Friday Afternoon Update

Relatively quiet afternoon at work.. so on to the updates.

The Bills Update

YES. This guy is doing the Bills-Dolphins game this weekend:



Since Eagle/Wilcots are off this week, I guess that makes them officially the Z-team of CBS broadcasters. And if I had an HDTV, I could watch the game in hi-def.

Seeing that Gus is doing the game made me wonder if I would remember differently some of the famous and infamous moments in Bills history if he had been calling the games.

Wide Right: Norwood lines up for the kick. This is at the EDGE of Norwood's distance. Marv Levy is putting his faith in the young kicker out of JAMES MADISON. It's all on the line for the Bills. The snap, the hold is down. The Kick is UP... And... It's NO GOOD!! NO GOOD!! WIDE RIGHT! And TIME HAS EXPIRED! The GIANTS WIN! Somehow the Giants are able to carry Parcells OFF THE FIELD. OH MY, Scott Norwood will carry this moment TO HIS GRAVE. SLEEP TIGHT SCOTTY! HA HAAAAAA"

Frank Reich comeback against Houston in '93: "Forget about the Nazis, here in Buffalo it's the RISE OF THE FOURTH REICH as the Bills unleash the stormtroopers aganist the Oilers. Ha haaaaaaa." "Christie lines up for the winning kick. And it's GOOOOOOOD!!!!! Christie drives a STAKE through the hearts of the Oilers as the Bills win in DRAMATIC FASHION!! DIE NOSFERATU!!!

(sidenote: this game was NOT televised locally in Buffalo because the Bills actually did not sell out the game. A playoff game. I had to listen to freaking Van Miller on the radio).

Music City Miracle: The kick is short to Neal. Neal hands off to Wycheck.. and Oh, Wycheck HEAVES it to Andre Dyson, and Dyson is RUNNING. OH NO, IT's A CLEAR PATH TO PAYDIRT. OH NO. NOBODY's GOING TO CATCH HIM. And Dyson is IN. And it's PANDEMONIUM in Tennessee. Rob Johnson can't bear to look. Wade Phillips is STUNNNED as the Titans RIP THE BEATING HEARTS out of the Bills's chests. KALI MA, they'll SEE YOU IN HELL!!!!!"

No, that still would have sucked.

Last Second Jason Elam Field Goal: Oh wait, he actually did call this game:



I'm surprised he didn't refer to it as a "CHINESE FIRE DRILL!!!!"

Anyway, it's always a "SPECIAL GAME" when Gus is announcing.

-- As for actual analysis? Happy that Losman is starting. He's like Brett Favre, except without the joy. Or much of the talent.

For actual analysis, go to Bflo Blog for the Tailgate.

Goose's Roost has an interesting post on Jim Kelly and Jack Kemp being potential white knights in a future sale of the Bills.

That's it. My prediction? (not that it matters): Bills 21, Miami 17

The Taxes Update

-- The House today passed a bill providing for a one-year AMT patch and extending a bunch of popular tax deductions, the cost of which is offset by changing the tax treatment of carried interest in private equity funds and eliminating offshore deferrals of compensation (where the payor is tax-indifferent). The Senate has not introduced a bill addressing AMT relief and apparently won't until December.

Which really is an abdication of Congresional responsibility. You see, even if a bill is introduced in December, debated, passed, harmonized with the House and signed by Bush, it won't be in time for the IRS to make changes to tax forms necessary to allow taxpayers to file returns correctly. This means that millions of taxpayers will end up overpaying their taxes and seeking refunds later (because they will be forced to file based on the law that is in effect now which sucks millions of taxpayers into the AMT. I think the House is probably more to blame for waiting so long to introduce a bill when EVERYONE KNEW ABOUT THE ISSUE.

-- One other interesting story from last week that is semi-sports related: The IRS has announced an initiative targeting foreign golfers, tennis players and entertainers who work in the U.S. That's right - Roger Federer is a tax cheat* The concern is that foreign entertainers are not paying their "fair share" of withholding taxes on income earned in the U.S. (there is a 30% withholding tax applicable to nonresident aliens performing services within the United States). The focus apparently is on the structures through which entertainers earn money within the United States and making sure that withholding takes place somewhere along the chain. This is all part of closing the tax gap.

*May not actually be a tax cheat, but this commercial is ridiculous:



And what the hell is Henry saying? "I nevuh fthk about ystdy".... Thanks Thierry, er Terry. Go back to playing with your ball.

No Death Update right now. Maybe later.

I've Been a Bad Bad....

blogger.



Anyway... here are the updates...

The Taxes Update

I didn't want to comment on any of Charlie Rangel's tax machinations (he is, after all, my congressman), although he has gotten superficial coverage in the Economist, the NY Times, and elsewhere. (Edited to note: I was glib - A Taxing Matter has had great coverage on this and other recent tax issues. Much better than I, anyway.

Bottom line: The AMT is scheduled to apply to a shitload of middle-class families in '08 absent at least a "one year patch" extending prior laws exempting more and more American taxpayers. The patch is a political necessity. Rangel proposed (and the House W&M committee passed) a bill that offset the cost of the patch and some popular extenders with (1) a change in taxation of carried interest and (2) a change in the taxation of deferred comp.

Grassley, et. al., have said that they did not view an AMT patch as requiring revenue offsets because the AMT was never intended to have the bite it now has (which is odd since it was never indexed to inflation).

Thus, we find ourselves in a bit of a stalemate. Although not that much of one as Rangel has already basically caved (via Tax Notes) and agreed to look at other possible revenue offsets besides the carried interest raise. See this also from Rep. Emanuel.

Here is my view: (1) A change in legislation allowing tax-exempts to invest in funds that borrow to fund their investments will pass, (2) The carried interest and deferred compensation bills will be deferred to '09, but then pass and (3) Whatever happened to the "Blackstone Bill"? It was not included in Rangel's bill. Would have thought that would be a great revenue raiser.

Lots of other interesting tax stuff, but, it will have to wait.

The Death Update

I realized today as i was writing an entry in my "bricks and mortar" journal that the book I was writing in was intended to be used as a book of remembrance for Dean Gordanier, a brilliant tax lawyer who passed away about 4 years ago in Boston.

He was a great man, a great tax lawyer. A brilliant guy, one who touched all who came in contact with him. He was always there with a hug or a clap on the shoulder and while a bit prickly, was the first to share with you a wide, kidlike grin when things were right in the world.

He also thought accountants "whores and charlatans". Of course, this was before the Andersen meltdown. Now he'd call them scurrulous and scaredy-cats. That was Dean.

So I should be careful to make sure my bricks and mortar journal is sturdy. For Dean.

The Rest Update

Since baseball season is over, the rest of the updates, will be the... um... "Rest" Update, like Paul Harvey says.. the rest of the story.

-- The Bills - Losman back in again. Damn. And I just got my hair cut. Seriously though, the team is more suited to a QB with his particular skills. Speed, dangerous long ball, acrobatic catches. It's not a possession receiver team. Hopefully they can keep the 'fish winless this week.

-- The Sox - Schilling resigned yesterday (have you noticed that the same word means two absolutely opposite things? resigned/re-signed. EERIE). Anyway.. Great K with Schill. Hopefully they'll sign Lowell and a spot starter for the rotation, and perhaps some backup IF help. Otherwise, not sure what else they need (except for a new starting C of course, but that's not happening).

That's it for tonight. I'm tired and my Sapphire and Tonic is empty.

Oh, almost forgot. This makes me happy.

The Taxes Update

The bill I mentioned yesterday was introduced today by Senator Kerry - S. 2199, the "Offshore Deferred Compensation Reform Act of 2007". Rep. Emanuel's bill apparently will be introduced in the House later with identical language.

(note - haven't found the bill yet online, but here is a press release from Kerry's office)

In substance, it is as I described - it would prevent nonqualified deferred comp arrangements by companies located in low tax jurisdictions. The definition of low tax jurisdiction for this purpose, however, is not quite clear. The bill requires that:

substantially all of the income of [the offshore] corporation is subject to an income tax imposed by [the offshore country]

It is not clear whether this means that a corporate income tax must be on the books of such country, or whether the corporate income tax must actually apply to the actual income of the company. In either case, however, it does not say that the rate needs to be high - so the idea I mentioned yesterday - domicile in a country with a legit corporate income tax, but negotiate for a low rate (Zug, Switzerland comes to mind) could still work. Treasury regulations (which are authorized) would be necessary to refine details like this.

I know that someone did a client alert on this yesterday, but I have not found it. I do not expect to do another one. There's nothing new here that I didn't already mention in my prior alert.

The Taxes Update

I referred to this a month ago when it first came out, but Rep. Rahm Emanuel (D-IL), along with Sen. John Kerry (D-MA) tomorrow will introduce legislation in the House and Senate that would limit deferral by hedge fund managers (among others) of compensation paid offshore. The bill would impose a limit equal to the amount people are allowed to defer into 401(k) and Roth IRA accounts (approximately $20,000).

Some background - Hedge fund managers receive management fees for operating their hedge funds equal to 2% of the NAV of the funds. In addition, they receive a performance based fee equal to 20% of the net appreciation of the funds (called, "2 and 20" in industry parlance).

It is common practice for fund managers to defer receipt of the 2 and 20 fees, avoid current tax on these amounts, invest them back into the funds they manage, and then receive them later, having compounded tax free in the interim (kind of like what happens to your 401(k) - you defer tax on the amounts you contribute into a 401(k) account, it earns a return tax-free while it is in there and then you pay tax at ordinary rates when you pull it out).

The perceived abuse is that this deferral opportunity is not available to regular taxpayers - only managers of offshore hedge funds. From a tax policy standpoint, so long as the deferred amounts are at risk and may be lost (which they are - the amounts are usually reinvested back into the hedge funds the managers run), I do not see how this is any different than any other deferred compensation plan. It's simply a matter of quantum.

Here is the press release from September when he first announced his intentions.

And here is my client alert on the same topic.

Update: I should have mentioned in the above that one of the reasons given for the "fairness" aspect of the bill is that deferrals of comp made by employees of US-based companies result in a economic detriment to the employer, as the employer loses the deduction until the employee is ultimately paid. By contrast, the deferrals that Kerry's and Emanuel's bill will apparently target, are made by employees of hedge fund management companies domiciled in tax havens (Cayman, Bermuda, etc). Thus, there is no lost deduction and no economic detrminent to the employer of allowing the deferral.

However, this grossly misunderstands why hedge funds are set up offshore in the first place - they are set up offshore to allow tax-exempt and non-US investors invest in hedge funds without becoming directly subject to US tax. Tax-exempt and non-US investors, of course, would also have no use for the tax deduction associtaed with payments of compensation to hedge fund managers, because they do not ordinarily pay US federal income tax. Thus, even if the hedge fund managers engaged directly with investors in these deferral arrangements, there would be no lost deduction.

It's a function of the nature of the taxpayer, not the domicile of the management company that creates the mismatch.

My personal view on the topic (which I should have included above) is that this is a small issue in the larger scheme of taxation of private equity funds and their managers and is a distraction from the larger debate. This bill (along with Rep. Sander Levin's bill on UDFI) would probably at least encourage hedge funds to come back onshore.

It's all moot, however, because no tax raises will be signed by President Bush, in my opinion.

Further update: The bill apparently has an easy workaround - organize the fund and management company in a country that can be low tax, but not a tax haven (e.g., Switzerland). The summary of the bill (no actual text yet) says that the cap on deferrals does not apply where the corporation is domiciled in a jurisdiction that imposes an income tax on corporate income, has deductibility rules that work similarly to the US rules and has a tax treaty with the US. Thus, an offshore fund manager could be set up in Switzerland, obtain a ruling to negotiate a low local rate of tax, and continue deferring as usual. There would be some tax slippage, but presumably the tax benefit would outweigh the slippage if the return on the deferred amounts was high enough.

Rainy Tuesday Night Update

The Bills Letdown

It was quite strange when I turned to the Taxwife not 10 minutes after the Bills lost last night and said "well, they deserved to lose that game - if you can't win getting six turnovers, you deserve to lose". In other words, serenity now.

This morning, before even going on the blogs to check out others' reactions to the games (links below), I thought a little more critically about the game...

-- The Bills gave up an easy 3 at the end of the first half by attempting a 53 yard field goal on a 4th and 3. Not to go all Gregg Easterbrook or anything, but going for it on 4th and 3 has a higher positive outcome than attempting a 53 yarder. Punting may have been the best move there.

-- They sent Roscoe Parrish on an end around (it may have been a reverse) on 3rd and 2 in Dallas territory. It was predictably blown up and the Bills needed to punt. A simple run up the middle or toss over the middle to Lynch or Royal (who was a great weapon in the game (would have obviously been much more productive).

-- Jauron misused times out in the second half, resulting in a bad onside kick defense formation.

-- Defensive playcalling down the stretch was atrocious, giving up easy yards over the middle and then the inexcusable 8 yard sideline route with 7 seconds left. Again, they could have called a time out if they had the wrong personnel on the field, or to make sure the young defense was on the right page.

-- The decision to pass on third and medium deep in Dallas territory in the 4th quarter is inexcusable. That should have been a fireable offense.

I realize that most of the above decisions were not made directly by Jauron, they were made by his coordinators, Brian Fairchild and Perry Fewell (Dr. Z really tears Fewell a new one in particular). Still, Jauron is the HEAD coach and has to ultimately take responsibility for the overall schemes and the decisions to try trick plays on third and short. Most importantly, it is clear that the Bills young players are trying extremely hard and giving it all they have, but they are young. They need a solid gameplan that will not let them down and a coaching staff that knows when to take a breather, settle the troops down and focus that energy. That is sorely lacking this year and it is clear to me that Jauron is not the right man for the job.

Others' more precise takes on last night:

Bflo Blog (special thanks to BfloBlog for linking to the Taxman, by the way)

Buffalo Rumblings

The Goose's Roost

I guess the silver lining I was looking for is that Jauron can't screw up the Bills this Sunday.

In happier news....

The Baseball Update

The ALCS and NLCS are set. Word from Boston is that Schilling will start Game 2 for the Sox, with Dice-K going in game 3. This makes sense insofar as Dice-K has been about 3/4 of a run better on the road than at home this year; however, the way the series lines up, that would have Dice-K going in game 7. I'm not sure how I feel about that, except that the Cubs-D-Backs series showed the fallacy of planning too far ahead in the tournament (although fundamentally, I think Lou was in the right pulling Z).

I'm sticking by my previous prediction of Sox in 6 over the Indians. I only got half of the NLCS teams correct, but I'll stick with the team I did get right - Rockies in 7.

The Taxes Update

Senator Reid announced today that no carried interest legislation would make it through the Senate in 2008. No surprise. Makes for an interesting election year issue. Romney has already pledged no new taxes if he is elected.

The Death Update

A rather obscure one today. Nolan Herndon passed away Sunday at the age of 88 from pneumonia. He was a member of the famed Doolittle Raiders who engaged in one of the most daring aerial missions of World War II. The mission, a bombing raid over Tokyo in the Spring of '42 was memorialized in the book and film Thirty Seconds Over Tokyo, with a screenplay by blacklisted screenwriter Dalton Trumbo (ironic that a writer of a film known as borderline propaganda was later blacklisted for refusing to name names).

Anyway, back to Mr. Herndon, he retired from the military shortly after the war ended and passed away apparently at his home in South Carolina. The obit is here.

Monday (actually Tuesday) Update

I've updated the pick results at the left and have included the Sportsguy's: picks. Poor second weekend. Neither the Saints nor the Falcons were who I thought they were.

Patriots obviously just destroyed the Chargers last night. It was very cool to see a team come out and just TCB like that, especially after all the ridiculousness of the past week.

Sox are officially worrying me. Not for the division - I think they're golden there. But there is a worrying inconsistency there. In all facets. We just came off three solid starts in the Yankee series, which went for naught because of one bad pitch by Schilling and one massive bullpen meltdown. But the bats were weak last night and tonight. I didn't get to watch the game and was too busy at work to pay much close attention, so no Three things I noticed, but I don't thin my input would add anything to the frustrating inconsistency.

I'm not one of those people who would say "even though the Sox have the best record, they're not the best team", but the Yanks have definitely outplayed them, against a more difficult schedule, the past 50 games.

Only Tax Update of the day was a report by to Penn economists that pointed out what I, along with many, have already pointed out - that as far as real revenues from carried interest in funds go, like Oakland, there's no there there. Carry constitutes about 20-25% of comp/payout to GPs of funds. A minor part of overall comp. Naturally because this is an average, it includes all the zeros to lower-performing funds, and for top-tier funds, carry is probably 70-80% of ultimate comp; however, it further gives lie to the notion that this is a tax loophole that is bleeding the Treasury of money that could be used to offset an AMT fix (which absolutely dwarfs the cash that would be raised by raising taxes on carry).

The Football Update

Yes, a diversion to regularly scheduled programming...

The Good: (1) Patriots demolishing the Jets and their jerk fans. Seriously Jets fans? Cheering for Kellen Clemens after Pennington LIMPS off the field to save your team a time out? J E T S JERKS JERKS JERKS. Pats win 38-14. Moss goes off 9-183-1. Ho-hum. Brady must be like the kid whose parents have been saving up for years for a cool present for Christmas and then but him a freaking Mustang. (2) Packers topping the Eagles on a last second figgie. Only because that's one of the few I got right on my picks this week (shows what little I know. as I said, what I know about football you could fit in a golf ball). (3) No three, because...

The Bad: (1) Bills game. (2) Specifically the 15-14 loss on a ridiculous last second field goal by Elam after the Broncos converted 2 fourth and 2s and scampering on the field with just seconds left. For the record, I told the TaxSister with 3 minutes left that the Bills would blow it and lose 15-14. (3) Prayers go out to Kevin Everett who flew into the wedge on a kick return and went down like a sack of potatoes. I guess because he went head in without using his arms and shoulders to cushion the blow - a la Jason Street on FNL. Anyway, it does not sound particularly good for Mr. Everett. I wish him all luck in recovery.

The Ugly: The aforementioned Jets fans. Also, Randy Cross and John Madden in HD (or so I hear).

Bflo Blog has the game story and great perspective, although, having become a fan of teams not located in WNY, I understand other people's pain (not Clinton-level, but still).

And Circling the Wagons has the report card.

The Baseball Update

Sox win 3-2 on Beckett's 18th. Paps with his 35th save. Yanks win too. Looks like a Sox-Yanks ALCS, unless the Angels can knock off the Yanks.

No three things I noticed today. Was too busy watching football.

The Taxes Update

O.k., so I have been through all the testimony from Thursday's private equity taxation hearings. Now I'm getting a little nervous. All kinds of proposals were and will come out of last week's hearings.

Seems at this point that some action will be taken on taxation of carried interest. Still probably not this year unless Rangel is really able to fold it into a real amendment of the AMT (/skeptical given the cost). Two things that are likely to get done - (1) Rep. Sandy Levin's bill to encourage tax-exempts to invest directly into hedge funds rather than through Cayman corps. (2) Rep. Emanuel's bill (as yet unintroduced) to minimize ability of hedge fund managers to defer comp from offshore funds. Client alert will be published tomorrow.

The Death update

No new notables tonight and I'm tired. More tomorrow all.

The Baseball Update

Quick one tonight. Sox just won 4-0. Solid, if unspectacular performance by Lester against the Orioles. Three Things I noticed: (1) Coco My man. He Loves us. I don't even mind if he dances with my date. Another great scrappy hitting night. No spectacular defense tonight, but that's o.k. (2) I am now convinced that Jim Palmer is probably the second best ex-player analyst in any sport (Jaws, so far, is number 1, but I'LL BE WATCHING MONDAY). He was spot on on why Cabrera balked (didn't pitch from the stretch) and generally was witty, candid (noting the reason why Devern Hanseck threw the no hitter in a monsoon on the last day of the season last night was because the Sox didn't want to give up their $2.5M gate) and generally smart. I dig Remy, but I could get used to a guy like Palmer too. (3) Daniel Cabrera is an idiot. Not sure what the hell happened there, but he's starting to remind me of a famous quote about Rod Stewart. i'm paraphrasing... very rarely is a man so gifted with talent and even more rarely does someone screw it up so badly.

The Taxes Update

Huge day today.

(1) Fallout from yesterday's Congressional hearings. The House had a marathon hearing on all kinds of tax issues, none of them I have confidence they will actually solve. Thankfully, my man Charles Rangel (D-Harlem BABY!) wants to totally revamp (renovate, novate?) the AMT in connection with any tax reform. Well, I fully applaud that, but am skeptical that this Congress with this President would be able to push something like that through without any obvious revenue raisers out there to offset the cost.

(2) Senate also held hearings yesterday, more focused on the effect raising taxes on carried interest would have on pension fund investors. Answer - not much. Well, duh. The big gorilla (I don't like elephants) in the room is that private equity, while extremely important in mergers and acquisitions and turnarounds, still is a niche investment allocation for most investors. 10% or so for pension funds. I'm still surprised that this is a surprise.

Anyway, my &*!# IT department failed to record the hearings for me, and I don't expect that C-Span will rebroadcast the hearings, so I will see what I can find online and review the prepared testimony from the hearings.

The ever indispensible Dan Primack did a liveblog of the hearings here which has links to lots of other good stuff. Check it out. He really is the man.

(3) Rep. Sander Levin has on his website text of a bill that may or may not have been introduced in the House today which would extremely liberalize the rules on tax-exempt investments into private equity and hedge funds. You can find the text here. The issue is that tax-exempt investors are taxed on proceeds from leveraged investments (i.e., any buyout deal, or investments on margin). As a result, many tax-exempts invest through cayman corporations to avoid the tax (the corporation blocks the negative tax effect). This bill is an attempt to bring these investments back "onshore" by eliminating this tax, at least for "securities". There are important technical requirements that need to be met for this new beneficial tax treatment, but it's an auspicious bill. I will have a client alert on this Monday which I will link to here.

Lots of other small things too, but a big Friday for taxes.

The Death Update

Of course Pavarotti died the other day. God bless. Today, however, Madeline L'Engle, author of "A wrinkle in Time passed away. She was 88. Basically, if you've ever been in 4th grade, you've read this book, even though it was repeatedly rejected by numerous publishers. Funny story, the TaxWife presented this book (actually the whole series (!)) when she was a skirt-wearin' catholic school kid and apparently repeatedly mis-pronounced the O'Keefe family as the "O-Keefe-eys". whoops. Apparently the teacher was a bitter repressed, um. woman. Anyway, the obit is here.

The Baseball Update

All glory be to Rick Ankiel on a truly massive day today. 2 HRs, 7 RBIs. Cards win. Still have hope. He was the first starting pitcher I took in my roto draft the year after he melted down in the playoffs (I had taken Benitez before him - ugh). Needless to say, my pitching was not fantastic that year. Anyway, it really is a tremendous story - not quite the real life Natural (maybe Tommy John is a better analogy - someone who truly had to reinvent himself), but quite impressive.

The Viva el Birdos blog captures the true excitement and joy of a fan watching an amazing event involving his team better than I could. Check today's thread out here and scroll down to the comments around 4:30. Just tremendous.

Sox, as I write this, are p 7-6 in the top of the 9th against the Orioles. Covelli (a/k/a Oscar Gamble Jr.) is having a tremendous night - 3 run HR, 2 singles, stolen base, fantastic catch of a Tejada liner on a dead sprint toward the centerfield wall. I like him better and better each game, even with his struggles. Three things I noticed: (1) I think we are seeing the beginning of the inevitable Mike Lowell slow-down. I think at age 33 (my god - I am older than someone who has gray hair in his beard), on pace for high ABs, and based on his second half track record, he appears to be slowing down and needs rest down the stretch, the race for top 5 in the MVP vote notwithstanding. (2) The Sox have at least 3 guys who do not use batting gloves - Crisp, Mirabelli and Kielty. This must be some kind of high among major league teams. I wonder if they all do the Alou to keep their hands supple. (3) Gary Thorne is possibly the worst play by play guy in MLB (yes, I am including Michael Kay who at least tries to instigate discussions among his myriad color guys). He insists on calling a three run home run a "3 RBI home run". He also continually misidentifies hitters, pitches, etc. Palmer is especially prescient, so he almost covers for him, but yeesh. Awful.

The Taxes update

Huge day in Congress as twenty witnesses testified before the House Ways and Means Committee and the Senate Finance Committee regarding all manner of tax issues, from taxation of carried interest in investment funds to AMT to taxation of publicly traded partnerships. I'll have a full report later once I am able to review the testimony, but initial thoughts after reading prepared remarks and seeing initial commentary is that nothing will get done this year unless it is part of an enormous tax bill which proposed a major overhaul of the AMT, nothing will ultimately end up getting done on taxation of carried interest because (1) not enough revenue there to make it worthwhile and (2) lawmakers will be convinced that taxpayers will just develop a workaround anyway (which they will) and (3) they're deathly afraid of doing anything to harm the economy in the current climate. This is an initiative that would have better been taken up when consumer confidence was higher, people could feel comfortable spending against the equity in their houses and the debt markets weren't in the crapper.

IRS also released more liberal rules on reverse 704(c) allocations for hedge funds. I am reviewing.

The Death Update

Former DC first lady Effi Barry passed away today at the age of 63. She had been suffering from Leukimia. To paraphrase Dave Chappelle as Rick James, Cancer is a hell of a disease. One could argue that Ms. Barry did more for the poor of DC than Marion ever did. Anyway, the story is here and of course my thoughts and prayers go out to her entire family.

It was about a year ago, after we told that the TaxBoy was in fact going to be a boy (and hopefully a lefty), that I decided I'd better fly home and see dad. We knew he was terminal at this point, but didn't know how long he would have. Patients with small cell lung cancer at his stage have an amazingly short life expectancy so I figured 6-12 months, even with treatment. Maybe double that if we were lucky. Anyway, I hadn't seen him since the July 4 holiday (and a stressful one at that) and so wanted to see him. I booked a flight on American Eagle for the week of 9/22. I really wanted to show him the movie review book Ernest Ng and I had put together (ranking the Top 10 movies each year since the advent of commercial film - to see how many I had wrong). Didn't get to really show it to him.

I am NOT Etta James

But at last..the updates.

The Baseball Update

Nobody reads this blog, but if they did, they would say "wow you suck at blogging" and "why are your baseball updates Red Sox updates?" Point taken.

My man Yovanni Gallardo pitched great for the Brewers tonight as they took the Astros to the woodshed 14-2. It appears that his confidence was not bruised that much by being left in to be pasted by the Rockies a few weeks ago.

Yankees. Screw them.

John Maine continues his downward spiral tm NIN in the second half of the season. Doesn't matter though as the Mets are in like Flynn to the postseason.

And yes, the Sox blew it tonight against the freaking Jays (ahhhh my first love. Wherefore art though Jorge (nee George) Bell?). I didn't see the bloody show aftermath, but it appears that Okie-dokey is Okie-Nofuckingwayhehaveupanotherhit. Mildly worried about pen depth now. Three things I noticed: (1) Varitek has become an all-or-nothing guess hitter. More of his ABs have resulted in the Three True Outcomes lately than ever before (check it out - last 10 games, 41 PAs, 3 HR, 10 BB, 9 Ks. More than 50%. (2) Ellsbury stands to become a folk hero in Boston, almost regardless of performance - a Dykstra/Hudler type, which would be unfortunate because he could be so much better and deserves not to instantly get labeled with the Damon, Jr. stereotype. (3) Schill isn't sharp, but generally will keep teams in games (like tonight) until the Sox have a chance to come back. Anecdotal jibber-jabber, I know (who said jibber jabber besides, or better than, Mr. T, anyway?).

Links - A funny riff from Jere at a Red Sox Fan From Pinstripe Territory (dude, I feel your pain) on the disconnect between certain commercials and the show they are interrupting. I hear that, although I never run into that problem when I'm watching lifetime. The flammable mattresses must be a big seller...

A view from across the border at Drunk Jays Fans. That is. Just wrong. Some view.

The Taxes Update

Big day tomorrow as the House holds a marathon hearing on the taxation of carried interest, impact on the investment world, impact on workers, etc., with two tax professors, Jack Levin, pe folks from Carlyle, etc. I actually asked our legislative affairs liaision whether it would be televised on C-Span.

In any event, the whole thing is smoke and mirrors. The JCT and CBO have come out with estimates of the revenue raisers from changing how carry is taxed - hold on to your hat, $3 to $5 billion. Total. A far cry from a dent in a chink in the armor ... o.k.. anyway, a far cry from the amounts that would be required to substantially reform the AMT (estimated in the $100 billion range). Click here for a link via Victor Fleischer's Conglomerate blog to a paper estimating the revenue that could be raised.

Update (11/9): These numbers need clarification. The estimated revenue raised is $25.6 billion over 10 years

The Death Update

Finally, the death update. Not a household name, but William Hudgins died last Friday in New York. He, along with Jackie Robinson founded Carver National Savings Bank, the largest black-owned bank in the country (there is a branch in the building at 145th and Bradhurst, I believe). He helped move the black community in Harlem in the mid-20th century into the traditional bank lending market and away from traditional lending arrangements. A fantastic success story and a man who did good for his community and his Community. He was 100. The obit is here.

Coming up shortly on the 22nd. Can't believe it has been almost a year. Mom leaves town tomorrow to go home for the weekend. I felt worst for her when dad died last year. Will feel extremely bad for her as the anniversary approaches. Hopefully little Jackson/Luis Junior/Sam (a friend suggested Samuel Luis Jackson as a compromise - funny) will come before then and occupy her.

All for now - need to fix the links.

Once again, I've been away/busy, so haven't posted... Here are today's updates

The Baseball Update

Since my last post the Sox have gone from 5 up to 8 up back to 6 up, just the typical late season swings. Their pitching is still, for the most part, their main strength as the offense comes and goes. Watched most of yesterday's game against the O's. Three Things I Noticed: (1) Lester still doesn't have a lot of arm strength back. His fastball isn't really fooling anyone and his control isn't really there right now. Luckily he was able to strand 8 of the 10 baserunners he allowed. (2) Ellsbury looks like a real player which will make personnel decisions interesting for next season. Everyone knows the club has a 20M option on Manny next year, Coco is signed through '09 at 10.5M (plus a 500K buyout for '10). Drew... well, let's not talk abut Drew. Unless the Sox let Manny go or deal Coco (which wouldn't make a lot of sense because he is the cheapest of the incumbents), Ellsbury will be without a position next year. 4th OF, coming in for speed and defense, and to spell Drew, wouldn't be the worst thing in the world, but the kid has nothing left to prove, except my contention that he doesn't really look like Damon. (3) Pedroia is the AL ROY. There are about a half dozen legitimate candidates. Here they are in a fancy chart (please scroll down - not sure why there is such a huge gap):

10/4/07 - Just figured out how to format so there are not breaks - table fixed

Player	Team	R	H	2B	3B	HR	RBI	SB	AVG	OBP	SLG
Pedroia	Bos	68	137	32	1	6	42	5	.324	.393	.447
Willits	Ana	65	107	16	1	0	32	25	.292	.394	.342
Iwamura	TB	67	111	16	8	6	24	10	.282	.359	.410
Gordon	KC	55	115	29	4	14	50	13	.249	.319	.420
Player	Team	IP	H	ER	BB	K	W	L	SV	ERA
Dice-K	Bos	176.1	151	76	66	174	13	11	0	3.88
Bannister	KC	148.1	135	52	36	72	12	7	0	3.12
Okajima	Boston	63.1	41	11	16	55	3	1	4	1.56

Pedroia has the best OPS of any AL rookie, and, as I write this, is tearing Jays pitching a new one tonight - 3-3 with 2 RBIs. He's also had some memorable defensive plays in the middle of a pennant race, which voters can't help but ignore (as an aside, I love how the bar is set higher and higher each year for winning any of these awards - individual excellence itself is not enough - you need to perform in the crucible of a pennant race. Tough luck if you're a Royal competing for one of these awards - or as the TV voice over guy used to say, "Sorry Tennessee").

In any event, as I (now) finish this, the Sox are up 7-1 and the Yanks have lost, so it's 7 games up with 24 left. Go Sox.

The Taxes Update

Quiet last couple of weeks on the tax front. There were various reports that came out the last couple of weeks indicating that tax revenue from a tax on carried interest would be a few billion at best, and likely less (perhaps even revenue neutral) because of likely tax planning around any new bill. So any idea that a tie-in to AMT relief (which would cost hundreds of millions to even Band-AidTM) is just plain silly-talk. Horse-hocky, if you will.

Also, Lee Sheppard looked appropriately stlyish, if a little deer-in-the-headlights in a NYT business section profile earlier this week. Click here for the story an a look at her gorgrous Gaultier outfit to which page C6 did not do justice.

The Death Update

Michael Jackson died. No, not that Michael Jackson (hee-hee). Michael Jackson, the beer conniouseur and advocate. I used to own one of his beer guides through which I learned that mead wasn't just what Beowulf had for dinner. It was an actual brew still in prodiction in various vampire-infested areas of Central Europe. Anyway, the obit is here. Raise a glass to Mr. Jackson.

Also, in the death update, mom is in town this weekend, getting ready for sis to have her baby. It was about one year ago (Sept 6 actually), that we found out Rex was going to be a boy, and that I found out my dad definitely was terminal with small cell lunch cancer - advanced stage. I remember how bummed out he was on the phone talking to him and remember how happy he was when we told him we were having a boy. I knew then that it was extremely unlikely he'd ever get to meet his grandson, but I was happy that at least for that day, some sunshine broke through the gloom. I miss him.

Your Taxes Update

Two things today as well. First, the IRS is suiing Darryl Strawberry for $115K in unpaid taxes and $350K in penalties. This after he's already spent 6 months in home confinement after pleading guilty to criminal tax fraud charges. The unpaid taxes derive mostly from unreported earnings at card shows. Sad. He still hit 8 homers in the Simpsons softball game, so he's got that going for him. Maybe his son can help bail him out with that second round NBA money.

Next, Senator Charles Schumer is reportedly working on a bill to tax carried interest as compensation. He's flip-flopped on this issue, having previously come out against Rep. Sander Levin's bill. He claims that he has always supported the tax increase in theory, but wanted it applied to all industries (oil and gas, etc.), not just private equity and hedge funds. This is worrisome news, but I still think nothing will happen on this in '07.

Your Baseball Update

Watched the last few innings of the Sox last night. Even though they were 1-41 in "comeback" games this year (i.e., games where they were trailing after 7 8), I just knew the D-Rays pen would blow it.

Three things I noticed: (1) Gagne's slider/curve/change was nasty. The pitch he struck out Pena on was just filthy. If he can spot his change like that and use his heat effectively (he was hitting low to mid-90s with his fb), he'll be fine. I think the high leverage closer-type situation also suited him well. (2) Varitek is an immensely boring interview. I know this isn't news, but man, he can't even show a little emotion on the night Lester returns to Fenway and the Sox finally come from behind and win? And I am certain that he toned it down even further once he realized the NESN feed was being played over the stadium loudspeakers. I'm not asking for Kevin Millar-style antics, but cut the Bull Durham cliche crap. (3) What happened to Gagne's goggles. He's wearing regular glasses now? Maybe that's his problem.

Some links: Surviving Grady's Take - celebrating the "at last" feeling - I agree - I was pumping my fist when Coco hit the gamewinner. Although I didn't think it was really ever in doubt.

Singapore Sox Fan rightfully notes the Al Reyes-Nomar connection. I had forgotten about that. I can't believe that guy is a major league closer.

Yanksfan v SoxFan Scroll up though for the nice remembrance of Rizzuto

Your Death Update

Which brings us to your death update. The first thing the Taxbabe (D-Nice) said to me when I mentioned that Rizzuto had passed away was "The Money Store" (take a look at Phil in action here). Not to get all Ruth Fisher on you, but it's little remembrances like that that help deal with death and loss. I almost forgot, and had to be reminded by someone, about one of the things I found most endearing about someone who just passed away. His hilarious Money Store commercials. Never mind that he was shilling for a bunch of predators. He was our shill. Here is a nice remembrance of his work for the Money Store.

I wonder what the first thing people think of when my dad's name is mentioned. I wonder how many of those things are things that I would remember or immediately recall. As it gets further and further away from his passing, there will be fewer and fewer opportunities to reminisce. I need to take better advantage of the ones I have.

Your Bonus REX Update

He hit the 15 lb mark yesterday (double his birth weight) at 6 months and 16 days. Very excited given how slow he was to put weight on. He gets cooler and cooler every day. Hard to remember how tiny he was when he was born even though it was just 6 months ago. Pictures help, but they're not perfect (picture-perfect? no such thing).

Your Taxes Update

Two interesting articles today in Tax Notes. First is by Lee Sheppard, scourge of tax planners everywhere. In yet another summary of the current mess concerning the examination of taxation of carried interest in private equity funds (bottom line: should what walks, talks and looks like comp be taxed as such, rather than as capital gains?), Ms. Sheppard focuses on a smaller technique used in funds - the management fee conversion. In this technique, managers of funds waive their entitlement to management fees (which are taxed at 35%) in exchange for a speculative interest in future profits of the funds they manage (which they hope will be taxed (1) later, and (2) at 15%). She ackowledges that the technique (if not some of its more aggressive offshoots) should work under current law, but then argues that service partners be "booted ... out of Subchpater K" and treated as any other service provider to an entity under Section 83. This would be the simplest answer to the carried interest debate as well, but would require an enormous change to current law governing partnerships. In any event, Ms. Sheppard rightly points out that the issue "has legs" in Washington. More wait and see. My client alert isn't stale yet!!

Second, and much more interesting (and relevant to this blog), is a piece, again in Tax Notes, so I can't link, regarding the potential taxation to Queens' own Matt Murphy who caught Barry Bonds's 756th home run ball. In 1998, the IRS (stupidly) came out and noted that the person who recovered McGwire's historic home run ball would be subject to gift tax if he returned it to McGwire (the IRS quickly reversed its position). Similalry, there has been talk recently as to whether Mr. Murphy, even if he decides to keep and not sell the ball should be subject to tax on an "accretion to wealth" concept. Typically, taxation applies only to "realized income", but catching a home run ball is, in many tax practitioner's view, akin to walking through Central Park and stumbling upon a Monet. Seems the IRS is smartly staying out of this one. For now (note to Mr. Murphy - make sure you file your taxes on time and don't take any silly deductions - wouldn't want to get audited.

Your Baseball Update

I watched the end of the Sox 3-0 win over the D-Rays last night. I had mixed emotions because I have James Shields in my "expensive" fantasy league and was hoping for a win (I'm in a dogfight right now), but obviously was rooting for the Sox who really needed a solid win to right the ship. Best of both worlds, I guess - good outing by Shields and a solid win for the Sox. What I noticed: (1) Papelbon looked nasty. He seemed to overthrow on the 1-2 pitch to Upton, but came back and got Pena on a weak grounder to second to end it; (2) Totally anecdotal, but Lowell seems to have a lot of big hits for the Sox; and (3) Tampa will never be close to good until it finds arms who can throw strikes in the pen. They've got some hard throwers (Balfour, et. al.), but they get themselves into trouble unnecessarily. I should know having had four separate Rays starters on my team at some point this year (Shields, Kazmir, Hammel and Sonnanstine).

Some good links:

Over the Monster, and read down for a "relax, keep breathing" (TM Dre) review of the situation viz a viz the Yanks.


Red Sox Fan in Pinstripe Territory. Good take on the ridiculousness at Yankee stadium too. Damn O's couldn't close the door.

Your Death Update

First, I feel guilty for starting this blog two weeks ago and not mentioning one thing about dad since then. I will try to make sure that one entry in the death update each day is a remembrance or something about how I am feeling. Don't worry, it will come after your death and taxes updates for the day.

September 22, 2006 was when he passed away. I'll tell the whole story some time, but I was there when it happened. In any event, the anniversary (what's the word for a bad anniversary? sadiversary?) is coming up in 5 weeks or so, and I feel like I used to feel when I had to get up in class and speak, or had to do something I really didn't want to do - like time is pulling me forward, dragging me, kicking and screaming. I feel resistance in my body as I don't even want to come close to a date, or an event, or any thing really, that will force me to remember that day and how I felt and how everyone felt and HOW MUCH IT FUCKING SUCKED and still does. Why I still won't watch Field of Dreams. Anyway, that's how I feel today.

Also, Brooke Astor finally died. I guess she was a NY big shot. Whatever. Reminds me of an interview sketch from college - Abe Vigoda was the guest - the host was surprised to see him and said "are you sure you're not dead. I could have sworn you were dead". All the legal wrangling around Ms. Astor's will - shit - I thought that was post-mortem. OH well. she was 105 and did some serious good for a boatload of people, including many in my 'hood. The obit is here.