Broker Check


                                                                                                                                             August 15, 2009

Tax Free Federal Payments to Homeowners

          Under the federal program, financially troubled homeowners who have defaulted or are at risk of defaulting on mortgages cab modify their loans to avoid foreclosure.  Those who make timely payments on the modified loans qualify to have payments of up to $1,000 a year made directly to their lenders to reduce the principal balance of their loans.  The IRS says those payments are nontaxable because they are akin to welfare. Rev Ruling 2009-19

IRS Can Grab Your Stock Options

            If you owe back taxes, the Internal Revenue Service can seize your vested stock options and sell them for cash in order to apply the proceeds against your debt according to a new private letter ruling.  The IRS says that the law gives it the power to ignore any transfer restrictions on the options, whether they are nonqualified options or incentive stock options. Kiplinger Tax Letter Vol. 84 No. 14

Away From Home on Business For Over One Year May be Deductible

            It is settled law, if you are living away from home while on a temporary assignment, you can deduct your living cost if the job lasts less than one year.  A recent Tax Court case states you might be able to deduct your living cost even if the job lasts more than one year.

            An individual accepted an assignment in another state.  The project was supposed to last nine months, but ended up lasting thirteen months.  The court reasoned that because the worker reasonably expected the job’s duration would be less than one year when he accepted it, he was allowed to deduct his meals, lodging and travel while away from home.

            In this case, the taxpayer stayed with his mother so he did not have any lodging expenses.  Because he is self-employed, he is able to use the IRS per diem rate to deduct costs for meals and incidentals even if he took advantage of his mother’s home cooking.  Senulis TC Summary Opinion 2009-97

Investing After a Recession Begins

            The S & P 500 has gained an average of 13.1% per year (total return) for the 10 year period that started on January 1st of the calendar year following the official beginning date of the last five recessions.  Our current recession allegedly began in December, 2007 (BTN Research)

Looking For Work

           2 out of every 9 workers age 45-54 believe it is likely their job could be eliminated by May 2010. AARP

Buy Low-Sell High

            Since 1957, the S & P 500 has averaged 35.8% rise in the first year following the end of bear markets and a 11.9% rise in the second year.

            The closing low point  (so far) of the 2007-09 bear market for the S & P 500 took place on March 9, 2009 in the 16 weeks following, the S & P gained 35.8%. BTN Research


            36% of households headed by an individual age 65-74 have an outstanding home mortgage or home equity loan.  Twenty years ago only 21% had such debt. Federal Reserve

Drowning in Red Ink

            The budget deficit for the US government through 8 months of fiscal 2009 (i.e. The 8 months ending May 31, 2009) is $992 billion as compared to a $319 billion deficit through 8 months of fiscal 2008.  For the entire 2009 fiscal year the government estimates a $1.84 trillion budget, 4 times the size of last year’s record $455 billion budget deficit.  Treasury Department

            I believe this deficit as well as the future Obama deficits will be paid for by higher inflation, higher taxes and higher interest rates.

Don’t Trust New York

            Imagine that you own a fledgling company in New York.  You employ lots of people and always pay your taxes on time.  Lured by the promise of tax benefits you moved your company into a depressed area a few years ago and took steps to invest in new employees, technology and real estate.  And those tax benefits-as promised by New York State in its 2000 Empire Zone legislation were supposed to last 14 years.

            Or so you thought.  In April, the Legislature decided to revise the Empire Zone program by increasing the obligations of those companies already in the program and entirely stripping the benefits of others.  The promise of 14 years of tax benefits was broken for many companies in one fell swoop.  Now some companies face the prospect of having to relinquish any tax benefits retroactively to January 1, 2008 under the newly enacted legislation.

            One can only wonder whose ox will be gored next !

Musical Review

            Here is a client’s musical view of the economic predicament. 

            If you have questions about the foregoing or any other financial matters, please call us.  If you want to read more, visit the AOHL Newsletter Archives at  We are always available to see if we can help your family or friends.

           Remember, We’re Here for You!!