SEC sought information from BofA on loan-loss reserves: filing (Reuters)

(Reuters) – The Securities and Exchange Commission (SEC) sought information from Bank of America Corp (BAC.N) last year about the loan-loss reserves used to repurchase faulty home loans, company filings showed.

In an exchange of letters, the SEC had also asked the bank to explain its methodology of establishing repurchase reserves.

"Discuss the level and type of repurchase requests you are receiving, and any trends that have been identified, including your success rates in avoiding settling the claim," the regulator said in a letter dated January 29, 2010.

The bank's correspondence with the SEC was made public on Monday.

Bank of America had temporarily halted foreclosures nationwide last fall after it found problems with the documents used to repossess homes.

The bank had also said a wide-ranging probe into banks' foreclosure problems could lead to "significant" legal costs in 2011.

"It is not unusual for the SEC to have questions about our regulatory filings and as the letters indicate, we responded to those questions and the issues appear to be resolved," Bank of America spokesman Jerry Dubrowski told Bloomberg in a phone interview.

Reuters could not immediately reach Bank of America for comment outside regular business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Vinu Pilakkott)

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New York Times Gives False Information on General Electric's Zero Income Tax Bill (ContributorNetwork)

COMMENTARY | It is hard to imagine that General Electric (GE), whose nuclear plants have been in the spotlight since the recent Japanese earthquake and subsequent tsunami, would have anything positive to say about that natural disaster, but the media uproar that followed it meant that the world's newspapers were distracted from the multinational corporation's recent SEC filing. That filing, Form 10-K, revealed that in 2010, for the second year in a row, General Electric paid zero federal income taxes.

The 258 page long PDF document was finally analyzed this week by reporters who latched onto phrases like "GE's effective tax rate is reduced because active business income earned and indefinitely reinvested outside the United States is taxed at less than the U.S. rate." The New York Times in particular took pleasure in writing a long-winded four-page diatribe that all but accused GE's tax department, led by John Samuels, a former Treasury official, of committing tax evasion in an effort to avoid paying the 35% federal income tax rate on tax profits.

What most readers of the New York Times, and anyone else not well versed in accounting rules and tax regulations, is likely unaware of, is that tax profits are different than book profits. There are expenses that can be deducted for accounting records but not for tax liabilities and vice versa. Major corporations like GE do complicated calculations each quarter to find out exactly what those differences are so that there are no ugly surprises when they report information to both their shareholders and the taxing authorities.

One of the New York Times' accusations is that GE pays no taxes in the United States. Logic tells us, though, that this simply is not true. With nearly 150,000 employees in the United States, GE pays millions in payroll taxes like employers of all sizes. GE also may pay income taxes to those states that it has a significant presence. While each state defines nexus, which triggers income tax return filing requirements, differently, considering GE's size, it is likely that they file and pay taxes in many states in this country. They also likely pay franchise tax fees as well as sales tax to various states and cities.

GE also has operations overseas and pays taxes to those countries. Like many large companies they hold profits overseas rather than have them repatriated to the United States and taxed at the 35% rate. While the New York Times criticized President Barack Obama's remarks that he wanted to reduce the corporate tax rate, the reason for doing so is to compete with these low tax countries. While the New York Times and others may not like that there are more than a hundred other countries in which GE and other companies can build factories and have offices, the reality is that there are. If the United States' citizens want to keep those jobs in our country, then competing with those countries' tax rates and laws is an essential part of doing so.

Although the New York Times criticized Samuels and his 975-employee department for "looking to exploit opportunities to reduce tax" as part of their day-to-day mission, that tax-accounting-speak really just means cutting costs. Taxes have a huge impact on a business's decisions, and to pretend that GE, which must work constantly to remain profitable amongst its competitors, should not work to cut that cost is naive and absurd.

The most ridiculous part of the New York Times' report though was the moronic extrapolation of the statement "U.S. current tax provision on continuing operations" to mean that the $2.7 billion tax benefit listed on GE's accounting records was a check from the IRS. All this means is that during the time period covered, GE erroneously accrued an expense of $3.2 billion in income taxes. When they did not have to pay that income taxes, they reversed that expense.

The bottom line? GE did what it had to do in 2010 to remain in business, which is to obey the laws while staying competitive. The New York Times on the other hand failed to hire competent writers, editors or researchers in 2011.

Shayna Leah offers an up close look at current issues facing taxpayers. An experienced tax accountant, she uses her familiarity with current tax issues and trends to break down the hottest issues and stories.

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New York Times Gives False Information on General Electric's Zero Income Tax Bill (ContributorNetwork)

COMMENTARY | It is hard to imagine that General Electric (GE), whose nuclear plants have been in the spotlight since the recent Japanese earthquake and subsequent tsunami, would have anything positive to say about that natural disaster, but the media uproar that followed it meant that the world's newspapers were distracted from the multinational corporation's recent SEC filing. That filing, Form 10-K, revealed that in 2010, for the second year in a row, General Electric paid zero federal income taxes.

The 258 page long PDF document was finally analyzed this week by reporters who latched onto phrases like "GE's effective tax rate is reduced because active business income earned and indefinitely reinvested outside the United States is taxed at less than the U.S. rate." The New York Times in particular took pleasure in writing a long-winded four-page diatribe that all but accused GE's tax department, led by John Samuels, a former Treasury official, of committing tax evasion in an effort to avoid paying the 35% federal income tax rate on tax profits.

What most readers of the New York Times, and anyone else not well versed in accounting rules and tax regulations, is likely unaware of, is that tax profits are different than book profits. There are expenses that can be deducted for accounting records but not for tax liabilities and vice versa. Major corporations like GE do complicated calculations each quarter to find out exactly what those differences are so that there are no ugly surprises when they report information to both their shareholders and the taxing authorities.

One of the New York Times' accusations is that GE pays no taxes in the United States. Logic tells us, though, that this simply is not true. With nearly 150,000 employees in the United States, GE pays millions in payroll taxes like employers of all sizes. GE also may pay income taxes to those states that it has a significant presence. While each state defines nexus, which triggers income tax return filing requirements, differently, considering GE's size, it is likely that they file and pay taxes in many states in this country. They also likely pay franchise tax fees as well as sales tax to various states and cities.

GE also has operations overseas and pays taxes to those countries. Like many large companies they hold profits overseas rather than have them repatriated to the United States and taxed at the 35% rate. While the New York Times criticized President Barack Obama's remarks that he wanted to reduce the corporate tax rate, the reason for doing so is to compete with these low tax countries. While the New York Times and others may not like that there are more than a hundred other countries in which GE and other companies can build factories and have offices, the reality is that there are. If the United States' citizens want to keep those jobs in our country, then competing with those countries' tax rates and laws is an essential part of doing so.

Although the New York Times criticized Samuels and his 975-employee department for "looking to exploit opportunities to reduce tax" as part of their day-to-day mission, that tax-accounting-speak really just means cutting costs. Taxes have a huge impact on a business's decisions, and to pretend that GE, which must work constantly to remain profitable amongst its competitors, should not work to cut that cost is naive and absurd.

The most ridiculous part of the New York Times' report though was the moronic extrapolation of the statement "U.S. current tax provision on continuing operations" to mean that the $2.7 billion tax benefit listed on GE's accounting records was a check from the IRS. All this means is that during the time period covered, GE erroneously accrued an expense of $3.2 billion in income taxes. When they did not have to pay that income taxes, they reversed that expense.

The bottom line? GE did what it had to do in 2010 to remain in business, which is to obey the laws while staying competitive. The New York Times on the other hand failed to hire competent writers, editors or researchers in 2011.

Shayna Leah offers an up close look at current issues facing taxpayers. An experienced tax accountant, she uses her familiarity with current tax issues and trends to break down the hottest issues and stories.

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