Posted by VicPlough on May 21, 2013 in
Business
Employing a nanny or other household workers can open a can of worms with the Internal Revenue Service, but the agency wants to make it easier for people who mishandle taxes for their hired help to put things right.
The tax-preparation season is a time when questions often surface about how employers of household help have handledâor notâthe withholding requirements and other tax issues, financial advisers say. This year, the IRS is allowing more people to enter a special program that eases penalties for those who haven’t been following the rules.
MarketWatch’s Jim Jelter discusses a report, released by the Office of Revenue Analysis of the Government of Washington, D.C., that reviewed the estimated property, sales, auto and income taxes a family paid in 2011 in the largest city in each state. (Photo: Getty Images)
A lot of people either aren’t familiar with the rules or don’t want to be bothered to jump through all the hoops. They may pay a nanny under the table or treat the worker as an independent contractor. That can prompt an audit and penalties.
The IRS, revising a program it started in 2011, has made it easier for those who haven’t been following the rules. It lets employers reclassify workers they had been treating as nonemployees or independent contractors. It foregoes interest and penalties, as well as most tax due for previous years, for employers who have been issuing Forms 1099.
Employers with all kinds of workers, not just household help, are affected.
Stephanie Breedlove, who is co-founder of Breedlove & Associates, a household tax and payroll company in Austin, Texas, recalls how one family came to her this year: A nanny they employed had tried to use a tax-preparation company to file her taxes as an independent contractor. That tax preparer refused, insisting she go back to her employers and have them report her pay properly.
This scenario may become more common as the IRS steps up efforts to get employers to follow the rulesâwhich call for the withholding and paying of Social Security and Medicare taxes if a worker is paid $1,800 or more for 2013.
Write to Arden Dale at arden.dale@dowjones.com
Posted by VicPlough on May 20, 2013 in
Business
Fri May 17, 2013 4:31pm EDT
* Deal increases Tesoro’s market share, but remains No. 2
* California puts conditions on deal
By Diane Bartz and Erwin Seba
WASHINGTON/HOUSTON, May 17 (Reuters) – U.S. refiner Tesoro
Corp. has received formal approval from antitrust
regulators in Washington and Sacramento on Friday to buy BP
Plc’s refinery and other assets in southern California
for more than $2 billion.
Tesoro will not have to sell any of the assets anti-trust
regulators said, but California officials demanded the company
upgrade the refinery it was buying.
Californians regularly pay some of the highest gasoline
prices in the nation. The state’s average price for a gallon of
regular unleaded gas is around $4.05, according to the AAA,
formerly known as the American Automobile Association.
The Federal Trade Commission, which assessed the deal to
ensure it complied with federal antitrust law, said there was
evidence that combining the BP refinery and a Tesoro refinery,
which nearly abut each other, could reduce the cost of producing
the special, low-carbon gasoline that state law requires be sold
in California.
“Demand for California-grade gasoline has declined over the
last decade and is projected to continue to do so. Additionally,
seven major refiners supply the West Coast, and that number will
not change as a result of the deal,” said the FTC said in a
statement.
California Attorney General Kamala Harris also approved the
transaction, saying her office and the California Energy
Commission would monitor gas prices, volume and refinery
capacity. A deal with the company also provides for safeguards
against price spikes by maintaining capacity.
The state also received a commitment that Arco gasoline,
which sells less expensive gasoline, would continue to do so. BP
had supplied the chain from the Carson refinery that Tesoro is
acquiring. It will be the fourth retail chain Tesoro supplies on
the West Coast.
Tesoro also agreed to upgrade both its older Wilmington
refinery and the Carson refinery that it is purchasing from BP
to reduce greenhouse gasses.
“These are reasonable conditions,” said David Hackett,
president of Stillwater Associates, a refining consultancy in
Irvine, California. “I think Tesoro can live with these without
problems.”
Liza Tucker of the advocacy group Consumer Watchdog said
that Tesoro’s pledge to Harris that it would slightly increase
capacity and maintain it for three years was inadequate.
“I think that she did the best that she could but I don’t
think this is good news,” said Tucker. “This is not good for the
California consumer.”
Tesoro announced in August that it had agreed to buy BP’s
Carson plant. The final purchase price of
the refinery and other assets is $2.375 billion, the company
said in a statement.
Tesoro could take control of the assets as soon as June 1,
sources familiar with the transaction told Reuters on Thursday.
Tesoro is the second-largest refiner in California, the
nation’s largest gasoline market, after Chevron Corp.
Adding the Carson refinery to Tesoro’s other two California
refineries gives Tesoro a combined crude oil throughput of
509,800 bpd, or 26 percent of the state’s refining capacity,
according to data from the U.S. Energy Information
Administration.
California is considered a virtual island for motor fuels,
dependent on production from West Coast refineries or imports
delivered by sea. The state has no pipeline connections to
refining centers on the U.S. Gulf Coast and Midwest.
The sale includes an 800-station retail network and
distribution and storage assets.
Once the transaction is closed, BP’s U.S. downstream
operation will be solely focused on refineries in the northern
continental United States, where cheaper Canadian crude oil is
easily obtained.
Tesoro expects to fund the estimated $2.4 billion purchase
with between $500 million and $750 million in cash, $500 million
in term loan borrowings and nearly $550 million from selling
Carson refinery terminals and other logistics assets to Tesoro
subsidiary Tesoro Logistics LP. Tesoro will get the rest from a
$3 billion revolving line of credit.
The commission, which has one vacant seat, voted 3-0 to
allow the deal to close. Commissioner Joshua Wright was recused.
Posted by VicPlough on May 20, 2013 in
Business
Lately,
bonds
are
falling
out
of
stepâwith
stocks,
with
each
other,
and
some
would
say
with
broader
market
forces.
Easing
efforts
by
global
central
banks
have
helped
stocks
post
sustained
gains
and
rise
to
record
levels,
notably
in
the
U.S.
…
Posted by VicPlough on May 19, 2013 in
Business
Fri May 17, 2013 9:41am EDT
* C$ at C$1.0311 vs US$, or 96.98 U.S. cents
* US$ strengthens near 10-mth high on Fed QE debate
* Bond prices rise across curve
By Solarina Ho
TORONTO, May 17 (Reuters) - The Canadian dollar weakened to
its softest level against its U.S. counterpart in more than two
months on Friday after data showed Canada's annual inflation
rate fell dramatically in April, far below expectations and well
off the Bank of Canada's target range.
Annual inflation fell to 0.4 percent from 1.0 percent in
March, its lowest level since the 0.1 percent hit in October
2009 and far below the central bank's target range of 1 to 3
percent. Analysts had expected no change from March to April.
"The numbers were softer than expected, but in line perhaps
with the weak inflation or deflation numbers we are seeing in
other parts of the world," said Shaun Osborne, chief currency
strategist at TD Securities.
"It's hard to imagine a significant pickup in prices in the
immediate future, which is probably going to keep CPI overall
through the second quarter roughly in line with the lower end of
the Bank of Canada's view."
Overnight index swaps, which trade based on expectations for
the central bank's key policy rate, showed that after the
announcement, traders cut their expectations of an interest rate
hike later this year.
The Canadian dollar traded at C$1.0311 versus the
U.S. dollar, or 96.98 U.S. cents, at 9:05 a.m. (1305 GMT),
weaker than immediately before and more than a cent weaker than
Thursday's finish at C$1.0192, or 98.12 U.S. cents.
The currency last traded at this level on March 8, when it
touched C$1.0315, or 96.95 U.S. cents.
"The currency was vulnerable already, heading into these
numbers. It was clearly on its back foot in any event, and to
have a lower-than-expected reading on CPI right across the
board, it just knocked whatever support there was for the
currency out from under it," said Doug Porter, chief economist
at BMO Capital Markets.
"This is outside of its recent range. (The future direction)
probably depends more on the broader U.S. dollar story, but at
least for a spell we could be probing some new lows for the
currency."
The Canadian dollar, which was underperforming against other
major currency counterparts, had already weakened significantly
prior to the data, with the U.S. dollar strengthening near
10-month highs.
The greenback's strength was underpinned by growing debate
over whether the U.S. Federal Reserve would wind down its asset-
buying program later this year.
Investors added to favorable bets on the U.S. dollar,
drawing support from comments by a regional Federal Reserve
chief, who said the Fed could begin easing up on stimulus this
summer.
The price of Canadian government debt rose across the curve
of maturities, with the 2-year bond up 2.9 Canadian
cents to yield 0.994 percent, while the benchmark 10-year bond
edged up 2 Canadian cents to yield 1.883 percent.
Posted by VicPlough on May 19, 2013 in
Business
Fri May 17, 2013 4:46pm EDT
* S&P 500 hits fresh record high
* U.S. gasoline futures up for 9 out of last 12 sessions
* Dollar/yen hits 4-1/2-year high
* U.S. consumer sentiment rises to highest level in six
years
(Updates to settlement, adds CFTC data)
By Anna Louie Sussman
NEW YORK, May 17 (Reuters) – Oil rose for a third straight
session on Friday, supported by a raft of strong economic data
from top oil consumer the United States that also boosted U.S.
equities, even as the dollar hit a multi-year high.
The Conference Board’s Leading Economic Index, a gauge of
future U.S. economic activity, rose in April to its highest
level in nearly five years, and U.S. consumer sentiment
rebounded in early May to the highest level in nearly six
years.
U.S. stocks continued their climb into uncharted territory
on Friday, racking up the fourth week of gains in a row as both
the Dow and the S&P 500 finished Friday’s session at record
highs.
“Everyone’s feeling buoyant, and we got a nice little bounce
on the S&P 500,” said Phil Flynn, energy analyst at Price
Futures Group in Chicago.
Brent crude settled up 86 cents at $104.64 a barrel,
after an earlier rise of more than $1.
U.S. oil rose 86 cents to settle at $96.02, its third
straight rise. U.S. crude has swung between $97 a barrel on May
6 and $92 a barrel on May 15.
The spread between July Brent crude and U.S. crude
CL-LCO1=R traded between $8 and $9 on Friday, closing at
$8.62. On Tuesday, it narrowed to $7.20, which was the lowest
since the end of 2011. Since then it has widened past $10 before
easing back on Friday.
At 10:30 a.m. EDT (1430 GMT), energy industry intelligence
provider Genscape reported the 400,000-barrel per day Seaway
pipeline was shut down, sending Brent and U.S. crude prices down
nearly $1 by 11:20 a.m. (1520 GMT). Seaway carries crude oil
from Cushing, Oklahoma, to Freeport, Texas.
Enterprise Product Partners LP, Seaway’s owner, said the
pipeline was operating normally. Genscape reported an increased
flow to near 110,000 bpd on Friday afternoon.
U.S. gasoline has risen for nine out of 12 sessions,
including the last three, despite a Wednesday report showing an
unexpected year-on-year build in gasoline inventories ahead of
the summer driving season.
The dollar index hit a nearly three-year high, making
dollar-denominated commodities more expensive for holders of
other currencies.
Jim Ritterbusch, president of Ritterbusch Associates in
Galena, Illinois, wrote in a research note that the U.S.
gasoline price strength was related to “a last minute influx of
seasonally motivated speculative capital that has been
accentuated by five-week highs in nearby futures.”
Timothy Evans, energy specialist at Citi Futures
Perspective, warned of a mismatch between underlying supply and
demand dynamics and Friday’s positive market sentiment.
“We have this tension in the market between the optimism
evident in the push higher in prices, versus the cold reality of
the inventory numbers and the demand figures,” Evans said.
Money managers cut their net long U.S. crude futures and
options positions in the week to May 14, the U.S. Commodity
Futures Trading Commission (CFTC) said on Friday.
The speculator group cut its combined futures and options
position in New York and London by 5,281 contracts to 249,136
during the period.
(Additional reporting by Alex Lawler in London; Editing by
David Gregorio and Marguerita Choy)
Posted by VicPlough on May 18, 2013 in
Business
Thu May 16, 2013 8:53am EDT
<span class="articleLocatio
n”>May 16 (Reuters) – Activist investor Elliott Management will
settle for three seats on the board of Hess Corp and
support the oil producer’s five director nominees to end a proxy
fight.
Hess and Elliott Management said in a joint statement that
the oil company’s reconstituted board would continue to comprise
14 members. Nine of the existing 14 directors would be replaced
after the company’s annual meeting on Thursday.
Posted by VicPlough on May 18, 2013 in
Business
Thu May 16, 2013 12:45am EDT
HONG KONG, May 16 (Reuters) - Following are monthly
bankruptcy statistics provided by the government:
Pct Change Pct Change
No. of April M/M Y/Y Jan-Apr Y/Y
Bankruptcy petitions 815 2.64 21.10 3,010 10.50
Bankruptcy orders 927 35.92 20.39 3,126 18.63
Hong Kong's economy grew a seasonally adjusted 0.2 percent
in the first quarter ended March over the previous three months
thanks to resilient domestic demand, although lacklustre trade
in developed markets was blamed for a slower pace of growth. The
government released GDP date on May 10.
(Reporting by Christina Lo; Editing by Jacqueline Wong)
Posted by VicPlough on May 17, 2013 in
Business
Thu May 16, 2013 8:18pm EDT
SINGAPORE, May 17 (Reuters) - Following is some
company-related and market news which could have an impact on
the local market.
----------------------MARKET SNAPSHOT @ 0007 GMT ------------
INSTRUMENT LAST PCT CHG NET CHG
S&P 500 1650.47 -0.5% -8.310
USD/JPY 102.2 -0.04% -0.040
10-YR US TSY YLD 1.8809 -- 0.002
SPOT GOLD 1388.81 0.23% 3.120
US CRUDE 95.06 -0.11% -0.100
DOW JONES 15233.22 -0.28% -42.47
ASIA ADRS 145.17 -1.80% -2.66
-------------------------------------------------------------
GLOBAL MARKETS-Stocks slip, dollar gains on Fed policy
remarks
SE ASIA STOCKS-Stocks-Philippines ends rally; Malaysia falls
to 1-week low
STOCKS TO WATCH
-- SINGAPORE AIRLINES LTD
- SIA, Asia's second-biggest airline, posted a net profit of
S$68.3 million ($54.6 million) in the fourth quarter, against a
net loss of S$38.2 million ($30.5 million) in the same period
last year. Full-year net income rose nearly 13 percent but
operating profit fell 20 percent, hurt by high fuel prices and
lower yields due to weak global economic conditions.
-- INTRACO LTD
- Trading company Intraco announced it has teamed up with
two parties to establish a joint-venture company in Singapore to
carry out a crane leasing and distribution business in Myanmar.
-- SINGAPORE POWER INTERNATIONAL
- Singapore Power International has agreed to sell a 19.9
percent stake in Australia's SP AusNet to China's State Grid
International Development Ltd for A$824 million ($812 million),
SP AusNet said in a stock market filing.
-- EU YAN SANG INTERNATIONAL LTD
- Eu Yan Sang International has sealed a joint venture deal
with a Chengdu-based company to set up a Traditional Chinese
Medicine processed herbs plant in China. The 50/50 joint venture
is expected to improve the group's margins through lower costs
of raw materials.
MARKET NEWS
> Nikkei may pull back on Wall St drop, set for gains
> Wall Street slips after Fed comments, but Cisco surges
> Prices gain on weak U.S. economic data, low inflation
> Dollar recovers vs the euro and yen
> Gold slides to 4-week low
> Oil ends slightly up, U.S. economic data caps gains
> Key political risks to watch in Singapore
ASIA-PACIFIC STOCK MARKETS
S.Korea China Hong Kong
Taiwan India Australia/NZ
OTHER MARKETS
Currency Eurostocks JP bonds
ADR Report LME metals
STOCKS NEWS
US
Europe
Asia
DIARIES & DATA:
Singapore diary
U.S. earnings diary
European diary
Asia Macro
TOP NEWS
Front Page Asian companies
U.S. company News European companies
Forex news Global Economy
Tech, Media and Telecoms
Financials General/political
A multimedia version of Reuters Top News is available at:
Posted by VicPlough on May 17, 2013 in
Business
It’s a common scenario: Someone walks into a chain restaurant, loves the food and ambiance and suddenly thinks, “I should own one of these.”
It’s tempting to pick a franchise based on personal experiences or love of the product. But the fact that you’re smitten with the business or what it sells doesn’t mean it fits your lifestyle, financial situation or long-term goals.
Franchise buyers need to spend ample time exploring their options and doing some thoughtful self-exploration before signing on the dotted line. The last thing you want is to buy a fast-food restaurant only to realize you don’t like 80-hour workweeks, chatting up customers or managing 20 people.
Many people buy franchises “thinking about how much money they can make without thinking about lifestyle issues,” says Mark Siebert, president of iFranchise Group, a Homewood, Ill., consultant to franchisers.
Self Exploration
Of course, a franchise’s financial health is an important factor and franchisees must spend ample time investigating a system. But along with that due diligence, they also need to think about their own skills, lifestyle preferences and long-term goals.
This means answering questions like:
- What are my biggest strengths and weaknesses both professionally and personally?
- How much money can I afford to invest in a franchise without risking all my retirement funds?
- How much flexibility do I want in the hours I work? What’s my risk tolerance?
- What tasks will I be happy spending at least 30 hours a week doing? What are my long-term goals?
For instance, many people assume they want a food-based franchise because they ate at one that they really enjoyed. But restaurant franchises often require huge upfront costs, lots of workers and inflexible long hours. Some people thrive in such an environment, but many people want a franchise with more flexibility and fewer employees.
Many people don’t realize the wide variety of franchises out there until they start looking, Mr. Siebert says. Nowadays, there are franchises for just about every industry imaginable with very different business models.
Some allow franchisees to set their own schedules and work from home. Some are far less flexible and require hiring and managing a lot of people; others are geared toward solo entrepreneurs. Some franchises require someone to be good at sales while others might fit less-brazen personalities.
Outside Opinions
Les Jordan, of Webb City, Mo., and his wife, Dian, purchased a Caring Transitions franchise last year. Mr. Jordan, 61, chose the franchise — which helps families sort through belongings and organize estate sales — after looking at dozens of other options.
Mr. Jordan had considered fast-food chains, home-design businesses, and woodworking suppliers among other options. But he ultimately chose Cincinnati-based Caring Transitions because he liked the low start-up costs as well as the ability to run the business from home and to mostly set his own hours. Having spent 25 years working for an architectural and management company, he also felt his previous sales experience would help.
“I didn’t want something where I’d have to come into work and do the same things day in and day out,” Mr. Jordan says. “That’s what I’d done for so much of my career — I wanted something different.”
Conducting such in-depth personal analysis is often easier said than done. People aren’t always the best judges of their own character. So, prospective franchisees should consider seeking some outside help assessing their strengths and weaknesses.
Friends, family members, former colleagues and objective advisers can give prospects some helpful insights on their personalities and strengths.
![[Franchisee]](http://si.wsj.net/public/resources/images/OB-CI000_Franch_D_20080912140121.jpg)
Getty Images
There also are so-called franchise brokers, professionals who interview prospective franchisees and then provide them with a list of compatible franchises for free. They could help a person clarify personality strengths and goals and provide a greater level of detail about the franchise systems and what franchisees are expected to do.
But there are limitations to using a broker. Many represent only a sliver of all the available franchises, and they get paid a hefty commission from the franchiser when a person buys one of the recommended franchises.
Finding the One
Once a prospective franchisee has come up with a list of criteria, there are some resources to help narrow down the pool of 3,000-plus franchises out there.
The International Franchise Association’s Web site, franchise.org, offers a free, searchable database of more than 1,250 franchise systems. On the home page, scroll over the “Find Your Franchise Here” tab near the top left, and then click on “Search over 1,250 Franchises” underneath it.
Some companies publish franchise directories that offer details about the franchise systems and what franchisees will be expected to do.
Also, Source Book Publications’ franchise directories provide detailed descriptions of the franchise systems and how they operate, including capital requirements, royalties and staffing needs. The publisher’s Bond’s Franchise Guide, 2008 (19th) Edition costs $34.95 online at SourceBookPublications.com.
- Kelly Spors covers small business for The Wall Street Journal. Email: kelly.spors@wsj.com
Posted by VicPlough on May 16, 2013 in
Business
An investment product with an unfamiliar name, no ticker symbol and hard-to-find performance data isn’t likely to be the most popular option in a 401(k) retirement-savings plan.
Journal Report
More in Encore: The New Retirement
Related Video
A lot of job-switchers are ignoring what may be one of the best options to get the most out of their retirement: Moving their savings into their new employer’s 401(k). MarketWatch’s Jim Jelter explains the benefits. (Photo: AP)
And that’s frequently the case with “collective investment trusts,” or CITs. But before writing these investments off, consider this: CITs are being added to a growing number of retirement-savings programsâand they could be a good low-cost option for your nest egg.
A collective investment trust is created or administered by a bank or trust company. Like a mutual fund, it assembles assets from a number of sources. For instance, the Manning & Napier Pro-Mix Extended Term CIT, a target-risk trust for investors with a time horizon of seven to 20 years, had 57.3% of its $8.8 billion in assets under management in stocks, 40% in bonds and 2.7% in cash at the end of the third quarter.
There are now more than 1,200 collective trusts, with at least $1.6 trillion in total assets, according to a report by Alexander Camargo, an analyst with Celent, a research and consulting firm in Boston. At least $800 billion of CIT assets are held in defined-contribution plans, up from roughly $730 billion in 2009, Mr. Camargo says, and he expects those assets to continue growing at a rate of about 13% to 18% a year.
Low Profile, Low Fees
At first glance, CITs don’t inspire much confidence. They aren’t traded on exchanges or offered to retail investors. By law, they don’t advertise. And CITs don’t issue formal prospectuses, says Brad Huss, a lawyer specializing in employee benefits with Trucker Huss, a San Francisco-based law firm.
Consumer groups and financial industry representatives often tout how well they’re protecting consumers’ best interests. But sometimes they’re not. MarketWatch’s Jim Jelter discusses five things financial advisers won’t tell you. (Photo: Getty Images)
All of that can make researching these products difficult. But these apparent shortcomings also help explain the trusts’ growing popularity.
To start, CITs are regulated by the Office of the Comptroller of the Currency rather than the Securities and Exchange Commission, which oversees mutual funds. As such, says Mr. Camargo, CITs have simpler disclosure statements, smaller prospectuses, and lower advertising and marketing costs. Less-stringent regulation translates into lower operating expenses.
That advantage is evident in fees. For example, one large value manager that manages funds for 401(k) plan sponsors charges 0.89% for a mutual fund and as little as 0.3% for assets greater than $140 million in a collective trust, according to Mercer LLC, a New York-based human-resources and financial-services consulting firm.
Another key benefit of CITs is that they can be tailored to suit the demographics of a particular employer’s workforce, experts say. So instead of offering an off-the-shelf target-date mutual fund to workers, plan sponsors can work with banks and trust companies to create a target-date fund that has a specific asset allocation or glide path built around its workforce and employee-benefit package.
Tougher to Track
Of course, CITs have their drawbacks. The fact that CITs don’t have ticker symbols makes it difficult to track one’s portfolio with online services such as Quicken, notes Lori Lucas, an executive vice president at Callan Associates Inc., a San Francisco-based investment consulting firm.
In addition, investors will have a harder time getting information on CITs than on mutual funds, which are listed in newspapers and online, says Laurie Nordquist, executive vice president and director of Wells Fargo Institutional Retirement and Trust in Charlotte, N.C.
(Note: Would-be investors aren’t flying completely blind. They typically have access to CIT fact sheets, assembled by research firms such as Morningstar Inc.
and distributed by retirement-plan providers and sponsors. Such fact sheets can help plan participants evaluate collective trusts.)
What’s more, workers can invest in collective trusts only in ERISA-qualified plans, according to Ms. Nordquist. (ERISA stands for Employee Retirement Income Security Act.) That means CITs aren’t available to retail individual retirement accounts, 403(b)s, government-sponsored 457(f) plans or any executive deferred-compensation non-qualified plan.
As such, participants who leave their employer can’t roll their collective trusts over to an IRA. They have to sell the CIT and then roll over cash.
In the main, however, many investment analysts and financial advisers say a CIT’s advantages frequently outweigh the disadvantages. If one is available through your employer, they say, it is worth considering as part of your nest egg.
“Collective trusts provide the overall benefits of a mutual fundâsuch as professional investment management, a broadly diversified portfolio of holdings, and the likeâgenerally at a much more effective price point,” says Winfield Evens, a partner and director at Aon Hewitt, a human-resources consulting firm based in Lincolnshire, Ill.
Mr. Powell is the editor of Retirement Weekly and a columnist at MarketWatch.com. He can be reached at encore@wsj.com.
A version of this article appeared March 18, 2013, on page R4 in the U.S. edition of The Wall Street Journal, with the headline: Not Your Normal Nest Egg.
