Beginning in 2010, the Minimum Revenue Subject to the Texas Franchise Tax Will be Increased to $1,000,000.
By Anish Patel
On June 16, 2009 Governor Perry signed into law Bill 4765 which will raise the minimum revenue required for a business to be subject to the franchise tax from $300,000 to $1,000,000. Such change will not go into effect until 2010, but it will relieve an estimated 40,000 small businesses in Texas from the burden of the franchise tax. The Governor's objective is that this law will allow small business to retain more of their money to reinvest it into their own business and the Texas economy.
Can You Recognize a Loss on Your General Motors (GM) stock?
By Anish Patel
Yes. Any stock considered "worthless " during a taxable year shall be treated as a loss from the sale of such stock, on the last day of such taxable year, pursuant to IRC Section 165(g)(1). The key, however (and the quotes probably give it away), is how do you determine if the stock is "worthless?" The practical test established in Sterling Morton v. Commissioner provides that for stock to be considered worthless it may 1) have no liquidating value and 2) there must be no reasonable hope or expectation that a continuation of the business will ultimately result in some value to the shareholders. Whether a corporation has a liquidating value is easy to determine. What is more difficult to establish is whether there is any "hope or expectation" that the stock will result in future equity. The courts have concluded, that while an identifiable event, such as bankruptcy, is not required to mark the closing of such "hope or expectation," an identifiable event, as such, can be an indicator that any "hope or expectation" has been foreclosed.
There is no question, based on GM's financial statement, that GM stock has no liquidating value. The real question is whether there is any "hope or expectation" with such stock. In GM's case, filing for bankruptcy is an identifiable event demonstrating the foreclosing of any "hope or expectation" of future equity to current shareholder. The bankruptcy plan does not plan for nor indicate any expectation of return for current shareholders, and as such it can be reasonably concluded that GM stock is "worthless" for IRC section 165(g)(1) purposes.
Employer Alert: Federal Minimum Wage Increase Effective July 24, 2009
By Laura Calhoun and Connie Peña
Pursuant to the Fair Labor Standards Act, all covered nonexempt employees are entitled to be paid at least the federal minimum wage per hour. Employers are reminded that the federal minimum wage will increase from $6.55 per hour to $7.25 per hour effective Friday, July 24, 2009. Employers should also verify any other state specific wage requirements because, although Texas is not one of them, many states also have minimum wage laws, which provide for a higher rate than the federal minimum wage (and such employees will be entitled to the higher of the two minimum wage rates).
