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Understanding gambling winnings and losses

You just won a jackpot on a slot machine! But before getting too excited let’s take a look at the tax consequences. Until Congress approves the changes proposed by the IRS regarding lowering the winnings reported to $600 from $1,200, winnings of $1,200 from slot machines and bingo are reported on a W2-G. This money must then be reported on line 21 of the 1040 as “Other Income.” Wait, you lost more than $3,000 all year at the casinos. Unless you can itemize your deductions, those losses are mute in offsetting the jackpot winnings. The “net income” is not what is reported on line 21, but rather, the gross of the winnings. In order to itemize for 2015 taxpayers who are single must have more than $6,300 in deductions to deduct gambling losses. Married filing jointly taxpayers must have more than $12,600 to deduct gambling losses. Head of Household taxpayers must have more than $9,250 to deduct gambling losses. If a taxpayer can itemize then the maximum amount reported on the Schedule A is the amount of losses up to the amount of the winnings. This means if you won $1,250 in a slot jackpot, the maximum amount of the $3,000 in losses that is reported is $1,250 on Schedule A. The remaining amount of losses don’t carry over to the next year, nor can they be deducted anywhere else on the tax return. If the proposed changes from the IRS are accepted by Congress and changes to the tax law occur, gamblers and casinos are in for more reporting requirements. The responses from the public heard at a public hearing on June 17 when the IRS opened up the proposed changes to the public were not in favor of the proposed changes. The proposed changes didn’t allow for any change to reporting the loss side of the winnings. This, in my opinion, isn’t a fair assessment of “Other Income.” If a taxpayer had to spend $3,000 to get $1,250 in winnings (for example) is it truly “Income?” Just as business income or capital gains allow for deductions or basis to be considered before reporting actual income, gambling winnings should have the same considerations. Taxpayers that enjoy gambling should make a call to their congressman to voice their opinion of the proposed changes. The IRS may propose a change, but Congress still has to approve it. Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or at tracy.bunner@hrblock.com.

Senate

Congress pushes ahead on highway bill after Senate smackdown

WASHINGTON — Lawmakers are pushing forward on must-pass highway legislation after an amendment reviving the federal Export-Import Bank provoked a heated clash on the Senate floor. The amendment advanced over a procedural hurdle by a vote of 67-26 in an unusual Sunday session, and was likely to win approval Monday to be included on the highway bill. But that was only after senior Senate Republicans publicly rebuked Texas GOP Sen. Ted Cruz, who last week accused Senate Majority Leader Mitch McConnell of lying to him about whether there was a deal to allow the vote on the Export-Import Bank. Conservatives strongly oppose the bank, calling it corporate welfare, and are trying to ensure that it stays dead after congressional inaction allowed it to expire June 30. Three of the Senate’s highest-ranking Republicans rose after the Senate convened Sunday afternoon to counter the stunning floor speech Cruz gave on Friday in which he attacked McConnell, R-Ky. “Squabbling and sanctimony may be tolerated in other venues and perhaps on the campaign trail, but they have no place among colleagues in the United States Senate,” said Sen. Orrin Hatch, R-Utah, the Senate’s president pro tempore. Cruz is running for president. “Such misuses of the Senate floor must not be tolerated.” After Hatch spoke, Cruz rose to defend himself, asserting, “Speaking the truth about actions is entirely consistent with civility.” For his part, McConnell said that given support for the Export-Import Bank, despite his own opposition no “special deal” was needed to bring it to a vote. The bank is a federal agency that makes and guarantees loans to help foreign customers to buy U.S. goods. It’s been renewed in the past with little or no controversy, but in recent years conservatives have turned it into a rallying cry. This year, the billionaire GOP donor Koch brothers have made it a focus. The action came as the Senate tries to complete work on the highway bill ahead of a July 31 deadline. If Congress doesn’t act by then, states will lose money for highway and transit projects in the middle of the summer construction season. With the Export-Import Bank likely added, the highway legislation faces an uncertain future in the House, where there’s strong opposition to the bank as well as to the underlying highway measure. The Senate’s version of the highway bill, which is on track to pass later in the week, sets policy and authorizes transportation programs for six years, though with funding for only three of those years. The House has passed a five-month extension of transportation programs without the Export-Import Bank included. For the moment, leaders of both chambers are insisting that only their version of the legislation will fly. That leaves the ultimate outcome uncertain as the House enters its final week of work before Congress’ annual August vacation, with the Senate set to go out of session a week later. In a meeting Friday, McConnell told about 50 lobbyists and Senate aides that he doesn’t plan to take up the House’s five-month extension and that he wants the House to take up the Senate’s six-year bill even if it means keeping the House in session through next weekend, according to a transportation industry official and a Senate aide familiar with the meeting. McConnell, who said he has had conversations with House Speaker John Boehner about the transportation bill, also told the group there won’t be a tax reform bill this year. The Obama administration and some lawmakers in both parties had hoped to find more money to pay for a six-year transportation bill by taxing profits U.S. companies park overseas, and House leaders are pushing their highway bill extension to buy more time to work on that issue. The industry official and the Senate aide spoke on condition that they not be named because they weren’t authorized to speak publicly.

SPACESUIT201

Giant leap for Smithsonian fundraising

WASHINGTON — Smithsonian officials are over the moon that they needed only five days to complete their first Kickstarter fundraising campaign — to conserve, digitize and display Neil Armstrong’s Apollo 11 spacesuit. The National Air and Space Museum reached its $500,000 goal Friday for the “Reboot the Suit” project, thanks to more than 6,200 backers who made donations ranging from $1 to $10,000. Because the online campaign continues through Aug. 19, museum officials have upped the goal to $700,000 and will use the additional money to preserve, digitize and display Alan Shepard’s Mercury spacesuit, which he wore in 1961 as the first American in space. Armstrong’s suit will be restored and displayed by July 2019, the 50th anniversary of the Apollo 11 moon landing. Both spacesuits will be featured in the Destination Moon exhibition the museum plans to open in about 2020. “It’s a little overwhelming,” Yoon Lee, the Smithsonian’s director of digital philanthropy, said about public reaction to the campaign. “We thought we could do it, get to our goal, but we didn’t think it would be so fast. We’ve been racing to keep up.” Elizabeth Ngonzi, a professor at New York University’s George H. Heyman Jr. Center for Philanthropy and Fundraising, called the project innovative. “It’s pretty genius,” Ngonzi said. “Part of it is a PR move. It helps them connect to the public. It’s a staid, established brand, and if you want to revive it, this gets you in front of people.” Like other Kickstarter projects, the campaign offers a variety of rewards to “backers” who make pledges. The money is paid only if the campaign is successful. After Kickstarter’s fees, the museum will receive about 90 percent of total donations, Lee said. Armstrong’s spacesuit is the largest project a cultural organization has launched on Kickstarter, Lee said. It is the first in a year-long partnership between the Smithsonian and Kickstarter. Upcoming initiatives will come from different Smithsonian facilities. The online project is part of the larger $1.5 billion fundraising effort underway at the Smithsonian, an organization of 19 museums and research centers that receives about $800 million in federal aid annually. The Smithsonian’s annual budget is about $1.3 billion. “One of our goals in that campaign is to reach people everywhere,” Lee said. “This partnership makes wonderful sense in that respect.” The campaign got the attention of Del. Eleanor Holmes Norton, D-D.C, who recently reintroduced a bill to change the governance of the Smithsonian Institution to make it easier for it to raise private donations. “The notion that you’d have to go around begging for money to restore this historical object makes my point,” she said. The institution’s 17-member Board of Regents would be expanded to 21, all private citizens. Currently, the board is made up of nine private citizens, six members of Congress, the vice president of the United States and the chief justice of the Supreme Court. In her proposed reorganization, House and Senate leaders would each nominate 12 citizens, and the president of the United States would chose 21 from those 24 candidates. “To have the board dominated by public officials ties the hands of the Smithsonian behind its back,” she said. “Federal funds can’t cover all the costs, and they need to do more fundraising.” But, Ngonzi said, the Smithsonian’s entry into online crowdfunding should be seen as innovative rather than desperate. Established organizations that have a significant pipeline to donors still need to find new ones, she said. Kickstarter helps them get their message to people who are not in their database but who are probably aware of their missions. “You’re leaving money on the table when you don’t activate people who are involved,” she said. “You start connecting to young donors, who eventually become older donors.” “This is low-hanging fruit,” she said. “It’s a way to activate people who are interested.”

Indonesia Jamaica Deep Seabed Mining

Deep-sea mining looms as UN body issues contracts

KINGSTON, Jamaica — The deep oceans span more than half the globe and their frigid depths have long been known to contain vast, untapped deposits of prized minerals. These treasures of the abyss, however, have always been out of reach to miners. But now, the era of deep seabed mining appears to be dawning fueled by technological advances in robotics and dwindling land-based deposits. Rising demand for copper, cobalt, gold and the rare-earth elements vital in manufacturing smartphones and other high-tech products is causing a prospecting rush to the dark seafloor thousands of meters (yards) beneath the waves. With authorities at the Jamaica-based International Seabed Authority issuing exploration contracts, alarmed conservationists are warning that the deep ocean’s fragile biodiversity must be protected and not nearly enough is known about the risks of extracting minerals from seabeds. “The pace of activity has increased dramatically over the last five years,” said Michael Lodge, deputy secretary-general of the obscure U.N. body in Kingston that acts as a global steward of the deep seafloor and is tasked with regulating this new mining frontier. “We’re seeing the private sector invest in a big way.” The U.N. agency, known by its initials ISA, presides over seabed outside the exclusive territorial waters of individual countries. So far, it has issued 27 exploration contracts, the large majority of them since 2011. The 15-year contracts allow for mineral prospecting on over 1 million square kilometers (over 390,000 sq. miles) of seabed in the Pacific, Atlantic and Indian Oceans. Governments and private companies have been moving so rapidly to stake claims and assess deposits that insiders forecast that commercial deep-sea mining could start within the next five years using robotic collectors equipped with cameras and sonar sensors along with pipe systems that can siphon crushed minerals to ships. During a gathering this month in Jamaica of representatives from nearly 170 member states, ISA has started drafting a framework to regulate commercial exploitation of seafloor metals and minerals. The session ended Friday. A group of international scientists, in a July 9 article in the journal Science, urged ISA to temporarily halt authorization of new mining contracts until networks of “marine protected areas” are established around areas targeted for mining. “We owe it to future generations to ensure that we think before we act and gain a thorough understanding of the potential impacts of mining in the deep sea before any mining is permitted,” said Matthew Gianni, co-founder of the Deep Sea Conservation Coalition, which sent observers to ISA’s 21st session in Kingston. But despite the warnings, in recent days ISA authorized its latest exploration contract, a 72,745 square kilometer (28,087 sq. mile) permit in the Pacific to China Minmetals Corp., sponsored by Beijing. China now has the most permits from the U.N. body with four. ISA was launched in 1994 and operates under the U.N. Convention on the Law of the Sea. The only major maritime power that has not ratified the convention is the United States, where lawmakers have argued it could impinge on U.S. economic and military sovereignty. The Department of the Interior has granted exploration licenses in the Pacific to Lockheed Martin Corp., a U.S. company that has also partnered with the United Kingdom, an ISA member, by setting up a deep-sea mining subsidiary there. So far, most of ISA’s contracts have been issued for the deep abyssal plains of the Clarion-Clipperton Fracture Zone, a sprawling area of the Pacific Ocean off Mexico and the U.S. At depths of 4,000 to 6,000 meters, it is known to be rich in nodules containing copper, cobalt, manganese and significant concentrations of rare-earth elements. As part of an environmental plan, ISA has set aside nine areas in this zone, prohibiting them to contractors. Other coveted exploration areas contain copper-rich sulphides formed around hydrothermal vents and black cobalt crusts created along the slopes of seamounts and volcanic mountain ranges. These biologically complex areas are found in the Western Pacific, Atlantic and Indian Oceans. ISA literature estimates that one site could provide up to 25 percent of the annual global market for cobalt. “The concentrations of minerals that you find in the seabed are very much richer than what’s left on land. So demand is only going to increase,” Lodge said. Douglas McCauley, an ecologist and conservation biologist at the University of California, Santa Barbara, said seabed mining and other industrial activities like ocean-based power generation and farming indicates that mankind is on the cusp of launching a “marine industrial revolution.” Current proposals for the oceans over the next several decades “look uncomfortably similar to what we did to land in the 1700s and 1800s,” he said, adding that the onset of the land-based industrialization was associated with a spike in animal extinction rates. But there are basic things humanity can do to approach seabed mining intelligently, he said. First, learn what biodiversity is down there before we mine. Second, go slowly on exploitation contracts and study the impacts of this mining as it is happening. Third, set up systems of protected areas before, not after, mining starts. “The terrestrial industrial revolution happened before we had the tools to manage goals for development and goals for sustaining biodiversity. You can’t really blame people in the 1700s for the damage they did to the environment...” he said. “But we certainly are to blame if we don’t do seabed mining properly.” David McFadden on Twitter: http://twitter.com/dmcfadd

National Business

Social Security Medicare

Report: Social Security disability fund to run dry next year

WASHINGTON — The 11 million Americans who receive Social Security disability face steep benefit cuts next year, the government said, handing lawmakers a fiscal and political crisis in the middle of a presidential campaign. The trustees who oversee Social Security and Medicare said the disability trust fund will run out of money in late 2016. That would trigger an automatic 19 percent cut in benefits, unless Congress acts. The average monthly benefit for disabled workers and their families is $1,017. The typical beneficiary would see a reduction of $193 a month. “Today’s report shows that we must seek meaningful, in some instances even urgent, changes to ensure the program is on stable ground for future generations,” said Jo Ann Jenkins, the chief executive officer of AARP. In more bad news for beneficiaries, the trustees project there will be no cost-of-living increase in benefits at the end of the year. It would mark only the third year without an increase since automatic adjustments were adopted in 1975. Separately, about 7 million Medicare beneficiaries could face a monthly premium increase of at least $54 for outpatient coverage. That works out to an increase of more than 50 percent. The annual report card on the financial health of Social Security and Medicare shows that the federal government’s largest benefit programs are feeling the strain of aging baby boomers as they both approach milestone anniversaries. Medicare turns 50 at the end of the month and Social Security turns 80 two weeks later. Together, the programs accounted for more than 40 percent of federal spending last year. There was some good news in the report: The trustees said Social Security’s retirement fund has enough money to pay full benefits until 2035, a year later than they predicted last year. At that point, Social Security will collect enough in payroll taxes to pay about 75 percent of benefits. Medicare’s giant hospital trust fund is projected to be exhausted in 2030, the same date as last year’s report. At that point, Medicare taxes would be enough to pay 86 percent of benefits. Advocates for seniors say that gives policymakers plenty of time to address both programs without cutting benefits. But some in Congress note that the longer lawmakers wait, the harder it gets to address the shortfall without making significant changes. There is an easy fix available for the disability program: Congress could shift tax revenue from Social Security’s much larger retirement fund, as it has done in the past. President Barack Obama supports the move. And acting Social Security Commissioner Carolyn Colvin said shifting the tax revenue “would have no adverse effect on the solvency of the overall Social Security program.” But Republicans say they want changes in the disability program to reduce fraud and to encourage disabled workers to re-enter the work force. “Washington has continually kicked the can down the road, and now, as 11 million Americans face cuts to Social Security disability benefits they rely on, it is time for Congress to take action,” said Sen. Rob Portman, R-Ohio. In January, Sen. Rand Paul, R-Ky., suggested that a lot of slackers are on disability. Paul, who is running for president, joked that half the people getting benefits are either anxious or their back hurts. The date that the disability fund will run dry is unchanged from last year’s report. But as the deadline gets closer, advocates say the need to act becomes more urgent. “The president has proposed a commonsense solution to improve the solvency of this fund in the short run so that Americans who rely on it will continue to receive the benefits they need,” Treasury Secretary Jacob Lew said. “It is vital that Congress move forward to maintain the integrity of this critical program sooner rather than later.” If the retirement and disability funds were combined, they would have enough money to pay full benefits until 2034, the trustees said. Lew noted that the life of the Medicare trust fund has been extended by 13 years since Congress passed Obama’s health law. The fund is also benefiting from a slowdown in the rise of health care costs. The Medicare premium increases would affect Part B, which provides coverage for outpatient services. For about 70 percent of beneficiaries, premium increases cannot exceed the dollar amount of their Social Security cost-of-living adjustment, or COLA. Because no COLA is currently expected for next year, increased costs of outpatient coverage would have to be spread among the remaining 30 percent. That would result in an increase of about $54 in the base premium, bringing it to $159.30 a month. Those who would feel the impact include 2.8 million new beneficiaries, 1.6 million who pay the premium directly instead of having it deducted from their Social Security, and 3.1 million upper income beneficiaries, those making at least $85,000 for an individual and $170,000 for a married couple. The increases for upper-income beneficiaries would be higher, up to $174 for those in the highest bracket. Health and Human Services Secretary Sylvia M. Burwell said no final decision has been made. She said premium increases are expected to average under 5 percent a year over the long term. Nearly 60 million people receive Social Security benefits, including 42 million retired workers and dependents, 11 million disabled workers and 6 million survivors of deceased workers. About 55 million retirees and disabled people get Medicare. The hospital trust fund is only part of the program. Coverage for outpatient care and prescription drugs is covered by premiums and other government spending. Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

Airlines Price Gouging

Five airlines probed for price-gouging

WASHINGTON — Transportation Secretary Anthony Foxx said the government has opened a price-gouging investigation involving five airlines that allegedly raised airfares in the Northeast after a deadly Amtrak crash in Philadelphia in May disrupted rail service. The Transportation Department sent letters on Friday to five airlines — Delta, American, United, Southwest and JetBlue — seeking information on their prices before and after the May 12 train crash. Among the routes the department asked airlines for price information on were flights to certain Northeast destinations from Dulles International Airport and Reagan National Airport near Washington, Baltimore-Washington International Airport, Philadelphia International Airport, three New York area airports — Newark, John F. Kennedy, and LaGuardia, Logan International Airport in Boston; MacArthur Airport-Long Island in New York, Green Airport in Rhode Island., and Bradley International Airport in Connecticut. “The idea that any business would seek to take advantage of stranded rail passengers in the wake of such a tragic event is unacceptable,” Foxx said. The department is exploring whether the price hikes violated federal regulations prohibiting airlines from engaging in unfair and deceptive practices. The letters to airlines explain that generally a practice is “unfair” if it “causes or is likely to cause substantial injury to consumers,” cannot be reasonably avoided by consumers and “is not outweighed by countervailing benefits to consumer or competition.” The investigation was prompted in part by a letter from Sen. Christopher Murphy, D-Conn., who complained to the Obama administration that some airlines had increased fares to as high as $2,300 following the train crash. Separately, the Justice Department announced earlier this month that it is investigating possible collusion among major airlines nationwide to limit available seats, which keeps airfares high. The civil antitrust investigation by the Justice Department appears to focus on whether airlines illegally signaled to each other how quickly they would add new flights, routes and extra seats. American, Delta, Southwest and United — the nation’s four largest airlines — have acknowledged receiving letters from the Justice Department related to that investigation. Eight people were killed and about 200 were injured in the Amtrak crash in Philadelphia, temporarily disrupting service. For reasons still unknown, the train accelerated to 106 miles per hour in the minute before it entered a curve where the speed limit is 50, investigators have said previously. In the last few seconds the brakes were applied with maximum force, but the train was still traveling at over 100 mph when it left the tracks.  

Jimmy Styks

Vista Outdoor buys paddle board company

CLEARFIELD — Vista Outdoor Inc. announced it has acquired privately owned Jimmy Styks, LLC, a designer and marketer of stand-up paddle boards and related accessories. Clearfield-based Vista said in its announcement that Jimmy Styks’ paddle board portfolio provides easy-to-use platforms for water sport enthusiasts engaging in activities ranging from personal fitness to fishing. The company offers nearly 30 units in epoxy, inflatable, soft and thermoform boards, as well as accessories. The transaction provides Vista Outdoor with access to the water sports market through the fast-growing SUP board segment, which experienced 35 percent growth in 2013 and 40 percent growth in 2014. Vista Outdoor paid $40 million in cash, with additional funds payable depending upon profitability over the next three years, the company said in a press release. Jimmy Styks was founded in 2009 in Huntington Beach, California by Kyle Reeves and Jeremy Wilkens, who will remain with Vista Outdoor, and the company will be integrated into the Outdoor Products segment of Vista Outdoor.

JetCom

New Amazon rival Jet is worth a try

Jet.com launched last week and sold just over $1 million worth of items during its first 24 hours — not a bad start for the ambitious online retailer. Jet's proposition is simple: it offers the lowest prices online on everything from computers to paper towels and mascara to mayonnaise. It's competing with Amazon, Walmart, Target and member clubs like Costco for your everyday dollars. Jet doesn’t make money on orders. Rather than taking a percentage of sales, Jet is based on a membership model that costs $50 a year. But unlike with other club stores, Jet promises you will save at least $150 a year or it will refund the difference between your savings and the membership fee. Consumerist.com described Jet as “either the future of retail or a doomed wacky scheme.” Indeed, company founder Marc Lore said he expects the company to lose money for five years. To turn a profit, Jet will need 15 million paid members buying $20 billion of stuff by 2020, Lore said. Along with low prices, Jet understands what many online shoppers want from a transaction. They call it transparency; I call it common sense. “No flash sales. No fancy sample stations that suck you in, resulting in the purchase of a 5-pound jar of mayonnaise,” Jet says on its website. Instead, it starts with low prices — typically about 10-15 percent lower than other retailers — and offers additional savings on other items. And the savings continue once you've finished shopping. At checkout, you'll have the option to forego free returns, which can save anywhere from a few pennies to several dollars. And, shipping is free on orders of $35 or greater. How does Jet do it? The company says it uses an algorithm to determine the optimal source for each product you buy from its retail partners, taking into account location and shipping zones. When you buy two products from the same retailer, that means shipping costs will be less and you save — however, all of this happens behind the scenes. All you see as a shopper is the cost of your items drop each time you add something new to your cart. I couldn't resist giving it a try. RIght off the bat, I appreciated the fact I could start shopping immediately without setting up an account or even sharing my email address. I shopped for items that I buy regularly, so I could compare Jet's prices with my local grocery store. The starting prices were at least a few cents lower and my savings climbed as I continued through my weekly list. I wound up with a $35.73 total and saved $10.64. I've already received several emails saying a Jet concierge found my items at Walmart and they are on their way. Should you try Jet? It all depends on your expectations. Jet is not Amazon. While the new retailer has around 10 million items, Amazon has an inventory in the hundreds of millions. I found the selection for non-perishable grocery store items better than I expected, home goods paltry and electronics adequate. The site's search feature is easy to use, but showed some duplicate products. The experience is much better on the desktop version than on mobile. The trick to finding items on Jet is to be specific. If you have a brand in mind, include it in your search. Jet is not for browsing. You can spend hours on Amazon, comparing products, reading reviews and finding things you never knew existed. It is a great place for product research and for finding obscure items. That's not Jet — all you'll see on the site is the name of the product, a description and the price. Reordering is simple: Go to your account, select order history and click "reorder" to add it to a new cart and initiate the shopping process. For security, remember to delete your payment card, a good thing to do whenever you shop online. Bottom line: If you'd like to save money on everyday shopping, give Jet a try — it's a lot more fun than a trip to the grocery store. Jet is currently offering a free six-month trial membership. Jet will not charge your debit or credit card when the trial is over without your permission — now, that's a first. Leslie Meredith has been writing about and reviewing personal technology for the past six years. She has designed and manages several international websites. As a mom of four, value, usefulness and online safety take priority. Have a question? Email Leslie at asklesliemeredith@gmail.com.