The First Marblehead Corporation (NYSE:FMD): Escapes Tax Refund Challenge

A cloud of uncertainty engulfed The First Marblehead Corporation (NYSE:FMD) over a challenge to the tax refunds it received. The Internal Revenue Service (IRS) had brought a challenge targeting certain tax refunds that the company earned. However, in a press release, the company announced that the IRS was no longer challenging $176.6 million and another $45.1 million that it previously received in tax refunds.

Are expert analyst predicting a future consolidation of FMD?

Tax refund issue settled

In Notices of Proposed Amendment (NOPAs) in September 2013, the IRS had sought to challenge certain losses that led to the award of the federal tax refunds in question. Additionally, the tax authority also required the company to include certain income documents that dated back to between 2009 and 2011. However, IRS has now dropped all those challenges and requirements, giving The First Marblehead Corporation (NYSE:FMD) a much-needed reprieve as it concludes the year.

According to The First Marblehead Corporation (NYSE:FMD), it is expecting IRS to supply it with the official written confirmation regarding the challenges to the federal tax refund challenge. That is expected to happen in 3Q2015.

Although the IRS issue is now settled, there is much more that the company needs to do. The company needs to prove to its shareholders that it is committed to building value for them. During the earnings call for 1Q2015, The First Marblehead Corporation (NYSE:FMD) addressed various issues, mostly citing how the management was working hard to win more business contracts and cut expenses.

Cost-saving partnership

The company particularly highlighted the deal with Firstmark Services, which will take over the loan origination services for the Monogram loan programs. According to The First Marblehead Corporation (NYSE:FMD), the agreement with Firstmark has multiple benefits. First, it allows the company to concentrate on what it knows best. Second, it is expected to lead to savings between $3 and $4 million in the first year of the agreement.

Financial outlook

The First Marblehead Corporation (NYSE:FMD) generated $14.1 million in revenue from the continuing operations. The revenue was up 11% over last year’s same quarter. The company disclosed $65 million in the treasury at the end of the latest quarter. The cash amount fell by $9 million from the previous quarter.


Transenterix Inc (NYSEMKT:TRXC) broke out of its stable phase in the middle of the year 2013 with a firm move above $4-5 levels. The following rally made a new high at $14 levels before it crashed intensely. According to classical Elliott Wave Theory, it was a typical Irregular Flat top formation. Now, the entire rise has been retraced and the price is finding support from the old $1 levels but as long as the resistance around $3 levels is not crossed firmly, the bulls may not expect much.

About the Author

Coper graduated from the University of Chicagi with majors in political science and journalism.

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