Daniel Cullinane CPA

25 Plaza 5 25th fl Jersey City NJ                                          phone 732-516-1648 fax 732-516-9778

MBA Taxation

Daniel Cullinane CPA

2500 Plaza 5 25th fl  Jersey City NJ 07311                                                          phone 732-516-1648  fax 732-516-9778

                 MBA TAXATION                                                                                                         

Copyright ©​ Daniel Cullinane CPA.


Top House Democrats are demanding answers from Apple CEO Tim Cook after a bug in the company’s FaceTime program allowed users to listen in on other devices even if their call hadn’t been accepted.

Rep. Frank Pallone Jr. (D-N.J.), the chairman of the House Energy and Commerce Committee, and Rep. Jan Schakowsky (D-Ill.), who leads the panel’s consumer protection subcommittee, wrote to Cook on Tuesday expressing concern about the vulnerability that Apple says it fixed last week…“As a first step, we believe it is important for Apple to be transparent about its investigation into the Group FaceTime feature’s vulnerability and the steps it is taking to protect consumers’ privacy,” they wrote. “To date, we do not believe Apple has been as transparent as this serious issue requires.”

The flaw was discovered by a 14-year-old in Arizona on January 19, according to reports. More than a week later, Apple disabled the FaceTime Group feature where the bug was present and announced a fix on February 1.

My take: Apple always makes a juicy, camera-ready target for TV-hungry pols. Remember the Senate subcommittee’s 2013 probe of what chairman Carl Levin (D-MI) called Apple’s “Holy Grail of tax avoidance”? I do. From Mr. Cook came to Washington and escaped unscathed:Claire McCaskill (D-MO) couldn’t say often enough how much she loved Apple. Ron Johnson (R-WI) praised the company’s tax minimization strategies as shareholder friendly. Rob Portman (R-OH) only wanted to talk about his tax reform proposals. Rand Paul (R-KT) thought the committee owed Apple an apology. John McCain (R-AZ), after a bout of tax dodging rhetoric, wanted to know why his iPhone was constantly updating its apps.

​When General Motors Co. (NYSE: GM) released its most recent quarterly results before the markets opened on Wednesday, the automaker said that it had $1.43 in earnings per share (EPS) and $38.4 billion in revenue. That compares with Thomson Reuters consensus estimates of $1.22 in EPS and revenue of $36.48 billion. In the fourth quarter of last year, GM said it had EPS of $1.65 on $37.72 billion in revenue.

The latest quarterly results were led by strong performance in GM North America, driven by a rich vehicle mix and strong pricing for GM’s all-new full-size pickup trucks.

In January, GM announced that Cadillac will lead the company to an all-electric future, revealing the brand’s plan for its first fully electric vehicle. Following the success of the XT4 compact luxury SUV, Cadillac revealed the all-new three-row XT6 crossover. The brand also hinted at a future Escalade and upcoming performance sedan. To continue this product momentum, Cadillac will launch a new model every six months through 2021.

In 2018 GM delivered nearly 3 million vehicles in the United States, with crossover sales topping a million. Separately, in the midst of a softening market in China, GM delivered 3.65 million vehicles. Cadillac deliveries in China surpassed 200,000 units, rising 17.2% for the year, while the brand’s global sales increased by 7.2%.

Overall the company sold 8.4 million vehicles globally for the full year.

Mary Barra, GM’s board chair and chief executive, commented:

GM delivered another strong year of earnings in a highly volatile environment in 2018. We will continue to make bold decisions to lead the transformation of this industry and drive significant shareholder value.

Shares of GM were last seen up about 2% at $40.17 on Wednesday, in a 52-week range of $30.56 to $45.00. The consensus analyst price target is $45.45.


​The U.S. Centers for Disease Control and Prevention (CDC) cites tobacco use as the nation’s leading cause of preventable disease and death, noting that nearly all tobacco use begins during youth and young adulthood. On Friday, the Food and Drug Administration (FDA) requested an order to ban sales of tobacco products at a Walgreens Boots Alliance Inc. (NASDAQ: WBA) store in Miami. The FDA also sought a similar ban on a Circle K store in Charleston, South Carolina.

The FDA action against the Walgreens store cites five repeated violations beginning in December 2015, with the last coming in October 2018. The FDA sent two warning letters and initiated two civil money penalty cases against the store before filing the complaint.

In the announcement of the filing, the FDA noted that “Walgreens is currently the top violator among pharmacies that sell tobacco products, with 22 percent of the stores inspected having illegally sold tobacco products to minors.” As of last August, Walgreens reported that it operates 9,560 stores in the United States, including Puerto Rico and the U.S. Virgin Islands.

FDA Commissioner Scott Gottlieb, M.D., said:

I will be writing the corporate management of Walgreens and requesting a meeting with them to discuss whether there is a corporate-wide issue related to their stores’ non-compliance and put them on notice that the FDA is considering additional enforcement avenues to address their record of violative tobacco sales to youth. … I’m also deeply disturbed that a single pharmacy chain racked up almost 1,800 violations for selling tobacco products to minors across the country. I have particular concerns about whether the pharmacy setting is influencing consumer and retailer perceptions around tobacco products in a way that’s contributing to these troubling findings.

CVS Health Corp. (NYSE: CVS) is the only pharmacy chain that has so far eliminated the sale of tobacco products from its stores. CVS stopped sales in October 2014 and said at the time that annual revenue would take a hit of about $2 billion.

The FDA includes e-cigarettes among its tobacco products, although none of the citations for the Walgreens store cites e-cigarettes or their flavors as the product sold illegally to a minor. More than 11% (1.73 million) of U.S. high school students claimed e-cigarette use 2017 of a total of 19.6% (2.95 million) who said they used any tobacco product. Some 7.6% said they smoked cigarettes and 5.5% used smokeless tobacco.

Ironically, Walgreens claims that more than 400 of its stores also include a health care center. When CVS announced that it was ending sales of tobacco products the company cited an article from the Journal of the American Medical Association: “These retail clinics, originally designed to address common acute infections, are gearing up to work with primary care clinicians to assist in treating hypertension, hyperlipidemia and diabetes – all conditions exacerbated by smoking.”

Walgreens stock traded down about 1.2% Friday morning, at $70.30 in a 52-week range of $59.07 to $86.31. The stock’s 12-month consensus price target is $76.26.


​Amazon.com says it has a consumer fraud problem because sellers market fake goods on its site. Amazon says it polices the activity and has harsh penalties for those who break the rules. A careful, in-depth investigation, however, shows that these claims are half-truths and that Amazon has a bigger fraud problem than any retailer in the country. Further, Amazon does much too little to stop it, according to new and comprehensive research. Ironically, Amazon is among America’s most admired companies.

The Amazon problem breaks into two parts. One is that Amazon itself sells counterfeit products. The other is that its third-pay retailers who market and sell products on Amazon are the biggest violators of Amazon’s rules. The most detailed description comes from the Counterfeit Report, which tracks fraudulent sales on Amazon, eBay and Alibaba. Its researchers claim that:

Amazon is the free-flowing conduit that enables Amazon, and facilitates “bad actors,” to flood the consumer market with an inexhaustible supply counterfeit, fraudulent, pirated and replica items. Simply, consumers are spending good money on bad products while Amazon takes a transaction fee for each item sold.

The Counterfeit Report’s accusations spread to what it can prove about very lax efforts to end the problem.

Amazon has admitted it has the problem and does have policies to limit them. They are together called the “Amazon Anti-Counterfeiting Policy.” Under the program, it examines products sold on the site. Those who violate the rules are thrown off the site. Amazon also may encourage criminal cases against the counterfeiters. And it has a program dubbed the “A-to-z Guarantee,” which in some cases reimburses buyers of counterfeit products listed on Amazon.

The Counterfeit Report claims Amazon’s efforts are half-hearted and do little to keep “bad actors” off the sites. As an example, Apple says:

Apple reported that 90% of Apple products it purchased directly from Amazon were counterfeit.” Apple continues to monitor the issue. Birkenstock, a shoe company, attacked Amazon as “an accomplice” of the fraudsters. The Recording Industry Association of America (RIAA) tested order orders with Amazon. It discovered 44 of the 194 top CD’s delivered were counterfeit. The Swiss watch operator Swatch which sells Longines, Omega and Blancpain stopped offering the products on Amazon. Amazon turned down the opportunity to honor a request to “proactively police its site for counterfeits and unauthorized retailers.

Among Amazon’s deepest problems is that two-thirds of products sold are via its third-party Market Place, which operates under Amazon rules, and which they regularly break, based on data from the Counterfeit Report. Over a million companies are part of this Market Place system. The Counterfeit Reports claims it “found over 89,800 counterfeit and fraudulent items on Amazon and removed 53,300 fakes on behalf of infringed brand owners.” The federal government also has gotten involved in the problem. The Counterfeit Report writes:

The GAO reported that about 50% of the items it purchased from e-commerce websites, including Amazon (AMZN), were counterfeit. The Federal Communications Commission (“FCC”) sent a letter to Amazon’s CEO, Jeff Bezos, telling him to knock off the counterfeit electronics.

The Counterfeit Report has been lauded by many mainstream media. Its reports have removed over 180 million counterfeit products from online markets that encompass Amazon, eBay, Walmart, Best Buy, Alibaba and DHgate. What does the Counterfeit Report believe will happen near term? Retailers will police Amazon’s pages, but the task is nearly impossible because Amazon is so big, a point 24/7 Wall St. has made before.




​For years we were told that interest rates were going higher and we will get back to the normal yields of the early 2000s. Then a funny thing happened on the way to those yields — we never got there. Oh sure, interest rates have increased; the federal funds rate has gone from literally zero to the current 2.5%. However, the difference between the one-month Treasury bill and the 30-year Treasury bond is just 57 basis points, or barely more than one-half of 1%.

While things have improved for savers, as CD rates for short-term guaranteed investments have gone up solidly, they are still a long way from the 7% five-year certificate of deposit that was available 20 years ago. So we decided to screen the Merrill Lynch research database for stocks that were rated Buy that had a yield over 5%.

While not suitable for ultra-conservative accounts, these stocks do make sense for those with higher risk tolerance who are looking for dependable income and the potential or some growth.


This stock has been absolutely hammered and is on the Merrill Lynch US 1 list. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE.

The company’s fourth-quarter revenue of $47.99 billion fell short of analyst estimates. AT&T also reported net additions of 134,000 phone subscribers, well below analyst estimates of 308,000. The company also lost 403,000 satellite TV subscribers and 14% of its DirecTV Now streaming subscribers in the quarter.

AT&T shareholders are paid rich 6.93% dividend. The Merrill Lynch price target for the share is $37, while the Wall Street consensus target is $35.36. The stock closed trading on Thursday at $29.45 a share.


This maker of tobacco products offers value investors a great entry point now. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008 it spun off its international cigarette business to shareholders. In December 2018, it acquired 35% of JUUL Labs. Fourth-quarter numbers were solid, and the Merrill Lynch analysts said this:

Altria reported fourth quarter 2018 earnings per share of $0.95, in line versus Merrill Lynch consensus estimates. Smoke-able net sales beat our forecast by $9 million due to stronger price/mix. Altria’s smoke-able shipments were in line. Management provided color on US industry trends, a mid-term category outlook, and insights on its recent investments. We believe that management has made proactive steps to secure long term growth with its evolving platform.

Altria investors are paid a huge 6.57% dividend. Merrill Lynch has a price target of $56, though the posted consensus price objective is $57.22 The stock closed at $48.72 on Thursday.

​Kraft Heinz

Kraft Heinz Co. (NYSE: KHC) was formed almost three years ago via the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion of annual revenues generated by well-known brands such as Kraft, Heinz, Oscar Mayer and Maxwell House.

The company is the third largest food and beverage manufacturer in North America, and it derives 76% of revenues from that market and 24% from international markets. The company’s many brands also include ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

Kraft Heinz shareholders are paid a huge 5.29% dividend. The $52 Merrill Lynch price target is less than the $56.33 consensus target price. The shares closed most recently at $47.23 apiece.


The volatile price of natural gas over the past year has weighed some on this top energy company. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and natural gas liquids (NGLs) gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying master limited partnership, ONEOK Partners.

The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which the RBC team feels provides high-return growth opportunities.

Many on Wall Street remain very positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.

Investors in ONEOK are paid a very solid 5.28% dividend. Merrill Lynch has set its price objective at $67. The consensus target was last seen at $70.16. The shares ended Wednesday’s trading at $65.14 apiece.24/7 Wall St.
5 Jefferies Franchise Picks Stocks With Huge Total Return Potential

Royal Dutch Shell

This is a top international play for investors looking to add energy exposure, and it is another company that posted solid results. Royal Dutch Shell PLC (NYSE: RDS-A) operates as an independent oil and gas company worldwide through its Upstream and Downstream segments. The company explores for and extracts crude oil, natural gas and NGLs.

Royal Dutch Shell also converts natural gas to liquids to provide fuels and other products; markets and trades crude oil and natural gas; transports oil; liquefies and transports gas; extracts bitumen from mined oil sands and converts it to synthetic crude oil; and generates electricity from wind energy.

In addition, the company engages in the conversion of crude oil into a range of refined products, including gasoline, diesel, heating oil, aviation fuel, marine fuel, LNG for transport, lubricants, bitumen and sulphur; production and sale of petrochemicals for industrial customers; refining; trading and supply; pipelines and marketing; and alternative energy businesses.

The Merrill Lynch team remains bullish on the shares and noted this when the earnings were released:

Fourth quarter 2018 saw solid earnings (8% beat vs. consensus) and $12.2 billion organic operating cash flow ahead of our already above-consensus estimate. $27 billion organic free cash flow in fiscal year 2018 significantly de-risks the company’s outlook for $25-30 billion in 2020 – funding $25 billion buybacks. Ongoing buybacks also underline continued capex discipline.

Investors in Royal Dutch Shell are paid a huge 5.09% dividend. The Merrill Lynch price objective is $70. The posted consensus figure is $78.13, and the stock was last seen trading at $62.84.


​Today’s software update fixes the security bug in Group FaceTime. We again apologize to our customers and we thank them for their patience. In addition to addressing the bug that was reported, our team conducted a thorough security audit of the FaceTime service and made additional updates to both the FaceTime app and server to improve security. This includes a previously unidentified vulnerability in the Live Photos feature of FaceTime. To protect customers who have not yet upgraded to the latest software, we have updated our servers to block the Live Photos feature of FaceTime for older versions of iOS and macOS.

Apple has also quietly compensated the Thompson family—son Grant and mother Michelle—for finding and reporting the bug, and has promised to make an additional unspecified gift to support 14-year-old Grant’s education.

My take: That ought to deflect some of the Congressional heat coming Apple’s way for not responding immediately to the Thompsons’ warnings.


​The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 2.5% in the group’s seasonally adjusted composite index for the week ending February 1. The prior week’s index was adjusted to account for the Martin Luther King Jr. Day holiday. Mortgage interest rates dropped on all five types of loans the MBA tracks.

On an unadjusted basis, the MBA’s composite index dipped by 12% in the past week. The seasonally adjusted purchase index decreased by 5% compared with the week ended January 25. The unadjusted purchase index rose by 13% for the week and was 2% lower year over year.

Mortgage loan rates for a top-tier 30-year fixed-rate loan slipped from 4.61% to 4.53% last week, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 4.54% for that loan. The yield on a 10-year U.S. Treasury note ticked down in the last week from 2.71% to 2.70% as of last night’s close. A year ago the 10-year note yielded 2.77%.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, commented:

Mortgage rates for all loan types declined last week, with the 30-year fixed mortgage rate falling seven basis points to 4.69 percent – the lowest rate since April 2018. Despite more favorable borrowing costs, and after a three-week surge in activity, purchase applications have slowed over the past two weeks, and are now almost 2 percent lower than a year ago. However, moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward.

The MBA’s refinance index increased by 0.3% week over week and the percentage of all new applications that were seeking refinancing dipped from 42.0% to 41.6%.

Adjustable rate mortgage loans accounted for 7.8% of all applications, down from 7.9% in the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage fell from 4.76% to 4.69%. The rate for a jumbo 30-year fixed-rate mortgage dropped from 4.60% to 4.50%. The average interest rate for a 15-year fixed-rate mortgage decreased from 4.16% to 4.11%.

The contract interest rate for a 5/1 adjustable rate mortgage loan slipped from 4.14% to 4.04%. Rates on a 30-year FHA-backed fixed-rate loan fell from 4.77% to 4.70%.