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Bramwell's Lunch Beat: Companies Long For a Renewed R&D Tax Credit

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Aug 12th 2015
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Companies lament missing R&D tax credit again
The tax credit companies use to offset some of their research and development (R&D) costs is missing again, but companies are forecasting the boost it could have on results this year, should lawmakers extend it, wrote Emily Chasan of CFO Journal. The Senate Finance Committee voted last month to advance a bill aimed at extending the tax break through the end of 2016. The most recent provision for the credit expired at the end of last year. Some legislators and the White House have proposed making the credit permanent. Companies are now reporting tax rates with and without the credit. For example, generic drugmaker Impax Laboratories Inc. said on Monday that its 37.6 percent adjusted effective tax rate for this year would have been 1.5 percent lower if the tax credit was still in effect. It expects it could record the impact of the credit on the full year in the fourth quarter if Congress decides to renew it then.

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SEC says hacked news releases were used to make illegal trades
An international network of hackers gained access to computer systems of business-newswire services to pull inside information from pending merger announcements, netting more than $100 million in illicit profits, according to federal indictments and a civil complaint unveiled Tuesday morning, wrote Dean Starkman of the Los Angeles Times. The indictments said the hacking network downloaded more than 150,000 press releases from Business Wire, Marketwired LP, and PR Newswire Association LLC. A network of traders in the United States made the illegal trades, paying the hackers for the information with either a flat rate or a percentage of the profits. Federal authorities filed criminal charges against nine individuals, including three from Ukraine and others living in the United States. The US Securities and Exchange Commission (SEC) filed civil charges against a wider network that included the five who were indicted and hackers, traders, and small securities firms in Moscow, Paris, Cyprus, and Malta.

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IRS union elects new president
The National Treasury Employees Union (NTEU), the country's largest federal labor group, elected a longtime executive to be its new president on Tuesday, wrote Bernie Becker of The Hill. Tony Reardon, currently the NTEU's executive vice president, will replace Colleen Kelley, who's retiring after 16 years at the helm of the union. Reardon, who received roughly nine out of every 10 votes in the union's election, said he was “honored and humbled” by the support. The union has had a tough job in recent years of defending IRS staffers in the wake of the agency's improper scrutiny of Tea Party groups seeking tax-exempt status. It also has pushed back at Republicans who have criticized bonuses received by IRS employees and the GOP's successful efforts to slash the agency's budget.

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IRS improves credit card oversight
Bernie Becker also reported for The Hill that the IRS has cleaned up its act when it comes to limiting improper purchases on agency credit cards, according to a new report from the Treasury Inspector General for Tax Administration (TIGTA). In an audit two years ago, TIGTA found that IRS credit cards were used to buy online pornography, Thomas the Tank Engine wristbands, kazoos, and wine for luncheons. But this most recent audit found just around 15 cases of confirmed or potential violations of the rules for using IRS charge cards over the first half of fiscal year 2015. In all, IRS staffers spent about $8.7 million on their cards in those six months, in almost 25,000 transactions.

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Labor secretary: We're moving ahead with financial advisor rule
Labor Secretary Thomas Perez is moving ahead with issuing a final regulatory proposal for financial advisors despite growing concerns from moderate Democrats and Republicans that it would hurt low-income Americans, wrote Kevin Cirilli of The Hill. Lawmakers in recent weeks have called on the administration to re-propose the controversial so-called “fiduciary standards,” which would increase disclosure requirements for financial advisors. The business community is vehemently lobbying against the proposal, arguing it would raise consumer costs for Americans who need financial advice the most, as well as force Americans into receiving virtual financial advice as opposed to human financial advice. But Perez and the administration argue the fiduciary rules are needed to better protect consumers from getting bad advice from their advisors, who could be benefiting off commission sales from financial institutions.

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Toshiba to write down over $800 million after accounting probe
Toshiba Corp. plans to book more than 100 billion yen ($802 million) in impairment charges for the last fiscal year in addition to marking down past results following an accounting investigation, Reuters reported. Independent investigators concluded last month the company had overstated profits by around 152 billion yen in the past few years. The impairment charges include a more conservative estimate of Toshiba's Westinghouse nuclear business and reflect weakness in its semiconductor and appliances units, according to an article in the Nikkei business daily. It said the financial results were not yet finalized as Toshiba's accountants were still reviewing them but that operating profit for the year through March was probably around 150 billion to 200 billion yen rather than the 330 billion yen the company had forecast.

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