Monthly Archives: August 2016

Don Slager and John J. Koraleski Join Board of Martin Marietta Materials

In recent business news, Martin Marietta Materials, Inc. (MLM) has announced that a new independent director was recently elected to their Board of Directors. At the Annual Meeting of Shareholders in May, Donald (Don) W. Slager was elected to their Board of Directors. Don Slager is the President and CEO of Republic Services, Inc. and is also a member of their Board of Directors. Republic Services is an industry leader in American recycling with approximately $9 billion in revenues. They have a vast array of operations including collection companies, transfer stations, landfills and recycling centers and more. Don Slager also serves on Martin Marietta’s Finance Committee and Ethics, Environment, Safety and Health Committee.

Another independent director was elected to the Board of Directors for Martin Marietta Materials, Inc. He is John J. Koraleski, the former Chairman of the Board of Directors and CEO of Union Pacific Corporation (UNP). He was the Executive Chairman of the Board of Directors for Union Pacific from February 2015 until he retired in September of that year. Union Pacific operates railroads that connect 23 states in the western area of the US by rail

As C. Howard (Ward) Nye, the Chairman, President and Chief Executive Officer of Martin Marietta said,

“We are excited to welcome Jack Koraleski and Don Slager to Martin Marietta’s Board of Directors. They are both experienced chief executives who are well-versed in corporate governance matters and whose strategic insights will be invaluable in helping Martin Marietta continue to deliver good results to its shareholders. In addition, their deep knowledge of logistics, transportation, land use, as well as a strong focus on safety and environmentally responsible businesses, will enable each of them to make a very meaningful contribution to the Board. We are extremely pleased to have people of Jack’s and Don’s caliber and expertise join the Martin Marietta Board and believe they are each going to make an important and positive impact on our company, its employees, customers and shareholders

Projection: By 2020 Netflix Will Have More Int’l Customers than Domestic

The headquarters of Netflix in Los Gatos. Photo by Coolcaesar at en.wikipedia

The headquarters of Netflix in Los Gatos. Photo by Coolcaesar at en.wikipedia

According to the London-based analytics firm IHS Markit, Netflix will have 75 million subscribers across the globe by 2020 generating $7 billion in revenue. Today, according to 2Q company results, Netflix has a total of 80 million subscribers in total, with 34 million outside the USA.

There has been concern among investors that growth in the USA is slowing critically. The company, which is a giant in the streaming media industry, recently changed its slow and steady growth tactics and launched 130 brand new international markets simultaneously.

Their strategy for growth in those global markets is to “listen, learn and improve rapidly, adding more content, additional languages and a better experience over time.”

IHS Markit sees this plan as the right way to increase growth in these markets. They forecast growth in the international arena to be $133 percent in 2017, and 62 percent in 2018.

“Netflix has launched a platform upon which it can build and differentiate the service to fit specifics of every region in the future,” IHS analyst Irina Korilova said. “Netflix is starting this localization process in Poland and Turkey this year. Subscribers in these countries can expect an addition of local languages on the user interface, subtitles and dubbing of content. This will help drive new subscriber numbers drastically.”

Cisco Systems to Fire Twenty Percent of Work Force

In what is still an unconfirmed development, sources close to the company have reported to the popular technology news site CRN that Cisco Systems Inc will be laying off approximately 14,000 workers. That number represents about 20 percent of their global workforce.

Cisco is a giant maker of network equipment.

“As we’ve met with investors in recent weeks, we’ve picked up on concerns that Cisco may be looking to reduce headcount in the not-too-distant future,” Jefferies analyst said.

If the story is true, then the development will be the second largest high tech layoff announced in 2016. Last April Intel Corp said it was reducing its own workforce by 12,000, an 11 percent decrease in employees.

Cisco is faced with a severe slowing in purchases by telecom carriers and other businesses who purchase network switches and routers, Cisco’s main business. To combat this decline, they have been building up their wireless security and data-center businesses.

Trump Vows Tax Breaks for Business

Promising to “revolutionize” the tax code in favor of business, Donald Trump revealed a comprehensive and coherent agenda for how he will lure businesses back to the United States through taxation policy.

In his address to the Economic Club of Detroit, the Republican candidate for president promised what he called the biggest “tax revolution” since the days of trickle-down economics of Ronald Reagan.

Trump vowed to cut the maximum tax bill for businesses will be 15 percent, a significant reduction from the current maximum of 35 percent. In addition, he said he will enact a one-time 10 percent tax on the trillions of dollars in corporate profits which are now ensconced off-shore, in order to incentivize the dollars to return home.

Trump emphasized that the cut was directed at business tax havens like Ireland and the United Kingdom. His 15 percent proposal followed a similar statement made by George Osborne, the former chancellor of the exchequer in the UK made in the aftermath of the British vote to leave the European Union.

“We are ready to show the world that America is back — bigger and better and stronger than ever before,” Trump stated.

IRS and New Estate Tax Rules: Opinion

taxThrough the process of its amended tax law regulations, the IRS is likely to encounter hostility at the upcoming December 1 hearing on the matter. Much of the discussion will focus on whether or not it will be accused of “overstep[ing] its authority” in this regard.

What are the experts saying on this? Pioneer Wealth Partners principal Johnathan Blattmachr believes that regarding the authority the Treasury and IRS are to be “viciously attacked by taxpayers and their advisers.” However, the Tax Court might uphold the regulations using the three-decade old deference doctrine set forth by the US Supreme Court decision in the Chevron USA Inc. v Natural Res. Def. Council case. Back then, the court formed a legal test to determine whether or not to “grant deference to a government agency’s interpretation of a statute that it administers.”

In terms of valuation discount elimination, Blattmachr notes that the regulations “would seem to eliminate minority (or lack of control) discounts for all family ‘controlled’ entities including active businesses.”

Charles (Chuck) Rubin sees one possible silver lining in a recent article in JDSupra Business Advisor. He said: “assuming the higher Section 2704 values allow for higher basis for interests held at death, this will allow for income tax savings. For estates within annual exclusion amounts (and thus no estate tax) such basis step-ups could make this a revenue loser for the IRS.” But in the same journal in an article by Leah Bishop, Tarin Bross and Alyse Pelavin, it was pointed out that “the proposed regulations, which attempt to significantly limit the ability to claim valuation discounts.”

Still, should these regulations be finalized there are still various exceptions. Bishop, Bross and Pelavin point out that: a) the regulations are not applicable to all entities; and, b) when a taxpayer dies, the valuation discounts of that estate tax benefit are “often offset by an income tax cost due to lower tax basis of the inherited property.”

The three concluded that where these regulations are “particularly important” is vis-à-vis infra-family gifts and sales to reduce estate tax payable with a death. In all such situations like these, consulting an expert in the industry on the specific case is the best way forward to avoid difficulties and gain clarity, given the complexity of the tax laws and their fluctuations.

Buffet Challenges Trump: Release Your Tax Returns

Warren Buffett - Caricature, courtesy of  DonkeyHotey

Warren Buffett – Caricature, courtesy of
DonkeyHotey

On the campaign trail in support of Democratic presidential candidate Hillary Clinton, billionaire Warren Buffet challenged Clinton’s rival, Republican candidate Donald Trump, to release his tax returns.

The race for the President of the United States is Trump’s first encounter with running for any kind of office. Not a politician, Trump is a businessman who claims his success in business is his main qualification to become president. Buffet, also a businessman, questioned Trump’s claims, demanding that he release his tax returns.

Trump’s response was to say that since he is being audited at the moment by the IRS he could not release them. Buffet replied to the rebuff at the rowdy, Nebraska ralley:

“Now I’ve got news for him,” said Buffett, whose Berkshire Hathaway (BRKa.N) conglomerate is based in Omaha. “I’m under audit, too, and I would be delighted to meet him anyplace, anytime, before the election.

“I’ll bring my tax return, he can bring his tax return … and let people ask us questions about the items that are on there,” Buffett said. He added that Trump is “afraid” not of the tax-collecting IRS but of voters.