483 Million GM Dollars = 483 New Jobs

Earlier this week General Motors announced their plans to invest $483 million in to their Spring Hill, Tennessee plant, which they claim will create 483 jobs. GM also explained that employees who had been laid off will be brought back to work at the new plant.

CNNMoney.com reports

Mark Reuss, president of GM North America, said his company would invest the money in the powertrain factory through 2012.

"By coincidence, the result in new jobs is 483," he said, before a crowd of cheering auto workers. "No, we didn't plan it that way."

The additional investment and jobs are pending successful incentive negotiations with local and state officials, GM said in an announcement.

The additional employees will be brought back from among workers GM had earlier laid off. The plant already builds three versions of GM's Ecotec four-cylinder engine. The additional jobs are needed to add production of a next-generation variant of the engine which, GM said, is more fuel efficient and runs more smoothly.

"The engines made in Spring Hill will drive the success of GM to meet our customer demands for advanced powertrains which offer high fuel economy without sacrificing performance," said Reuss, in a corporate announcement.

Read more here

18 Ways to Earn 5% or More

Due to the poor economy and weak banking industry, most account holders are earning next to nothing from interest on their savings. Many Americans are being forced to find other investment opportunities, however finding a safe investment is much easier said than done. Fortunately, MSN Money.com put together a helpful article with over a dozen tips on earning 5% or more on your savings. I have included a few of their tips below, but you can find the full story here.

Taxable munis

In little more than a year, cities, states and public agencies have issued $100 billion of taxable Build America Bonds (BABs). BABs pay extraordinarily high interest rates because Uncle Sam, as part of the 2009 financial-rescue package, picks up 35% of the issuers' interest costs. BABs now yield more than corporate bonds with similar maturities and credit ratings, making them great not just for IRAs and other tax-deferred accounts, but for taxable accounts as well.

Yields of at least 6% are common for new, long-term BABs. The state of Illinois, for example, just issued 25-year BABs at 6.6%. These are general-obligation bonds, backed by the state's taxing power. Standard & Poor's rates Illinois A-plus, although the state is on watch for a possible rating downgrade. If you prefer to lend to an entity that appears to be in better shape, consider a new, 30-year New York City water-and-sewer revenue bond. The BAB, rated double-A-plus, hit the market at 6.4%.

Fans of exchange-traded funds should consider PowerShares Build America Bond ETF (BAB, news, msgs). With an average credit quality of double-A, it pays dividends once a month and was recently yielding 6.2%.

Preferred stocks

A preferred stock is closer in spirit to a bond than a common stock because a preferred dividend is almost always fixed. So, if long-term interest rates rise, a preferred reacts like a bond and loses value. You also face company risk should the issuer run into trouble and suspend preferred dividends. If you can stand some price fluctuation, consider reinsurer Endurance Specialty Holdings 7.75% Preferred (ENH-A, news, msgs). Rated triple-B-minus, the issue is not callable until 2015 and sports a current yield of 8.1%. Under current federal law, the top tax rate on qualified dividends is just 15%. (Many stocks that look like preferred are actually hybrid securities and aren't eligible for preferential tax treatment.)

Banks, insurers, and real-estate investment trusts are the most common issuers of preferreds. With a preferred-stock ETF, you can diversify into utilities and industrials. The oldest and largest among these is iShares U.S. Preferred Stock Index ETF (PFF, news, msgs). It pays dividends monthly and yields 6.5%.

IRS loses in case over Prudential, others’ payouts

From BostonHerald.com Business Today:

“It took seven years, but Charles Ulrich did something many people dream about, but few succeed at: he beat the IRS in a tax dispute.

Not only that, but tax experts say potentially millions of other taxpayers could benefit from his victory. The case potentially involves payouts from a wide range of insurers, including Prudential.

The accountant challenged the method the IRS has used for more than 20 years to tax shares and cash distributed by mutual life insurance firms to their policyholders when they reorganize as public companies.

A federal court recently agreed with his interpretation.

‘There’s a tremendous amount of money at stake,’ said Robert Willens, a New York City-based tax analyst at Robert Willens LLC. “Tens of thousands of people could be in line for a refund.”

Don Alexander, an IRS commissioner in the 1970s and now a tax attorney in Washington, said while it’s not unusual for individuals to take on the agency, ‘most of them lose.’

Alexander called it ‘quite a significant case.’

The dispute arose when more than 30 mutual life insurance companies became publicly traded corporations in the late 1990s and earlier this decade, in a process known as demutualization.

Mutual companies are owned by their policyholders, so the companies provided stock and cash to compensate them for the loss of their ownership interests when they went public.

All told, roughly 30 million policyholders received distributions, Ulrich estimates. MetLife Inc. provided over $7 billion of stock to about 11 million policyholders when it went public in 2000, while Prudential distributed $12.5 billion in stock to another 11 million.

The IRS held that the recipients hadn’t paid anything for the shares and owed taxes on the full amount when the shares were sold. Cash distributions also were fully taxable, the IRS said.

That didn’t sound right to Ulrich, 72, an accountant for 49 years. He began researching the issue in 2001, when he received shares from two companies, Prudential and Indianapolis Life.

Ulrich concluded that policyholders had paid for their ownership rights through their premiums so the distributions should have been tax-free.

That could make a significant difference in what a taxpayer owes. If a company distributed shares worth $30 and a recipient subsequently sold them at $32, under the IRS’ view they would pay taxes on all $32. Under Ulrich’s interpretation, they would owe taxes only on the $2 per share gain.

In 2003, Ulrich publicized his views by contacting tax and insurance experts and setting up a Web site.

‘Largely I was regarded as a lunatic,’ he said, who ‘would never prevail against the IRS.’”