Topics Covered:

1. U.S. Retail Sales Decline As Consumers Remain Cautious

2. Although The Economy Grew Last Year, Poor Americans Needed More Charity

3. Some Of The Celebrities Found Linked To The “Panama Papers”.

4. Questions from our listeners:

• Can you expand on ways to save for child care/education expenses? How would I go about investing an HSA and can I use that for child care? Then as far as college goes how much do I need to invest annually in a 529 to pay for say a four-year UC school?
• In 2015 I inherited a bank account and stocks. I received the statements from the foreign financial institution indicating the exchange rate they used was an average during the year. However to my understanding, we are to use the exchange rate reported by the Department of Treasury as of December 31, 2015. Which of these two exchange rates should I use? Also, do I need to file any form with IRS as well and if so what are the due dates?

*************************************

Jeff states: Good afternoon! Yes sometimes we just have to take the money and run!

Welcome to Inside Advantage – Your Financial And Tax Radio Show.
This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:
And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:
Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: Although the Economy Grew Last Year, Poor Americans Needed More Charity

Windus states:

Also coming up is:

Segment 3 material: Some of the celebrities found linked to the Panama Papers.

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: So for today’s top story:

U.S. Retail Sales Decline as Consumers Remain Cautious

http://www.wsj.com/articles/u-s-retail-sales-fell-in-march-1460550802; http://www.wsj.com/articles/u-s-producer-prices-fell-march-1460550723; http://www.wsj.com/articles/would-negative-rates-work-in-the-u-s-1460493711; http://www.wsj.com/articles/wsj-survey-most-economists-expect-next-fed-rate-increase-in-june-1460037602

Jeff states: With slow wage gains and on-going crises overseas, sales growth has been more conservative this year and has not yet posted an increase for 2016.

Windus replies: That’s right, Jeff. The initial signs of consumer caution were made prevalent as Americans cut back on auto purchases last month.

Jeff continues: Indications continue to surface as retail stores and restaurants were down 0.3% from the prior month in a statement by the Commerce Department last Wednesday.

Windus replies: What’s more is that sales have either sunk or shown no movement at the start of each of the three months leading us into the New Year. So even though the economy is improving, consumers have slackened the pace since mid-2015, at least for the time being.

Jeff states: In the past couple of years, consumer spending really has been the primary source of growth in the U.S. Although, this will more than likely remain the case, that driving force seems to have slowed since the fourth quarter leaving us in a sluggish first quarter.

Windus replies: Looking at the numbers, sales in January fell 0.4%, whereas in February, they we reported flat. Then if we go to March compared to a year ago, sales rose 1.7%. The reasoning behind March’s generally meager reading was the 2.1% decrease in spending on vehicles and parts.

Jeff replies: To put it in more relatable terms, the same time last year we saw a record 17.5 million light vehicle purchases compared to a disappointing seasonally adjusted annual rate of 16.5 million this past month in numbers released by the Commerce Department.

Windus states: If we dissect this further to exclude motor vehicles, March’s retail sales were up 0.2% from February. Alternately, if we exclude gasoline, sales were down 0.4%. By excluding both, sales only advanced at a rate of 0.1% last month.

Jeff continues: As a fundamental measurement for overall consumer spending, retail sales account for roughly two-thirds of economic output in the U.S. So while households across America have been benefiting from lower prices at the pump and an improving labor market for more than a year now, wage growth has been inadequate at best.

Windus states: You consider slow wage growth in combination with the volatility of the market in the opening months and plethora of mixed measures of the economy, and consumers can’t help but react more conservatively.

Jeff replies: Overall, the Wall Street Journal has reported retail sales for the entire first quarter are 0.1% lower than the final three months of 2015. Meanwhile, higher savings rates have counterbalanced the relaxed spending on goods and services.

Windus states: Rightly so considering market volatility. Americans are preparing for that other shoe to drop. Last Wednesday, reports announced that March spending on gasoline had gone up as a result of gas prices climbing. Similarly, sales also climbed at building suppliers and health or personal-care stores.

Jeff continues: However, economists are predicting flourishing overall spending in the coming months, despite a lackluster first quarter. With 628,000 having been added since the end of 2015 and average hourly earnings up 0.7%, we should expect to see consumer spending growth to recover.

Windus replies: That’s right, Jeff. Steve Murphy, a U.S. economist over at Capital Economics, predicts that “with employment gains still healthy and real incomes growing at a solid pace, we expect real consumption growth to rebound further over the first half of the year.”

Jeff states: Well, Windus, with the Federal Reserve keeping a close eye on consumer-spending data to gauge economic growth, some economists are predicting a Fed rate increase as soon as June.

Windus replies: Actually, nearly 75% of business and academic economists polled in a survey by the Wall Street Journal expect the Federal Reserve to raise short-term rates in June while leaving them unchanged at its April policy meeting.

Jeff continues: It’s unlikely that the Feds would make moves to raise interest rates any sooner than June, considering wage growth remains uninspiring and economic growth is cruising right along in the slow lane.

Windus states: Even just a couple weeks ago, Chairwoman Janet Yellen had expressed her concerns that, “given the risks to the outlook, [she] considers it appropriate for the committee to proceed cautiously in adjusting policy.”

Jeff asks: In which case, let’s explore the other end of the spectrum: would subzero interest rates work in the U.S.?

Windus replies: That’s an interesting question you ask, Jeff. The current debate amongst monetary-policy makers, bankers and economists is whether negative interest rates, like those experienced in Europe and Japan, would boost the U.S. economy.

Jeff states: It’s definitely more of a hypothetical question for now, since the Federal Reserve has signaled its expectations to raise rates and not cut them. But the idea behind dropping rates below zero rests on the concept that it would also pull other interest rates down as well, making it more affordable to borrow, thus creating an incentive for investors to take greater risks.

Windus replies: Usually with positive interest rates, commercial banks collect reserves, or interest on money. Alternately, with negative interest rates, the banks pay. However, some economists believe the idea behind this concept of subzero rates, would undermine the main goal: to encourage banks to lend more thus stimulating stronger growth.

Jeff states: The issue is that if banks are paying the interest rates, their income is taking the hit, which will push them to raise costs and tighten credit. Less money devoted to lending.

Windus states: In fact, the hit the banks would take would be largely amplified considering the Federal Reserve, in an effort to encourage lending, had plunged reserves into the banking system during the financial crisis.

Jeff replies: Therefore, if negative rates are failing to result in lower borrowing rates to the broader economy, they essentially lose their validation.

Windus finishes: So for now, we should be keeping an eye out for that possible June rate increase and not a decrease anytime soon.

Well it’s time for a break but stay tuned because we are going to tell you how although the economy grew last year, poor Americans needed more charity.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And before we start this next segment, Windus would you tell our listeners of your offer?

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Although the Economy Grew Last Year, Poor Americans Needed More Charity

http://blogs.wsj.com/economics/2016/04/11/states-where-day-care-costs-more-than-college/; http://blogs.wsj.com/economics/2016/04/13/the-economy-grew-last-year-but-poor-americans-needed-more-charity/; http://www.bloomberg.com/news/articles/2016-04-11/how-the-tech-industry-s-women-problem-is-advancing-paid-family-leave; http://www.bloomberg.com/news/articles/2016-04-12/new-gender-pay-gap-studies-are-challenging-conventional-wisdom

Jeff begins: There was an upturn in the index measuring seven types of poverty-related assistance last year contradicting a distinct improvement in the economy.

Windus replies: Although widespread economic measures showed improvement last year, the measure of the dire necessities of poor Americans worsened.

Jeff replied: Furthermore, this is a prevalent theme in this year’s presidential race: the middle and lower-income households are struggling as wealthier Americans are thriving.

Windus states: According to the Salvation Army’s Human Needs Index, which peaked at 3.00 in 2012 and fell to 1.97 in 2014, poverty-related assistance soared to 2.28 last year.

Jeff continues: This index measures everything from food to clothing, furniture, even help in paying medical or heating bills and rent. This monthly data goes back to 2004 and incorporates data from the 7,500 centers run by the charity.

Windus states: This data reversal illustrates how many families are still struggling in the wake of the recession. And although the 2015 federal poverty rate won’t be released until the fall, in 2014, the rate rang in at 14.8%. Those 47 million people reported lived in poverty in data compiled by the Census Bureau.

Jeff continues: In fact, the 14.8% remained unchanged from the prior year, 2013. In regards to recessionary effects, the rate was 2.3% lower in 2007 before the market crash.

Windus replied: Unfortunately, at the end of last year roughly eight million people still remained unemployed and another six million could only find part-time work. Making it that much harder on them financially.

Jeff states: Consider the costs it takes to raise a family when you’re only working a fraction of the hours you not only need but want to be working to make a living. In some states, daycare cost more than college. That has a big effect on dual income families that are working just enough hours to cover childcare with a little residual left over.

Windus states: Exactly! You think college is expensive, think about how much full-time daycare or even pre-school costs. According to the Economic Policy Institute, the annual cost, we’re talking one year, of care for a 4-year old at a full-time daycare center or school is greater than the cost of in-state tuition at a four-year college in twenty-three out of the fifty states.

Jeff replies: That’s outstanding; especially when you break out the figures. The state with the highest child care costs, Massachusetts, care for a preschooler runs an annual $12,781. That’s nearly 20% more than an undergraduate’s average tuition fees of $10,702.

Windus continues: Even in Florida, where you’ll find the country’s lowest college tuition costs, child care for that same 4-year old comes in at 73% more expensive than college tuition at a whopping $7,668.

Jeff states: In fact, EPI research showed that in 40 of the U.S. states, the average spent on child care exceeded 10% of the median income for a base family of four. Meanwhile, the government defines affordable childcare as any rate costing less than 10% of the families’ income.

Windus replies: Now if you’re looking to see who rates the highest on this chart as well as the contrasting lowest, you’re in luck. New York ranks the highest of any state with a typical 17.5% of a family of four’s income going to childcare. While at the other end of the spectrum, South Dakota rates 7.8% of a similar family’s income, averaging $4,804 to care for a child.

Jeff states: Now childcare would not be an issue if one parent was to stay home to provide care for their children, but many of us do not have that luxury or simply enjoy the benefits of work. So, current American society trends show dual income families.

Windus replies: This brings us to the gender pay-gap. Studies using the median pay for all workers show that women make 21% less than men. And this takes into account several factors from think tanks on different ends of the spectrum.

Jeff replies: That’s right, Windus. If you think about it, women may make less if they need to work less since fewer child care options give them no choice.

Windus replies: Some women have even been blocked out of jobs by physical requirements. We’re not saying discrimination doesn’t play its role as a small part of the grand scheme of things, but the theory is that child-care duties disproportionately limit a woman’s options and therefor her pay.

Jeff states: This is where the need to provide child-care brings up the much needed advances in family paid leave. Companies’ tend to predominantly employ men because it’s cheaper to give employees family paid leave when your workforce is primarily male.

Windus continues: The U.S. is the only nation in the developed world that does not mandate maternity leave with pay. And like we mentioned earlier, the cost of childcare for families with two children surpasses that of rent in 500 of 618 metro areas in this country.

Jeff replies: Realistically speaking, the most effective way to shrink the gender pay-gap is for companies to provide more generous parental leave, regardless of gender. Also, the U.S. would need to figure out how to create more affordable childcare for single mothers or fathers.

Windus states: Now, we can’t say there hasn’t been any progress over the years. Nowadays, research shows a woman in her early thirties makes 90 cents on the dollar, up from 68 cents on the dollar 35 years ago.

Jeff continues: According to Bloomberg, a woman in the finance and insurance industries earns 59 cents for every dollar a man makes. The widest gap geographically would focus on the Bridgeport-Stamford –Norwalk region of Connecticut, where the women make 44 cents on the dollar vs men.

Windus finishes: To help make family life more affordable, it would be wise to start early, putting money aside in a child care fund, maybe. Or even plans to save for your little one’s college education further down the road. We can plan for everything. In fact, at….

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Stay tuned because after the break we are going to tell you some of the celebrities found linked to the Panama Papers.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: And before we start this segment, I want to remind our listeners that …

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Some of the celebrities found linked to the Panama Papers

www.fusion.net/story/288251/panama-papers-leak-celebrities-list-of-names/?utm_source=emailshare&utm_medium=email&utm_campaign=socialshare&utm_content=theme_bottom; www.npr.org/sections/thetwo-way/2016/04/03/472889872/massive-document-leak-reveals-offshore-accounts-of-world-leaders

Jeff states: On last week’s show we reported about the “Panama Papers”, a collection of more than 11 million documents reveal how dozens of the most powerful and wealthy people around the world are laundering money, as well as evading taxes and sanctions, by using offshore accounts.

Windus states: Furthermore, the documents leaked from the law firm Mossack Fonseca connect to 140 politicians in over 50 countries including former leaders of Ukraine, Saudi Arabia, Argentina, Iceland, Georgia, Qatar and Iraq.

Jeff continues: Due to the extent of the papers, this leak is probably the hardest hit the offshore world has ever taken. The BBC even had reports of connections to families and associates of Syrian President Bashar Assad, former Libyan dictator Moammar Gadhafi, and former Egyptian President Hosni Mubarak.

Windus states: The International Consortium of Investigative Journalists (ICIJ) published these findings Sunday after working in collaboration with German newspaper Suddeutsche Zeithung. The newspaper leaked 2.6 terabytes of data that began a year-long investigation involving more than 370 journalists from 107 news organizations.

Jeff states: And the politician at the center of attention is Vladimir Putin. Documents leaked from a Panama law firm confirm that associates of the Russian President have funneled as much as $2 billion through offshore accounts, banks and shadow companies.

Windus states: Well last Monday, Fusion published its findings from a months-long investigation into a trove of millions of leaked documents from the Panamanian law firm Mossack Fonseca.

Jeff states: While it’s not necessarily illegal to distribute wealth across these secret companies, which can be used by the super wealthy as legitimate forms of holding their wealth, shell companies can be used to evade taxes and disguise illegal behavior. Also just because the Panama Papers show someone being involved with Mossack Fonseca, it doesn’t necessarily mean their business holdings are illegal or they did anything illegal. Unfortunately, when one is mixed in with a basket of bad apples, you know how people will tend to judge the whole harvest. Politicians (see: Iceland’s prime minister Davíð Gunnlaugsson, who resigned Tuesday) and public figures alike were named in the leaked documents—including a number of celebrities. Here’s who we know are involved so far.

Windus discusses:

Jackie Chan (and his son, Jaycee)
Chan, 61, was estimated by Forbes to have a net worth of about $350 million as of 2015. According to the ICIJ, the movie star “has at least six companies managed through the law firm,” including one called Dragon Dream Services, Ltd. The ICIJ is quick to point out that “there is no evidence that Chan used his companies for improper purposes.”

Jeff discuses:

Simon Cowell
The Guardian reports that Cowell, known to most Americans for his biting evaluation of contestants as a judge on American Idol, “is the sole shareholder of two British Virgin Islands (BVI) companies called Southstreet Limited, set up in February 2007, and Eaststreet Limited, set up in October 2007.” The companies were apparently set up when Cowell was in talks to purchase land in Barbados. Now, however, the project has stalled and the companies are inactive. A spokesman for Cowell said in a statement to The Guardian that the companies were never used: The companies were set up, not by my client, but by accountants acting for him as a common means for an overseas investor to purchase property in Barbados. My client, however, preferred to purchase them transparently in his own name. Therefore, the companies were never used for anything at all. I can also confirm on behalf of my client that he has not used any offshore companies for any purpose whatsoever.
Cowell reportedly has a net worth of $459m.

Windus discusses:

David Geffen
The DreamWorks co-founder also started Asylum and Geffen records, and has an estimated net worth of $6.8 billion.Records from Mossack Fonseca show that the law firm drew up the contracts for the sale of Geffen’s Pelorus, a 377-foot-long yacht, to a Panamanian shell set-up by the firm.

Jeff discusses:

Micheline Roquebrune
The wife of actor Sean Connery is listed in as the shareholder of Blue Cedar Investments Limited, with documents showing the company was incorporated in the Bahamas. Connery and his wife are noted tax exiles, having fled Scotland for the Bahamas. The couple are also currently facing tax fraud charges in Spain in a case that resembles a Hollywood thriller.

Windus discusses:

Nick Faldo
Faldo is considered one of the best golfers of his era. He won the Masters tournament and the British Open three times. A spokesman for Faldo declined to comment to the ICIJ about Faldo’s ownership of Blenhim Limited from 2006 to 2008. Faldo was knighted by Queen Elizabeth in 2009.

Jeff discusses: And speaking of the British monarchy …

Sarah Ferguson (Fergie)
According to The Guardian, “The documents reveal a degree of chaos around the Duchess of York’s finances.” Allegedly, letters between Ferguson’s legal representatives and Mossack Fonseca show the British royal “trying to make sense of her assets,” set up in Essar Company Inc. in the British Virgin Islands in 2000.  Ferguson is perhaps best known stateside as a representative of Weight Watchers. Ferguson issued the following statement to The Guardian: Essar Company Inc. was formed by the partners who were to develop the business opportunities with the duchess. Had any of the intellectual property generated income or gains or other profits, it would have been disclosed by the duchess as part of her normal tax filings. The spokesman said the duchess has always disclosed all sources of income in her tax returns.

Jeff continues: But one of the biggest celebrity names linked to the Panama Papers is …

Lionel Messi
The world-famous athlete, who plays for the Spanish club Barcelona as well as the Argentine National Team, is already facing accusations of tax evasion, and his inclusion in the Panama Papers is adding fuel to the fire. The Associated Press reported that “Messi and his father, Jorge Horacio Messi, have been charged with three counts of tax fraud and could be sentenced to nearly two years in prison if found guilty. They are accused of defrauding Spain’s tax office of €4.1 million ($4.4m) in unpaid taxes from 2007-09.”

Windus continues: According to ICIJ, the shell corporations implicated in that allegation are likely comparable to the one linked to Messi through the Mossack Fonseca files. The ICIJ explains that “the records show Messi and his father were owners of a Panama company: Mega Star Enterprises Inc.”

Windus continues: Messi, for his part, has denied all allegations of tax fraud. Messi’s family said in a statement to Reuters: [We wish] to make it clear Lionel Messi has not carried out any of the acts of which he is accused in the stories and that the allegations of him having designed a tax evasion project are false and injurious, as are those relating to the creation of a money laundering network…. the Panamanian company referred to in said reports is a completely inactive company, which has never had any capital or active current accounts, and which dates from the old corporate structure set up by the Messi family’s previous financial advisors, with the tax implications for Lionel Messi having been settled at the time.

Jeff states: Now consider this – about 60,000 U.S. taxpayers have come forward to disclose their previously undisclosed offshore accounts but just last year alone, 300,000 U.S. taxpayers filed Form 8938 disclosing foreign accounts. That would mean that about 240,000 did not previously report their foreign accounts and that under this recent filing of Form 8938 to IRS, they have put the IRS on direct notice of their non-compliance.

Windus asks: I am wondering how many of those 240,000 “new filers” just happened to be listed in the Panama Papers?

Jeff replies: That is a good point Windus. Our office saw an increase in interest and activity by U.S. taxpayers hiring our firm after the 2004 UBS scandal and subsequent implementation by IRS of its first dedicated Offshore Voluntary Disclosure Program.

Jeff continues: The IRS has special programs for taxpayers to come forward to disclose unreported foreign accounts and unreported foreign income. The main program is called the Offshore Voluntary Disclosure Program (OVDP). OVDP offers taxpayers with undisclosed income from offshore accounts an opportunity to get current with their tax returns and information reporting obligations. The program encourages taxpayers to voluntarily disclose foreign accounts now rather than risk detection by the IRS at a later date and face more severe penalties and possible criminal prosecution.

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

Question from Steven of San Diego: Can you expand on ways to save for child care/education expenses? How would I go about investing an HSA and can I use that for child care? Then as far as college goes how much do I need to invest annually in a 529 to pay for say a four-year UC school?

Windus Answers.

Question from Douglas in Newport Beach: In 2015 I inherited a bank account and stocks. I received the statements from the foreign financial institution indicating the exchange rate they used was an average during the year. However to my understanding, we are to use the exchange rate reported by the Department of Treasury as of December 31, 2015. Which of these two exchange rates should I use? Also, do I need to file any form with IRS as well and if so what are the due dates?

Jeff Answers:

In the case of non-United States currency, convert the maximum account value for each account into United States dollars. Convert foreign currency by using the Treasury’s Financial Management Service rate (select Exchange Rates under Reference & Guidance at
www.fms.treas.gov) for the last day of the calendar year.

Jeff states: Now since we are running out of time, Douglas I will have to come back to your question on our next show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!