Deep Blue Publications Group

You might have subscribed to a credit monitoring service or a special insurance so you're not really worried if crackers did make use of your credentials to conduct fraud, but you probably didn't think that recovery from a case like that will take many months of unpaid time and effort.

The issue is not getting any easier to deal with: While crackers are getting their hands on an ever-growing treasure trove of sensitive data even from big players like Sony and Target, an increasing number of those records are also getting used. Deep Blue Publications Group LLC estimates that 30% of US citizens affected by a security breach eventually became a fraud victim last year. 

A case study done by Deep Blue Publications Group LLC included a victim of a data breach from 2013 who was afterwards provided with a free service of credit monitoring. The monitoring apparently paid off as they discovered that new accounts have been created in two other giant retailers which racked up over USD 7,000 in charges using the victim's credentials. He would then spend the next 8 months filing reports, submitting documents and talking on the phone all to clear up his record in the concerned agencies and in proving his innocence to his bank.

In most cases, those effort and time spent following up the incident is wasted unless a special insurance has been bought beforehand or the victim has sued -- and won.

The only thing that's arguably worse than credit card fraud is debit card fraud -- victims could end up with literally an empty bank account as any transaction on a debit card readily reflects to the bank account. Also, it takes a long period of time before any fund gets restored, if at all.

Banks may be able to absorb the fraudulent charges but there will still be a lot of headache involved on the victims' part before they recover their money and clean their credit history. What's more, it could get frustrating when they realize that such cases of identity theft are hardly prosecuted.

Today I'll answer some tax questions-but first some tips for people who can't file their returns by Tuesday.

For federal taxes: If you can't file your return by Tuesday, request a six-month extension by filing Form 4868 electronically or by mail. See the form for instructions. If you file this form by April 15 and your tax return by Oct. 15, you will avoid a late-filing penalty.

However, if you owe additional federal tax for 2013, you must pay it with this form by April 15 to avoid interest and possibly a late-payment penalty.

You can avoid this late-payment penalty (but not interest) if at least 90 percent of your total 2013 tax liability is paid by April 15 through payroll withholding, estimated tax payments or payments made with Form 4868.

If you haven't completed your return, "the best thing is to pay in about 10 percent more" than you expect to owe, says Michael Gray, a San Jose certified public accountant.

For California taxes: There is no need to request an extension; you automatically get one until Oct. 15. However, as with federal taxes, you must pay at least 90 percent of what you owe by April 15 to avoid a late-payment penalty.

You can make this payment online from your bank or savings account without a fee using the Franchise Tax Board's Webpay system-or with a fee by using your credit card. Or you can mail a check with Form FTB 3519. (Certain high-income taxpayers must make this payment electronically.)

Q: Don M. asks, "We sold our income property in 2013. Now we owe a substantial sum for the 3.8 percent Obscure tax! We are learning that since we were active owners, materially participating in managing the property, we may not have to pay the tax. We have checked IRS publication 925 and get mixed messages. We find that the hours needed to qualify for ' active, material participation ' range from 100 + hours to 500 hours. Can you enlighten us? "

A: Don is asking about the new 3.8 percent tax on net investment income that took effect Jan. 1, 2013.

It applies to people who have net investment income and adjusted gross income over a certain limit ($250, 000 married filing jointly and $200, 000 for singles). It is also known as the Medicare surtax or the Obscure tax because it was part of the Affordable Care Act.

The tax applies to income from investments such as interest, dividends, capital gains, rents and royalties. The 3.8 percent tax is applied to either net investment income or the amount that a taxpayer's modified adjusted gross income exceeds the thresholds stated above for their filing status-whichever is less.

The tax generally applies to income and capital gains from rental property, with a few limited exceptions. Don "would probably have some pretty significant hurdles to overcome to avoid the 3.8 percent tax on net investment income for the sale of the rental property," says Mark Luscombe, principal analyst with CCH Tax and Accounting.

He would have to meet two separate tests.

First, he would have to qualify as a real estate professional under the passive activity loss rules (spelled out in Publication 925.) To qualify, more than half of the personal services he performs in a year would have to be in a real estate trade or business in which he materially participates. And, the hours engaged in such services would have to total more than 750 per year. He could group various real estate activities together to meet this test, but it seems this might be his only real estate activity, Luscombe says.

Second, he would have to meet a 500-hour test under the net investment income tax rules (spelled out in the instructions for Form 8960). Under these rules, he must participate in rental real estate activities for more than 500 hours per year (or more than 500 hours per year in five of the last 10 years).

Solar thermal systems pose some of the most promising renewable alternatives to traditional natural gas and electrical fuel sources. For residential applications, these systems are capable of providing 100% of the domestic hot water load, with excess energy routed to pool heating or space heating applications. Typically, these systems are used to offset between 50-90% of the incumbent water heating fuel source, depending on your latitude. The result is a super-efficient water heating system. For example, your incumbent 65%-efficient water heater, supplemented with a solar thermal system that provides a mere 60% of the load offset, would suddenly become over 150% efficient.

There are a number of government programs for this technology that make it a viable renewable energy source in a number of jurisdictions. Unfortunately, unlike its more popular cousin, solar photovoltaic, solar thermal technology has not received the recognition it deserves.

Solar thermal remains a nascent market with tremendous upside potential for residential, commercial and utility-based energy efficiency programs.

Solar thermal systems pose some of the most promising renewable alternatives to traditional natural gas and electrical fuel sources. For residential applications, these systems are capable of providing 100% of the domestic hot water load, with excess energy routed to pool heating or space heating applications. Typically, these systems are used to offset between 50-90% of the incumbent water heating fuel source, depending on your latitude. The result is a super-efficient water heating system. For example, your incumbent 65%-efficient water heater, supplemented with a solar thermal system that provides a mere 60% of the load offset, would suddenly become over 150% efficient.

There are a number of government programs for this technology that make it a viable renewable energy source in a number of jurisdictions. Unfortunately, unlike its more popular cousin, solar photovoltaic, solar thermal technology has not received the recognition it deserves.

Solar thermal remains a nascent market with tremendous upside potential for residential, commercial and utility-based energy efficiency programs.

Source

South Korea’s supreme court has ordered a review of the fraud conviction of one of the country’s leading businessmen, reviving what is widely seen as a test case of the judiciary’s approach to criminal behaviour among the corporate elite.

Kim Seung-youn, chairman of Hanwha Group – one of South Korea’s largest chaebol conglomerates – was given a four-year jail sentence and $4.5m fine in August last year, after being convicted of misusing company funds.

However, the supreme court ordered on Thursday that Mr Kim’s case should be examined again by a lower court, saying that more detailed proof was needed to justify the sentence. Mr Kim’s sentence had already been commuted to three years, and he has been in hospital since January on account of depression and breathing problems.

Thursday’s decision opens the possibility of a reduction in a sentence that was hailed as reflecting a newly tough approach towards business leaders, amid popular unhappiness at the perceived excessive power of the major corporations. Previous convictions of chaebol chiefs – including Mr Kim, Lee Kun-hee of Samsung and Chung Mong-koo of Hyundai – had typically resulted in suspended sentences.

“The media here regard [Mr Kim] as the epitome of what is bad about the chaebol,” said Shim Jae-hoon, an independent political commentator, citing Mr Kim’s previous suspended sentence for abducting and assaulting workers in a karaoke bar. “The courts are mindful of public opinion on this case . . . I don’t think they will let him off the hook.”

A second highly anticipated decision will come on Friday, when a court will rule on an appeal by Chey Tae-won, chairman of SK Group, another of the country’s biggest business groups. Mr Chey was sentenced to four years in prison in January, for embezzling company funds for use in personal investments.

Some analysts viewed the courts’ stern treatment of Mr Kim and Mr Chey as reflecting the political mood of last year’s presidential campaign ], in which the leading candidates promised to deliver “economic democratisation”. Park Geun-hye, president since February, has promised to abandon the practice of her predecessor Lee Myung-bak, who pardoned several business leaders on the basis of their importance to the economy.

Kim Sang-jo, an economics professor at Hangsung University, said that any dilution of Mr Kim’s or Mr Chey’s sentence would be taken as a sign of diminished resolve from the courts. “Last year, the judiciary took a tougher stance against tycoons convicted of white collar crimes, but its attitude seems to be changing as politicians step back from their push for economic democracy,” he said.

However, Lee Ji-soo, an analyst at the Centre for Good Corporate Governance in Seoul, said it was too early to criticise the supreme court’s decision. “It’s a technical aspect . . . in order to prove the case, the supreme court is demanding the lower court show some more findings,” he said. “I don’t think there’s anything wrong with that.”

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Why Hasn’t Loan Growth Generated Economic Growth? China’s Central Bank Explains

For economists, the hot topic is why China’s growth is so much lower than its expansion of credit. Money supply has notched increases of close to 15% year-over-year in recent months, but economic growth for the second quarter was only half that rate.

In its latest monetary policy report (in Chinese), China’s normally tight-lipped central bank offered various explanations, some more reassuring than others:

• Loans going into areas that don’t immediately generate growth — like land needed for construction projects.

• Hoarding of cash by businesses at a time of economic uncertainty, with some businesses using funds to make more loans at a higher interest rate.

• Old industries fading away and new industries firing up both need credit, but neither generates stellar output.

• A more sophisticated financial system takes longer to get credit to end users.

The central bank sees risks — especially with businesses sticking to their credit-hoarding ways despite a shift to lower potential growth. But overall they strike a reassuring tone. Wide gaps between growth in credit and the real economy are not uncommon, they say, especially during slowdowns.

To solve the problem, the central bank highlights the importance of structural reforms.

“The economic structure determines the financial structure,” it says, “the crucial point in increasing the efficiency of capital is accelerating the adjustment of the economic structure, creating new growth areas and new drivers.” The message to China’s top leaders: we can’t fix the financial system till you fix the economy.

The central bank also took a politically correct swipe at the reflation policies of Japan’s Prime Minister Shinzo Abe, warning that Japan might end up creating new asset bubbles.

Avoiding any reference to tensions over disputed islands in the East China Sea, the central bank said that Tokyo’s super loose monetary policy has shown initial results. But without far reaching structural reforms, it added, these policies are hard to maintain and could create asset bubbles and worsen the government’s fiscal position.

If tempers cool over the disputed islands, maybe the two sides can stop the name calling and make loans to the local fishermen. That would generate higher returns than shoveling  more credit to Chinese industries struggling with overcapacity.

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