9 Great American Companies That Aren't Recovering

Few companies escaped the last few years completely unscathed, but most are at least showing signs of improvement. Not so for these nine former All Stars. Check out Huffington Post’s great article taking a look at the 9 companies that have yet to achieve a corporate turnaround. You may be surprised to see some of the national brands that made the list!

1. Borders

Borders Group Inc. (NYSE: BGP) may have a financial white knight, or it may not. Reports were out late last week that GE's finance arm held talks about providing a financial lifeline. Then came word that Borders hired restructuring lawyers. It recently began delaying payments to vendors to conserve cash. Let's pretend that Borders does get a last-ditch financing pact and that it gets its debt refinanced. What really changes? Borders has faced eroding sales and the last sales gain for a year was in calendar 2006 (fiscal year ending Feb. 3, 2007). The new figure was down roughly 30% by even a year ago since then. Borders just trimmed 45 jobs at the corporate headquarters in Michigan and that is on the heels of a fresh plan to close a Tennessee distribution center to cut 310 more jobs.

Borders is now a penny stock and its market cap is a mere $64 million. With shares back under the $1.00 mark, a delisting notice is a risk and more problems may be coming its way. For some reason, the Fahrenheit 451 analogy keeps coming to mind.

2. Boston Scientific

Boston Scientific Corporation (NYSE: BSX) is one that we (and many others) keep thinking will make a comeback. The medical device maker has been riddled with device issues and recalls. Its prior 3-year run of roughly $8 billion in revenues is expected to fall to $7.79 billion in 2010 and $7.91 billion in 2011, according to Thomson Reuters. The only saving grace is that the earnings estimates of $0.39 EPS for 2010 and $0.43 EPS for 2011. We see little risk to an implosion here, but the company is lost in space.

Competition from Johnson & Johnson (NYSE: JNJ), Medtronic (NYSE: MDT), St. Jude Medical (NYSE: STJ) is fierce, and its acquisition of Guidant for almost $27 billion has never really paid off despite Abbott Laboratories (NYSE: ABT) participating in that merger. At $7.33, shares are less than half and then some since its Guidant deal was completed.

Continue reading at Huffington Post.com...

BP's Tax Deductions from the Gulf Oil Spill

The Congressional Research Service issued a new report earlier this week titled Tax Deductible Expenses: The BP Case. You can find the text of the introduction below, or download a PDF of the full report here, courtesy of the Tax Prof Blog.

Following the release of BP’s second quarter earning statement, which showed a $10 billion reduction in tax liability for oil-spill-related cleanup and expenses, media headlines have generated public concern, and in some cases outrage, over these tax savings. Further, the ability of BP to realize these tax savings has generated a number of inquiries as to how and why BP is entitled to this reduction in tax liability.

BP’s reduction in tax liability is the result of standard business expense deductions and the general ability of taxpayers to claim refunds for previously paid taxes when realizing a net operating loss (NOL) or carrying the loss forward to offset future tax liabilities. Business expense deductions and NOLs play a significant role in enhancing economic efficiency by reducing business-cycle-induced fluctuations and spreading risk. BP has reportedly incurred, or expects to incur, $32 billion in cleanup-related costs and settlements over a multiyear period. Under current law, these costs can be used to offset business income and reduce tax liability. To the extent that these costs generate an NOL, these costs can be used to collect a refund for taxes paid in previous years or carried forward to offset tax liability in future years.

The $10 billion “credit” that appears on BP’s second quarter earnings statement is a financial account of BP’s anticipated tax savings associated with legitimate cleanup-related expenses. The figure does not reflect a tax credit as typically defined in the tax code. The $10 billion reduction in tax liability relates to a multiyear period, over which the $32 billion will be spent. The $32 billion was reported in 2010 for financial reporting purposes, but reflects cleanup spending costs in the current year as well as costs the company expects to incur in future years. The financial account and financial reports do not directly correspond to current year tax liabilities. Actual oilspill- related expenditures will be made over multiple years. Consequently, the associated tax savings will not be realized until the year expenditures are made.

'Too Big to Fail' Banks May Try to Get Smaller

From CNNMoney.com:

Wall Street appears to have beaten Washington to the punch.

While lawmakers enter the home stretch on regulatory reform with Thursday's Senate vote, the financial industry has already started to shake up how it does business ahead of the proposed new rules.

Just last week, Wells Fargo (WFC, Fortune 500) said it planned to shutter its more than 600 Wells Fargo Financial stores across the country and announced it was no longer going to make mortgage loans to people without stellar credit.

And on Tuesday, Citigroup (C, Fortune 500) said it had struck an agreement to transfer the management of part of its private equity business to outside parties StepStone Group and Lexington Partners.

Neither Wells nor Citigroup acknowledged that the moves were prompted by the proposed legislation which is expected to be signed into law by President Obama as early as next week.

U.S. Firms Dodge Billions in Taxes by Moving Profits Overseas

As the U.S economy tries to recover, some American businesses are legally dodging billions in taxes by taking advantage of overseas profit transfers. ABC News posted a new article on this questionable tax loophole that is saving U.S. businesses billions of dollars. You can find a snippet of their article below, or read the full post here.

As America struggles with record deficits, tax dodgers apparently are taking billions of dollars out of the country. A new report from the business giant Bloomberg News finds hundreds of companies skirting $60 billion in taxes, and the practice is completely legal.

Thirty million prescriptions were filed last year for the anti-depressant Lexapro, made by the U.S. pharmaceutical company Forest Labs. According to a story in Friday's Bloomberg Businessweek, most of the profits from that drug were transferred overseas, thus avoiding having to pay taxes in the United States.

The news is shocking to Lexapro customers like Tyler Hurst, who buys the drug at a Phoenix pharmacy.

"It does not say, 'The profits of this go outside the country,' anywhere," said Hurst as he looked at the drug bottle. "It is shady."

Turnaround for Big Three automakers? Not so fast

From CNNMoney.com:

One year ago, the U.S. auto industry faced the worst crisis in its history.

Chrysler Group filed for bankruptcy on April 30, the same week that GM announced a plan that put it on the path toward its own bankruptcy a month later. Ford Motor (F, Fortune 500) had just reported huge losses.

So by comparison, conditions for Detroit's Big Three today represent an almost shocking turnaround.

Ford just reported a profit of $2.1 billion. While GM has yet to report a profit, the company managed to cough up enough cash to make an early repayment of $5.8 billion in loans to the U.S. Treasury.

And Chrysler Group just reported that despite another loss, it is no longer burning through its cash reserves.

But many experts still think it's too soon to call a turnaround in the domestic auto industry.

5 Lies The Big Banks Keep Telling Us

The federal bank bailouts and financial crisis are hot topics currently on the minds of many. Regarding the topic, it seems like every day we hear more excuses from CEOs. However, taxpayers are becoming fed up with big banks and the lies they are telling. MSN Money published a great article this morning highlighting the five most common lies big banks are telling us all and I highly recommend reading their full list here.

It's tough to head off the next disaster if you don't understand why the last one happened -- an insight that's apparently lost on Wall Street.

Instead, as I watch banker after banker being grilled on how the mortgage mess happened, they seem to repeat a lot of the excuses I've heard for more than a year. Such as "No one knew." Or "It was everyone else's fault."

Although there's a little truth in each excuse, no excuse is completely honest. "If we're going to avoid these mistakes, it really starts with an honest assessment of what's happened," says Phil Angelides, the head of the Financial Crisis Inquiry Commission, an investigative panel charged with identifying to causes of the credit crisis.

The excuses also muddy the waters at a critical time. The nation is just starting to recover from the meltdown. Financial reform has finally taken center stage in Washington. We need to know what truly went wrong to keep this from happening again.

Big lie No. 1: No one could have known

Consider this scenario: You work at the top of a key bank on Wall Street. You hire the smartest guys from the best schools. You get paid big bucks to know your business better than anyone else. And warning signs are everywhere. When it goes bad, can you really say you didn't know?

Continue reading at MSN Money.com…

IRS Data Show Tax Agency Audits Big Firms Less Often

According to new data from the IRS, there has been a 20% drop in number of audits being performed on companies with more than $250 million in assets over the past decade. As Kevin McCoy of USA Today explains, although these numbers are surprising, the data could be somewhat misleading as the total number of returns filed changes every year.

The data confirm a downward trend identified in a critical analysis this week by the Transactional Records Access Clearinghouse, a non-partisan research organization based at Syracuse University. The IRS provided the data to USA TODAY after questioning TRAC's conclusions.

"There's been a steady decline in IRS audits of the largest corporations," said TRAC co-director Sue Long.

The drop is significant for taxpayers — who face a midnight deadline to file their personal income tax returns — because TRAC found the IRS identified nearly $28.6 billion in tax-underreporting by the nation's largest firms in fiscal year 2009.

The IRS said audit percentages are an imperfect measure because they include tax returns filed, a changing number the agency can't control. The annual number of large corporation audits rose more than 22% in the last decade, IRS data show.

Continue reading at USA Today.com…