It's Back To Playing By The Rules: Sec. 412(i) Retirement Plans
June 01, 2004
A common expression in the tax arena is the "red flag" ' the concern that a tax deduction is so large, or the tax benefits of a transaction are so favorable to the taxpayer, that it is comparable to waving a red flag at the IRS, inviting scrutiny and possible adverse consequences. Over the past few years, certain retirement plans created under the provisions of Section 412(i) of the Internal Revenue Code have been designed using methods that are questionable, at best, in terms of compliance with the tax code and regulations. This problem became so pervasive that it was widely anticipated the IRS would respond to the red flags, and put an end to the abuses. Last month, it happened. IRS guidance and proposed regulations were enacted to try to get everyone to play by the rules. Not that the rules are bad; a 412(i) plan could still be right for you.
Is It a True Lease or a Loan?
June 01, 2004
The first part of this article, published in last month's issue, addressed the importance of the distinction between true leases and loans and began a detailed analysis of the rules that courts use for state law and bankruptcy purposes to determine the category in which a given transaction belongs. <br>As outlined in part one of this article, courts utilize the Two-Part Test provided in §1-201(37) of the Uniform Commercial Code, and any transaction that satisfies that Two-Part Test creates a security interest as a matter of law. The first prong of the test is satisfied if the lessee does not have the option of terminating the lease early or if any such early termination option requires the lessee to pay the lessor a significant sum. The second prong, which addresses the issues that are most often litigated, is discussed below.
On-Site Sales: What Lessor's Counsel Should Know
June 01, 2004
When equipment lessors evaluate the risks of underwriting lease transactions for manufacturing equipment, one of the primary considerations in the credit decision is the resale value of the equipment in the event of default. In preparing for this risk, a key component of an underwriter's evaluation must be how to access and market the equipment in the event of a default. Therefore, it is critical to look at every transaction from the perspective of how much money a piece of equipment will bring in a sale, if there is an established market for the particular equipment, and also, how and where the equipment can best be marketed and sold if a liquidation is necessary. An often-overlooked and significant factor in this analysis is whether the lessor will have unfettered access to remove the equipment to sell, refurbish, and/or prepare for liquidation at the location where it has been used.
Best Practices and the Leasing Industry
June 01, 2004
Best practices" seem to be on the tips of everyone's tongues these days. At the recent ELA Executive Roundtable Conference, the concept of applying best practices to leasing companies was a key focus of discussion. This trend is a clear endorsement of continually benchmarking performance and learning from others what works and what doesn't.
AHLA Seeks Clarification on Malpractice Insurance
May 28, 2004
<b>Part One of a two-part article</b>. Proper malpractice coverage is essential to any physician's practice. When that coverage is not readily available or premiums skyrocket, that essential can seem like a luxury. Physicians facing other economic pressures in their practice not infrequently opt to reduce their insurance limits, increase their deductible, drop their coverage altogether, retire or leave the area, or discontinue what they view as high-risk portions of their practice (eg, serving on ER call rosters or accepting Medicaid or indigent patients). As a result, physicians' personal assets (and careers) are more at risk, hospitals face more liability exposure as the "deep pocket," and patients face significantly reduced access to care.
The Death Knell for One-on-Ones?
May 27, 2004
When the Securities and Exchange Commission settled a Regulation FD enforcement action against Schering-Plough Corporation and its Chief Executive Officer in late 2003, the reaction from the pundits was swift. Repeatedly quoting a sentence from the SEC's cease-and-desist order that indicated that a violation had arisen through "a combination of spoken language, tone, emphasis, and demeanor" (emphasis added), many securities counsel began speculating that the enforcement action would irrevocably and further chill communications with securities professionals. Some went so far as to predict that so called "one-on-one meetings" with analysts should no longer be a part of a responsible company's investor relations program.
Best of the Best Practices in Corporate Governance
May 27, 2004
This article summarizes certain best of the "best practices" in corporate governance, including those standards that have been implemented by many of the corporations at the forefront of governance reform.
Technology and Corporate Risk Management
May 27, 2004
It's a fact: Litigation costs have skyrocketed over the last two decades. In the securities industry, this trend is evident in that governmental inquires into the practices and dealings of financial and corporate entities on the heels of the MCI WorldCom and Enron scandals have shown no signs of abating. The shareholder actions resulting from these scandals have done little to restore investor confidence. To ameliorate the situation and shore up public confidence in a system that has been operating in a de facto mode of "irrational exuberance," a host of legislation has been introduced to address the need for greater accountability and transparency in the way our financial institutions and corporations conduct their affairs. The most significant legislation is the Sarbanes-Oxley Act of 2002 (SOX). Comprised of 11 parts and 66 sections, this is broadest piece of legislation out of Washington since the 1933 and 1934 U.S. Securities Acts.
Anti-Spam Law Impacts Legitimate e-Mail
May 26, 2004
Despite its clever name, the recently enacted CAN-SPAM Act does not in fact prohibit "spam." What the law does do is regulate "commercial e-mail," which is defined broadly. Accordingly, the legal department of every business that uses e-mail should be advising its employees to take immediate steps to comply with the Act, as violations carry stiff penalties.
