Gross Income

What is Gross Income?

In the United States, individuals, members of partnerships, corporations, estates and trusts must pay income tax on their gross income (which is the value before tax).

According to Title 26 of the United States Code along with Section 61 of the Internal Revenue code, gross income is the total income from whatever sources it may come from before any taxes applied to the income. The gross income is the starting point in figuring out just what income is applicable to be taxed under the federal income tax

Sources of gross income can include:

• Gross income from a business

• Compensation for fees, services, fringe benefits, commissions, and other similar items

• Gains when dealing with property

• Rent

• Dividends

• Royalties

• Annuities

• Alimony and other separate maintenance payments

• Pensions

• Income resulting endowment contracts and life insurance

• Share of partnership gross income

• Income resulting from discharge of indebtedness

• Income from an interest in a trust or estate

• Income of a decedent

In general, all income from whatever source can be considered a part of gross income unless it is specifically excluded by law, such as inheritances or gifts, although there may be an estate or gift tax on the donor.

The United States Supreme Court has taken this interpretation of gross income this to mean that under Article 1 Section 8 Clause 1 of the U.S. Constitution, the federal government can use its full power to tax the gross income as directed by the powers given to it in the Constitution. This power also is from the 16th amendment which says Congress can create an income tax without states approval.

Some items that are excluded gross income and do not get taxed are:

• Social Security benefits, although this exemption is often not given to individuals who have a gross income over a certain amount

• Tax exempt interest such as state and municipal bonds which do tax under the federal income tax

• Life insurance proceeds

• Inheritance and gifts

• Scholarships, although certain types do get taxed, such as teaching scholarships

• Compensation for sickness or injury

• Meals and lodging given to an employee on an employer’s premises for the employer’s convenience

• Specific employee benefits such as group health insurance, certain fringe benefits

• Specific elective deferrals of an employee’s salary, such as for a 401k plan

• Contributions received by a corporation to a capital

• Profit of up to a quarter of a million dollars or half a million on a married joint tax return when selling a personal residence

Novation

The Use of Novation in Contracts and Agreements

In both business law and contract law, novation is a mutual agreement of the substitution of a new debt or obligation for an old one. The old one is then relieved and replaced by the newly contracted one. This can happen both with or without a chance in the parties involved.

A novation is most often applied when the parties involved are in the situation where performance or payments are not possible under the given terms of the original agreement or contract. A novation can also be applied when the debtor has no choice but to default or declare bankruptcy if the debt cannot be restructured. Examples of contracts that are discharged by novation are mortgages, legacies, and negotiable instruments.

There are three different ways to make a novation, which result in three different types:

• The first scenario does not involve any new person or parties. In this situation, the debtor creates the new engagement with a creditor, which liberates the parties from the former engagement. This form of novation does not have an appropriate term and is simply called a novation.

• The second scenario requires the intervention of a new party for the debtor. Here, a third party becomes a debtor and replaces the former debtor. This new debtor is then accepted by a creditor, now called the expromissor, and the former debtor is then released from the obligation. This is an expromissio novation.

• The third and final type of novation occurs when a new creditor replaces the old one. Here the debtor makes an agreement or contract some with the new creditor. This is a delegation novation.

It is a defined quality of the common law, that a simple agreement for substitution of another obligation in lieu of the original one is not valid unless it is actually executed and accepted to a satisfactory point. No situation or action can be kept upon the new obligation, nor can the obligation be held to the original demand. However, if the agreement is put into by a deed, the deed gives provides a cause of action and can potentially be enough and satisfactory for a for a simple contract debt.

The general rule that applies to a novation is that if one party is indebted to another party through a typical contract, give his creditor a promissory note, drawn by him for the same amount or value, without any new consideration, the new note will not be considered satisfactory to the original obligation unless agreed by the creditor. But if the agreement is transferred, he cannot sue based on the first contract while the note is not in his possession.

Leverage

The Business Behind a Leverage

Leverage is a basic term for using any technique to increase or multiply gains and losses. Leverage can be done by using borrowed funds, using derivatives, and buying fixed assets. For example:

• A company or public corporation can borrow money to leverage its equity. This means that the more the company borrows, the less capital it requires. Any losses or profits are then shared with a smaller base and as a result, are proportionately larger.

• Hedge funds can be used to leverage assets through using their derivatives. By posting a certain value of cash as a margin, it may be possible for the hedge fun to get losses or gains on a larger value.

• A business entity or company can buy fixed assets to leverage its revenue. Doing so will increase the proportion between the fixed costs, as opposed to variable. This will allow for a change in revenue that then gives a larger operating income change.

While the potential of getting a higher amount of profits is appealing, the obvious risk of leverage makes it somewhat risky. Leverage allows for a chance of multiple losses. Any corporation that winds up borrowing too much can face the possibility of bankruptcy or severe financial struggle when experiencing a business downturn. Meanwhile, a company using less leverage may have a better chance of surviving. For example:

• If an investor purchases a stock that has a 50% margin, the investor can lose 40% of his money if the stock only declines 20%.

There is a very important implied assumption in looking at an account that has leverage versus an identical one that does not have leverage. In a situation where a company borrows money in order to modernize, expand internationally, or add new items to its product line, any additional diversification may potentially offset the additional risk from leverage even further.

Another situation is if an investor uses a certain fraction of his portfolio in order to margin stock index futures and ends up putting the remainder in a money market fund. In this case, the individual may have the equal amount of volatility and same predicted return as another investor who is in an unlevered equity index fund, which will have a limited downside.

Ultimately, adding leverage to a certain given asset will always add risk. However, this does not necessarily mean that a company with leverage or an investment with leverage is always riskier than one without leverage. It is very possible for a fund that has high leverage to have even less volatility in return in comparison to the funds without leverage.

Pay Per Click Advertising Benefits

Pay per click advertising is a term used for internet advertising where a business pays a third party website to direct traffic to their website for a specific amount every time a unique visitor is sent to the business’ website. The third party website will usually show an advertisement or other mention of the business, which takes the viewer from a content page to the advertising page. This method has become very popular on all sorts of websites and is one of the main forms of income generation for these sites.

How can Pay Per Click Advertising help your business

1. Evaluate how your business and its website

Before you can use the services of a pay per click advertising website, you must have an established business website that viewers can be directed to. Your website must be readily accessible and should have content that keeps visitors engaged and informed about your company. Not every business can benefit from this form of advertising. Pay per click is usually used by businesses that are seeking widespread reach and less so by local businesses.

2. Consider your budget

Pay per click advertising varies greatly depending on who the third party website is, how many unique visitors they generate, and how reliable they are. Nationally read websites with creative content will charge very high pay per click advertising fees, so be aware of what expenses to expect before agreeing to a pay per click service. There are two ways for purchasing per per click advertising, flat-rate and bid-based.

A. Flat-Rate require that the business pay the advertising company a specific fee for each unique click that is generated from placing the ad on their website. The costs will be dependent on the location of the ad on the web page, its visibility, and the size.

B. Bid-Based pay per click advertising is typically used on search engines or content sites with search features. The advertising will accept bids for keywords, essentially favoring those businesses that pay more when a consumer searches for a specific topic.

The financial aspect of the advertising that is generated can be greatly beneficial for your company. Pay per click has been increasing dramatically each year, but a click can range from 1 cent per click up to $4 per click, depending on the level the keyword costs or how prominent of a website your are using.

3. Put your Pay Per Click Advertising into effect

After conducting research about where and when your business will benefit from pay per click advertising, you need to get your links set up and your website prepared for the increased traffic. You will need to prepare the links that will be clicked on. Your links may be text based or picture based, which in either case must be highly visible and attract the reader.

Websites utilize pay per click advertising by placing them in locations where viewers are most likely to see them. Search engines, such as Google or Bing, will place pay per click advertisements in specific “advertising boxes” above search results or on the side bar. Content websites try to have pay per click advertisements below content articles titles and in between written text blocks.

4. Evaluate whether Pay Per Click Advertising is working

Pay per click advertising is very easily evaluated, as you will be able to see whether you have increased website traffic and from what source this increased traffic is from. You will also be billed on each unique visitor, so just from your billing statements you can determine whether it is working. Also important will be determining whether visitors stay engaged on your site and how long they spend on your website. All of this must be calculated in order to determine if you need to modify or eliminate the pay per click advertising that you are engaging in.

Pay Per Click Search Engine Advertising

Search engines do not typically use a pay per click advertising method, but instead use a bidding system for specific keywords. Keywords are purchased and the order of appearance will determine when a website will come up on a search engine. Some search engines to have some forms of pay per click advertising, but they will either put your business’ link in a separate “advertiser box” or outside of the main search results.

Legal Issues

Pay per click advertising is usually a very safe way of advertising over the internet, as long as you avoid any fraudulent advertising or misleading information. You must ensure that any services you use in implementing your pay per click advertising is not attaching spy ware to consumer’s computers and not keeping illegal data. Consult a legal professional with experience in advertising and internet regulation if you require further consultation.

How Can Internet Advertising Help Your Business?

Internet advertising is one of the newest ways of getting exposure and brand recognition for your business, however many small and mid-size businesses do not take full advantage of all of the marketing opportunities it has. Internet advertising opens the door to endless sources of clients and other businesses, as almost everyone is currently connected in one way or the other. Below are some tips for using internet advertising to your advantage.

How to use Internet Advertising for your business

1. Evaluate how your business can benefit from Internet Advertising

Internet advertising is a broad term for numerous types of marketing strategies using the internet. The following are some examples of internet advertising that your business should consider:

A. Blogs – Blogs are a great method for garnering attention for your business. A blog is a journal that your business can keep with different entries that relate to your consumer needs. While blogs are cheap and relatively easy ways of reaching consumers, you will need to battle with many other blogs that exist. In order to set yourself a part, you need interesting information that engages the reader and has information found nowhere else.

B. Social Networking – In recent years, social networking has exploded across the internet, as people spend much of their time conversing with friends, family, while posting pictures and commenting. Facebook has become the go to social networking site, and your business should have a presence by either a facebook profile or fan page. Social networking is again a cheap and relatively easy method of internet advertising, however you will be competing with many other pages and profiles, so you will need interesting and engaging content.

C. E-Mail Marketing – One method that is often used is the sending of mass emails, either describing your company or providing informational texts that involve your business. E-mail marketing must be approached with caution, as you run the risk of being considered spam, which will reflect negatively on your image with consumers. Instead, you must send e-mails only with important updates and interesting new content.

2. Consider your budget

Budgeting is a crucial elements when coming up with a marketing plan using internet marketing. The internet provides advertising that range from the very cheap to the very expensive. While advertising by using emails and other basic forms of communication can be very cheap, they often are not as effective as the much more expensive methods. Professional companies can build your website and provide services to help your business’ website generate traffic.

Revenue can be generated from internet advertising, but it may not be noticeable at first and take some time. Blogs, facebook pages, and e-mails all take time to build followers and readership. You must slowly develop your internet presence before having any noticeable affects on your business. However, you will more clients will come to you seeking your service who have been exposed to your internet marketing.

3. Put your Internet Advertising plan into effect

Internet advertising works best when you have multiple types of advertising working together in conjunction with one another. Articles sent through email should be linked to your website, your website should be linked on other websites, and all of these should be search-able on search engines such as Google and Bing. A facebook profile can link to blogs and written content generated by you and your business. All of these advertising methods need to be put in place to work together in order to maximize the effectiveness of internet marketing.

4. Evaluate how your Internet Advertising plan is working

Once you have your internet advertising plan up and running, you must constantly monitor how well they are working. The internet can be a fickle medium to garner attention, so you must constantly check how many clients are being reached, how engaged they are in your advertising materials, and whether you should change your strategy. Consulting outside firms is often the best method for determine how helpful your internet advertising is for your business.

Internet Advertising compared to regular advertising

Regular advertising and internet advertising can always be used together to full expose your company to as many clients as possible, however you need to understand the benefits and limitations of each. Internet advertising will usually be significantly cheaper and more diverse, in that you can reach many people with just simple blogging posts or facebook updates. However, with this simplicity comes the fact that you will be up against thousands of other advertisements and content all vying for your consumers attention.

Regular advertising can be more expensive, more time consuming, and can challenge you to be creative. However, regular advertising, when done properly, can expose your company to more consumers, especially older ones who do not use the internet as much as the younger generation. Regular advertising can include sending mailers, taking ads out in publications, or other media outlets.

Legal Issues with Internet Marketing

While most internet marketing is simple and is not affected by regulation, you must be aware of illegitimate forms. Spamming and spy ware are used by some groups in order to send mass emails and reach many more consumers than they should be reaching. Such methods are often illegal and you business can face sanctions if caught up with such internet marketing plans. If you have any questions or concerns, contact a legal professional who has experience with advertising laws and internet regulation.

List of Celebrity Branded Fragrances

List of Celebrity Brand Fragrances: Actresses

The most successful fragrances branded by a celebrity are those of Elizabeth Taylor as she collaborated with Elizabeth Arden. The duo released 12 of the most successful celebrity fragrances between 1988 and 2010, and some of these fragrances include Passion, White Diamonds, Black Pearls, Gardenia, and Violet Eyes.

Jennifer Lopez has released over 15 fragrances and some of the most successful include Glow, Still, Deseo, and Love and Glamour.

Sarah Jessica Parker released 8 fragrances between 2005 and 2009 that included Lovely, Covet, SJP NYC, Endless, and Twilight.

Halle Berry released three popular fragrances including Halle, Halle Pure Orchid, and Reveal. The branded fragrances have been released by Jennifer Aniston, Kate Walsh, Eva Longoria, Reese Witherspoon, Mary-Kate Olsen, Ashley Olsen, and Isabella Rossellini.

List of Celebrity Brand Fragrances: Male Actors, Models, and Athletes

Male musicians with the most successful branded fragrances include Diddy, Usher, Akon, and Nelly.

Diddy’s successful fragrances include Sean John I Am King, Sean John Unforgivable, and Sean John Unforgiveable for Women. Usher’s successful fragrances include UR for Men, UR for Women, and Usher VIP. Popular fragrances by Akon include Konvict Homme and Konvict Femme. The most popular fragrance by Nelly is Apple Bottoms, and other musicians like 50 Cent and Tim McGraw have popular fragrances as well.

Antonio Banderas has released 15 branded fragrances, and some of the more popular fragrances include Seduction in Black, Spirit VIP for Men, Spirit VIP for Women, and The Secret. Male celebrities like David Beckham and Patrick Dempsey have released branded fragrances as well.

List of Celebrity Brand Fragrances: Female Musicians

Celine Dion has released 14 fragrances, and some of the popular fragrances include Celine Dion, Belong, Enchanting, Sensational Moments, and Simply Chic.

Britney Spears has released 9 different fragrances, and she has collaborated with Elizabeth Arden for most the fragrances. Her popular fragrances include Curious by Britney Spears, Fantasy, Midnight Fantasy, Circus Fantasy, and Radiance.

Mariah Carey has also released 9 fragrances, and she has also collaborated with Elizabeth Arden. Some of her popular fragrances are M, Luscious Pink, Forever, and Lollipop Bling Honey.

The following female musicians have also released popular fragrances: Avril Lavigne, Beyonce, Christina Aguilera, Rihanna, Katy Perry, Shakira, Fergie, Gwen Stefani, Jordin Sparks, Faith Hill, Shania Twain, Jessica Simpson, Mary J. Blige, Hilary Duff, and Queen Latifah.

List of Celebrity Brand Fragrances: Other Popular Celebrities

The following celebrities are known for popular branded fragrances as well:

Andy Warhol: Andy Warhol and Marilyn Rose

Kat Von D: Saint, Sinner, and Adora

Cindy Crawford: Cindy Crawford, Summer Day, and Joyful

Maria Sharapova: Maria Sharapova

Heidi Klum: Shine

Kim Kardashian: Kim Kardashian and Gold

Kate Moss: Kate, Vintage, and Wild Meadow

Paris Hilton: Heiress, Siren, and Tease

Daisy Fuentes: So Luxurious, Dianoche Love, and Mysterio

Naomi Campbell: Eternal Beauty, Cat Deluxe, and Naomi

Michael Jordan: Michael Jordon, 23, and Legend

Trade Secret

A trade secret is primarily defined by the Uniform Trade Secrets Act (UTSA). Essentially, the trade secret is information such as a formula, pattern, program, method, process, technique, or similar piece of information that produces economic value. However, the information only produces actual or potential economic value because it is not accessible by other parties who could also generate economic value with its use.

Before the UTSA was passed, the use of a secret in trade was an offense under a common law tort known as the Restatement of Torts. Section 757 and 758 of this tort laid out general policies, and the majority of U.S. Courts adopted the trade secret tort. Comment (b) of §757 is still accessed regularly and determines what qualifies as a secret in trade. A secret in trade is recognized depending on the following:

· the amount of information about the secret known outside of the business

· the amount of information known by employees for the business

· the measures taken by the business to protect the information from exposure

· the value of the secret to the business compared to competitors

· the difficulty involved in acquiring the information and duplicating the information

In order to submit a trade secret claim, the information needs to qualify for protection in the first place. Secondly, the party holding the secret needs to prove that they took reasonable steps to keep in the information private. Thirdly, the party holding the secret must prove that the secret was not unlawfully obtained from another party.

There are two cases when a secret in trade is unlawfully obtained. The information was unlawfully obtained through improper means or there is a breach of confidence. For example, if an employee accessed information and sold the information to another company, the second company committed breach of confidence.

It is not illegal to obtain a trade secret if the information is discovered independently, reverse engineering leads to the discovery, or the company holding the secret failed to take proper steps in protecting the secret.

A trade secret does not last for a specific number of years like a patent. The secret in trade continues indefinitely until disclosure of the secret is reached lawfully. An inventor has the choice to choose between a patent and a protection of the secret, but the information cannot by dually protected at the same time.

Obtaining a secret in trade does not always exist as a crime only under tort law. It qualifies as a federal crime in some cases. The crimes becomes a federal crime when it violates the Economic Espionage Act of 1996.

A recent trade secret violation occurred when Kolon Industries stole information about the manufacturing process used by DuPont for Kevlar para-aramind fiber. Kolon is headquartered in South Korea and makes a bullet-proof product called Hercron. Kolon wanted to improve its products, so they targeted former employees that formerly worked for DuPont to receive information on the secrets.

They soon received information about the secret manufacturing process used by DuPont and replicated the process in three years.

Hungry Jack’s

Hungry Jack's

Hungry Jack's is an Australian fast food franchise that was originally under the control of the American fast food franchise Burger King. From 1995 to 2001, the two companies were involved in a prolonged legal dispute that was ultimately decided in favor Hungry Jack's.

Hungry Jack's began business in 1971 as the exclusive franchise of Burger King in Australia. In 1991, the contract between the two businesses was renewed. The contract included a "termination clause" stating that Hungry Jack's was responsible for opening four new franchise locations a year. However, the contract contradicted itself with another clause which stated that as long as Hungry Jack's opened at least two new locations in a year, another year's worth of a "grace period" would be granted.

In 1995, Burger King decided it wanted to take over directly from Hungry Jack's. Though the terms of the contract stated that every franchise location opened had to be approved by Burger King, the company refused to approve the opening of any new locations, making it impossible for Hungry Jack's to live up to the terms of the contract. At this time, Burger King also made use of a Hungry Jack's employee who provided them with information about the company's activities.

In 1996, Burger King claimed that Hungry Jack's had violated the terms of its contract and began directly opening its own franchise locations. In 2001, Hungry Jack's filed suit against Burger King, claiming that they had violated the terms of the contract. The case was heard in the New South Wales Court of Appeal and resolved on June 21, 2001. In its decision, the court considered the termination clause's terms and its contradictions with other parts of the contract. The court ruled that the contract allowed Burger King to arbitrarily impeded and hinder Hungry Jack's, making it impossible for them to honor the contract.

In reviewing the contract, the court considered the question of "good faith." Because the contract in question was not a standard commercial agreement for which precedent concerning good faith had not yet been established, the court had to rule on whether there was an implicit, justifiable reason to assume such a basis for business. Taking into account Burger King's attempts to prevent Hungry Jack's from opening more locations and use of internal information provided by its informant, the court ruled that Burger King's actions were taken with the direct intent of harming Hungry Jack's to allow Burger King to open its own locations.

As a result, the court ruled in favor of Hungry Jack's and ordered that Burger King pay roughly 71 million in Australian dollars. Burger King appealed the decision but was not successful in this attempt. The case is considered in the Australian legal system for introducing "good faith" as a measure of determining the merits of two parties' actions when involved in a contractual dispute. The case is often cited as a precedent in such cases.

Competition

How the Law Handles Competition between Businesses

In business, competition between sellers within an open marketplace is beneficial for both businesses and consumers. Competition not only keeps prices lower and raises quality, but it also provides more choices and more reason to be innovative. In order to maintain this sense of competition between sellers, the Federal Trade Commission enforces the antitrust laws.

These laws were first created in response to many companies who concealed their business practices using trusts in the late 19th century, which threatened the free market.

· The Sherman Act (1890)

o Created to prevent potential cartels or monopolies that could be detrimental to having competition in a free market

o The act does not allow companies to artificially raise the price

· The Federal Trade Commission Act (1914)

o Created the Federal Trade Commission which now regulates large corporations and stops them from having unfair trading practices

· The Clayton Act (1914)

o Prevents certain practices that could harm competition in free market, such as price discrimination or having an individual being a director on two companies in competition with each other.

While the anti-trust laws are applicable to most organizations, there are certain types that are exempt from the anti-trust laws, such as labor unions banks, and agricultural cooperatives.

The Federal Trade Commission still continues to monitor large corporations to ensure that no business practices occur that may harm the free market and healthy competition. The Federal trade Commission Monitors the following activities:

· Mergers

o While mergers can allow firms to operate more smoothly, mergers result in fewer options and possibly higher consumers.

· Agreements Among Competitors

o Businesses cannot conspire to raise prices, hinder other businesses from operating, or raising prices

o The Federal Trade Commission pays close attention to potential artificial price fixing

· Manufacturers and Product Dealers

o There are some agreements, for example a car with a brand of tires that are acceptable, but others can be illegal if they restrict competition without providing customer benefits.

· Monopolies

o By excluding other companies or impairing their ability to compete, it can hurt the consumer by allowing them to control prices.

· Other Anticompetitive Actions

By regulating major corporations, a free market can exist and competition is possible between sellers. However, there can be downsides to competition in the free market. It can potentially lead to increased costs and if waste if companies repeat ideas without innovation. In certain circumstances, competition is inefficient and a natural monopoly flourishes.

Charities

Charities and the Law

A charity is a non-profit organization that works to benefit the public or accomplish some form of philanthropy.

Charities can be either public or private foundations. When a charity (even if foreign) qualifies under the Internal Revenue code Section 501(c)(3), which makes them exempt from taxes, they are considered to be a private foundation. A private charity receives the majority of its funds from one source, such as a family, individual or a corporation.

If the charity does not qualify to be a private foundation, it is considered to be a public foundation, and also classifies under Section 508(b) or 509(a). In a public charity, the majority of funding comes from the government, private foundations, or individuals.

For a charity to have 501(c)(3) status, it must be organized and run exclusively for the reasons described in the code, in this case purely for charity. The organization cannot benefit any private interests and none of the earnings should benefit any one private individual shareholder. Because of this status, a charity can get tax-deductible contributions.

A charity is limited in its ability to conduct legislative and political activities, such as lobbying. Under 501(c)(3) code, a charity must do the following:

• Restrict lobbying to a very small part of the charity’s activities

• Refrain from taking part in any candidates during political campaigns on any level of government

• Not let any earnings benefit one individual or private shareholder

• Refrain from operating for the benefit of one private interest or for the purpose of any trade or business that is not related to the exempt purpose

• Refrain from illegal activities

The most common 501(c)(3) charities promote:

• Fighting community deterioration

• Preventing juvenile delinquency

• Eliminating discrimination and prejudice

• Constructing or maintaining public monuments, buildings, or works

• Advancing science or education

• Advancing religion

• Securing civil and human rights through the law

• Helping the underprivileged, the distressed, or the poor

A charity that is under 501©(3) must follow two disclosure rules placed by the federal tax law. A donor must receive from the charity a written acknowledgement for any individual contribution that is at least $250 in order for the donor to claim a federal contribution on a federal income tax return. Second, a charity must give a written disclosure to a donor who pays $75 or more as a combination of contribution and payment for a service or good.