openbox9 Premium Member join:2004-01-26 71144 |
openbox9
Premium Member
2014-Jul-30 10:38 am
Why notThe major tower owners on the wireless side are REITs. Makes perfect sense and I'm surprised it didn't happen sooner. | |
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| rradina join:2000-08-08 Chesterfield, MO |
rradina
Member
2014-Jul-30 11:56 am
Re: Why notAlthough the amount is lower, I would think municipalities would welcome this reclassification. At least in my state, real estate taxes are used for local services such as schools, fire and ambulance. If the previous higher amount of tax was due to depreciation being used to offset corporate income, that's usually general revenue.
Of course the state loses and regulators should be careful how high the lease gets.
What's curious is who would buy the stock of this publicly traded company? Although it has the potential for consistent revenue (lease income) and commensurate dividend payouts, their "real estate" degrades without continued investment and takes all the risks from mother nature. I suppose it's possible to buy some kind of stop-loss insurance but if an area is prone to hurricanes, such a policy might be cost prohibitive. | |
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| | mdurkin join:1999-08-11 San Bruno, CA |
Re: Why notIt has no effect on local taxation where these assets would already be taxed either as real property or as business personal property. It avoids double taxation at the federal level since REITs don't pay corporate income tax as long as they issue at least 90% of their profits annually as dividends, which are then taxed as ordinary income to the recipient. | |
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1 recommendation |
Re: Why notOrdinary income? Hardly. Capital gains. They are significantly different.
I support abolishing business/corporate taxes as long as reduced capital gains taxes are done away with and all income is treated equally under the income tax. The system we have no is designed to allow the system to be gamed from two sides so the well heeled can avoid the taxes on both sides.
Don't call dividends ordinary income, they aren't, they are capital gains and they are taxed at significantly lower rates. | |
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| | | | mdurkin join:1999-08-11 San Bruno, CA 1 edit |
Re: Why notYes, taxed as ordinary income. Because it's a REIT. REIT dividends are not taxed the same way general corporate dividends are taxed; REIT dividends don't get a preferred tax rate. That is part of the deal that allows them to not pay income tax at the corporate level.
Capital gains and dividends are two different things even though the same preferred tax rates have been used for them in general in recent years. Capital gains comes from sale of the stock itself, has the same treatment for the stockholder whether it's a REIT or not, and has no impact on the corporation's taxation. | |
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Re: Why notMy apologies, you are correct, I was not aware of this exception and I've owned REIT stocks. Though there have been several exceptions to this rule added in the last 15 years, several of which Windstream could qualify for depending on how they structure the REIT.
There are also several situations where REIT's dividends meet the requirements for qualified dividends, such as when the taxpayer earns less than $400k which is why I never noticed it when I owned REIT stocks because they were qualified dividends in my case and taxed at the 15% maximum. | |
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| | openbox9 Premium Member join:2004-01-26 71144 |
to rradina
said by rradina:What's curious is who would buy the stock of this publicly traded company? Anyone interested in cash-flow and income. | |
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| | | rebus9 join:2002-03-26 Tampa Bay |
rebus9
Member
2014-Aug-1 6:29 pm
Re: Why not+1
From prior long, protracted, bitter experience using (suffering with) Paetec/Windstream at $DAYJOB, I hate the company from a network admin viewpoint.
But as an investor, I like them. Their dividend is a fairly respectable 8.5% based on current share price. They're far from blue chip, but they've provided a consistent income stream with decent return.
I'd be willing to at least review the prospectus if they spin off some of their assets into an REIT. | |
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LoopholeTime for this loophole to end. | |
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| openbox9 Premium Member join:2004-01-26 71144 |
openbox9
Premium Member
2014-Jul-30 11:16 am
Re: LoopholeTime to stop taxing creators of jobs funnels of transactions and monies and driving them out of the country. Tax where the money goes, not the medium it transfers through. | |
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| | bbbc join:2001-10-02 NorthAmerica
1 recommendation |
bbbc
Member
2014-Jul-30 11:32 am
Re: LoopholeWhat a load, job creators. Maybe be patriotic and pay for the infrastructure that drives this country. Attitudes like yours is why we're in a race to the bottom. Take everything, pay for nothing. Privatize profits and socialize losses. | |
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| | | openbox9 Premium Member join:2004-01-26 71144 |
openbox9
Premium Member
2014-Jul-31 3:16 am
Re: LoopholePlease.... Tax the money, not the funnel. Money moving through corporations is being taxed heavily, multiple times. Have you thought about why businesses are merging and moving to more efficient tax jurisdictions? | |
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1 recommendation |
Responsible to openbox9
Anon
2014-Jul-30 12:08 pm
to openbox9
said by openbox9:Time to stop taxing creators of jobs funnels of transactions and monies and driving them out of the country. Tax where the money goes, not the medium it transfers through. The US, like most industrialized countries, should STOP taxing corporations, and just tax the income of investors. That way US corporations won't be moving their companies and jobs overseas to avoid taxes. | |
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| | | firephotoTruth and reality matters Premium Member join:2003-03-18 Brewster, WA |
firephoto
Premium Member
2014-Jul-30 12:21 pm
Re: Loopholesaid by Responsible :said by openbox9:Time to stop taxing creators of jobs funnels of transactions and monies and driving them out of the country. Tax where the money goes, not the medium it transfers through. The US, like most industrialized countries, should STOP taxing corporations, and just tax the income of investors. That way US corporations won't be moving their companies and jobs overseas to avoid taxes. No, all money that is made that is extra to operating the existing company plus a percentage amount for a buffer should be taxed. The current system allows most successful businesses to skip out on taxes, use the extra money to make their business bigger and thus skip out on even more taxes (as measured in dollars). This is over simplified but it includes actual taxes, government payments, government discounts, government grants, government backed insurance payouts, ... you get the idea. It's the biggest example of welfare ever known, but only if it's measured in dollars rather than your econ taught people who like to measure these things in people units to shift focus from the "job creator" class of perpetrators. | |
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| | | | rradina join:2000-08-08 Chesterfield, MO |
Re: LoopholeCorporate earnings are double taxed. The corporation is taxed their net income and if dividends are paid, investors are taxed again (usually at a reduced capital gains tax rate). If they have net income and don't pay dividends after taxes, the price of the stock should rise to represent increased market cap (the cash they keep increases their market value). Assuming the stock price rises, an investor can sell their shares to access the income. When they do, they are taxed on any difference between their original purchase price of the shares and the selling price. | |
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| | | | openbox9 Premium Member join:2004-01-26 71144 |
to firephoto
said by firephoto:No, all money that is made that is extra to operating the existing company plus a percentage amount for a buffer should be taxed. It is taxed, multiple times. said by firephoto:The current system allows most successful businesses to skip out on taxes, use the extra money to make their business bigger and thus skip out on even more taxes (as measured in dollars). Or, it encourages US businesses to go elsewhere to lower taxes. Tax where the money goes, not the funnels that get it there. Tax the individual owners (i.e. equity owners [I can't believe the "90%" isn't chomping at the bit for this) not the legal entities created for legal protections. | |
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| | | | | WhatNow Premium Member join:2009-05-06 Charlotte, NC |
WhatNow
Premium Member
2014-Jul-31 11:32 pm
Re: LoopholeIt also causes companies to do a lot of things they would not do if they were not taxed on income. The only tax they should pay are local property tax unless a personal income tax was charged on each employee at the muni level. The biggest problem with a no corporate tax is it would be a job killer for all the staff accountants that are employed to keep the tax burden at a minimum. Something is wrong when a Fortune 100 company that announces big profits also show they got a tax refund or paid no taxes. | |
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| | | openbox9 Premium Member join:2004-01-26 71144 |
to Responsible
Yes please. The money still gets taxed and silly governments still get their revenue to spend like drunken sailor and corporations are enticed to actually move to the US to do business. Imagine how many businesses would move to the US for zero tax. Talk about job growth. | |
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to openbox9
Openbox9, the "job creator" myth is a common misconception. Demand actually creates jobs while business owners take advantage of this demand to supply their products. A job is a direct causation of product/service demand... Lower taxes does not create more jobs it lowers expenses...
Supply & Demand is ECN-101 | |
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Re: Loopholei believe openbox9 is of the political persuasion that takes the "job creator" myth as gospel. as such, your real world explanation is falling on deaf ears. | |
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| | | | openbox9 Premium Member join:2004-01-26 71144 |
openbox9
Premium Member
2014-Jul-31 3:26 am
Re: LoopholePlease, explain the creation of jobs to me then, oh wise NASA guy. | |
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1 recommendation |
ECON101 to SHABAZZ
Anon
2014-Jul-30 8:01 pm
to SHABAZZ
Demand doesn't create jobs. Supply does. You can have demand up the yin-yang and there will be no jobs until a job creator creates the supply and if demand is not there, you simply have surpluses until equilibrium is reached again (as job creators slow the rate of creation).
Lower expenses lowers the final cost of the product which increases demand for the product (for elastic demand anyway).
If this were not the case, the Administration would not be handing out thousands upon thousands in "rebates" for people to buy electric cars and New York state (not exactly a Red state) would not be offering zero tax rates for start ups.
Where tax cuts are wasted are on companies with inelastic demand products, like oil. Whether gas is $4 or $6, people have to get to work. Whether medicine is $10 or $20, people have to buy it. Companies simply pocket the margin because they are not compelled by market forces to lower the price of their inelastic products. | |
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| | | openbox9 Premium Member join:2004-01-26 71144 |
to SHABAZZ
Of course demand drives supply. Supply drives jobs. Where are those jobs? In a lower cost jurisdictions | |
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silbaco Premium Member join:2009-08-03 USA |
silbaco
Premium Member
2014-Jul-30 10:59 am
InvestmentsWhat they mean by investments is probably more fiber backhaul for cell towers. Their residential DSL lines probably won't see much in terms of investments anytime soon. | |
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Who sets value on theseThere is a fair market valuation of any land anywhere, supposedly what it would fetch on the open market.
But what about the valuation of improvements, in this case cables, poles, vaults, crossboxes, handholes, entire buildings? Who sets the value of these? There aren't very many potential buyers, so what's a fair market value?
In Wisconsin, regulated utilities submit valuations to the state, not local governments, and pay a nominal tax on these assets. For example if you look up a wire center on the local assessment roll, it will show up as exempt.
I have no idea how they are valued and how often the state challenges these figures, but I can only guess that while it was once a well-intentioned effort to make it easier to account for linear assets throughout the state, it has not kept up with inflation and shrinking enforcement, so it now serves as an example of corporate welfare. | |
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| rradina join:2000-08-08 Chesterfield, MO |
rradina
Member
2014-Jul-30 11:44 am
Re: Who sets value on theseAre these improvements considered capital improvements? If so, they can be depreciated. Since poles, wires and fiber don't last forever, there should be a reasonable method to determine how quickly the value fades and develop a schedule (10, 25, 50 years?). The tax value would then be part of the organization's accounting records and relatively easy to acquire and determine annual tax assessments. | |
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| | firephotoTruth and reality matters Premium Member join:2003-03-18 Brewster, WA |
firephoto
Premium Member
2014-Jul-30 12:28 pm
Re: Who sets value on thesesaid by rradina:... they can be depreciated. Since poles, wires and fiber don't last forever... Not so fast with that theory. If they are in business and operating then the poles, wires, fiber, everything are functioning as expected and not in a depreciated capacity. | |
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| | | rradina join:2000-08-08 Chesterfield, MO |
Re: Who sets value on theseA business can either expense something or capitalize it. If they expense it, the entire amount goes against CY income and reduces CY tax obligations. If they capitalize it, they depreciate it over a period of years and recognize that depreciation over the life of the asset. It's generally advantageous to capitalize the cost of an asset so that it's cost is incrementally recognized against the earnings made over the life of the asset. Of course once an asset is fully depreciated, it may have residual value and still function adequately to generate revenue. | |
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Re: Who sets value on theseAm I missing something? I thought depreciation was only considered for income tax (IRS) purposes, not property tax assessment purposes. Depreciation lowers income tax liability, but what effect does it have on property taxes when you spend your money on real estate such as cable plant and wire centers?
My point was that utilities seem to have a sweetheart deal when it comes to state and local taxation of real estate. If they had to pay property tax on the "true" value of their plant, it might not make sense for them to reclassify this stuff as real estate. | |
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| | | | | rradina join:2000-08-08 Chesterfield, MO |
Re: Who sets value on theseThe question was "who sets the value on these". If it's not real estate, it's a corporate asset. The current value should be on the books. There shouldn't be any monkey business to understand it's current value. | |
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to ArgMeMatey
According to Windstream, they hired a third-party to conduct the valuation and determine the payments to the REIT ($650M per year). Windstream also said the REIT will hold just 25% of the value of Windstream's existing assets, since the REIT will just have the fiber/copper, while Windstream retains all the electronics. Windstream is a "triple net" payer, meaning they have to pay for upkeep, but the REIT funds any new capex in fiber deployments. | |
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Bodybagger Premium Member join:2010-03-30 Saint Matthews, SC |
One thing only"maximize shareholder value"
Windstream has made it clear to countless rural customers that they have absolutely no interest and no motivation to provide the services being bought. And then they find another way to suck more money into their greedy pockets by dodging taxes. Calling this company slime would be a total insult to slime. | |
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SunnyD join:2009-03-20 Madison, AL
1 recommendation |
SunnyD
Member
2014-Jul-30 11:51 am
So I should be charging my ISP rent?My home wiring closet and home network are "real estate" now too then? I suppose I should rightfully be demanding rent from my ISP... | |
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| ITGeeks join:2014-04-20 Cleveland, OH |
Re: So I should be charging my ISP rent?But you don't need the home network to use them, and you don't need a wiring closet either. | |
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Separ8tion
Anon
2014-Jul-30 2:29 pm
It's a toe in the waters of structural separationKarl, what I think you've missed here is, yes this is a tax dodge gimmick, but it is structural separation. Windstream is the initial exclusive renter of the wired assets, but according to their S-8 filed yesterday, the REIT will be providing access to other service providers.
If Wall Street can be eased into the idea of structural separation as a good thing, then we might eventually see increased ISP competition. It's no surprise this is Windstream, and not a Baby Bell taking this move first. But hopefully its a trend. | |
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| IowaCowboyLost in the Supermarket Premium Member join:2010-10-16 Springfield, MA |
Re: It's a toe in the waters of structural separationHopefully Comcast will follow this move. | |
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anonomeX
Anon
2014-Jul-30 2:31 pm
Huh?Since when do such fixed-line providers' networks not run over someone else's *actual* real estate (usually public)?
(And BTW that "debt" reduction of 3+ billion dollars will mean the govt. *raising* taxes by 3+ billion elsewhere (say, idunno, with real estate taxes, for instance).) | |
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Termites
Anon
2014-Jul-30 2:36 pm
tAXESSo theyre getting tax breaks to have crappy service,
the trust will allow them to avoid lawsuits regulators...
why not just move your HQ to Canada that way you wont pay taxes period.and offer the internet service in the usa. | |
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So now...I guess any company can come along and lease this stuff from said spun off company at comparable rates and begin competing with them? | |
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| KrKHeavy Artillery For The Little Guy Premium Member join:2000-01-17 Tulsa, OK |
KrK
Premium Member
2014-Jul-30 6:06 pm
Re: So now...LOL. Not a chance.
The lease of said "real estate" will have exclusive clauses in it. | |
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2 recommendations |
Re: So now...Wait what? How can that be? This company is in the business to lease network "real estate". How can they possibly pass up the opportunity to lease to another company that may be willing to pay them more?
Oh that's right.... this is another one of those elitist tax scams designed to make the rich richer. | |
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mediaguyPolitically Incorrect Premium Member join:2014-01-22 Guitar Town ·T-Mobile Netgear CM500 TP-Link Archer A7
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mediaguy
Premium Member
2014-Jul-30 3:10 pm
Real Estate?!?Who comes up with this sh**?? I've got a few hundred acres of "Real Estate"...er, old computers - that are past amortization - but could generate huge tax savings every year if I called them "Real Estate"!
The IRS, tasked with collecting what's legally owed to fund our ever-more-indebted country, just hands a huge multi-billion dollar company a 'get out of jail free' card, while a home business owner can get slapped with fines and penalties if we claim too much of our internet bill as a business expense.
Does the corporate tax code need to be changed? Without question.
Should the IRS hand out a special exemption for one single company (a company almost universally despised by their customers)? I'm pretty sure a case could be made for that action being a direct violation of existing US law, and certainly a slap in the face of the legislative branch, who are constitutionally responsible for any changes to the law!
We taxpayers already subsidized the majority of the cost of those physical lines, and now we are going to subsidize the very company we handed that infrastructure over to?
So, who's campaign fund do I have to contribute to in order to get this kind of 'special treatment'? | |
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| O1OOO1O join:2005-12-23 Lewisville, TX |
Re: Real Estate?!? | |
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ArkhmAsylmEvrythng I need isn't really what I want Premium Member join:2006-02-22 Saint Paul, MN
1 recommendation |
Another giveback to business, to the detriment to the people (The taxpayers) This reclassification should be predicated upon the recipient being required to fully upgrade and maintain their newly reclassified "real estate."
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KrKHeavy Artillery For The Little Guy Premium Member join:2000-01-17 Tulsa, OK |
KrK
Premium Member
2014-Jul-30 6:04 pm
Time to scrap all the tax lawsAnd just establish a flat tax.
Put too many people out of work, I guess. | |
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| Kommie2 (banned) join:2003-05-13 united state |
Kommie2 (banned)
Member
2014-Jul-31 5:30 am
Re: Time to scrap all the tax laws15% of a Million Dollar Income does not hurt as 15% of a 50k income.
Fuck the Flat Tax. | |
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Pegasus Premium Member join:2008-01-04 united state
1 recommendation |
Pegasus
Premium Member
2014-Jul-31 7:34 am
Giggle.Oh nice. with all this saved money i wonder how much will go into upgrading plant?
LOL!!!!!
the IRS must be the only windstream customer that can get over 1 Mbps. | |
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IowaCowboyLost in the Supermarket Premium Member join:2010-10-16 Springfield, MA |
City taxesA few years ago when the city was going through a fiscal crisis I was reading a memorandum to city employees from the former control board that one of the city's biggest corporate taxpayers changed the way it did business so it was now exempt from paying city taxes. | |
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