Intuit Becomes #9 Most Shorted Nasdaq 100 Component

Joel Kornblau for Forbes writes: The most recent short interest data has been released by the NASDAQ for the 10/31/2013 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the Nasdaq 100 by “days to cover.” There are a number of ways to look at short data, for example the total number of shares short; but one metric that we find particularly useful is the “days to cover” metric because it considers both the total shares short and the average daily volume of shares typically traded. The number of shares short is then compared to the average daily volume, in order to calculate the total number of trading days it would take to close out all of the open short positions if every share traded represented a short position being closed.

Click here to find out The 25 Most Shorted Nasdaq 100 Stocks »

In our new rank based on the most recent short interest data from NASDAQ, Intuit Inc (NASD: INTU) has taken over the position of #9 most shorted Nasdaq 100 component, from Discovery Communications, Inc. (NASD: DISCA) which is now in the #16 spot.

The “days to cover” at 10/31/2013 was 9.92 for INTU, and 7.16 for DISCA; this compares to the average across all Nasdaq 100 components of 4.12 (down from the average back on the 10/15/2013 settlement date of 4.33). The chart below shows the movement over time of the “days to cover” values of both INTU and DISCA, versus the average Nasdaq 100 component.

Below is a chart showing the relative positions of INTU versus DISCA over time within the 100 Nasdaq 100 components, with #1 representing the component with the highest “days to cover” value (most heavily shorted) and #100 representing the component with the lowest “days to cover” value (least heavily shorted):

A stock with a high “days to cover” value compared to its peers would be considered to have a higher level of short interest as compared to those peers. This could mean short sellers are using the stock to hedge a long bet elsewhere, or could also mean that short sellers believe the price of the stock will decline. When short sellers eventually cover their positions, by definition there must be buying activity because a share that is currently sold short must be purchased to be covered. So investors tend to keep an eye on that “days to cover” metric, because a high value could predict a sharper price increase should the company put out some unexpectedly good news — short sellers might rush to cover positions, and if the “days to cover” number is high, it is more difficult to close those positions without sending the stock higher until the higher price produces enough sellers to generate the necessary volume.

Below is a three month price history chart comparing the stock performance of INTU vs. DISCA:

INTU,DISCA makes up 2.09% of the Direxion NASDAQ-100 Equal Weighted Index Shares ETF (QQQE)

---

Special Offer: Free Sample Issue to the Preferred Stock List Newsletter plus 20% OFF your subscription

---

At last check, INTU was down about 0.2%, while DISCA was down about 0.3% on the day Tuesday.

intuit : User Experience as Customer Service

Alex Schmelkin writes: Intuit’s QuickBooks has been held up as an example of data standardization and a robust developer platform. And Quickbooks is most certainly THE de facto standard for small business accounting software. But, in recent years, newer entrants like Freshbooks and Kashoo (among others) have been stealing market share, feature by feature, with a better user experience. Accounting is no fun, but it’s actually a pleasure to send invoices and process payroll with these new platforms.

The mighty Intuit appears interested to buck this trend with its latest product update, the new QuickBooks Online. They are not bringing the update to market with a traditional playbook touting how many reports the product has or how many banks it can connect to. Instead, they are focused on Why Design Matters, and how the new look of the app will “create a harmonious user experience,” implying that users should care more about the design than about QuickBooks’ storied permissions levels and sales receipt processing. It may indeed be marketing fluff, but they’re putting their design money where their UX mouth is in a follow-up post on their blog.

To hush a user that posted something along the lines of ”but I want this feature because it’s best for me,” customer services reps are replying with data. It’s a UX researcher’s dream:

statistically the recurring page is 34th in the list of most used pages, COA is 15th

Blammo. Stop complaining. We did our research and built our product around real user usage and needs.

In that initial reply to the customer, the responding customer service agent (who is so fluent in UX language as to make you think he’s actually a product owner) also mentions that the new QuickBooks finally supports tabbed browsing. The original inquirer pushes back again, “I assume that if you open some links/functions in a new tab/window, that other open windows will not be updated with a transaction performed in a different tab/window without a manual refresh. Is that so?”

Ever-focused on the user, the agent replies:

We actually worked hard to implement that feature, so it is there. Where it applies is mainly on Customers, Vendors, and other transaction list pages.

And still the user was not satisfied, demanding perfect refreshes of every function: “So if I keep the home page [open]….I should see the bank balance shown on the home page change automatically?”

Ever cool, the UX master replies:

I will pass that use case on to our banking team though and see if we can get that working.

Use case!? They’re talking to a customer here! The CSR didn’t take it quite as far as saying he would force rank that user story in their backlog and make sure it’s tracked in GreenHopper, but they sure are training their users that direct feedback is important and will be incorporated into future versions of the software.

Smart move, Intuit. Every time a customer service agent says use case twin unicorns is born in the forest.

TaxJar releases a tool that automates sales tax reporting / One tax preparer says he no longer dreads doing e-commerce tax returns.

Paul Demery writes: With the end of another year of online sales just around the corner, tax preparer George Sleeman says he’s no longer dreading the preparation of state sales tax returns for his e-commerce clients. A new software tool for collecting sales tax data for retailers selling through e-marketplaces is making life easier for both him and his client web retailers.

“In the past I’ve dreaded doing online sales tax returns because they were the hardest tax returns I had to do, because of all the work in gathering the information,” says Sleeman, a Colorado Springs, CO-based tax specialist who operates the tax-preparation service Tax Man To You. “But this year I’m actually looking forward to it.”

Sleeman has recently started using TaxJar Pro, new sales tax management software from TaxJar designed specifically for retailers who sell through e-marketplaces Amazon.com, Etsy.com and eBay.com. TaxJar Pro can also be used to manage sales tax records for sales transactions processed through the online payment system PayPal, and for transactions processed through the Shopify e-commerce platform, Tax Jar says. Amazon is No. 1 in the Internet Retailer Top 500; Etsy is No. 38.

Although Amazon, Etsy, eBay, PayPal and Shopify enable merchants to set up their accounts to figure and charge sales tax in states where the merchants are required to collect it, it’s up to merchants and their tax-return preparers to compile information on collected sales tax revenue and remit the revenue and tax returns to states. If preparation of e-commerce tax returns gets backed up because of the chore of gathering information, it puts pressure on the retailers as well as their tax preparers to meet filing deadlines, Sleeman says.

Under federal law, merchants are only required to collect sales tax in states where they have a physical presence, such as a store or distribution center. For many small web-only merchants, their only physical presence outside of their home state is the fulfillment centers operated by Amazon’s Fulfillment By Amazon service, which Amazon marketplace sellers use to fulfill orders.

TaxJar Pro was developed with network connections that pull information on sales transactions from third-party e-commerce and payment platforms and compile them into reports of sales tax collected across each of the 45 states plus the District of Columbia that have sales tax laws. Before he started using TaxJar Pro, Sleeman says he worked with huge spreadsheets from Amazon and other e-commerce companies that contained detailed records of his clients’ sales transactions, including sales tax collected, across each state where a client had a sales-tax responsibility. “It was spreadsheets galore,” Sleeman says. And each spreadsheet had so many columns and rows that it was difficult to sort and organize information into taxable sales to apply data on collected sales tax for each tax jurisdiction within a state.

It would take from 45 minutes to more than two hours to figure all the collected sales tax for each state for each client. “It could be two and half hours for just one state,” says Sleeman, who is an enrolled agent certified by the Internet Revenue Service to prepare tax returns. He adds that Kansas in particular, because of its many tax rules and jurisdictions, “is a nightmare.”

But with the new TaxJar Pro system, he says he’s traded the spreadsheets for a computer screen. He now prepares sales tax returns while facing two computer screens—one showing a state’s sales tax return web site, the other a TaxJar Pro screen showing a client’s list of sales already organized into taxable sales and collected sales tax. It now takes about five minutes to enter information from the TaxJar Pro screen onto an online state tax return for each client, he says.

TaxJar provides its Internet-hosted software for monthly fees ranging from $9.95 for up to 1,000 client sales transactions per month, to $49.95 for up to 15,000 transactions per month.

Sleeman says that, instead of dreading the annual preparation of online sales tax returns, he’s now looking to grow his number of e-commerce clients.

Xero price hikes face criticism

TOM PULLAR-STRECKER writes:   Sharemarket darling Xero is under fire from its usually loyal fanbase of customers and accounting partners after announcing new pricing for its online accounting software.

Spokesman Richard Wood said most of the negative feedback was from customers in Australia, which is Xero's fastest-growing market in dollar terms.

Some Australian customers who use Xero to manage their payrolls complained that they would need to pay A$11 (NZ$12.45) a month more to use Xero's software from December 9. That was because companies with more than one employee would be forced to use the higher-priced version of its software.

Wood said some other criticisms were the result of "misunderstandings" after Xero announced the changes in a blog on its website.

One partner posting on Xero's website said he was not looking forward to advising most of his clients that they would be charged $10 more a month.

Another described the changes as "really not cool".

Sydney-based bookkeeper and Xero certified adviser Scott Rhys Jones said the changes were "bitterly disappointing" and would change the accounting platforms he marketed to some of his smaller clients.

Others said Xero should have given much more notice of the price changes.

Xero chief revenue officer Stuart McLean said some Australian accounting partners who had to pay more would have their prices frozen until the end of the Australian financial year in June.

That was not in response to criticism but "was always part of the plan", he said.

Xero indicated on its website that all its customers would be limited to receiving no more than 1000 invoices a month, but Wood said that was not intended to be a "hard limit".

Xero had emailed more details of the price changes to its partners and would email its customers directly tomorrow, he said.

"Some of the complaints from partners were because they jumped on the blog before they got the email," McLean said.

Xero's prices varied from country to country and "90 per cent" of customers would be paying less or no more than $1 a month more to use its software, he said.

Wellington-based Xero already charges less for its software in the United States than in New Zealand, and the price differential will in some cases increase after the changes.

It has three versions of its software for New Zealand customers, which cost $29, $49 or $64 a month.

Its three US versions cost US$19, US$29 and US$39.

The price of Xero's entry-level product in the New Zealand market will fall by $4 from next month to $25, while its "medium" and "large" plans will increase by $1.

Xero will cut the price of its "starter" package in the US by US$10 to US$9 a month.

One post on Xero's website queried why the new pricing for Xero's "standard" product was $50 in New Zealand and US$30 in the US. "Either you need a better treasury team or you are ripping off your home market."

Chief executive Rod Drury defended the regional variation in Xero's pricing, saying its New Zealand product was more "mature" as Xero was still building out its product set in the US.

McLean said its New Zealand product was better for that reason, but people also needed to take into account "market conditions".

"In the US, we are trying to penetrate a massive market where there is an incumbent, Intuit, with 95 per cent market share," he said.

"You have to take into account market conditions when you price your product, and that goes for any product, whether it's a Ford motor car or a Mars bar."

Xero / New and refreshed subscription plans

Xero writes: Today we’re announcing new and refreshed subscription plans globally to replace our Small, Medium and Large plans. We need to make these changes as we add other products, such as payroll in the US, and increase the storage limits for our game-changing Files storage feature.   Click here for U.S. Pricing. 

The new plans are Starter, Standard and Premium. Small is now Starter and pricing is reduced in NZ, UK, Australia and the USA. Medium is now Standard. Large becomes Premium and in Australia and the US there are variations of the Premium plans with allowances for different numbers of payroll employees and storage. You will be automatically moved to the equivalent plan or most cost effective according to your feature use.

As always our prices are what you see is what you pay – no hidden fees per pay slip, no pay-per-use for certain features. Our core principles remain – unlimited users, free mobile app and bundled support.

We’re being very careful to align price to value, and believe Xero is highly competitive. Around 90% of our customers will pay less or $1 more. Any discounts, for example for non-profits, remain the same. The new plans and pricing come into effect with our release due December 9. All subscribers are being sent a notification within the next 24 hours.

The Xero product has evolved dramatically and with each release we try to deliver more value. This is the first time we’ve significantly tuned our plans since Xero began in 2006. In that time we’ve added many features – see the timeline. Our new Files service lets you attach source documents to your financial data, saving our customers costs on 3rd party storage as well as the hard to quantify costs of managing paper documents.

Subscriptions include any bank feed charges or direct deposit fees that we incur in the United States and automatic superannuation fees in Australia. Our 24/7 support continues to be free to all subscribers and we continue to invest heavily in our support teams, recently opening our newest center in Denver.

We are also very pleased to announce larger Files storage limits for all plans beyond Starter. The Standard plan will have 5GB and Premium plans will have at least 10GB.

For accounting and bookkeeping partners, now is the time to consider what’s best for your clients, perhaps adjust your bundled pricing as appropriate, and communicate with them as needed.

Check out the detail for your region.

Lessons on knowing what IRS gets when you win at casinos

Pesach Kremen for GamingToday writes: With the end of the year getting closer, I thought I would give you some information on casino reporting and your gambling deductions.

The casino is required to report to the IRS and your state any net winnings on a keno ticket(s) of $1,500 or more. That means if you hit a 10-game multi-race ticket for $10 and “win” $1,500 they will not fill out a form, but very important, you still must report the net win on your taxes.

The difference is if the win generates a W2G it gets included in the AGI (Adjusted Gross Income). Then if you itemize deductions you can deduct gambling losses up to the extent of gambling winnings.

For example, you get a $2,000 W2G for hitting a 6-of-6 at the Pop 80 rate. But in trying to win this 6-of-6 you had non-winning tickets totaling $700. Thus you show the $2,000 income and, if you itemize, you can deduct this $700 gambling loss as it is less than your gambling winnings.

Here is the rub. What if your itemized deductions, including your gambling losses, are less than the standard deduction? Basically you are out of luck, though I would rather win the $2,000 and pay the taxes than not win at all.

If you want, you can ask the casino to withhold taxes so you don’t get a larger tax bill at the end of the year. The best suggestion, of course, is to ask your tax professional as the above advice is just a simple statement. Your tax professional can give you the best advice in these situations.

But if that tax preparer tells you not to report your winnings, find another tax preparer as he or she is telling you to do something that is clearly illegal. No reputable CPA would tell you to be dishonest, but there are some “tax preparers” out there who are not really qualified and they will tell you anything to get your business.

The keno department can give you a win-loss statement the same as the slot club. Also, if you play regularly, keep a daily record of your wins and losses to present to your accountant at tax time. A simple pocket notebook should suffice or even the note pad on your smart phone, which you can later transcribe to paper at your convenience.

There is one playing technique, completely legal, to avoid any problems. Play tickets where the win is less than $1,500 net for a solid hit. That way you just have your daily wins minus your losses to report, and the effect on the AGI will be less. This can be important because some tax credits and deduction qualifications are based on your AGI regardless of how much you can legally deduct to get at your final tax bill. Again, ask your tax preparer what is best.

Sometimes it can get complicated, and even if you ask the IRS you are apt to get different answers from different people in different offices. That is why a good CPA is so helpful. Some may allow you to base your reporting on your net winnings without the W2G’s for the same trip and then add the W2G winnings. Others may say each day is separate.

In my case, I just get the casino printouts or win-loss statement along with my own records and give them to my accountant. The peace of mind from honestly filing your returns with a true professional outweighs the temporary small dollar savings of going the dishonest route.

The gambling pros can do a schedule C but the recreational gambler (you and me) must report the W2G’s in the appropriate space. If you have winnings that didn’t require a W2G, they go on the miscellaneous income line of your return.

And remember, if you do itemize deductions, losses at one gambling game can be deducted from winnings at another gambling game up to the extent of the winnings. Again, consult your tax professional.

Will the tax laws hamper your enjoyment at keno? Not really. You can play a ticket designed to avoid the paperwork (but not your reporting requirement) unless the hit is really big, in which case you can use the winnings for the deductible expense of your tax professional.

The downtown 7-spots are good for this as if you hit 6-of-7 or less your win is very small, and even if you come out net ahead it is just the one line miscellaneous income reporting. But if you hit 7-of-7 at the better downtown casinos – paying up to $17,500 for the hit – you will have enough to set aside money for the taxes and the accountant’s fee, and still have plenty left over.

Remember, the ideas in this column are not to substitute for the advice of a tax professional and neither this paper nor I can take any responsibility for your actions of properly paying your taxes or getting the best tax advice available. There are plenty of good honest CPA’s out there. Consider them another minor expense of your gaming vacation and you cannot go wrong. Hope this helps!

Built-in Gains Tax Planning Opportunity Expires on 12/31/13

Aronson writes: If you are a former C corporation with an S election older than five calendar years (i.e., your business has been an S corporation since 1/1/2008) and are currently subject to built-in-gains (BIG) tax implications, there might be immediate relief in 2013 to permanently avoid BIG tax ramifications without IRS scrutiny.

General background information:  The BIG tax regime is an S corporation, entity level tax calculated at the highest C corporation federal income tax rate (currently 35%) by some states (i.e., depending on the state taxing jurisdiction) and is imposed on the taxable recognition of net unrealized built-in gains (NUBIG) within the S corporation recognition period, which, unless modified by law, generally stands for the first 10 taxable years (full calendar years) of an electing S corporation. The calculated BIG tax is limited each reporting year within the S corporation recognition period to the calculated taxable income of the electing S corporation as a C corporation. Realized but unrecognized former NUBIG becomes a carried over tax item and is accounted as incurred for purposes of the BIG tax calculation in the subsequent year of the S corporation recognition period.

The NUBIG is comprised of all the C corporation deferred income tax items that include the taxable disposition of appreciated assets as further explained below within the S corporation prescribed recognition period.  Depending on the state tax ramifications beyond the scope of this blog, the double taxation regime (i.e., combined S corporation and stockholder level tax on the same pass-through taxable income) could be as much as 70% in some cases.  The NUBIG is measured at the S election conversion date and generally stems from either:

• The application use of friendly tax accounting methods (e.g., cash basis, completed contract for long-term contracts, installment sales reporting, and accelerated and bonus depreciation)  creating deferred income taxes including unrecognized accounting method change cumulative balance  (i.e., Sec 481(a) adjustment); or
• The net gain recognition (i.e., limited to the appreciation measured at the S election conversion date) attributable to tangible and intangible self- created assets (e.g., intellectual property, contract rights, customer list, goodwill, etc.) disposed within the prescribed S Corporation recognition period.

Note: The NUBIG items described above do not comprise an all- inclusive list.    

The good news is that, thanks to Congress, the recognition period has been temporarily reduced from ten to five calendar years for 2013. Therefore, it is strongly recommended that any S corporation with an S election conversion, effective date of on or before January 1, 2008, should consider accelerating taxable income into 2013 and taking full advantage of the five-year reduced recognition period. 

In the context of contemplated Sec 338(h) (10) or Sec 336(e) sales transactions involving a target S corporation with a BIG tax profile, you will need to run the numbers to get the full picture, but it might make sense to induce the seller party to accelerate the contemplated transaction into 2013 by reducing the asking price (i.e., sharing the tax savings).