Reno Gazette-Journal from Reno, Nevada • Page 12

U1 12A Thursday, January 20, 1983 Gazette-Journal J.v t' Economists see 1983 as year of recovery in Washington a crniin of business and financial If. By ROBERT BURNS The AP After the steep drop in economic activity last year, 1983 ought to be a year of steady, if modest, improvement for businesses and consumers, many economists believe. "The turn is at hand," Alan Greenspan, chairman of the economic consulting firm Townsend-Green-span Co. told a forum in New York on Wednesday. "There has not been any deepseated, permanent damage in our economy which would prevent it from really moving up very sharply, provided that interest rates, somehow, could be brought down," Greenspan said.

Many economists are looking for a turnaround from the 2.5 percent drop in gross national product during the 1982 fourth quarter. The Commerce Department reported Wednesday that the fourth- Juarter retreat ended a year in which the GNP ropped 1.8 percent the biggest decline since 1946, when it fell 14.7 percent. drige, the Commerce Secretary. He added that he expected the recovery to pick up speed as the year progressed. Albert T.

Sommers, chief economist at the Conference Board in New York, said he believed a recovery already was under way and that the economy would grow much faster this year than the Reagan administration's forecast of a 1.4 percent rise. Sommers put the year's growth at 2.4 percent compared with the Reagan adminstration's projection of 1.4 percent. By historical standards, both figures are extremely small for the first year of a recovery in business conditions. "The reported government forecast has implications for a violent policy collision, far more powerful than any experience in memory," Sommers said. He said he inferred from the administration's forecast that it expected interest rates to begin rising early this year, shutting off the chance for a solid recovery.

"The consequences will be no significant decline in the unemployment rate," Sommers said. The Conference Board is a research group supported by executives told the Reagan administration they feared interest rates could be pushed higher in 1983 unless the federal budget deficit is trimmed from the current projections of $200 billion. "On this course, we could not expect either sus- tained economic growth or genuine price stability," the group said in a letter to President Reagan and congressional leaders. In other economic developments: Reagan neared completion of a 1984 budget plan as Treasury Secretary Donald Regan promised deficits of under $200 billion for the next three years and another senior aide vowed a return to black ink by the end of the decade. Other administation officials said next year's deficit will approximate $190 billion, a record budget gap.

Japanese Prime Minister Yasuhiro Nakasone ended talks with President Reagan at an impasse over U.S. requests that Japan lift import quotas on key agricultural products. "We got no promises on that," said Commerce Secretary Malcolm Baldrige. This is a year of recovery, said Malcolm uai- 2 13-year-old boys head computer business; employ 30 people T71 A riTI S11'J AT ITW 1 1 t( AIHA 'I rein .11 innlArt nwrlniw 1 4- a 11 4 1 1 a I sla orders. small Dins indicating catalog The games include "Alpine," a much of it really isn't quality," he said.

NEWPORT BEACH, Calif. (AP) A sign that says "Executive At Work Do Not Disturb" hangs on his doorknob. Cornelison, who gave an abbreviation of his name to the company, is president. "The thing I like about running the T.I. division is that T.I.

only has about 10,000 games," he said, smiling through braces. "T.I. users are hungry for software." With a market glut of Apple software, Emigh faces a different challenge. "There is so much software, but The 30 employees at Corn Software who write and sell video game computer programs have two bosses, both 13 years old. Michael Cornelison and Scott Emigh are computer buffs who whispered schemes for a video venture in seventh-grade English class.

Corn Software, a division of Texas Instruments, is their boyhood dream come true still in boyhood. "I heard how much other software companies were making," Cornelison said. "I kind of liked the idea. I liked the games, too." lom on the TV screen through gates and around trees; "Missile Strike," a battle in the sky, with an audio rendition of artillery worthy of any arcade; and 29 others with leaping frogs, hurling meteors, radioactive snowflakes, wandering camels, lunar landers, all made for Texas Instruments and Apple computers. At his seaside Corona del Mar home, Cornelison's bedroom doubles as division headquarters for the Texas Instruments models.

A map of the United States hangs above his bed, with colored tacks marking software sales, and "I know everything that's out there. I know what there is to beat. I like to think that my programs and the programs my people write are quality programs." The business began when Cornelison's father Bob bought a Texas Instruments home computer two years ago. "I slipped in a few game modules when (dad) wasn't using it, read the manual and started programming," the boy said. He decided to sell his programs and drew up a catalog.

-HA No approval for Dunes, Riviera aid Reno businessmen share deficit concern Lumber prices jump as orders rise sharply PORTLAND, Ore. (AP) A sudden jump in orders for lumber has touched off a sharp rise in lumber prices over the past two weeks, shattering company and industry records and generating optimism in the long-depressed Western timber industry. "Panic buying has been set up to fill the inventory pipeline, which is virtually empty," said Jerry Griffin, a spokesman for Louisiana-Pacific the nation's second-largest lumber producer. "People are falling over themselves to pay high prices to get protection." Random Lengths, a private reporting service in Eugene-, said this week that its composite index, of lumber prices has risen 17 percent since Jan." 1, which it called "probably the sharpest overall price increase in history." Orders at sawmills in Western states in the first week of the month were 107 percent above normal, the highest level in nearly two years, the Western Wood Products Association reported. Airlines warned on financing NEW YORK (AP) If the nation's airlines continue their widespread discounting, they will be unable to raise the $13 billion they are committed for to buy new airplanes over the next four years, a leading banker warned Wednesday.

John S. Bliven, senior vice president of Bankers Trust told members of the Wings Club, a 'national aviation group, that in 1983 alone the 20 major and national carriers will have a pre-tax loss of a "quarter of a billion dollars," even in a moderately favorable environment, because of $1.4 billion interest expense on funds borrowed to finance new fleets. "We are concerned that the airlines, in their determination to take delivery of new planes, may not fully appreciate the financial risks that lie ahead," Bliven said. Profit off at First interstate, others Continental Illinois National Bank Trust Co. reported a 42 percent drop in fourth-quarter 1982 Erofit on Wednesday, and two large California-ased banks reported smaller declines.

Each said its earnings were hurt by an increase in bad loans. First Interstate Bank, the 13th largest bank, said its profit dropped 10 percent in the fourth quarter, to $57 million from $63.3 million a year earlier. Continental Illinois, which was harder hit than most other banks by bad loans in 1982, said from its Chicago headquarters that it earned $40.8 million in the final three months of last year, compared with $70.5 million a year earlier. Continental Illinois is the nation's seventh-largest bank as ranked by assets. Bank of America, the nation's biggest bank, reported a 12.4 percent decline in fourth-quarter earnings despite a 14 percent increase in net interest income.

Profit dropped to $74.1 million from $84.6 million in the year-earlier period. For the full year 1982, Continental Illinois' earnings fell 69 percent, to $77.9 million from $254.6 million in 1981. Bank of America's full-year profit was up 1.4 percent, to $451.5 million from $445.4 million, and First Interstate said its profit dropped 7.3 percent, to $228.4 million from $246.5 million. Joe Pinola, chairman of First Interstate, attributed his company's 1982 profit decline the first full-year drop in seven years to "the continuing economic recession on the domestic as well as international fronts." Epcot helps boost Disney revenue BURBANK, Calif. (AP) High interest payments on funds borrowed to build Epcot Center at Walt Disney World depressed first quarter profits slightly for Walt Disney Productions, despite record revenues, the company said.

The opening of the $1 billion futuristic entertainment center near Orlando, Fla. brought almost 4.7 million visitors to Walt Disney World in the first fiscal quarter ending last Dec. 31, compared with 2.4 million visitors the same quarter a year earlier. However, attendance at Disneyland in Anaheim, dropped 14 percent for the quarter to 1.7 million from 2 million in the same period the previous year. First quarter revenues rose 28 percent to $270 million, compared with $212 million in the first quarter a year earlier, the company said.

At the same time, net income for the quarter declined 1 percent to $17.2 million, or 51 cents per share, compared with $17.4 million, or 53 cents per share, in the same quarter in the previous year. American Express profit up NEW YORK (AP) American Express a diversified financial services company, said Wednesday its profit in the final 1982 quarter jumped 16.5 percent, largely on the earnings growth of its Shearson-American Express subsidiary. Profit for the full year climbed 10.8 percent, to $581.1 million from $524.2 million the year before. American Express said it was the 35th consecutive year in which profit had grown. Revenue rose 11 percent, to $8.09 billion from $7.29 billion in 1981.

Per-share earnings advanced to $6.04 from $5.58. McDonalds to open on military base CAMP PENDLETON, Calif. (AP) Ronald McDonald is joining the Marines, helping soldiers supplement their mess hall fare with Big Macs and french fries. McDonald's plans to open a restaurant Feb. 7 on sprawling Camp Pendleton, 60 miles north of San Diego.

It will be the first time that a fast-food enterprise has invaded a U.S. military base, officials say. Although the Camp Pendleton McDonald's will have a military touch manager Jim Case is a retired Marine Corps drill sergeant. CARSON CITY (AP) Following a lengthy and sometimes bitter public hearing, the state Gaming Control Board has refused to approve transactions designed to help two financially troubled Las Vegas casinos. The Control Board split 1-1 on a request from the Dunes Hotel to allow proposed buyers Clifford and Stuart Perlman to pump another $10 million in it.

AITS parent company of the Riviera Hotel, was denied its request Wednesday to allow Rapid American Corp. to pay off AITS' $8 million debt owed to the First National Bank of Chicago. Board Chairman James Avance voted against the Dunes request while member Patricia Becker voted yes. Two favorable votes were needed for approval and Richard Hyte does not take his seat until the end of the month. Both matters will be discussed by the Gaming Commission in a meeting Thursday in Las Vegas to make a final decision on the recommendations.

"This was a very expensive denial for a non-gaming matter. I don't understand it," complained Riviera President Isadore Becker. He explained that if the Gaming Commission upholds the board's denial it could cost Rapid American the $1 million security note it used to seal the arrangement with the Chicago bank, scheduled to be consumated on Feb. 1. It would also leave the Riviera under threat of foreclosure by the Chicago bank.

Under the terms of the agreement, Rapid American would pay off the $8 million loan at a 40 percent or $3.2 million discount. In exchange, Rapid American would become debtor for AITS, but since Meshulam Riklis is majority owner of both companies, the Riviera would be "in a more comfortable position," insisted Becker. Ms. Becker, who is not related to the Riviera president, said she was against the request because the board didn't have enough time to study the deal. But Becker did move that the Perlmans be allowed to pump another $10 million into the Dunes Hotel, with $5.3 million to be used to pay off a debt that becomes due Jan.

27. The debt is held by Berlanga, a Hong Kong investment consortium. An attorney for the group said his instructions were to satisfy the debt by "any and all means available," including Dunes foreclosure. Board Chairman James Avance voted against the motion, citing recently obtained information on the Perlmans "that's causing concerns." The Perlmans, who were forced out of Caesars World Inc. by New Jersey gaming regulators, have applied for a license to run the Dunes.

The Perlmans, who have proposed buying the hotel for $80 million and assuming $105 million in debt and other obligations, have already invested $8 million in the hotel. Taxes: who must file, what forms? 3 fa By TIM ANDERSON Reno representatives for three businesses said Wednesday that they share the concern raised by national business groups that massive federal budget deficits will stifle economic recovery. "The fear of big budget deficits is legitimate because they would severely impair the recovery process. We can't afford to allow this to continue. There has to be a mid-course correction (in the Rea- gan presidency) or we're in big trouble," said Tom Schrader, executive vice president of the Associated Builders and Contractors' Sierra Nevada Chapter.

i Concern and fear about expanding budget def- icits in the business community came to the forefront Tuesday when three national organizations repre- -senting about 550,000 small, medium and large busin- -esses asked for additional cuts in the 1984 budget. Spokesmen for the National Federation of Indepen- dent Business, the National Association of Manufac- turers and the American Business Conference specif- ically said defense spending should be cut deeper than the president wants. I 1 The national business organizations proposed that the federal deficit be slashed 25 percent or about $50 billion if it reaches $200 billion or more in the fis- 7' cal year beginning Oct. 1. Schrader, in charge of day-to-day operations for the 78-company building association in Reno, said rising budget deficits are likely to push interest rates higher, thereby snagging chances for a reasonably quick recovery period.

"When the government has to borrow, it gets first crack and leaves less for others to borrow. The last thing we need is more government borrowing," Schrader said. He said Reagan's seemingly intractible stance on the military budget and the appearance of a lack of direction in government policy are particularly both- ersome. Even so, Schrader said the builders' group believes the administration is prepared to make tough deci-sions in cutting federal spending "when push comes to shove." And he said the organization continues to solidly support Reagan's basic economic programs. "We're convinced that a lot of budget cuts can still 1 be made in defense and other areas," Schrader said.

Randy Capurro, co-chairman of the Reno chapter of Citizens for Private Enterprise, a statewide busi- ness advocacy organization, agreed that all areas of the budget should be closely scrutinized. "Nothing should be sacred. If we don't cut and cut deep our country is going to be crippled. We've been using scissors. Now we need shears," Capurro said.

Capurro, a Reno insurance company owner, emphasized that he was speaking for himself and not the organization he's affiliated with. However, he said many of his views parallel those of other mem-. bers of the group. "There's really only two things we can do about this (budget) problem cut spending or raise taxes. And it wouldn't be very wise to raise taxes in this economic climate," Capurro said.

Once government spending is brought under con-A trol, it won't take long for business to turn around. The key to everything is the federal budget," Capurro said. If the budget can be controlled, Rea- I ganomics will have a chance to work, he said. Fred Davis, government affairs director for the Greater Reno-Sparks Chamber of Commerce, said the business organization has previously called on I Nevada's Congressional delegation to search for additional ways to cut government spending. "We've been pushing this for some time because we're convinced that more cuts can be made.

We've I encouraged our representatives not to spare any area as they look at possible cuts." EDITOR'S NOTE This is the second in a series of five articles to help taxpayers prepare their 1982 income tax returns. WASHINGTON (AP) Some people find the toughest part of filing a tax return is figuring out whether they have to file at all. The Internal Revenue Service is still looking for a simple way to spell it out. The instructions that accompany Form 1040 (Page 3) use a two-column chart to supply the answer. The instructions for 1040A and 1040EZ (page 3) have a four-column chart.

The helpful "Your Federal Income Tax" booklet uses what looks like a board game to lead the taxpayer through a series of questions; at the end of the maze you find the answer. Whether you have to file a return depends on your age, income and marital status. In general, you must file if you are single or widowed and have income of at least married, filing a joint return and with income of $5,400 or more; or married, filing separately and with income of at least $1,000. But there are so many exceptions that the only way to be sure is to read the instructions. In most cases, for example, a person 65 or over may make $1,000 a year more than someone younger before having to file.

And a person who may be claimed as a dependent on a parent's return must file if income from interest and other investments was $1,000 or more. Many people should file to get tax refunds even though they otherwise would not have to file a return. These include part-time workers who had some tax withheld from their checks, and lower-income families who are eligible for the earned-income credit. If you must file, the next decision is what form to use. Now there are three basic forms: 1040EZ is the newest and simplest.

If you qualify, you stick on the mailing label, list your wages plus interest of $400 or less, subtract up to $25 for charitable contributions, and subtract $1,000 for your personal exemption to determine your taxable income. Look in the tax tables for that figure closest to your taxable income; find your tax, sign your return and you're finished. Of course, something that simple is not for everyone. For example, people over 65 are allowed a second $1,000 exemption because of age; they can't use that exemption on 1040EZ. You may use 1040EZ only if your are single, have no dependents, have income only from wages or tips and up to $400 in interest, and your taxable income (after subtracting your exemption) is less than $50,000.

1040A is basically the same two-page form as last year, but the front page is broken down into seven specific steps that are keyed to sections of the instructions. You may use it if your taxable income is less than $50,000 and is solely from wages, tips, interest, dividends and unemployment compensation. The new "marriage-penalty" deduction for working couples may be claimed by using this form, as may the earned-income credit for families with children and earnings under $10,000, the partial deduction for charitable gifts, and the partial credit for political contributions. 1040, the long form, is basically unchanged. It has 71 numbered lines, including a new one for the working-couples deduction.

You must use 1040 if you itemize deductions or your spouse itemizes on a separate return; if you pay into a tax-deferred Individual Retirement Account or Keogh plan; claim an adjustment for moving expenses, employee business expenses or alimony paid; average your income; or take a tax credit for the elderly, for child-care expenses or for energy-conservation measures. But just because you must file the long 1040 form does not mean you have to itemize deductions. For example, many people who set up an IRA account for themselves or their spouses are likely to file 1040 and still claim the standard deduction. NEXT: What is taxable? Zt .11 St.