New Bookmarks
Year 2005 Quarter 1:  January 1 - March 31 Additions to Bob Jensen's Bookmarks
Bob Jensen at Trinity University

For earlier editions of New Bookmarks go to http://www.trinity.edu/rjensen/bookurl.htm 
Plus the Tidbits Directory --- http://www.trinity.edu/rjensen/TidbitsDirectory.htm 

Click here to search Bob Jensen's web site if you have key words to enter --- Search Site.
For example if you want to know what Jensen documents have the term "Enron" enter the phrase Jensen AND Enron. Another search engine that covers Trinity and other universities is at http://www.searchedu.com/.

My communications on "Hypocrisy in Academia and the Media" --- http://www.trinity.edu/rjensen/hypocrisy.htm 
My  “Evil Empire” essay --- http://www.trinity.edu/rjensen/hypocrisyEvilEmpire.htm
My unfinished essay on the "Pending Collapse of the United States" --- http://www.trinity.edu/rjensen/entitlements.htm 

Of course the people don't want war. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country.
Hermann Göring

Facts about the earth in real time --- http://www.worldometers.info/ 
Sure wish there'd be a little good news today.

Choose a Date Below for Additions to the Bookmarks File

March 22, 2005         March 1, 2005            

February 20, 2005     February 8, 2005     February 1, 2005 

January 18, 2005       January 5, 2005     

March 22, 2005

Bob Jensen's New Bookmarks on March 22, 2005
Bob Jensen at Trinity University 

For earlier editions of New Bookmarks go to http://www.trinity.edu/rjensen/bookurl.htm 

Click here to search Bob Jensen's web site if you have key words to enter --- Search Site.
For example if you want to know what Jensen documents have the term "Enron" enter the phrase Jensen AND Enron. Another search engine that covers Trinity and other universities is at http://www.searchedu.com/.

Facts about the earth in real time --- http://www.worldometers.info/ 
Sure wish there'd be a little good news today.  Think it over 
http://www.inlibertyandfreedom.com/Flash/Think_It_Over.swf

Real time meter of the U.S. cost of the war in Iraq --- http://www.costofwar.com/ 

Pictures from the war ---  http://www.clermontyellow.accountsupport.com/flash/UntilThen.swf 
New pictures from the war --- http://209.157.64.200/focus/f-news/1291780/posts 
Also see some troops who'd rather be home <http://www.clermontyellow.accountsupport.com/flash/UntilThen.swf>

For Quotations of the Week, go to http://www.trinity.edu/rjensen/book05q1.htm#Quotations032205

For Humor of the Week, go to http://www.trinity.edu/rjensen/book05q1.htm#Humor032205

My communications on "Hypocrisy in Academia and the Media" --- http://www.trinity.edu/rjensen/hypocrisy.htm 

My  “Evil Empire” essay --- http://www.trinity.edu/rjensen/hypocrisyEvilEmpire.htm

My unfinished essay on the "Pending Collapse of the United States" --- http://www.trinity.edu/rjensen/entitlements.htm 

"IRS Announces the 2005 Dirty Dozen Tax Scams," AccountingWeb, March 3, 2005 --- http://www.accountingweb.com/cgi-bin/item.cgi?id=100597 

The 2005 Dirty Dozen

The IRS urges people to avoid these common schemes:

Trust Misuse. 
Unscrupulous promoters for years have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits, and the IRS is actively examining these arrangements. More than two dozen injunctions have been obtained against promoters since 2001, and numerous promoters and their clients have been prosecuted. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.

Frivolous Arguments. 
Promoters have been known to make the following outlandish claims: that the Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; that wages are not income; that filing a return and paying taxes are merely voluntary; and that being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don’t believe these or other similar claims. Such arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

Return Preparer Fraud. 
Dishonest return preparers can cause many headaches for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Taxpayers should choose carefully when hiring a tax preparer. As the saying goes, if it sounds too good to be true, it probably is. No matter who prepares the return, the taxpayer is ultimately responsible for its accuracy. Since 2002, the courts have issued injunctions ordering dozens of individuals to cease preparing returns, and the Department of Justice has filed complaints against dozens of others, which are pending in court.

Credit Counseling Agencies. 
Taxpayers should be careful with credit counseling organizations that claim they can fix credit ratings, push debt payment agreements or charge high fees, monthly service charges or mandatory “contributions” that may add to debt. The IRS Tax Exempt and Government Entities Division has made auditing credit counseling organizations a priority because some of these tax-exempt organizations, which are intended to provide education to low-income customers with debt problems, are charging debtors large fees, while providing little or no counseling.

"Claim of Right" Doctrine. 
In this scheme, a taxpayer files a return and attempts to take a deduction equal to the entire amount of his or her wages. The promoter advises the taxpayer to label the deduction as “a necessary expense for the production of income” or “compensation for personal services actually rendered.” This so-called deduction is based on a misinterpretation of the Internal Revenue Code and has no basis in law.

“No Gain” Deduction. 
Similar to “Claim of Right,” filers attempt to eliminate their entire adjusted gross income (AGI) by deducting it on Schedule A. The filer lists his or her AGI under the Schedule A section labeled “Other Miscellaneous Deductions” and attaches a statement to the return, referring to court documents and including the words “No Gain Realized.”

Corporation Sole. 
Since September 2004, the Department of Justice has obtained six injunctions against promoters of this scheme and filed complaints against 11 others. Participants apply for incorporation under the pretext of being a “bishop” or “overseer” of a one-person, phony religious organization or society with the idea that this entitles the individual to exemption from federal income taxes as a nonprofit, religious organization. When used as intended, Corporation Sole statutes enable religious leaders to separate themselves legally from the control and ownership of church assets. But the rules have been twisted at seminars where taxpayers are charged fees of $1,000 or more and incorrectly told that Corporation Sole laws provide a “legal” way to escape paying federal income taxes, child support and other personal debts.

Identity Theft. 
It pays to be choosy when it comes to disclosing personal information. Identity thieves have used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans. The IRS is aware of several identity theft scams involving taxes. In one case, fraudsters sent bank customers fictitious correspondence and IRS forms in an attempt to trick them into disclosing their personal financial data. In another, abusive tax preparers used clients’ Social Security numbers and other information to file false tax returns without the clients’ knowledge. Sometimes scammers pose as the IRS itself. Last year the IRS shut down a scheme in which perpetrators used e-mail to announce to unsuspecting taxpayers that they were “under audit” and could set matters right by divulging sensitive financial information on an official-looking Web site. Taxpayers should note the IRS does not use e-mail to contact them about issues related to their accounts. If taxpayers have any doubt whether a contact from the IRS is authentic, they can call 1-800-829-1040 to confirm it.

Abuse of Charitable Organizations and Deductions. 
The IRS has observed an increase in the use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur, for example, when a taxpayer moves assets or income to a tax-exempt supporting organization or donor-advised fund but maintains control over the assets or income, thereby obtaining a tax deduction without transferring a commensurate benefit to charity. A “contribution” of a historic facade easement to a tax-exempt conservation organization is another example.

In many cases, local historic preservation laws already prohibit alteration of the home’s facade, making the contributed easement superfluous. Even if the facade could be altered, the deduction claimed for the easement contribution may far exceed the easement’s impact on the value of the property.

Offshore Transactions. 
Despite a crackdown on the practice by the IRS and state tax agencies, individuals continue to try to avoid U.S. taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance to do so. The IRS, along with the tax agencies of U.S. states and possessions, continues to aggressively pursue taxpayers and promoters involved in such abusive transactions.

Zero Return. 
Promoters instruct taxpayers to enter all zeros on their federal income tax filings. In a twist on this scheme, filers enter zero income, report their withholding and then write “nunc pro tunc”–– Latin for “now for then”––on the return.

Employment Tax Evasion. 
The IRS has seen a number of illegal schemes that instruct employers not to withhold federal income tax or other employment taxes from wages paid to their employees. Such advice is based on an incorrect interpretation of Section 861 and other parts of the tax law and has been refuted in court. Recent cases have resulted in criminal convictions, and the courts have issued injunctions against more than a dozen persons ordering them to stop promoting the scheme. Employer participants can also be held responsible for back payments of employment taxes, plus penalties and interest. It is worth noting that employees who have nothing withheld from their wages are still responsible for payment of their personal taxes.

Other Scams Still Lingering

The IRS removed four scams from the Dirty Dozen this year: slavery reparations, improper home-based businesses, the Americans with Disabilities Act and EITC dependent sharing. The agency has noticed declines in activity in some of these schemes. But taxpayers should remain wary because the IRS has seen old scams resurface or evolve.

"The Dirty Dozen is a reminder that tax scams can take many forms," IRS Commissioner Mark W. Everson said. "Don’t be fooled by false promises peddled by scam artists. They’ll take your money and leave you with a hefty tax bill."

Involvement with tax schemes can lead to imprisonment and fines. The IRS routinely pursues and shuts down promoters of these scams. But taxpayers should also remember that anyone pulled into these schemes can face repayment of taxes plus interest and penalties.

"America's wackiest taxes," by Jeanne Sahadim and Les Crhristie,  CNN Money, February 22, 2005 --- http://money.cnn.com/2005/02/18/pf/taxes/strangetaxesupdate/index.htm 

History is littered with odd tax schemes. William Pitt the Younger introduced a tax on windows in Britain. Peter the Great taxed souls, and Nero, urine.

Let no man say that we here in America cannot compete for oddity of tax laws. We have some really weird assessments on the books.

In certain states and cities, you'll pay special taxes for buying a deck of cards, possessing illegal drugs, and, possibly, buying things from naked people.

Here are a dozen peculiar state and local taxes, as noted by tax information publisher CCH Inc. and the Tax Foundation, a nonprofit tax policy research group.

Illegal drug tax: On Jan. 1, Tennessee became the latest of 23 states to institute a tax for possession of illegal drugs. Usually, you have to be in possession of a minimum quantity, say over 42.5 grams of marijuana in North Carolina, to be subject to the tax.

In Tennessee, when you acquire an illegal drug (even "moonshine"), you have 48 hours to report to the Department of Revenue and pay your tax, in exchange for which you'll receive stamps to affix to your illegal substance. The stamps serve as evidence you paid the tax on the illegal product.

Don't worry that you might get in trouble for admitting you have enough drugs to fuel a rave party for years. You need not provide identification to get the stamps and it's illegal for revenue employees to rat you out.

Still, next door in North Carolina, which has had a similar law for 15 years, only 79 folks have voluntarily come forward since 1990, according to the Department of Revenue. Most were thought to be stamp collectors, or perhaps just high. Another 72,000 were taxed after they were already busted.

North Carolina has collected $78.3 million thus far, almost all from those arrested and found without stamps.

Flush tax: In 2004, Maryland began charging homeowners and businesses for producing wastewater. The funds will be used to help protect Chesapeake Bay waters.

Maryland will add $2.50 a month to the sewer bills of residents hooked up to treatment systems. It will also assess an annual charge of $30 to homeowners with their own septic systems, even though many believe these residents add little to the stream of pollutants that have damaged the Chesapeake.

Virginia appears poised to enact a similar flush tax of $1 a week per household.

Sex sales tax: Sin got pricier in Utah last July, when owners of sexually explicit businesses where "nude or partially nude individuals perform any service" began paying a 10 percent sales and use tax on admission and user fees as well as the sales of merchandise, food, drink, and services.

That would be on top of the 4.75 percent sales tax the state already imposes on most transactions, sexually explicit or not. Not that the measure will raise much money. So far only one or two businesses in staid Utah are actually wild enough to be subjected to the tax.

Jock tax: This is a tax on income earned by athletes, entertainers (OK, not just jocks), and their various entourages, including non-athletic or non-performer employees. Generally, any money player or performer earns while playing in that particular city or state gets taxed.

California levied the first jock tax in 1991, on athletes from Chicago, right after the Chicago Bulls beat the L.A. Lakers. (Chicago quickly responded in kind.) Today, most states with a professional sports team impose a jock tax.

William Ahern, of the Tax Foundation, said a DC United soccer player received tax forms from 10 different states. The player was no Alex Rodriguez. "The guy makes $26,000 a year," says Ahearn. "The jock taxes he owed varied from $200 to $2."

Sparkler and novelties tax: In West Virginia, businesses selling sparklers and novelties pay a special fee on top of the state's 6 percent sales tax. The novelties, according to the West Virginia State Tax Department's information sheet on sparklers and novelties, include: Explosive caps designed to be fired in toy pistols; snake and glow worms and; trick noisemakers which produce a small report designed to surprise the user.

Playing card tax: If you want a deck of cards in Alabama, be prepared to shell out an extra dime. The state government has levied a 10-cent tax on the purchase of a playing deck that contains "no more than 54 cards," plus the retailer must pay an annual license tax of $3 and a fee of $1, according to the Alabama Department of Revenue.

Blueberry tax: Like fresh, wild blueberries? If they come from Maine, you may be paying a bit of a premium. Anyone who grows, purchases, sells, handles or processes the fruit in the state is subject to a penny-and-a-half-per-pound tax.

Wagering tax: Speaking of cards – and bets – most people know they have to pay tax on their gambling winnings. But some places, including Pennsylvania, West Virginia, Illinois, and Oklahoma, exact a wagering tax on casino or track owners, whether you gamble or not. It can get passed onto customers through the cost of casino amusements.

Illinois forces casinos to charge a $2 admission price, which is essentially a tax since it must be remitted to the city and state.

Fur clothing tax: Keeping comfy during Minnesota winters can cost you. Businesses in the state must pay a 6.5 percent tax on the total amount received for the sale, shipping, and finance charges associated with the purchase of clothing in which fur accounts for three times more of the garment than the next most valuable material.

Most types of clothing in Minnesota are sales-tax-free, so if you want to keep warm switch to "leather, suede, or other animal skins where the hair, fleece or fur fiber is completely removed," as the Minnesota Department of Revenue Fur Clothing Tax instructions form puts it,

Fountain soda drink tax: This one hails from Chicago. If you buy a "fountain soda drink," you'll pay a 9 percent tax. If you buy the same soda in a bottle or a can, you'll only pay 3 percent.

Amusement tax: Ever wondered about the extra tax you pay on stadium seats? That's the amusement tax, often levied at both city and state levels. Most states, including Massachusetts, Virginia, and Maryland, and cities like New Orleans, have amusement taxes on tickets sold at any venue with more than 750 to 1,000 seats.

Amusing, isn't it?

Tattoo tax: As of last July, anyone in Arkansas wanting to get a eagle etched on their abs or a nose ring notched in their nostrils will have to pay an additional 6 percent, as the state included tattooing and body piercing in its list of services subject to sales taxes. Electrolysis treatments count, too.

Bob Jensen's threads on taxation are at http://www.trinity.edu/rjensen/bookbob1.htm#010304Taxation 

Counseling Guide for Chairs of Faculty Committees and College Administrators

Forwarded by Auntie Bev

• I've learned that you cannot make someone love you.
  All you can do is stalk them and hope they panic and give in.
  
• I've learned that one good turn gets most of the blankets.
  
• I've learned that no matter how much I care,
  some people are just jackasses.
  
• I've learned that it takes years to build up trust,
  and it only takes suspicion, not proof, to destroy it.
  
• I've learned that whatever hits the fan will not be evenly distributed.
  
• I've learned that you shouldn't compare yourself to others
  - they are more screwed up than you think.
  
• I've learned to not sweat the petty things,
  and not pet the sweaty things.
  
• I've learned that we are responsible for what we do,
  unless we are on faculty committees.
  
• I've learned that 99% of the time when something isn't working in your house (especially on your computer), one of your kids did it.
  
• I've learned that the people you care most about in life are taken from you too soon and all the less important ones just never go away.
  
• I've learned that the real pains in the butts are permanent.

"Our Special Universe," by Charles Townes, The Wall Street Journal, March 11, 2005; Page A10

What is the purpose or meaning of life? Or of our universe? These are questions which should concern us all. As a scientist, I have been primarily trying to understand our world -- theuniverse, including humans -- what it is and how it works. As a religiously oriented person, I also try to understand the purpose of our universe and human life, a primary concern of religion. Of course, if the universe has a purpose, then its structure, and how it works, must reflect this purpose. This obvious relation brings science and religion together, and I believe the two are much closer and more similar in nature than is usually recognized.

My study of the connection between science and religion began when, back in the 1960s, the Men's Class of Riverside Church in New York asked me to talk as a scientist about my view of religion -- perhaps because I was the only scientist they knew who regularly attended church. The editor of IBM's THINK magazine happened to be in the audience and shortly afterwards telephoned to ask if, of all things, he could publish the talk in THINK. He did. I was again surprised when the editor of MIT's alumni journal asked if he could also publish it. The latter resulted in a serious objection on the part of an MIT alumnus, who would have nothing more to do with MIT if such were ever done again.

I certainly agree that university journals should not be used to sell religious views. On the other hand, I believe that serious intellectual discussion of the possible meaning of our universe, or the nature of religion and philosophical views of religion and science, need to be openly and carefully discussed. In the intellectual world, we shouldn't try to sell ideas, but we should be able to examine them freely. A well-established scientist and philosopher was once asked to define the "scientific method." Oh, he said, it is "to work like the devil to find the answer, with no holds barred." I believe the same can be said of religion. We use all of our human resources to understand either one -- instincts, intuition, logic, evidence (experiences or observation), postulates or faith, and even revelations.

We all recognize that science has produced remarkable results. It allows us to do so many things and to think we already understand so much. Science is indeed wonderful, and yet there are still mysteries, puzzles and inconsistencies.

We are now convinced that the matter we can identify in our universe is only about 5% of all that is there. What is the rest of it? Scientists are trying hard to detect this strange unknown matter. Will they, and when? Relativity and quantum mechanics have been remarkably successful, and we believe they explain and teach us many things. And yet, in certain ways they seem logically inconsistent. At present, we simply accept such inconsistencies and use these two fields of science with pride and pleasure.

The mathematician Gödel noted that to prove something we must start with a set of postulates, but then demonstrated that we can never prove the set of postulates are even self-consistent unless we make a new overarching set of postulates which themselves cannot be proven self-consistent. So, in science, too, we need faith -- or what we normally call postulates. An extreme and somewhat amusing statement of our lack of firm proof was that of Bishop Berkeley, for whom my town of Berkeley, Calif., was named. He noted that we cannot absolutely prove that the people and things we think we see are really there -- we may not be seeing them at all but only have such things in our imagination. The bishop was perhaps correct, but nevertheless we all believe those people and things we see are real. The most basic of sciences, which is physics, has been increasingly concentrating on problems which are pertinent to the interaction of our ideas in science and religion, such as the origins of the universe, cosmology, the nature of matter, and of the physical laws. This has recently focused attention on what a special universe is ours, and the strikingly special laws of science required for the existence of life.

Why does such an improbable universe exist? As we try hard to learn and understand more, where will that take us, and how much of our present sense of reality and meaning will be changed? I believe physics provides an illustration of the possible nature of future changes.

Classical, or Newtonian, physics has been remarkably successful, explaining and predicting many things very accurately and convincingly. But, as scientists began to look closely at very small things such as atoms and molecules, they were forced to modify their ideas basically, and "quantum mechanics" was discovered. Quantum mechanics and classical mechanics are philosophically very different, and the behavior of atoms and molecules can only be understood by this radically different quantum mechanics. But quantum mechanics must and does also apply to larger objects such as planets, balls, or our own motions. Classical mechanics was in principle quite wrong. But, it was a good approximation, explaining very accurately the motions of everything much larger than atoms, such as planets, balls, or ourselves. We still teach and use classical mechanics. It's a very good approximation to reality and much simpler to understand than quantum mechanics, even though philosophically incorrect.

As we understand more, will our views in science and also in religion be revolutionized as science already has been by quantum mechanics? My guess is yes. We must be open-minded and without completely frozen ideas in either science or religion. But even with future changes, I also guess that, like classical mechanics, our present understanding may be a good and useful approximation even though new and deeper views may be revolutionary. Overall, I believe we must try hard to understand both how our universe works and what is its meaning as well as we can, and for now, live by our best understanding. I hope very much that humans will in the future understand more and more deeply, which can change our views. And, just as classical mechanics still works well, I expect our present ideas and principles will still have a useful and functional validity.

Mr. Townes is a 1964 Nobel laureate in physics and inventor of the laser. On March 9, he was awarded the 2005 Templeton prize for his study of the relation between science and religion.

March 8, 2005 message from Dennis Beresford [dberesfo@TERRY.UGA.EDU] 

The latest issue of the Journal of Accountancy (page 16) has a brief item inviting readers to submit their "Top 10 Reason to Become a CPA." The results will be included in a special issue of the Journal commemorating its 100th anniversary in October. The item invites readers "to join in the celebration by submitting your own witty observations on why it's great to be a CPA." The final list will be "a fond look at some of the more lighthearted motivations for joining the accounting profession."

I'd be willing to bet that the contributors to this listserv could come up with some excellent suggestions for the "Top 10."

By the way, my main reason for becoming a CPA was that I wanted a job where I could sit down most of the time after working my way through school as a grocery store cashier for about eight years.

Denny Beresford

March 8, 2005 reply from Bob Jensen

And after working as a CPA, Denny eventually saw the light.  He then became professor so he could have more time for golf --- right Denny?  By the way Denny is known as a colorful golfer (I mean literally in terms of his fashion wear.)

I became a CPA because I wanted to work in a white shirt in the tallest building in Denver .  Alas!  My first audit (really) entailed wading through manure at the Monfort cattle feed lots in Greeley .  My senior on the job got to count the cows.  I had to try to find an innovative way to measure bi-product after the "split." Those are the things they don't teach in auditing courses.

Then I quickly became an educator but not because of manure. I discovered E&E's tax season long hours were not conducive to my real dream of being a ski bum (true story) --- http://www.trinity.edu/rjensen/academ01.wav

The rest of the story:  Getting married and becoming a father ended my dreams of being a ski bum and, if you ever watched me ski, probably saved my life.  In truth, being tamed didn't exactly end my "dreams."  I now live vicariously through Bode Miller who lives with his family within walking distance of where Erika and I retired in the White Mountains .  Bode is now the world's greatest Olympic racer and a truly fine young man (sigh) --- http://www.bodemillerusa.com/BodeMiller.html   

Bob Jensen

"The Adjunct Pay Gap," Inside Higher Ed, January 27, 2005 --- http://www.insidehighered.com/mla/the_adjunct_pay_gap 

Among the study's findings, which are based on data from the National Center for Education Statistics:

• Full-time, non-tenure-track faculty members earn approximately 26 percent less per hour than do tenure-track assistant professors.
• Part-time, non-tenure-track faculty members earn approximately 64 percent less per hour from their institutions than do tenure track assistant professors.
• Total earnings for part-time, non-tenure-track faculty members are only 1 percent less than assistant professors because so many of those part-timers hold down multiple jobs -- in and out of academe.
• The median, full-time, tenure-track faculty member is paid $8,424 per section taught, compared to $5,435 for full-time, non-tenure-track, and $2,174 for part-time, non-tenure-track.

All of these figures underestimate the gap between adjunct and tenure-track faculty members because these dollar totals are based on salaries only. While the quality and expense of health insurance and other benefits vary from campus to campus, many adjuncts have few or no benefits and many full-time academics have extensive benefits.

"Proper Accounting Can Save Your E-Business Time and Money:  A real-life story of how one e-commerce business created an accounting mess," by Devin Comiskey, eCommerce Guide,  March 10, 2005 --- http://ecommerce-guide.com/solutions/building/article.php/3489076 

After a week's worth of accounting clean up and a few lessons in QuickBooks, Carol was set up the way she should have been from the very beginning. As long as she follows the correct bookkeeping practices, next year all she'll have to do is present her accountant with a disk containing her QuickBooks data file.

To help new e-commerce businesses start off on the right foot, JT put together a list for budding entrepreneurs to follow before building a web site and selling merchandise. These rules apply for any new small business.

She said a new business needs to determine the following when setting up a new business:

1. Select a legal entity.
2. Registering with the tax authorities (IRS, state and local)
3. Accounting (tax or accrual basis): "Who are the users of the financials? Do they need to provide financials to any financial institutions that lent them money? What questions do I need answered to manage the business? Who will be keeping the books/posting entries?"
4. Payroll: "There are lots of requirements for filing payroll taxes."
5. Income taxes: "Proper forms; will estimates need to be made?"
6. Cash planning and forecasting: "You can save a lot of tax dollars by properly planning ahead, and making certain transactions by certain dates - i.e. contributing to a SEP."
7. Internal controls - "Who is going to manage cash? When you spend money, are you sure that you received the goods or services? And, when you receive money, are you sure that the entry was recorded properly?"

"I would definitely suggest that someone setting up a business sit down with an accountant to set up their books (chart of accounts/accounting method); and either hire a bookkeeper or take some basic accounting classes to understand how to record transactions in your financials," said JT. "It makes a lot more work for accountants, because they basically have to recreate an entire year's worth of transactions if those transactions have not been properly accounted for. They need to remember that if they have proper financials, they can be used for a lot of things — like planning and managing your business!"

Continued in article

Bob Jensen's helpers for small businesses are at http://www.trinity.edu/rjensen/bookbob1.htm#SmallBusiness 

I think I can safely say that nobody understands quantum mechanics. 
Richard P. Feynman

As I've quoted repeatedly.  "The physicists stole all the easy and glorious problems to study."  Even in quantum mechanics  there is a bit of a problem in that the process may change just because you are able to predict it.  If you factor in people (behavior) being studied it is likely to change big time.  

One goal of Quantum Economics and Finance is to predict when market bubbles will form and then burst.  But if success is achieved in predicting them, human participants in the model are likely to change their behavior.  You're then back to square one but the academic trip probably will have been delightful.

On the Academic (Chaotic) Edge:  Is Quantum Everything for real or just another passing academic fad?
Special Section on Quantum Physics, Quantum Economics, Quantum Finance, Quantum Accounting, Quantum ...

First the Quotations to Spark Your Interest:  From a book I received without having ordered
A book arrived in my mail box in a black box with lettering "Top Secret."  I was somewhat apprehensive about even opening the box.  Inside was a paperback book and a velvet pouch full of chocolate wafers individually wrapped in gold foil.  Now I was curious and would've never touched the chocolate until I looked more closely at the book  When I opened the book, I literally could not put it down.  The following quotations appear on the first page of 
Thog's Guide to Quantum Economics: 50,000 Years of Accounting Basics for the Future
by Mike Brown, Zoe-Vonna Palmrose, Warren Miller (Illustrator)  ($12.81 on Amazon)
Mike  and Zoe-Vonna both worked for Deloitte and Touche before Mike became President of NASDAQ and Zoe Vonna became a well-known accountancy professor and capital markets researcher at the University of Southern California.

THOG'S GUIDE

50,000 YEARS OF ACCOUNTING BASICS FOR THE FUTURE

"After being an accounting educator for over thirty years, I now have a whole new perspective from Thog's Guide.  It is a must read for any serious accounting student, faculty, practitioner, or regulator."
        --Michael Diamond, Vice President and Executive Vice Provost, University of Southern California

"An engaging and entertaining book - a philosophical and historical exploration of why accounting is central to any society based on commerce.  Thog's Guide offers a glimpse of current work aimed to reformulate economics on the basis of ideas from physics and biology - and all through the eyes of a charming family of hunter-gatherer-accountants.  I never had so much unexpected fun nor learned so much from a book about a subject I didn't even know I was interested in."
        --Lee Smolin, Perimeter Institute for Theoretical Physics

"Physics has Brownian motion and now economics has Brownian accounting, as a family of hunter-gatherers teaches a team of real complexity scientists the importance of back to basics accounting in economic modeling.  Thog's Guide is a light-hearted read, but it promises a serious breakthrough - the ability to test the consequences of our financial and accounting regulations in virtual reality before trying them out on you and me."
        --Alfred R. Berkeley, Former President and Vice-Chairman of NASDAQ, Chairman and CEO, Pipeline Trading

Jensen Commentary on Fashion Fads in Academic Accounting
On the Academic (Chaotic) Edge:  Is Quantum Everything for real or just another passing academic fad?
Special Section on Quantum Physics, Quantum Economics, Quantum Finance, Quantum Accounting, Quantum ...

First let me say that this book is very well written as long as you are not interested in getting into too much technicality.  And the various experts who write or appear in the book are for real and very well known.  It is an inexpensive good read that I highly recommend.  I could not put it down last night.

From the academic side of the world, let me say that Chaos Theory is definitely on the leading edge in the hard sciences and in some social sciences, particularly economics.  It is a valiant effort by some very smart scientists attempting to put more order into a very confusing chaotic world that is not in stationary state much or all of the time.

I received my PhD in 1966 and have been in the academy either as a faculty member or in think tanks since becoming a card carrying member.  This was an era when higher education in business was trying to attain more academic respect.  The drive was to put mathematics and science into business research.  Some of the efforts in the next couple of decades were at best trivial and at worst silly.  Although my doctoral degree is in accounting (I was a CPA when I went to Stanford), most of five full-time years was spent in operations research and economics since the accounting program didn't quite know what to do with me.  I became an evangelist for equations and was fortunate that I graduated in an era of business research where almost anything with an equation in it could get published in a leading journal.  

After about ten years, while I was actually teaching things like nonlinear programming, I became disenchanted with what I was seeing as fads in academia that put in the words of economics and business but made little contribution to the world (professions) of economics and business.  My best example is the short academic wave of accounting/business research rooted in Information and Entropy Theory as envisioned by Bell Labs scientist Claude Shannon.  After seeing a bubble of accounting research using this theory, I delved into Shannon's work.  It became obvious, at least to me, that business and information could just not be reduced to logarithms to base 2.  The fad rose and then fell in academic accounting and never got off the ground in the accounting profession even though this is still important theory in communications and computer science.

Then there were years of academic accounting research effort in applying Bayesian probability theory.  The research itself was most interesting and excited us and our students.  Interest has not yet died off on this one, but there was a lot more hype than hope in the academic output rooted in Bayesian probability.  One still sees a paper, usually at research conferences, with the term Bayesian in the title, but for the most part interest in Bayesian accountancy has waned.  Has there been any value added to the profession of accountancy itself?  

Then one of my own doctoral professors, Yuji Ijiri, developed the Momentum Theory of Accounting with a series of papers and one of the best selling Accounting Research Study monographs of the American Accounting Association --- See Volume 18 at http://aaahq.org/market/display.cfm?catID=5 
This became the focal point of much academic interest and enthusiasm.  But the world just wasn't amenable to triple-entry bookkeeping as envisioned by Ijiri and academic interest waned.  Has there been any value added to the profession of accountancy itself?

Time series models became a great fad in accounting research but died down somewhat, not completely, due to frustrations of fitting models into processes that were seldom stationary.

Much of my own research and writing was devoted to another fad called the Analytical Hierarchy Process where I wrote over 20 papers, most of which got published  and got me research leaves as far away as Canada.  AHP is still active in some corners of academe and even business management.  But academic interest waned.  Has there been any value added to the profession of accountancy itself?

There have been many other academic research fads that never did add noteworthy value to the profession and were not sustained over the years of academic inquiry.  This leads me to now view Quantum Everything with suspicion.  It is trite to say the world is exceedingly complex.  It is also stupid to discourage efforts to model some or all of its great complexities.  And I most certainly am growing old and perhaps more cynical with each year that now passes.  But I have to say that my view of Quantum Everything is that it will be a passing fad in accountancy and economics even though it may have sustaining value in mathematics and the hard sciences just like information defined in terms of logarithms to the base 2 have sustaining value in communication theory and computer science.

But far be it from me to completely discourage new fashion.  I suggest that you read Thog's Guide and take it where you may.  It is fun and richly rewarding to be an academic researcher in a world that loves its passing fads.  Fortunately we are never judged on whether our research adds value to the profession itself.  We live in the world of models that are increasingly computerized and complex but are, nevertheless, still models that leave out most of the important variables and complicated structures.  

As I've quoted repeatedly.  "The physicists stole all the easy and glorious problems to study."  Even in quantum mechanics  there is a bit of a problem in that the process may change just because you are able to predict it.  If you factor in people (behavior) being studied it is likely to change big time.  

One goal of Quantum Economics and Finance is to predict when market bubbles will form and then burst.  But if success is achieved in predicting them, human participants in the model are likely to change their behavior.  You're then back to square one but the academic trip probably will have been delightful.

From the Scout Report on March 10, 2005

BBC: Science & Nature: Human Body and Mind-Interactive Body [Macromedia Flash Reader] http://www.bbc.co.uk/science/humanbody/body/interactives/3djigsaw_02/ 

The BBC is well regarded around the world for its fine news reporting and in recent years, equally well known for its educational websites. This very fine interactive website produced as part of the network's online Science & Nature site allows visitors to explore the human body through a series of interactive activities. Visitors can select the gender of the body they wish to view and then proceed to look through the organs, muscles, skeleton, and nervous system of each human body. The interactive part is really the best facet of the site, as users can choose each organ, learn about its various functions and properties, and then drag the organ onto the correct location within the human body. Visitors can continue by moving on to correctly place the muscles and elements of the nervous system within the body. Overall, this is a fine pedagogical tool and rather elegant in its user interface structure.

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Russia Profile http://www.russiaprofile.org/index.wbp 

The availability of high-quality news reporting on the Internet continues to improve, though at times finding reputable sources can still be difficult for certain parts of the world. Russia Profile is one such source, as it is produced by the Independent Media group, which is responsible for publishing The Moscow Times along with a number of other magazines across Russia. The goal of this website is to both broaden the scope of news coming out of Russia and "to provide a platform for an informed discussion of issues related to or concerning Russia". From the site's homepage, visitors can read about the latest from Russia Profile, view a calendar of events, and subscribe for free to the print edition of Russia Profile. Visitors can also participate in a number of online forum discussions.

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The Ten O'Clock News [QuickTime] http://main.wgbh.org/ton/ 

While it is relatively easy to find old sitcoms and variety programs in a variety of media formats, it is somewhat difficult to find news broadcasts that may be of seminal interest to any number of researchers, including historians or other social scientists. Working with funds provided by the Institute of Museum and Library Services, this collection created by the WGBH Media Archives and Preservation Center includes video clips of these original newscasts which date from 1974 to 1991. The collection focuses on news stories which relate directly to Boston's African-American community and may be browsed by categories such as personal name or geographic location. Some of the topics covered by these video clips include the desegregation of the Boston public school system, race relations in the city, and interviews with such notable African-American leaders as Julian Bond and Andrew Young.

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EasyOffice+PDF Filter 8.0 http://www.e-press.com/downloads/freeware.html 

This free version of EasyOffice is an office suite package that is compatible with Microsoft Word, Excel, and Adobe pdf files. Some of the programs include a dictionary, a notepad, a calculator, an image editor, and a diagram creation device. Additionally, EasyOffice is available in a host of different languages, including Turkish, Spanish, Chinese, and German. This version of EasyOffice is compatible only with Microsoft Windows 98 or newer.

From the Scout Report on March 17, 2005

Landmark Supreme Court Cases http://www.landmarkcases.org/ 

There is always a great demand for educational materials regarding the most important US Supreme Court Cases and this website is an outgrowth of that sustained interest. Developed by Street Law and the Supreme Court Historical Society, this website was developed in order to provide teachers with a full range of resources and activities regarding such cases. The general teaching strategies offered here include political cartoon analysis, moot court, continuum exercises, and website evaluation. Some of the cases covered here include Mapp v. Ohio, Gideon v. Wainwright, and Miranda v. Arizona. The site also offers some detailed explanations of important related concepts, such as federalism, national supremacy, and judicial review. Additional, the site provides background summaries of each case and pertinent discussion questions for a variety of reading levels and abilities.

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International Institute for Environment and Development [pdf] http://www.iied.org/index.html 

The question of sustainable development is one that has garnered significant attention during the past few years, and there are a number of organizations doing work around the globe to promulgate these principles. The International Institute for Environment and Development (IIED) is one such organization, and it has been working in this field since 1971. As the mission statement on its site indicates, the Institute seeks "to promote sustainable patterns of world development through collaborative research, policy studies, networking and knowledge dissemination." The homepage is a great place to start, as visitors can quickly delve into the latest reports and newsletters. Also, a dropdown menu titled "IIED Research" allows visitors access into its work in such areas as human settlements and sustainable agriculture. Finally, visitors can read seventeen issues of the IIED journal, _Environment and Urbanization_, (dating from 1995 to 2002) at no charge.

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University of California-Los Angeles: Online Archive of American Folk Medicine http://www.folkmed.ucla.edu/ 

The Archive of American Folk Medicine is the result of more than 50 years of work by UCLA-associated folklorists who "documented beliefs and practices relating to folk medicine and alternative healthcare. In order to make the data more readily available to the worldwide community of researchers and medical practitioners, the Online Archive of American Folk Medicine was established in 1996 under the direction of Dr. Michael Owen Jones, a professor of folklore and history at UCLA." The Archive draws from over 3,200 published works, and is intended to serve folklorists, sociologists, and historians. The website provides basic and advanced search options; and records include brief entries for Citation, Condition, Belief, Method of Treatment, and more. Users should be aware that the Archive website has not been updated in several years but it remains a valuable resource for researchers and others interested in folk medicine. This site is also reviewed in the March 18, 2005 _NSDL Life Sciences Report_

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Historic Scotland http://www.historic-scotland.gov.uk/ 

Scotland is well-known for its efforts to preserve its fantastic range of historic sites, buildings, and monuments and much of this work happens under the auspices of Historic Scotland. Historic Scotland is an agency with the Scottish Executive Education Department and as such, is largely responsible for developing long-range plans for the preservation of the built heritage of the country. To get a sense of the broad range of properties within Historic Scotland, visitors would do well to look through the interactive map of Scotland offered within the "Places to Visit" area. Those persons with a penchant for historic preservation and planning will also want to take a look at the organization's long-range preservation program and some of its free online publications such as "Archaeological Information and Advice in Scotland" and "Conserving the Underwater Heritage".

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MultiGrabber 3.34 http://www.mulgra.com/smartgrabber.php 

These days websites usually have a number of compelling multimedia files embedded within their pages, and some of them may be worth downloading to view at a later date. This trial version of MultiGrabber 3.34 is an application that will let users do just that, as it can be used to save pictures, cascaded style sheets, Macromedia Flash movies, and RealPlayer movies. This 30-day trial version of MultiGrabber is compatible with Windows 98 or higher.

"How Banks Pretty Up The Profit Picture:   Playing with loan-loss reserves can produce deceiving earnings," Business Week, February 21, 2005 --- http://yahoo.businessweek.com/magazine/content/05_08/b3921110_mz020.htm 

Last year the banks had an easy way to juice their profits. All they had to do was allocate a little less money to loan-loss reserves -- the money they set aside to cover bad debt. As the economy has improved and defaults have slowed, many decided they didn't need as much in reserve as they did in 2003, and presto, their earnings per share would rise a few cents.

But investors who assume the profits are humming and decide to buy bank stocks could be in for a shock. In 2005 many banks won't have this profit source. Some have already pared loan-loss reserves as much as they reasonably can, analysts say. "A lot of banks may do this from time to time to meet estimates," says Brian Shullaw, senior research analyst at SNL Financial in Charlottesville, Va.

The trouble with whittling away the reserves is that as banks write more loans, they will have to replenish the reserves. Plus, if credit conditions worsen as economic growth slows and interest rates rise, they will need to set aside even more, eating further into profits.

Do a little digging, and the current numbers don't look so great. Detroit's Comerica Inc. (CMA ) had one of the largest drops in its loan-loss reserves relative to total assets, according to a study of large banks' fourth-quarter earnings done by SNL for BusinessWeek. Not only did Comerica fail to add money in the fourth quarter, it also extracted $21 million from the pot. That gave it an extra $98 million in income, or 57 cents a share, that it didn't have last year. The bank beat analysts' earnings estimates by 10 cents. Comerica Chief Credit Officer Dale Greene says muted loan growth, coupled with major improvement in credit quality, justify the move.

Others, such as Citigroup (C ), garnered a few extra cents from replenishing reserves by a smaller amount than before. But it was enough to help them beat analysts' earnings estimates by a penny or two. Citi Chief Financial Officer Sallie L. Krawcheck said in a Jan. 20 conference call that the reserving process was done in mid-quarter based on a mathematical formula. She noted: "We as a company work very hard to systematize the process around rigorous analytics."

Of course, banks can't just shift funds around willy-nilly. Accounting rules dictate that they have to justify decreases in loan-loss allowances, for example by citing substantial improvement in credit trends. This past quarter, a bevy of bank earnings releases cited fewer nonperforming loans, improving asset quality, and a stronger underlying global economy as reasons for smaller loan-loss provisions. Bill Lewis, leader of the U.S. banking practice at PricewaterhouseCoopers, notes that subjectivity is often involved, but "most banks, in light of heightened regulatory scrutiny, are more precise in their estimation methodologies today than they have been in the past."

Maybe so, but even if the decreases in reserves are perfectly justifiable, there are still problems with this common industry practice. Besides cutting reserves to the core, banks "are increasing the cyclicality of earnings," says Richard Bove, a banking analyst at Punk, Ziegel & Co. "When bad times come, you know they are going to be increasing the size of the reserves." Already, Citi's Krawcheck has warned analysts not to expect substantial reductions in provisions in the future.

Continued in the article

Bob Jensen's threads on banking misdeeds are at http://www.trinity.edu/rjensen/fraudrotten.htm 

Say what?  Do all presidents of Harvard University think alike?
More than 30 years before Harvard University President Lawrence H. Summers suggested that innate differences may keep women out of science and engineering, Harvard took a stand on women's affinity for science -- and helped limit the scope of a key civil-rights law.  In a 1971 letter to a congressman, a spokesman for new Harvard President Derek C. Bok argued that accepting more female undergraduates at Harvard University "might underutilize our science faculties and require expensive additions to our faculty and staff in already crowded departments in the humanities and social sciences."
Karne Blumenthal, "How Harvard Helped Curb Title IX's Role In Admitting Women, The Wall Street Journal,  March 2, 2005; Page B1 --- http://online.wsj.com/article/0,,SB110972681148867821,00.html?mod=todays_us_marketplace 
Jensen Comment: I guess we can almost hope that success in future recruiting will result in even more expensive additions to science facilities.

March 2 reply from McCarthy, William [mccarthy@BUS.MSU.EDU] 

I am not sure why everything that Harvard does (grading, treatment of women professors and students, meaningless classes, and who knows what else in the future) becomes a cause for criticism on AECM, but I think we need a little more balance here.  From the father of a current Harvard MBA student:

• The grading system at HBS is ruthlessly uniform.  Grades of 1-2-3 (plus some downside outliers I suspect) are assigned on something like a 15-70-15 distribution (my percentages might be off a little).  This is hardly inflationary, and in fact, I am sure that it is better at keeping grades properly aligned than the majority of business schools nationwide.  Hardly the image portrayed on AECM.
• My daughter has experienced 3-4 superlative women professors who are among her most inspirational, most enthusiastic, and most knowledgeable teachers.  When she graduates, I am sure that some of these ladies will be her role models and advisors for her professional life.  Again, hardly the image portrayed on AECM.
• The classes are certainly not meaningless.  On the contrary, based on my conversations with her 2-3 times a week, I would describe them as electric.  I have won multiple teaching awards at the department and school level at MSU, but I was very envious on the two occasions where I attended her classes, because I could see places where I can do so much better.  The classes had 90 superbly-prepared students having wide-ranging discussions on difficult and interesting topics.  The discussions were wonderfully orchestrated by two very good teachers, and it felt like 15-20 people instead of ninety.  Every school has some teaching clunkers, but they are very hard to find at HBS.  Again, hardly the image portrayed on AECM.

If we insist on being negative on the list, isn’t it about time to start picking on somebody else?

March 2, 3005 reply from Bob Jensen

Hi Bill,

My wife's in New Hampshire and I'm in Texas. I'm a loose cannon with too much free time. Many AECMers are eagerly looking forward to Erika's visit to Texas in March so that they can take a "Jensen Break."

I congratulate your daughter on being admitted to Harvard. That's the hardest part of the entire process. You have to be good just to get in.

Interestingly enough, in the Ivy League schools the biggest complaint about grade inflation is coming from the very best of the entire set of students admitted. With such a huge proportion getting A grades, there's no recognition of the best among the best. For example, how can a law school even consider grades if all the applicants have 4.0 grade averages?

Some schools react to the complaints of the best students. Some years back when Jim Van Horne was Associate Dean of the GSB at Stanford, he imposed what then became known as the Van Horne Cap of 15% A grades (I don't think they had A+ grades in those days). I don't know that such a cap exists anymore, but the point is that Jim told me the pressure was coming most from the very best students in the GSB. They're the ones who desperately wanted the job offers from the most elite consulting firms in the world and felt that Stanford was not giving them a chance to stand out from the crowd.

I found the syllabus of another Jim (Wachowicz).  It is interesting in and of itself to read.  But in particular, I noted that this Jim is allowed to assign an A+ grade.  I think that should be allowed in every college.  My own school does not allow me to do this, and in the graduate school students must have 3.0 to even be allowed to graduate.  Giving a graduate student a C might result in my having prevented him or her from graduation, which is especially stressful in three days before graduation when the cap and gown is ordered and parents are already in the hotel.

There's also a motivational factor. I'm absolutely certain that the very best of the A students will work much harder if only a small proportion of them might have a chance for an A+. Some faculty, not me, argue that it is immoral to motivate students with grades. See Alfie Kohn's citation at http://www.trinity.edu/rjensen/assess.htm#GradeInflation 

I think the time has come to let up on Harvard.  Since I’m the worst offender, I apologize Bill.  I will refrain from future posts on this issue, at least in terms of singling out Harvard.  I admit to being on a campaign against grade inflation and especially the teaching evaluations that drive a great deal of that inflation.  I cite Harvard mainly because the world has picked more on Harvard with respect to grade inflation.  There is much more literature to cite about Harvard’s grading.  But I will try to avoid singling out Harvard in my AECM communications.  Harvard apparently banned its old 1-15 scale in favor of what you call the 1-2-3 scale.

I do have one question about where you got your 15-70-15 numbers?  My most recent numbers are 49-41-10 ignoring the outliers.  Some 2001 versus 1985 data given by NPR are as follows:

All Things Considered, November 21, 2001 · Student's grades at Harvard University have soared in the last 10 years. According to a report issued Tuesday by the dean of undergraduate education, nearly half of the grades issued last year were A's or A-minuses. In 1985, just a third of the grades were A or A-minus. Linda Wertheimer talks with Susan Pedersen, Dean of Undergraduate Education and a Professor of History at Harvard University, about grade inflation.
Harvard Grade Inflation, National Public Radio --- http://www.npr.org/templates/story/story.php?storyId=1133702 
You can also listen to the NPR radio broadcast about this at the above link.