January 19, 1998

Happy New Year!

          The following tax rates and amounts are effective for 1998:

                1)  OASDI rate remains at 6.2% but wage base rises to $68,400 from
                     $65,400
                2)  Medicare rate remains at 1.45% and there is no wage limit.
                3)  The maximum retirement earnings one can earn before social security
                     benefits  will  start  to  be  withheld  is  $14,500 up from $11,520 for
                     those ages 65 through 69 and 9,120 up from $8,280 for those under
                     age 65. There is no lid for 70 and older.
                4)  Personal exemptions rise to $2,700 from $2,650 and exemptions will
                     begin  to  phase  out  at  $186,800  of  AGI  for  couples  instead of
                     $181,850. For singles, $124,500 up from $121,200.
                5)  Standard deductions  will  increase to $7,100 for marrieds in `98, up
                     from $6,900. For children age 14 who must file returns at least $700,
                     up from $650. Can be as high as $4,250 if they have earned income,
                     up from $4,150.
                6)  Income tax rates for `98 are the same as 1997, 15%, 28%, 31%,
                     36%, 39.6% but brackets change.
                7)  Federal unemployment Tax Rate (FUTA) remains at .8%.
                8)  IRS interest rate on refunds remains at 8% and 9% on taxes owed.
                9)  Alternative Minimum Tax rate remains at 26% on first $175,000 of
                     income and 28% over that. More people will pay this since brackets
                     and exemptions are not indexed and there are fewer deductions
                     allowed.
              10)  Back up withholding rate remains at 31%
              11)  401(k) pay in limitation rises to $10,000 from $9,500.
              12)  403(b) contribution limit rises to $10,000 since 401(k) contributions
                     reached $10,000.
              13)  Maximum level of pay on which pay-ins to plans can be based upon
                     remains at $160,000 with the maximum pay in for profit sharing plans
                     remaining at $24,000, for plans putting in the maximum 15%. No
                     change to maximum money purchase plan pay in of $39,000
              14)  Business meal and entertainment deductibility remains at 50%.
                     Standard business mileage allowance rises to 32.5¢ per mile.
              15)  Self-employeds can deduct 45% of medical insurance premiums as
                     an adjustment to arrive at adjusted gross income, up from 40% in
                     1997.
              16)  Federal estate tax exemption rises to $625,000 from $600,000.
              17)  New York State Disability Insurance employee percentage is .5% of
                     wages but not more than 60¢ per week.
              18)  Individuals who estimate their taxes can base their estimates on100%
                     of their `97 taxes, same as other prepayers, instead of 110% of prior
                     year income.
              19)  Phaseouts for IRA deductions begin at $50,000 for couples and
                     ends at $60,000, a $10,000 increase on each. Phaseouts for singles
                     $30,000-$40,000. If only one spouse is covered, the other can
                     deduct the full $2,000 when AGI is under $150,000; $2,000 drops
                     to zero at $160,000.

Hybrid Stockbrokers

          The stock market is soaring and investors are awash in a sea of financial information. Magazines, telephone hotlines and the Internet have given them access to more data on this bull market than any that has come before.

          So who needs to pay big bucks for stock tips? A growing number of investors have concluded they don`t, and that has led to the rise of discount stock brokers.

          Discount brokers vary widely in the level of services they offer and the commissions they charge, but they hold one thing in common. Unlike their full-service brethren, discount brokers are not permitted to recommend individual stocks and they charge for most services heretofore received for free.

          Full service brokers from giants like Merrill Lynch and Prudential Securities to the local storefront brokerage conduct research that help them guess at which stocks are most likely to improve in price. They recommend those stocks to their customers, who pay higher commission fees for any transactions they make.

         Today there is a middle ground called a hybrid brokerage, that is a discounter which provides a variety of services such as recommending a stock when a customer requests it. We offer a hybrid brokerage service through CFS Brokerage Corp. with services such as discounted rates, interest bearing money market checking accounts, IRAs, SEPs, Keoghs, asset backed credit cards, and no charge to hold your securities. If you are interested in more information, please talk with me.

Insurance Coverage

          We urge you to take the time to have an annual review of your medical insurance coverage in view of recent increases with a view to raising your deductible or switching companies. We also urge you to consider the use of umbrella insurance coverage to reduce your automobile and homeowner`s cost of insurance. Review these policies to eliminate redundancies.

          We urge you to consider disability insurance coverage.

          We also suggest you look at the insurance benefits offered by the American Express Corporate Card, specifically business overhead insurance.

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