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BioCryst shars plunge after disappointing study
Apollo Education Group to be taken private
India is world's fastest-growing major economy
Volkswagen's quality-control chief resigns
Struggling LeapFrog bought by VTech


12th March 1954:  Lynda Sharp pours water over her sister Margot whilst sharing a bath at their home in Chorley Wood, Buckinghamshire.  (Photo by Fox Photos/Getty Images)  
23 stocks they’re throwing out with the bathwater

Chipotle wants to give you a burrito — how to get it
Chipotle closes up shop for a few hours Monday
VOTE: If not Chipotle, where would you eat?

Tesla downward revision is among the biggest

Chesapeake denies bankruptcy plan as shares dive
What are the 8 strongest S&P energy stocks?

20 dividend stocks that Wall Street loves the most
The 20 dividend stocks that Wall Street loves most
Dividend stocks that will give you a raise

Venezuela can’t get Saudis to cut oil production
Only place left to invest if ‘Oilmageddon’ hits
Iran sets crude oil export volumes for Europe
Mark Mobius no longer investing in Petrobras


Rubio in freefall in New Hampshire betting
Republican primary: 3 things to watch

Voter turnout in each U.S. state (24/7 Wall St.)
Americans giving up citizenship at record rate

In the U.S., socialism is no longer such a dirty word

Bill Clinton blasts Bernie Sanders as ‘the enemy of all things big’
Bill Clinton: Sanders is the ‘enemy of all things big’

Blunders may reveal real flaws in Clinton and Rubio
All those terrible things Hillary Clinton has done
Clinton can rebound after New Hampshire

Geithner gets investment aid from J.P. Morgan

These ‘Buffett stocks’ are bargains in this market

Why a selloff in European bank stocks is ominous
Bank stocks have taken enough: analyst

What you can expect in Coca-Cola’s earnings

Hasbro blows past estimates as Star Wars boosts revenue
Hasbro blows past estimates on Star Wars boost
What to look for from Disney: Star Wars, ESPN

Teen gets to keep $20,000 gold bar found in lake
Gold one of Wall Street’s best bets early in 2016
Chinese herdsman finds 17-pound gold nugget


Randgold raises dividend after record output
Rio Tinto, 5 others quit London Metal Exchange
Anglo American CEO: Tough 2016 ahead
Is the gold rally the real deal or ‘fool's gold’?

China’s forex reserves poised for another record drop
China’s foreign-currency reserves drop $99 bln

New refugee crisis is looming at Turkey’s border

N. Korea faces new sanctions after rocket test
North Korea fires long-range rocket
The 6 most corrupt countries in the world



/conga/frontpage.html 367359

Markets »

94.84MDow Volume:
Avg Vol: 128.61M
Unchanged
87
Decliners
5181
Advancers
1204
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 15,870 -335 2.07%
Nasdaq
/quotes/zigman/12633936/realtime 4,230 -133 3.05%
S&P 500
/quotes/zigman/3870025/realtime 1,836 -44 2.36%
GlobalDow
/quotes/zigman/629063/realtime 2,097 -42 1.94%
Gold
/quotes/zigman/33772884/delayed 1,195 +37 3.21%
Oil
/quotes/zigman/2260836/delayed 29.93 -0.96 3.11%
FTSE 100
/quotes/zigman/3173262/delayed 5,689 -159 2.71%
DAX
/quotes/zigman/2380246/delayed 8,979 -307 3.30%
CAC 40
/quotes/zigman/3173214/delayed 4,066 -134 3.20%
FTSE MIB
/quotes/zigman/1482176/delayed 16,441 -809 4.69%
IBEX 35
/quotes/zigman/2759620/delayed 8,122 -377 4.44%
Stoxx 600
/quotes/zigman/2380150/delayed 314 -12 3.54%
Asia Dow
/quotes/zigman/6959860/realtime 2,515 +5 0.18%
Nikkei 225
/quotes/zigman/5986735/delayed 17,004 +185 1.10%
Hang Seng
/quotes/zigman/2622475/delayed 19,288 +105 0.55%
Shanghai
/quotes/zigman/1859015/delayed 2,763 -18 0.63%
Sensex
/quotes/zigman/1652085/delayed 24,287 -330 1.34%
Singapore
/quotes/zigman/1709939/delayed 2,623 +65 2.53%
Euro
/quotes/zigman/16008136/realtime/sampled 1.12 +0.01 0.45%
Yen
/quotes/zigman/16008150/realtime/sampled 115.40 -1.48 1.26%
Pound
/quotes/zigman/16008140/realtime/sampled 1.44 -0.01 0.45%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 +0.00 0.16%
DXY Index
/quotes/zigman/1652083/delayed 96.55 -0.49 0.50%
WSJ $ Idx
/quotes/zigman/41508961/realtime 89.62 -0.19 0.21%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.74 -0.10 5.23%
German 10y
/quotes/zigman/15866409/realtime 0.22 -0.08 26.83%
Italy 10yr
/quotes/zigman/15866497/realtime 1.70 +0.14 9.21%
Spain 10yr
/quotes/zigman/15866444/realtime 1.76 +0.11 6.81%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.41 -0.15 9.62%
Japan 10yr
/quotes/zigman/15866525/realtime 0.04 +0.01 25.61%
Crude Oil
/quotes/zigman/2260836/delayed 30 -1 3.11%
Gold
/quotes/zigman/33772884/delayed 1,195 +37 3.21%
Corn
/quotes/zigman/25518691/delayed 363 -3 0.89%
DJIA F
/quotes/zigman/48241424/delayed 15,782 -349 2.16%
S&P F
/quotes/zigman/43106711/delayed 1,827 -48 2.56%
Silver
/quotes/zigman/32655632/delayed 15 +1 4.28%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 97.71 -6.36 -6.11%
AAPL /quotes/zigman/68270/composite 93.90 -0.12 -0.12%
GOOG /quotes/zigman/59527964/composite 666.00 -17.57 -2.57%
BAC /quotes/zigman/190927/composite 12.21 -0.75 -5.75%
C /quotes/zigman/5065548/composite 37.41 -2.45 -6.15%
F /quotes/zigman/264304/composite 11.48 0.03 0.22%
T /quotes/zigman/398198/composite 36.97 0.09 0.24%
BP /quotes/zigman/247026/composite 29.72 -0.74 -2.43%
GE /quotes/zigman/227468/composite 27.92 -0.62 -2.17%
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Rates »

5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.5%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.88% 11.62%
Business 13.12% 13.11% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.30% 14.12%
Airline 15.17% 15.16% 15.10%
Cash Back 15.26% 15.23% 15.27%
Reward 15.28% 15.25% 15.14%
Instant Approval 18.21% 18.18% 18.00%
Bad Credit 22.88% 22.88% 22.73%
Source:CreditCards.com

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The Tax Blog
The latest news, insights and tips about taxes

The “Edwards Shelter”: Pitfalls Of Low Pay

My latest Tax Report column about the perils of low pay for owner/shareholders of “Subchapter S” firms received a raft of comments and emails. As the column described, it’s a common tax-cutting maneuver available to the owners of millions of closely held businesses; there are nearly 4 million Sub-Ss in the U.S. today.

Several writers wanted to know why the story didn’t mention John Edwards, the former vice-presidential candidate and Senator (D-N.C.), who was accused by opponents of using the same technique described to shrink the payroll tax bill from his lucrative legal practice. It’s such a well-known issue that some people refer to the practice I outlined in my column as the “Edwards shelter.”

Because Edwards was not available to comment on the issue or supply information regarding it and calls to his attorney weren’t returned, we didn’t include it in the story out of fairness. But for the curious, here’s a summary of past reporting on this issue.

Questions about Edwards’s taxes arose both during his 1998 Senate campaign and his 2004 vice-presidential campaign. In both cases, the question was the same: Had he used a Subchapter S entity and minimized the salary from his highly successful legal practice, lowering his payroll taxes in years before he joined the Senate?

In July 2004, the New York Times reported that the Edwards campaign released documents showing that Mr. Edwards paid $9,353,448 of income tax on income of $26,869,496 before joining the Senate in 1998. However, using the Subchapter S entity allowed him to avoid paying $591,112 in Medicare tax, the paper said.

How? In those years the 2.9% Medicare tax was levied on all salary (as it still is), while the 12.4% Social Security tax applied only on income up to a certain level (as it still does). So income Edwards classified as dividend rather than salary, reported in The Wall Street Journal editorial as $360,000 per year, was not subject to the Medicare tax. Medicare tax on the full $26 million would have come to nearly $780,000.

Vice-President Dick Cheney raised the issue in his 2004 debate with Mr. Edwards, and he responded: “I have paid all the taxes that I owe.”

In addition, the New York Times reported that the campaign released a Jan. 14, 2004 letter from a well-known Washington law firm, Caplin & Drysdale, after the Edwardses asked them to review of ten years of tax filings. The paper quoted the letter as saying, “The structure initiated by the Edwardses’ tax professionals was entirely lawful, ethical, and proper.”

In 2004, there was considerable debate in the tax press about whether, according to the information released, Edwards’s avoidance of the Medicare tax was proper. In the well-regarded journal Tax Notes, one commenter called the move a defensible and legal “tax savings opportunity” while another called it an “abusive tax shelter.”

One defender of the technique did note, however, that the IRS was free to attack Edwards’s compensation as too low—as it did in the David E. Watson case. Watson, who had 20 years experience and a graduate degree in tax, reported far less salary than a typical recent graduate in accounting, prompting the IRS to object that his pay was too low, and an Iowa District Court judge agreed. The problem for the agency, say many experts, is that each case turns on individual facts and circumstances, making the issue cumbersome to fight.

A final note: There is no information about any IRS reaction to Edwards’s compensation.

Comments

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 14)

View all Comments »
    • Recent news stories make it clear that there are airrcultugal tax advantages in Florida, but the land must be used airrcultugally. Talk to your county assessors and state tax offices.

    • What’s the statute of limitations on this though? IRS went after the guy for 2002-2003 taxes on the article you wrote.

    • What would be nice is for the government to leave my money alone and to allow me the “choice” of deciding my own retirement future. I don’t want social security and I hate giving money to politicians, who use the money in elaborate vote buying schemes.

    • ******

      It’s a Little off Topic but Anyone Looking for a Job

      Should Check Out this Website!
      They are Hiring People to Work from Home for $77 / hour

      http://www.CNN-Job-Report.com-employment.com

      Getting into the Online Business has
      Really Saved my Family from the Recession!

      And I Can Work from Home with my Kids !

      They are Hiring Today.

      *******

    • Edwards payed himself a reasonable salary of $360,000. The IRS has to be careful because if they aregue that Edwards should have taken all the profits in salary and bonus they are basically saying there is no such thing as unreasonable compensation at the C corp level.

      At audit our client had their pay reduced from 11 million to 7 million as unreasonable comp.

About The Tax Blog

  • The Tax Blog brings together a team of award-winning tax journalists from the Dow Jones network and around the web to examine the tax issues, changes and legislation that affect families, investors and small business owners. Our contributors include Tax Report columnist Laura Saunders (WSJ), Tax Guy columnist Bill Bischoff and senior reporter Jilian Mincer (SmartMoney.com), retirement-focused reporter Anne Tergesen (WSJ), wealth management writer Arden Dale (Dow Jones Newswires), TaxWatch columnist Eva Rosenberg and personal finance reporter Andrea Coombes (MarketWatch), and reporter Alyssa Abkowitz (SmartMoney). They’ll provide the latest news and insight, mine the tax code for tips and loopholes, and answer your questions about tricky tax situations. Contact the The Tax Blog with ideas, suggestions or tax questions at thetaxblog@dowjones.com.

MarketWatch - Stock Market Quotes, Business News, Financial News
Bulletin
Investor Alert

New York Markets Close in:

need to know
BioCryst shars plunge after disappointing study
Apollo Education Group to be taken private
India is world's fastest-growing major economy
Volkswagen's quality-control chief resigns
Struggling LeapFrog bought by VTech


23 stocks they’re throwing out with the bathwater

Chipotle wants to give you a burrito — how to get it
Chipotle closes up shop for a few hours Monday
VOTE: If not Chipotle, where would you eat?

Tesla downward revision is among the biggest

Chesapeake denies bankruptcy plan as shares dive
What are the 8 strongest S&P energy stocks?

20 dividend stocks that Wall Street loves the most
The 20 dividend stocks that Wall Street loves most
Dividend stocks that will give you a raise

Venezuela can’t get Saudis to cut oil production
Only place left to invest if ‘Oilmageddon’ hits
Iran sets crude oil export volumes for Europe
Mark Mobius no longer investing in Petrobras


Rubio in freefall in New Hampshire betting
Republican primary: 3 things to watch

Voter turnout in each U.S. state (24/7 Wall St.)
Americans giving up citizenship at record rate

In the U.S., socialism is no longer such a dirty word

Bill Clinton blasts Bernie Sanders as ‘the enemy of all things big’
Bill Clinton: Sanders is the ‘enemy of all things big’

Blunders may reveal real flaws in Clinton and Rubio
All those terrible things Hillary Clinton has done
Clinton can rebound after New Hampshire

Geithner gets investment aid from J.P. Morgan

These ‘Buffett stocks’ are bargains in this market

Why a selloff in European bank stocks is ominous
Bank stocks have taken enough: analyst

What you can expect in Coca-Cola’s earnings

Hasbro blows past estimates as Star Wars boosts revenue
Hasbro blows past estimates on Star Wars boost
What to look for from Disney: Star Wars, ESPN

Teen gets to keep $20,000 gold bar found in lake
Gold one of Wall Street’s best bets early in 2016
Chinese herdsman finds 17-pound gold nugget


Randgold raises dividend after record output
Rio Tinto, 5 others quit London Metal Exchange
Anglo American CEO: Tough 2016 ahead
Is the gold rally the real deal or ‘fool's gold’?

China’s forex reserves poised for another record drop
China’s foreign-currency reserves drop $99 bln

New refugee crisis is looming at Turkey’s border

N. Korea faces new sanctions after rocket test
North Korea fires long-range rocket
The 6 most corrupt countries in the world



/conga/frontpage.html 367358

Markets »

94.85MDow Volume:
Avg Vol: 128.61M
Unchanged
86
Decliners
5182
Advancers
1202
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 15,870 -335 2.07%
Nasdaq
/quotes/zigman/12633936/realtime 4,230 -134 3.06%
S&P 500
/quotes/zigman/3870025/realtime 1,836 -44 2.36%
GlobalDow
/quotes/zigman/629063/realtime 2,097 -42 1.95%
Gold
/quotes/zigman/33772884/delayed 1,195 +37 3.20%
Oil
/quotes/zigman/2260836/delayed 29.93 -0.96 3.11%
FTSE 100
/quotes/zigman/3173262/delayed 5,689 -159 2.71%
DAX
/quotes/zigman/2380246/delayed 8,979 -307 3.30%
CAC 40
/quotes/zigman/3173214/delayed 4,066 -134 3.20%
FTSE MIB
/quotes/zigman/1482176/delayed 16,441 -809 4.69%
IBEX 35
/quotes/zigman/2759620/delayed 8,122 -377 4.44%
Stoxx 600
/quotes/zigman/2380150/delayed 314 -12 3.54%
Asia Dow
/quotes/zigman/6959860/realtime 2,515 +5 0.18%
Nikkei 225
/quotes/zigman/5986735/delayed 17,004 +185 1.10%
Hang Seng
/quotes/zigman/2622475/delayed 19,288 +105 0.55%
Shanghai
/quotes/zigman/1859015/delayed 2,763 -18 0.63%
Sensex
/quotes/zigman/1652085/delayed 24,287 -330 1.34%
Singapore
/quotes/zigman/1709939/delayed 2,623 +65 2.53%
Euro
/quotes/zigman/16008136/realtime/sampled 1.12 +0.00 0.44%
Yen
/quotes/zigman/16008150/realtime/sampled 115.40 -1.48 1.26%
Pound
/quotes/zigman/16008140/realtime/sampled 1.44 -0.01 0.44%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 +0.00 0.17%
DXY Index
/quotes/zigman/1652083/delayed 96.55 -0.49 0.50%
WSJ $ Idx
/quotes/zigman/41508961/realtime 89.62 -0.19 0.21%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.74 -0.10 5.23%
German 10y
/quotes/zigman/15866409/realtime 0.22 -0.08 26.83%
Italy 10yr
/quotes/zigman/15866497/realtime 1.70 +0.14 9.21%
Spain 10yr
/quotes/zigman/15866444/realtime 1.76 +0.11 6.81%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.41 -0.15 9.62%
Japan 10yr
/quotes/zigman/15866525/realtime 0.04 +0.01 25.61%
Crude Oil
/quotes/zigman/2260836/delayed 30 -1 3.11%
Gold
/quotes/zigman/33772884/delayed 1,195 +37 3.20%
Corn
/quotes/zigman/25518691/delayed 363 -3 0.89%
DJIA F
/quotes/zigman/48241424/delayed 15,782 -349 2.16%
S&P F
/quotes/zigman/43106711/delayed 1,827 -48 2.56%
Silver
/quotes/zigman/32655632/delayed 15 +1 4.28%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 97.60 -6.47 -6.22%
AAPL /quotes/zigman/68270/composite 93.87 -0.15 -0.16%
GOOG /quotes/zigman/59527964/composite 665.82 -17.76 -2.60%
BAC /quotes/zigman/190927/composite 12.21 -0.75 -5.75%
C /quotes/zigman/5065548/composite 37.42 -2.44 -6.12%
F /quotes/zigman/264304/composite 11.49 0.04 0.34%
T /quotes/zigman/398198/composite 36.96 0.08 0.23%
BP /quotes/zigman/247026/composite 29.73 -0.73 -2.40%
GE /quotes/zigman/227468/composite 27.92 -0.62 -2.17%
Visit the quote page and your most recently viewed stocks will automatically be displayed here.
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MarketWatch Portfolio

World News from MarketWatch

Rates »

5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.5%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.88% 11.62%
Business 13.12% 13.11% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.30% 14.12%
Airline 15.17% 15.16% 15.10%
Cash Back 15.26% 15.23% 15.27%
Reward 15.28% 15.25% 15.14%
Instant Approval 18.21% 18.18% 18.00%
Bad Credit 22.88% 22.88% 22.73%
Source:CreditCards.com

Top 3 from Barron's

Today's list of the most-viewed stories from Barron's. More »

  1. 1.
  2. 2.
  3. 3.

Visit Barrons.com

SPONSORED SECTIONS

Trending Tickers
  • /quotes/zigman/126832/composite CHK-34.31%
  • /quotes/zigman/9021597/composite YELP-12.65%
  • /quotes/zigman/245568/composite DIS-3.63%
  • /quotes/zigman/157332/composite NAT+6.67%
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X
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