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The Board is adopting amendments to Regulation Y to require large bank holding companies to submit to the Federal Reserve on an annual basis and to require such bank holding companies to obtain approval from the Federal Reserve under certain circumstances before making a capital distribution. This rule applies only to bank holding companies with $50 billion or more of total consolidated assets.
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Small businesses typically acquire equipment in one of four ways: through cash purchases, loans, line of credit or leases. Leasing is increasingly becoming an attractive option because of its cost-effectiveness. Leases are different from loans in terms of computation of costs. On a cost-of-capital basis, leasing is less expensive compared to a loan. The other benefits of leasing include tax-deductible overhead expense for a lease, better management of balance sheets, immediate write-offs for dollars spent and flexibility in changing and upgrading equipment.
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Loans made by an S corporation shareholder to the S corporation to increase stock or debt basis and allow the shareholder to apply the proportionate share of business losses to taxable income are limited by the extent of positive year-end basis. Shareholders can plan capital contributions or loans to take advantage of the losses, but they must actually contribute the cash or property. Losses can be taken only to the extent that the shareholder is at risk under Internal Revenue Code Section 465. Corporate liabilities guaranteed by the shareholder will suffice.
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It's time for investors to get serious about cost basis, if for no other reason than the IRS finally is. Cost basis, in simple terms, is what an investor has paid for an investment. The original cost basis is then adjusted for subsequent purchases or sales, as well as for reinvested dividends and capital gains. Then there are stock splits, commissions, fees and other possible adjustments. This is principally an issue with taxable investments, not IRAs or other retirement accounts.
