Broker Check

December 22, 2011




Energy Credit Audits


            Filers who erroneously claimed excess home energy credits over the $1,500 combined limit for 2009 and 2010 will be liable for IRS audit. The Kiplinger Tax Letter 11/23/11.


Cannot Return 529 Plan Payouts


            A couple set up 529 plans for their children. During economic hard times, the father tapped the 529s to help cover living expenses. Before he cashed the checks, he told his wife about the payouts. She overruled him and made him return the money to each child’s account. The Tax Court ruled that putting back the funds was not a tax-free rollover because the money was not transferred to a different 529 plan for the same beneficiary or to a different beneficiary’s 529 plan. Thus, the withdrawals are taxed. However, the court said it would be unfair to have a 10% penalty on 529 payouts that are not used for education. Karlen TC Summary Opinion 2011-129.


IRS Audits Vehicle Sales Taxes


            The IRS is planning to audit those who claimed a vehicle sales tax in 2010 and deducted state income taxes in 2010. The IRS believes that because in 2009 filers could deduct any state sales tax paid on up to $49,500 of the purchase price of a vehicle purchased after February 16, 2009. If the sales tax on a purchase in late 2009 was actually paid in early 2010, filers who elected to deduct state income taxes in 2010 could also deduct the sales tax that year. Not surprisingly, many filers erroneously deducted sales taxes paid on vehicles purchased in 2010. So the IRS is planning a set of audits to verify the purchase and payment dates. The Kiplinger Tax Letter 11/23/11.


More Swiss Bank Accounts


            Credit Suisse and Clariden Leu will soon disclose the names of US account holders who are suspected of stashing their money overseas in order to evade US income taxes. The Kiplinger Tax Letter 11/23/11.


A New Year’s Thought


            Do you know how much money it takes for you to comfortably retire and for you to remain comfortably retired? How long do you have to achieve it? Would you like us to sit with you and help you to figure it out?



Home Price Comparison


            The average home price in North Dakota increased 17.3% over the 5 years ending March 2011. The average for Nevada was a drop of 55.9% over the same period. OFHEO.


IRS Feasts on S Firms


            that pay low salaries to owners. In many cases, S Corporation owners take low salaries so they can receive the bulk of the profits as dividends, which are not subject to payroll taxes. In a recent case, the District Court agreed with the IRS that a CPA who took a $24,000 salary in a year when his share of the profits was $200,000 had an unreasonably low salary and ruled that the dividends were properly reclassified as salary and are hit with payroll taxes. (Watson, D.C., Iowa).


Variable Annuity Carriers Hunkering Down


            Despite a marked increase in investor appetite for variable annuities, many insurers have exited the market due to low interest rates including Cetera Financial Inc., John Hancock Life Insurance Company, and Sun Life Financial Inc. A number of insurers, including Prudential Financial Inc., MetLife Inc., and Jackson National Life Insurance Company have eliminated attractive living benefits or derisked investment options. Investment News 12/19/2011 p. 3.


Happy New Year


            New York, is dependent upon the fortunes of the financial industry. According to Richard Bove of Rochdale Securities, in the past two years approximately 250,000 financial services employees have been laid off. He says that the financial institutions have announced approximately 120,000 worldwide layoffs in the next 12-18 months.


            How fortunate for New York that Governor Cuomo is trying to add more taxes on the surviving employees?


Holiday Wishes


            We hope you have a safe and healthy holiday season.


            As always, if you have any questions about these or any other matters, do not hesitate to call us.

            Remember, We’re Here For You!