CONGRESS EYES STOCK OPTIONSWASHINGTON - After months of increasing reports of investigations by both the Securities and Exchange Commission and academics, Congress is now examining the sometimes-questionable timing of stock options granted to executives, considering reducing or eliminating a deduction that encourages companies to award executives options.
SEC Chairman Christopher Cox expressed support for the idea in testimony before the Senate Banking Committee. Companies are required to pay taxes on compensation that exceeds $1 million a year received by each executive. However, there is an exception for pay tied to a company's financial performance, which can be deducted, and which authorities believe has led to companies doling out stock options. Cox described that $1 million threshold as an unworkable price control.
According to various published reports, upwards of 100 public companies are being investigated by the Justice Department or the SEC for possible false reporting of stock option grants. The Internal Revenue Service is also conducting its own investigation for possible tax-law violations.
SAN FRAN FIRM MERGES IN COMPETITOR
SAN FRANCISCO - Burr, Pilger & Mayer LLP has inked a deal on its second major merger of the summer, with the planned acquisition of Walnut Creek, Calif.-based Leibowitz Shumaker Berger & Holsworth LLP. LSB&H's four partners and staff of 25 will more than double the manpower of BPM's existing Walnut Creek office, which has two partners and about 15 employees.
In July, the firm completed a merger with San Jose, Calif.-based Brach, Neal, Daney & Spence LLP.
Combined, the new firm will have more than 225 employees - including 28 partners - with offices in San Francisco, San Jose, Palo Alto and Walnut Creek, Calif. BPM ranked No. 100 on Accounting Today's 2006 list of the Top 100 Firms, with revenues of $24 million. The firm expects to crack $30 million in revenues with the acquisitions.
PITNEY BOWES IN $1.1B IRS SETTLEMENT
STAMFORD, CONN. - Pitney Bowes Inc., a manufacturer of postage meters, mailing systems and other equipment, agreed to a $1.1 billion tax settlement with the Internal Revenue Service. The largest part of the settlement - about $900 million - resulted from the May sale of Pitney Bowes' Capital Services external financing business for $745 million. The IRS tab represented the amount owed on transactions that the company entered into over the past 15 years. The taxes would have been due over the next 20 years, but the sale accelerated the time at which they must be paid. The remaining payments reflect taxes owed on other transactions. Pitney Bowes, which had already accounted for the liability in its statements, expects to spread the payment of the $1.1 billion over the next six months.
NAACP DIDN'T VIOLATE EXEMPT STATUS
WASHINGTON - In an August letter, the Internal Revenue Service said that the National Association for the Advancement of Colored People did not violate its tax-exempt status when the civil rights group's chairman gave a speech criticizing President Bush. In a letter dated Aug. 9, the IRS said that a review of video footage of a speech given by Julian Bond in October 2004, as well as other information, indicated "that political intervention did not occur." According to published reports, Bond said of the Bush administration: "They preach racial neutrality and practice racial division. They've tried to patch the leaky economy and every other domestic problem with duct tape and plastic sheets. They write a new constitution of Iraq and they ignore the Constitution here at home."
Political campaigning is prohibited under the Baltimore-based NAACP's tax-exempt status. The IRS had said that its inquiry has focused on whether Bond's speech was too political, and that the investigation was just one among dozens.
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