Another option for both stocks and mutual funds is to search by the stock symbol at Yahoofinance.com. On the stock’s performance chart, look for the Events tab and check the Stock Splits option. You may need to reduce the historical time frame to see splits marked clearly.
You also may be able to search for stock split history on the website of your online broker. Many outfits offer these types of research tools.
Stock Splits, Explained
August 1, 2022 · Blog, Financial Planning, Uncategorized
⏱ 5 min read
Imagine selling slices of a large pizza. You can cut it into four even slices and charge $2 a slice. Or, you can cut it into eight even slices and charge $1 per slice. Either way, the total value of the pizza will still be $8.
That’s what happens when a stock splits. Let’s say a stock’s market price is $100. With a 2-for-1 split, each current owner receives one additional share for each share he owns. Now, each share is worth $50. If you had one share to start, you now have two, but the total value of the investment remains $100.
A stock split differs from when a company decides to issue new shares, wherein new shares flooding the market can dilute the value of existing shares. With a stock split, the value of existing shares do not decrease. The total market value of a shareholder’s holdings will remain the same.
There are different forms of stock splits, such as the 2-for-1, 3-for-1, or 3-for-2 stock split. They all work the same way: You get two shares for everyone you hold, or three shares for everyone you hold, or three shares for every two shares you own.
Another, the less common form is called the reverse stock split. This is when a company decides to reduce the number of outstanding shares, which in turn will increase the stock price of shares held by stockholders. This strategy is generally used to boost the price of a stock that has lost value over time.
It is important to recognize that the stock split is a simple strategy designed to affect the stock price. It in no way changes the company’s market capitalization (i.e., total value of all outstanding shares) or other fundamental metrics. In order to issue a stock split, it must be approved by both company management and the board of directors. Furthermore, the company must publicly announce its intention to conduct a stock split within days or weeks of implementation.
The timing of the announcement is important because some investors try to take advantage of a stock split, believing that the value of the stock will increase as a result. This has more to do with market sentiment than any change in company fundamentals.
For example, in the past when a stock split its value often returned to its pre-split price within a year. This is not necessarily because the company has improved fundamentals, but rather because the investor market simply believes that stock is worth that price — it’s a form of confirmation bias. However, in recent years it is not as common for split stocks to climb back to their original price as it was in the past.
Why Conduct a Stock Split?
Again, the reason for a stock split is largely driven by market sentiment. For example, some investors may not have a lot of discretionary income to invest, so they look for a lower-priced stock. While they might not consider a stock valued at $100 per share, they may be interested in the company at $50 a share. In fact, following a recent stock split, investors may see it as getting a bargain price for that stock. As such, they might buy two shares. Now they’ve spent $100 on two shares whereas they were reluctant to buy one share for $100. The value is the same, but psychologically, that stock now seems like a great buy. This is referred to as unit bias. Psychologically, most people perceive lower per share prices to mean that a stock is “cheaper” and therefore may have more room to make gains.
In addition, now they can further diversify their portfolio with different stocks, whereas before those high-priced shares may have dominated their portfolios, exposing them to greater market risk.
A stock split also gives current shareholders the opportunity to increase their holdings at half price. While the value hasn’t changed when they make the buy if the stock increases in the future their portfolio will increase in value because they have more shares of that stock. For example, let’s say you have 10 shares of a stock priced at $10, for a total value of $100. The stock splits 2-for-1, so now you have 20 shares priced at $5, still valued at $100. In a few years, the stock price grows to $20 per share. Had the stock not split, your total value would grow to $200. But because you now own 20 shares, the total value of those shares would grow to $400.
Clearly, the true value of a stock split comes from holding those shares until the price increases substantially.
Mutual Fund Split
Some mutual funds also engage in the split strategy, but instead of splitting an individual stock, the fund company issues additional shares of the fund at a reduced price. In all other ways, a mutual fund share split works like an individual stock split.
If you’d like to learn the history of a company’s stock splits, consider the following resources:
Click on the investor relations tab on the company website, which often provides a history of the company, including dates of past stock split activity.
Another option for both stocks and mutual funds is to search by the stock symbol at Yahoofinance.com. On the stock’s performance chart, look for the Events tab and check the Stock Splits option. You may need to reduce the historical time frame to see splits marked clearly.
You also may be able to search for stock split history on the website of your online broker. Many outfits offer these types of research tools.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
With such news making the headlines, businesses may wonder how they can benefit from NFTs.
How Can a Business Benefit from NFTs?
Businesses still hesitant about adopting new technologies should start considering creating NFTs that align with their brand image. Below are some ways in which a business can benefit:
1. Brand Visibility
Aside from digital marketing, NFTs provide another way businesses and corporations can drive attention to their brand. For instance, by creating a digital version of your products, you expose it to NFT enthusiasts, some of who might not be aware of your products. NFTs also can be incorporated as part of your brand storytelling, creating unique experiences for your customers, consequently increasing consumer engagements.
2. Authenticity
Many businesses undergo massive losses of revenue due to counterfeit products. With NFTs, businesses can ascertain the authenticity of their products and services. A digital certificate is issued with every transaction and a record is kept on the blockchain. A customer can check the authenticity since the blockchain can be traced to the original seller.
3. Additional Revenue Stream
Businesses can use NFTs as an additional source of income by selling digital forms of their products or services. One way to do this is by creating an early access opportunity before the official product launches, creating a buzz and ensuring the NFT value will rise.
4. Customer Loyalty Program
The versatile nature of NFTs makes them ideal for use in loyalty programs. The tokens can be used as medals for loyal clients or as membership tokens.
5. Prevent Ticket Scams
Many people fall victim to online ticket scams where they buy fake discounted tickets or duplicate tickets of an original event ticket. The money collected doesn’t go to the business, which also affects the event organizers. Customers also risk their credit card information being stolen by scammers. However, turning a ticket into an NFT makes it easy to verify its authenticity and even prevent ticket black markets.
6. Managing Supply Chain
NFTs are positively disrupting the supply chain. By the use of blockchain technology, it’s now easy to trace the entire process of a product lifecycle, from raw material, transportation, manufacturing, and distribution up to the end consumer. Hence, businesses interested in improving transparency and accountability can embrace NFTs to automate their supply chain.
Conclusion
NFT technology is relatively new, and its practical use is still limited. However, the fact that people are willing to spend on them is reason enough why any business should consider leveraging NFTs in its marketing strategies to help boost brand engagement and drive sales.
What Are NFTs and How Can Businesses Benefit?
August 1, 2022 · Blog, Uncategorized, What’s New in Technology
⏱ 4 min read
Non-fungible tokens (NFTs) are rising in demand, and some brands are already generating great results in their campaigns and providing a unique experience to customers. As the hype around NFTs continues, businesses need to understand how they can benefit.
What is an NFT?
An NFT is a valuable digital asset created using blockchain. Unlike cryptocurrencies, NFTs are not mutually interchangeable as each NFT represents a different asset with a different value. Hence, an NFT verifies the authenticity of a non-fungible asset. This means that the purchaser of the asset/product can only use a product. Unlike other digital products, an NFT can’t be duplicated and sold. This is because the non-fungible asset is made into a token with a digital certificate of ownership, creating authenticity and credibility. NFTs could include videos, music, physical products, services, documents, artwork, and even memes.
A non-fungible asset’s value depends on various factors, such as underlying value, ownership history, perception of the buyer, future value, etc.
How NFTs Have Been Used
So far, some industries are already reaping benefits from NFTs. Various cases of NFTs can be found in gaming, music, fashion, sports, and virtual real estate.
The growth of NFTs has been attributed to the fact that humans like to collect things, and since NFTs are designed to be scarce digital assets, this contributes to the high prices. According to research conducted in March 2021 by Morning Consult, a global decision intelligence company, about half of the people who identified themselves as avid physical collectors were interested in NFTs. In addition, users have more control over the asset bought because it cannot be used in any other way or duplicated, making it more valuable.
With such news making the headlines, businesses may wonder how they can benefit from NFTs.
How Can a Business Benefit from NFTs?
Businesses still hesitant about adopting new technologies should start considering creating NFTs that align with their brand image. Below are some ways in which a business can benefit:
1. Brand Visibility
Aside from digital marketing, NFTs provide another way businesses and corporations can drive attention to their brand. For instance, by creating a digital version of your products, you expose it to NFT enthusiasts, some of who might not be aware of your products. NFTs also can be incorporated as part of your brand storytelling, creating unique experiences for your customers, consequently increasing consumer engagements.
2. Authenticity
Many businesses undergo massive losses of revenue due to counterfeit products. With NFTs, businesses can ascertain the authenticity of their products and services. A digital certificate is issued with every transaction and a record is kept on the blockchain. A customer can check the authenticity since the blockchain can be traced to the original seller.
3. Additional Revenue Stream
Businesses can use NFTs as an additional source of income by selling digital forms of their products or services. One way to do this is by creating an early access opportunity before the official product launches, creating a buzz and ensuring the NFT value will rise.
4. Customer Loyalty Program
The versatile nature of NFTs makes them ideal for use in loyalty programs. The tokens can be used as medals for loyal clients or as membership tokens.
5. Prevent Ticket Scams
Many people fall victim to online ticket scams where they buy fake discounted tickets or duplicate tickets of an original event ticket. The money collected doesn’t go to the business, which also affects the event organizers. Customers also risk their credit card information being stolen by scammers. However, turning a ticket into an NFT makes it easy to verify its authenticity and even prevent ticket black markets.
6. Managing Supply Chain
NFTs are positively disrupting the supply chain. By the use of blockchain technology, it’s now easy to trace the entire process of a product lifecycle, from raw material, transportation, manufacturing, and distribution up to the end consumer. Hence, businesses interested in improving transparency and accountability can embrace NFTs to automate their supply chain.
Conclusion
NFT technology is relatively new, and its practical use is still limited. However, the fact that people are willing to spend on them is reason enough why any business should consider leveraging NFTs in its marketing strategies to help boost brand engagement and drive sales.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
While the IRS continues to audit higher earning taxpayers more often overall, during the 10-year period audit rates consistently declined for all levels of taxpayers, except those with the highest incomes. The audit rate for taxpayers with income between $200k and $500k experienced the largest drop, with the audit rate declining from 2.3 percent down to 0.2 percent; a 92 percent reduction in audits. Taxpayers with the highest incomes, defined as $10 million or more, saw a resurgence in audit rates from 2017-2018; however, even they experienced an overall decline, dropping from 21.2 percent in 2019 to only 3.9 percent in 2019 – equating to an 81 percent decline.
Impact on the Treasury
There is the theory that the prospect of a tax audit leads to greater voluntary compliance. In other words, if people think they won’t get audited, then they are more likely to cheat on their taxes.
Non-compliance with tax laws and regulations have a material impact on the Treasury. According to the IRS, it is estimated that on average, individual taxpayers under-reported nearly $250 billion a year for the period 2011-2013. This obviously leads to the non-collection of taxes that are otherwise owed the government and raises issues of fairness for taxpayers who are playing by the rules.
Why the Decline in Audit Rates?
One of the main drivers is a lack of resources at the IRS, a combination of both reduced funding and less auditors on staff. The number of agents working for the IRS has declined across the board since 2011. Tax examiners, the type who handle basic audits by mail, have dropped by 18 percent. Meanwhile, revenue agents, who handle the more complex cases in the field, declined by more than 40 percent over the same period.
Demographics point to an increase in these trends as there are a wave of coming retirements in the IRS. Over the next three years, nearly 14 percent of current tax examiners and 16 percent of revenue agents are expected to retire. Stack on top of this the fact that the inexperience of newer agents and the time to complete audits is also taking longer.
Conclusion
The IRS claims it is missing out on millions in legally due tax revenues due to the inability to maintain enforcement. They say they need more funding to hire more agents to perform more audits, which not only find fraud in the audits themselves but also increase overall compliance due to the pressure this creates.
Currently, there is no political focus on bringing major new resources to the IRS, so it’s not likely to see an uptick in individual tax audit rates anytime soon. The trend of focusing on the highest earners, however, will likely continue as this is where the IRS can find the most bang for its buck.
The IRS is Auditing Fewer Returns than Ever
July 1, 2022 · Blog, Tax and Financial News, Uncategorized
⏱ 3 min read
One of the perennial fears of taxpayers is getting audited by the IRS. Financially, few scenarios strike such fear into the heart of taxpayers. However, taxpayers can probably breathe a sigh of relief – at least for now. This is because the rate at which the IRS is initiating audits of individual taxpayers is dropping like a stone.
Decline in Audit Rates
The rate at which the IRS is auditing individual taxpayers has declined overall between the years of 2010 and 2019 (2020 data is too new and 2021 returns are still being filed through the extension period). According to the Government Accountability Office (GAO), nearly 1 percent of all taxpayers were audited in 2010 compared to only 0.25 percent for the tax year 2019. The GAO chart below shows the ski slope-like drop in individual tax audit rates over the period.
While the IRS continues to audit higher earning taxpayers more often overall, during the 10-year period audit rates consistently declined for all levels of taxpayers, except those with the highest incomes. The audit rate for taxpayers with income between $200k and $500k experienced the largest drop, with the audit rate declining from 2.3 percent down to 0.2 percent; a 92 percent reduction in audits. Taxpayers with the highest incomes, defined as $10 million or more, saw a resurgence in audit rates from 2017-2018; however, even they experienced an overall decline, dropping from 21.2 percent in 2019 to only 3.9 percent in 2019 – equating to an 81 percent decline.
Impact on the Treasury
There is the theory that the prospect of a tax audit leads to greater voluntary compliance. In other words, if people think they won’t get audited, then they are more likely to cheat on their taxes.
Non-compliance with tax laws and regulations have a material impact on the Treasury. According to the IRS, it is estimated that on average, individual taxpayers under-reported nearly $250 billion a year for the period 2011-2013. This obviously leads to the non-collection of taxes that are otherwise owed the government and raises issues of fairness for taxpayers who are playing by the rules.
Why the Decline in Audit Rates?
One of the main drivers is a lack of resources at the IRS, a combination of both reduced funding and less auditors on staff. The number of agents working for the IRS has declined across the board since 2011. Tax examiners, the type who handle basic audits by mail, have dropped by 18 percent. Meanwhile, revenue agents, who handle the more complex cases in the field, declined by more than 40 percent over the same period.
Demographics point to an increase in these trends as there are a wave of coming retirements in the IRS. Over the next three years, nearly 14 percent of current tax examiners and 16 percent of revenue agents are expected to retire. Stack on top of this the fact that the inexperience of newer agents and the time to complete audits is also taking longer.
Conclusion
The IRS claims it is missing out on millions in legally due tax revenues due to the inability to maintain enforcement. They say they need more funding to hire more agents to perform more audits, which not only find fraud in the audits themselves but also increase overall compliance due to the pressure this creates.
Currently, there is no political focus on bringing major new resources to the IRS, so it’s not likely to see an uptick in individual tax audit rates anytime soon. The trend of focusing on the highest earners, however, will likely continue as this is where the IRS can find the most bang for its buck.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
No one knows when gas prices will go down. In the meantime, the only thing you can do is try to work around the situation as best you can. The good news is that nothing lasts forever.
July 1, 2022 · Blog, Tip of the Month, Uncategorized
⏱ 4 min read
We’re all feeling the pain at the pump. Unless you decide to walk, bike or take public transportation, you might feel stuck. But all is not lost. Here are some fuel-efficient driving techniques that can help you save hundreds of dollars in fuel each year.
Don’t Drive Too Fast
Of course, when you’re on the highway, you must maintain a certain speed. However, cars, vans and pickups are typically the most fuel-efficient when driving between 50 and 80 mph. If you go any faster, you’ll use more gas. Consider this: When you’re driving roughly 75 miles per hour, you use 20 percent more fuel than you would if you were going around 60 mph. On a 15-mile trip, if you’re driving faster, you’ll only save two minutes. Only you know if shaving two minutes and gulping extra gas from your tank is worth it.
Maintain a Steady Speed
When you drive in bursts, slowing down and then accelerating, your fuel consumption increases. Specifically, tests have shown that varying your speed up and down between 75 and 85 mph every 18 seconds can bump up fuel usage by 20 percent. If your car has cruise control, use that. Word from the wise: Slow and steady wins the race.
Accelerate Gently
The heavier your foot is when putting the pedal to the metal, the more gas you use. Here’s how to accelerate and save gas: From a stop, take five seconds to get to 12 mph. You’ll speed on up after that, but the point is to pay attention to when you’re just starting and ease into your journey.
Coast to Decelerate
If you tend to have a heavy brake foot, you’re thwarting your forward momentum. Granted, you want to control your car if you’re in rain or snow. But here’s the trick: Look ahead to see what traffic is like and, if you have some room when you’re headed down that hill, take your foot off the gas and the brake, and enjoy the ride – you’ll conserve fuel and save money.
Try Not to Idle
Except when you’re in traffic, if you’re stopped longer than a minute, turn off your engine. The average vehicle with a three-liter engine drinks in over a cup of fuel for every 10 minutes it idles. Ouch!
Measure Tire Pressure
Do this every month. If your tires are under-inflated by 56 kilopascals (aka 8 pounds per square inch), fuel consumption rises by up to 4 percent. If you don’t know the right tire pressure for your car, look on the edge of the driver’s side door. If your tires are low, it also can reduce the life of them. Make it a habit to check your tires.
Use Credit Cards with Gas Rewards
These cards are usually issued in partnership with a bank and offer a discount on gas, like saving five or six cents off a gallon. Yes, mere pennies; but when you add it up, it makes a difference. A few of the top cards to check out are Citi Custom CashSM Card, Blue Cash Preferred® Card from American Express, and Discover it® Cash Back. Here are a few more. Another smart way to save is to get an app like GasBuddy that shows you the cheapest gas near you.
No one knows when gas prices will go down. In the meantime, the only thing you can do is try to work around the situation as best you can. The good news is that nothing lasts forever.
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
Imagine selling slices of a large pizza. You can cut it into four even slices and charge $2 a slice. Or, you can cut it into eight even slices and charge $1 per slice. Either way, the total value of the pizza will still be $8.
