The story has just been reported through various blogs and on-line news that Mayweather called Pacquiao to agree to fight.  A verbal agreement to fight is great, but if no one is negotiating then the details of a fight are still left blank.  Bob Arum will not negotiate because he wants a few more fights under his promotion contract with Pacquiao.  So what needs to be done?  Someone needs to negotiate.

First, there needs to be a cleaning of house.  There is the law suit between Pacquiao and Mayweather.  Defamation law suits usually mean that that somethings has been said or done that will hurt the earning power of the person being talked about.  However, in Pacquiao's case earning power has gone up, not down.  End the law suit and move on.  Your just waisting dollars on attorney fees.  Now the issue that is outstanding is conflict of interest.  The same law firm that represents Top Ran and Bob Arum now represent Manny Pacquiao.  Who doesn't want the fight to happen?  Bob Arum.  Who has controls over a law suit that is still pending and stopping a fight.  Bob Arum.  So you need to clean the house of law suits and get to a point where that is out of the way.  Plus, the law firm needs to be dismissed because a legal entity should never be representing both boxer and promotor.  If you read the Federal Boxing laws of the United States it clearly states there needs to be an arms length relationship and no financial ties should hold the boxer to the promoter.  Conflict of interest and financial ties have to be severed to bring the boxer to a solid financial place and be independent.

Second, someone needs to negotiate that knows what they are doing.  Parties from both sides need to sit down quickly and start laying out the bout agreements, bout monies, logistics of the fight, and HBO pay per view agreements, sponsorship agreements and the list goes on.  And the negotiator needs to be independent from Top Rank that represents Pacquiao.  The negotiator has to be involved in every aspect of all agreements, including HBO.  Vital - independent negotiator that can pull all sides together.  In every business you have to have in place a good negotiator or else no deal.  Just good business practice.

Third, what has happened in the past has to end.  So much has been said and promoted.  Many things have been done and said so that the fight could not go forward.  But, if we are reading correctly it now appears Mayweather has reached out to Pacquiao and both have agreed to fight.  Again, if no one is negotiating there still is no fight.  So everyone needs to stop talking and someone needs to step up and do something.  Get out of ring side and go into the ring and negotiate.  If you have a good negotiator and a strong independent team of attorney's and accountants, everything can be done quickly.  But if you have someone in the background going behind everyone's back to stop the talks, then you will have a legal challenge. 

Let's negotiate.  That is how a clean fight is done and how a good business is run.

STANDARD DEDUCTION.  The standard deduction amounts for 2011 ae $11,600 for married individuals filing jointly (and surviving spouses),  $8,500 for heads of households, and $5,800 for unmarried individuals nad married individuals filing separetly.  An increase in the standard deduction may also be claimedin 2011 for motor vehicle sales and excise taxes and net disaster losses.

ITEMIZED DEDUCTIONS.  The amount of itemized deductions claimed in 2011 is not subject to phaseout for high-income taxpayers.

EXEMPTIONS.  The amount of a personal exemption, and of each dependency exemption, claimed in 2011 is $3,700.  The exemption deduction is not subjexct ot phaseout in 2011 for high-income taxpayers.

ROTH IRAs.  The modified AGI and filing status requirements for conversions of a traditional IRA to a Roth IRA were eliminated for 2010.  An amount that would be included in income during the year due to a conversion may be included ratably in income in 2011 and 2012 unless the taxpayer elects to include the entire amount in income in 2010.

HOMEBUYER CREDIT.  The first-time homebuyer credit, which is generally unavailable after 2010, is extended for any individual who serves on qualified official extended duty service outside the United States for at least 90 days during the period beginning after December 31, 2008, and ending before May 1, 2010, and, if married, such individual's spouse.

DUE DATE FOR RETURNS.  The due date for filing Form 1040 or form 4868 for the 2011 tax year is Tuesday, April 17, 2012, due to a legal holiday in Washington D.C.  The due date for a calendar-year taxpayer, who have filed for an extension to file Form 1040 is Monday, October 15, 2012.

To make an appointment with one of our qualified tax preparers go to:  www.vqrginc.com and book an appointment or call:  818.547.0497 Ext 3

Tax season is here again! While the filing deadline might be a couple of months away, this month you will receive all required third-party reporting documents: W2s, 1099s for interest and dividends, 1099s for nonemployee compensation if you are an independent contractor, 1099-Bs from your broker reporting proceeds from the sale of stocks and bonds, 1098s from your mortgage holder, K-1s from partnerships, S Corps, estates, and trusts. Hopefully, you’ve set up a file to store all these documents to make data gathering for tax preparation a snap. If not, now’s the time to create one.

Note that the due date for filing this year is April 17. If a tax due date falls on a weekend or a holiday, the next business day becomes the due date. This year April 15 is a Sunday and Monday, April 16 is a federal holiday so the due date falls on Tuesday, April 17. If you are unable to file by the deadline, you may obtain an extension to Oct. 15. Bear in mind that the extension is for filing, not paying. All taxes must be paid by April 17 otherwise you may suffer penalties and interest.

If you pay estimated tax payments throughout the year, the due date for your next quarterly installment for prepayment of 2011 income taxes is Tuesday, Jan. 17. Estimated tax payments for 2012 will be due on April 17, June 15, Sept. 17 and Jan. 15, 2013.

Beginning in 2011, brokerage firms are required to report to the IRS not only proceeds from sales of stocks and mutual funds, but also the cost basis of the investments that are sold. The IRS has designed a new Form 8949 for reporting capital gains and losses. A summary of the information listed on this form is carried over Schedule D. A couple of new columns are added to Form 8949 reporting – one for adjustments to basis (in case your broker has an incorrect figure) and one for coding the transaction to identify the type of sale.

Business mileage rates for 2011 were changed mid-year, so when calculating your mileage for 2011 use the rate of 51 cents per mile for miles driven up to June 30, 2011 and 55 ½ cents per mile from July 1 to Dec. 31.

Mileage rates for 2012 are as follows: 55 ½ cents per mile for business, 23 cents per mile for moving and medical, and 14 cents per mile for charitable purposes.

The temporary payroll tax cut has been extended to Feb. 29; employees will enjoy a continued savings of 2% of wages withheld for Social Security – from 6.2% to 4.2%. The Social Security wage base for 2012 is $110,100 up from $106,800 in 2011. Once your wages exceed this amount, Social Security will not be withheld but Medicare will continue to be withheld.

The self-employment health insurance deduction no longer offsets the self-employment tax. In 2010 only, self-employed workers were able to reduce the amount subject to self-employment tax on Schedule SE by the amounts paid for health insurance premiums. You can still take the deduction on Form 1040 as an adjustment to income.

Foreign financial assets are reported on a new Form 8938. The foreign asset disclosure form is separate and different from the foreign bank account report. Taxpayers with foreign assets may need to file both documents.

The first-time home buyer’s credit is now only available to members of the military or Foreign Service. If you are repaying the first-time home buyer’s credit, you may not need to complete and attach Form 5405.

Also gone for 2011 is the Making Work Pay Credit. For the past few years we enjoyed $400 per year single and $800 married filing joint credit against our tax liabilities.

IRS to Use SAS Analytics to Combat Fraud Cary, N.C. (December 9, 2011)
By Michael Cohn, Accounting Today The Internal Revenue Service has signed a $6.25 million contract with the SAS Institute to use the company’s analytical software to help it identify tax evasion and fraud as part of the agency’s Return Review Program.

The RRP system is being deployed to help the IRS reduce the estimated $345 billion tax gap between taxes owed and paid. The SAS Analytics software will help the IRS improve its fraud detection capabilities and uncover noncompliance at the time a tax return is initially filed.

The IRS is planning to move toward a more real-time tax system in the years ahead that would automatically match electronically filed tax return data with information returns from third parties such as employers and banks. On Thursday, the service held the first of a series of meetings to solicit feedback from accounting and tax practitioner organizations (see AICPA Backs IRS Plans for Real-Time Tax System).

“There is a significant opportunity to avoid improper refunds and payments of large sums of money,” said SAS Federal president Karen Knowles in a statement. “With SAS, the IRS can reduce the number and amount of fraudulent tax refunds, discover emerging fraud schemes and increase tax collections to shrink the tax gap.”

SAS’s analytical software will score tax returns using a combination of business rules, anomaly detection, predictive modeling and social network analysis. Users at the IRS will be able to set up business rules that detect possible fraud and alert investigators and auditors to suspicious-looking returns.

The software searches data for anomalies that could indicate fraud or error. Predictive modeling techniques employ historical behavioral information to identify suspect behavior similar to known fraud patterns. Social network analysis uncovers hidden relationships or linkages that suggest collusion and organized fraud rings.

Another tool to combat fraud, SAS Text Miner, will scour unstructured data, such as from call centers, to detect suspicious activity. Alerts and results will be reported to the IRS via a customizable dashboard. Case management capabilities in the software will also help IRS investigators prioritize and assign cases.

The $6.25 million contract will give the IRS Return Review Program access to many SAS technologies, including SAS Fraud Framework for Government, SAS Social Network Analysis and SAS's data integration, data mining and business intelligence technologies. To analyze the massive amounts of data in the system, the IRS will also be able to leverage SAS In-Database, SAS Scoring Accelerator for Greenplum and SAS Grid Manager.

SAS’s software is also used by other government agencies to detect Medicare and Medicaid fraud, purchase-card fraud, bid-rigging and terrorist financing.

Beverly Hills, CA – December 8, 2011:  VisionQwest Global Group, a division of VisionQwest Resource Group, Inc. will be in joint venture with Century City Development Corporation (Philippine-base Real Estate Developer) to represent their latest project, The TRUMP TOWER Manila.  This project, valued at $150 million US dollars is scheduled to start construction in early 2012.  VisionQwest feels that this investment is the best project in Asia at this time. “When a project is built with the Trump name on it”, stated Michael Joseph Cabuhat, Executive Vice President of VisionQwest, “the project will always outshine all other projects as pure quality and luxury that drives the success of the project”.  In a joint agreement with Century City Development Corporation of Manila, VisionQwest will introduce and assist prospective buyers of this luxurious piece of property through VisionQwest’s network of clients all over the United States. VisionQwest is pleased to be working with Century City Development Corporation and their team of professionals in assisting our clients who would be interested on owning a piece of The TRUMP TOWER Manila.  Information on this project can be seen by going to the VisionQwest web site at www.vqrginc.com under VQ Global tab; or please contact Mr. Michael Joseph Cabuhat, Executive Vice President of VisionQwest Resource Group, Inc. at 818.547.0497 ext 1 or at 424.653.4888. 

All leagal administrative issues should be addressed to Michael Lodge, President & CEO at legal@vqrginc.com

The U.S. Tax Court ruled against South African golfer Retief Goosen in a case last week involving the two-time U.S. Open champion’s royalty income, disagreeing with his claim that only 7 percent of it came from U.S. sources.

Goosen had endorsement agreements with a variety of sponsors, including Acushnet, TaylorMade, Izod, Upper Deck, Electronic Arts and Rolex. They were allowed to use his name, face and likeness in advertising and marketing campaigns worldwide, and he was paid a base endorsement fee by all the sponsors.

Acushnet, TaylorMade and Izod also pro-rated the base endorsement fee if he did not annually play in a specific number of golf tournaments, the court noted. The three companies also paid him a bonus if he achieved a specific finish in a PGA or European Tour tournament, or reached a specific spot on the World Golf Rankings.

Goosen characterized the endorsement fees and bonuses from Acushnet, TaylorMade and Izod as 50 percent services income and 50 percent royalty income on his nonresident federal income tax returns for 2002 and 2003. The endorsement fees from Upper Deck, Electronic Arts and Rolex were characterized as 100 percent royalty income.

The golfer reported approximately 7 percent of the total endorsement income as U.S. source income. The IRS, however, determined that he should have characterized the endorsement fees and bonuses from Acushnet, TaylorMade and Izod as 100 percent personal services income. The IRS also re-allocated a larger percentage of his endorsement fees as U.S. source income.

The Tax Court ruled on June 9 that the endorsement fees and bonuses Goosen had received from Acushnet, TaylorMade and Izod should be allocated 50 percent to personal services income and 50 percent to royalty income, and that the royalty income he had received from Acushnet, TaylorMade and Izod was 50 percent U.S.-source income effectively connected with a U.S. trade or business. The court also held that the royalty income he had received from Rolex was 50 percent U.S.-source income not effectively connected with a U.S. trade or business.

However, the royalty income he had received from Upper Deck was considered by the court to be 92 percent U.S.- source income not effectively connected with a U.S. trade or business. In addition, the royalty he received from Electronic Arts was deemed 70 percent U.S.-source income not effectively connected with a U.S. trade or business.

On top of that, the court ruled that Goosen should not benefit from any provision under either the 1975 or the 2001 income tax treaty between the United States and the United Kingdom.

Washington, D.C. (November 10, 2011)
By Michael Cohn, Accounting Today The Internal Revenue Service has issued a revenue ruling permitting an employer that is using an accrual method of accounting to take a deduction in the current year for a fixed amount of bonuses payable to a group of employees, even though the employer does not know which of the employees will receive a bonus or the amount of any particular bonus until after the end of the taxable year.

Under Revenue Ruling 2011-29, employers could take a deduction on the bonuses, whether or not the employees has determined who will receive the bonus.

“In other words, the entire amount of the bonus pool will be paid to members of the group of employees in the following year, but at the end of the current year the employer doesn’t yet know which particular employees will receive any bonus or how much,” the IRS said when issuing the revenue ruling Wednesday.

The revenue ruling could prove helpful in particular to financial firms that typically award year-end bonuses to high-performing employees. Wall Street banks are expected to pay lower year-end bonuses this year as a result of the trading volatility this past year. Other types of companies could also benefit. In the revenue ruling, the IRS cited court precedents involving the Washington Post Company and casino operator Hughes Properties

IRS Commissioner Shulman Clamps Down on Secret Foreign Bank Accounts November 18, 2011
By Roger Russell, Senior Editor, Accounting Today

A 2008 Senate report estimated the costs of non-compliance by taxpayers using offshore bank accounts to be at least $100 billion annually.
Doug Shulman

To combat this, the Internal Revenue Service has initiated several voluntary compliance programs in addition to negotiating the release of information from a number of banks.

The 2009 and 2011 offshore voluntary disclosure initiative programs were hugely successful, both in terms of the number of people coming forward and the amount of dollars collected. However, some suggested that this was only the tip of the iceberg, and that there are thousands more waiting to be discovered. In a recent conversation with IRS Commissioner Doug Shulman, I asked him if he believes there are a significant number that haven’t yet come forward, and whether he has the plans and the resources to pursue them. His answer is instructive, and reflects the success of the program not only in initial amounts that it collects, but in changing the long-term behavior of those who otherwise might be tempted to cheat.

“A major focus of mine has been making sure we’re up to the task of tax administration in a global economy and a global world. One of the key components has been combating offshore tax evasion,” he said.

“We’ve been very successful in our enforcement activities, piercing the veil of bank secrecy for the first time in some key jurisdictions,” he added. “We’ve been getting better and better over the last several years at finding people who are hiding assets overseas, and pursuing banks, promoters and advisors who facilitate evasion. We’ve had very close cooperation with foreign governments, and have increased the flow of information and communication to help crack down globally on offshore tax evasion. As you mentioned, while we were cracking down we also gave people a chance who wanted to come in, pay their back taxes, pay a very stiff penalty but avoid going to jail. And the numbers are now well over 30,000 people who have come in.”

“For me the big deal about this effort isn’t about those 30,000 people or the successful enforcement effort, it’s about changing the risk calculus for the long term,” Shulman continued.

“I think individuals who would have thought about hiding assets overseas really understand today that that’s not a wise thing to do,” he noted. “Advisers are much less willing to facilitate it, banks are much less willing to take deposits, and so I think we’ve changed the risk calculus, which leads to long-term compliance which is our goal. Your specific question about are there other people, of course there are others out there, but I would tell you I don’t think it’s very wise for them to be out there because their chances of getting caught are exponentially higher today than they were just several years ago.”

New York (November 18, 2011)
By Michael Cohn, Accounting Today

Small businesses and nonprofit organizations often overlook the warning signs of employee fraud, especially by senior managers, according to accounting firm Marks Paneth & Shron.

The firm advises management and board members to recognize the red flags and act early to stop fraud.

“Organizations pay a high price for fraud,” said Sareena Malik Sawhney, a forensic accountant who serves as a director in the Litigation and Corporate Financial Advisory Services Group at the New York-based accounting firm. "The damage can be particularly severe at small organizations where losses can be extremely threatening. These organizations often do not have the systems in place to detect fraud and prevent or limit their losses."

According to the Association of Fraud Examiners 2010 Report to the Nations on Occupational Fraud and Abuse, the typical organization loses 5 percent of its annual revenues to fraud. Frauds last a median of 18 months before being detected.

The report found that frauds committed by senior executives or owners were more than three times as costly as frauds committed by managers, and more than nine times as costly as employee frauds. Executive-level frauds also took much longer to detect.

“There are warning signs for the most common types of fraud,” said Sawhney. “If management and board members recognize them, they will be better able to detect fraud early and prevent or minimize the losses.”

She warned of signs of fraud such as shrinking inventories. "Skimming is defined as diverting funds before they get recorded into an organization's books,” she noted. “For example, employees often skim funds by pocketing customers' checks and trying to cash them, but customers will complain if they don't receive their goods, so the employee ships them. The result is that goods disappear from inventory, but no sale has been recorded. Inventory comparisons can reveal the fraud, as can analytical procedures such as gross profit analysis."

Bank deposits that don't match cash receipt records are another telltale sign. “Cash larceny involves diverting funds after they're on the books—it's clearly outright theft,” she said. “An example might be an employee who steals checks or cash before they can be deposited at the bank. The best detection method is to compare receipt records to deposits. Data analysis software can help an organization check for this kind of fraud.”

Checks made payable to an employee, an unknown person, an unapproved vendor, or “cash,” are another warning flag "Any of these are signs of a kind of check fraud known as a 'forged maker scheme' where an employee intercepts, forges or alters one of the organization's own checks,” said Sawhney. “Usually, the check is made out to the employee, but it might be made out to an accomplice, an unknown vendor, or simply to cash. Strange endorsements can also be a sign of fraud, as can missing checks or missing disbursement documentation."

She said organizations should also beware of payroll fluctuations—or poorly documented employees on the payroll. "In a payroll scheme, fictitious employees are added to the company's payroll. If you find unusual fluctuations in payroll, or employees with minimal or no personnel records, or employees with missing social security numbers receiving payroll checks, you should suspect payroll fraud,” said Sawhney. “High overtime for a particular job category can be a red flag, as can discrepancies between net payroll and payroll checks issued."

Changes—or unusual patterns—in employees' expenses are another red flag. “It's common for employees to commit fraud by inflating their expenses or submitting fictitious expense reports,” warned Sawhney. “Look for unusual fluctuations or changes in patterns in employees' expenses. Also watch for expenses that end in round numbers, recurring expenses for the same amount, and expenses that fall just below the reimbursement limit. This is another area where data analysis software can reveal the patterns and help detect the fraud.”

2011 is just about OVER, VisionQwest Accountancy Group is offering a early sign up for tax appointments for this 2011/2012 Tax Season.  

2010 was the first year we used our on-line automated appointment system.  The system worked so well that this year we decided to let our clients schedule their tax appointments starting November 1, 2011. 

Follow the link below and schedule your appointment.
TAX APPOINTMENTS 2012

To start preparing for next year the new tax organizer is located at:
2012 TAX FORMS

Our phone is:  818.547.0497 Ext 3
Fax:  818.547.0449

VisionQwest Accountancy Group
A Professional Accountancy Corporation
500 N Central, Suite 740
Glendale  CA  91203