Personal loan guarantee not basis.

Losses from an S corporation flow through to its shareholders, who

can deduct them on their individual tax returns as long as they have

sufficient basis to absorb them. Economic outlays such as capital

contributions and loans by a shareholder to an S corporation will

increase a shareholder’s basis. Generally, loan guarantees, pledges

of collateral and other forms of indirect borrowing are not considered

economic outlays. The Eleventh Circuit Court of Appeals created an

exception in Selfe v. U.S., 778 F.2d 769, in which a taxpayer borrowed

money and later loaned that money to her newly formed S corporation. The

corporation then assumed her liability for the loan, but the bank

required the taxpayer to personally guarantee its repayment. The court

permitted a basis increase because of the loan guarantee, since the

substance of the transaction showed she was the primary obligator on the


Last year, the Sixth Circuit refused to apply the Selfe exception

to a case in which the taxpayer cosigned on the loan but the bank never

sought payment from him.

William Maloof was the sole shareholder of Level Propane, Petroleum

& Gases Co., which borrowed $4 million from a bank. Maloof

personally guaranteed the loans by pledging all of his stock in it and

other S corporations and a $1 million insurance policy on his fife.

Level Propane defaulted on the loan and was forced into bankruptcy, but

the bank did not demand payment. From 1990 to 2000, Level Propane

sustained large losses. Maloof increased his basis by $4 million because

of the loan guarantee and then deducted the losses on his individual

return. The IRS took the position that no increase in basis was

warranted, disallowed the losses and assessed a tax deficiency against

him. Maloof petitioned the Tax Court.

Maloof argued that his personal guarantee of the loan and the

pledging of his stock and insurance policy constituted economic outlays

that increased his basis. The Tax Court rejected this argument, stating

the bank never sought his personal assets for repayment of the loan. The

taxpayer also argued he had an economic outlay because he incurred a

“cost” when he lost control of the corporation. No evidence

was presented supporting any loss of control, nor was any evidence

offered that measured a cost related to that loss. Finally, the taxpayer

argued that, in substance, he had borrowed the money and in turn

transferred it to the corporation and that the holding in Selfe should

be followed. The court ruled the Selfe holding did not apply because

Maloof never personally borrowed any money and the bank never sought any

payments from him (see “Tax Matters,” JofA, Mar.06, pages

78-79). Maloof appealed to the Sixth Circuit.

Result. For the IRS. The appeals court said Maloof’s basis

could be increased if the corporation was indebted to him or if he had

incurred a cost evidenced by an economic outlay. The loan agreement

clearly showed the corporation as the borrower, and the corporation

would be indebted to him only if he used personal assets to pay the

corporate loan. Even though the taxpayer cosigned the loan, the bank

never sought his assets for repayment. Based on this, the court

concluded Maloof never incurred any type of economic outlay

This decision marks another defeat for taxpayers attempting to

increase their S corporation’s stock basis with a loan guarantee.

It should also be noted that if the taxpayer had shown that the loan was

his, the interest payments made by the corporation to the bank on his

behalf would be constructive dividends. He still would have had some

additional tax liability.

* William H. Maloof v. Commissioner, 456 F.3d 645.

Prepared by Charles J. Reichert, CPA, professor of accounting,

University of Wisconsin, Superior.


Romania Top Court Strikes Down Swiss Franc ‘Mortgage’ Loan

Romania’s constitutional court has struck down a bill to help holders of mortgages that were taken out is Swiss francs by converting them into Romanian currency at the rate at which they were borrowed.

Court chairman Valer Dorneanu said Tuesday that one reason for the rejection was the significant differences between the bill approved by the Senate and the final version approved by the lower house.

In the mid-2000s, thousands of Romanians took out low interest rate loans denominated in Swiss francs. When the Swiss franc increased in value, they found it hard to repay the loans.

Lawmakers approved the bill in October. The central bank has opposed the measure, which it says will cost local banks about 2.4 billion lei ($570 million).

Obama touts consumer watchdog’s plans to regulate payday loans | Reuters

By Emily Stephenson and Julia Edwards


WASHINGTON/ BIRMINGHAM A U.S. consumer financial watchdog on Thursday outlined plans to crack down on payday lending practices that leave borrowers with debt they cannot repay, and President Barack Obama touted the move as a contrast with Republican polices.

Obama told an audience at a community college in Birmingham, Alabama, that the U.S. Consumer Financial Protection Bureau’s plan would protect consumers while Republicans are seeking to unravel such financial safeguards.

“If you lend out money, you have to first make sure that the borrower can afford to pay it back,” Obama said.

Payday loans are small extensions of credit that borrowers agree to repay in a short time, such as when they next receive a paycheck. Similar products include car title loans, in which borrowers use vehicles as collateral, and installment loans, which can be longer-term and are paid back in larger amounts.

Lenders who offer the products say they help people who are strapped for cash. But consumer advocates say borrowers often roll over or refinance loans rather than paying them back, racking up debt due to high interest rates and fees.

Republicans in the U.S. House of Representatives are seeking to weaken the consumer watchdog agency by rolling back the Wall Street reform that established it after the 2008 financial crisis.

Obama said he would veto legislation that would unravel that reform.

The framework gives lenders two options. They can verify prospective borrowers’ income and debt history upfront, or they can offer cheap repayment options and limit how many loans people may take out.

Even before the framework was released, lenders warned the consumer bureau not to disrupt access to credit.

“Consumers thrive when they have more choices, not fewer, and any new regulations must keep this in mind,” the Community Financial Services Association of America, which represents short-term lenders, said in a statement on Wednesday.

A CFPB spokesman said a formal payday proposal could come later this year. A comment period for the industry would follow, after which the rules could be finalized.

Shares of consumer lenders dropped on Thursday. Enova International Inc (ENVA.N) shares were down 14.4 percent, First Cash Financial Services FCFS.O was down 2.2 percent and Cash America International Inc CSH.N was down 3.9 percent.

(Reporting by Emily Stephenson and Julia Edwards; Editing by Dan Grebler, W Simon, Bernard Orr and David Gregorio)

Advantages And Disadvantages Of Plc

In industries that exist right now, the presence of PLC is necessary especially to replace the wiring or cabling systems that previously were used in controlling a system. By using the PLC will get many benefits which are as follows:

1. Flexible

In the past, each different electronic device controlled by each controller. Suppose ten machines require ten controllers, but now with only one tenth PLC machine can be run with each program.

2. Changes and error correction system easier

If one system will be modified or corrected, the change is only done on the programs contained in computers, in a relatively short time, after that it downloaded to the PLC. If not using a PLC, for example relays the amendments made by altering the wiring cables. This course takes a long time.

3. Number of contacts many

Number of contacts held by the PLC on each coil is more than the contacts held by a relay.

4. Cheaper

PLC is capable of simplifying a lot of cabling compared to a relay. So the price of a PLC at a price cheaper than some fruit relay capable of doing the wiring for the same amount with a PLC. PLC includes relays, timers, counters, sequencers, and other functions.

5. Operating speed

PLC operation speed is faster than the relay. Speed PLC scan time is determined by its in units of milliseconds.

6. Resistant character test

Solid state devices are more resistant than the relay and test mechanical or electrical timers. PLC is a solid state device that is more resistant test.

7. Simplifies the control system components

The PLC also have counters, relays and other components, so it does not require components such as additional. Use of relays requires counters, timers or other components as additional equipment.

8. Documentation

Printout of the PLC can be directly obtained and do not need to see the blueprint of his circuit. Unlike the printout relay circuit cannot be obtained.

9. Security

Changing the PLC cannot be done unless the PLC is not locked and programmed. So there is no unauthorized person can change the PLC program for a PLC is locked.

10. Can make changes by reprogramming

Since the PLC can be programmed quickly reset the production process that mixes can be completed. For example part B will be executed but sections of A is still in the process, the process in section B can be re-programmed in seconds.

11. Addition of faster circuits

Users can add a circuit controller at any time quickly, without requiring great effort and cost as in conventional controllers.

Besides the benefits mentioned above, there are losses that are owned by the PLC, namely:

12. The technology is still new

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Changing the old control system using relay ladder or to a PLC computer concept is difficult for some people

13. Bad for the application programs that remain

Some applications are applications with a single function. On application by one function rarely done did not even change at all, so the use of PLC in applications with a single function will be a waste (cost).

14. Environmental considerations

In a process, the environment may experience a high heat, vibration direct contact with electrical appliances within the PLC and this event continuously, thus disrupting the performance of the PLC is not functioning optimally.

15. Operating with a fixed circuit

If the circuit in an operation are not changed then the use of more expensive PLC compared with other control equipment. PLC will be more effective if the program on the process to be upgraded periodically.


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Gene sequences reveal secrets of symbiosis

Gene sequences reveal secrets of symbiosis

Gene sequences reveal secrets of symbiosisThe symbiosis between photosynthetic dinoflagellate algae and stony corals underpins the three-dimensional structure of coral reefs that provides a habitat for thousands of different species. Credit: (C) 2017 Tane Sinclair-Taylor

Advances in genomic research are helping scientists to reveal how corals and algae cooperate to combat environmental stresses. KAUST researchers have sequenced and compared the genomes of three strains of Symbiodinium, a member of the dinoflagellate algae family, to show their genomes have several features that promote a prosperous symbiotic relationship with corals.

Dinoflagellates are among the most prolific organisms on the planet, forming the basis of the oceanic food chain, and their close symbiotic relationships with corals help maintain healthy reefs. However, because dinoflagellates have unusually large genomes, very few species have been sequenced, leaving the exact nature of their symbiosis with corals elusive.

“We had access to two Symbiodinium genomes, S.minutum and S.kawagutii, and we decided to sequence a third, S. microadriaticum,” said Assistant Professor of Marine Science Manuel Aranda at the University’s Red Sea Research Center, who led the project with his Center colleague Associate Professor of Marine Science Christian Voolstra and colleagues from the University’s Computational Bioscience Research Center and Environmental Epigenetics Program. “This allowed us to compare the three genomes for common and disparate features and functions and hopefully to show how the species evolved to become symbionts to specific corals.”

The unusual makeup of the three Symbiodinium genomes meant that the team had to adjust their software to read the genomes correctly. Ultimately, their research revealed that Symbiodinium has evolved a rich array of bicarbonate and ammonium transporters. These proteins are used to harvest two important nutrients involved in coral-dinoflagellate symbiosis: carbon, which is needed for photosynthesis, and nitrogen, which is essential for growth and proliferation.

Symbiodinium either evolved these transporters in response to symbiosis or the presence of these transporters allowed Symbiodinium to become a symbiont in the first place, noted Aranda.

Explore further:Large-scale study reveals new insights into coral and symbiotic algae partnership

More information:M. Aranda et al, Genomes of coral dinoflagellate symbionts highlight evolutionary adaptations conducive to a symbiotic lifestyle, Scientific Reports (2016).DOI: 10.1038/srep39734

Journal reference:Scientific Reports<img width=”25″ height=”25″ title=”search and more info” alt=”search and more info” src=””&gt;website

Provided by:King Abdullah University of Science and Technologysearch and more infowebsite

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Title Loans Utah

Taking title loans on your vehicles is easier and efficient than going to a bank for loan. Many times we need instant cash and for that we go to our friends, family members, to banks and other sources. Lots of time visit to pawn brokers to get cash by pawning their expensive entities, in the same way you can use your car as collateral to get a certain amount of cash. It is a very simple and easy process as compared to getting loan from banks which is a very lengthy and inconvenient process.

Taking car title loans is getting popular day by day because of its numerous profits. No matter how good your financial status is. Sometimes you may find yourself in serious financial crisis. Getting car title loan in this situation is a good choice . Title Loans Utah helps you to get instant title loan without any kind of complication and in an easy way. There are many advantages of getting car title loans rather than using other sources of getting cash.

The most important benefit is that taking title loan involves less risk as compared to taking a home loan from a bank. It keeps you away from the stress of paying loan at time and losing your house. Car title loans are only used to take smaller amount of loan which is based on the value of your car which means you can take more or less cash according to the value of your car. Therefore it is better than credit card and payday loans. One more benefit of keeping your car as collateral and taking car title loan is that there is no need of credit check since your loan is secured against the value of your car. Having good or bad credit is irrelevant in taking car title loans.

To get instant cash you should have clear title of your car. It is the fastest and easiest way of getting loan for everyone whether you have no or damaged credit. The interest rate depends upon the title loan company but most of the time it is negotiable. Since title loan is a short term loan so the interest rates do not matter so much. When taking car title loan you don’t have to get your credit history checked and therefore your credit score will not get affected. Moreover you don’t have to give your car; you can keep it with you only and use it. Also there is no need to wade through stacks of legal papers like in the case of banks.

Taking title loan takes a minimal processing time as compared to banks and other sources. The whole process hardly takes a few minutes so you don’t have to wait for a long time especially in emergency cases and is a convenient and effective way of getting loan. But before taking car title loan one has to keep a lot of things in to mind. One should always visit to a reputable and reliable title loan company which offers quick cash at low rates and above all should offer high percentage approval rate. There are very few companies such as Title Loans Utah that are the best in providing these kinds of loans; therefore one should be very careful when planning to take car title loan.

Title Loans Utah is a well known and reputable company which offers instant cash at very low rates as compared to its competitors. They provide title loan at both new and old cars without considering the credit of the borrower. We provide loan in a very short time of few minutes without much legal formalities. Our staff members are very professional and friendly and provide you information about your queries.

So if you want instant and convenient car title loan then Title Loans Utah is the best choice. For more details now visit our website

Author’s Bio: 

We provide loan in a very short time of few minutes without much legal formalities. Our staff members are very professional and friendly and provide you information about your queries.

So if you want instant and convenient car title loan then Title Loans Utah is the best choice. For more details now visit our website

What Happens to Your Twitter Account After Death

What becomes of a person’s Twitter account after they die has come into focus this week after a sexting spam bot briefly took over a Twitter account belonging to David Carr, a New York Times media columnist who died last year.

The bot briefly took over Carr’s account this week, changing the name and photo to “Miranda Davis” and tweeting to Carr’s nearly half a million followers, according to the Washington Post. The account was scrubbed of traces of the spam bot and was restored within hours.

When asked for comment on the incident, a Twitter representative told ABC News: “We do not comment on individual accounts, for privacy and security reasons.”

The incident has put a spotlight on Twitter’s policy for handling accounts of users after they die. On Twitter, immediate family members can provide proof of death and request their loved one’s account be deactivated. The only other alternative is to leave the account as is.

“Please note: We are unable to provide account access to anyone regardless of his or her relationship to the deceased,” Twitter’s policy states, leaving a sort of grey area for family members who want to keep an account up but may worry about the issue of bots.

Facebook and Instagram allow next of kin to request account deletion or allow them to memorialize a loved one’s account. Facebook lets users assign a “legacy contact” who can act as the administrator of a loved one’s page in the event of their death, allowing them to act as an administrator for the page but also preventing them from accessing private messages or posting under the deceased’s name.

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