Amazon May Lose Hundreds of Millions, but Things Are Looking Up

Jeff Bezos, CEO and founder of Amazon, at the introduction of the new Amazon Kindle Fire HD and Kindle Paperwhite personal devices, in Santa Monica, Calif., Thursday, Sept. 6, 2012. (AP Photo/Reed Saxon)
Reed Saxon, AP
Amazon just announced another quarter of tiny profits, and says it expects to lose as much as $340 million this quarter. But things are still looking up for the world's biggest online retailer.

First, the good news: Sales for the first quarter rose 22% to $21.27 billion, only slightly below Wall Street's expectations. And its earnings per share for the quarter came in at 18 cents, double what was expected.

The bad news? Amazon still isn't a terribly profitable company. After eking out $97 million in profit last quarter, it reported $82 million in net income this time around. There's a reason CEO Jeff Bezos had to reassure investors this month that his company is not, in fact, a charitable organization.

And that isn't expected to turn around in the immediate future: Its guidance for the second quarter calls for operating income somewhere between a gain of $10 million and a loss of $340 million. Yes, there's a real possibility Amazon could lose a third of a billion dollars for the quarter.

Yet things are looking up for Amazon. Here are a few things working in its favor:
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Its investors don't care about profits. As we recounted last time around, investors are on board with Amazon's consistent sales figures and heavy investments in future growth.

The new Internet sales tax will help Amazon. The Marketplace Fairness Act, which would give states the ability to tax out-of-state online sales, looks poised to clear the Senate this week. The tax would hurt Amazon's smaller competitors, and free up Amazon to build the fulfillment centers it needs to facilitate fast deliveries.

It's aking on Netflix. Amazon wasn't content to be just a bookseller, and it's not content to be just a retailer. Rumors that Amazon is planning a set-top box to stream its Instant Video service drove the share price upwards on Thursday.

Its "cloud" is growing. Amazon Web Services, the company's cloud computing platform, is expanding its reach in the Asia Pacific region.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at, and follow him on Twitter at @Brownellorama.

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Amazon May Lose Hundreds of Millions, but Things Are Looking Up
It may seem like adding insult to injury to force workers who've lost their jobs to pay taxes on their unemployment checks. But with unemployment acting as a substitute for your regular wages, federal tax laws treat it the same way for tax purposes. Most states also impose income taxes on unemployment benefits as well.
Not all Social Security recipients have to pay taxes on their benefits, but if your income is above certain limits, then a portion of what you get in Social Security is subject to tax. To figure out what you owe, take half your Social Security benefits and add in your other income. For single filers, if the result is between $25,000 and $34,000, you might have to add in up to half your benefits as taxable income. Above $34,000, as much as 85 percent of your benefits could be taxable. The corresponding figures for joint filers are $32,000 and $44,000.
Many struggling borrowers seek debt restructuring deals with their lenders that involve having a portion of their outstanding debt written off. If you're fortunate enough to get banks to forgive part of your debt, the IRS will treat the amount forgiven as income and charge you tax on it. One big exception: forgiveness of mortgage debt on primary residences, which became a hot-button issue during the housing bust and the ensuing financial crisis.
If you get divorced, then the alimony payments that one spouse makes to the other are generally treated as deductible by the paying spouse and must be included in the receiving spouse's income. Keep in mind, though, that payments for child support are not the same as alimony and aren't includible as taxable income.
The tiny amount that most jurors get for doing their civic duty may seem insignificant, but Uncle Sam still wants his share. Jury duty is taxable unless you have a deal with your employer that requires you to turn it over in exchange for earning your regular pay.
Stories about lottery winners often bemoan the fact that after taxes, winners end up with far less than the official jackpot amount. But what many people don't realize is that all gambling winnings are taxable, and in most cases, you can't simply offset corresponding gambling losses. Instead, those losses have to be taken as itemized deductions and are subject to limitations. Casinos are required to report winnings of $1,200 or more on slot machines, while lottery winnings of $600 or more are often reported as well. You'll typically have to fill out a form with the casino to claim your winnings, and failing to report those winnings on your return will trigger a red flag with the IRS.
Students who are fortunate enough to get money from scholarships often don't realize the tax implications involved. Scholarships that go toward tuition, as well as required fees, books, supplies, and equipment, qualify for tax-free status if the student is in a degree program. But amounts for room and board and travel, as well as compensation for teaching or research, are subject to tax.
Many businesses offer rebates to customers for doing business with them, and often, those rebates aren't taxable. If the rebate effectively reduces the price of something you buy, then it's usually not taxable. But if you get cash or other gifts upfront just for opening an account, the IRS has a much better argument that it's taxable. Many companies offering those rebates report them on a 1099-MISC form, forcing you to include them on your return to avoid an IRS audit flag.
Tax season will soon be behind us for another year. But the complexity in figuring out what's taxable and what's not will be with us for a long time to come.
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