IRS Desperation: Taxing Frequent Flyer Miles

Two things about the U.S. government, they are broke and their tax collection agency the IRS will do anything for revenue. This piece of legal news comes via TaxProf Blog:

The Tax Court yesterday required the taxpayer to include $668 in income as reported by Citibank on Form 1099-MISC as the value of an airline ticket received by the taxpayer upon redemption of 50,000 “Thank You Points” from opening a Citibank account. Shankar v. Commissioner, 143 T.C. No. 5 (Aug. 26, 2014).

Housing Market Will Be Very Slow Next Decade

I’ve been seeing some house sales numbers popping up as of late but haven’t really dug into them. This post I’m writing is because I stumbled upon a claim, looked it up and found a trend that maybe reversing……How long Americans stay in their homes they buy. While reading an article from Dave Ramsey on “Homebuyer Mistakes” he had this in the article:

Homeowners stay in their homes an average of just four years, according to the National Association of Realtors.

I found this to be very intriguing and wanted to dig more into this number. First article I found (Longtime Homeowners a Relative Rarity in U. S., Census Shows) dated November 21, 2003. Seems to back up the claim of short ownership of a home.

Although a relative rarity in the United States, where homeowners stay in their homes an average of six years, according to the National Association of Realtors

Now a more recent article I found (Downside of low US mortgage rates? Less selling) written in July of this year shows homeownership economic factors pertaining to the effects of low interest rates caused by in fashion by the Federal Reserve. Shows why the housing market will be very slow the next decade.

More than one-third of homes with a mortgage now have rates below 4 percent, real estate data provider CoreLogic estimates….. As a result, many homeowners with low rates are staying put. Others are moving and buying new homes, but keeping their old ones and renting them. The number of available homes last year was the equivalent of just 4.9 months’ worth of sales, according to the National Association of Realtors.

The big problem of people not being be able to sell is equity issues…..

Another factor is that almost 40 percent of homeowners still don’t have enough equity to enable them to sell. Some are “underwater,” with a mortgage higher than the home’s value. Others may have so little equity that they can’t afford to pay off the sales costs and put a down payment on their next property.

One final note on top of this, many investors and Americans expect interest rates to rise significantly over the next few years. This will be a big pressure on home sales along with the above mentioned.

Food Chains Hit By Inflation

Inflation is being reported amongst the bigger food chains this past month. This will ultimately lead to higher costs for the consumer.

CNBC reported in Mid August:

“Food retailers like Red Robin Gourmet Burgers and Noodles & Company are sounding the alarm on inflationary pressures, raising the question: Is this the start to higher food prices for consumers?

“Official data show inflation only gradually rising for the economy as a whole with the personal consumption index gaining 1.6 percent in June; however, a dozen food companies in the past few weeks have warned steeper price hikes hurt results last quarter.

Prices are rising for several restaurant staples like beef, seafood and cheese. But costs aren’t up everywhere: Grain and vegetable prices, for example, have been declining.

“This morning Red Robin said lower margins, which fell 1.3 percent from the same period a year ago, were mainly due to higher food and beverage costs.

“Noodles & Company, which reported last night, posted a two percent drop in margins due to increased costs. During the company’s conference call, CFO Dave Boennighausen said the cost of goods sold rose 70 basis points last quarter as a result of modestly higher pork, dairy and shrimp ingredient costs, as well as more promotional activity.

“Wholesale food inflation rose 4.2 percent in the first six months of the year, its steepest rise since 2011; however, menu and grocery prices – what consumers are paying – were only up 2.2 percent and 1.6 percent, respectively, in the same period, according to the National Restaurant Association.”

These are striking numbers considering the purchasing power(Economies of Scale) these chains have compared too smaller food retailers. The smaller ones which most refer to as “Mom & Pop” will not be able to keep up as inflation keeps increasing. The consumer is still feeling squeezed on normal groceries going up in price. Eating out is a very easily controlled expense to decrease.

Beef Market Supply Dips Lower

The beef market supply is still low from the 2012 drought and supply numbers are still dipping which will only keep prices high for the foreseeble future. Here is the latest from the USDA.

According to the U.S. Department of Agriculture’s National Agricultural Statistics Service, beef production came in at 2.09 billion lbs. That’s 9% down from last July. Slaughter totals are also trending down with 10% fewer cattle taken to the packer at 2.6 million head. However, live weights are moving up as feedlots and packers try to compensate for the loss of cattle. This July cattle averaged 1,320 lbs. when entering the processor, up 18 lbs. from last year. Overall red meat production was down 6% nationally. Only 3.91 billion lbs. of red meat was produced in this past month compared to 4.16 billion lbs. in July 2013.

From January to July of 2014 a similar drop off occurred with 3% less red meat produced at 27.4 billion lbs.

Indiana Hoosier Lottery Financial Release

Via Indiana Hoosier Lottery –

Hoosier Lottery officials announced Tuesday that the Lottery is providing the State of Indiana with more than $250 million in surplus revenue for fiscal year 2014.
The State uses the contributions to support the Build Indiana Fund, pensions for local firefighters and police officers and retirement funds for Indiana teachers.

The $250 million in surplus revenue for fiscal year 2014 is a 12 percent increase from $224 million in fiscal year 2013. Although final audited figures will not be available until later this year, preliminary totals show sales were $1.018 billion for fiscal year 2014.

The rest of the article is here

Census Bureau: 109 Million on Welfare

The Census Bureau released their fourth quarter 2012 results and found 35.4% of all Americans to be receiving welfare. Here is more from a lengthy CNSNews Report.

109,631,000 Americans lived in households that received benefits from one or more federally funded “means-tested programs” — also known as welfare

The number jumps when other programs are added in:

When those receiving benefits from non-means-tested federal programs — such as Social Security, Medicare, unemployment and veterans benefits — were added to those taking welfare benefits, it turned out that 153,323,000 people were getting federal benefits of some type at the end of 2012.

Here is a breakdown of what welfare program is received by Americans and how many on it:

82,679,000 Medicaid
51,471,000 Food stamps
22,526,000 Women, Infants and Children program
20,355,000 Supplemental Security Income
13,267,000 lived in public housing or got housing subsidies
5,442,000 got Temporary Assistance to Needy Families
4,517,000 received other forms of federal cash assistance.

Indianapolis Gen Con Record Attendance

Gen Con just wrapped their annual convention in Indianapolis this last weekend and released their attendance information on their website:

Gen Con 2014, completed August 14-17 at the Indiana Convention Center, experienced another year of record attendance numbers and unprecedented growth. For the fourth consecutive year, Gen Con grew by more than 10%. This year, reaching more than 14% year-over-year growth with a weekend turnstile attendance of 184,699 and unique attendance of 56,614. This number surpasses 2013’s previous record of 49,530 unique attendees. Since 2009, Gen Con’s annual attendance has more than doubled.

The convention attendees also helped raise $40,000 for Gleaners Food Bank.