Broker Check

November 15, 2009

October Newsletter

           Judging by the response to my October Newsletter, my readership is up.  I am glad that my musings stimulate discussion.
          Contrary to certain assertions, I do not express opinion in my newsletter.  I adhere to Jack Webb’s dictum, “Just the facts, please!”  You, on the other hand, are entitled to your opinion.  We hope the facts support it.

So You Are Dissatisfied With Your 10 Year Market Return

          The trailing 10 year total return for the S&P 500 as of the end of 2008 was negative, the first time this has occurred at the end of a calendar year since 1939! BTN Research

Healthy Choice

          Modern culture portrays men being forced to choose between the stereotypes of the dark haired eyeglasswearing librarian or the sultry dumb blonde.  A recent study shows that while the blonde may be more fun, the man is likely to last longer with the librarian.
          The spouses of educated women appear to live longer than the spouses of less educated women, even when controlling for the spouse’s own socioeconomic and education levels, according to a study in the Journal of Epidemiology and Community Health.  Men living with women who had not attended college or another form of post secondary school were at least 10% more likely to die during the study’s 12 year period than men living with women who had completed at least three years of post secondary school.
          Researchers suggested that women having more influence over family’s health habits could partly explain the findings. Selection biases could have skewed the results.  For instance, smarter women may avoid living with men who smoke or drink heavily. Wall Street Journal 10/20/09
          You ask what does this have to do with finances; well, it would appear, the male spouse might tend to be healthier married to the educated woman which in turn may tend to mitigate healthcare costs over the long term. 

“Our” Cash for Clubbers

          We thought cash for clunkers was the ultimate waste of taxpayer money, but, as usual, we were too optimistic.  Thanks to Obama’s stimulus plan, Americans are being paid to purchase that necessity of modern life, the golf cart.
          The federal credit provides from $4,200 to $5,500 for the purchase of an electric vehicle and when combined with state incentive plans can pay for almost the entire cost of a golf cart, which has a sticker price of approximately $8,000.
          The IRS has ruled that golf carts qualify for the electric car credit as long as they are roadworthy (add side and rearview mirrors, three point seat belt and go 15.25 mph).  The IRS has also ruled there is no limit on the amount of golf carts you can buy. “The Golf Cart Man” in the Villages of Lady Lake, Florida, runs an ad that declares, “GET A FREE GOLF CART, or make $2,000 doing absolutely nothing!”  He refers to his offer in which you can buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months at which point the Golf Cart Man will purchase the cart for $2,000.
          You can’t blame a guy for exploiting the loopholes that Congress created.  Wall Street Journal 10/17-18/09, p. A12 
          Thank you to those who sent me the article.

Review Year End Tax Plans

Year by Year

          Most filers will benefit by accelerating their deductions into 2009 and deferring income into 2010.  The Bush tax cuts will expire 12/31/10.  Tax rates will rise in 2011.  Obama/Pelosi surtaxes won’t be effective until 2011.  2010 is an election year!

Sales Tax on Auto

          Buying a new vehicle in 2009 may pay tax dividends.  You can deduct the sales tax paid on up to $49,500 if any amount of the new vehicle is purchased before 2010.  If you do not itemize, the sales tax can be added to the standard deduction.  The sales tax break will phase out for itemizers who are married with AGI over $250,000; singles with AGI over $125,000.

ROTH Conversions

          If you plan to convert an IRA to a ROTH, you may want to wait until 2010.  The 2010 conversion can be deferred and spread over 2 years.  Pay 50% of the conversion tax in 2011 and 50% in 2012.
          Top bracket filers may want to pay their tax up front with the top rate to go from 35% to probably greater than 39.6% after 2010.

Tax Free Gains

          You may want to take the capital gains you may have this year and use last year’s large capital losses to net out the gain, so the gain this year, up to the loss carryforward amount, will not be taxed.

Dump Losers?

          It may pay to dump losers this year so as to insure that you have at least $3,000 in losses to offset your ordinary income.

No Required IRA Distributions

           for individuals age 70 ½ and older.  Congress is not likely to extend this relief for 2010 on required withdrawals.

Boost Margin Interest Deduction

          by taking short term gains.  Margin interest is deductible up to the amount of your net investment income which includes short term gains.

AMT Wreaks Havoc

          with your year end tax planning, such as paying your January, 2010 state tax estimates in 2009 or purchasing a vehicle late in the year and deducting sales tax.  Interest paid on HELOCs is not deductible if you are subject to AMT unless the proceeds are used to improve your home.

Heavy SUV

          Placing a new SUV with a weight of more than 6000 pounds into service by December 31 will allow a company or self-employed to expense $25,000 and it can claim up to $12,500 as bonus depreciation plus regular depreciation.  On a new $50,000 vehicle, the total first year write off can equal $40,000, for 100% business use.


          the new Pelosi Healthcare bill removes the Reaganesque inflation adjusted tax bracket feature of the tax law.  As a means of paying for Healthcare, inflation will cause “bracket creep” to be reborn.

          If you have any questions as to how this law or other tax matters may pertain to you, please call us. If you want to read more, visit the AOHL Newsletter Archives at

          Remember, We’re Here For You!!