Archive for July, 2010

Sen. Kerry to pay Mass. tax on yacht docked in RI (AP)

Tuesday, July 27th, 2010 | Finance News

BOSTON – Sen. John Kerry moved to end a controversy over his decision to base his new $7 million yacht in tax-free Rhode Island, informing the Massachusetts Department of Revenue on Tuesday that he would "promptly" pay taxes as if the vessel were docked in his home state.

In a statement to The Associated Press, the Democrat said, "As we've said from the beginning, we have always complied with tax laws and we always will. ... The payment is being made promptly."

The 2004 Democratic presidential nominee has been dogged by charges of tax evasion since last week, when the Boston Herald first reported about his decision to dock the 76-foot sloop Isabel in Newport, R.I.

Doing so spared Kerry a $437,500 one-times sales tax charge in Massachusetts, as well as about $70,000 in annual excise taxes. Rhode Island repealed those taxes in 1993, making the state something of a nautical tax haven.

Massachusetts officials said Kerry was within his rights to base the vessel in Rhode Island, despite owning homes in Nantucket and Boston, but they also said he would be liable for taxes if he brought the yacht to Massachusetts within six months of taking ownership.

Subsequent news accounts placed the Isabel in Nantucket over the Fourth of July weekend and on Martha's Vineyard more recently. It is now in a shipyard in Portsmouth, R.I., undergoing warranty repairs. A Kerry spokesman said he chose to base the vessel in Rhode Island not for tax purposes, but charter opportunities and long-term service.

In his statement, Kerry said, "Whether owed or not, we intend to pay the equivalent taxes as if the boat's home-port were currently in Massachusetts."

The wording underscored the tax treatment Kerry and his wife, millionaire philanthropist Teresa Heinz, constructed for the boat.

It is registered in Newport but owned by a limited liability corporation based in Pittsburgh, hometown of both Heinz and the ketchup company from which her family derived its wealth. In recent days, Kerry has indicated Heinz was the majority stockholder in the corporation, raising questions about whether a Pennsylvania resident owed taxes in Massachusetts for a vessel based in Rhode Island.

Reporters dogged Kerry at a public event on Monday, and the issue bubbled over to the Massachusetts gubernatorial race on Tuesday.

Independent gubernatorial candidate Timothy Cahill, a former Democrat, told reporters it "looks like" John Kerry was dodging his tax bill and said the revenue department should investigate.

"I don't think that the state should treat anyone differently — senators, congressmen or regular people — so, if someone's not paying their taxes that should be paying them, then the DOR should go after them," said Cahill, who currently serves as state treasurer.

Gov. Deval Patrick, a fellow Democrat, also was asked if he thought Kerry was trying to avoid taxes.

"I think if there's a tax to be paid he's going to pay it," the governor said shortly before Kerry released his statement.

The Massachusetts Republican Party was unyielding in its criticism, despite the promised tax payment.

"Senator Kerry will only pay the taxes because he got caught," party Chairwoman Jennifer Nassour said in a statement. "He should spend more time creating jobs rather than customizing his yacht. Democrats think they live by another set of rules, and the voters of the commonwealth will soon remind them they do not."

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US Steel talks of hurdles ahead after 2Q loss (AP)

Tuesday, July 27th, 2010 | Finance News

NEW YORK – United States Steel Corp. on Tuesday said there are some hurdles ahead for the global steel industry, as it gave a shaky outlook for the current quarter after posting a second-quarter loss.

The loss was far smaller than a year ago as sales more than doubled. For the current quarter, the company expects to post a profit compared with a year-ago loss. It thinks results will fall below the $198 million in income from operations during the second quarter because of declining orders from spot market customers.

Shares fell $3.23, or 6.6 percent, to $45.66 in afternoon trading.

In a conference call with analysts ,Chairman and CEO John Surma said while there is an economic recovery under way, there is also "a high degree of uncertainty" about the shape and pace of the recovery, including whether the economy will fall into a "W" shaped double-dip recovery or a slow and steady "U" shaped rebound.

"You can take whatever alphabet you like but I think it is going to be choppy recovery and it is going to take some time," he said.

US Steel noted that European demand is slightly higher than in North America.

"While we're still not prepared to say there is a turn or we're getting optimistic again, (it) feels like there is a little bit more traction in the spot markets in Europe than there are so far in North America," Surma said.

US Steel offers insight into the economic recovery because it makes steel products used in everything from appliances to cars.

The company posted a second-quarter loss of $25 million, or 17 cents per share. That compares with a loss of $392 million, or $2.92 per share, a year earlier.

Taking out the impact of the weakening euro against the U.S. dollar and some accounting charges, US Steel made 45 cents a share — well below the forecast of analysts polled by Thomson Reuters, who on average predicted profit of 63 cents per share.

Sales more than doubled to $4.68 billion. Analysts predicted $4.63 billion. Surging revenue was offset by higher operating expenses, which nearly doubled from a year earlier.

Shipping and production are being dragged down by slower order rates, due to seasonal weakness and changes in inventory.

Steel prices have fallen in recent weeks because of diminishing demand.

Also on Tuesday, AK Steel said it is cutting production capacity amid weakening demand. The gloomy news from the pair of steelmakers was a stark contrast to a number of largely positive corporate earnings reports and outlooks in the past week.

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Summary Box: UBS posts 2Q profit that tops view (AP)

Tuesday, July 27th, 2010 | Finance News

THE RESULTS: Swiss bank UBS AG posts a second-quarter profit of 2 billion Swiss francs ($1.9 billion), reversing a year-ago loss and easily topping forecasts.

THE REASONS: A strong performance from its investment bank even as crosstown rival Credit Suisse and U.S. banking giants experienced a slowdown in the sector during the volatile quarter. Earnings also were boosted by a 595 million-franc ($560.7 million) credit gain on financial liabilities. Customers continued withdrawing more than they deposited, but at a far slower rate.

THE TAX MAN: UBS expects to resolve all U.S. tax matters by October. The bank has agreed to turn over 4,450 names of wealthy Americans suspected of dodging taxes through secret accounts.

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