Broker Check

April 30, 2002

Untimely IRS Notice Re: 9/11/01

In a Notice released by the IRS on March 27, 2002, the IRS stated that because of the unique circumstances of  the September 11, 2001 tragedies, the substantiation requirements for taxpayers who made charitable contributions after September 10, 2001 and prior to 2002 will be eased.

The general rule for a charitable contribution is, a deduction is allowable for a charitable contribution of $250 or more (including cash contributions to a church) only if the donor obtains a contemporaneous written acknowledgment from the donee organization on or before the due date (including extensions) of the tax return.

A contemporaneous written acknowledgment is a timely written statement from the donee organization that contains the following information
      l the amount of cash and a description (but not value) of any property other than 
                     cash  contributed,
      l whether the donee organization provided any goods or services in consideration
                     for the property contributed, and
      l a description and good faith estimate of the value of any goods or services
                     provided  by the donee organization for the property contributed.

The IRS has become aware that due to the overwhelming number of charitable contributions made in the wake of September 11th, many donee organizations are unable to supply donors with the required documentation in a timely manner.  Therefore, the IRS has extended the time until October 15, 2002 for the taxpayer to either obtain the required documentation or to provide evidence of a good faith effort to obtain it!  An example of a good faith effort is sending the donee organization a letter or an e-mail requesting a written acknowledgment.  A copy of such a request is evidence of a good faith effort.

 This means that a donor can obtain the written acknowledgment or get evidence of a good faith effort to get it after he files his return as long as he does so by October 15, 2002.  There is no need to get a return filing extension to benefit from the relief rules.

This Notice is also a subtle reminder to all those individuals who are contributing cash on a weekly basis to churches and claiming the donation deduction that written proof of any contribution over $250 is required. IRS 2002-38

Prudential Securities Clients

ought to be aware that the Chairman and CEO of Prudential Financial, Inc. has put the company’s brokers on notice that 5600 brokers must increase gross commissions or else!!  If you are a client of Prudential and have recently been getting increased attention from your broker, be aware of the possible reason. Investment News 4/1/02 Vol: 6 No: 13 pg. 1


NYS  Cut Income Taxes

Effective January 1, 2002 the earned income credit is increased from 25% to 27.5% of the federal amount.  For married taxpayers filing a joint return, the standard deduction was increased from $13,900 to $14,200.  The amount of allowable college tuition expenses increased, providing for greater college tuition credits or deductions.  A new credit for 10% of long term care insurance premiums is available for both business and corporation income and franchise taxes.  Tax News Winter 2002  pg. 7

IRS Will Not Tax Frequent Flyer Miles

The IRS announced that it will not assert an individual owes tax because of his receipt or personal use of frequent flyer miles or other in-kind promotional benefits attributable to business or government related  travel.  However, promotional benefits received in cash do not benefit from this policy.  This announcement formalizes what had been an unofficial IRS approach.  There are no potential tax issues when frequent flyer miles are earned in connection with personal travel -they are non-deductible reductions in the purchase price of the ticket.  IRB 2002 pg.10

Macintosh Lawyers

Some of you are aware that I am the largest Macintosh based CPA firm in New York. As a service to those few lawyers who use a Macintosh and for those thinking of using one, know that the best place on the Web for lawyers to find Macintosh resources is, the Law Office Software List for the Macintosh Computer.  The site is maintained by Randy Singer, a lawyer in Woodland, California, who is the co-author of several editions of the Macintosh Bible.  The site lists more than 150 software applications.  It has a newsletter which you can request.

Another site devoted to lawyers who use the Mac is  It is an email discussion group of lawyers and legal professionals from around the world.

Finally, there is Apple’s site which created a Web resource exclusively for lawyers, Apple Law Office Technology, at   Features include suggesting the best hardware and software for the law office and specialized applications for litigators.  Law Technology News April 2002 pg. 43

If you have any questions about these or any other financial matters, please call us.  Remember, We’re Here For You!