonds. According to FactSet, several industries have outperformed REITs: airlines and biotechnology returned 93.7% and 35.5%, respectively. By contrast, total returns have been 20.6% for pharmaceuticals, 10.9% for the tobacco industry and 9.5% for the textiles, apparel and luxury goods industry.
Back to the future
In its annual report, the Office of the Controller of the Currency said that U.S. lenders have loosened requirements for corporate loans and consumer borrowing over the past three years. The easing comes as banks seek higher returns amid low interest rates and competition from nonbank lenders. It is similar, they say, to the underwriting standards measured in pre-crash 2006. OCC officials say they don’t believe lending standards are too loose, but wanted to highlight specific areas where they believe banks could be on a risk path that could lead to losses.
If only for an instant
Photo-sharing service Instagram is now worth $35 billion according to Citigroup. That’s almost double Citi’s last valuation and 49 times what Facebook paid when they bought the service in late 2012 for $715 million. Citing “faster audience growth as well as continued monetization gains by social media properties,” Citigroup raised its price target for Facebook to $91 from $86 based on its higher underlying valuation of Instagram. At $35 billion, Instagram is worth 50 percent more than Twitter and valued higher than Yelp and LinkedIn.
Just pucker-up and blow
The winners of a record $170 million whistleblower award will be split amongst three individuals and a small mortgage company for helping investigators nail Bank of America with a record $16.6 billion penalty relating to Countrywide Financial Corp. which the bank acquired in 2008.
If you liked it, then you shoulda put a ring on it
Beyonce and Jay-Z won’t be moseying around the Beverly Hills mega-mansion they tried to buy late last year. Originally listed at $85 million, the spec mansion features a car showroom, vodka and tequila bars, a candy room, a 50-foot glass door opening onto the pool, eight bedrooms, 15 bathrooms, a movie theater, closets the size of most apartments, and …. well you get the picture. Oh, wait – we forgot to mention that all 15 bathrooms have Toto Neorest toilets (you’ll need to Google it, we’ve not had the pleasure). Now where were we… oh yes, so the most popular celebrities in the world (sorry Kardashians) submitted their best offer. Everyone thought they were the front-runners, but no. Apparently, it’s all in how you play the game. The house just sold to Minecraft game creator Markus “Notch” Persson for $70 million, making it the highest priced home sale in Beverly Hills. Notch got the house and a lot of its funky furnishings including: towers of M&Ms, a replica of James Dean’s motorcycle, and several 90-inch HD TV screens that bring panoramic views of Los Angeles from the roof into the downstairs lounge.
Simply Stated: We’ll explain: In the Minecraft world Beyonce and Jay-Z thought they were playing in Creative Mode when they were actually in Multiplayer Mode — with the game’s creator no less. If they are still in the game at all, we’d guess they are now playing in Spectator Mode.
To collect on tax liens for the years 1989, 1990, 2003 and 2004, the IRS is now auctioning off baseball player Darryl Strawberry‘s contractual right to receive payments under his deferred compensation agreement with the New York Mets. Said to be worth $1,279,000, the opening bid will start at $550,000.
Can we talk?
The IRS is freezing hiring, will stop overtime pay, and is warning that it won’t answer about half the calls it will receive during the upcoming tax-filing season. The IRS got nearly $11 billion for the new fiscal year under the spending bill signed by President Obama last month. That’s 3 percent less than last year and apparently not enough to man the phones. Bloomberg News reported that Republicans in Congress pressed for the lower budget, “partly as a way to curb the tax agency, which gave extra scrutiny to Tea Party groups seeking nonprofit status.”
Simply Stated: If you can’t get through by phone, try emailing – the IRS never loses emails… er, never mind.
YOUR FREE GIFT FOR READING THIS FAR
Congratulations! Everyone who read through this entire issue gets a free gift — even those who skipped over a couple stories to get here (you know who you are).YOUR FREE GIFT IS: The 2014 Filing Season Quick Guide (link below).It’s packed with all kinds of rates and tables for every tax-filing occasion. Display it proudly at your office (it’s suitable for framing), or download it to your Smartphone for quick reference and instantly impress all your friends.When someone asks about your “bracket”, you can rattle off “Married, Filing Jointly, 33% bracket — but might get snagged by the AMT!” No matter that they were asking about your college basketball picks… you know, March Madness? “Right,” you shoot back, “March is madness, but April is totally nuts.”This is our special gift to you… even though it says Journal of Accountancy at the top. Class it up by typing in “PROUD WEINBERG CLIENT”. (We recommend 36 point Helvetica Extra-Bold).And because it also makes a perfect gift*, if you act now, we’ll give you a second guide for free! (Just download another one.)*CAUTION: We do not advise using this as an Anniversary or Valentine’s Day gift – unless you plan on filing Single Status next year.
WEINBERG & COMPANY
Simply the right choice
Weinberg & Company is a leading, international, full service, multi-office CPA firm serving clients throughout the United States and the Pacific Rim. Founded over two decades ago, the practice groups include: Assurance and Audit, Tax and Accounting, and Advisory Services. Weinberg has a depth of knowledge and experience to meet the needs of both public and privately held companies, high net worth individuals, entrepreneurs, family offices, and can provide customized business management services. www.weinbergla.com
1925 Century Park East, Suite 1120
Los Angeles, CA 90067
6100 Glades Road, Suite 205
Boca Raton, FL 33434
Room 2109, 21/F, Shui On Centre
6-8 Harbour Road, Wanchai, Hong Kong P.R.C.
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
Firm Managing Partner
Director of Tax,
Assurance & Audit
Tax & Accounting
Leisure Time Industries
Media & Entertainment