Wealth Matters: The End of a Decade of Uncertainty Over Gift and Estate Taxes

FOR many of the wealthy, the American Taxpayer Relief Act, passed this week by Congress, is aptly named.

For estate and gift taxes in particular, all but the richest of the rich will probably be able to protect their holdings from taxes, now that Congress has permanently set the estate and gift tax exemptions at $5 million (a level that will rise with inflation).

“You could say this eliminates the estate tax for 99 percent of the population, though I’ve seen figures that say 99.7 or 99.8,” said Richard A. Behrendt, director of estate planning at the financial services firm Baird and a former inspector for the Internal Revenue Service. “From a policy point of view, the estate tax is not there for raising revenue. It’s there for a check on the massive concentration of wealth in a few hands, and it will still accomplish that.”

And while Congress also agreed to increase tax rates on dividends and capital gains to 20 percent from 15 percent for top earners — in addition to the 3.8 percent Medicare surcharge on such earnings — the rates are still far lower than those on their ordinary income. For the earners at the very top, whose income comes mostly from their portfolios of investments, and not a paycheck like most of the rest of us, this is a good deal.

The estate tax, once an arcane assessment, has been in flux and attracting significant attention since 2001. That was when the exemption per person for the estate tax began to rise gradually from $675,000, with a 55 percent tax for anything above that amount, to $3.5 million in 2009 with a 45 percent tax rate for estates larger than that. Estate plans were written to account for the predictable increases in exemptions.

Then in 2010, contrary to what every accountant and tax lawyer I spoke to at the time believed would happen, the estate tax disappeared. Congress and President Obama could not reach an agreement on the tax. So that year, for the first time since 1916, Americans who died were not subject to a federal estate tax. (Their estates still paid state estate taxes, where they existed, and other taxes, including capital gains, on the value of the assets transferred.)

At the end of 2010, President Obama and House Speaker John A. Boehner reached an agreement that was just as unlikely as the estate tax expiring in the first place: the new exemption was $5 million, indexed to inflation, with a 35 percent tax rate on any amount over that, and it would last for two years. The taxes and exemptions for gifts made during someone’s lifetime to children and grandchildren were also raised to the same level, from $1 million and a 55 percent tax above that.

As I have written many times, this was a far better rate and exemption than anyone expected. It also created a deadline of Dec. 31, 2012, for people who could make a major gift up to the exemption level or above the amount and pay the low gift tax.

Using the gift exemption was enticing because it meant those assets would appreciate outside of the estate of the person making the gift. Even paying the tax became attractive to the very rich because of how estate and gift taxes are levied. Take, for example, someone who has used up his exemption and wants to give an heir $1 million. The amount it would take to accomplish this differs depending on when it is given. In life, it would cost $1.4 million because the 40 percent gift tax is paid like a sales tax. If it was given after death, the estate would have to set aside about $1.65 million after the 40 percent estate tax was deducted. But this presented a conundrum: while it may make perfect sense to give away a lot of money during your lifetime and save on estate taxes, it means ceding control of cash, securities or shares now. What if you end up needing them? It wasn’t an easy decision, and it led to a fourth-quarter rush.

As of this week, this is no longer an issue. The estate and gift tax exemptions are permanently set at the same $5 million level, indexed for inflation, and the tax rate above that exemption is 40 percent, up from 35 percent. With indexing, the exemption is already about $5.25 million per person — double for a couple — and it will rise at a rate that means most Americans will continue to avoid paying any federal estate tax.

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Bush-Era Wiretapping Case Killed Before Reaching Supreme Court

A federal appeals court’s August ruling in which it said the federal government may spy on Americans’ communications without warrants and without fear of being sued won’t be appealed to the Supreme Court, attorneys in the case said Thursday.

The decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals this summer reversed the first and only case that successfully challenged then-President George W. Bush’s once-secret Terrorist Surveillance Program. In December, the San Francisco-based appeals court — the nation’s largest — declined to revisit its decision — making the case ripe for an appeal to the Supreme Court.

The appellate decision overturned a lower court decision in which two American attorneys — who were working with the now-defunct al-Haramain Islamic Foundation — were awarded more than $20,000 each in damages and their lawyers $2.5 million in legal fees after a years-long, tortured legal battle where they proved they were spied on without warrants.

Jon Eisenberg, the attorney for the two lawyers, said in a telephone interview that he would lose in the Supreme Court with its “current composition.”

“It would be a risky endeavor to take this case to this Supreme Court,” he said.

Eisenberg’s legal strategy means that the appellate court’s decision remains binding only in the 9th Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. Had the Supreme Court ruled against Eisenberg, a nationwide precedent would be set.

“At some point down the line, a case could end up in a different circuit that would not be bound by the 9th Circuit ruling,” Eisenberg said. By that time, he said, perhaps a more willing Supreme Court would be sitting.

Eisenberg sued under domestic spying laws Congress adopted in the wake of President Richard M. Nixon’s Watergate scandal. The government appealed their victory, and the appeals court dismissed the suit and reversed the damages.

The appellate court had ruled that when Congress wrote the law regulating eavesdropping on Americans and spies, it never waived sovereign immunity in the section prohibiting the targeting Americans without warrants. That means Congress did not allow for aggrieved Americans to sue the government, even if their constitutional rights were violated by the United States breaching its own wiretapping laws.

Congress authorized Bush’s spy program in 2008, five years after the illegal wiretapping involved in this case. Last week, Congress reauthorized it for another five years.

The Bush spy program was first disclosed by The New York Times in December 2005, and the government subsequently admitted that the National Security Agency was eavesdropping on Americans’ telephone calls without warrants if the government believed the person on the other end was overseas and associated with terrorism. The government also secretly enlisted the help of major U.S. telecoms, including AT&T, to spy on Americans’ phone and internet communications without getting warrants as required by the 1978 Foreign Intelligence Surveillance Act, the law at the center of the al-Haramain dispute.

A lower court judge found in 2010 that two American lawyers’ telephone conversations with their al-Haramain clients in Saudi Arabia were siphoned to the National Security Agency without warrants. The government subsequently declared the group a terror organization. The eavesdropping allegations were initially based on a classified document the government accidentally mailed to the former al-Haramain Islamic Foundation lawyers Wendell Belew and Asim Ghafoor.

The document was later declared a state secret, removed from the long-running lawsuit and has never been made public. With that document ruled out as evidence, the lawyers instead cited a bevy of circumstantial evidence that a trial judge concluded showed the government illegally wiretapped the lawyers as they spoke on U.S. soil to Saudi Arabia.

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Taylor Swift’s ”Red” holds down top spot on Billboard chart

LOS ANGELES (Reuters) – Country-pop star Taylor Swift‘s “Red” finished 2012 atop the Billboard 200 album chart on Thursday, claiming the No. 1 spot for the fourth consecutive week.

It was the album’s seventh non-consecutive week at No. 1 on the chart as post-holiday digital sales accounted for more than half of its 241,000 units sold, according to figures from Nielsen SoundScan.

Swift, 23, has now topped the Billboard album chart for 24 weeks in her four-album career, tying Adele for the most weeks by a female artist at number one on the chart since Nielsen SoundScan began tracking sales figures for Billboard in 1991.

The soundtrack to the big screen adaptation of Broadway musical “Les Miserables” jumped 31 spots to number two on the album chart. It sold 136,000 units and was buoyed by a full week on the chart and the release of the film in movie theaters on December 25.

British boy band One Direction placed third with “Take Me Home,” while singer Bruno Mars‘ “Unorthodox Jukebox” and rapper T.I.’s “Trouble Man: Heavy Is the Head” round out the top five.

U.S. album sales for last week were up 27 percent compared to the same week in 2011, at 9.77 million units.

The post-Christmas week, in which many cashed in their holiday gift cards, saw a record for digital song downloads in a week as a total of 55.74 million tracks were downloaded, besting the previous record of 47.73 million from the same week in 2008.

(Reporting by Eric Kelsey; Editing by Sandra Maler)

Music News Headlines – Yahoo! News

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Deepwater Horizon Owner Settles With U.S. Over Oil Spill in Gulf of Mexico

The driller whose floating Deepwater Horizon oil rig blew out in 2010 to cause the nation’s biggest oil spill has agreed to settle civil and criminal claims with the federal government for $1.4 billion, the Justice Department announced Thursday.

The Deepwater Horizon exploded, burned and sank in April 2010. Eleven men were killed and millions of gallons of oil flowed into the Gulf of Mexico and fouled the shores of coastal states. The Macondo well was owned by British oil giant BP, which settled its own criminal charges and some of its civil charges in November for $4.5 billion.

While this settlement resolves the government’s claims against Transocean, that company and the others involved in the spill still face the sprawling, multistate civil case, which is scheduled to begin in February in New Orleans. In a deal filed in federal court in New Orleans, a subsidiary, Transocean Deepwater, agreed to one criminal misdemeanor violation of the Clean Water Act and will pay a fine of $100 million. Over the next five years, the company will pay record civil penalties of $1 billion under the act. Transocean also agreed to pay the National Academy of Sciences and the National Fish and Wildlife Foundation $150 million each. Those funds will be applied to oil spill prevention and response in the Gulf of Mexico and natural resource restoration projects. The agreement will be subject to public comment and court approval. The company agreed to five years of monitoring of its drilling practices and improved safety measures.

In a statement, Transocean Ltd., the Switzerland-based parent of the rig owner, said that the company thought these were “important agreements” and called them a “positive step forward” that were “in the best interest of its shareholders and employees.” Of the 11 men killed on the rig, the company said, “Their families continue to be in the thoughts and prayers of all of us at Transocean.”

The company announced in September that it had set an “estimated loss contingency” of $1.5 billion against the Justice Department’s claims.

Shares of Transocean Ltd. rose nearly 3 percent on the news, to close at $49.20.

In a statement, Lanny A. Breuer, assistant attorney general for the Justice Department’s Criminal Division, seemed to suggest that Transocean played a subservient and lesser role in the disaster to that of BP: “Transocean’s rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs — at a tragic cost to many of them.” He said that the $1.4 billion “appropriately reflects its role in the Deepwater Horizon disaster.”

Under a law passed last year, 80 percent of the penalty will be applied to projects for restoring the environment and economies of Gulf states.

That fact was applauded by a coalition of Gulf coast restoration groups, including the Environmental Defense Fund and the National Audubon Society. A joint statement called this “a great day for the Gulf environment and the communities that rely on a healthy ecosystem for their livelihoods.”

Still, the penalty struck some experts in environmental law as somewhat light. David M. Uhlmann, who headed the Justice Department’s environmental crimes section from 2000 to 2007, praised the size of the civil settlement, which he said “reflects the scope of the Gulf oil spill tragedy.”

He argued, however, that the criminal penalty should have been at least as onerous, “given Transocean’s numerous failures to drill in a safe manner, which cost 11 workers their lives and billions of dollars in damages to communities along the Gulf.” The settlement, he said, should have included seaman’s manslaughter charges, which were part of the BP settlement.

As for the company’s role in following the lead of BP, he said, “following orders is not a defense to criminal charges.”

At the Environmental Protection Agency, Cynthia Giles, assistant administrator for the office of enforcement and compliance assurance, called the settlement “an important step” toward holding Transocean and others involved in the spill accountable. “E.P.A. will continue to work with D.O.J. and its federal partners to vigorously pursue the government’s claims against all responsible parties and ensure that we are taking every possible step to restore and protect the Gulf Coast ecosystem,” she said.

The multistate trial over claims in the Deepwater Horizon cases that have not been settled are scheduled to begin in February. Stephen J. Herman and James P. Roy, lawyers who represent the steering committee of plaintiffs in the cases, said that Thursday’s settlement did not change the case, and that the plaintiffs thought that BP, Transocean and Halliburton “will be found grossly negligent” at trial.

For its part, BP continued its longstanding argument that the accident, in the words of the spokesman Geoff Morrell, “resulted from multiple causes, involving multiple parties,” and that other companies had to shoulder their share of the blame. Transocean, Mr. Morrell said in a statement, “is finally starting, more than two-and-a-half years after the accident, to do its part for the Gulf Coast.” He then turned his attention to the other major contractor on the well, and said, “Unfortunately, Halliburton continues to deny its significant role in the accident, including its failure to adequately cement and monitor the well.”

Beverly Blohm Stafford, a Halliburton spokeswoman, said that the company “remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP’s specifications for its well construction plan and instructions,” and so Halliburton, she said was protected from liability through indemnity provisions of its drilling contract. “We continue to believe that we have substantial legal arguments and defenses against any liability and that BP’s indemnity obligation protects us,” she said. “Accordingly we will maintain our approach of taking all proper actions to protect our interests.”

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Enraged Chris Christie attacks Boehner, House GOP over Sandy aid

New Jersey Gov. Chris Christie delivered a spirited condemnation of Republican House leadership for its reluctance to vote on a relief bill for Hurricane Sandy.

WASHINGTON – Enraged over Congress' failure to approve disaster relief for victims of Superstorm Sandy, Gov. Chris Christie of New Jersey unloaded Wednesday on House Speaker John A. Boehner and Republican lawmakers in Washington for putting "palace intrigue" ahead of their official responsibilities.

Washington politicians "will say whatever they have to say to get through the day," Christie said, adding that, as a governor, he had "actual responsibilities" -- "unlike people in Congress."

Christie, a potential 2016 GOP presidential contender, reserved his most blistering words for the Republican House speaker.  He described Boehner, variously, as selfish, duplicitous and gutless for reversing course at the last minute on Tuesday night and refusing to allow a vote on a $60-billion aid package before the current Congress adjourned.

PHOTOS: Scenes from the fiscal cliff

Christie said that as a result of "the speaker’s irresponsible action," there will be further delay in federal disaster aid to New Jersey, New York, Connecticut and other areas hit by the October storm. He pointed out that it had been 66 days since the storm hit and that areas struck by other hurricanes in recent years had received relief packages in far less time. 

However, as outrage continued to pour in from elected officials in the affected area, Boehner agreed to hold a vote Friday to direct needed resources to the National Flood Insurance Program. And on Jan. 15, the first full legislative day of the 113th Congress, the House will consider the remaining supplemental request for the victims of Hurricane Sandy.

But that came after Christie dished out his cold outrage on members of his own party. 

"Shame on you. Shame on Congress," Christie said at a news conference in Trenton, the state capital. "It's absolutely disgraceful, and I have to tell you, this used to be something that was not political. Disaster relief was something you didn't play games with." But "in this current atmosphere, [it's] a potential piece of bait for the political game.  It is why the American people hate Congress."

At another point, he said of Republicans in Congress: "We've got people down there who use the citizens of this country like pawns on a chessboard."

PHOTOS: 2016 presidential possibilities

"My party was responsible for this," Christie said, charging "one set of Republicans was trying to prove something to another set," and that Boehner was trying to "prove something. I hope he accomplished it."

Christie, whose disaster-relief-themed efforts to reach across partisan lines to President Obama in the days leading up to the election angered many Republicans, said he did not think that was a factor in Boehner's decision. 

But the governor, who delivered the keynote address at last summer's Republican National Convention and has helped raise money in recent years for fellow members of the party, did not rule out retaliating against his enemies in Washington.

"We'll see. Primaries are an ugly thing," he said.

[For the Record, 1:46 p.m. PST  Jan. 2: This post has been updated to include the House's new plan to vote on Sandy aid.]

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Bartenders Get Your Foursquare Dossier

Foursquare has loads of data on users’ habits, but the information it can share with merchants has been tightly limited. Until now.

The mobile check-in service has quietly updated its privacy policy to say the company will share your history of visits with any merchant you check in to, allowing everyone from your local baker to your neighborhood dive bar to your favorite national pharmacy chain to see just how often you’ve been visiting their venue in recent days, months, or possibly years.

Take, for example, the owner of your favorite bar. Under the old system, if you checked in once at 11 p.m. and again the next day at noon, the owner would only know you are a repeat customer if he checked Foursquare’s database before 3 p.m. on the second day. Even then, he’d only see that you had visited once before; he wouldn’t know it was barely 12 hours prior. Under the new policy, the bar owner will be able to take his time checking the Foursquare database, and Foursquare is empowered to show him the exact date and time of all your prior visits. If the owner can put a name, face, and detailed dossier to his die-hard customers, he will have even greater incentive to buy Foursquare ads, which can be targeted at regulars. That means more revenue for Foursquare, which has reportedly had trouble convincing investors to support its $760 million venture capital valuation.

Foursquare’s current privacy policy and an accompanying document allow merchants to see limited information about you if you’ve checked in within the last three hours or if you’re one of their 10 most frequent visitors. In those situations, the merchant can see your total number of check-ins along with your name, photo, and linked accounts, like Twitter or Facebook.

Under the new privacy policy set to take effect Jan. 28, far fewer limits are placed on those same merchants. They will be able to see information on more customers, according to an e-mail Foursquare sent to users Dec. 31, being able to see everyone who checked in over an unspecified period longer than the current three hours.

Foursquare also isn’t specifying any limits on how much of your history will be visible to places where you’ve checked in. In a new section of the privacy policy about sharing with “Businesses, Locations, Events and Brands,” the company simply says that “when you check-in to a particular location that is a ‘claimed location’ your check-ins are shared with that location in order for it to better provide services to you.” An accompanying FAQ, linked in the privacy policy, provides little more detail, saying only that merchants can see “who has recently checked into their location and/or event as well as a list of frequent visitors to their location.”

Foursquare told users about its expanded sharing of personal information over the holidays, strongly hinting that it wanted to keep the change quiet. Like other media outlets, Wired has been unable to reach the company for more specifics on the change. The last thing Foursquare wants is for users to worry about privacy and stop checking in. At the same time, CEO Dennis Crowley has said Foursquare is trying to find new ways to leverage its huge trove of user data, a key asset as the company, backed by more than $70 million in venture capital, tries to turn a profit.

As Foursquare tries to make more money by sharing more information, it is wise to be wary of blowback. Much more than Facebook or Twitter, Foursquare is the social network people take with them into bars, nightclubs, and other semi-private, semi-shady venues. And no one wants a drinking buddy who blabs.

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From “Les Misérables” to “The Hobbit,” holiday movies are getting longer

LOS ANGELES (TheWrap.com) – Moviegoers rushing out to catch “Django Unchained” or “The Hobbit” over New Year’s should consider packing an overnight bag.

The average length of a holiday movie has been larded up by nearly 10 minutes since 2011, according to a survey of the running times of the top 10 box office films of the final weekend of the year. They ran well over two hours.

Moreover, the top 10 grossing holiday movies of 2012 were nearly 25 minutes longer than they were just two years ago.

Of the five top earners last weekend, only one film, the family flick “Parental Guidance,” clocks in at under two hours. In contrast, three of those movies, “Django Unchained,” “The Hobbit: An Unexpected Journey” and “Les Misérables,” eat up roughly 160 minutes of ticket-buyers’ time.

And that group doesn’t even take into account hits like “Skyfall” (143 minutes), “The Avengers” (143 minutes) and “The Dark Knight Rises” (165 minutes) or limited release films such as “Zero Dark Thirty” (160 minutes), all of which boast the kind of languorous pacing usually reserved for a David Lean epic.

The capacious running times are testing moviegoers’ patience, as well as bladders. In the Los Angeles Times Monday, Steven Zeitchik bemoaned the series of false endings in films like “Lincoln” and “Life of Pi.” He argued that several accomplished filmmakers are piling on the climaxes and prolonging the ending credits in a way that undermines the emotional impact of their word.

“Hollywood films are struggling to find the exit,” Zeitchik wrote. “Stories that seem to end, end again, and then end once more. Climactic scenes wind down, then wind up. Movies that appear headed for a satisfying resolution turn away, then try to stumble back.”

Also crying out for a bloodier approach in the editing suite was Variety’s Josh Dickey. The swollen run times aren’t just artistically necessary, he noted – they actually damage a film’s box-office take.

“It turns out that a long runtime causes no positive or negative reaction during a film’s marketing period,” Dickey wrote. “And for really big event movies, viewers sometimes feel a longer movie gave them their money’s worth (call it the TGI Friday’s portion-size effect). But once a film gets playing, social response suggests long length can stall its word-of-mouth momentum, usually emerging as secondary complaint – but a persistent one.”

It’s certainly true that exhibitors favor shorter running times for films, because it allows them to cram in more showings on a given day. Despite Dickey’s fears, however, the expansive lengths of movies like “Lincoln” (145 minutes) and “Les Misérables” (157 minutes) haven’t scared off moviegoers.

Both movies will likely gross more than $ 100 million domestically.

Overall, the domestic box office is poised to shatter records with $ 10.8 billion in revenue. Attendance will also likely be up 6 percent by the time 2012 wraps up.

Admittedly, surveying the top 10 grossing films of a particular calendar weekend is a small sample size, but it does appear that audiences and critics are noticing that they are checking their watches more frequently as they follow Bilbo’s adventures in Middle-Earth or Jean Valjean’s travails.

It’s not clear, however, that this is a seasonal anomaly. A decade ago, films like “Gangs of New York” and “The Lord of the Rings: The Two Towers” similarly strained audience’s endurance. The average length of the top 10 films during 2002 was 126.6 minutes, just two minutes shorter than the average this year.

Movies News Headlines – Yahoo! News

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Employers Must Offer Family Health Care, Affordable or Not, Administration Says

WASHINGTON — In a long-awaited interpretation of the new health care law, the Obama administration said Monday that employers must offer health insurance to employees and their children, but will not be subject to any penalties if family coverage is unaffordable to workers.

The requirement for employers to provide health benefits to employees is a cornerstone of the new law, but the new rules proposed by the Internal Revenue Service said that employers’ obligation was to provide affordable insurance to cover their full-time employees. The rules offer no guarantee of affordable insurance for a worker’s children or spouse. To avoid a possible tax penalty, the government said, employers with 50 or more full-time employees must offer affordable coverage to those employees. But, it said, the meaning of “affordable” depends entirely on the cost of individual coverage for the employee, what the worker would pay for “self-only coverage.”

The new rules, to be published in the Federal Register, create a strong incentive for employers to put money into insurance for their employees rather than dependents. It is unclear whether the spouse and children of an employee will be able to obtain federal subsidies to help them buy coverage — separate from the employee — through insurance exchanges being established in every state. The administration explicitly reserved judgment on that question, which could affect millions of people in families with low and moderate incomes.

Many employers provide family coverage to full-time employees, but many do not. Family coverage is much more expensive, and the employee’s share of the premium is typically much larger.

In 2012, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,615 a year for single coverage and $15,745 for family coverage. The employee’s share of the premium averaged $951 for individual coverage and more than four times as much, $4,316, for family coverage.

Starting in 2014, most Americans will be required to have health insurance. Low- and middle-income people can get tax credits to help pay their premiums, unless they have access to affordable coverage from an employer.

In its proposal, the Internal Revenue Service said, “Coverage for an employee under an employer-sponsored plan is affordable if the employee’s required contribution for self-only coverage does not exceed 9.5 percent of the employee’s household income.”

The rules, though labeled a proposal, are more significant than most proposed regulations. The Internal Revenue Service said employers could rely on them in making plans for 2014.

In writing the law, members of Congress often conjured up a picture of employees working year-round at full-time jobs. But in drafting the rules, the I.R.S. wrestled with the complex reality of part-time, seasonal and temporary workers.

In addition, the administration expressed concern that some employers might try to evade the new requirements by firing and rehiring employees, manipulating their work hours or using temporary staffing agencies. The rules include several provisions to prevent such abuse.

The law says an employer with 50 or more full-time employees may be subject to a tax penalty if it fails to offer coverage to “its full-time employees (and their dependents).”

Employers asked for guidance, and the Obama administration provided it, saying that a dependent is an employee’s child under the age of 26.

“Dependent does not include the spouse of an employee,” the proposed rules say.

Thus, employers must offer coverage to children of an employee, but do not have to make it affordable. And they do not have to offer coverage at all to the spouse of an employee.

The administration said that the rules — which apply to private businesses, nonprofit organizations and state and local government agencies — would require changes at many work sites.

“A number of employers currently offer coverage only to their employees, and not to dependents,” the I.R.S. said. “For these employers, expanding their health plans to add dependent coverage will require substantial revisions to their plans.”

In view of this challenge, the agency said it would grant a one-time reprieve to employers who fail to offer coverage to dependents of full-time employees, provided they take steps in 2014 to come into compliance. Under the rules, employers must offer coverage to employees in 2014 and must offer coverage to dependents as well, starting in 2015.

The new rules apply to employers that have at least 50 full-time employees or an equivalent combination of full-time and part-time employees. A full-time employee is a person employed on average at least 30 hours a week. And 100 half-time employees are considered equivalent to 50 full-time employees.

Thus, the government said, an employer will be subject to the new requirement if it has 40 full-time employees working 30 hours a week and 20 half-time employees working 15 hours a week.

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Stocks Jump 2.5% on Fiscal Deal

Stock markets around the world ended the first trading day of 2013 with big gains, after investors welcomed a deal between President Obama and Congressional Republicans that ended, at least temporarily, an impasse over fiscal policy that had threatened chaos in the new year.

The benchmark Standard & Poor’s 500 index finished Wednesday up 2.5 percent. The technology-heavy Nasdaq composite index was up even more strongly, rising 3.1 percent. The Dow Jones industrial average rose 2.4 percent, or about 308 points.

The major indexes ended the day within striking distance of the highs they reached before the election.

The drama over the fiscal impasse ended when a sufficient number of Republicans in the House joined Democrats to back a deal the Senate had reached earlier. The deal modestly raises income taxes on the highest-earning Americans, ends payroll tax cuts and creates permanent tax cuts for others.

“You’ve just removed a huge worry from the market,” said Jonathan Lewis, the chief investment officer at Samson Capital Advisors.

Congress signed off on the deal late Tuesday night and it immediately sent stocks soaring first in Asia and then in Europe. Leading indexes rose 2.6 percent in France, 2.2 percent in Germany and 2.9 percent in Hong Kong. Markets in Japan and mainland China were closed for holidays.

In the United States, share prices experienced most of their increases in the first 30 minutes of the day and then plateaued for most of the rest of the day. In the bond market, investors sold off the longer-dated Treasuries that have been used as safe havens in recent years, pushing up the yield on the benchmark 10-year bond to 1.839 percent.

Many market strategists were already shifting their attention to the political sticking points that were not handled in this week’s agreement. Congress decided to defer for two months $110 billion of government budget cuts that were supposed to begin on Tuesday. Those cuts will have to be dealt with around the same time the government hits the so-called debt ceiling, beyond which it may not be able to borrow more money in the bond markets.

“There’s a recognition that this isn’t the end of the game,” said Jack Malvey, the chief market strategist at BNY Mellon.

In economic reports, the Institute for Supply Management said manufacturing in the United States expanded slightly in December. Its manufacturing activity index rose to 50.7 points in December, up from 49.5 in November.

In Europe, manufacturing activity remained in the doldrums. Surveys of purchasing managers by Markit Economics showed euro zone factories ended 2012 in poor shape, with both production and new orders declining in December. German factories posted declines in both output and new orders, according to the Markit data, while the Spanish manufacturing shrank a 20th consecutive month, with both the decline and the pace of job cuts accelerating.

This article has been revised to reflect the following correction:

Correction: January 2, 2013

An earlier version of this article misstated the surname of the chief investment officer at Samson Capital Advisors. He is Jonathan Lewis, not Jonathan Samson.

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Ruling over bumper-car injury supports amusement park

SAN FRANCISCO — The California Supreme Court, protecting providers of risky recreational activities from lawsuits, decided Monday that bumper car riders may not sue amusement parks over injuries stemming from the inherent nature of the attraction.

The 6-1 decision may be cited to curb liability for a wide variety of activities — such as jet skiing, ice skating and even participating in a fitness class, lawyers in the case said.

"This is a victory for anyone who likes fun and risk activities," said Jeffrey M. Lenkov, an attorney for Great America, which won the case.

But Mark D. Rosenberg, who represented a woman injured in a bumper car at the Bay Area amusement park, said the decision was bad for consumers.

"Patrons are less safe today than they were yesterday," Rosenberg said.

The ruling came in a lawsuit by Smriti Nalwa, who fractured her wrist in 2005 while riding in a bumper car with her 9-year-old son and being involved in a head-on collision. Rosenberg said Great America had told ride operators not to allow head-on collisions, but failed to ask patrons to avoid them.

The court said Nalwa's injury was caused by a collision with another bumper car, a normal part of the ride. To reduce all risk of injury, the ride would have to be scrapped or completely reconfigured, the court said.

"A small degree of risk inevitably accompanies the thrill of speeding through curves and loops, defying gravity or, in bumper cars, engaging in the mock violence of low-speed collisions," Justice Kathryn Mickle Werdegar wrote for the majority. "Those who voluntarily join in these activities also voluntarily take on their minor inherent risks."

Monday's decision extended a legal doctrine that has limited liability for risky sports, such as football, to now include recreational activities.

"Where the doctrine applies to a recreational activity," Werdegar wrote, "operators, instructors and participants …owe other participants only the duty not to act so as to increase the risk of injury over that inherent in the activity."

Amusement parks will continue to be required to use the utmost care on thrill rides such as roller coasters, where riders surrender control to the operator. But on attractions where riders have some control, the parks can be held liable only if their conduct unreasonably raised the dangers.

"Low-speed collisions between the padded, independently operated cars are inherent in — are the whole point of — a bumper car ride," Werdegar wrote.

Parks that fail to provide routine safety measures such as seat belts, adequate bumpers and speed controls might be held liable for an injury, but operators should not be expected to restrict where a bumper car is bumped, the court said.

The justices noted that the state inspected the Great America rides annually, and the maintenance and safety staff checked on the bumper cars the day Nalwa broke her wrist. The ride was functioning normally.

Reports showed that bumper car riders at the park suffered 55 injuries — including bruises, cuts, scrapes and strains — in 2004 and 2005, but Nalwa's injury was the only fracture. Nalwa said her wrist snapped when she tried to brace herself by putting her hand on the dashboard.

Rosenberg said the injury stemmed from the head-on collision. He said the company had configured bumper rides in other parks to avoid such collisions and made the Santa Clara ride uni-directional after the lawsuit was filed.

Justice Joyce L. Kennard dissented, complaining that the decision would saddle trial judges "with the unenviable task of determining the risks of harm that are inherent in a particular recreational activity."

"Whether the plaintiff knowingly assumed the risk of injury no longer matters," Kennard said.

maura.dolan@latimes.com

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