The use of tax shelters is quite common and there are many legal variations of tax shelters available to individuals and. While there are many legal and legitimate types of tax shelters, there are also many that are used for malfeasance and fraudulent purposes. The United States and the Internal Revenue Service closely monitor the use of tax shelters.
The surveillance and investigation of tax shelters has grown in recent years as the IRS has learned and discovered more about complex processes behind popular tax shelters (Barrymore). The use of tax shelters, and their increasing complexity and widespread use have become a major concern for the IRS and the United States government. The IRS claimed that the "partnerships were formed for the purpose of tax avoidance and therefore lacked economic substance".
TYPES OF MERGERS AND ACQUISITIONS
There are many different ways in which two firms combine to create one entity. In order to combine, their individual identities dissolve to form a single new and separate identity. As globalization becomes an increasing theme in today's business world, mergers have become increasingly important for MNCs and companies to remain competitive and relevant.
Companies with large conglomerates or supply chain channels are able to be more efficient and adept at taking advantage of economies of scale to pass savings on to the customer.
HISTORY OF ANITTRUST LAWS AND THE US ECONOMY
In 1890 the Sherman Antitrust Act was passed, effectively prohibiting restraint of trade and monopolization. The Sherman Act was not the only antitrust law that was filed and passed by congress. The Clayton Act was enacted just 14 years later in order to fill many of the gaps that Congress felt were left by the Sherman Act.
The Clayton Act, unlike the Sherman Act, is not criminal law; it merely defines practices that are unlawful. Figure 3.
ANTITTURST CASES
The Federal Trade Commission Act is similar to the Clayton Act in that it is not a criminal statute, it lacks the authority to impose penalties. States had no jurisdiction and thus could not be held accountable within the US court system. The Supreme Court held that they were liable and that the Sherman Act applies to foreign conduct that was intended and had a substantial effect on United States markets (Hartford Fire v. California).
This case set a precedent for all companies and multinationals that chose to operate in the US that they could and would be responsible for the breakdown of US antitrust and. However, not all intercompany agreements necessarily lead to anticompetitive results, as the Supreme Court held in Texaco Inc. In this particular case, Dagher Gas Station sued Equilon Enterprises, a joint venture formed by the oil companies Texaco and Shell, alleging that the joint venture was price-fixing and thus a price-fixing violation under the Sherman Act.
The Supreme Court ruled in a unanimous decision that the entities involved in the joint venture are no longer in competition with each other, and therefore cannot participate in price fixing (Texaco v. Dagher). Price fixing schemes are required to have two competing firms colluding to set prices above a competitive level forcing people to pay higher prices. Since Texaco and Shell Oil no longer competed, but rather operated as a single unmerged organization under the name Equilon, they could not be charged with price fixing.
In 2001, Microsoft was accused of becoming a monopoly and engaging in abusive strategies under the Sherman Antitrust Act because it sold its operating system and web browser, Internet Explorer, as a bundled package. It is claimed that the Microsoft and Internet Explorer bundle was responsible for Microsoft toppling all competition in the Internet browser category, as all Windows machines came pre-installed and could only use Internet Explorer.
RECENT MERGERS AND ACQUISITIONS
One of the main concerns was that Kraft, an American-run company, would move a large part of the British company's business supervision, which would cause thousands of British jobs to be lost or relocated. But not everyone agreed; in the first months of the acquisition, over twenty senior executives from various departments resigned, claiming that Kraft and their operating style were "bossy and overbearing". Many of the integration issues have been resolved, or at least smoothed over, and both Kraft and Cadbury have seen an increase in sales in new markets such as India and China.
Another merger with similar intentions to break into new markets was Wal-Mart's purchase of African retailer Massmart. Through this acquisition, Wal-Mart was able to secure a strong market foothold in Africa which enables them to be in an excellent position to benefit from the positive economic movement of several developing countries. Wal-‐Mart believes South Africa is a key market with reference to South Africans alone responsible for twenty percent of consumer spending on the entire continent.
South Africa also allows Wal-Mart to expand into neighboring countries, particularly those such as Nigeria, which is becoming increasingly attractive due to growing wealth and a growing middle class (Team). Over the next few years, Wal-Mart planned to build an additional 140 stores in South Africa and 10 in neighboring countries such as Botswana. Going forward, Wal-Mart has many issues to address, such as: establishing a reliable and efficient transportation network, dealing with an ever-changing political environment, and meeting the needs and wants of a whole new culture.
Many investors have and will continue to use the Wal-Mart Massmart merger to gauge how South Africa; and Africa as a whole is responding to foreign investment. In just two years, Massmart has grown to 377 stores across the continent and has a strong presence in South Africa, giving Wal-Mart a solid foothold in this fast-growing region.
PROPOSED MERGER
Eagles Nest Outfitters, on the other hand, is a privately held company based in Asheville, North Carolina. Now Eagles Nest Outfitters, ENO as they are commonly known, have taken the camping and backpacking industry by storm. By combining Columbia and Eagles Nest Outfitters, Columbia would add significant depth and a new product line to its outdoor camping division, and Eagles Nest Outfitters would see a tremendous increase in sales through Columbia's premium distribution channels.
In the coming years, ENO will be perfectly positioned for continued growth due to increased exposure both nationally and internationally, allowing ENO to establish itself as a leading brand for Columbia in the camping goods industry. For just $3 million dollars, Columbia has the ability to grow and capitalize on their investment and re-establish itself as a world leader in the camping retail industry. APPENDIX A Columbia Sportswear Financial Analysis APPENDIX B Eagles Nest Outfitters Future Financial Analysis APPENDIX C Project Presentation Slides APPENDIX D Professional Speaker Series Write Ups.
Due to Columbia's huge market share in the outdoor retail industry, I expect ENO to gain significant exposure, causing ENO to experience a massive 180% increase in sales in its first year. As ENO becomes part of a much larger organization, they will naturally see an increase in sales, general and... It appears that revenues from gas sales have dropped significantly in recent years as more and more people make the switch to more environmentally friendly vehicles.
This woman was a friend of the owner and had held a number of financial jobs in the past. Also, just because you have an accountant or bookkeeper doesn't mean you shouldn't be involved in finances; being involved in the handling of money can make it much easier for you to identify and assess the risk of fraud and even in the initial stages. There were letters that seemed to represent numbers and in the form of a journal entry.
Accountants and those with financial backgrounds are highly sought after by the FBI for evaluating, deciphering and understanding covert operations.
During the presentation we were asked several questions and asked to submit our answers using a clicker device. We were also given a worksheet that outlined the requirements for testing journal entries and why it is important. We were given a huge database of journal entries for a bank of about 45,000 and asked how journal entries could be fraudulent and how to pick them out of the 45,000 regular ones.
For the KPMG International Case Competition, we actually got the history and opinions of the Kraft-Cadbury merger that took place in 2010. We were told to open Kroger's financial statements for the past year and look at them, identifying things like the income statement. , balance sheet and cash flow statement. We were also able to project Kroger's profitability and return on investment based on past numbers and reasonable expectations, as well as the future stock price and value for several years into the future.
We were also told to read and educate ourselves about the different taxes and payback periods in different businesses and the laws and rules that govern them. For example, we got a pharmaceutical company and its financial records for the last two years. We also received a forecast of the company's expected revenues, expenses and income for the next five years.
We were told that we would then have to assess whether we could postpone the loss and other ways we could deal with the loss. We then jumped right into a discussion of the business life cycle from their infancy, through maturity, and were given several examples of businesses in each stage of the life cycle.
