February 28, 2015 NJ Pension Problems Getting Worse New Jersey’s pension system, is in dire straits and the problem has been exacerbated by Governor Christie’s decision not to make promised payments according to the financial executive the Governor tapped to find ways to fix the system. The system is currently underfunded by about $90 billion. At stake, are the pensions and benefits of approximately 250,000 employees in the system. Some of the planned fixes are to reduce the pensions and substitute 401(k) types for the workers. Wall Street Journal 12/12/14 p. A17. We think that if you are counting on a pension and benefits from this system, you should think twice and hedge your bets. Save some of your own funds and invest it for your future. Indebted The total debt of the US on 1/20/09 (6 year ago on President Obama’s inauguration) was $10.627 trillion. The total debt rose to $18.080 trillion on 1/15/15. The increase of $7.453 trillion is an average daily deficit of 3.41 billion every day for over 6 years. US Treasury Department. Foreign Crackdown The foreign bank crackdown continues with Bank Leumi Le Israel as the latest victim. It avoided prosecution for tax evasion by giving the IRS the names of over 1,500 of its U.S. account holders and agreeing to pay a stiff fine. The IRS has a new method to uncover folks who hide money overseas. It is sending summonses to delivery companies such as FedEx, UPS, and DHL in a probe of Sovereign Management and Legal Ltd., an offshore financial services firm. The Kiplinger Tax Letter 1/16/15. >Interest Paid On Another’s Mortgage Might Be Deducted A son moved into his mother’s home in order to help her take care of the property. He paid the house’s maintenance costs, including the mortgage with proof of the understanding that he would later get a share of the property. Even though he was not liable on the loan, the court ruled he could claim a deduction for the mortgage interest he paid because he was an equitable owner of the home. Phan JC Summary Opinion 2015-1. The IRS does not have to follow this decision since it is only a Summary Opinion. Thievery Lost among the headlines is the real headline: New York Assembly Speaker, Sheldon Silver was arrested by the US Attorney for the Southern District because of his part in an elaborate bribery scheme that generated millions to him and the former Senate Majority Leader, Senator Harry Reid. Mr. Silver is alleged to have pocketed more than $5,000,000 in a scheme whereby he directed state funds to the clinic of an asbestos doctor. The doctor in turn provided Mr. Silver with patients who had asbestos claims. Mr. Silver then directed those cases to the class action law firm of Weitz & Luxenberg, which paid Mr. Silver the $5,000,000 in fees. Also alleged is that Mr. Silver’s job was to block any Albany bills that might interfere with its business model. Weitz & Luxenberg has also given $600,000 to federal politicians, 99% of them Democrats. It was the top contributor to Nevada Senator Harry Reid from 2009 to 2014 who also happened to be the recently deposed Senate Majority Leader. Mr. Reid has performed the same job in Washington that Mr. Silver did in Albany, block any Washington bills that interfered with the firm’s business model. At the top of that list was his refusal to bring up a House passed bill called FACT ACT, which would root out asbestos litigation fraud, making it harder for lawyers to simultaneously raid asbestos bankruptcy trusts and courtrooms. Wall Street Journal 1/30/15 p. A11. Kudos to Preet Bharara the US Attorney for the Southern District who showed courage in bringing this indictment. Maybe he should have been the one who was proposed to be the next Attorney General. Nursing Home Benefit Taxpayers who have owned and used a home as their principal residence for at least two of the five years leading up to the sale can exclude up to $250,00 ($500,000 if married) of the gain when they sell. However, the rules are more lenient for homeowners who cannot care for themselves and have moved to a nursing home. The length of use requirement is lowered to one out of five years preceding the sale. 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!