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Lunch Beat

Bramwell's Lunch Beat: Boeing Accounting, Overhaul vs. Piecemeal, IRS Security

Feb 18th 2016
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Boeing chief defends accounting practice
Boeing Co. Chief Executive Dennis Muilenburg on Wednesday defended the aerospace company’s accounting practices and corporate strategy in the wake of weeks of volatile stock movements, wrote Jon Ostrower of the Wall Street Journal. Last week, a media report said the US Securities and Exchange Commission was probing Boeing’s financial projections. Muilenburg defended the company’s longtime use of a system called program accounting and reaffirmed the expectation that it would deliver the profitability and cash flow that it has promised investors on its flagship 787 Dreamliner. He neither confirmed nor denied the existence of any investigation but sought to calm investor concerns. Boeing uses program accounting to spread its high early costs over a large block of deliveries, and the method is compliant with US GAAP. “It’s a very disciplined, rigorous accounting process, one we understand well. And the way we apply it on 787 is the same way we apply it on all of our commercial airplane lines,” he said.

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Business Roundtable chief: Corporate tax system needs overhaul, not piecemeal fixes
The business tax system is broken, and those problems can only be addressed comprehensively, said Doug Oberhelman, the new chairman of the Business Roundtable, wrote Richard Rubin of the Wall Street Journal. “I don’t think you can take them piecemeal,” Oberhelman, CEO of Caterpillar Inc., told reporters at the CEO association’s Washington office on Wednesday. “You’ve got to have revenue on the table. You’ve got to have lower tax rates on the table, simplification. And you play with all of this at the same time to get something that’s going to be a compromise for all.” House Republicans have been considering a piecemeal approach to address what they see as urgent problems in the international tax system, including corporate inversions and foreign takeovers of US companies. Their broader plans, shelved until 2017, would require lowering the individual income tax rates that apply to many smaller companies’ profits.

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IRS online security getting worse, not better, lawmakers fear
Joseph Marks of Politico wrote that as the 2016 tax-filing season begins, the IRS has yet to fix digital vulnerabilities that allowed identity thieves last year to steal tax records belonging to more than 330,000 Americans. Lawmakers who fear a repeat of that episode say the IRS is unable to distinguish between taxpayers and crooks seeking to impersonate them online in order to grab illicit tax refunds. “There is more taxpayer data on the black market today than ever before, and we shouldn’t think for a second that it’s going to change,” said Senate Finance Committee Chairman Orrin Hatch (R-UT). “We have to fundamentally rethink the way we authenticate taxpayers and process tax returns. And that change is going to have to start with the IRS.” The Obama administration is seeking $62 million in its fiscal 2017 budget to bolster IRS network defenses. The White House last year made a midyear request for $242 million to shore up IRS information security.

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Trump: Churches should not lose tax-exempt status for political participation
Republican presidential candidate Donald Trump believes churches should not lose their tax-exempt status for engaging in political activity, telling Christian Broadcasting Network that he believes more faith leaders would endorse him if they didn’t feel threatened, wrote Jose A. DelReal of the Washington Post. “I see churches where they’re afraid to be outspoken because they don’t want to lose their tax-exempt status and I realize that is one of the problems,” he said. “I want to give power back to the church because the church has to have more power. Christianity is really being chopped; little by little it’s being taken away.” Trump has heavily courted Christian evangelicals and social conservative voters in the election season.

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Quick Links:

  • How I managed to pass REG in the middle of busy season (Going Concern)
  • Hooked on startups (CFO)
  • Small businesses still fighting for cash seized by IRS (CNBC)
  • IRS chief counsel notice highlights Tax Court procedure changes due to PATH Act (Forbes)
  • Kim Kardashian and Kanye West file taxes separately, should you? (Forbes)
  • Oxymorons in the tax law cannot be fixed with clever ideas (Forbes)
  • How valid is Tax Foundation dynamic scoring? (Forbes)
  • 4 sneaky tax hikes in the Obama budget (Forbes)
  • Utah’s Internet sales tax folly (Forbes)
  • How former president Washington dealt with the first real tax crisis in America (Forbes)
  • Ted Cruz would radically reform taxes but also explode the debt (CNN)
  • Here’s a better oil tax plan for Obama to consider (New York Post)
  • Obama’s oil tax could curb our growing deficit (Wall Street Daily)
  • Want debt-free college? Tax the rich. (The Nation)

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