Nightly Business Report – April 5, 2016

NBR-ThumANNOUNCER:  This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue

government issues tough new tax rules that threaten Pfizer`s $160 billion takeover of Ireland`s Allergan                                                                       (NYSE:AGN).

For rent.  Why the hot market for apartments may be cooling off.

And weird write-offs.  Yes, some oddball deductions that could save you
money as Tax Day approaches.

All that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, April

Good evening, everyone, and welcome.  I`m Sue Herera.  Tyler Mathisen will
join us with a report from Seattle in just a few moments.

But we begin in Washington where the government is getting tough on tax
loopholes.  President Obama is urging Congress to take action and stop
American companies from taking advantage of regulations that allow them to
pay a lot less in taxes.


to eliminate some of the injustices in our tax system.  So, I`m very
pleased that the Treasury Department has taken new action to prevent more
corporations from taking advantage of one of the most insidious tax
loopholes out there and fleeing the country just to get out of paying their


HERERA:  While Congress has been slow to act in the past, many see the
Treasury Department`s new rules as taking direct aim at Pfizer`s $160
billion takeover of Ireland`s Allergan (NYSE:AGN).  That sent shares of
Allergan (NYSE:AGN) tumbling more than 14 percent while Pfizer (NYSE:PFE)
shares rose.

Meg Tirrell has more on whether this crackdown could potentially crack the
biggest pharmaceutical deal ever.


of rules as urged by the Treasury Department to curb so-called
“inversions”, mergers designed to move an American company`s tax base
overseas.  And many say this time they`ll succeed in stopping the biggest
inversion deal of all, Pfizer`s merger with Allergan (NYSE:AGN).

which suggests the deal looks mostly done as in not going to happen.

TIRRELL:  The deal was worth $160 billion when it was announced last
November.  And that`s a more stringent structure required by earlier
treasury rules to allow Pfizer (NYSE:PFE) to invert.

Allergan (NYSE:AGN) shareholders would own 44 percent of the combined
company.  But the new provisions would change that, prompting many to
assert Treasury specifically targeted this deal.  The rules are complicated
but they come down to how big the foreign company is compared with the
American company.

The new guidelines would exclude acquisitions made by the foreign company
of U.S. assets in the last three years.  This would mean two megadeals
Allergan (NYSE:AGN) completed in 2014 and 2015 wouldn`t count in
calculating its size compared with Pfizer (NYSE:PFE), putting it back under
the thresholds that would allow Pfizer (NYSE:PFE) to invert.

FUNTLEYDER:  It makes the action less valuable for Pfizer (NYSE:PFE).  And
so, I would expect that Pfizer (NYSE:PFE) would then walk away without the
benefits of the tax minimization strategy.

TIRRELL:  Pfizer (NYSE:PFE) and Allergan (NYSE:AGN) said in a joint
statement last night that they are reviewing the Treasury`s actions and
won`t speculate on any potential impact.

As for Pfizer (NYSE:PFE) and Allergan (NYSE:AGN) on their own, most
analysts see bright prospects for both.  Pfizer (NYSE:PFE), they say, could
potentially split itself into two smaller companies.  Allergan (NYSE:AGN)
is close to closing the sale of its generic business to Teva, with more
than $40 billion in proceeds headed its way.  Both are expected to remain
buyers if they remain independent from one another.

And this deal may be thwarted by the new rules, President Obama said today
the only way to stop inversions completely is for Congress to enact tax
reform.  Lowering the corporate tax rate in the U.S. appears to be just
about the only thing both sides agree on.



HERERA:  One well-known businessman made clear what he thinks about so-
called inversions and the corporate tax code.

Tyler Mathisen spoke to him at an entrepreneurial conference in Seattle.


day, as you know, in Seattle, at the Iconic Conference, a celebration
basically of entrepreneurship.  We had one of the most famous voices in
entrepreneurship here today.  And I asked him view about tax inversion.

Listen to what Kevin O`Leary of O`Leary Financial and “Shark Tank” fame had
to say.

KEVIN O`LEARY, O`LEARY FINANCIAL GROUP:  We are the most uncompetitive
corporate tax rate in the world today.  And so, our great companies like
Pfizer (NYSE:PFE), which have billions of dollars they want to repatriate
to bring back home to America can`t do it.  That`s problem number one.

Number two is they`re not competitive.  They don`t have the save income
statement that all their competitors have.  So, we`re at a disadvantage.
We can`t spend as much because we`re paying so much tax.

The last administration was focused on the distribution of wealth and
health care.  That mandate is over.  The next administration, man or woman,
who`s ever running America, must fix our corporate tax rates or we will
fall to the wayside of competitors globally and Pfizer (NYSE:PFE) is a case

MATHISEN:  O`Leary is certainly not alone in believing that it is
imperative that we fix or corporate tax system, whoever the next president
may be.

From Seattle in the Iconic Conference, Tyler Mathisen, NBR.

Back to you, Sue.


HERERA:  Thanks, Ty.

Well, we just want to point out that Kevin O`Leary is also a shareholder of
Pfizer (NYSE:PFE) stock.

The president today also said tax avoidance is a huge problem worldwide and
not just a strategy used by some American companies to lower their tax


OBAMA:  Tax avoidance is a big global problem.  It`s not unique to other
countries because, frankly, there are folks here in America who are taking
advantage of the same stuff.  A lot of it`s legal but that`s exactly the
problem.  It`s not that they`re breaking the law.  It`s that the laws are
so poorly designed that they allow people if they`ve got enough lawyers and
enough accountants to wiggle out of responsibilities that ordinary citizens
are having to abide by.


HERERA:  Eamon Javers has been following the story for us.

Eamon, the president tied tax avoidance today to the “Panama Papers”.
What`s the connection there?

is the difference between the elites and the rest of us.  And that`s the
theme you`re hearing playing out on the campaign trail in the Donald Trump
campaign and also in the Bernie Sanders campaign among Democrats.  You`re
hearing this whole suspicion among American voters that elites somehow get
a better deal than the rest of us get.

And that`s what the president was trying to tap into with that comment that
wealthy people in corporations with better accountants and lawyers are out
there playing by a different set of rules.  That`s politically powerful
stuff.  We`ll see whether it works in this case.

HERERA:  We saw the first casualty of the Panama Papers.  Iceland`s prime
minister was forced to resign.  What do we know?

JAVERS:  Well, a bizarre situation in Iceland today.  We saw massive
protests in that country, which was so hard hit by the global financial
crisis, after the prime minister there, his name and his wife`s name showed
up in these documents that were revealed over the weekend from a law firm
in Panama, which sets up shell corporations.

The political pressure on the prime minister there was intense to step
down.  His deputy said he was going to step down.  And then he later
clarified may be he wasn`t going to step down.  Maybe must a temporary
basis.  But in the end, it appears he has succumbed to the political
pressure and will withdraw from that office.  That may be just the first of
other presidents around the world who are impacted by this scandal.

HERERA:  Yes.  British Prime Minister David Cameron is also taking heat in
his country.  What did he say?

JAVERS:  Well, he said he has no beneficial ownership.  He doesn`t have any
shares.  He`s never used an offshore account.

But the reason he was forced to answer the question was because in the
Panama Papers documents that were released over the weekend, his late
father`s name shows up as potentially one of the people who owned one of
those offshore accounts.  So, Cameron, very clear in his comments today
saying that he does not own any shares now.  One of the questions is going
to be, did he ever, did his family ever and what benefitted the family get

HERERA:  All right.  Eamon, thank you very much.  Eamon Javers for us in

Well, a rough session on Wall Street as stocks fell for a second straight
day.  The decline here followed a drop in markets overseas.  So, by the
finish, the Dow Jones Industrial Average was off more than 133 points to
17,603, the NASDAQ declined 47, I should say, and the S&P 500 fell 20.

Hiring in the U.S. reached a nine-year high in February.  The Labor
Department reported that 5.4 million people found jobs that month.  That`s
nearly a 6 percent increase from January and the most since November of
2006.  More Americans also quit their job, a sign of a healthy labor market
and worker confidence.

Growth in the services sector, which accounts for about 80 percent of the
economy picked up for the first time in months.  The Institute for Supply
Management`s non-farming manufacturing index rose in March from the prior
month.  The report eases some fears that slowdown overseas was spilling
over here into the U.S. economy.

HERERA:  The housing economy and the red hot apartment market in particular
is starting to show some cracks.  Rents are still rising but not by as
much.  And a huge supply of new apartments coming to market nationwide has
banks and developers nervous.

Diana Olick explains.


Commons in Washington, D.C., 94 percent of the 145 apartments are filled.
High end buildings like this one are multiplying fast, and that is taking a
toll on what have been red hot rising rent.  Annual rent growth in first
quarter of this year was 4.5 percent.  Still strong but a significant slow
down from the 5 percent annual gains in the previous quarter.  Vacancies
have been rising now for three straight quarters.

RYAN SEVERINO, REIS, INC.:  Banks are starting to pull back on construction
lending.  So, I do believe that banks are somewhat concerned as it relates
to the amount of dollars they have out on multi-family properties right

OLICK:  New construction during the first quarter of this year was at the
highest level since 1999 when REIS started tracking this.  Over the last 12
months, just over 200,000 new units were completed, the highest year over
year tally since 1988.  That has banks who lend to this market worried.

WILLY WALKER, CEO WALKER & DUNLOP:  Supply is really starting out strip
demand.  Contrary to some of the conventional wisdom, there isn`t this
insatiable pool of demand because of the significant number of millennials.
And not that there aren`t a lot of them, but it`s not infinite.

OLICK:  Which maybe healthy for the high end glut, but not so good for
young renters, because the supply of affordable rental housing is still
very low.  Still, some argue that the oversupply of luxury buildings like
this one will actually fuel more affordable housing.

SEVERINO:  The way you create C class properties is add new A`s and the A`s
turned to B`s and the B`s turn to C`s.  And so, quote/unquote, “affordable
housing” and building affordable housing, there are very few developers out
there that are building affordable housing.  So, what happens overtime is
you get new supplies of A`s which push everything down.

OLICK:  That however takes everything down, which means that while the rent
burden may ease for some high end renters, those struggling most will get
no relief.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.


HERERA:  Still ahead, cord cutting, declining cable viewership as if Disney
(NYSE:DIS) shareholders didn`t have enough to worry about.  Now, there`s
something else.


HERERA:  Ford will invest more than one and a half billion dollars to build
a new plant in Mexico.  The move will create more than 2,800 jobs by the
year 2020.  The automaker says it remains committed to adding jobs in the
U.S., even as it expands south of the border.  Ford has been criticized by
GOP front-runner for its manufacturing operations outside the U.S.  Today,
Trump called Ford`s move a disgrace.

The governor of Mississippi has signed a controversial Religious Freedom
Bill into law.  Governor Phil Bryant signed the legislation despite
opposition from gay rights groups and some businesses who say it`s
discriminatory.  The legislation allows businesses to deny services to
members of the gay and lesbian community based on religious beliefs.  North
Carolina recently enacted a similar law.

And in response to that North Carolina law, PayPal says it`s abandoning
plans to expand into Charlotte.  That move would have added millions of
dollars to the local economy and create about 400 jobs.  But PayPal says
the new law perpetuates discrimination and violates the values at the core
of PayPal`s mission.

From North Carolina to Ohio, where that state has seen its auto and steel
industry slow.  But now, the Buckeye State is reinventing its economy,
shifting from manufacturing to a future in e-commerce.

Courtney Reagan reports from Troy Township, Ohio.


of online shopping is the ability to shop when ever from wherever.  And
there is a hub for retailers to locate ecommerce fulfillment centers, not a
major shopping area, but the Buckeye States.

fulfillment centers, Ohio is usually at the top of the list for retailers.
If you`re going to have one distribution center, or one fulfillment center,
they can serve most of the nation from that area.

REAGAN:  Home Depot (NYSE:HD) says this Troy Township, Ohio location,
allows it to deliver to 90 percent of its customers within two days.  The
choice to locate has added nearly 600 jobs to the area.  And Home Depot
(NYSE:HD) calls the labor force good when it comes to the availability of
high quality employees.

LAYO:  Our clients have, who have a fulfillment or distribution presence in
Ohio typically have a more tenured or a more skilled work force, and the
way that manifests itself is the labor productivity.

REAGAN:  In the U.S., the growth rate for warehouse jobs has outpaced total
job growth since the Great Recession.  In Ohio, the industry contributed
more than 3,000 job jobs, the largest gain since 2007.  And the state`s
many colleges and universities are adding programs.  Some with help of
federal grant money to keep those jobs here.

just opened up our supply chain career development center.  And it covers a
variety of different training and educational opportunities in the supply
chain logistics area.  We offer training in forklift operation, or
industrial truck certification, global logistics certificates, to one year
certificates, to associate degree.

REAGAN:  And while states compete with incentives for businesses to locate
their operation, Ohio is often the top choice for retailers of late.  The
state now hosts nearly 800 warehouse and storage establishments, double
those in Tennessee, though still fewer than Pennsylvania.  Two other states
considered ideal for distribution.

In addition to proximity to population and the strong labor force, Ohio is
a less expensive option.  The major interstates, rail lines and air cargo
hubs make it less expensive to move goods into and out of state quickly.
Plus, some private equity investors estimate tax incentives and cheaper
land can save a retailer as much as 20 percent in operating costs.

Kurt Salmon retail consultant Frank Layo also says an added benefit is a
collegiality of Ohio`s retail network, a group of companies even shared
shipping containers during last year`s port crisis.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan, in Troy Township, Ohio.


HERERA:  Revenue at Walgreens Boots alliance misses estimates and that is
where we begin tonight`s “Market Focus”.

The drugstore is blaming a slow flu season for weak demand for cold
medicine.  Profit however rose, thanks in part to cost-cutting efforts and
higher prescription sales.  The company also raised its yearly guidance on
its earnings.  That wasn`t enough, though.  Walgreens shares fell more than
3 percent to $83.36.

Some positive news for Valeant Pharmaceuticals.  The company says it will
not have to restate financial statements pertaining to pharmacy Philidor
and that no outstanding issues were found in Valeant`s accounting
practices.  The company says it expects to release its 2015 financial
report by April 29th.  Shares rose a full 10 percent to $28.73.

Marvel Technology CEO and president have been ousted.  This after an
internal investigation revealed ethical issues within the company`s
management.  The co-founders are expected to maintain their seats on the
company`s board of directors.  Shares were up 13 percent to $10.88.

The Justice Department will reportedly file a lawsuit this week to stop the
proposed merger between oil service providers Halliburton (NYSE:HAL) and
Baker Hughes (NYSE:BHI).  As first reported by Bloomberg, officials will
say the deal violates antitrust laws.  The two oil companies have not
commented on that report.  Shares of Halliburton (NYSE:HAL) up a percent to
$34.40, while Baker Hughes (NYSE:BHI) shares fell 5 percent to $39.36.

A surprise departure at Disney (NYSE:DIS).  The company`s chief operating
officer and heir apparent to CEO Bob Iger says he`s leaving the company.
And the move has Disney (NYSE:DIS) shareholders concerned.  The stock fell
more than 1 1/2 percent in trading today.

Julia Boorstin has more on the big question mark now hanging over one of
the most well-known and widely held companies.


UNIDENTIFIED MALE:  Please welcome, Tom Staggs.

apparent to Disney (NYSE:DIS) CEO Bob Iger stepping down from his position
in May, shocking Hollywood insiders and Disney (NYSE:DIS) investors.

JAMES STEWART, NEW YORK TIMES COLUMNIST:  Iger I thought he was doing a
fantastic job as he`s done many aspects of management, and laying the
groundwork for succession, a smooth transition, highly qualified, very
popular, very smart, great candidate in Tom Staggs.

BOORSTIN:  When Staggs was appointed COO last February, he seemed perfectly
position to take over from Iger when his contract expired in June 2018.
Staggs was CFO for a dozen years and well-liked by Wall Street analysts and
investors, and then ran the parks and resorts division for five years,
overseeing high tech wrist bands My Magic Plus, and laying the groundwork
for the launch of Disney (NYSE:DIS) Shanghai coming up in June.

So, what happened?  It had been a year since Staggs became COO, a source
close to the situation telling me Disney`s board wasn`t ready to assure him
he`d be Iger`s successor in two years.  Without that guarantee and with the
board wanting to explore other options, it didn`t make sense for Staggs to

DOUG CREUTZ, COWEN & CO. ANALYST:  It`s surprising and a little mystifying,
frankly.  I mean, Tom`s been a senior executive at Disney (NYSE:DIS) for
two decades.  You know, one would have thought that he was pretty known
quantity and they evaluated him thoroughly and that he was the heir
apparent, and obviously seems like the board made a difference decision.

BOORSTIN:  Now, Disney`s board is making an executive search a to priority,
saying it will, quote, “broaden the scope of the planning process to
identify and evaluate a robust slate of candidates for consideration.”

A source telling me Disney (NYSE:DIS) is particularly focused on looking
for candidates outside the company, and that it`s far too soon for any
speculation to be meaningful.  And while Disney (NYSE:DIS) says Iger does
intend to step down when his contracts expires, it`s possible that the
acclaimed CEO could extend his contract again.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.


HERERA:  Twitter has bought the rights to live stream ten Thursday night
NFL games as they air on NBC or CBS (NYSE:CBS), beating out Amazon
(NASDAQ:AMZN) and Verizon (NYSE:VZ).  The win allows the social media
company to stream the games through its app on mobile devices and game
consoles without requiring users to sign up.

Matt Ufford, editor at large and video host with any sports news website SB
Nation, joins us to explain what this means for Twitter and, obviously, for
our viewers as well.

Welcome, Matt.  Nice to have you here.


HERERA:  So, what do you make of this deal with Twitter?

UFFORD:  In the simplest terms possible, I`d say it`s a win-win in that
Twitter, which has struggled a little bit on the business side, gets this
great package in the NFL and the NFL, by giving it to Twitter, gets
probably the best social media platform for responding to live events.

HERERA:  Yes.  They`ve been — they really had a hard time growing their
users base.  That`s been disappointing to Wall Street and somewhat
surprising initially to Wall Street.  Does this help them achieve that?

UFFORD:  I think so.  The way that Twitter is going to air the games, you
don`t have to be a user to be able to watch the Thursday night games.  So,
you can go and I`m guessing how they`re going to air that, you`re going to
have the opportunity to sign up and make an account and talk with all the
other people in sports media who are complaining about the Thursday night
quality of the games.

HERERA:  You know, they got this deal for a bargain when you compare what
Yahoo (NASDAQ:YHOO) paid to stream one game last year, which was $20
million.  Twitter got ten games for $10 million.  Does any of that have to
do with Anthony Noto who is the CFO at Twitter but was the CFO at the NFL?

UFFORD:  Certainly, there`s a relationship between Twitter and the NFL.
Last year, Twitter and the NFL came to an agreement by giving Twitter the
right to air certain NFL highlights.  But more to the point is that Twitter
is going to be streaming the NBC or CBS (NYSE:CBS) feed.  They`re not going
to have the same advertising opportunities.  When Yahoo (NASDAQ:YHOO) aired
the London game last year, they were also responsible for the broadcast and
all the advertising opportunities that came with that.

HERERA:  We`ve talked about what it means for Twitter.  But what does it
mean for the NFL?

UFFORD:  I think this just one more opportunity for the NFL to make sure
that it is in every American`s face every day of the year despite there
only being 16 regular season games a year.  It`s a 365-day news cycle for

HERERA:  How much does it have to do with international reach, she tried to

UFFORD:  You know, that`s a good point.  I think that last year game was
streamed on Yahoo (NASDAQ:YHOO), 33 percent of the streams came from
international users.  I think that, you know, Twitter is the live social
media platform, whether it`s Arab spring or the Oscars or the Super Bowl,
this is something the world can use to react to a live event.

HERERA:  All right.  Matt, thanks so much.  Appreciate it.

UFFORD:  Thank you.

HERERA:  Matt Ufford with SB Nation.

Coming up, they may sound strange but some oddball deductions may help you
lower your tax bill.


HERERA:  Come tax season, everyone wants to know how to make the most of
every deduction so they can lower that tax bill.  So, we did some digging
or Sharon did, and found a few very strange but very legal federal

Sharon Epperson joins us now.

Good to see you, Sharon, as always.


HERERA:  Are there any deductions that, you know, maybe fly underneath the
radar, but are applicable to a wide group of people?

EPPERSON:  Well, a lot of people are taking classes these days to reinvent
themselves and their career, just to stay fresh with job skills, graphic
skills, social networking classes, graphic design, maybe learning another
language.  You could possibly get a $2,000 credit on your taxes for taking
the classes, a lifetime learning credit.  So, that`s something to consider.

HERERA:  Absolutely.

EPPERSON:  The other thing that a lot of people —

HERERA:  Does it count for common core math?


EPPERSON:  I`ll get to the kids in a minute, I`ll get to the kids in a

But pet moving expenses.  When you move and relocate you`re changing jobs
and moving out of state.  You need get your pets there, too.  Yes, you can
deduct the moving expenses for your cat, dog, cat.  That`s something a lot
of people do not consider either.

The other one is smoking cessation programs.  That, you may be able to have
a deductible expense for that.

And one about kids that we know but we know that a lot of our friends don`t
know is about summer camp.  Your kids under 13 years old, you can take a
child dependent care.  If you have two or more kids, they`re under 13, up
to $2,100 because they`re the day camp.  Just to make sure you keep the

HERERA:  Yes, exactly.  You have to keep the records.

And that could cover, if it`s not sleep away camp, that`s a very expensive.
But if it`s like a day camp.

EPPERSON:  No, it`s only for day camp.  It`s not for overnight camp, but it
can cover a lot of the costs.  Some of these day camps are very expensive
as well.

HERERA:  You know, do people — what kind of documentation do you have to
have with some of this stuff?


EPPERSON:  Yes, I have to get to that.  But for one, I have to tell you
about some really crazy ones, first.  Let me tell you about some really
crazy ones that people don`t know, which is gambling losses.

You can usual — you have to claim the income on the winnings, but if you
have losses, that can offset that.  The other one that`s crazy to people
can`t believe is a swimming pool in your house that you might need for
medical treatment.  There has been case where someone has been able to
deduct that expense.

So, and also pets for business, they`re kind of — the guard dog for your
home business.  That`s something else you can —

HERERA:  Oh for your home business?

EPPERSON:  For your home business.

HERERA:  Right.

EPPERSON:  All of this, though, requires documentation.  It requires
keeping really good records, having the documentation in hand before you
file, not because you have to submit it with your return, but you just want
to make sure that you have all those records.  So, we know we have done

HERERA:  It probably wouldn`t hurt to submit it with the returns.

EPPERSON:  Well, definitely to your accountant, to make sure if someone
else is doing your tax return.  But with the actual return, you don`t
necessarily have to.  But you need to keep that on hand, because you don`t
want to get audited, but we talked about this before.  You just want to be
ready in case it happens.

The other thing is, that you want to look at all this to see whether or not
itemizing or taking the standard deduction is best for you.  So, when you
look at all these different types of deductions that you can take, look at
the expenses.  Then you can figure that out

HERERA:  I don`t know how long it took you to find those things, but thank

EPPERSON:  You`re welcome.

HERERA:  Appreciate it, Sharon Epperson.

All right.  That does it for NIGHTLY BUSINESS REPORT.  Thanks for joining
us.  I`m Sue Herera.  We`ll see you tomorrow.


Nightly Business Report transcripts and video are available on-line post
broadcast at The program is transcribed by CQRC
Transcriptions, LLC. Updates may be posted at a later date. The views of
our guests and commentators are their own and do not necessarily represent
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