Books are main characters in the Schenaker house. Every night --
and at any time of the day on weekends -- parents Debra and Michael curl
up with their three children to lose themselves in the smooth pages.
They sip hot chocolate, perhaps passing the book around, the adults and
older children each reading a few pages aloud. Together they have read
books that are worlds apart in style and content: Rudyard Kipling
novels, Winnie--the-Pooh stories, C.S. Lewis fantasies, Jack London
adventures.
"Books fire the imagination, unlike watching the screen, where
it's someone else's imagination" Debra says. "When you're reading a
book, you have to fill in all the blanks, and I think it does more for
your synapses to fill in the blanks."
There is power in the written word, reading specialists and
educators agree. Reading presents children with a wealth of ideas and
experiences and can model expressive, elegant writing. It is a
cornerstone of school success, a skill and passion worth nurturing and
supervising.
In fact, reading ability accounts for 90 percent of success in
content areas, says Reid Lyon, a National Institutes of Health research
psychologist and an adviser to President George W. Bush on
early-childhood development and education. After grades three or four,
Lyon says, "children's vocabulary is much more reliant on written
interchange rather than oral interchange, and most of your vocabulary on
college tests comes from reading."
In addition, children who don't read "not only fail in school,
but also drop out in substantially higher rates and tend to get in
trouble with the law" Lyon adds. That dropout rate, emphasized in a 1993
National Longitudinal Transition Study conducted by SRI International
in a granted program, was 38 percent for children with a learning
disability but only 25 percent for children who experienced no
compromise in reading skills.
"If, by the end of high school, children are not reading, then
they are at much greater risk of not completing high school or of [not]
graduating than their non-reading-disabled peers," says Sheldon
Horowitz, director of professional services at the National Center for
Learning Disabilities, a nonprofit education organization headquartered
in New York.
Beyond the tangible benefits, reading is a profound source of
pleasure that can be shared between parents and children, book advocates
say. "Kids value what they see their parents valuing when they're
little;' says Lee Galda,
a University of Minnesota professor who specializes in children's
literature and language arts. "If you really want to make sure your
children value reading, you have to spend time on it. Read with them,
not just to them. You're choosing to turn off the TV, not talking on the
phone. You have a book, they have a book."
Reading takes priority in the home of Andy and Laurel Vogelsang
of Arlington, Va. The couple both loved books in their childhoods. Now,
she says, they are determined to share the pleasure and power of
reading with their two boys, Bennett, 6, and Will, 5.
"I can legitimately say I love to read, so that, in turn, gets
them excited about it" says Laurel, the development director for the Capital Children's Museum in Washington. "Reading is an escape, really; it's information-gathering:'
Every night -- as well as frequently during the daylight hours
-- Laurel sits down with the boys to read. "It's a staunch routine" she
says. "It's pajamas, brush teeth and books." They have tackled chapter
books, including some of her childhood favorites, such as E.B. White's
The Trumpet of the Swan and Roald Dahl's Charlie and the Chocolate
Factory and James and the Giant Peach.
The family also has cultivated several contemporary interests:
Rosemary Wells, for example, who writes the Max and Ruby series, and
Janell Cannon, author of Stellatuna. In addition, the couple have
introduced their boys to the children's page of the newspaper. They also
frequent their local library, although Laurel says the children's
response is lukewarm.
"We don't go as much as I'd like, and I can't say we go there
and the kids are enthralled" she says. "They will gravitate toward
Pokemon and Star Wars books."
Many times, not-so-cerebral rifles can serve as bread crumbs
that lead children to better books. "We're so demanding of children in a
very well-intentioned way, but books should be fun" says Kathleen
Odean, a contributing editor for children's literature for Book magazine
and author of Great Books About Things Kids Love. "A lot of kids will
end up reading good and not-so-good ones. In the same way, adults don't
just sit around reading classics. A lot of kids are attracted to lighter
reading. Also, a lot of kids, like adults, choose books by the cover,
so there's a big visual element."
Nevertheless, better books have more meaning and help children
look at the world in a slightly new way, says Odean, who was a
children's librarian for 17 years and was chairwoman of the 2001 award
committee for the Newbery Medal, presented annually by the American
Library Association to the author of the year's most distinguished
contribution to American literature for children. Better books more
skill fully showcase vocabulary and use grammar more elegantly, which
children absorb.
For older children, Odean says, "I'm not dead-set against the
series books -- the Goosebumps or Baby-Sitters Club -- because a lot of
times those are the books that get kids to like books. The goal for
parents and educators is to not let the kids stop there."
Clearly, many parents make a practice of steering their
children toward books remembered fondly from their own childhoods. "Yes,
parents choose books they enjoyed themselves" Odean says. "Parents can
convey the feeling to the child, so it has a high chance of being a book
the child would like. I also think it's very difficult to choose books
today because there are thousands of books coming out. It's easier to
choose books you're familiar with."
Publishers are answering the call, she says, bringing back into
print books that baby boomers knew, loved and continue to seek: The
Moffats, for example, Gone Away Lake and Magic or Not, to name a few.
"If you love something, you want to share it with your children -- you
want your kids to experience the same thing" says Galda, the University
of Minnesota professor. "But I think if you're stuck there and that's
all you do, that's too bad, because each year thousands of books are
published, and children's literature is so rich these days."
For help in choosing quality literature, Galda suggests parents
turn to children's librarians or teachers who are knowledgeable about
children's books. In addition, she says, independent children's
bookstores can be wonderful resources.
"The people who work there know the books -- they're not just
hired as sales clerks" she says. "If you have one near you, you will get
more help than you ever knew you needed. And get to know authors and
illustrators that your children like. Make sure you offer a wide range
of books -- nonfiction, story and poetry -- and watch to see what they
choose and spend their time on"
If you have the money, Galda adds, "having a child own a book
that he can call his own is a wonderful gift. It's a way of showing
children that you value books because you spent your money on them. You
just don't know when a book is going to be a prize possession. By all
means go to the library, but having a book that you've loved is a
wonderful thing for a kid."
Most important, say these educators and specialists, parents
must make a conscious effort to ensure that reading is a family
activity. "We have to grasp the moments because of everyone's busy
schedules" says Sophie Kowzun, program supervisor for reading and
language arts for Montgomery County public schools in Maryland. "You've
got to maximize on everything."
She suggests that parents always have a bag of books at the
ready. Pull one out at the pediatrician's office, the restaurant. Keep a
pile in the car. Just keep reading.
"If children are not practicing reading outside of school, then
how are they going to get better?" Kowzun asks rhetorically. "You have
to practice -- just like the piano -- in order to get really good at
it."
"How can you get your child to like reading? Read out loud," says
Kathleen Odean, an editor at Book magazine and a former longtime
children's librarian. By reading aloud, parents "can fool a kid into
listening and wanting to find out what happens next. It's a great
device."
Another strong reason to read aloud is that it models fluent
reading and speaking. "Kids hear how it should sound," says Lee Galda, a
professor of children's literature at the University of Minnesota.
Vocabularies are enhanced when children hear words with which they are
not familiar. "Kids learn to define words according to the context in
which they're used," Galda says. "Kids come up on new words, and
teachers teach them to look at the context and make a guess. They're not
meeting the word in isolation on white paper."
Parents can help children learn new words by pausing during a
story, Galda says. "While reading, ask your child, `Do you know what
that means?' Say, `What a neat word -- exasperated -- she wasn't just
impatient, she was exasperated.' Then use it in a context that helps the
child understand what the word is."
Having a conversation about books -- not a quiz -- tells
parents a lot about their child's interests and learning level. In such
conversations, the parent conveys that he or she cares about the
character and is engaged in the story, Galda adds.
Another advantage of reading aloud: Children get to hear book
language, says Sophie Kowzun, program supervisor for reading and
language arts at Montgomery County public schools in Maryland. "It's
different than the language we use to have a conversation," she says.
Kowzun recommends that parents initiate a discussion with their
child after turning the last page of a book: "`What did you like best?
What picture?' It's important to know if the child understood what has
just been shared. Find out if the child grasped it or was just confused.
If so, you can go back and reread it. In addition, you can always stop
during the reading and have the child predict what is going to happen
next."
Sheer pleasure of reading aloud is a win-win situation that
unites caregivers and children, says Denny Taylor, a professor of
literacy studies at Hofstra University in New York City and author of
Family Literacy: Young Children Learning to Read and Write. "Books bring
families together. Sharing a story is like a cuddly blanket that you
wrap around yourself and your child."
In searching for the truth about the devils of Salem we shall
investigate the demons in all human societies and all human souls,"
writes Frances Hill in A Delusion of Satan: The Full Story of the Salem
Witch Trails (Doubleday, $23.95, 269 pp). It is a lofty ambition, aiming
to extend spiritual knowledge into historical writing, and Hill pursues
it without pause.
Hill holds Samuel Parris, pastor of Salem Village in 1692, most
responsible for the hysteria that sent 19 men and women to the hanging
tree and caused several other deaths. Parris used Puritanism's
"terrifying absolutes of good and evil" to reduce life in his parsonage
to a daily trauma of fear, guilt and suspicion.
According to an account published in 1700, Parris, impressionable 9-year-old daughter,
Betty, and his 11-year-old orphaned niece, Abigail, began "getting into
holes, and creeping under chairs and stools, and to use sturdy odd
postures and antic gestures, uttering foolish, ridiculous speeches." A
doctor suggested the girls were "under an evil hand" and a neighbor,
Mary Sibley, urged Parris, Caribbean slave couple, Tituba and John
Indian, to bake a "witch cake" containing Betty and Abigail's urine. The
plan was to feed it to the dog and see if the animal would act
strangely.
Parris discovered the scheme and denounced Sibley from his pulpit
with a call to arms: "The Devil hath been raised amongst us." When the
girls screamed that Tituba's specter was pinching and pricking them,
Parris beat the servant to get a confession of witchcraft. In her
terror, Tituba tried to mollify her accusers with a partial but
dangerous admission. She said her old mistress in Barbados had taught
her "some means to be used for the discovery of a witch and for the
prevention of being bewitched." Four other girls, seeing Betty and
Abigail's fits and the sympathetic attention they were getting, began to
writhe, choke and babble. They screamed out the names of two tormentors
in league with Tituba: Sarah Good and Sarah Osborne, both outcasts in
Salem. Good was a beggar and the weak-witted Osborne was believed to
have lived in sin with her indentured servant before they married, an
offense punishable by whipping.
Village leaders, including the powerful Thomas and Edward Putnam, filed a complaint with the Salem magistrates accusing Tituba, Good and Osborne
of using witchcraft to hurt the afflicted girls. Constables apprehended
the three women on March 1, 1692, and at 10 o,clock that morning
brought them to the meeting house to be examined.
Chief magistrate John Hathorne--ancestor of Nathaniel Hawthorne,
author of The Scarlet Letter --assumed guilt with his very first
question: "Sarah Good, what evil spirit have you familiarity with?" When
she refused to confess, he told the afflicted girls to look at Good to
see if this was the person who had been hurting them. The record states:
"So they all did look upon her and ... presently they were all
tormented." They twisted their limbs, collapsed, choked and fainted. The
three women were jailed and the precedent for convicting on "spectral evidence" was set for the trials to come.
Why did hysteria overwhelm all sense of justice? The accusers
felt threatened and disinherited. Indians had killed one in 10 settlers
in a 1675 war--more deaths per capita than in any other American
conflict--and the colonists were having trouble negotiating a new
charter from London, without which they had no legal rights to their
lands.
Significantly, Thomas Putnam and Parris had both been deprived of
family wealth. In their battle to keep the moral, political and
socioeconomic authority that Puritanism granted them, they drafted the
emotionally vulnerable: Of the eight girls who screamed out the names of
witches, three or four were orphans and two others had lost one parent.
By mid-May, 36 accused witches were in jail. Some were "tied neck
and heels" for 24 hours or longer to force confessions. Four died in
prison. The magistrates sent Good's 4 1/2-year-old daughter, Dorcas, to
the dungeons, where she endured eight months of terror and went insane.
The new governor of the colony, Sir William Phipps, established
an ad hoc court to try the accused witches. The trials proceeded just as
the examinations had; the girls, fits and descriptions of specters were
admitted as evidence.
In June, Bridget Bishop was the first to be convicted and hanged,
in part because she had a previous conviction for marital quarreling.
Five were hanged in July, and 13 more in August and September. They went
heroically to their deaths, enduring the merciless mocking of the crowd
as they climbed the ladder to the noose. One man was pressed to death
with stones piled on his chest after he refused to give testimony at his
trial. Legend holds that his only words during the pressing were "more
weights." About 200 men and women were accused and 150 imprisoned.
The witch-hunt ended when the girls overreached by naming Lady
Phipps, wife of the governor. On Oct. 3, Increase Mather, the leading
Boston minister and politician, delivered a sermon that cast serious
doubt on the value of spectral evidence in trying witches. The ad hoc
court was dismissed on Oct. 29, but no one was held accountable for the
deaths and suffering.
Parris quit Salem Village and his replacement filled a diary, not
as Parris did with his imaginary demons, but with observations on the
natural world. In this, he prefigured a flowering of the human spirit
that another minister in the region, Ralph Waldo Emerson, would achieve
150 years later. Joseph C. Haney is a senior editor at Reader's Digest
In a few hours, Eileen and I will be leaving this magnificent
building -- the tallest all-suite hotel in the world. We will attend
rehearsals for tomorrow's show and then we will return to our original
hotel, The Millennium Airport Hotel. Sinubukan lang naming matulog dito
sa Burj Al Arab kagabi. Tinesting lang baga. Kukwentuhan ko kayo next
week.
Tomorrow is also the birthday of my youngest son Jio Sebastiean, Happy Birthday Jio!
"Eat Bulaga" was also here at the U.A.E. when we did a show at Abu Dhabi on Dec. 7 of last year.
A little more than two weeks ago, after a "back" story (the
Cebu hospital canister scandal) made the front pages, another startling
medical event, this time from La Union, occurred. But unlike the first
one which was controversy-laden, this one is praise-worthy. Well, they
were both "below the belt" incidents but definitely, this new one is
laudable and a winner.
A doctor named Jessie Miranda, a law graduate, and who was once
president of the La Union Gay Society (wow, si J.Law naman), is set to
establish a record for himself and for San Fernando, La Union -- to be
the world's fastest circumciser of the most number of patients in an
hour. According to the news, he was able to "finish the penis" of 640
young boys in a little more than eight hours! Wow! He operates using
laser -- no stitches, bloodless, painless and most importantly ...
payless!
Yes, walang bayad! Parang panata at gift niya sa sarili at sa
mga tao sa birthday n'ya. Kahanga-hanga! He will be submitting his
documents to the Guinness Book of Records. Miranda's longest circumcision did not exceed a minute. Ibig sabihin, eto na ang pinakamatuling tuli!
Now, I know that some of you are quite queasy and uneasy about
the title of this article. Para bang ginawang First Communion? But isn't
it when we were younger, the practice was to confess first before you
are given communion? And that is what I am going to do right now -- I
have a confession -- kung masusunod lang ako, I'll have a second
circumcision! Yes, if there's one thing I would like to correct and
sacrifice going through again, it's my circumcision! Or, sana hindi na lang ako nagpatuli! True. Ganito kasi 'yun ... tandang-tanda ko pa ...
Long time ago (s'yempre naman 'no), I went to the North General
Hospital (I think) ... actually, I'm really not certain now if it was
Philippine General Hospital or even San Lazaro Hospital. Basta, ospital
s'ya. It was a hot afternoon. I remember it was my cousin Tita Abola who
scheduled me for that circumcision. I believe I was even unaccompanied.
Aba, ang tapang ko ha. When the male doctor arrived, I was asked to lie
down on a leather-covered bed in the clinic. Nakahiga? I was wondering
-- akala ko noon ang tinutuli nakaupo lang.
Then I was left alone in the room. I was lying down for maybe
ten or fifteen minutes. Then the door opened, and in came the doctor...
with about five or six people in tow (later, I learned they were medical
students). Then the doctor ordered one to apply anesthesia on me. Then
another was ordered to start the operation and cut me. At this point,
naliligo na ako sa pawis. Leather ba naman 'yung hinihigaan ko eh. Hindi
ako maka-angal s'yempre -- para tanungin kung bakit pasa-pasa sila ng
trabaho. Then another one cleaned and dressed my pututoy. I think about
two or three were asked to suture me. And in between, they were
discussing about the procedure. I believe that what I went through was
the longest circumcision in the history of the medical world!
Pinag-aralan ka ba naman eh. Eto matindi -- naturally, iba-iba ang pulso
nila; iba-iba din ang tahi noong isa duon sa isa. In short, nung
natapos, in today's language -- ang tuli ko ay nabalbon! Balahura! Kung
baga sa painting, abstract na, interaction pa!
I didn't even have the chance to ask what style of cut they
gave me -- if it was German, Israeli or what. Gusto ko lang kasing
makalayas agad. But definitely, it was a work by the United Nations!
Ang nasabi ko na lang sa sarili ko, habang lumalakad ako nang nakabukaka at iika-ika, "Pasens'ya ka Joey ... libre kasi eh!"
Yes, my poor Peter, is not as handsome and good-looking like
the others but on second thought, baka pag pinaulit ko ito ngayon,
mahirap na at baka ma-video pa tayo! 'Wag na nga lang!
Pero salamat na rin to my little friend -- he greatly served
his purpose (para bang wala nang silbi ngayon). Thanks for the good
times ... and the most important of all ... we are still together!
If David Westin, the president of ABC News, were to ask the magic
mirror on the wall who was fairest of them all, the answer would
disappoint him just as it did the wicked queen. Westin, a lawyer with no
journalistic experience who took over the news division less than six
months ago, already has badly tarnished what conservatives used to
regard as the fairest of the TV network-news operations.
He is proving that there is some merit to the claims of
leftists who maintain that the capitalists who control news-media
companies can and do shape the way the news is covered. The leftists'
claims were rooted in their ideology, not based on any concrete evidence
of management's meddling in the news-rooms. Marxists, knowing how they
would dictate to editors and reporters if they were in control, assume
that capitalists must do the same thing.
I found out how wrong they were during the Soviet invasion of
Afghanistan. The head of the Committee for a Free Afghanistan, knowing
that I was on friendly terms with Leonard Goldenson,
the chairman of ABC, asked me to inform Goldenson that a story ABC News
was planning to air could jeopardize an important channel of aid to the
Afghan freedom fighters. I discussed this with Goldenson. He agreed
that would be an undesirable outcome. He said he would see what he could
do about it, but it turned out that he could do nothing. He agreed with
those who told him that it would be improper, even in this case, to
violate the rule that management should not try to influence news
coverage.
Tom Murphy, Leonard Goldenson's successor, took a similar
hands-off approach, even resisting persistent efforts by Accuracy in
Media to get him to direct ABC News to correct a serious error. But now
Michael Eisner, the chairman of the Walt Disney Co., is the ultimate
boss of ABC News. He has shown that he wants David Westin and the ABC
newsroom to respect his wishes. One of his wishes is that ABC News
refrain from airing stories that are damaging to Disney. He made this
clear on Sep. 29, when Eisner said on Fresh Air, a National Public Radio
program: "I would prefer ABC not to cover Disney ... ABC News knows
that I would prefer them not to cover [Disney]." Only days later, a
story that was to air on 20/20 exposing Disney's lax attitude toward
employing pedophiles at its theme parks was killed by David Westin.
The December-January issue of Brill's Content has a detailed
report by Elizabeth Stevens on this story and why it was killed.
Inspired by a book titled Disney: The Mouse Betrayed, by Peter and
Rochelle Schweizer, the story was the work of ABC's veteran
investigative reporter Brian Ross. It had been approved by high-level
news executives and ABC's lawyers. Stevens says it was "well-sourced"
and that it "met the standards of fairness and reportorial backup
commonly found in investigative television-news magazine pieces."
According to Stevens, the four-month investigation by Ross and his
producer, Rhonda Schwartz, turned up new evidence showing that Disney
had a worse pedophile problem than the other theme parks that were
examined. Disney also had a bad reputation among Florida law-enforcement
officials, who were critical of Disney's failure to run
criminal-background checks of new employees and not always assisting
their investigations of crimes on Disney property.
Ross's story told of a 7-year-old British girl who recently was
molested by Jeffrey Bise, a puppet vendor at Disney World. The girl's
uncle, a British police officer, confronted Bise and reported the
incident to Disney security, who filled out a report and gave the family
a few cheap souvenirs. They tried to dissuade the uncle from calling
the police. He called them. They came, questioned Bise and got his
confession. He is now in prison, no thanks to Disney.
Stevens says Douglas Rehman, a retired officer who specialized
in sex crimes involving children, complains that Disney has done less
than other theme parks to combat problems with pedophiles. He said
Disney was the only theme park that did not agree to work with the
Central Florida Child Exploitation Task Force when it was established in
1995.
Stevens does a good job of exposing the contrast between what
Westin and other ABC News officials have said in the past about their
determination not to allow Disney to influence their news coverage and
what they are saying and doing now. She quotes Vice President Richard
Wald as having said a year ago that if "selective coverage" of Disney
were to occur, "nobody who works at ABC News would stay there."
Selective coverage has occurred but Wald, who plans to retire in
December, did not advance his departure date in protest. Brill's Content
asked 21 ABC News employees if they would feel comfortable working at
ABC if Ross' story was killed because of the Disney connection.
Two-thirds of them, including Peter Jennings, Barbara Walters, Ted
Koppel, Diane Sawyer and Sam Donaldson, refused to comment. None of
ABC's wealthy journalists has resigned. That would require something
priceless -- character.
There is an axiom in technology circles that porn drives technology
usage. Pick a category--VHS, video rentals, premium cable,
pay-per-view, CD-ROMs, PC games, the Web, chat rooms, broadband, online
shopping, etc. Porn has been given credit for the rapid growth of just
about all of them. Even VOD owes what little success it's had to naughty
content.
Porn's track record as a tech driver has come up again as more new technologies start cropping up. HDTV
is one example, although as Wired columnist Brendan I. Koerner once
pointed out, porn is a genre where high-def may work against it.
The other big example is next-gen cellular, now that
color-screen handsets are mainstream and 3G services are popping up
around the world. Many 2.5G operators already offer adult comtent in
some form or another, and 3G operators are following suit. Hutchison,
for example, has an arrangement with Playboy, which now licenses content
to cellcos in well over a dozen countries.
For all the buzz over wireless porn, however, skepticism abounds, and with good reason. Several of them, actually.
The first, of course, is the morality issue. Even in markets
where porn is more socially acceptable, like the US, it's still a
bugaboo for many cellcos that don't want the bad publicity that
anti-porn groups will give them for carrying it. In Australia, Optus
is currently in hot water over the revelation of its involvement in a
deal several years ago to host porn content and generate international
porn traffic for porn company Gilman via Vanuatu--not exactly the
publicity it was hoping for with plans to launch mobile adult content
services this year.
There's also the device itself. Proponents claim the handset or
PDA is a good medium because it's more personal than a desktop--you can
view it anywhere, and more discreetly. Critics of mobile porn point to
the small screen and say, "No way." Storage demands can also be a
problem, though devices like the new photocapable iPod could up the ante
considerably--or create expectations 3G can't deliver.
Interestingly, the introduction of handsets with cameras and
camcorder features creates some DIY porn opportunities, from sending
naughty MMS postcards of yourself to your spouse/lover to sending them
to strangers for money. And imagine what you could do with 3G video
calls.
The upside is more traffic for the cellco. The downside
includes potential illegal activity (like taking pictures in gymnasium
locker rooms) or highly unethical incidents like the one reported in
India last November, in which a Delhi Public School student took
cam-phone video footage of himself and his girlfriend having sex and
then, after they broke up, sold MMS clips to his friends for too rupees a
clip.
From driver to niche
As for the business case, Yankee Group research analyst Adam
Zawel noted in an October report that PhoneErotica.com, a UK-based Web
site for mobile users that provides adult pics, video clips and text,
generates over 300 million hits per month, and rings up more minutes of
use per month than MSN. Zawel also estimates the annual market for
wireless adult content could reach $1 billion globally by 2008.
While $1 billion is a nice number, it's a drop in the bucket
compared to what mobile operators earn from non-voice services
today--and non-voice revenue is still well under a third of their ARPU.
Even so, there is a sort of inevitability to 3G porn,
regulatory environments permitting. For one thing, the novelty factor
alone will result in some downloads initially. Also, bear in mind that
"adult content" is a broad category. It's not all XXX hardcore or even
Playboy-level softcore--Page 3-style pics from such magazines as FHM and
Maxim also count as "adult content". So do Java game downloads (i.e.
strip poker on your PDA) and directory services (i.e. where the good
gentlemen's clubs are in town).
The other key thing to remember about mobile porn-apart from
the critical importance of access control--is that while porn may be a
driver of tech adoption, technology has never become dependent on it. Of
all the technologies that owe their start to porn, none of them rely on
porn to stay in business today. Case in point: porn titles today
account for a fraction of the total home video market. The same goes for
CD-ROMs, games, pay-per-view, and whatever VOD services are still out
there. Porn may be at the vanguard of new technology, but it's almost
always relegated to niche status once the technology in question goes
mainstream. 3G will be no different.
20 (Plus) Deductions You May Have Overlooked -- And Shouldn't
Even after countless rounds of tax reform, many deductions
remain for the self-employed entrepreneur. Remember that if some item,
service, or fee is a legitimate cost of doing business, you should
deduct it. Don't be swayed by reports that many write-offs are audit
targets. Legitimacy can vary from business to business; you have to be
honest with yourself about whether a particular expense really is a
business expense. And you have to hold on to receipts, records, and
notes to document your deductions.
So peruse the following list, see what deductions you didn't
take this past year that you could have, take what's coming to you in
the coming years, and start keeping good records today.
The obvious stuff. Paper, pens, copying costs, business cards,
computer disks, and the like--any supplies, services, or tools that you
must have to run your business are eminently deductible.
The home-office deduction. This deduction scares most people
away, because it's a haven for tax cheats and a beacon for tax auditors.
But anyone who legitimately runs a business out of a home office would
be foolish to ignore this deduction--it's worth a lot of money. Does
your home office meet IRS
requirements of regularity and exclusivity? (You must use the space
regularly to run your home-based business, and you must use it for that
purpose exclusively--no kids playing games at the computer.) If you can
comply with IRS rules, you can deduct real estate taxes, mortgage
interest, casualty losses, utilities, insurance, depreciation, painting,
and repairs. Just prorate any deduction by the ratio of home-office
square feet to total home square feet.
Office furnishings. When it comes to deductibles, you've
probably got a lot more than just a desk and a bookshelf. That means
curtains, posters, trash cans, clocks, lamps, file cabinets, and
anything else you buy for your home office. For most small businesses,
up to $10,000 of new furnishings and equipment can be written off in the
year that they're purchased (it's called a section 179 deduction), as
long as that deduction doesn't produce a loss. Used items, such as a
desk and chair, can be depreciated from their value when they entered
the business, but they can't be deducted.
Cleaning. Having someone clean your house, including your home
office, once every week or two is a luxury I highly recommend. It not
only forces you to organize and straighten up regularly, it allows you
to deduct a prorated portion of the cleaning bill on your Schedule C.
Sorry, you can't deduct any landscaping or yard work, even if you
regularly see clients at home and want to make a good impression.
Computer equipment. Of course your computer, printer, and
modem are legitimate business expenses, but if you use them for personal
tasks you can jeopardize their deduction. Keep a log of business time
and personal time on the computer, and prorate your equipment deduction
by the percentage of time that it is used for business purposes. If you
use the computer less than half the time for your business, you can no
longer deduct its cost, and depreciation becomes restricted. In the
long run, it's cheaper and easier on the equipment to reserve your
system for your business, and use the savings to buy your kids a
computer for their video games and school reports--and perhaps for your
own personal finances as well.
Phone service. If you use your personal line for business
calls, you cannot deduct your basic service, but you are allowed to
deduct all long-distance business calls and any service enhancements,
like call waiting, that you require just for business. Of course, if
you add an extra line and use it exclusively for business calls and fax
or modem transmissions, you can deduct its full cost, even if it's a
residential line. In addition to providing a deduction, a separate line
is often easier to manage and can help you appear more professional.
Telecommunicating. If you use on-line services or bulletin
boards for business reasons like finding customers or doing research,
you can deduct the portion of your connect and subscription charges that
is work related. If you have a special business reason for getting
certain premium television channels (such as a journalist who has to
watch CNN), you can deduct that, too.
Contributions to retirement accounts. If you haven't set up a
retirement plan for 1991, do it today: The sooner you contribute, the
more your money grows. For instance, you have until your tax return is
due to establish a SEP-IRA (simplified employee pension) for the
previous year. In contrast, Keogh plans must be started by December 31.
Contributions you make on behalf of employees come directly off of
your Schedule C (and reduce self-employment taxes as well as income
taxes.) Contributions you make for yourself are taken off of your 1040
form.
Health insurance. If your business is a regular C corporation,
you can write off your health-insurance premiums as an employee
benefit. If you are a sole proprietor, a partner, or an S corporation
owner, you can deduct 25 percent of your health insurance premiums
on line 26 of your regular 1040 form, as long as you have no other
means of getting health insurance and as long as this deduction doesn't
exceed your net business income.
Disability insurance. If you are a C corporation, you can
deduct this as an employee benefit, too. Indianapolis certified
financial planner F. David Bixler has noted that if your health and
disability insurance bills are high enough, they could help make
incorporation worthwhile.
Self-employment taxes. This deduction was new in 1990. You
can deduct half of your 15.3 percent self-employment tax payments on
line 25 of your 1040 form.
Interest. This is tricky, but it's worth learning the nuances,
according to Fred Birks, a CPA in the Washington, D.C., firm Birks
& Co. If you take the home-office deduction, you can prorate a
portion of your mortgage interest and take it on your Schedule C. That
saves you some money, because the bottom line on your Schedule C
determines your self-employment tax bill. The same goes for a
home-equity loan that is used in your business; if you borrow against
your house to buy business equipment, you can take the interest on that
loan as a business expense. For big borrowers this has an extra
benefit: Home-equity borrowing to finance your business doesn't count
against the $100,000 cap on interest-deductible home-equity debt.
Gifts to clients. If you brought your best clients a Christmas
or New Year's gift like a cheese basket or bottle of wine, that's
deductible. Just remember not to deduct more than $25 on each gift.
Entertainment. Be prepared to justify meals and entertainment
cost by keeping a log of whom you dined with and what you discussed.
And be prepared to swallow 20 percent of the cost of tickets and meals
without deducting them. If you entertain business associates in your
home, 80 percent of those costs are deductible, too--but this practice
may trigger an audit.
Making a good impression. What if you're asked to be on a
television show to talk about your business, and you really want to look
good? You could deduct payments to a video trainer, who will tell you
to wear a blue shirt and a red tie. But you couldn't deduct the shirt
or the tie, since you could wear them in other situations.
Maintenance and repairs. You might want to take your compuer
and other home-office equipment in for a yearly cleaning and checkup;
those would be deductible. Also keep trake of such purchases as toner.
Magazine subscriptions. Your subscription to HOME-OFFICE
COMPUTING and any other publications that help you run your business or
keep uo with developments in your field are entirely deductible.
Local transportation. You can deduct business miles on your
car at a rate of 26 cents per mile for 1990 taxes and 27.5 cents for
1991. You can also deduct bus, subway, and taxi fare for in-town
traveling to meetings, offices, restaurants, and stores when you are on a
business mission. You don't need receipts for every bus trip or cab
fare, but you need contemporaneous records.
Business trips. If you went to Florida for a week to take the kids
to Disney World and see your mother, and stopped off on the way to take
a client to lunch, you can deduct the lunch, or 80 percent of it,
anyway. If you went to Florida for a convention and took your mother to
lunch, you can deduct the trip, and 80 percent of your lunch, but not
your mother's. There are strict rules about prorating trips when you
combine business and pleasure, and if you did go to Disney World, you
might see Jiminy Cricket, who would tell you always to let your
conscience be your guide.
More and more deductions. Add professional dues, airline-club
memberships, special uniforms, child care (even if you work at home), business checking-account fees,
continuing-education courses, computer software, collection-agency
fees, overnight-delivery charges, and reference books. Happy deducting!
While transatlantic and pan-European cable construction seems to
have ebbed after reaching a saturation point in the last year or two,
the action now seems to have shifted to the trans-Pacific and pan-Asian
domain.
Since around the end of last year, there have been a number of
subsea cable landings and service launches in Asia, such as the
completion of the redundant leg of Asia Global Crossing's Pacific
Crossing-1 trans-Pacific cable.
However, the same time period also saw select subsea cable
consortia in high-profile repair mode. Earlier this year, the China-US
Cable -- the first trans-Pacific cable directly connecting the US and
China -- suffered a major blow as a section off the coast of Shanghai
was snapped in two. The event cut off the majority of China's overseas
'Net connectivity and forced carriers with capacity booked on the system
to reroute the traffic on to other systems.
Less than a month later, fishing trawlers snapped another
section of the China-US cable -- this one a coastal underwater link
connecting Shanghai and Shantou, the system's two landing points in
China.
The second cut had less of an overall impact on regional
traffic flows compared to the first one, but both episodes serve to
illustrate that the business of building subsea cables is easy to take
for granted -- especially when considering that it's been 153 years
since someone first deployed a communications cable underwater.
Obviously, the business has come a long way since then in terms
of technology and cost, but after a century and a half of trial and
error, the actual act of deploying a subsea cable network has become a fairly straightforward procedure.
As Asia Global Crossing's MD for network development, David Milroy, puts it, "Deploying a submarine cable system isn't rocket science."
Of course, he adds, that doesn't mean it's child's play,
either. Indeed, there is far more to deploying a fiber-optic cable
system under a few kilometers of water than spooling it out off the back
of a boat. In fact, comparatively speaking, that's the easy part.
Choose your armor
According to AGC's Milroy, just the initial planning of a
subsea system involves a lot of legwork even before the ships start
rolling out fiber into the sea.
"Before you even think about putting a cable system underwater,
you have to take a number of things into account, such as the network
engineering, what it's made of, where it goes, how it's manufactured,"
Milroy says. "For example, do you need single or double armor, and for
which sections do you need it?
"Typically you'll need a double wrap [armor] for shallow water
up to about 1,000 meters," explains Milroy, citing fishing trawlers and
ship anchors as the most common hazards to be found at those depths. "If
the water is deeper than that, you're pretty safe with single armor,
since fishing nets and anchors typically don't reach that far."
K.F. Larm, regional director for Level 3's global submarine
division, says that lightweight cables are okay for depths below 2,000
meters, but recommends light armor at depths of around 1,500 meters,
where the danger isn't so much anchors and trawler, but sharks.
"If the cable becomes free-floating for some reason and isn't
lying flat, the current will move it back and forth, and sharks will try
to bite the cable."
(Those who wonder just how much damage a shark could possibly
do to a fiber-optic cable are hereby reminded that (a) the optical fiber
inside the cable is essentially made of glass, and (b) sharks are known
to have a biting torque that measures in the range of several hundred
pounds per square inch.)
Another reason for determining armor requirements in advance is
that the type of armor used affects how much cable can be carried by a
ship at one time.
Captain Frank Kitt of the CS Bold Endeavour -- part of the Global Marine fleet owned by Global Crossing
- says that the two storage drums in the hold of his ship can carry
between 4,000 and 6,000 km of fiber, depending on the armor thickness.
"Obviously, a double-armor cable is thicker than single-armor -- about
46 mm compared to 31 mm," says Kitt. "That may not sound like a big
difference, but it is when you coil it up in one drum."
Survey says
Another aspect of pre-planning a submarine system, says AGC's Milroy, is mapping out the undersea terrain.
"You have to do a marine survey, where you're taking a look at
the sea bed and looking out for things like mountains and valleys and
areas where earthquakes might pose a problem," Milroy explains. "You
want to avoid natural and man-made formations and areas where there's
plate movement activity. At the same time, you want the cable path to be
as straight as possible. You don't want any bends because you risk
breaking the fiber."
Even more potentially challenging are the things that most
people outside the international carrier business might not associate
with subsea systems at all, says Level 3's Larm, who offers a fairly
long checklist of items.
"Oil exploration and exploitation areas, military zones,
dumping zones, third-party territorial waters and political claim areas
are all things to watch out for," Larm says. "You also want to avoid
areas where there's heavy fishing activities or dredging. You also want
to take things like water currents into account."
Then there's the matter of selecting a landing site. This is
not to be confused with getting a license to land an international cable
in a market -- which is certainly a key issue, but only for private
systems like East Asia
Crossing and Level 3's Tiger network, since club cables like
SEA-ME-WE-3, APCN-2 and FLAG are the products of incumbent telcos who
have had permission to land cables domestically since at least the start
of the 20th century.
According to Su Weichou, VP for the Greater China market for
Level 3, there are many issues to consider in deciding where to
physically land a cable. He suggests keeping the cable away from the
local shipping channels. "The reason is that you have to consider your
future operation and maintenance plan," he says. "If you run the cable
through a shipping channel and it breaks, you have to stop all ships
from using that channel while you're repairing the cable."
Su offers Level 3's own experience with selecting landing sites
for the Tiger system as an example. "In Taiwan, we couldn't land cable
anywhere on most of the east coast because there's a lot of undersea
volcano and earthquake activity just offshore," Su says. "Landing the
cable on the southern tip presented a backhaul problem because it's too
far away from the exchange. We also had to be careful with deploying
cable in the Taiwan Straits, because it's a politically sensitive area."
By the book
The bright side is that by the time all of that gets sorted,
deploying the cable itself is actually a relatively by-the-book affair.
Once the cable itself has been manufactured according to spec, it's
loaded onto the ship.
"After the shore ends are put in," says AGC's Milroy, "at both
ends you run about 10 to 15 km of cable from the [beach] manhole and tie
it off to a buoy, then you basically run the cable between the ends
according to the survey."
That survey is loaded into the ship's computers, so the ship is
in essence preprogrammed to follow the undersea route plotted out for
the cable.
During this process, the cable isn't just lying on the sea bed
-- at least not for the whole length of the system, although this was
standard practice until at least the 1960s. Nowadays, the cable is
buried under the sea bed, offering further protection from fishing
boats, anchors and shark attacks.
Burial depth varies according to the situation. Burying the
cable becomes optional at depths below 2,000 meters. For those who
choose to bury the cable at those depths, a meter under the floor is
usually sufficient. In shallower waters (from 1,000 meters and up),
burial is virtually mandatory, and a burial depth of 10 meters is
strongly recommended, especially as the system gets closer to shore.
The burial process is performed by the self-explanatory cable
plow, which is remotely controlled from a bay onboard the ship. So is
the ROV (remote operated vehicle), a track-mounted vehicle whose job is
to guide the cable to the appropriate place mapped out for it on the sea
bed. Both are bristling with video cameras so the remote operators can
see the floor and make sure the burial is done properly. The cable plow
is typically capable of plowing through solid rock as well as sediment.
Naturally, this is painstaking work -- the ship's speed will
usually average between 1 to 2 km per hour, slowing down every 50 km or
so when a repeater is about to go over the side -- one reason why cable
laying is a 24-hour-a-day operation.
Bandwidth on demand
Despite the massive amount of preparation involved in planning
out a subsea cable and the fairly routine nature of deploying it, things
do go astray in the execution. Indeed, how to explain the fact that
modern technology has given us double-layer armor and the ability to
bury cables 15 meters deep under two kilometers of water, yet 20 million
Internet users in China can be cut off from every single overseas Web site on the 'Net courtesy of a fishing boat?
Some industry analysts have observed that both cuts occurred
near China in areas that are heavy traffic areas for fishing boats that
use net anchors heavy enough to sink well below a meter into the sea
floor, especially when they are dragged along the bottom. As such, no
one could expect a fiber-optic cable to last long in those areas unless
it was buried good and deep.
The real shocker in the case of the China-US cable, of course,
was that it shouldn't have mattered where the cable was cut, as the
system was designed as a redundant loop that would provide instant
failover to backup capacity.
That didn't happen because the second leg of the loop hasn't
been finished yet because of environmental issues raised in the system's
second landing point in San Luis Obispo, Calif., which means that the
China-US cable has been operating with no redundancy protection since
its service launch in January 2000.
This isn't an unusual thing. The business logic is simple: Why
wait for the rest of the system to be operational in 12 months when you
could be spending that time selling what capacity you have and earning
revenue off the traffic volumes? Essentially, fiber operators are
gambling that a fiber cut won't happen until long after the rest of the
system s built. The China-US cable club lost that bet, although to be
fair, if construction had stayed on schedule, Internet users whose
packets were being routed on that system might never have noticed any
difference in service quality.
Interestingly, the concept of Sonet/SDH protective rings has
been around for over 10 years, yet most subsea cable systems built over
the last decade are not built on redundant topologies.
"There are a surprising number of single-shot cables, and other
carriers are just now realizing the vulnerability of those systems,"
Milroy says.
He doesn't mince words when offering his thoughts on why
carriers would willingly skimp on redundancy. "The reason no one does it
is because it costs more money," Milroy says candidly, who adds that
redundancy is a figment of the imagination of many carriers.
"What most carriers do is they buy capacity on multiple cable
systems as backup -- the problem is that if a cable actually fails for
whatever reason, they have to go through the process of rerouting the
traffic from that cable to the other cables, which is why it takes them
10 hours to do it."
RELATED ARTICLE: 153 years of submarine cable history: the highlights
1848 First submarine cable laid across the Hudson River in New York
1858 First transoceanic subsea cable deployed (and destroyed the same year)
1866 The world's first working transatlantic telegraph cable is launched, with a transmission speed of eight words per minute
1867 Invention of siphon recorder speeds up subsea telegraph transmission to 10 words per minute
1870s Duplexing becomes widely used.
1880 Transatlantic subsea traffic now averages 1,500 messages per day in each direction
1902 The first trans-Pacific cable is completed between the US and New Zealand
1955 The world's first amplified cable, TAT-1, is deployed across the Atlantic
1988 TPC-3, the first fiber-optic trans-Pacific cable, goes online
Source: Pacific Telecommunications Review, 3Q00
RELATED ARTICLE: FIX THIS! The art of cable O&M
Pop quiz: You are the owner of a multi-billion-dollar submarine
fiber-optic cable system. A fishing trawler's net snags one of your
cables and drags it until it snaps, causing a traffic outage that is
costing you millions of dollars a minute. What do you do?
If your system is built with a redundant architecture, the one
thing you don't do is panic, says Asia Global Crossing's David Milroy.
"If you've got a ring system like we have, you're not so pressured to
get it fixed."
Pressure or none, the first step is to determine the physical
location of the break. "We use differential GPS to keep track of where
the repeaters are, as well as the cable itself," says Milroy. "So if
there's a break in the cable, we can find it. Our network operating
center can give us the exact location by tracking how far the impulses
go before they stop, and the GPS gives the maintenance ship the exact
physical location on the surface."
The next step is to notify the O&M provider, who keeps a
dedicated fleet of ships ready to go for just such an occasion. Of
course, it's impossible to know where a cable cut might happen, but
Christian Reinaudo, president of the optics division of Alcatel -- which provides O&M services with its fleet of 12 ships -- says it is possible to make an educated guess.
"Usually cables
get cut close to shore, fortunately, so you do have a fair idea of
where it's most likely to happen," Reinaudo says. "So we locate our
ships close to those risky zones."
Once the ship arrives on the scene, which can take as long as a
few days, depending on the location of the break, the crew drops the
subsea cable ship equivalent of a tailhook into the water, which catches
the cable. The severed ends of the cable are then pulled to the surface
and hung on buoys, AGC's Milroy explains, with the cut ends brought
onboard and spliced to a new length of cable that will run between them.
"Obviously it's impossible to splice the original two ends back
together, because the cable is pretty taut to begin with," he says.
There's still enough time to stash away some of your 1990
self-employment earnings in a tax-deferred retirement account, that
great perquisite of the independent business person.
Gary Lesser, a New York City attorney who specializes in
benefits consulting for small- to medium-size businesses, points out
that Keogh and simplified employee pension (SEP) retirement accounts can
provide great advantages for people who own corporations or
partnerships, or are sole proprietors (even if only part-time), but that
too many entrepreneurs are turned off by the legal jargon and
administrative burdens and complexities that accompany those plans.
There's no need to be. Let's cut through the jargon to get at what you
need to know.
SEPs and Keoghs are the best financial perks available. It's
very profitable to build your nest egg with pretax dollars. In the 28
percent bracket, you'll save $280 in federal taxes alone for every
$1,000 you invest in a retirement plan. And as the money builds up
tax-deferred, it really makes a difference: T. Rowe Price,
a Baltimore mutual-fund company, estimates that if you save $2,000 a
year in a tax-deferred account earning 8 percent, you'll have $12,671 in
five years and $244,691 in 30 years. If you had been taxed on the
interest at the 28 percent margin, you would have only $8,079 after five
years and just $109,148 after 30 years.
Keoghs and SEPs are typically better than IRAs. After the Tax
Reform Act of 1986, most Americans lost their eligibility for
tax-defeffed individual retirement accounts. Even if you still qualify
for a tax-deferred IRA (which means you are covered by no other pension
plan, even through a spouse, and that you earn less than $25,000 as a
single taxpayer or $40,000 as a couple), you can shelter more
retirement savings in a Keogh or SEP, also called a SEP-IRA.
A SEP plan is simpler than a Keogh. A SEP works just like an
individual retirement account, except that its eligibility requirements
aren't restricted the way standard IRAs' are. There are no requirements
that you continue contributing to a SEP or that you contribute at all
during lean years. You can establish a SEP even if your spouse is
covered by a pension plan. Even if you have your own pension plan from a
regular job, you can set up a SEP for your self-employed earnings. You
can't do that with a regular IRA. You can set up a SEP-IRA simply by
going to a bank, mutual-fund company, or brokerage house and filling out
one form.
Here's where the government requirements come in: Every year,
you are allowed to deduct SEP-IRA deposits of up to 15 percent of your
taxable business income after adding back in half of your
self-employment tax, but after subtracting the SEP deposit. That means
you have to know how much you're going to contribute before you can
calculate your contribution. There's a basic calculation that will
handle that for you, and it comes down to this: You can deduct
contributions of up to 13.0434 percent of your taxable business income
every year, after you add back in half of your self-employment tax. If
the bottom line on your schedule C is $50,000, your self-employment tax
is $7,650 in 1990. Add half of that back in, for a total of $53,825, and
multiply it by 0.130434. The result, $7,020, is your allowable SEP-IRA
contribution. Your yearly contribution cannot exceed $30,000.
Keoghs are more complicated than SEPs, but potentially more profitable. Keoghs are established under different IRS
standards that require a higher level of setup documentation than for
SEPs and thus are more complicated. Still, any good bank, brokerage, or
mutual-fund company should be able to guide you through the forms if you
decide to establish a Keogh. And last year the IRS eased the annual
reporting requirement on Keoghs-now you have to report on your plan
annually only if it has amassed more than $100,000.
One advantage of Keoghs over SEPs is an income-averaging
provision for withdrawal of the funds at retirement. If you retire at 59
1/2 and withdraw a sum from your Keogh account, you don't have to pay
tax on it all at once-you can average it as income over five years (or
10 years if you were 50 years old before January 1986), which reduces
your tax liabilities. With a SEP, you would have to pay tax on the
entire withdrawal in the year you took the money out. However, with
either plan you can spread out the tax burden by making withdrawals
gradually throughout your retirement.
There are two types of Keogh plans--one's more flexible, the
other allows bigger deductions. When you open your Keogh account, you
need to decide which type of plan you want: profit-sharing or
money-purchase. Profit-sharing Keogh plans give you flexibility. You can
contribute as much or as little as you want every year, as long as you
stay below the maximums, which are the same as the SEP limits: 13.0434
percent of your taxable business income, after adding to your income
half of your self-employment tax, with contributions not to exceed
$30,000. With a profit-sharing Keogh, you don't have to put anything at
all into the plan if you don't want to.
Money-purchase plans eliminate that flexibility but let you
deduct a larger percentage of your earnings-up to 25 percent of your net
business income after including half the self-employment tax and,
again, after subtracting your Keogh contribution. That comes to 20
percent of your taxable income plus half of your self-employment tax.
With a $50,000 net business income, your money-purchase contribution
would be $10,765. You still can't exceed $30,000, so if your income is
approaching the $230,000 mark, there's no advantage to the
money-purchase plan; you'll hit the $30,000 limit at 13.02 percent.
Money-purchase plans make you decide up front what percentage
your contribution will be and stick with it during fat and lean years.
If you set up a money-purchase plan, you can't decide to skip a year, or
the account could lose its eligibility as a tax-deferred plan, and you
would suffer hefty penalties by the IRS.
Combining plans often increases flexibility and ids you make a
larger contribution. Set up a money-purchase Keogh with a regular 10
percent contribution and you are still free to set up a SEP-IRA or Keogh
profit-sharing plan (or both) for up to an additional 15 percent of
your income. Of course, those figures are also subject to the same
convoluted calculation-where you have to reduce your qualifying income
by the intended contribution to figure out the maximum allowable
contribution-so the two plans together would come out to 20 percent of
your net income after you've reduced it by half of your self-employment
tax. Attorney Gary Lesser calculates that the maximum contribution for a
year in which you earned $50,000 would be $3,694 for the money-purchase
Keogh and $5,541 for the profit-sharing plan.
That combination of plans gives you the maximum leeway to
contribute as much as possible but still refrain from locking into a
money-purchase plan at a 25 percent contribution.
You can make contributions (and even set up a SEP) after the
tax year is over. You have to establish a Keogh before the end of the
fiscal year-for most small businesses, that means the end of the
calendar year. However, you have until your tax-return due date-April 15
if you are unincorporated and don't file for extensions-to set up your
SEP-IRA for 1990. If you are incorporated and on a calendar-year basis,
your tax-return due date is March 15.
If you already have a retirement plan, remember: You can make
1990 contributions to your Keogh or SEP until the date your tax return
is due.
If you hire employees, you'll have to cover them with your
Keogh or SEP. Now your financial life gets much more complicated,
because you may find that your new employees are eligible for a plan you
thought you were setting up just for yourself.
If your company grows from a one-person shop to a business with
employees, it's unlikely that the same retirement plan that worked for
you in the past will work in the future. If you established a plan when
you were your company's sole employee and then began hiring others, it
is often best to terminate your current plan and draw up a new one with
employees in mind.
SEPs let you defer coverage on new employees until they have worked
in three of the preceding five years, but then the employees are fully
vested, and you must contribute to their plans just as you do your own.
Under a Keogh, you can defer employees' participation until they have
completed 1,000 hours of service in one year (about 20 hours a week) and
then phase in a graduated vesting schedule. These are considerations
that must be checked off on the plan contract when the plan is
established.
There are a few ways to get at your money. Once you hit age 59
1/2, you can begin taking money out of your retirement account without
paying a penalty, even if you are still working. But you will be taxed
on the withdrawal as part of your income tax.
Once you've turned 70 1/2, you must start to withdraw the money and pay
tax on it, even if you aren't retired, don't need it, and would rather
keep it socked away in its tax-deferred account.
Since Keoghs and SEPs are legally established retirement accounts, you usually can't withdraw your money before you are 59 1/2 without paying a 10 percent penalty
as well as the income tax due that year on the amount of the
withdrawal. You can take the money out before then and avoid the penalty
if you withdraw it in small, regular amounts calculated to last your
lifetime (like an annuity). In that case, you still pay the income tax
on the withdrawal annually.
The compounding benefits of saving money tax-deferred are so
great that even if you build up your account for 10 years or so and then
decide to pull the money out to send your kids to college or for some
other reason, you cab end up with more money after paying taxes and a 10
percent penalty than you would have had before.
Let's look at another T. Rowe Price estimate: If you save
$2,000 every year for 20 years in a tax-deferred 8 percent account, you
will accumulate $98,844. Subtract the 28 percent income tax (which you
would have paid anyway) and the 10 percent early-withdrawal penalty,
and you're left with $61,283. That's still several thousand dollars
better than the $54,598 you would have built up in a taxable account at
the same 8 percent interest rate.
A WBS is a product-oriented family tree, composed of hardware,
software, services, data, facilities, testing, and everything else
resulting from a system engineering process. Whenever an organization
has a large project to manage--whether organizing a picnic for several
hundred people or developing a major weapon system--breaking down the
effort into manageable parts is the first step.
DoD and large commercial contractors use a specific format,
called a Work Breakdown Structure (WBS), to organize the breakdown of
work into small areas and parts. Organized as a hierarchical structure,
the WBS depicts a relationship between the largest and the smallest
elements.
WBS Types
There are two types of WBS: Program WBS and Contract WBS. In
the Program WBS, the government develops Levels 1 to 3. In the Contract
WBS, the contractor develops all levels below Level 3. Developed prior
to program initiation, the Program WBS encompasses the entire overall
effort (big picture) of the program. To illustrate, Figure 1 represents a very simple WBS--a diagram of a new house (to be constructed).
Level 4 and below would represent the beginning of the Contract
WBS. The Contract WBS is developed by the contractor and covers all of
the products and services that the contractor is responsible to produce
and perform. Contractors will take the government's Program WBS and
extend the effort down (in the form of the Contract WBS) to whatever
level they believe is necessary to make a realistic bid on the contract
and manage the work effort on the program. They will break each element
down into further levels of detail until they reach the level of work
packages, which are portions of the project that will determine cost
accounting data in each area within the organization. Work packages
typically range from 80 hours to 60 days of level of effort. Details of
the process are described later in this article.
Within the acquisition process, the WBS is used on several
occasions throughout a system's life cycle. Regardless of the life cycle
model, the WBS applies to all acquisition models. Early in the
acquisition process, the WBS is a "strawman" of a proposed program WBS.
As the program develops and other documents provide further guidance,
the WBS takes shape into a real object. A notional design for an early
prototype eventually evolves into a refined engineering effort. The WBS
creates this notional structure to help the manufacturer work toward a
design and eventually prepare for production.
In certain instances, depots will bid on a contract and also
will be required to submit a Contract WBS. Depots would be expected to
generate the same level of information as any other contractor to
realistically bid and manage the work effort.
The Contract WBS usually starts off with a Level 3 element from
the Program WBS to ensure continuity For example, in our Program WBS
for the house (Figure 1), one of the Level 3 elements was the framing.
The Contract WBS would divide the framing into components (such as the
wall framing, ceiling framing, floor framing, and interior framing).
Each of these areas would be further subdivided into smaller and smaller
parts. The program and contract WBS must be consistent with one
another; and any revisions to one must be reflected in the other.
Obviously, Figure 1 does not show everything used in the
construction of a house--the drawing would be too massive for this page.
So, realize that all entities of the house (e.g., blueprints, labor and
materiel cost, paint, nails, subcontractors' work) are actually shown
in a WBS, but not for this particular illustration. Now, consider a
Program WBS for an aircraft system (Figure 2). Like our WES in Figure 1,
the aircraft system has three levels in a Program WBS. Directly below
the Program WBS appears a Contract WBS.
At the top (Level 1) is the overall project--the aircraft
system. Level 1 is usually directly identified as a major program; a
PPBS [Planning, Programming, and Budgeting System] program element; or
as a project or subprogram within an aggregated program.
The second row (Level 2) is a general breakout of the parts and
activities associated with the aircraft system. Level 2 elements are
major elements of the defense materiel item; for example, the vehicle
itself (the prime mission product, which includes all hardware and
software elements), aggregations of system-level services (e.g., systems
test and evaluation, system engineering, program management), training,
and data.
The third level (Level 3) further breaks down the components
into more detailed levels. Level 3 element are elements subordinate to
Level 2 major elements such as airframe, propulsion, and fire control
type of service (e.g., developmental test and evaluation, contractor
technical support), or types of data (e.g., technical publications).
Level 3 elements are generally common across similar programs. Lower
levels follow the same process.
In rare circumstances, the Program WBS can extend below Level
3. However, these circumstances would be in cases where the government
believes that a critical management effort is necessary to control the
program. Otherwise, dictating a contractor to go below three levels
could result in litigation against the government if the development
goes poorly.
Defining the Program
The WBS is used primarily during the development and production
of defense systems. Large commercial companies also use the WBS when
developing complex systems. For example, Boeing used the WBS to link their Integrated Product
Teams, called Design Build Teams (DBTs) with established design goals.
Boeing's 238 DBTs directly corresponded to major elements in the WBS.
Each DBT had a specific design goal assigned by management.
The WBS is intended to completely define everything in the
program. A WBS displays and defines the products(s) to be developed or
produced and relates the elements of work to be accomplished to each
other and to the end product. Therefore, the WBS plays a significant
role in planning and assigning management and technical
responsibilities; and monitoring and controlling the progress and status
of engineering efforts, resource allocations, cost estimates,
expenditures, and cost and technical performance.
Providing a logical framework for specifying the technical
objectives of the program, the WBS first defines the program in terms of
hierarchically related, product-oriented elements and the work
processes required for their completion. Each element for the WBS
provides logical summary points for assessing technical accomplishments,
and for measuring the cost and schedule performance accomplished in
attaining the specified technical objectives.
For each WBS element, the detailed technical objectives are
defined as well as the specific work tasks assigned to each contractor
organization element; and the resources, materials, and processes
required to attain the objectives.
As resources are employed and work progresses on the task,
current technical, schedule, and cost data are reported. The task data
may then be summarized to provide successive levels of management with
the appropriate report on planned, actual, and current projected status
of the elements for which they are responsible. Management will thus be
better able to maintain visibility of status and to apply their efforts
to assure desired performance.
The WBS is: 1) identified on the Contract Data Requirements
List (CDRL); 2) included with the Statement of Work (SOW); and 3)
submitted as part of the draft Request For Proposal (REP).
The format for developing a WBS is provided in Military
Handbook 881 (MILHDBK-88 1), formerly Military Standard 881B (MIL-STD
881B), which contains a format for the seven types of systems. In
developing the Contract WBS, MILHDBK-881 shall be cited "for guidance
only" in solicitations and contracts.
* Missile System
* Ordnance System
* Ship System
* Space System
* Surface Vehicle System
* Aircraft System
* Electronic/Automated Software System
Figure 3 is an overall depiction of the relationship of the WBS
to the contractor work effort. Because it is an evolving document that
represents a snapshot in time, the WBS does not end here. The WBS is the
beginning of everything else in the acquisition process. For example,
the WBS plays an important role in configuration management. Configuration Items
(CIs)--also called Computer Software Configuration Items (CSCIs), or
Software Items (SIs)--are initially identified by the PM and marked on
the WBS. The CIs are an aggregation of hardware or software items that
are risky to manufacture, new technology, potential safety problems, or
are politically sensitive.
For example, the WBS for the B-2 Bomber identified over 200 CIs.
The advanced state of stealth technology (materials and manufacturing
process) used on the B-2 required extra attention by the program
management team. Over 900 new manufacturing processes had to be invented
to develop the B-2.
Private industry often refers to the WBS as Scope Definition.
Scope Definition is defined as the customer's deliverables that are
reflected in the WBS. The deliverables are ultimately verified by the
stakeholders through reviews and audits--the same as DoD. Outside DoD,
the WBS is often referred to as the Project WBS (PWBS), Contractual WBS
(CWBS), Organizational WES (OWES), or Resources WBS (RWBS). Each of
these WBS entities performs distinct functions.
Not Exclusively a Scheduling Tool
Although the WBS can be used for developing a schedule, it is
not exclusively a scheduling tool. Within the WBS, a cost account matrix
is also developed that relates functional organizations to the WBS
elements. A logical numbering system is used on the WBS to keep track of
all the WBS elements. This numbering system is typically referred to as
the Code of Accounts. The code of accounts normally displays the
relationship between the cost account and the work package. The cost
account code is one level above the work package and is used for cost
reporting purposes. An example of this relationship follows:
Cost Account Code
Cost Account (Summary Activity or Parent) 1.4.3
Work Package (Child) 1.4.3.1
Note the numeric relationship between parent and child. The
work package simply adds a digit to the original cost account number.
Network diagrams are ultimately derived from these work packages. Again,
work packages normally range from 80 hours' level of effort (not in
duration) to 60 calendar days. The WBS provides the structure for the
efforts of contracting, cost accounting, manufacturing, engineering,
testing, and logistics. Also, the WBS is a form of network that
ultimately addresses risk vs. time.
Various government and commercial tools exist that use the WBS
structure to convey risk and schedule data. The Program Manager's
WorkStation (PMWS) is an excellent automated tool to track and manage
risk. Another good example of the risk management effort is the
resulting Program Evaluation and Review Technique (PERT) and Cost
Performance Measure (CPM) information generated from the WBS to develop a
schedule and depict critical paths. Automated tools such as Microsoft
Project are also very useful to convey a multitude of scheduling
configurations.
The WBS will continue to be a useful tool in commercial
industry and the DoD acquisition process. Program managers will continue
to use the WBS to help with cost, schedule, performance, manufacturing,
logistics, testing, and risk management. More importantly, the customer
will continue to get a cost-effective and better product as a result of
the WBS.
Editor's Note: The authors welcome questions or comments on this article. Contact Clark at clarkj@lee.army.mil; contact Littrell at Philip.Littrell@dau.mil.
Clark is an adjunct professor for Florida Institute of Technology, Fort Lee, Va.
Littrell is a professor at the Fort Lee Center, DAU Mid-Atlantic Region, Fort Lee, Va
WHEN CHUCK AND LORRAINE BRAUD Hill of Irvine, California, mulled
over where to set down retirement roots, their decision was dictated by
quality of life concerns. California's declining services, crumbling
infrastructure, and crushing housing prices--even after the recent price
slump--made the director of international alliances and business
development for University of California, Irvine Extension and his
banker wife look beyond the Golden State.
Their top choice for where they're planning to move within the
next year: Nashville, Tennessee, a friendly locale where all the
"streets and schools are still working." In the city of the Grand Ole
Opry, the couple built a stately semi-custom house for $350,000--the
equivalent in Southern California would have cost a whopping $1.2
million. "The cost of housing and living are so much lower, yet there's
such a high quality of life raves Chuck, 64. "I don't plan on sitting in
a rocking chair. I intend to open a professional mediation practice
focused on intellectual property disputes. With so much of the music
industry centered in Nashville, it's an ideal location for such a
practice. Nashville just made a lot of sense for us."
Nashville may be the best fit for the Hills, but it may not
necessarily be for others. And there's the rub: Retirement is something
supremely individual. Some may fulfill their dreams with a seaside retirement haven
on the East Coast, such as Virginia Beach. Others may be more inclined
toward an outdoorsy life in the West such as that offered in Portland,
Oregon. After all, no two retirees are alike.
It's up to you to figure out what place works for you--not just
for the next year or two, but for the next 10 or 20 years since 65
these days is only the start of the next phase of your life. For those
who have ditched the 9-to-5 life--or are planning to--you might start by
thinking about what retiree group you fall into.
"We've identified three different stages of retirement," says
Bert Sperling, an urban researcher and president of the consulting firm
Sperling's Best Places (www.bestplaces.net).
"There's a go-go phase for those just beginning retirement and wanting
to do all the things they've dreamed of--like travel the world. There's
the slow-go phase, when you might feel more like relaxing or playing
with the grandkids, and then there's the no-go phase, when you might
need some assisted care. You're going to have different needs at
different phases of your life, and that's why it's so important to think
through where you're going to retire."
We can't tell you where to live, of course. But we can give you
the tools you'll need to make the right decision. To help on that
front, our editors and BE Research developed a scoring system based on
the following (see ranking):
* Quality of life (40% of the overall score): Using Expansion
Management magazine, which advises executives of companies that are
expanding or relocating, as one of our primary references, we identified
cities that received the publication's highest ratings. We also
included BE's 10 Best Cities for African Americans (May 2007) as another
valuable source.
* Healthcare (20%): As indicated by Cities Banked & Bated by Sperling and Peter Sander, we identified locales based on two factors: hazards that reveal health problems and top-notch healthcare facilities and their costs.
* Taxes (15%): Using a variety of sources, including AABP, we
developed a proprietary weighting to evaluate property, income, and
sales tax burdens of cities within each state.
* Leisure (15%): Through Sperling's research, we found that it
was important to identify factors such as shopping, entertainment,
spectator sports, and outdoor recreation.
* Arts & Culture (5%): We found that other important
elements were fine arts, performing arts, and museums. Access to African
American culture was also taken into consideration.
* Climate (5%): Although cited as a factor in relocation,
climate--defined as temperature, precipitation, cloud cover, humidity,
and hazards--tends to be lower in priority than you might think. A
recent Merrill Lynch survey found that climate was ranked No. 6 of nine
retirement priorities.
As a result, we've screened out subpar performers and singled
out overall winners: 20 areas, coast to coast, which you should consider
as you get closer to retirement. Among them are some perennial
favorites, such as Durham, North Carolina, and Nashville. There are also
some smaller locales that might not be on your radar such as Kent,
Washington; and Johnson City, Tennessee.
By reviewing the key factors, you'll see we've done all the legwork Now it's up to you to decide.
QUALITY OF LIFE
"People need clear and objective information that establishes
the differences in quality of living between cities." says Stacy
Bronstein, a spokeswoman for human resources consulting firm Mercer.
Headquartered in New York City Mercer rates cities around the globe.
When determining where you're going to spend the rest of your life,
things such as taxes, climate, and leisure activities are all important.
But topping the list of critical factors is basic quality of life.
Just ask Claire Williams who tired of the "brutal" winters in
Des Moines, Iowa, where winds sweep across the prairies and trap the
town in bitter cold. Although she's quick to point out that it's a
lovely place with kind people, when it came time for her and her
husband, Carl, a former executive for the financial services company
Principal Financial Group, to think retirement, they just couldn't
contemplate a future blanketed in snow and ice.
But neither did they want a desert existence, 365 days a year
in the scorching sun of Arizona or Nevada. Their desired locale: a spot
on the East Coast, close to most of their friends and family; somewhere
where Carl, 70, could easily jet to board meetings; with a temperate
climate where they could enjoy all four seasons without sweltering heat
or bone-chilling cold. The couple settled on Durham, a city that seemed
to possess everything they were looking for. It had plenty of cultural
offerings--critical for Claire, 50, an accomplished singer and
author--and since it is a transit hub, it's easy to travel to and from
without a nightmare web of connecting flights. Best of all, they were
able to get their dream home at a great price. "It was certainly a
plus," says Claire of the Georgian-style, columned beauty where they
entertain friends and family. "Now we have an exquisite home, and the
people here have been warm and wonderful. North Carolina has offered us
so much."
Quality of life may seem like a tricky thing to quantify, but
it can be done. That's what Expansion Management achieves with its
Quality of Life Quotient, crunching numbers for 362 metro areas around
the nation. Among the factors making up its rankings: housing prices,
public schools, crime levels, adult education level, standard of living,
traffic and commuting, continuing education opportunities, commercial
air access, and the labor market. Almost 50 stats back up the final
list. Since quality of life made up almost half of BLACK ENTERPRISE'S
numbers, all cities on our list scored at, or near, the highest level
possible--surpassing at least 80% of metro areas nationally.
HEALTHCARE
No matter how well-laid your retirement plans, healthcare is
the one issue that trumps everything. Your retirement will be wrecked if
you get sick and must go to a questionable healthcare facility with
substandard care. That's why retirees need to do serious due diligence
in researching their top cities when it comes to health issues. In
Sperling's evaluation of environmental hazards and local healthcare
services and their costs, he identified factors such as air quality,
prevalence of disease, and availability of doctors and hospital beds.
On our list, certain cities emerged as healthcare all-stars.
Chief among them, Charlottesville, Virginia; and Johnson City, both
scored in the high 90s out of 100 possible points. Others, like Durham;
Ann Arbor, Michigan; and Lexington; were not far behind. The existence
of a top-flight research outfit can definitely juice those numbers--as
is the case with Durham, with its proximity to Duke University and its
massive medical facilities.
In fact, premium healthcare helped lure the Hills to Nashville.
With a succession of budget crises that have nibbled away at essential
services over the years, California's "not the same state I moved to 25
years ago," Chuck says. So the couple did their due diligence by looking
into the healthcare situation at potential retirement locations, and
"thanks to Meharry Medical College and Vanderbilt University, the quality of medical care in Nashville is very high."
In conducting your own research on healthcare facilities, check
out sites such as StateHealthFacts.org, a project of healthcare
researcher Kaiser Family Foundation.
There you can dive into more than 500 health topics such as budgets,
number of uninsured, and number of hospitals. The Commonwealth Fund, a
private organization, ranks each state's healthcare by 32 different
indicators, including access, quality, cost, and efficiency. Click on
its interactive map to evaluate your chosen areas, at www.commonwealthfund.org/statescorecard.> TAXES
