November 21, 2005 Once More A Lisch Becomes a CPA Shortly before the Japanese attacked Pearl Harbor, my father, Simon Lischinsky, became a Certified Public Accountant. Forty years later a second Lisch was added to the list of Certified Public Accountants. Now, almost twenty-five years later it gives me untold joy, much nachas and an opportunity to kvell (almost as much as my mother) that a third Lisch has been added to the Licensee list of New York Certified Public Accountants. More than anything else, being a CPA shaped my father’s life. I love being a CPA. Audrey and I hope that our daughter, Melissa, will enjoy it as well. With her siblings and the rest of our family, we take pride in congratulating Melissa Dawn Lisch on her accomplishment. You can see all three Lisch names on the New York State Education Department website at www.nysed.gov/COMS/OP001/OPSCR1 Flat Tax Dies The death knell rings for the flat tax. The President’s advisory panel on tax reform has figured that a 21% rate would be needed after the first $38,000 before a family of four is tax free. No itemized deduction such as mortgage interest and charitable giving would be allowed. The rate is too high for Congress to consider passage. The Kiplinger Tax Letter Vol. 80, No. 16 8/12/05 National Sales Tax Dies Also because it would require a 25% rate to match what the individual income tax and the corporate income tax bring in. The Kiplinger Tax Letter Vol. 80, No. 16 8/12/05 A Noncustodial Parent does not always have to file a Form 8332 to claim dependency exemptions for children. A couple’s divorce decree awarded custody of their children to the ex-wife but gave the exemptions to the father as long as he paid the child support on schedule, which he did. She refused to properly fill out Form 8332 to release the exemptions, so he attached to his return a copy of the notarized divorce decree with her signature. The Tax Court said the signed decree was sufficient to get the exemptions because it included the key information required by Form 8332. Omans TC Summary Opinion 2005-110 Tool Allowances are taxable income according to the IRS unless the employee is required to substantiate their tool expenses and return any excess reimbursements. This is so even though employees have to provide their own tools. Payroll taxes are also due on the allowances. Revenue Ruling 2005-52 Pledge Survives Donor’s Death The testator signed a pledge promising to pay an amount to Drexel University to establish a scholarship in his name. The testator died two months later. The New York Surrogates Court held and the New York Court of Appeals affirmed that Pennsylvania law provides a written promise shall not be invalid for lack of consideration if the writing contains an "express statement, in any form of language, that the signer intends to be bound by his pledge". If you have any pledges outstanding, you may want to discuss with your lawyer the likelihood your estate will be bound by your obligation Matter of Wirth 200 NY Slip Op 00274 Invest In Energy In the wake of Hurricane Katrina and the multitude of email petitioners to the federal government to stop the excessive profits of oil companies and to roll back the price of a gallon of gasoline, I submit the following facts: America used to have more than 300 oil refineries Due to age, there are now about 150 refineries, one half being shut down due to age. The newest refinery was built 30 years ago American petroleum consumption in 1980 was 15 million barrels a day. Today it is up to 20 million barrels. Katrina disabled 8 refineries which account for 10% of US refining capacity and more than 100 oil & gas platforms. Rita threatened 19 refineries representing 27.5% of refining capacity Exxon Mobil’s Energy outlook forecasts that between 2004 and 2030, energy use by China, India, and Latin America will rise 100%, 164% and 85% respectively. The Sierra Club has succeeded in preventing expanded drilling on federal lands including the Arctic National Wildlife Refuge. The Sierra Club successfully litigated for 15 years to prevent the last refinery from being built in Virginia. Second quarter earnings of oil and natural gas companies were 7.7% of sales compared with 7.9% for all U.S. Industries. We think that becasue the energy dilemma is caused by politicians unwilling to tap the billions of barrels of domestic oil and trillions of cubic feet of natural gas and by the rapid industrialization of third world countries that this problem is going to go unsolved for a long period of time. As a result, you may wish to consider investing in energy related companies. Investors Business Daily 9/26/05 p.A16 If you have any questions about the foregoing or any other financial matters, please call us. Remember, We’re Here For You!!