Broker Check

June 17, 1997

Tax Tips for Mutual Fund Investing

          It may be difficult to see the downside of mutual fund investing with the stock market hitting record highs and the resulting success of mutual funds in attracting record amounts of cash inflows. Other than a steep stock market decline, the next worst downside is the numerous tax pitfalls and compliance headaches that await the unwary investor. For example:
          1) Switching from one fund to another within a family of funds is a    
              taxable event, a sale and reinvestment; such transfers are not treated as
              tax-free swaps.
          2) Checks drawn on funds result in gain or loss. It`s probably safe to say that
              mutual funds that offer investors check-writing privileges on their mutual
              fund account never advertise the fact that every check written results in a 
              redemption of shares that must be reported on Schedule D, Capital
              Gains and Losses.
          3) Identification of shares sold is a problem. Four different methods for
             calculating cost basis are available. Under the general rule applicable to
              investors in stocks and bonds, mutual fund investors that purchase
              identical shares of stock at different prices or on different dates and then
             sell only part of the stocks are presumed to have sold the stock acquired
             earlier (FIFO) unless the specific shares sold are adequately identified.
              Some mutual funds will calculate gain and loss for you, but on an average
             cost basis.
          4) Finally, since a taxpayer pays tax on dividends and capital gains dividends
             even if automatically reinvested; when any portion of the investment is
              sold, a proportionate part of the previously taxed distribution must be
             added to the investor`s basis to avoid double taxation.

Secret Holocaust Swiss Bank Accounts Revealed World Jewish Congress Asks Our Help

          Recently, the World Jewish Congress obtained a partial list of Swiss Bank accounts held as of June 14, 1941. The list is all the foreign  accounts held at the New York Agency of Swiss Bank Corporation on that date. We have been asked by the World Jewish Congress to help make this list available. If you believe you or a relative may have an account on that list, then please contact our office.

 Compensation for Concentration Camp Survivors

        We have been asked by World Jewish Congress to publish this Notice:

          In recent negotiations with the German Government on behalf of the Claims Conference, the World Jewish Congress has succeeded in liberalizing some of the regulations concerning compensation of concentration camp survivors.

          If you know of someone who spent six months or more in a German labor or death camp and is not currently receiving compensation, please ask him or her to contact:
          Conference on Jewish Material Claims Against Germany
          Article II Fund
          15 East 26th Street
          New York, NY 10010

         There is no deadline to file. The recent change benefits camp survivors who may have already received a small lump sum payment. But, be aware that other restrictive regulations still apply.

NYS Unemployment Insurance and Corporate Officers

          A corporate officer`s eligibility for unemployment insurance depends on whether he or she is totally unemployed and whether the individual`s separation from employment was due to non disqualifying circumstances.

          Unemployment insurance benefits may only be paid to an individual who is totally unemployed. The conditions which constitute "total unemployment" have been defined by many Unemployment Insurance Appeal Board and court decisions.
          Consider the following:
              a) a corporate officer is not considered to be totally unemployed when
                  business operations are slow or the business is closed for the season
                  and is expected to resume operations during the upcoming season.
             b) A corporate officer who becomes unemployed due to the sale of 
                 corporate stock is considered to have voluntarily quit employment
                 without good cause unless the sale was for a compelling reason.
             c) If a corporate officer states that the business had to be closed or sold
                 due to financial losses, he or she must show proof of the losses, explain
                 why the business was no longer viable and describe the steps that were
                 taken to save the business.

 Tax Man Awaited Peruvian Hostages

          Imagine you are a Peruvian hostage, freed after 4 months in a daring rescue. If you were planning to celebrate by going to Disneyland you had better cut your vacation short. The Peruvian tax office ruled that the hostages must pay their 1996 income taxes and the deadline for paying them will be 30 working days after they recovered their freedom! And you thought the IRS was tough!!!

NYS Admits They`re Wrong-Lisch is Right

          Recently, we pointed out to Commissioner Teitelbaum that the law regarding the Dependent Care Credit was being improperly administered and New York State`s official Form to obtain information to see if you qualified to use Form IT-216 was incorrect. The Commissioner agreed and said only twice in the past 3 years has a CPA shown that NYS was in error in administration of the law.

          If you have any questions about this or any other financial matters, please call me.