About provision for bad debts

Note: Register for this month’s CLE, “Current Developments in Tax Law,” from 1-2 p.m. ET on Wednesday, Nov. 18.Despite recent murmurs that the recession may be easing its grip on the United States, debt continues to sap the financial strength of millions of families and businesses around the country.Home foreclosure is one of debt’s most wrenching symptoms. In August, according to RealtyTrac, foreclosure filings were reported on 358,471 properties. That number amounts to one of every 357 housing units in the country.There was a smidge of good news. Filings were down 1 percent from July. Still, there were 18 percent more than in August 2008.Meanwhile, August consumer bankruptcy filings totaled 119,874, an increase of 24 percent over the number of filings in August 2008,according to the American Bankruptcy Institute, a nonpartisan organization that analyzes issues relating to insolvency. Here, too, there was a little bit of good news: The number of bankruptcy … [Read more...] about The Bad-Debt Blues

On July 11, 2012, the U.S. Department of Health and Human Services (HHS) published a proposed rule codifying the Medicare bad debt provisions in Section 3201 of The Middle Class Tax Extension and Job Creation Act of 2012, which became effective earlier this year.Under the rule, by fiscal year 2015, allowable bad debt amounts will decrease to 65 percent for many providers, including hospitals, skilled nursing facilities, critical access hospitals, federally qualified health centers, and rural health clinics.  HHS notes that the new bad debt provisions will save the Medicare program $10.9 billion over the next ten years. … [Read more...] about New Medicare Bad Debt Proposed Rule

Introdution The Debts Recovery Tribunal has been constituted under Section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The original aim of the Debts Recovery Tribunal was to receive claim applications from Banks and Financial Institutions against their defaulting borrowers. To aid the procedure thereof, the Debts Recovery Tribunal (Procedure) Rules 1993 were also drafted.While initially the Debts Recovery Tribunals did perform well and helped the Banks and Financial Institutions recover substantially large parts of their non performing assets, or their bad debts as they are commonly known, but their progress was stunted when it came to large and powerful borrowers. These borrowers were able to stall the progress in the Debts Recovery Tribunals on various grounds, primarily on the ground that their claims against the lenders were pending in the civil courts, and if the Debts Recovery Tribunal were adjudicate the matter and auction off their … [Read more...] about Debt Recovery Tribunal: A Non-Performing Asset

The U.S. Department of the Treasury recently issued final regulations providing helpful clarifications on the partnership and partner level tax consequences of debt-for-equity exchanges.On November 15, 2011, the U.S. Department of the Treasury (DOT) issued final regulations governing the federal income tax treatment of a transaction in which a partnership issues a partnership interest to a creditor in satisfaction of the partnership’s indebtedness.  These regulations largely follow the approach taken in the proposed regulations issued in 2008, but with some helpful clarifications added.BackgroundIn 2004, Congress amended Section 108(e)(8) of the Code to provide that, when a debtor partnership issues a capital or profits interest to a creditor in satisfaction of a recourse or nonrecourse debt of the partnership, the partnership is treated as having satisfied the debt for an amount of money equal to the fair market value of the partnership interest being issued to the … [Read more...] about Final Regulations on Partnership Debt-for-Equity Exchanges

Academics in Hong Kong have found that companies that have adopted executive compensation clawback provisions tend to substitute one type of earnings manipulation for another, and that this trend is more pronounced in companies with high growth or transient institutional ownership.In an article published in the American Accounting Association’s journal, the authors analyzed companies from the Russell 3000 that voluntarily adopted clawback provisions of the type required by Section 954 of the Dodd-Frank Act. Because the Securities and Exchange Commission has not yet finalized the rules to implement this section, only some companies have adopted these measures. Section 954 is intended to deter financial misstatements.By carefully matching about 250 companies that have adopted clawback provisions with those that have not, the authors investigated two main questions: (1) do clawbacks lead companies to substitute one type of earnings manipulation with another; and (2) which kind of … [Read more...] about Hong Kong Study Finds Executive Compensation Clawback Provisions Do Not Eliminate Possible Earnings Manipulation