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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 170.90-1.3%Nov 7 3:59 PM EST
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To: kech who wrote (30994)1/10/2003 6:39:53 PM
From: Art Bechhoefer  Read Replies (1) of 196546
 
Tom, company revenues tend to vary from quarter to quarter, especially in the retail sector, where most of the revenue is generated the month before Christmas. But dividends tend to be steady throughout the year. The proposal to eliminate taxes on dividends requires net earnings. So dividends for some quarters might be tax free because revenues were sufficient to allow a profit, but at other times of the year, dividends might exceed profits, owing to lower seasonal revenues. If we as taxpayers are trying to figure out whether the dividends we receive for the year ending December 31 (the fiscal year for most of us) but have to use data from a company based on its fiscal year (which might be different), I can see only a huge hassle. This would apply to a capital gain as well--the deemed dividend might vary from quarter to quarter.

Then think of some of the ramifications. QUALCOMM gets licensing fees in one quarter, but they must be spread out over several years, according to the new accounting standards. This could affect the cost basis for capital gains taken BEFORE all the licensing fees showed up as revenue. Every time I think about the proposal, it just keeps looking worse and worse--as if it were designed by nincompoops, or perhaps people who never had to worry about doing their own taxes year after year. Yeechhhhhh!

Art
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