U.S. Stadiums Look to Solar Power

http://online.wsj.com/video/us-stadiums-look-to-solar-power/06E46D28-5AF2-443F-A9FE-BD8FD6FC01CE.html

Quote of the day....

Impossible is a word only to be found in the dictionary of fools.

-- Napoleon Bonaparte,
French military and political leader

About the Equipment Leasing And Finance Association

Bloom Box Unveiled

We can't get enough...Section 179 - Tax Relief

Section 179 – Tax Relief From Depreciation Rules

“Depreciation.” For business owners, this word is the one most likely to inspire headaches and fits of cussing. The expanded provisions of Section 179 are just the medicine you need to cure the depreciation blues.

Traditionally, if your business property had a life of more than one year, the cost had to be deducted over several tax years. The number of years depended on the characteristics of the property, which made depreciation the flag-bearing example of the complexities of the tax code. Shockingly, the federal government has provided substantial relief to business owners.

Section 179 of the Internal Revenue Code has been dramatically expanded to the benefit of businesses. This code allows businesses to completely deduct the cost of tangible property in the year of purchase. The tax relief comes from the expansion of the total amount that can be deducted in one year.

What Property Qualifies?

You can deduct the cost of the following property under Section 179:

• Machinery and equipment
• Furniture and fixtures
• Computer software.

As shocking as this will sound, the government should be applauded for expanding Section 179. The expansion of Section 179 is a nice piece of tax relief legislation. Let’s hope more is on the way.

U.S. Machine Tool Consumption up 62.4% in 2010

U.S. Machine Tool Consumption up 62.4% in 2010
Wednesday, October 13, 2010 http://www.monitordaily.com/

U.S. machine tool consumption totaled $246.42 million in August, a drop of 5.7% from July but up 88.0% when compared with the total of $131.06 million reported for August 2009.

According to the data, released jointly by The Association For Manufacturing Technology (AMT) and the American Machine Tool Distributors’ Association (AMTDA), with a year-to-date total of $1,697.27 million, 2010 is up 62.4% compared with 2009.

“Despite the normal summer slowdown, the first 8 months of 2010 saw an order rate that was up 60% over the same time period in 2009,” said Douglas K. Woods, President of AMT. “We expect orders to be strong through the remainder of the year due in part to Congress extending the bonus depreciation allowance, which will remain in effect through December.”

The United States Manufacturing Technology Consumption (USMTC) report, jointly compiled by the two trade associations representing the production and distribution of manufacturing technology, provides regional and national U.S. consumption data of domestic and imported machine tools and related equipment.

U.S. manufacturing technology consumption is also reported on a regional basis for five geographic breakdowns of the United States. Northeast Region
August manufacturing technology consumption in the Northeast Region totaled $39.16 million, down 24.0% when compared with the $51.56 million total for July but up 63.7% when compared with August a year ago. The $298.77 million 2010 year-to-date total was 49.3% higher than the total for the same period last year.

Southern Region
At $30.71 million, August manufacturing technology consumption in the Southern Region was up 20.3% from July’s $25.52 million and up 32.7% when compared with last August. The $242.10 million year-to-date total was 59.3% more than the 2009 total at the same time.

Midwest Region
With a total of $82.59 million, August Midwest Region manufacturing technology consumption was down 12.2% when compared with July’s $94.02 million but up 133.0% when compared with August a year ago. At $509.21 million, 2010 year-to-date was 73.2% higher than the comparable figure a year ago.

Central Region
Central Region manufacturing technology consumption in August stood at $69.13 million, 13.4% higher than the $60.96 million total for July and 120.2% higher than the figure for last August. With a year-to-date total of $450.21 million, 2010 was up 76.4% when compared with 2009 at the same time.

Western Region
Manufacturing technology consumption in the Western Region in August stood at $24.84 million, 15.4% less than July’s $29.37 million but 44.7% more than the August 2009 total. The year-to-date total of $196.98 million was 37.1% more than the comparable figure for 2009.

Farm Belt Bounces Back

By SCOTT KILMAN , WSJ.com

Major agricultural commodities continued their extended run-up in price, underscoring how much of America's farm belt is booming even as the overall economy continues to struggle.
Contracts for the delivery of corn and soybeans into mid-2011 jumped Monday by 5% and 2%, respectively, after rising their daily permissible limits on Friday, when the U.S. Department of Agriculture sliced production estimates by small percentages. Cash cotton prices rose 3.3% Monday after a 3.9% gain Friday. They are 86% higher than a year ago.

For many crops, prices are climbing even as big harvests pile up, a rare combination. Farmland values are up while those for some other kinds of real estate languish. Debt on the farm is manageable. Incomes are rising.
And trade, of which many Americans are growing wary, is for agriculture a boon. Asia's economic vigor and appetites make the farm sector's reliance on exports—once thought a vulnerability in some quarters—a plus today.
"The farm economy is coming out of the recession far faster than the general economy," said Don Carson, a senior analyst at Susquehanna Financial Group, New York.

Overall, the USDA projects net farm income to climb 24% this year to $77.1 billion, the fourth highest ever. In September, farmers were being paid 62% more for hogs than a year earlier, and 32% more for milk.

The higher prices probably won't sting consumers at the dinner table as much as did a crop-price surge in 2008, when the consumer price index for food jumped 5.5%. With unemployment high and shoppers frugal, food executives are leery of trying to pass higher costs on. The USDA expects retail food prices to rise 0.5% to 1.5% this year, which would be the least since 1992, though some economists see these prices climbing 3% to 4% next year.

For taxpayers, higher commodity prices mean the government's cost of farm subsidies this year will fall to around $12 billion, about half the level in years when prices were much below targets set by Congress. Farmers this year are reaping about $4.8 billion in direct payments that aren't tied to market prices, as well as checks for such things as weather-related disasters and a land-idling conservation program.

Growers' improved lot is rippling out to other industries. The boom is mending even America's tattered cotton belt, and that means long-stressed cotton farmers can buy new machinery. Hurst Farm Supply near Lubbock, Texas says sales are up 20% this year.

"I will probably have to turn people away," says Joe Hurst, general manager, who plans to limit his sales of new cotton-harvesting machines so he isn't swamped with trade-ins.
Some of the price increases are from levels that were depressed by the financial crisis. For instance, the recession hammered demand for expensive cuts of meat, and therefore prices for cattle and hogs. Producers responded by thinning their herds. The resulting supply reductions helped set up today's higher prices.

In other words, the boom partly reflects the cyclical trends that continually whipsaw agriculture.
They could trip up the sector again. Surging grain prices could mute the recovery of livestock producers by raising their costs. Imponderables such as bad weather, a strengthening of the dollar or a politically inspired trade spat could send parts of the Farm Belt into the dumps.
But some of the forces lifting the agriculture economy today are powerful, such as the strength of Asia's appetite for commodities.

Asian economies are growing roughly three times as fast as America's, and their demand is bolstering U.S. farmers across the board. The USDA estimates farm exports climbed 11% during the fiscal year ended Sept. 30, to $107.5 billion, and forecasts a further 5% rise in the new fiscal year.

Analysts think a quarter of this year's U.S. soybean crop could end up in China. The U.S. government expects American wheat exports to soar 35% to $8.1 billion, partly because of the summer drought in Russia that knocked its farmers out of the export market.

Modest debt is another factor helping the farm economy. A debt crisis on the farm in the mid-1980s was so punishing that it dealt both operators and lenders a generation-long dose of caution. Farm debt, which had hit 28.5% of equity in 1985, now is just 13% of equity.
So while soured debt weighs on values in other forms of real estate, Midwestern farmland prices are climbing. Iowa land was up 8% on July 1 from a year earlier, according to the Federal Reserve Bank of Chicago.

Another long-term factor is the biofuels industry, which consumes roughly a third of the U.S. corn crop—buoying prices—and has government support behind it.
Cotton's comeback is vivid evidence of how robustly agriculture is rebounding from the recession.

Once, U.S. cotton growers' biggest customer was the U.S. textile industry. But in the 1990s, textile makers' losses to low-wage countries turned cotton into one of America's most export-dependent crops, with nearly 80% now consumed abroad.
As the domestic market shrank, thousands of cotton farmers in Mississippi and Lousiana switched to other crops such as corn and soybeans. By last year, cotton acreage in those states stood at its lowest since record-keeping began in 1866. Cotton middlemen were swallowed up in a consolidation wave.
Now, the preponderance of foreign customers is seen as a strength. From the harvest under way, the U.S. will export 15.5 million 480-pound bales, up 29% from a year before, the USDA estimates. More than a third will find its way to China's textile mills and apparel makers, which send much of it back in clothes.

Cotton prices have broken through the $1-a-pound level for the first time in 15 years. The prices and an expected bountiful harvest could swell cotton farmers' 2010 cash receipts to $5.3 billion. That would be up nearly 50% from last year and the biggest jump of any major farm commodity, according to Agriculture Department forecasts.

Half of that U.S. cotton grows in Texas, whose producers are starting to buy more fertilizer and pesticides—expenses they had been cutting before.  Brady Mimms, who began harvesting his cotton near Lubbock last week, is making plans to replace a decade-old tractor and a five-year-old cotton harvester with new models. "We're having good yields and good prices," said Mr. Mimms, who raises 4,000 acres of cotton with his sons and his father.

Economists don't expect many of the cotton farmers who had abandoned their traditional crop for others like corn to rush back into cotton and drive up the supply. That's because grain prices also are strong, and also because cotton is an expensive and labor-intensive crop to raise.
The world continues to consume cotton faster than farmers can grow it. The U.S. is the world's biggest cotton exporter, but U.S. and foreign supplies relative to consumption are getting the tightest they have been since the mid-1990s.

"It is shaping up to be the most profitable year for the cotton producer in my career," said Bud Holmes, an executive vice president of PlainsCapital Bank in Lubbock who has been lending to farmers since the late 1980s.

Why It's Hard To Get A Loan

Defaults on commercial real estate loans loom, threatening the stability of U.S. banks.

Vincent Ryan - CFO.com | US

Wonder why your bank doesn't have room for you on its balance sheet? Check its exposure to commercial real estate lending. Distressed CRE loans continue to choke banks' balance sheets, and their poor performance could force some U.S. banks to raise more capital, or even cause them to fail.

Midsize banks in particular are highly exposed. In an analysis of data provided by Capital IQ, CFO found 44 U.S. banks with assets greater than $1 billion (the recognized ceiling for a small bank) that had more than 50% of their total loans secured by CRE. The largest was First Citizens Bancshares of Raleigh, North Carolina ($21.1 billion in assets), which had 57.5% of its total loan book in CRE as of the first quarter. In total, the 44 banks held $86.9 billion in CRE loans.

 

Dime Community Bancshares of Brooklyn, New York, had close to 100% of its loan portfolio in CRE at the end of the first quarter. (Dime's loan portfolio is collateralized primarily by multifamily apartment buildings in New York City, widely considered the least-risky type of CRE, says the bank.) Rounding out the top five were Wilshire Bancorp, Nara Bancorp, Intervest Bancshares Corp., and Dearborn Bancorp Inc., according to Capital IQ data. Fifteen of the 44 banks had more than 60% of total loans in CRE.

The average bank in the population had 5.3% of its loans classified as nonperforming, meaning a loan is currently not accruing interest. At 5 of the 44 banks, nonperforming loans represented more than 10% of the total loan books. Naples, Florida-based bank-holding company Bank of Florida had the highest nonperforming loan ratio, at 14.9%. The FDIC closed three affiliated banks owned by Bank of Florida in late May, and the holding company was delisted from Nasdaq on June 3.

CRE also looms as a big threat for the biggest banks. In a report released Friday, the International Monetary Fund said it conducted "stress tests" of the 53 largest banks in the United States. The IMF found that in a baseline economic scenario of moderate GDP growth this year and next, 12 of the 53 banks would need to raise as much as $14.2 billion in the next four years to maintain minimum regulatory capital ratios.
In particular, the IMF highlighted problems with CRE loans: nonfarm nonresidential loans for properties such as shopping centers, motels, office buildings, and automobile dealerships. They are a big threat to banks' capital situations, the fund says.
Delinquency rates on CRE loans fell slightly to 8.6% in the first quarter, according to the Federal Reserve, but that was off a 17-year high of 8.71% in 2009's fourth quarter.
"Given the employment situation, which tends to be a good indicator for CRE, commercial property prices are not expected to recover soon," says the report. (CRE prices are down 41% from where they were in 2007.) "Around $1.4 trillion of CRE loans are expected to mature by 2014, and almost half of these are underwater or seriously delinquent. [In addition], the market for commercial mortgage-backed securities remains depressed."
Of the $1.4 trillion, $245 billion matures this year and $245 billion will mature next year. It's when CRE loans mature and borrowers need to refinance the existing loan that banks may have to realize losses and suffer more hits to capital, says Malay Bansal, managing director of NewOak Capital LLC, an asset management and capital markets advisory firm. "A lot of these banks have loans they haven't marked down enough," says Bansal. "Regulators are giving them a fair amount of leeway to manage portfolios, to avoid a fire sale."
But when some CRE loans mature, lower property values and lower leverage available will mean borrowers that need to refinance will get smaller loans, and they will have to come up with capital to repay the old loans. If they don't have it, they will be forced to default, says Bansal.
Small banks with significant exposure to CRE and limited access to private capital could be especially vulnerable to capital stresses, the IMF said in its study. That's because while CRE exposure makes up only about 10% of total bank loans nationwide, "it represents 50% of smaller banks' loan books," the fund said. At seven banks the FDIC closed two weeks ago, CRE made up 80% of the nonperforming loans.
Some banks made headway in cutting their CRE exposure in the second quarter. Dime Community Bancshares, for example, disposed of tens of millions of dollars of nonperforming loans. Intervest Bancshares did the same, saying it sold the assets "at a substantial discount to their net carrying values." By selling loans now, however, banks have to realize losses and risk falling below regulatory capital levels. "If they hold the loans till they mature they get time to raise capital before they sell," explains Bansal.
Nonperforming assets are still rising at some of the 44 banks. Dearborn Bancorp's nonperforming assets inched up to 14.5% in the second quarter, a 50 basis point quarterly increase. (Dearborn, parent of Fidelity Bank [Michigan], had 65% of its loan book in CRE as of the first quarter.) The bank said that according to regulatory guidelines, it was undercapitalized as of June 30.

It is time to make that purchase! Taking advantage of the new depreciation allowances under Section 179.

 POWERFUL TAX INCENTIVES FOR EQUIPMENT PURCHASES EXTENDED

SECTION 179 “SMALL BUSINESS”

EXPENSING THROUGH 2011

BONUS DEPRECIATION THROUGH 2010

The Small Business Jobs Act has been enacted into law. In a major victory for manufacturers, the new law expands Section 179 expensing for small business new or used equipment purchases ordered and placed in service through 2011. It also extends 50% bonus depreciation for the 2010 tax year, which applies to new equipment only.

                       

The boost to $500,000 in Section 179 expensing is extended for new and used equipment purchases ordered and placed in service in the 2010 and 2011 tax years. Moreover, the cap on how much equipment can be purchased to fully enjoy the write-off increases to $2 million (after which the amount that can be deducted phases out dollar for dollar).

50% Bonus Depreciation on new equipment purchases has been extended for the 2010 tax year.

Here’s how the new provisions work for you:

Let’s assume that the X Manufacturing Co.* retools their facility with new and used equipment totaling $800,000. Under the new Section 179 extensions, X Manufacturing can write off 68% of the asset in the first year, as opposed to 28% had enhanced Section 179 not been enacted for the 2010 and 2011 tax years.

Now assume that the $800,000 is a new equipment purchase placed in service in 2010. X Manufacturing can write off 84% of the asset using bonus depreciation together with Sec. 179.

SECTION 179 BOOST FOR SMALL BUSINESSES

Under the extension, small businesses (whose total equipment purchases don’t exceed $2 million) can expense the first $500,000 for the 2010 and 2011 tax years.

$800,000 on New/Used Machine

OLD LAW (pre-2008 change/2010 extension)

Section 179 Deduction = $128,000

PLUS 14% depreciation on remaining 1st yr basis ($672K) = $ 94,080

TOTAL Old Law First-year Deduction = $222,080 – 28% write-off in 1st yr.

NEW 2010/2011 LAW - $800,000

Sec. 179 Deduction = $500,000

PLUS14% on remaining basis ($300K) = $ 42,000

TOTAL 2010/2011 Deduction = $542,000 – 68% write-off in 1st yr. 

2010 50% BONUS DEPRECIATION EXTENSION

Plus Sec. 179 can be combined with 50% Bonus Depreciation on NEW equipment purchases in 2010.

http:/www.mazumacapital.com$800,000 on NEW Machine

NEW 2010 LAW - $800,000

Sec. 179 Deduction = $500,000

PLUS 50% Bonus Depreciation on remaining basis ($300K) = $150,000

PLUS 14% on 1st year basis ($150K) = $ 21,000

TOTAL 2010 Deduction = $671,000 – 84% write-off in 1st yr.

* Examples assumes a 7-year asset depreciation class

Source: AMT- The Association For Manufacturing Technology

2010-11 Bonus Depreciation/Section 179 Expensing Fact Sheet

2010-11 Bonus Depreciation/Section 179 Expensing Fact Sheet

Intermodal Holds Near 2010 Peak

Intermodal Holds Near 2010 Peak