US LAW AS OF AUGUST 10, 2010 --- NEED HELP INTERPRETING

[Scooter]

DV TEAM,

I'm not quite sure all the angles in which this law will affect our investment, if any but I encourage your comments if you know anything about this or its affects. Nevertheless, you should probably be aware of it because it has an affect on Foreign Assets, distributions, and establishing the basis for individuals and corporations. It was signed into law on August 10th, 2010.

CTRL - ZOOMS IN

CTRL + ZOOMS OUT

I hope you find some benefit and we'll be speaking with you soon.

Scooter

-----------------------------------------------------------------------------------------------------------------------------------------------

[BobbyToGo]

Effective date listed as after December 31, 2010. Looks like it is aimed at those who would cash in outside the country under international corporation charters so as to pay taxes in that country and take advantage of the U.S. foreign tax credits. It isn't clear to me that they want the exceptional rate on domestic currency exchanges.

But, I'm NOT the man.

[kingfish]

I was having a hard time reading it but it did seem to be aimed at foreign corps. I could be wrong.

Mark my words.... O will be in your pocket somehow. That is the only thing you can count on for sure.

Do you have any idea how much the economy would be "Stimulated" if the Govt was to just leave us alone.

The deficit would be gone after RV and people would actually be able to pay things off... that would free up money for loans.... maybe even start the economy going again.

If O has thought about this... He is the hold up.. He seems more intrested in Killing us rather then Saving us.

[Scooter]

BobbytoGo,

Thanks for the comment! I thought that as well until I began reading page 7 and 8 (H. R. 1586—7 and H. R. 1586—8) and I began to wonder how deep this goes into individual investors and their foreign investments. Take a look and let me know. Again, thank you for the comment!!!

H. R. 1586—7

‘‘(4) COVERED PERSON.—The term ‘covered person’ means,

with respect to any person who pays or accrues a foreign

income tax (hereafter in this paragraph referred to as the

‘payor’)—

‘‘(A) any entity in which the payor holds, directly or

indirectly, at least a 10 percent ownership interest (determined

by vote or value),

‘‘(

any person which holds, directly or indirectly,

at least a 10 percent ownership interest (determined by

vote or value) in the payor,

‘‘© any person which bears a relationship to the payor

described in section 267(

or 707(

, and

‘‘(D) any other person specified by the Secretary for

purposes of this paragraph.

H. R. 1586—8

‘‘(2) COVERED ASSET ACQUISITION.—For purposes of this

section, the term ‘covered asset acquisition’ means—

‘‘(A) a qualified stock purchase (as defined in section

338(d)(3)) to which section 338(a) applies,

‘‘(

any transaction which—

‘‘(i) is treated as an acquisition of assets for purposes

of this chapter, and

‘‘(ii) is treated as the acquisition of stock of a

corporation (or is disregarded) for purposes of the foreign

income taxes of the relevant jurisdiction,

‘‘© any acquisition of an interest in a partnership

which has an election in effect under section 754, and

‘‘(D) to the extent provided by the Secretary, any other

similar transaction.

Best regards,

Scooter

[Trimark]

It was hard for me to read all of the bill because half the page gets cut off when I enlarge the screenshots but from what I was able to read of it and the summary I read from another thread I'm pretty sure that this doesn't apply to us at all.

We are not a 'covered person' as indicated in the bill:

the term ‘covered person’ means, with respect to any person who pays or accrues a foreign

income tax

If you cash in within the US you would pay US income tax and no tax is owed to Iraq on the transaction so you would not be a person who accrues foreign income tax.

Also, if you cash in offshore and that money is in a country that doesn't charge you income tax on the transaction then you would not accrue foreign income tax as defined in the bill (HR 1586 section 7, part 2).

The way I read it this is about corporations that split the credits and basically try to 'double dip' and get money from using tax credits that they don't really deserve to take.

It's been years since I've used my background with tax laws so I could be wrong, but I'm not worried at all about the bill posted.

[Scooter]

Trimark,

Thanks for comment. Here's my suggestion for the pages being cut off:

CTRL - ZOOMs you Closer into the image while in your browser --- just hold the CTRL key down and hit the "-" key.

CTRL + ZOOM's you out from the image while in your browser

Please let me know if that works for you. If it doesn't, I send you a direct link to the image.

Thanks again and have a great evening,

Scooter

[marineonwatch]

Scooter:

I did a bit of research regarding the senate ammedments regarding HB 1586 and fopund this. I hope it helps. This is straight from the web site.

H.R. 1586 Senate Amendments

Senate Amendments to H.R. 1586—The State Bailout Bill

Date August 10, 2010

111th Congress, 2nd Session

FLOOR SITUATION

On Tuesday, August 10, 2010, the House is expected to consider the Senate amendments to H.R. 1586 (originally the FAA Air Transportation Modernization and Safety Improvement Act). The House-passed text of the FAA authorization was replaced by the Senate by an amendment sponsored by Sens. Reid (D-NV) and Murray (D-WA) which includes $26.1 billion in federal bailouts for states that is partially offset with permanent tax increases and rescissions. The amended version of the bill passed the Senate on Thursday, August 5, 2010, by a vote of 61-39. According to Democrat House Leadership, the Rules Committee will meet on Monday, August 9, 2010, to report a rule for consideration of the bill.

EXECUTIVE SUMMARY

The bill contains a total of $26.1 billion in temporary state bailouts paid for with permanent tax increases and spending reductions (mainly from the “stimulus” bill). The bill provides $10 billion for a state education bailout that can only be used to pay teacher salaries. In order to receive the education money, states would be prohibited from reducing their education budgets below 2009 levels and the federal money could not be used to reduce the state’s debt. Thus, the bill not only shields states from making tough budget choices, it prohibits them from doing so.

In addition, the bill extends the increased federal Medicaid matching rate of 6.2 percent through 2010 and begins to phase out the increased rate by June, 2011. This provision will cost $16.1 billion.

The bill is partially offset by $9.7 billion in permanent tax increases which would impact U.S. multinational companies. These taxes have been used by Democrats at least three other times as offsets for other spending bills. While Democrats call these “tax loopholes,” these tax hikes could risk jobs and put American companies at a competitive disadvantage when operating in foreign markets.

In addition, the bill contains $14 billion dollars in spending reductions from the Democrats’ stimulus bill. The Democrats call this a spending cut, but stimulus money is designated as emergency funding and therefore not subject to PAYGO. CBO does not recognize any savings from stimulus reductions for the purposes of statutory PAYGO. Thus, CBO estimates that this bill will actually increase the deficit by $12.6 billion.

STATE BAILOUTS

State Education Bailout: The legislation includes $10 billion for an “Education Jobs Fund” to supplement states’ education costs. The bill stipulates that the funds shall be distributed by the Department of Education through their respective funding formulas or based on each district’s share of Title I funds. States may only use the funds to pay the salaries of employees and the bill prohibits the spending from being used to add to “rainy-day funds” or to reduce state debt. The bill also forbids states from reducing education expenditures below FY 2009 levels. Thus, states would be barred from reducing spending to address their current budget shortfalls. In addition, the bill would require the Secretary of Education to refuse a Governor who did not want access to the $10 billion slush fund and provide the funds to another state entity for distribution. This provision would cost $10 billion over ten years.

The fund is similar to the State Fiscal Stabilization Fund, which was created in the first “stimulus” and has already distributed $53.5 billion to states to supplement education budgets. The president claimed that this spending would create millions of jobs. Instead, the funding was largely used to subsidize existing obligations, delaying tough budget decisions that would otherwise be essential. In a number of areas, cash-strapped state and local governments used the money to give employees raises. Meanwhile, these governments were shielded from budgeting within their means to meet funding gaps. In addition, states are barred from making reforms that would lower education spending and ease budget pressures. These federal bailouts not only allow state governments to skirt fiscal responsibility with fungible federal money, but they forbid them from cutting spending or reducing debt.

Extension of “Stimulus” Increase in FMAP: The bill would extend the federal Medicaid matching rate of 6.2 percent to all states through December 2010. The legislation would then begin to phase down the FMAP increase to 3.2 percent for the first three months of 2011 and 1.2 percent from April through June 2011. This provision would cost $16.1 billion over ten years.

TAX INCREASES, RESCISSIONS AND OTHER OFFSET PROVISIONS

Tax Increases

The legislation includes $9.7 billion in permanent tax increases to offset a portion of temporary state bailouts. These tax provisions would impact U.S. multinational companies and increase the cost of doing business for companies during a recession. These tax hikes could risk jobs and put American companies at a competitive disadvantage when operating in foreign markets. In addition, these same tax provisions have been used as offsets for no less than two other pieces of House-passed legislation in the past two weeks (H.R. 5893 and H.R. 5982).

Rules to Prevent Splitting Foreign Tax Credits from the Income to Which They Relate: This provision would implement a matching rule that suspends the recognition of foreign tax credits until the related foreign income is taken into account for taxing purposes in the U.S. This provision would apply to all split foreign taxes claimed by taxpayers after the date of introduction. According to JCT, this provision would increase taxes by $4.25 billion over ten years.

Denial of Foreign Tax Credit with Respect to Foreign Income Not Subject to U.S. Taxation by Reason of Covered Asset Acquisition: This provision would prohibit taxpayers from claiming the foreign tax credit with regard to foreign income that is never subject to U.S. taxation because of a covered asset acquisition. The legislation would apply to related party transactions occurring after the date of introduction. According to JCT, this provision would increase taxes by $3.64 billion over ten years.

Separate Application of Foreign Tax Credit Limitation to Items Resourced Under Treaties: The legislation abides by the treaty commitment to treating income as a foreign source, but segregates the income so that it is not the basis for claiming foreign tax credits that have nothing to do with double taxation. The bill would conform the foreign tax credit treatment of taxpayers operating abroad through foreign branches and disregarded entities to the treatment already afforded to taxpayers operating through foreign corporations. According to JCT, this provision would increase taxes by $250 million over ten years.

Limitation on the Amount of Foreign Taxes Deemed Paid with Respect to Section 956 Inclusions: The bill would limit the amount of foreign tax credits that may be claimed on a deemed dividend under section 956 to the amount that would have been allowed with respect to an actual dividend. According to JCT, this provision would increase taxes by $704 million over ten years.

Special Rule with Respect to Certain Redemptions by Foreign Subsidiaries: The bill would eliminate a tax planning technique that allows foreign-based multinationals (e.g. a foreign-based company that owns a U.S. company, and that U.S. company owns a foreign subsidiary) earnings to bypass the U.S. tax system. According to JCT, this provision would increase taxes by $250 million over ten years.

Modification of Affiliation Rule for Purposes of Rules Allocating Interest Expense: The bill would prevent taxpayers from using certain techniques to minimize the amount of foreign source interest expense, which has the effect of boosting foreign source income – thus allowing taxpayer to utilize more foreign tax credits. According to JCT, this provision would increase taxes by $390 million over ten years.

Termination of Special Rules for Interest and Dividend Received from Persons Meeting the 80-percent Foreign Business Requirement: The bill terminates the “80/20” rule that exclude a corporation with gross income of at least 80 percent from a foreign source income and attributable to foreign trade or business during a three-year period from a 30 percent withholding tax. Some corporations that meet specific requirements and are not abusing the “80/20” company rules may receive relief. According to JCT, this provision would increase taxes by $153 million over ten years.

Limitation on Extension of Statute of Limitations for Failure to Notify Secretary of Certain Foreign Transfers: The bill would make a technical correction to the Hiring Incentives to Restore Employment (HIRE). This provision would clarify the circumstances in which the statute of limitations period for corporations that fail to provide certain information on cross-border transactions or foreign assets. According to JCT, this provision would have no revenue impact over ten years.

Elimination of the Advance Earned Income Tax Credit: The bill eliminates the ability of recipients of the Earned Income Tax Credit (EITC) to receive advanced payments throughout the year by having their payments of withheld income reduced by their employer. According to Senate Democrat staff, the advanced option is employed by three percent of EITC recipients. According to CBO, this provision will reduce spending and increase revenue by $1.13 billion over ten years.

Spending Offsets

Medicaid Average Manufacturer Price: The bill would include inhalation, infusion, and injectable drugs not dispensed through retail community pharmacies in the calculation of the Medicaid average manufacturer price (AMP). Under current law, the AMP calculation excludes certain payments and rebates if received from or provided to entities other than retail community pharmacies. According to CBO, including these additional drugs in the AMP calculation will reduce spending by $795 million over five years and $2 billion over ten years.

Stimulus Food Stamp Provisions: The bill would terminate stimulus spending increases for the Supplemental Nutrition Assistance Program (SNAP), also known as Food Stamps, on March 31, 2014. According to CBO, this provision would reduce spending by $7.4 billion over five years and $11.9 billion over ten. Some Members may question the accounting methods which lead CBO to score this provision as a spending reduction. Since the SNAP spending baseline was raised 18 months ago in the Democrats’ stimulus, the bill merely reduces a significant funding increase that was designated as emergency spending and never offset. In essence, the Democrats increased the spending baseline without offsetting the cost and are now returning the baseline to its original trajectory and calling it a “savings.”

Because this spending was designated as emergency, these savings are not counted in the calculation of the effect of the bill on the deficit under the Statutory Pay As You Go Act. Since these funds—and roughly $2 billion of emergency rescissions in the bill—cannot be counted as a savings under PAYGO, the legislation violates the Democrats’ statutory PAYGO by $12.6 billion.

Rescissions

The bill includes $6.7 billion in rescissions, including approximately $2.5 billion in Department of Defense rescissions. In addition, the bill includes roughly $2.3 billion in rescission from the stimulus bill. Since these funds are regarded as emergency spending, these savings are not taken into consideration when calculating the deficit effect of the bill for PAYGO. A list of the specific rescissions in the bill follows.

•$2.2 billion in unobligated Highway Trust Fund contract authority.

•$1.8 billion in funds appropriated to the Department of Defense, primarily from previously appropriated funding for operations and maintenance and procurement.

•$1.5 billion from stimulus funding for the Department of Energy’s Innovative Technology Loan Guarantee Program.

•$500 million in funds appropriated to the Department of Defense for military construction.

•$302 million in stimulus funding provided to the Department of Commerce for broadband grants.

•$260.5 million in stimulus funding provided to the Department of Defense.

•$122 million in funding provided to the Department of Agriculture for past emergencies.

•$115 million in miscellaneous stimulus rescissions.

•$70 million in funding appropriated to the Department of State and USAID for the Civilian Stabilization Initiative.

•$50 million in funding appropriated for the Millennium Challenge Corporation.

•$50 million in funding from the Department of Education for literacy.

•$14.2 million in funding provided in as early as 2004 to the National Park Service and the Fish & Wildlife Service.

•$10.7 million in miscellaneous Department of Education rescissions.

•$7.9 million in funds appropriated in 2004 and 2006 to the Federal Aviation Administration.

•$6.1 million in Stimulus funding provided to the Department of Veterans Affairs for which the purpose has been completed.

•$100 million in funding appropriated to the General Services Administration.

•$82 million from the Department of Education Student Aid Administration.

•$47 million in Stimulus funding to the Commissioner of Social Security.

•$28.6 million in Stimulus funding appropriated to the Department of Interior and the EPA.

•$20 million from the Department of Energy for nuclear energy.

•$18 million in funding appropriated to the Nuclear Regulatory Commission.

•$6 million in funds appropriated in 1995 to the Department of Health and Human Services.

COST

The bill includes $26.1 billion in new spending which is offset with $27.4 billion in increased taxes and spending reductions. However, CBO states that $14 billion of spending reductions come from emergency funding which is not subject to PAYGO and thus cannot be used as an offset. Therefore, according to CBO, the bill violates statutory PAYGO and increases the deficit by $12.6 billion.

ADDITIONAL VIEWS

More “Stimulus” Spending: The bill contains $10 billion in so-called “teacher jobs” spending. This money would be used to bail out states with shortfalls in their education budget. The funding is on top of $53.6 billion that was provided to states in the Democrats’ stimulus bill through the State Fiscal Stabilization Fund in order to fill education gaps. According to the Department of Education, the “one-time appropriation” in the stimulus bill was meant as “a historic infusion of funds that is expected to be temporary.”

While Democrats may argue that the increased government spending will result in the creation of jobs, past experience suggests otherwise. Since last year more than a trillion dollars has been spent by Democrats on so-called “jobs” legislation that has done little to lower unemployment or curb the effects of the recession. As it has been widely reported, the Obama Administration said in late January 2009, if the $1 trillion stimulus bill was passed unemployment would not surpass 8 percent. However, unemployment has hovered near 10 percent since the stimulus was passed and the recent drop in the unemployment rate—from 9.9 percent to 9.7 percent—was due only to 410,000 new government jobs. Even the country’s economic growth rate has disappointingly slowed from 5.6 percent in the fourth quarter of 2009 to the 3 percent in the first quarter of 2010. Such growth rates are entirely insufficient to put the 15 million unemployed Americans back to work. In short, government spending has done nothing to improve our nation’s economic station and done much to impair fiscal stability.

Prohibits Responsible Budgeting: Some Members may be concerned that the bill bars states from making reforms which may be necessary to maintain a fiscally responsible state budgeting process. The bill temporarily shields states from addressing budget and funding gaps within their means to meet funding gaps. In addition, states are prohibited from reforming and reducing education spending to ease budget pressures. These federal bailouts not only allow state governments to skirt fiscal responsibility with federal money, but they forbid them from cutting spending or reducing debt.

Permanent Tax Increases for Temporary Bailouts: Some Members may be concerned that the legislation includes $9.7 billion in permanent tax increases to offset a portion of temporary state bailouts. These tax provisions would impact U.S. multinational companies and increase the cost of doing business for companies during a recession. These taxes risk jobs and put American companies at a competitive disadvantage when operating in foreign markets.

PAYGO Violations and Gimmicks: According to CBO, the net effect of the legislation is a deficit reduction of $1.3 billion. However, this estimate includes $14 billion in spending reduction from Food Stamps and stimulus rescission which are designated as emergency funding and thus not subject to PAYGO. According to CBO, these savings are not counted in the calculation of the effect on the deficit under the Statutory Pay-As-You-Go Act of 2010. Some Members may be that CBO’s estimated effect of the bill for compliance with statutory PAYGO is an increase in the deficit of $12.6 billion over ten years and would be a violation of the Democrats’ PAYGO.

[PAPATOM]

Trimark,

Thanks for comment. Here's my suggestion for the pages being cut off:

CTRL - ZOOMs you Closer into the image while in your browser --- just hold the CTRL key down and hit the "-" key.

CTRL + ZOOM's you out from the image while in your browser

Please let me know if that works for you. If it doesn't, I send you a direct link to the image.

Thanks again and have a great evening,

Scooter

Hey Scooter....

this deals with Foreign Income. If you trade your dinar in, in the USA and have it sent to your bank it will be domestic income, cap.gains. Also, this is dealing with acquisition of assets...stocks etc. it's not dealing with the purchase of currency. So I wonder, is this what was being discussed in your chat that was posted earlier today? I kind of took that chat to say that there was language being inserted in up coming legislation that would affect our currency related domestic income....I hope this was it.

[marineonwatch]

For those looking for a link, this is from GOP.gov.

http://www.gop.gov/bill/111/2/hr1586senateamendments

[Trimark]

Thanks Scooter. The ctrl zoom works to a degree in that it enlarges the images but there isn't a scroll bar at the bottom of the screen window. This cuts off everything to the right of the window frame which ends up being about 1/4 of the screenshot. No worries though. I'm usually able to decipher enough to get the gist of the images.

In this case, I really don't think the bill/law applies to us at all. They might try to insert another tax that does affect us in an upcoming law but we're safe on this one.

[MrRich]

Thanks Scooter. The ctrl zoom works to a degree in that it enlarges the images but there isn't a scroll bar at the bottom of the screen window. This cuts off everything to the right of the window frame which ends up being about 1/4 of the screenshot. No worries though. I'm usually able to decipher enough to get the gist of the images.

In this case, I really don't think the bill/law applies to us at all. They might try to insert another tax that does affect us in an upcoming law but we're safe on this one.

What I do is right click the Scooter research image and save it to my hard drive and then I can insert it into a Word document and zoom in with a horizontal scrollbar. Use the View tool if necessary. Good luck.

[BobbyToGo]

BobbytoGo,

Thanks for the comment! I thought that as well until I began reading page 7 and 8 (H. R. 1586—7 and H. R. 1586—8) and I began to wonder how deep this goes into individual investors and their foreign investments. Take a look and let me know. Again, thank you for the comment!!!

H. R. 1586—7

‘‘(4) COVERED PERSON.—The term ‘covered person’ means,

with respect to any person who pays or accrues a foreign

income tax (hereafter in this paragraph referred to as the

‘payor’)—

‘‘(A) any entity in which the payor holds, directly or

indirectly, at least a 10 percent ownership interest (determined

by vote or value),

‘‘(

any person which holds, directly or indirectly,

at least a 10 percent ownership interest (determined by

vote or value) in the payor,

‘‘© any person which bears a relationship to the payor

described in section 267(

or 707(

, and

‘‘

(D) any other person specified by the Secretary for

purposes of this paragraph

.

-Scooter, this only should be referenced AS IT RELATES to paragraph 4.

H. R. 1586—8

‘‘(2) COVERED ASSET ACQUISITION.—For purposes of this

section, the term ‘covered asset acquisition’ means—

‘‘(A) a qualified stock purchase (as defined in section

338(d)(3)) to which section 338(a) applies,

‘‘(

any transaction which—

‘‘(i) is treated as an acquisition of assets for purposes

of this chapter, and

‘‘(ii) is treated as the acquisition of stock of a

corporation (or is disregarded) for purposes of the foreign

income taxes of the relevant jurisdiction,

‘‘© any acquisition of an interest in a partnership

which has an election in effect under section 754, and

‘‘(D)

to the extent provided by the Secretary, any other

similar transaction

.

-Scooter, this is vague on purpose, but not for our domestic transactions.

"this section" still only refers to some exception to foreign income rules.

Best regards,

Scooter

Hope this helps. Thanks for all your work, Scooter.

Bobby

[Trimark]

What I do is right click the Scooter research image and save it to my hard drive and then I can insert it into a Word document and zoom in with a horizontal scrollbar. Use the View tool if necessary. Good luck.

That's great. Thanks for the tip Scooby Doo.

[RicknSaudi]

Trimark,

Thanks for comment. Here's my suggestion for the pages being cut off:

CTRL - ZOOMs you Closer into the image while in your browser --- just hold the CTRL key down and hit the "-" key.

CTRL + ZOOM's you out from the image while in your browser

Please let me know if that works for you. If it doesn't, I send you a direct link to the image.

Thanks again and have a great evening,

Scooter

Hey Scooter,

I find that right-clicking, save image as, then using picture/fax viewer allows me to navigate these (wonderful) images any way I desire. KUTGW