September 17, 2002 Refinancing Your Home may be in order. Even if you refinanced your home a couple of years ago with thirty year mortgages approaching 6% and fifteen year mortgages at 5.75%, you must reconsider the benefits of refinancing. Low rates have returned, in large part, because of the fear of a double dip recession. Most forecasters do not expect the Federal Reserve to resume raising short term interest rates for many months, so long term rates have slipped downward again. NY Times 8/23/02 C1 You may choose to refinance your 30 year mortgage with a 15 year loan and find that you can keep your monthly payment more or less the same and pay off your home sooner. And, of course, with the rocky ride in the stock market, many people are choosing to put more equity into their homes. IRS to Crack Down on S-Corporations A newly released Treasury report says insufficient S-corporation compensation does not get enough attention. The report states that S corporations underpay reasonable salaries to corporate officers and shareholders and thereby avoid FICA taxes. The report recommended IRS field personnel be equipped with software to aid in determining reasonable officer compensation for a variety of occupations and to launch a nationwide initiative to track the results of S corp officer compensation issues. RIA 7/18/02 p. 351 If you have an S corporation, please call us so that we can arrange a consultation to determine you tax and audit exposure. NY Film Production Sales Tax Exemption Effective December 1, 2002, the New York State sales and use tax will exempt tangible personal property used directly and predominantly in producing a film for sale regardless of the medium used to carry the film to the purchaser (film, cd rom, floppy diskette, email). Prior to this, film production qualified for a similar production exemption, but, only if a tangible product was sold. For purposes of this change, film means feature films, documentary films, shorts, television films, television commercials, and similar productions. The exemption also extends to certain services rendered to the exempt property and fuel and utility services used directly and exclusively in production of a film for sale. NYS Empire News. Summer 2002 p.1 Remember when Ronald Reagan earned a $2,000,000 fee for a 1989 speechmaking trip to Japan and then retired from speechmaking, and the resulting furor that it was a political payoff from Japan, Inc.? Compare that to the $9,200,000 that Bill Clinton made from speeches in 2001 (not including his $10,000,000 book advances and other deals), with nary a peep! NY Times 6/15/02 A.10 IRS Views Foreign Credit Card Accounts in a move to clamp down on individuals who use offshore accounts to evade U.S. income tax liabilities, the IRS has asked the US District Court to grant permission for the agency to serve a “John Doe” summons on Visa International and Mastercard International to obtain records for the years 1999, 2000, and 2001 of credit cards issued by banks in more than thirty (30) countries, including Liechtenstein, Switzerland, Belize, Bermuda and St. Kitts and Nevis. The papers filed by the IRS said that in response to an earlier summons for records covering the years 1998 and 1999 the produced documents led to civil audit and criminal investigations “of many” United States taxpayers. RIA 8/22/02 p.418 Market Capitulates Investors apparently lost patience with the stock market in July and pulled an estimated record $49 billion from stock funds. This could mark the bottom of the bear market and the beginning of an upturn. If it does, it would mark the end of the longest bear market since 1938-1942 (when the survival of the free world and Western Civilization as we know it was in doubt). Investor's Business Daily 8/27/02 p.1 This was classic crowd behavior, probably marking a significant market bottom. If this is the bottom, classically, the strong move upward starts after several months of building a base at the bottom. I think probably in November. This may be a very good time to buy. We think it is even better for you to continue to, or to start, a dollar cost averaging purchase program. A cautionary note is added as to the concern that a possible Iraq invasion is exerting on the stock market. Look to the June, 2002 newsletter to see where I think the market will be eighteen months from now. Congress Came to New York ostensibly to show solidarity with New York on the anniversary of 9/11/01. It really came here to see where its money comes from. The business of New York is to make money and each year New York sends more money to Washington than it gets back in return. In 2000, the deficit was $47,300,000,000. NY Times 9/6/02 B1 New York should never feel like it is asking the Federal government for a handout. It’s merely asking for some of its money back! I hope Louisiana (Trent Lott) and South Dakota (Thomas Daschle) are listening. Small Employers Reduce Health Insurance as a fringe benefit with health insurance premiums across the country soaring by 12.7% last year, almost eight times the 1.6% overall inflation rate. Forty-five (45%) percent of employers with 3 to 9 workers now offer no health benefits, up 3 percentage points from 2001. It was the largest one year increase since 1990. NY Times 9/6/02 C1 If you would like more details about any of the foregoing, or have any financial problems, please call me. Remember, We’re Here For You!!