Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Politics And The Market, IMF Cutting Outlook For Global Growth and Taxpayer Rights You Need To Know On ESPN Radio – January 22, 2016 Show

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Topics Covered:

1. Politics And The Market: Where are the U.S. and global markets are headed, when we begin the New Year in a slump and the Presidential election is right around the corner.

2. Recap from last week, as the International Monetary Fund once again cuts it outlook for the world economy, warning Tuesday that economic turmoil in China and financial contagion throughout emerging markets threaten to curb global growth.

3. Valuable rights you have as a taxpayer when interacting with the IRS.

4. Questions from our listeners:

a. If emerging markets are unstable and oil and commodities are tanking, which market segments should I be looking at for more stable growth when investing for retirement?

b. Will calling the IRS help me get my refund any faster?

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

Good afternoon! 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: What could be in store for the global financial markets in 2016 now that the IMF once again cut the outlook for the world economy?

Windus states:

Also coming up is:
Segment 3 material: The second part to our series on getting to know your Taxpayer Bill of Rights.
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:

Politics and the Market: Where are the US and global markets are headed, when we begin the New Year in a slump and the Presidential election is right around the corner.

Several recent articles in the Wall Street Journal and The Week, review recent market analysis and the presidential campaign trail. http://www.theweek.com/articles/599573/hillary-clinton-biggest-glass-jaw-politics http://www.theweek.com/articles/599576/donald-trump-right-pick-trade-war-china-just-wrong-strategy  http://blogs.wsj.com/washwire/2016/01/20/john-mccain-stocks-plunge-will-hurt-democrats-in-november/# http://nyti.ms/1OGtcTz

Jeff states: The hits just keep coming, don’t they? The U.S. stock market had a turbulent day of trading mid-week as economic growth and the decline in oil prices continues to worry investors. During the peak of trading on Wednesday, the Dow Jones Industrial average was down a whopping 500+ points before redeeming itself to a near 250 point down for the day, or 1.5%. At market close, the S&P 500-stock index was down roughly 1% after fluctuating as much as 3.7%, while the NASDAQ, mostly tech-heavy, was left relatively unaltered.

Windus replies: Yes, Jeff. Wall Street had a fairly volatile day right off the bat on Wednesday, in response to the announcement after market close on Tuesday that IBM had seen a drop in its fourth quarter profit. This only adds to the heavy losses we’ve been seeing all month, with enormous amounts of selling reportedly amounting to more than $3.6 trillion globally, according to Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices.

Jeff continues: The early morning sell-off affected a broad range of global investments with the European stocks sinking severely, the Euro Stoxx 50 index down 3.3% and London’s FTSE 100 dropping 3.46% for the day. While Japan closed down 3.7%, showing a decline of more than 20% in the Nikkei 225 since its near-term high in June.

Windus states: With the state of the market in what it is, let’s reflect on how this might affect the upcoming election, this November. An article in the Wall Street Journal from the perspective of John McCain sheds light on the effects of a market plunge during an election year, with consideration to what the previous market crash did to his 2008 bid for presidency.

Jeff replies: On Wednesday in a brief interview, Mr. McCain stated that he bore the brunt of public outrage since voters blamed the Republicans, as Republican George W Bush then occupied the Oval Office. His speculation is that, this election year, the Democrats will suffer, as we now have President Barack Obama occupying the White House. “People hold presidents responsible,” he articulates.

Windus continues: Now the one big difference is, in 2008, the market plunge corresponded to the banking fiasco as many of the country’s financial institutions went under, taking the economy down the tubes with it. This time around, the slump is tied to economic slowdown in China.

Jeff replies: Also, the 2008 market collapse came just weeks before the November election, whereas we now have close to ten months to see the market turn around and have the economy recover. Therefore, it’s really too early to start speculating on government involvement, as Senate Minority Leader Harry Reid confirms that it is premature to conclude that the decline in the stock market reflects broader problems in the economy.

Windus states: In which case, let’s look at the Democratic candidates and see what else will be weighing against them. In the weeks beginning the New Year, Hillary Clinton’s national polling lead over her primary opponent, Bernie Sanders, has plummeted much like the market. All things considered, it’s astonishing that Sanders has gotten within striking distance.

Jeff replies: Let’s break this down to explain. The Democratic Party has long been enthusiastic for more diverse representation, and let’s face it, Sanders is a 74 year old white male, who is not particularly a great orator, and without any roots amongst minority groups. In 2008, Obama gained a significant amount of his support for potentially being the first black president. Now in 2016, Clinton would be the first woman commander-in-chief, thus claiming representational value as the first female president.

Windus continues: That being said, odds were firmly stacked against the Vermont Senator’s campaign. But what he lacks in prominence, he sincerely makes up for in credibility. His “root-and-branch” analysis of the American political and economic structure have been corroborated in the post-recession market, according to The Week. They continue by stating, ”The good old Bernie Sanders had been right there the whole time, railing against both conservatives and Clintonite neoliberal compromises”, when commenting on inequality nearing a record high, a decades old stagnant median wage and Wall Street basically owning Congress.

Jeff replies: So how do you beat a contender like Sander’s? Strategists lay it out simply, “acknowledge the basic truths of his perspective, but insist that Clinton is the more experienced, electable, pragmatic candidate….and run out the clock.” See if that will dampen Sanders unpretentious gusto, gaining on Clinton, as Obama before him.

Windus states: Clinton in turn has made a series of incoherent tactical mistakes, including over the past week, an obviously strategized attack on Sanders’ health care plan, drawing Republican speaking points. Let’s face it, if she continues to attack liberal goals, more leftist supporters will be willing to bet on someone who won’t betray them. Let’s take this moment to discuss the last GOP debate.

Jeff states: I’m sure everyone heard of the exchange between Donald Trump, Ted Cruz, and Marco Rubio last week. I’m talking about the one that started when host Neil Cavuto brought up an article by the New York Times that confirmed Trump supporting a 45% tariff levied on imports from China. Trump acknowledging a misquoting on the amount of the tariff, went on to defend the broader policy.

Windus continues: His reasoning behind supporting a plan for raising taxes on imports from a specified country, i.e. China, is to make those imports more expensive domestically. Bringing their price into balance with comparable American goods, providing Americans with a greater tendency to buy the latter. Considering the U.S. trade deficit with China was a monstrous $342.6 billion in 2014, Trump isn’t exactly mistaken here.

Jeff replies: Let’s look at it this way. As you said Windus, U.S. was indebted $342.6 billion in goods in 2014. That means that the demand for those products didn’t generate jobs in the U.S., but in China. In 2013, the Economic Policy Institute estimated that since 2001, we’ve lost 2.8 million jobs to China, primarily in manufacturing. This hurts the working class since these lost jobs are predominantly held by lower-income Americans.

Windus continues: However, where Trump is flawed is endorsing tariffs as a solution when the core problem is currency manipulation by the Chinese government. They are buying up U.S. dollar denominated assets in immense magnitude, driving up demand for the dollar, which increases its value. What do you get? American exports are more expensive and Chinese imports are cheaper. Tariffs would only affect imports. We need to make American exports cheaper to revive jobs at home.

Jeff replies: Now China may not be the only currency manipulator in the world, but it’s definitely the biggest. Since currency manipulation by China and other countries took off in the 1990’s, the annual totals for America’s trade deficit have exploded, according to The Week. Good news is that the Chinese are trying to “mend their ways and been seen as a reasonable player”, says Robert Scott, EPI’s expert.

Windus states: The good news is that the United States already has the legal implements to rebalance the holdings of assets in the two countries. According to Scott, “The Treasury and the Federal Reserve have the authority to buy Chinese assets to offset their purchase of U.S. assets, if they’re destabilizing our economy.” One way to put it would be a proposal called, “countervailing currency intervention,” that basically neutralizes the effect with strategic purchasing of assets.

Jeff replies: This would still be a trade war of sorts, but it creates a balancing effect with a long-term goal of convincing the offending country to lessen its holdings with an agreement for the U.S. to follow suit in a rewarding equal measure. This would essentially keep China from continuing to export its unemployment problem to the States.

Windus finishes: That’s right, Jeff. Unlike the Chinese, the U.S. hasn’t devaluated our currency to increase demand for our goods, ending up with more jobs being sent oversees creating an increase in inequality and a decrease in enough jobs to keep everyone employed.

Well it’s time for a break but stay tuned because we are going to tell you what could be in store for the global financial markets in 2016 now that the IMF once again cut the outlook for the world economy.

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.

Recap from last week, as the International Monetary Fund once again cuts the outlook for the world economy, warning Tuesday that economic turmoil in China and financial contagion throughout emerging markets threaten to curb global growth.

Jeff states: Considering the last few weeks in the market, Windus and I think it would be good to discuss how the economic outlook for the world economy is shaping global growth.

Jeff continues: But before we do Windus would like to remind you of her 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.

Jeff states: Some recent articles in The Wall Street Journal have looked at what we could expect in the way global growth decline and its effect on the world economy, given the instability on Wall Street with a lack luster start to 2016. This, in conjunction to a widening trade deficit and what looks like a full blown financial crisis in China. http://on.wsj.com/1RQez6r http://on.wsj.com/1RQbpPW http://on.wsj.com/1V4nXkq http://on.wsj.com/1RR3jqr

Windus states: That’s right, Jeff. According to International Monetary Fund (IMF) chief economist Maurice Obstfeld, “it’s going to be a year of great challenges, unless the key transitions in the world economy are successfully navigated, global growth could be derailed.” This is expanded upon in the fund’s recent update in its World Economic Outlook.

Jeff states: A large part of the current stumble seen in global markets is concern of the world’s second largest economy, China. Investors have been pulling a lot of their capital out resulting in a surge in borrowing costs and suppression of currency. With commodities prices taking a nose dive as seen with oil prices and weak global demand, prospects of growth across emerging markets is questionable.

Windus continues: When it comes down to it, exporters have received the brunt of this effect. The IMFs forecast for Brazil diminished by 2.5 percentage points down to 3.5%, as the scandal of government corruption is compounding growth problems. Russia’s growth will contracted by 1%, a 0.4 percentage point under the previous outlook, while the Eurozone and Japan are struggling to recuperate growth amidst lofty debt loads and weakened demand, providing little expansion by 1.7% and 1%, respectfully.

Jeff replies: Here in the U.S., a strong dollar is crippling exports, therefor softening the acceleration of the world’s largest economic engine. The IMF has given the American economy a growth rate of 2.6% his year, up just a 0.1 percentage point from last year, but a 0.2 percentage point down from their previous predictions.

Windus states: As far as China is concerned, the IMF left its forecast to settle at 6.3% this year, with a projected 6% for next year, falling from 6.9% in 2015. While these rates are lower than Beijing’s official estimates, the effect of monetary and fiscal policy growth being extracted by authorities will steadily deflate the financial sector.

Jeff replies: This is where investors begin to worry. Beijing’s ability to implement economic shift from a credit based model to a more consumption based one, is uncertain. As stated in the Wall Street Journal, “the country’s debt burdens, excess manufacturing capacity, questionable data and a series of recent policy missteps are all raising concerns.”

Windus continues: The fact is China’s pending economic doom is fanning the flame of market volatility. Or more generally speaking, emerging markets are vulnerable to a financial crisis the IMF warns. Over the past year, emerging market bonds, currencies and equities have taken a beating as investors have withdrawn hundreds of billions of dollars. The concern of an accelerated, plummeting China or even the U.S. Federal Reserve alluding to a more aggressive interest rate, could potentially turn the seeping outflow of money into a torrent flood.

Jeff replies: In order to offset these risks, the IMF has sounded its familiar “call to arms” of additional government stimulus and a revamp of economic policy. “A mix of demand support and structural reforms is even more urgent,” says the world’s premier economic counselor. Obstfeld caution’s not stumble into a deflationary trap, as weak demand risks pushing the global economy over the edge.

Windus replies: Now what does the IMF have in mind as far as a plan of attack? Well, the fund advises the Feds to hold tight for signs of more solid growth before taking on higher interest rates, whereas central banks in Europe and Japan should floor the “easy-money gas pedal”. Countries with a little more wiggle room in their budgets, like Germany for instance, should throw taxpayers funds into the economy, with an emphasis on spending. In addition, requiring emerging markets to focus on credible economic reforms that would result in boosted economic growth, would in turn bolster investors.

Jeff states: So when should we see global growth pick up? The IMF predicts growth rates to remain fairly flat next year for many of the world’s largest economies, and given that China’s economy is due to slow, the slight increase in global growth in 2017 is expected to come from Brazil and Russia recovering from their two-year recessions.

Windus states: Focusing more on the China factor, the world’s second largest economy is, in fact, signaling weakening economic momentum. According to Nomura Group economist Yang Zhao, “the real economy basically hasn’t picked up very well”, as China forecasting choppier seas ahead of them with growing debt and excessive housing and factory capacity.

Jeff replies: Any gains from the recovery of the summertime crash have been depleted, as stocks fall into the New Year. That, and any tools the government has traditionally used recover growth are proving progressively ineffectual, i.e. infrastructure spending, easy money and ramped-up exports. Not to mention, as we alluded to earlier, the reliability of China’s economic data flashes concern that growth is declining at a higher rate than the government is actually reporting.

Windus replies: These fears of unreliable data combined with concerns over the nose-dive of oil and commodities prices, are said to be the cause of the 2016 stock market slump, according to the Wall Street Journal. Don’t get me wrong, companies like Delta Air Lines are profiting off of the dive in oil prices. The recently named, No. 2 carrier, even showed a little 1.4% recovery in the market once confirming final quarter profits. This was after a rough 12% loss into the 2016 tumble.

Jeff states: Let’s continue to bring it home a little more. Saying at the same time that there are weak spots in the economy, the Federal Reserve continues to endorse the strength in the job markets signally positivity. The December jobs report of 292,000 added jobs in the U.S., exceeded analyst expectations, while unemployment remained a low 5% and steady core inflation, despite declines in oil prices.

Windus replies: Standing behind their decision to raise interest rates this past December, the Feds new target from short-term rates, of 0.25%-0.50%, is still well below the long-term average, and is still supportive of economic growth and financial markets. Not to worry, they won’t automatically continue to raise rates, but will consider any changes in the economy.

Jeff states: Contrary, Peter Boockvar, chief market analyst at the economic and market research firm called the Lindsey Group, argues the Federal Reserve should raise rates this year on the basis of driving the U.S. economy on a more beneficial long-term trajectory, regardless of the risk of pushing us into another recession. He continues by saying, “there will never be a good time to raise interest rates after being easy for so long, but we can either turn into Japan(which has had low rates and low growth for many years), or break out of the trap” by jump starting interest rates.

Windus states: Well it sounds like 2016 will be a challenging year for investors which is another reason why …

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.

Jeff states: Stay tuned because after the break we are going to tell you valuable rights you have as a taxpayer when interacting with the IRS.

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.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Getting to Know Your Taxpayer Bill of Rights

Jeff states: Did you know that every taxpayer has a set of fundamental rights. The Taxpayer Bill of Rights takes the many existing rights in the tax code and groups them into 10 categories.

But before we start, we want to remind you 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.

Jeff continues: Every taxpayer should be aware of these rights before interacting with the IRS. We covered the first five in last week’s show so today we will cover the remaining five and grade how the IRS is doing on preserving each right for taxpayers.

[Windus to read off each “right” followed by comment by Amy and then by Jeff. Windus to end each one asking Amy and Jeff what grade they give from IRS on a scale of A to F. OK for Jeff and Amy to give different grades. Windus can ask why the difference.]

Windus states: It’s great that I have not one but two tax attorneys that I can bounce these rights on.

Number Six … The Right to Finality.  Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

Jeff adds comments. Amy can also add comments.

Number Seven …The Right to Privacy.  Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

Jeff adds comments. Amy can also add comments.

Number Eight …The Right to Confidentiality.  Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

Jeff adds comments. Amy can also add comments.

Number Nine …The Right to Retain Representation.  Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

Jeff adds comments. Amy can also add comments.

Number Ten … The Right to a Fair and Just Tax System.  Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

Jeff adds comments. Amy can also add comments.

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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

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?

Samantha from San Diego asks: If emerging markets are unstable and oil and commodities are tanking, which market segments should I be looking at for more stable growth when investing for retirement?

Windus answers.

Peter from Newport Beach asks: Will calling the IRS help me get my refund any faster?

Answer: As of January 19, 2016 the IRS has opened up processing of 2015 income tax returns. Calling the IRS will not speed up your refund. Instead use the IRS2Go mobile app or use the Where’s My Refund? tool. Both are available 24 hours a day, 7 days a week. So at what point should you approach IRS if this service is not showing the issuance of a refund. Keep in mind that the IRS phone and walk-in representatives can only research the status of your refund if it has been 21 days or more since you filed electronically, more than 6 weeks since you mailed your paper return, or “Where’s My Refund?” directs you to contact the IRS. If the IRS needs more information to process your tax return, the IRS will contact you by mail. The IRS will not call you without first sending you a notice.

Jeff states: Well we are reaching the end of our show.

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

Windus states: Have a great day everyone!

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Dropping Oil Prices, 2016 Corporate Earnings and Taxpayer Rights On ESPN Radio – January 15, 2016 Show

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Topics Covered:

  1. With A Barrel Of Oil Now Going For As Low As $30.00, Should We Be Concerned That This Could Result In Financial Turmoil For Investors?
  1. Margins, Energy and the Economy: the three themes Goldman Sachs says will dominate 2016 earnings.
  1. Valuable rights you have as a taxpayer when interacting with the IRS.
  1. Questions from our listeners:
  • You’ve emphasized figures according to Goldman Sachs Group, how reliable (historically) is the projected information that they are releasing? Is it fair to say that they are accurate within a reasonable means, or is this like the Wall Street strategists running predictions of the S&P 500?
  • Is there anything different about filing tax returns in 2016 that I should be aware of?

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

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

Good afternoon! 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: Margins, Energy and the Economy: the three themes Goldman Sachs says will dominate 2016 earnings.

Windus states:

Also coming up is:

Segment 3 material: Valuable rights you have as a taxpayer when interacting with the IRS.

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

Jeff starts chit chat with Windus.

So for today’s top story: Crude oil’s plunge to nearly $30 a barrel is sparking concern that it could sink a third of U.S. oil producers.

Jeff starts:

With A Barrel Of Oil Now Going For As Low As $30.00, Should We Be Concerned That This Could Result In Financial Turmoil For Investors?

Three recent articles in the Wall Street Journal discuss this possibility. http://on.wsj.com/1OY5Qhw; http://on.wsj.com/1ZXEjP1; http://on.wsj.com/1ZXpCLQ  

Jeff states: This issue which will impact each of us has multiple levels, so let’s break this down for you on how crude-oil prices plunged to a twelve year low which could lead to bankruptcies of oil development companies who were not prepared to operate at such a low price. We will then move on to how these low prices have affected the demand for oil on the U.S., European and Chinese economies. And then consider the weakening Chinese currency which the Chinese government is looking to prop up.

Windus states: Starting with the direction that U.S. crude oil prices have taken this past week – on Monday, the benchmark price of crude dropped more than 5% to trade at a 12-year low of $31.41 a barrel. This not only triggers concern that a third of the U.S. oil producers could sink, but also that it could continue to crash below the $30 threshold. Various heavier grades of crude are already under $20 a barrel, with Iraq’s heavy grade flirting around at $20 and Canada’s heavy grade oils trading at $16 a barrel.

Jeff replies: The Wall Street Journal reported that the three largest investment banks, Morgan Stanley, Goldman Sachs Group Inc. and Citi Group Inc., are expecting oil to fall into the $20 a barrel territory given the slowdown of the Chinese economy and the appreciation of the U.S. dollar and the growing glut in oil supply as oil producers are looking to maintain market domination as any price.

Windus states: So you may be thinking, why so much excess? Well, London-based Energy Aspects focused on the mild start to the Northern Hemisphere winter as a key factor in the fall of demand at 800,000 barrels less this time of year. Further weather updates for this next week are forecasting above-normal temperatures for some of our country’s biggest markets for oil-based heating in New England, only contributing to the lack of demand. The Wall Street Journal reported that too much supply and not nearly enough demand has led to more than 30 smaller companies with combined $13 billion of outstanding debt, having already filed for bankruptcy protection. Survival for as many as a third of American oil-and-gas producers would be possible if a rebound to a least $50 a barrel could occur.

Jeff states: Morgan Stanley recognized in a report this week that our current situation could be worse than the last big oil bust in 1986 which lasted for years. North American producers are losing nearly $2 billion every week at current prices and are expected to cut their budgets by 51% from 2014. However, while the reduction exceeds the worst years of the 80’s, the oil glut is expected to continue as well.

Windus states: Jeff I agree that there is no end in sight of the supply excess considering that most energy companies took on large amounts of debt to finance the U.S. drilling boom. These companies have to keep pumping in order to generate enough cash to put toward interest payments and avoid declaring bankruptcy. According to S&P Capital IQ, these companies have actually poured more than 40% of their third quarter revenue into the interest payments on their outstanding loans.

Jeff states: In the same instance, some of the strongest operators with larger assets have used hedges to lock in oil prices well above $50 a barrel, serving as an insurance policy against low prices. These stable companies are going about business as usual, pulling more oil out of the ground to maintain efficiency. It’s a smart move, considering investors will keep rewarding growth at energy companies that are considered to be solid. We have already seen this in the stock market as the stock prices for energy companies that announced declines into 2016 are getting pounded.

Windus states: The value of loans among oil and gas borrowers rated “substandard, doubtful or loss”, nearly quintupled to $34.2 billion. That means that 15% of the total energy loans evaluated are in poor standing, in comparison to the 3.6% in 2014. So the next step for these struggling companies is to sell assets or utilize revolving credit lines. However, unlike the supply of oil which now seems unlimited, their borrowing capacity is not and that is way the bankruptcy card now can come into play.

Jeff states: Of course Windus. Why loan or ease these producers who are struggling in this low-oil-price environment when you can wait for the upsurge of bankruptcies rendering productive assets at a deep discount.

Windus states: A lot of investors are banking on this and are just waiting for all debt to be wiped out before jumping in. The Wall Street Journal reports that $100 billion of buying power from investors could be brought to the table. Senior energy analyst at FBR & Co, Chad Mabry, said it best stating, “There’s no reason to be anybody’s savior. If you can just get the assets out of bankruptcy, then you don’t have to save anyone.”

Jeff follows: So once the oil producers’ balance sheets are cleared of this debt, these producers can then operate profitably at a lower oil price and investors can reap the rewards.

Windus states: The Wall Street Journal goes on to report that financial distress hasn’t been a positive catalyst for a slowing down U.S. oil production. The concern is that any amount of a cut in production may come too late and the output estimates for 2016 are already 1% higher than the start of last year when oil was trading for 40% more.

Jeff states: In the same instance, oil could rebound and dig out of this historic 12 year low. Light, crude oil for February delivery rose 31 cents, or an increase of 1%. Even ICE Futures in Europe gained 39 cents, at a 1.2% rise. I know that this increase is not much but at least it is an increase.

Windus states: As far as fixing the issue of over producing, Tuesday, Nigeria’s oil minister said that some nations are calling for an emergency OPEC meeting. Historically these meetings were designed to determine production levels as a way of regulating prices. Remember that the Organization of the Petroleum Exporting Countries (OPEC) still controls more than one-third of the world’s crude oil supply. Despite what OPEC decides to do, investors believe that it will now affect the trends we discussed.

Jeff replies: So with every oil producer effected by this, how do we tell what is the rock-bottom for oil prices? I think a good clue is to look at the manipulation of the Yuan by the Chinese Government and the affect that it is having on stocks, commodities and currencies around the world.

Windus starts: Now China’s oil intake is second only to the U.S. in the global market but its demand for oil is slackening. Barclays is predicting that a decrease of 210,000 barrels a day. That’s then a big hit on oil exporters like Russia who is China’s biggest supplier of crude oil.

Jeff states: So considering the oil relationship between China and Russia and the unexpected extreme move to weaken the Yuan last week in combination with a surge of selling by Chinese investors, the falling Chinese stock prices should be no surprise. The Shanghai Composite Index dropped 5.3 % (already down 15% in this new year). We have also seen so far U.S. stocks tumbling and currencies in South Africa and Russia falling.

Windus continues: Now China accounts for 11% of the world’s GDP, 12% of the oil consumption and half of the global demand for steel. They also rank as the No. 1 trading partner for countries such as South Korea, Australia and Brazil, drawing exports worth more than 10% of GDP from Singapore and Taiwan.

Jeff replies: Historically, the Chinese government has looked to isolate its economy from the rest of the world by strictly controlling their currency and their banking system. But let’s face it – China’s enormous presence in global trade makes it more tightly entwined with the rest of the world.

Windus states: And so with the Chinese government still trying to control their economy as they have done in the past, the possibility could be grim for the price of goods and commodities, and generally speaking, the global markets.

Jeff comments: In the same instance, when the value of the Yuan falls, it helps steelmakers by cutting prices and exporting to places like Colombia and Brazil, which pushes down prices even further.

Windus finishes: Last week, when the Yuan fell, key materials for steelmaking like coking coal and iron ore decreased as well. Good for buyers, bad for places like Australia who are producing raw ingredients that go into the metal.

Jeff states: Well it’s time for a break but stay tuned because we are going to tell more about margins, energy and the economy: the three themes Goldman Sachs says will dominate 2016 earnings.

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.

Goldman Thinks These 3 Themes Will Dominate 2016 Earnings

Jeff states: So with this being the first show of 2016 with both Windus and I in the studio, I think it would be good to discuss what themes will dominate earnings in 2016.

Jeff continues: But before we do Windus would like to remind you of her 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.

Jeff states: Some recent articles in The Week and The Wall Street Journal have looked at what we could expect in the way of 2016 earnings given the instability on Wall Street with a lack luster start to 2016, a widening trade deficit and what looks like a full blown financial crisis in China. What was surprising that given all this bad news, the labor market keeps improving as the economy added 292,000 jobs in December.

http://www.theweek.com/articles/598194/hillary-clinton-should-still-worried-about-economy; http://www.theweek.com/articles/597993/what-worries-wall-street; http://blogs.wsj.com/moneybeat/2016/01/11/what-to-expect-from-fourth-quarter-earnings/#; http://blogs.wsj.com/moneybeat/2016/01/11/goldman-thinks-these-3-themes-will-dominate-2016-earnings-talks/    

Windus: As we all have seen, signals for 2016 “don’t look so hot” after the market rang in the New Year with a tremendous opening day belly flop reminiscent of 2008. The other not-so-welcomed signals are signs of slowing growth in China and weak U.S. manufacturing data.

Jeff continues: Not to mention the S&P 500 ended the year down 0.7% for the first time since the financial crisis. BUT, despite all these shortcomings the U.S. economy seems to be in good shape.

Windus replies: Yes, Jeff. Reports show that unemployment is down to 5%, consumer confidence is up, and as we all saw, the Federal Reserve as enough trust in the recovery to have raised rates for the first time since 2006.

Windus continues: But let’s take a look what one of the top investment banks is revealing. After all, some experts still see us in danger on the horizon. For instance, Citigroup’s Citi Research puts the probability of the U.S. slipping into another recession at 65% this year, which they are partially basing on historical data that five years into a recovery, the odds of economic downturn increase to 50/50. Currently, we’re in year seven and in the process of facing an economic challenge with the slowdown of the Chinese economy that could “batter the fragile U.S. recovery into submission”.

Jeff replies: Plenty could go wrong on top of that. The Federal Reserve could raise interest rates too quickly, and a strong dollar may keep impairing manufacturers. For that matter, oil prices could stay low putting more pressure on the energy market.

Windus replies: That’s great for the consumer! I love this discount on gas myself, but trends are showing that consumers are saving the money that’s put back in their pockets or paying off debt instead of spending it.

Jeff comments: I love the discount at the pump too!

Windus states: Now, on a positive note, a group of Wall Street strategists are expecting the S&P 500 to rebound and gain an average of 8% this year. Yet, with that being said, most market predictions like this aren’t worth much considering since 2000, the S&P has only returned a 4% average annual gain, while strategists have predicted 10% yearly returns.

Jeff states: So Windus what is Goldman Sachs Group saying about all of this?

Windus replies: Starting off, they’re pointed out three themes we’re going to see in the economy this year. First of which is profit margins.

Windus continues: Goldman is under the belief that profit margins hit a high in the third quarter of 2014 at 9.1% and we will finish 2015 at 8.2%. Furthermore, it expects the next couple of years to improve steadily in profitability at a rate of 8.8% and 8.9% respectfully, fueled by a recovery in the energy sector. And as reported in an article through Money Beat in the Wall Street Journal, Goldman continues to explain that the following years, 2018 to 2019, anticipate a fall, with margins remaining below their 2014 high.

Windus continues: Much of the credit for boosting the S&P 500 profitability during the recent bull market, has been credited to the decent margin expansion from Apple Inc. and the tech sector as a whole. Forecasts continue to see Apple margins on a rise of 0.2 percentage points through 2017, pressuring margins for the tech sector.

Jeff states: So Goldman’s first theme is profit margins. What is the second theme?

Windus replies: Next, Goldman mentions energy earnings. Or in this case, as we’ve previously discussed, the lack there of, as oil fell 66% from its high in the middle of 2014. Unfortunately, predictions show 2016 with drops in overall revenue of 2% as descending oil prices continue to linger.

Windus continues: Although oil is currently trading around $30 a barrel, Goldman expects the international average will weigh in around $44 this year, which is still 17% lower than this previous year.

Windus continues: The good news is that S&P 500 earnings are not that sensitive to energy profits since this specific sector makes up such a small portion of the index.

Jeff asks: So you have covered the first two themes of Goldman – that being profit margins and energy, what is the third theme?

Windus replies: The last theme that Goldman Sachs Group is focusing on in the economy. Forecasting a slowing GDP growth over the next couple of years, Goldman is focusing on a 2.2% in 2016 as well as in the following 2017, with a lower 2% in 2018, when in 2015 we saw 2.5% growth. Slowing GDP growth would be a drag on earnings.

Windus continues: Granted, we had the worst start to the year…ever, and the S&P 500 is already off 6% for the year. So, we’re going to keep seeing the cut in profits for the fourth quarter from the same issues in the energy sector, rising US dollar and slow global growth, that weighed on earnings for a majority of 2015.

Windus continues: According to FactSet , the fourth-quarter profits forecast to decline 68% for the energy sector. In which case, if you exclude the energy sector completely, we’re looking at flat profits this quarter for the S&P 500. This would actually mark four consecutive quarters of declines.

Windus confirms: I do believe that would be the first time this has happened since the third quarter of 2009.

Jeff states: In corporate America, sales growth is a crucial factor as it looks to mend its bottom line. Only six of the ten S&P 500 sectors are expected to see top line growth in the fourth quarter according to FactSet.

Windus concludes: Those sectors are telecom, health care, consumer discretionary, utilities, financials and consumer staples at an estimated rise of 13%, 7.8%, 3.7%, 3.1%, 2.8% and 1.6% respectfully.

Jeff states: Well it sounds like 2016 will be a challenging year for investors which is another reason why …

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.

Jeff states: Stay tuned because after the break we are going to tell you valuable rights you have as a taxpayer when interacting with the IRS.

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.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Getting to Know Your Taxpayer Bill of Rights

Jeff states: Did you know that every taxpayer has a set of fundamental rights. The Taxpayer Bill of Rights takes the many existing rights in the tax code and groups them into 10 categories.

But before we start, we want to remind you 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.

Jeff continues: Every taxpayer should be aware of these rights before interacting with the IRS. We will cover the first five in today’s show and grade how the IRS is doing on preserving each right for taxpayers.

[Windus to read off each “right” followed by comment by Amy and then by Jeff. Windus to end each one asking Amy and Jeff what grade they give from IRS on a scale of A to F. OK for Jeff and Amy to give different grades. Windus can ask why the difference.]

Windus states: It’s great that I have not one but two tax attorneys that I can bounce these rights on.

Number one … The Right to Be Informed. Taxpayers have the right to know what is required to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to know about IRS decisions affecting their accounts and clear explanations of the outcomes.

Jeff adds comments. Amy can also add comments.

Number two… The Right to Quality Service. Taxpayers have the right to receive prompt, courteous and professional assistance in their dealings with the IRS and the freedom to speak to a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.

Jeff adds comments. Amy can also add comments.

Number three… The Right to Pay No More than the Correct Amount of Tax. Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties. They should also expect the IRS to apply all tax payments properly.

Jeff adds comments. Amy can also add comments.

Number four… The Right to Challenge the IRS’s Position and Be Heard. Taxpayers have the right to object to formal IRS actions or proposed actions and provide justification with additional documentation. They should expect that the IRS will consider their timely objections and documentation promptly and fairly. If the IRS does not agree with their position, they should expect a response.

Jeff adds comments. Amy can also add comments.

Number five… The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including certain penalties. Taxpayers have the right to receive a written response regarding a decision from the Office of Appeals. Taxpayers generally have the right to take their cases to court.

Jeff adds comments. Amy can also add comments.

Jeff states: I know how dealing with the IRS or a State Tax Agency can be a very stressful experience which we why …

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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

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.

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?

Cindy from San Diego asks: You’ve emphasized figures according to Goldman Sachs Group, how reliable (historically) is the projected information that they are releasing? Is it fair to say that they are accurate within a reasonable means, or is this like the Wall Street strategists running predictions of the S&P 500?

Windus responds.

Matt from Chula Vista asks: Is there anything different about filing tax returns in 2016 that I should be aware of?

Jeff answers: The IRS announced that the nation’s 2016 individual income tax filing season opens January 19th. The IRS expects more than 150 million tax returns will be filed this year.

People will have several extra days to file their tax returns this year. Everyone will have until Monday, April 18th, to file their 2015 tax returns and pay any tax due because of the Emancipation Day holiday in Washington, D.C., falling on Friday, April 15th. Taxpayers in Maine and Massachusetts will have until Tuesday, April 19th, because of Patriot’s Day observances on April 18th.

The IRS expects more than 70% of taxpayers to again receive tax refunds this year. Last year, the IRS issued 109 million refunds, with an average refund of $2,797.

More than four out of five returns are expected to be filed electronically, with a similar proportion of refunds issued through direct deposit.

Now whether you prepare your own tax returns or go to a tax preparer, make sure you have all your year-end statements in hand before you file your return. This includes Forms W-2 from employers, Forms 1099 from banks and other payers, and for those claiming the premium tax credit, Form 1095-A from the Health Insurance Marketplace. Doing so will help avoid refund delays and the need to file an amended return later.

Jeff states: Well we are reaching the end of our show.

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

Windus states: Have a great day everyone!

Jeffrey B. Kahn, Esq. with guest Brian DeVore Discuss Powerball Facts & Tips, Top Housing Trends and Extended Tax Breaks On ESPN Radio – January 8, 2016 Show

/0 Comments/in /by

Topics Covered:

  1. Few ways to improve your odds for record $700M Powerball
  1. Top Housing Trends Coming Your Way in 2016.
  1. Valuable Tax Breaks Of The Past Are Extended To The Future.
  1. Questions from our listeners:
  • I saw a property that I am interested to buy but it is a bank owned home. What are some of the questions I should be asking?
  • I am getting ready to do my 2015 taxes and want to know what is required to deduct business-related entertainment expenses.

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

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

Good afternoon! 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. My co-host, Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services, is out on assignment so I have a special guest host joining me in today’s show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

So I would like to introduce: Bryan DeVore. Hi Bryan.

Hi Jeff.

Jeff states: Bryan is a realtor with Berkshire Hathaway HomeServices California Properties. You have been in the real estate business of over 12 years and your message is that you help clients achieve their real estate goals.

[Chit chat with guest co-host]

Jeff states: Each week Windus and I state – 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! 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 continues: Now don’t fret if you miss any of our shows broadcasted each Friday at 2:00PM Pacific Time because replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show our guest co-host, Bryan DeVore, be discussing:

Segment 2 material: Top Housing Trends Coming Your Way in 2016.

Also coming up is:

Segment 3 material: Valuable Tax Breaks Of The Past Are Extended To The Future. You will want to make sure you are taking advantage of Congress’ gift to you.

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

[Chit chat with guest co-host]

Jeff states: So for today’s top story:

Few ways to improve your odds for record $700M Powerball

With all the hoopla going on with Powerball, an article in Yahoo news caught my attention that really puts things in perspective. http://news.yahoo.com/few-ways-improve-odds-record-700m-powerball-213015825.html

The record-breaking $700 million Powerball jackpot is the stuff of dreams, but it all boils down to math. From the huge prize to the enormous odds against winning it, Saturday night’s drawing is a numbers game that gives players good reason to brush up on their math, maybe as they stand in line to buy a ticket. A look at some of the statistics:

Bryan states: THE MOST IMPORTANT NUMBERS – For those who match all five white balls and the red Powerball, the key numbers are the $700 million jackpot, paid out over 30 years or as an immediate $428.4 million in cash. Those figures are before federal and state taxes, which will eat up roughly half of the cash-option prize.

Jeff states: THE ODDS – Ticket holders have a 1 in 292.2 million chance of winning. To put that in perspective, the odds of hitting the jackpot are about the same as your odds of flipping a quarter and getting heads 28 times in a row, said Jeffrey Miecznikowski, associate professor of biostatistics at the University at Buffalo.

Bryan states: WHEN WILL SOMEONE WIN? No one has won the Powerball jackpot since early November, which is why the prize has grown so large. The bigger prize entices more people to buy tickets, and that drives up the jackpot. The increased ticket sales also make it more likely there will be a winner, simply because all those extra tickets mean more number combinations are covered.

Jeff states: DOES MATH OFFER ANY HINTS TO IMPROVE THE ODDS? Scott A. Norris, an assistant professor of mathematics at Southern Methodist University, said there’s no trick to playing the lottery, but your tiny odds of winning are a bit better if you let the computer pick rather than choosing yourself. That’s because when people use birthdates or other favorite figures, they generally choose numbers 31 or below. That ignores the fact that there are 69 numbered balls.

Bryan states: HOW MUCH DOES BUYING MULTIPLE TICKETS HELP? Your odds increase with additional tickets, but it’s important to keep in mind how small they are to begin with. If you have a 1 in 292.2 million chance of winning with one ticket, you have 10 times the odds if you buy 10 tickets. Yet the probability is still incredibly small. “The odds are so astronomically small that even 100 times that number is exceedingly unlikely to win,” Norris said. “It’s probably still not going to happen if you buy a hundred tickets or a thousand tickets or even a million tickets.”

If you have extra cash and are thinking of buying all possible number combinations, that is allowed, but it wouldn’t be very smart. At $2 a ticket, the strategy would cost about $584 million, and when taxes are subtracted, you’d end up losing money. And if someone else had the winning numbers, you’d need to split the prize. You’d make back some of that money by smaller prizes paid for matching three, four or five of the balls plus the Powerball, but chances are it still wouldn’t be a good bet.

Jeff states: WHAT TO DO WITH THE WINNINGS? Despite the odds, someone will eventually win the prize. What then? Is it better to take the money as an annuity or in cash?

Olivia S. Mitchell, a professor of Insurance and risk management at the Wharton School at the University of Pennsylvania, said to avoid the risk of overspending or an investment mishap, a safe option would be to take the annuity, guaranteeing a huge annual payout for three decades.

For those who want to invest the money themselves, Mitchell suggested setting aside part of the cash option to buy their own annuity that would give them a guaranteed income in case the return on the money they do invest comes up short.

Well it’s time for a break but stay tuned because we are going to tell you Top Housing Trends Coming Your Way in 2016.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, 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. My co-host, Licensed Financial Planner, Windus A. Fernandez Brinkkord, is on assignment today so in her place I have in the studio with me Bryan DeVore of Berkshire Hathaway HomeServices California Properties.

And before we get into this next segment I want to remind our listeners of Windus’ special offer … 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 to make an appointment to meet with Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169.

Jeff states: Bryan DeVore is a realtor with Berkshire Hathaway HomeServices California Properties. You have been in the real estate business of over 12 years and your message is that you help clients achieve their real estate goals.

Top Housing Trends Coming Your Way in 2016.

So Bryan an article in Yahoo Finance caught your attention discussing the Top Housing Trends Coming Your Way in 2016. http://finance.yahoo.com/news/10-housing-trends-coming-way-143600162.html

Bryan talks.

Jeff states: So everyone wants to know what will 2016 hold for homebuyers, sellers and renters? Well I am going to read off each of the top real estate trends to watch for next year according to Yahoo Finance and let’s get Bryan’s take on this.

[Jeff to read off each trend and Bryan to comment]

  1. Home prices will continue to rise…moderately.
  2. Interest rates will inch up.
  3. First-time buyers will continue to struggle.
  4. Credit will get—a little—looser.
  5. It will still be cheaper to buy than rent.
  6. The suburbs will make a comeback.
  7. Buyers will want green and smart homes
  8. Videos will be the new photos.
  9. All-cash sales will continue to decrease.
  10. New homes will come back big time.

Jeff states: And so if you are looking for a realtor, you should call Bryan DeVore of Berkshire Hathaway HomeServices California Properties at 760-908-3838. That number is 760-908-3838.

Stay tuned because after the break we are going to tell you some valuable tax breaks of the past that are extended to the future. You will want to make sure you are taking advantage of Congress’ gift to you.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, 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. My co-host, Licensed Financial Planner, Windus A. Fernandez Brinkkord, is on assignment today so in her place I have in the studio with me Bryan DeVore of Berkshire Hathaway HomeServices California Properties.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Valuable Tax Breaks Of The Past Are Extended To The Future

Jeff states: Last month Congress before taking off for the Christmas holiday left a package of tax cuts under the tree by passing a Tax Extenders bill. This was picked up in many articles including one in Yahoo. https://taxes.yahoo.com/post/136611638293/valuable-tax-breaks-brought-back-to-life 

Jeff states: Now some of the goodies are the same ones Congress let die at the end of 2014 which Congress not only reinstated but also made them retroactively apply for 2015. In some cases, Congress actually made them permanent. And Congress even improved a few.

Jeff states: So we pulled a few of these goodies to discuss that may reduce your tax bill for 2015, 2016 and beyond. But before I have Bryan read off the first goodie 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.

[Bryan to read off each goodie followed by Amy’s explanation and Jeff’s comment]

1. Deduction of State Sales Tax

For several years, taxpayers have been given the choice of deducting either the state income tax or the state sales taxes they pay. The chance to deduct state sales taxes, though, expired at the end of 2014. This option has now been revived retroactively for 2015 and made permanent. This is a no-brainer for itemizers who live in states with no (or limited) income tax. The nine states in this group are: Florida, Texas, Tennessee, South Dakota, Wyoming, Nevada, Washington, New Hampshire and Alaska. In some cases, it can even pay off for folks who live in states that collect income taxes. The IRS has tables to estimate how much sales tax folks with different incomes pay in different states. To the table amounts you can add sales tax paid on big-ticket items, such as cars or boats. Whenever the sales tax write-off is bigger than the income tax deduction, go for it.

2. Tax-Free Discharge of Home Mortgage Debt

Generally, the tax law treats the forgiveness of debt as taxable income to the debtor. But as a wave of foreclosures followed the housing bust that began in 2006, Congress decided to cut some slack for homeowners who lost their homes. A new rule allowed up to $2 million of debt discharged by lenders in foreclosures or short sales, for example, to be excluded from income. That provision expired at the end of 2014, but it has now been revived retroactively to cover 2015 and extended for 2016, too. This break does not apply to the discharge of debt on second homes or rental property.

3. Tax Deduction for Private Mortgage Insurance

This on-again, off-again deduction is for homeowners who bought after 2006 and are required to pay private mortgage insurance. The right to deduct those premiums expired at the end of 2014 but has now been revived retroactively for 2015 and extended for 2016. You must itemize deductions to claim this write-off, which is now scheduled to expire after 2016.

4. Tax-Free Donations From Your IRA

The past several years have brought nail-biting anxiety to taxpayers older than age 70½ who wanted to make charitable contributions using part or all of the required minimum distributions from their IRAs. Congress has allowed up to $100,000 of a traditional IRA to be donated directly to charity tax-free. But the break has often been allowed to expire, only to be brought back to life retroactively at the last minute. Congress did that again this year, eventually allowing tax-free donations for 2015. And now, finally, the lawmakers have made this tax break permanent.

5. Buy Computers Tax-Free With 529 College Saving Plans

These state plans allow parents (and others) to save for college expenses in a tax-favored account. Earnings accrue tax-deferred and are tax-free when withdrawn if used to pay college expenses, such as the cost of tuition, books, and room and board. In 2009 and 2010, computers counted, too. That provision disappeared five years ago, but the new law brings it back retroactively for 2015 purchases. What’s more, it’s permanent: From now on, 529 distributions used to buy computers and pay for Internet access are tax-free. There’s no federal tax deduction for contributions to 529 plans, but most states offer tax incentives.

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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, 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. My co-host, Licensed Financial Planner, Windus A. Fernandez Brinkkord, is on assignment today so in her place I have in the studio with me Bryan DeVore of Berkshire Hathaway HomeServices California Properties.

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.

Jeff continues: 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 to make an appointment to meet with Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169.

Jeff continues: 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 Bryan, what questions have you pulled for us to answer?

Bryan states Question: Denis from Carlsbad asks I saw a property that I am interested to buy but it is a bank owned home. What are some of the questions I should be asking?

Jeff replies: That sounds like a great question for Bryan to answer.

Answer: [Bryan’s talking points]

  • How long has it been vacant?
  • What are some of the defects?
  • Ask for property disclosure.
  • Make sure you get your own property inspection.
  • Don’t let them get you a property inspector.
  • If anything is wrong with the house it should be on property disclosure.

Jeff states: And so if you are looking for a realtor, you should call Bryan DeVore of Berkshire Hathaway HomeServices California Properties at 760-908-3838. That number is 760-908-3838.

Bryan states Question: Mark from Los Angeles asks I am getting ready to do my 2015 taxes and want to know what is required to deduct business-related entertainment expenses.

Answer: You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee if you show they are both ordinary and necessary and meet one of the following tests – the “Directly-related test” or the “Associated test”.

To meet the directly-related test for entertainment expenses you must show that:

  • The main purpose of the combined business and entertainment was the active conduct of business,
  • You did engage in business with the person during the entertainment period, and
  • You had more than a general expectation of getting income or some other specific business benefit at some future time.

Example: I meet my client at a coffee shop where we discuss business.

To meet the associated test for entertainment expenses you must show that the entertainment is:

  • Associated with the active conduct of your trade or business, and

  • Directly before or after a substantial business discussion.

Example: I have a late afternoon meeting with a client to discuss business. Afterwards we go out for dinner.

The concepts are not difficult to apply and you could probably justify must interactions as having some sort of direct or associated business purpose. Where most people lose out is they do not document these meetings and/or expenses so that years later when they are selected for audit they cannot substantiate the deductions and IRS denies them.

Jeff states: Well we are reaching the end of our show.

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

Jeff states: Have a great day everyone!

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Republican Fears on Immigration & Trade, Bond History Reveals Interest Rate Secrets and Top Five Tips For Dealing With The IRS On ESPN Radio – December 18, 2015 Show

/0 Comments/in /by

Topics Covered:

  1. The Roots of Republican Fears on Immigration and Trade
  2. Bond History Reveals Rate Secrets That Fed Doomsayers Don’t Get
  3. Top five tips for dealing with the IRS.
  4. Questions from our listeners:
  • How long is the progression of the interest rate hike? Is there a time frame we’re looking at when we would see the next one?
  • How does the tax break effect homeowners on the verge of foreclosure, looking at short sales? What would the tax be if the provision didn’t pass, for example?

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

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

Good afternoon! 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: Well in light of where interest rates are heading it is another visit to the junk bond market to look at how your short-sale may be incurring a tall bill come tax time.

Windus states:

Also coming up is:

Segment 3 material: You will hear the top five tips for dealing with the IRS.

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

Jeff starts chit chat with Windus.

So for today’s top story: How Republican presidential candidate Donald Trump is appealing to struggling middle-class, middle aged voters on immigration and trade, and what that means for the global market.

The Roots of Republican Fears on Immigration and Trade

From immigration to interest rates in the U.S. to international economies, we have what was, what is and what may be according to Articles pulled from The Wall Street Journal, Bloomberg and the Schwab Market Perspective.

http://on.wsj.com/1O4Yrga; http://www.bloomberg.com/politics/articles/2015-12-14/trump-s-rise-enabled-by-decades-long-slide-for-the-middle-class; http://www.bloomberg.com/news/articles/2015-12-14/meanwhile-in-canada-red-carpet-treatment-for-syrian-refugees; http://www.schwab.com/public/schwab/nn/articles/Market-Perspective.

Windus states: Let’s take a look at what we can expect from the economy next year, in light of the Presidential Election and touch on Republican front runner Donald Trump.

Jeff states: Republican presidential candidate Donald Trump is taking advantage of a new level of personal insecurity anxiety associated by a growing number of terror attacks.

Windus states: The middle class, middle age voters who make up much of Trump’s supporters, are unwavering in their views that open trade and immigration have more undermined than developed economic opportunity. They remain unconvinced of the benefit provided to the middle, when they solely perceive the advantage it brings to the business leaders in the upper-class and the immigrant workers at the bottom.

Jeff states: The fact is, middle-class households are the minority for the first time since 1971, according to Bloomberg; inequality has hit a 45-year peak.

Windus states: Yes, and fifty-five percent of Republicans polled believe that Trump, with his blunt words in combination with his wealth and perception, would be the best candidate to handle the economy.

Jeff states: However, there is a solid economic argument that, cumulatively, immigration amounts to an economic stimulant that is conclusively beneficial for all classes. This is according to a nonpartisan organization called the Partnership for a New American Economy who produce a regular stream of reports designed to show the economic boost immigrants provide. Democratic Presidential hopeful Bernie Sanders has been reinforcing this for some time; some Republican candidates are now jumping on board.

Windus states: When it comes down to it, unskilled immigrants take jobs that few others will do; while skilled immigrants provide intellect and entrepreneurial energy to balance the scale. After all, the last time I checked, entrepreneurship creates jobs.

Jeff states: That’s exactly what I what I’m getting at, Windus. In an earlier report this month, in Toledo, Ohio, reports show that foreign-born households collectively have more that $242 million in spending power, while contributing more than $31 million in taxes to state and local budgets. Denver has also reported that more than one in four professional, scientific and technical service workers are foreign born.

Windus states: Yet, Republican Presidential candidate Donald Trump is advocating “building a bigger wall” and temporarily banning Muslim immigrants, as Americans struggle to reconcile a celebrated immigration history. Governors of 30 states are publicizing their mutual opposition to accepting the victims of a brutal civil war in Syria that has emigrated more than 4 million people. “Hate mongering” Trump is feeding off fears refugees from the Middle East will steal jobs, drain public services or, worse case scenario, turn out to be terrorists.

Jeff states: Might I add that, while Trump is advocating an anti-immigration campaign, the new prime minister, Justin Trudeau, in Canada has personally helped fit Syrian children into puffy winter jackets with major corporations donating goods, services and cash, according to Bloomberg Business. The second-largest railroad in North America, Canadian National Railway, contributed C$5 million to resettlement programs, in addition to Jim Estill, tech entrepreneur, leading a major community effort to welcome 50 Syrian refugee families, footing the bill himself.

Windus states: Estill is investing C$1.5 million in food, housing and clothing as well as securing access to about 300 job openings, both blue and white collar occupations, while helping kids get to school and providing language and health services.

Jeff states: Estill is definitely doing his part to help people get back on their feet and is quoted to believe, “there are many studies that immigrants tend to be more entrepreneurial.” Foreign defense minister, Perrin Beatty recognized, “your average plane load of refugees is far better than the average planeload of tourists. What you’re getting is enormously grateful people who fled from the most terrible conditions of oppression and war. These are people who want to make a new life and contribute.

Windus states: About 65 percent of Canadians support the liberal government’s efforts, according to a poll by Nanos Research.

Jeff states: Trudeau’s government has pledged to bring in 25,000 refugees before the end of February. That’s twice the target of the Obama administration and 15,000 more than Former Prime Minister Stephen Harper, who was ousted in the October federal election.

Windus states: Instead of the U.S. focusing on fear and the perception of immigration, the issue of manufacturers not seeing much job growth, with payrolls falling in three of the past four months, can be attributed to a stronger dollar and weaker orders from overseas customers.

Well it’s time for a break but stay tuned because we are going to tell you how the Bond History Reveals Rate Secrets That Fed Doomsayers Don’t Get.

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.

Bond History Reveals Rate Secrets That Fed Doomsayers Don’t Get

Jeff states: Now that the Federal Reserve has announced the first interest rate hike everyone seems to have an opinion as to how the Fed made this decision in light of no inflation and U.S, unemployment being low. Windus you looked at a number of Articles including the Wall Street Journal, Bloomberg News and Schwab Market Perspective and I know you have your insightful perspective as well.

http://www.bloomberg.com/news/articles/2015-12-14/bond-history-reveals-rate-secrets-that-fed-doomsayers-don-t-get; http://www.bloomberg.com/gadfly/articles/2015-12-14/junk-bond-market-dominated-by-tiny-commodities-issuers-gadfly; http://on.wsj.com/1TK49Cc; http://on.wsj.com/1TK7eCe; http://www.schwab.com/public/schwab/nn/articles/Market-Perspective

Windus: Yes Jeff, the Feds have finally decided to raise interest rates for the first time in nine years, up from the de facto zero it’s been at for the past seven. This would make the sixth tightening cycle since 1979. News of a twenty-five basis point, federal-funds rate increase would still keep interest rates remarkably low, offering plenty of encouragement for economic growth.

Jeff: So then what does this mean for the market?

Windus replies: I would have to say so far, so good. Upon the release of the news, the market remained steady and then progressed to an overall rise as Janet Yellen, Federal Reserve Chairwoman, began to expand upon the expectations of a very gradual rate increase, dependent on a rise in inflation and a more normal level of part-time employment. We’re looking long-term here.

Windus continues: Moreover, a gradual rise in interest rates have characteristically been positive for stocks as it allows for the economy and markets to adjust and accordingly makes the case that now you need to re-evaluate your investment strategy which is why …

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.

Jeff states: Fed Chair Yellen has alluded that with respect to international markets and the continuing plummet of commodities, she sees import prices and energy prices as holding down inflation. She then states that she expects there to be a bottom which we will be seeing soon.

Windus states: She further explains that although “inflation is well below our 2% goal” the committee has a theory for how inflation should behave. They will be “carefully monitoring” factors like inflation as they slowly raise interest rates to meet 2% over time. Not like the 5% before the great recession.

Jeff states: According to Charles Evans, president of the Chicago Fed, “inflation has been too low for too long.”

Windus states: There is opinion that low inflation can stall growth in wages and profits, meaning without them rising, debts become harder to pay off.

Jeff states: Currently, Central bank officials predict inflation will approach their target, next year in 2016. However, they’ve had this same expectation for the last four years running. If they’re still wrong about next year, rising rates could mean risking another recession.

Windus states: Yes, but Ms. Yellen’s model is based on the concepts of an exchange between inflation and slack in the economy, as seen in the Philips curve. The Philips curve finds when unemployment is high, wages are low; equally, wages rise as unemployment falls.

Jeff states: The issue we are having in our current economy is with both the jobless rate and inflation rate. History tells us that these rates should act as polar opposites. Could it be that this is no longer the case due to an undermining effect of the global economy where competition from low-wage economies decreases U.S. wages?

Windus states: The other idea is that inflation is influenced by the masses; families, investors, business owners. When companies and their employees expect inflation to rise, they in-turn attempt to demand higher prices and wages, assisting in a rise in inflation. Likewise, when they expect everything to fall, they resist spending and aid in deflating inflation.

Jeff states: The good news is, average hourly earnings are increasing 2.4% year after year, so we may finally start seeing that trickle over into wage gain as the labor market tightens in 2016 and it becomes harder to find qualified workers.

Windus states: Not to mention, many local governments and large companies have raised their minimum wage, while unions are negotiating decent pay hikes for the first time since the recession.

Jeff states: So Windus what we can expect to see in 2016?

Windus replies: I think we will see “smarter” Americans who are more financially sound of mind and are unwilling to pile on consumer debt. Currently, the savings rate is at its highest, 5.6%, since 2012 as consumers are looking to save more.

Windus continues: Nevertheless, this isn’t inferring that American consumers are putting away their credit cards entirely, now is it Jeff?

Jeff replies: No it is not Windus. Holiday sales reports show that moderate retail storefront sales are being counterbalanced with robust online sales, indicating a shift in shopping methods.

Windus states: Positive consumer confidence is great for the economy, but a savings trend is exactly what some consumers need to be acting on when you consider that another item on the agenda next year is a possible end to the tax break home short sellers may suffer.

Jeff states: Congress has though decided to renew the tax break, and other so-called “tax extenders”, that expired at the end of 2014. So for homeowners who go through foreclosure or short sale, the provision (which originally passed under George W. Bush in 2007) allowing for the exclusion of gain has been made retroactive for 2015 and extended to 2016.

Windus states: According to Zillow, even though it’s been some eight years since the housing crisis began, there are still 13.4% of homeowners still owing more than their homes are worth.

Jeff states: The argument for the provision to be reinstated remains the incentive for homeowners to come to an agreement with the bank. Without the tax break, more homes may be let into foreclosure as property holders choose to simply walk away from their obligations.

Windus: And that’s not good for families, communities or the economy which is another why …

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.

Stay tuned because after the break we are going to tell you the top five tips for dealing with the IRS.

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.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Top Five Tips For Dealing With The IRS.

Jeff states: Is the IRS breathing down your neck and sending you intimidating notices and telephone calls? Are you having tax problems? Is the IRS or State filing liens, garnishing your wages, levying assets, and devastating your financial and personal life?”

Well we have our top five tips for dealing with the IRS. But before we start, we want to remind you that … PLUG: The Law Offices Of Jeffrey B. Kahn 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 to read off each tip followed by comment by Amy and then by Jeff.]

Windus states: It’s great that I have not one but two tax attorneys that I can bounce these tips on.

Number one…NEVER talk to the IRS before you call a tax professional.

Amy states: Everything you say to the IRS agent is ON THE RECORD forever and believe me, they know what questions to ask you.

Jeff adds comments. Amy can also add comments.

Number two…NEVER send correspondence to the IRS without talking to a tax professional first.

Amy states: Many times, the IRS will ask you for documentation that helps them build THEIR case, where as your tax representative’s job is to help build YOURS.

Jeff adds comments. Amy can also add comments.

Number three… NEVER disregard an IRS Notice. 

Amy states: It may contain valuable appeals rights which if not exercised make the IRS’ job a lot easier to collect from you.

Jeff adds comments. Amy can also add comments.

Number four…NEVER assume that an IRS official upon hearing your sad story will have a heart and give you a break. 

Amy states: All IRS officials are bound to set-procedure and that is to collect as much tax as quick as possible from whatever source they can get their hands on.

Jeff adds comments. Amy can also add comments.

Number five… NEVER approach the IRS without first being fully informed and fully prepared by talking to a tax professional.

Amy states: There is no such thing as winging it and believe me you do not want to make your case an example of “on-the-job training”.

Jeff adds comments. Amy can also add comments.

Jeff states: I know how dealing with the IRS or a State Tax Agency can be a very stressful experience which we why …

PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

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.

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 Patricia from Irvine: How long is the progression of the interest rate hike? Is there a time frame we’re looking at when we would see the next one?

Answer: The Fed has basically stated that they not only plan on raising rates slowly but also likely when they will give a statement after they meet.  They have proven to be very cautious.  They do not give statements more then 3-4 times a year.  We expect them to keep to this trend and anticipate a very slow raising in to next year.  I would even venture to guess 1/2 of a percent total of the course of the year.

Question from Sam from Los Angeles: How does the tax break effect homeowners on the verge of foreclosure, looking at short sales? What would the tax be if the provision didn’t pass, for example?

Answer: Congress has decided to renew the tax break, and other so-called “tax extenders”, that expired at the end of 2014. So for homeowners who go through foreclosure or short sale, the provision (which originally passed under George W. Bush in 2007) allowing for the exclusion of gain has been made retroactive for 2015 and extended to 2016.

Jeff states: Well we are reaching the end of our show.

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

Windus states: Have a great day everyone and Happy Holidays!

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Junk Bonds, Student Loans and FATCA uncovering undisclosed foreign bank accounts On ESPN Radio – December 11, 2015 Show

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Topics Covered:

  1. Is The Stock Market Missing the Warning From Junk Bonds?

  2. Should Everyone Be Eligible for Student Loans?

  3. Beware if you are a U.S. Taxpayer with undisclosed foreign bank accounts, you have nowhere to run and no way to hide because the IRS has upgraded and enhanced the FATCA Registration System.

  4. Questions from our listeners:

  • I have been hearing a lot about new action from congress on student debt relief and the forgiveness of student loans for those with economic hardship. Being under the impression that student loans were the “unforgivable” debt, is this a marketing scheme or are there actually such measures in place now?
  • My daughter is almost eight and with all the news I’ve been hearing, I know I need to start putting away for her college tuition. What are my options to best invest in her future?

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

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

Good afternoon! 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: Should Everyone Be Eligible for Student Loans?

Windus states:

Also coming up is:

Segment 3 material: Beware if you are a U.S. Taxpayer with undisclosed foreign bank accounts, you have nowhere to run and no way to hide because the IRS has upgraded and enhanced the FATCA Registration System.

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:

Is The Stock Market Missing the Warning From Junk Bonds?

Jeff states: Windus this article in the December 6, 2015 issue of the Wall Street Journal caught your attention. http://on.wsj.com/1HPjqB0.

Windus states: That’s right. Investors are concerned of probable challenges in the economy as U.S. corporate high-yield bonds are headed for their first annual loss, on a total-return basis, since the credit crisis several years ago. The accumulation of defaults signal the slow of our six-year economic push, leaving some investors feeling unstable just as the Federal Reserve revisits raising interest rates for the first time since 2006.

Jeff states: So for those listeners who do not know or are too embarrassed to ask, what are junk bonds?

Windus replies: Junk bonds are basically an IOU from a corporation or organization stating the amount owed to the investor plus interest. This principal typically pays over a high 7% interest rate and has a shorter maturity than other bonds, gaining the attention of riskier investors. There are $1.3 trillion junk bonds currently outstanding, up from $247 billion in 1998 and $709 billion in 2007, according to data from Bank of America. Although attractive, these high-yield bonds come from heavily indebted companies that are most susceptible to default.

Jeff states: Therefore, investors who were previously eager to buy these high-yield bonds in a rising economy are just as hurried to dump them when the market starts to fluctuate.

Windus states: Historically that is true. An increase in junk-market defaults has a reputation of signaling economic declines. With new bond sales at a stand-still and an increasing high-yield bond default rate, after years of near record low levels, investors are now steering clear of new high-yield bonds from weak performance companies with triple-C credit ratings. When investors stop funding triple-C debt, it does not bode well for the economy.

Jeff states: But as long as corporate mergers and acquisitions continue, there will still be a need to fund these acquisitions with junk bonds as this is the preferred manner to acquire another company. Why issue more stock when it is easier to issue an IOU?

Windus replies: Which is probably why the ratio of high-yield debt to corporate earnings is nearing a historic high.

Windus continues: The article further goes on to state that, not to worry, the bottom hasn’t fallen out of the market. The withdrawal from risk is gradual as high-rated junk bonds are still finding buyers. In fact, some agencies are indicating a stable economy.

Jeff states: Well let’s point to some statistics:

According to the Labor Department, nonfarm payrolls increased a seasonally adjusted 211,000 in November while the unemployment rate remained at 5%. By comparison, Barclays PLC reported U.S. corporate bonds are down 2% this year. In 2008, junk bonds fell 26%.

Windus states: Yet, economists caution that a credit decline could drag on, replaying the junk bear market of 1999 to 2002, if economic growth slows at an uneven rate.

Windus continues: This year, according to data from Barclays, energy junk bonds are down 14% and heavy-industry junk bonds receded 15%. While pharmaceuticals have fallen 8% since September.

Windus states: While bond investments in restaurants and gambling for instance are still being made, in growth industries there have been aggressive discounts for out-of-favor bonds. In part, this is due to new regulations hindering trading by Wall Street Banks, which would be otherwise buying said bonds to bolster the market.

(free talk summarizing points and relating to business)

Well it’s time for a break but stay tuned because we are going to explore whether everyone should be eligible for student loans.

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.

Jeff asks:

Should Everyone Be Eligible for Student Loans?

Windus replies: This was another article from the Wall Street Journal that I saw suggesting new standards for federal aid be introduced to limit debt to borrowers that are more likely to graduate. http://on.wsj.com/1lHqLrN

But before we talk about this I call your attention to my 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.

Jeff states: Windus you brought this article to my attention to take the opportunity to discuss the effect of a student debt sentence on investing in your future.

Windus states: Jeff, we are experiencing an excessive surge in Americans defaulting on their student debt after decades of the federal government not imposing any underwriting standards in its student loan program. This allows any citizen to borrow as much at $57,500 for college- and practically unlimited funds for graduate programs.

Jeff states: This is definitely a concern when you consider that these loans are being issued with little regard for a person’s ability to pay said funding back, with interest.

Windus states: The fact is, as of September 30, 2015, just over 7 million borrowers had gone without making a payment on their federal student loans for at least a solid year, according to Education Department figures. This surge in delinquencies is akin to the subprime mortgage lending which aided in the housing crisis…and we all know where that ended us.

Jeff states: Exactly and according to the New York Federal Reserve, the student delinquency rate has jumped to around 12%. Roughly double its rate from before the recession. The equivalent figure for home-mortgage debt never surpassed 9% after the housing market crash.

Windus states: The main issue we are facing here is defaulted borrowers are largely “nontraditional students” who either enrolled in community colleges or for-profit institutions, which have low or a lack of academic standards for enrolling. These students tend to be older, from lower-income families and more likely to be first-generation college scholars compared with four-year universities.

Jeff replies: Similarly, the Federal Reserve linked defaults to those having weak credit scores. Nearly 30% of students having credit scores at 500-599 a year before leaving school eventually became delinquent. Whereas only 9% became delinquent with a score of 680-729.

Jeff asks: How do we remedy this?

Windus replies: By either targeting more aid in the form of grants, which do not have to be repaid, or underwriting criteria based on the borrowers high school grades and test scores, colleges’ graduation and job-placement rates, and the earnings potential of various majors.

Jeff states: I know that law school can be very expensive especially if you attend a private law school but many private law schools offer programs that if let’s say a graduate passes up on that lucrative and generous salary working for a high-powered Wall Street law firm and instead takes a much lower salary working for the government or tax exempt organization, after a certain number of years of service the balance of the student loans are written off.

Jeff asks: With all the candidates running for President, what alternatives have we heard from the campaign trail?

Windus replies: Democratic presidential candidate Hillary Clinton has called for colleges to be held liable when their student default on loans, as a way to control costs.

Windus continues: Florida Senator Marco Rubio, a GOP presidential candidate, calls for all higher education programs to publish detailed data on their graduates to influence better financial decision making of future college borrowers.

Windus closes: Either way you spin it, we need to focus on ways to keep borrowers from making bad investments.

Which is why … 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.

Jeff states: Now if you are a U.S. Taxpayer with undisclosed foreign bank accounts, beware that the IRS has upgraded and enhanced the FATCA Registration System. With nowhere to run and no way to hide you will want to stay tuned for this.

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.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

IRS Upgrades And Enhances FATCA Registration System

Beware if you are a U.S. Taxpayer with undisclosed foreign bank accounts, you have nowhere to run and no way to hide.

Jeff states: On November 24, 2015 the IRS announced that it has upgraded the Foreign Account Tax Compliance Act (FATCA) Online Registration System, enabling foreign financial institutions to register for a global intermediary identification number.

Amy states: The global intermediary identification number is a key identifier for foreign financial institutions just like a social security number is to a U.S. person. By following this registration process, foreign financial institutions can seek compliance under the Foreign Account Tax Compliance Act (FATCA).

Windus asks: What is all the hype about under the Foreign Account Tax Compliance Act?

Amy replies: The Foreign Account Tax Compliance Act (FATCA) was enacted into law by the U.S. in 2010 and by 2014 has been fully phased in establishing a network of intergovernmental agreements (IGAs) between the U.S. and foreign jurisdictions. Automatic third-party account reporting began in 2015, making it less likely that offshore financial accounts will go unnoticed by the IRS.

Amy continues: In addition to FATCA and reporting through IGAs, the Department of Justice’s Swiss Bank Program continues to reach non-prosecution agreements with Swiss financial institutions that facilitated past non-compliance. As part of these agreements, banks provide information on potential non-compliance by U.S. taxpayers.

Jeff asks: So what more can you tell us about this upgraded and enhanced FATCA reporting system?

Amy replies: The Online Registration System is a secure, web-based system run by the IRS that financial institutions and other entities can use to register for FATCA purposes. It was originally launched in 2013. The system allows the IRS to identify foreign financial institutions and certain other entities with FATCA obligations. These entities generally report on foreign financial accounts held by U.S. taxpayers under the terms of FATCA or pursuant to the provisions of specific intergovernmental agreements (IGAs).  

Jeff states: IRS Commissioner John Koskinen has said this registration system is the backbone of FATCA and that these upgrades improve the FATCA process and allows the IRS to more effectively identify U.S. taxpayers with undisclosed foreign bank accounts.

Windus asks: How many foreign financial institutions have registered with the IRS?  

Amy replies: The IRS claims that more than 170,000 financial institutions worldwide have registered with the IRS. These financial institutions are located in more than 200 jurisdictions.

Windus asks: And what motivation do the foreign financial institutions have to register?

Amy replies: In most cases, those foreign financial institutions that do not comply with FATCA or participate through an IGA are subject to 30% withholding on certain U.S. source payments.  

Jeff states: So with foreign banks acting like domestic banks and reporting your account information to the IRS, you can’t ignore this. Which is why …

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.

Jeff asks: Amy, what programs are available to U.S. taxpayers who have undisclosed foreign accounts?

Amy replies: 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.

Windus asks: Amy, When did the IRS first start OVDP?

Amy replies: OVDP was first started by the IRS in 2009. Since then there have been more than 54,000 voluntary disclosures by taxpayers with undisclosed foreign bank accounts. The IRS has collected more than $8 billion from this initiative. 

Windus asks: If a foreign bank has not yet reported a U.S. account holder to the IRS, why should a taxpayer NOT put off going into OVDP?

Amy replies: Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations. Those penalties could be as high as 50% of the account balances and can be assessed on an annual basis.

Jeff states: During the course of U.S. taxpayers with previously undisclosed interests in foreign financial accounts and assets consulting with us on their options, we have heard a lot of myths out there causing confusion and misinformation so we are going to try and clear some misconceptions.

[Jeff to reading off each myth and Amy to respond.]

Myth #1: An individual will be better off “explaining” the undisclosed foreign bank accounts through amended tax returns, rather than opting into OVDP.

Even outside of OVDP, any disclosure to the IRS requires that the taxpayer file amended tax returns and be prepared to provide the foreign bank information and statements to support the new income being reported. Such returns are signed by the taxpayer that they are true and complete. Being outside of OVDP the government can develop a case supporting severe penalties and even criminal prosecution using the combination of original filed tax returns which omitted the foreign income and amended tax returns reporting the foreign income as admissions of intent to evade U.S. income tax.  

Myth #2: Once an individual enters into OVDP, you cannot dispute the amount of penalties imposed by the program.

Just because the penalty rate structure is set in OVDP does not mean the amount of penalty can never be disputed. Agents assigned to OVDP cases do make mistakes and do misinterpret foreign bank income and transaction activity including those accounts, assets and transactions that should not be part of any penalty calculation. These disputes or differences can still be contested and challenged through different means and channels while still remaining in OVDP.

Myth #3: An individual who enters into OVDP opens up all years for examination since becoming a U.S. person for tax purposes with undisclosed foreign bank accounts and unreported foreign income.

While the normal Statute Of Limitations to examine a tax return is three years, it can be extended to six years where there is a substantial omission of income and where the government can show fraud, the government has no limitation on how far back it can go. Furthermore, the government has a six-year Statute Of Limitations to pursue criminal prosecution. A person who is in OVDP avoids criminal exposure and any income tax return amendments are limited to the last eight years or if shorter, from the time the individual becomes a U.S. person for tax purposes.

Myth #4: An individual who enters into OVDP is forfeiting assets, including entire lifetime savings and more to the government so that any income, inheritances, or gifts these people may receive in the future will belong to the IRS. 

Outside of OVDP, the MINIMUM penalty is 50% of the value of your foreign assets. But for taxpayers participating in OVDP, the MAXIMUM penalty is 27.5%. That means for taxpayers who are in OVDP, they will still get to keep at least 72.5% of their foreign assets.   And under the new Streamlined Procedures with a penalty of 5%, you still get to keep 95% pf your foreign assets.

Jeff states: And the IRS is confident that it will catch those taxpayers who are not coming forward in OVDP. So we encourage taxpayers who are concerned about their undisclosed offshore accounts to come in voluntarily before learning that the U.S. is investigating the bank or banks where they hold accounts or the foreign banks are reporting you to the IRS. By then, it could be too late to avoid the higher penalties and you may be subject criminal prosecution. Which is why …

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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

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.

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.

Jeff continues so this week I have pulled some questions for Windus to answer. [Jeff to read questions]

Question from Debbie from Temecula: I have been hearing a lot about new action from congress on student debt relief and the forgiveness of student loans for those with economic hardship. Being under the impression that student loans were the “unforgivable” debt, is this a marketing scheme or are there actually such measures in place now?

Windus to respond.

Question from Steven in Los Angeles: My daughter is almost eight and with all the news I’ve been hearing, I know I need to start putting away for her college tuition. What are my options to best invest in her future?

Windus to respond.

Jeff states: Well we are reaching the end of our show.

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

Windus states: Have a great day everyone!

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Finances, IRS CI 2015 Annual Report and Taxes On ESPN Radio – December 4, 2015 Show

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Topics Covered:

  1. The strife of the Chinese tourist and how it impacts the U.S. economy.
  2. How OPEC and the level of production for oil can impact your financial plan.
  3. IRS Criminal Investigation Division releases Fiscal Year 2015 Annual Report – What You Need To Know If You Have Undisclosed Foreign Accounts.
  4. Question from our listeners – What should I do if I have a large win-fall in company stock?  My company was sold and I am walking with a mix of payouts between Restricted Stock Units (RSU’s) and regular stock.

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

Good afternoon! 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: How OPEC And The Level Of Production For Oil can impact your financial plan.

Windus states:

Also coming up is:

Segment 3 material: IRS Criminal Investigation Division Releases Fiscal Year 2015 Annual Report – What You Need To Know If You Have Undisclosed Foreign Accounts.

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 our top story today is about –

The strife of the Chinese tourist and how it impacts the U.S. economy.

Jeff states: Windus you picked up this article http://on.wsj.com/1NY4T2w in the November 30, 2015 Wall Street Journal and I think this is another fine example that we are a global economy and what impacts one country or one region will impact us too. 

[Windus replies with following talking points allowing for comment and discussion with Jeff on each]
1. The trouble that started in China this summer and spread to the world markets is now spreading to the Chinese tourist.
2. Out bound Chinese tourism is slowing due to the decline in the Yuan. 
3. Spending on travel by Chinese abroad dropped from $25 Billion in September to $19 Billion in October!  Year over year, this is still higher given that $16 billion was spend in October of 2014.  But year of year growth is slowing.  In what used to be a 60% growth rate in the first half of the year is now a 20% growth rate is all. 
4. As with most tourists, your vacations are planned well in advance so there is a slight delay from when currency pressure begins to when we see this reflected in the numbers.
But there is other data this will impact.  Chinese love to travel and buy luxury goods.  If their currency is lower, the ability to buy those goods declines. 
5. And try as they might to stabilize the currency, the Chinese government has been unable to full stop this decline.  A drop in currency won’t kill the Chinese travel bug entirely, but slow it down, it will. 
6. To continue this, the Chinese tourist is still the largest buyer of Luxury goods internationally.  In 2014, they made up 46% of all luxury goods purchased and that number is holding steady for 2015, even with the yuan pressure.
7. Chinese are also becoming more sophisticated in terms of quality and not just buying a brand due to good marketing. 
8. Up to 78% of Chinese luxury goods purchases took place outside of China.  Chinese feel that price is just one aspect to buying abroad; they are often treated better and enjoy the experience more.
9. To make matters worse, when they buy at home they pay a 25% premium due to duties being charged on importation.  Even though this is down almost 60% from 4 years ago, it isn’t down enough.

What I do know, trouble in China kicked off a very turbulent August and September for the markets.  If the Yuan stays under pressure and the economy slows, it isn’t just luxury goods that will suffer.
Travel will suffer and other economies will feel that pain more than they already did in August.  Something to keep an eye on. 
Although we do not have a crystal ball, it is important to make sure you are investing with your time horizon in mind and not trying to time investments.  Markets are often volatile and even more so now.

Well it’s time for a break but stay tuned because we are going to tell you how OPEC and the level of production for oil can impact your financial plan.

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.

How OPEC And The Level Of Production For Oil Can Impact Your Financial Plan.

Jeff states: In one of our prior shows we talked about the riff in OPEC which was brought out in another article from the Wall Street Journal stating that the comments from Mohammed Bin Hamad Al Rumhy come as OPEC’s Persian Gulf producers unleashed a broad defense of their strategy. http://on.wsj.com/1WLRAHd

Windus states: But before we talk about this I call your attention to my 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.

[Windus replies with following talking points allowing for comment and discussion with Jeff on each]

  1. OPEC is meeting this Friday.  More pressure to decrease production.  Arguing is pre-running that meeting.

2.  Let’s talk about who is in OPEC.  There are 13 countries.  Some of the U.S.’s best friends:  Libya, Kuwait, Venezuela, Algeria, Qatar, Ecuador, Nigeria, Angola, Iran, United Arab Emirates, Saudi Arabia, & Iraq.  And the newest one just admitted is Indonesia which produces 890,000 barrels a day.
3.  Some of the OPEC countries have already decreased production. They do not agree with the continuing to produce route that both Iraq & Saudi Arabia have deployed.
4.  Countries that are decreasing production are Libya, Kuwait, Venezuela, Algeria, Qatar, & Ecuador.  These countries have really reduced the barrel per day production.  More Libya, by a long shot but the others as well.
5.  Iran released an article Wednesday stating that they were reconsidering the level of production they are producing ahead of the OPEC meeting. 
6.  Why is this an issue for these countries?  It drives their economies.  Countries like Venezuela are hurting, and need oil to be higher to help them stabilize.  Brazil is not one of the OPEC countries but is a key example of a country struggling due to commodities being down in general.
7.  OPEC stands for:  The Organization of the Petroleum Exporting Countries
8.  Officially split by two groups.  Group1 (Saudi Arabia, Kuwait, Qatar) believe that current production levels will flush out competition that need higher prices to make money.  Group 2 are the ones who disagree.
How does this all tie into your financial plan:  Basically, with oil bouncing all over, you may be benefiting at the pump, but your commodity related investments are really down and looking like they will stay there for a while.

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.

Stay tuned because after the break we are going to tell you about the IRS Criminal Investigation Division Releases Fiscal Year 2015 Annual Report – What You Need To Know If You Have Undisclosed Foreign Accounts.

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.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

IRS Criminal Investigation Division Releases Fiscal Year 2015 Annual Report – What You Need To Know If You Have Undisclosed Foreign Accounts.

Jeff states: The Internal Revenue Service on December 3, 2015 announced the release of its IRS Criminal Investigation (CI) annual report, reflecting significant accomplishments and enforcement actions taken in fiscal year 2015.   In Fiscal Year 2015 the IRS CI initiated 3,853 cases. 

Amy states: Yes and for those of you who are not aware, the 2015 fiscal year for the Federal government is for the 12 months ending with September 30, 2015.

Windus asks: Amy, what is the purpose of the IRS issuing this annual report?

Amy replies: The annual report is released each year for the purpose of highlighting the agency’s successes while providing a historical snapshot of the make-up and priorities of the organization.  The very first Chief of IRS CI, Elmer Lincoln Irey, served from 1919 to 1946 and envisioned releasing such a document each year to showcase the agency’s work.   CI is the only federal law enforcement agency with jurisdiction over federal tax crimes.  This year, CI again boasted the highest conviction rate in all of federal law enforcement— 93.2%. 

Jeff states: In other words what Amy is saying is that this document is propaganda of the IRS to show taxpayers what could happen to you if you do not comply with the tax law. And in the case of criminal violations, you could lose your freedom. Which is why you need to remember that:

PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Jeff states: Now this 50-page report summarizes a wide variety of IRS CI activity throughout the fiscal year and includes case summaries on a range of tax crimes, money laundering, public corruption, terrorist financing and narcotics trafficking financial crimes.  But for this show we are going to focus on that section dealing with the Bank Secrecy Act.

Amy states: The Bank Secrecy Act (BSA) mandates the reporting of certain currency transactions conducted with a financial institution, the disclosure of foreign bank accounts, and the reporting of the transportation of currency across United States borders. Through the analysis of BSA data, CI identifies money laundering schemes and other financial crimes.

Windus asks: Amy are you saying that IRS CI is into big data and analytics just like companies say like Google?

Amy replies: Yes, CI is the largest consumer of BSA data. The CI BSA Program has grown substantially since its inception in the early 2000’s when CI helped establish the initial 41 Suspicious Activity Report Review Teams (SAR-RT). The mission is to scrutinize BSA data to identify and target significant illicit financial criminal activity.

Jeff states: So what has happened to this program over the last 10 years or so?

Amy states: Well now the current BSA program is comprised of participation in 94 SAR-RTs (one in each judicial district and led by the responsible U.S. Attorney Office), and sponsorship and management of 55 Financial Crimes Task Forces (FCTF) throughout the country. The FCTF involves collaboration between CI and state or local law enforcement agencies for the purpose of identifying and investigating specific geographic area illicit financial crimes. More than 150 state or local agencies have joined FCTFs across the country and have detailed more than 350 law enforcement officers to become Task Force Officers. The Task Force Officers are granted the authority to investigate money laundering and BSA violations under the direction of CI.

Windus: So it seems that CI is well connected to data collected by the Federal government and state enforcement agencies to establish a huge dragnet to catch taxpayers suspected of violating the tax laws.

Amy replies: That is correct and with the electronic transmission of data by banks (both domestic and foreign) to the BSA Data Center and the improved analytic resources of CI, it will be harder for taxpayers to avoid getting caught in these networks.

Jeff states: I pulled from the report a table on BSA Investigations which is posted on our site www.kahntaxlaw.com. It covers the last three fiscal years. You may not have access to your computer now so Amy please summarize what is presented in this table:

Amy summarizes [except do not talk about Percent of Investigations NOT Recommended For Prosecution]

BSA Investigations FY 2015 FY 2014 FY 2013
Investigations Initiated 613 809 922
Prosecution Recommendations 519 677 771
Indictments/Informations 533 608 693
Sentenced 557 535 453
Incarceration Rate 72.4% 74.8% 70.6%
Average Months To Serve 31 35 35
Percent of Investigations NOT Recommended For Prosecution 15.3% 16.3% 16.3%

Windus shares her comments.

Jeff states: Now in this table I added another statistic and that is the Percent of Investigations NOT Recommended For Prosecution. It is consistent each year in that 15% or so of all BSA cases initiated by CI DO NOT GET REFERRED FOR CRIMINAL PROSECUTION. What this tells me is that if you are under criminal investigation for a tax crime, early intervention by a tax attorney is key as you want to fall within this group of 15%. Which is why …

PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

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.

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.

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?

Sampson from Mountainview, California asks: What should I do if I have a large win-fall in company stock?  My company was sold and I am walking with a mix of payouts between Restricted Stock Units (RSU’s) and regular stock.

Windus to address financial planning concerns involving RSU’s.

Restricted stock – Stock is ownership of a company. When that stock has limitations on it, it is said to be restricted.

Kind of restrictions – One of the most common restrictions requires a certain length of time to pass or a certain goal to be achieved before the stock can be sold. This is the vesting period.

Vesting period – The vesting period is the length of time before the restrictions are lifted. If the restricted stock is awarded based on the employee remaining with the company for two years, those two years are the vesting period. If the stock vests when “gross sales increase beyond $10 Million” the vesting period is however long it takes for that to happen, if it ever does.

Outcome if one leaves the company before stock vests – You forfeit the stock.

Windus to talk about other financial aspects.

Jeff to address taxes.

When you own stocks outside of tax-sheltered retirement accounts such as IRAs or 401(k)s, there are two ways you might get hit with a tax bill. If your stock pays a dividend, those dividends generally are taxed at a rate of up to 15% at the end of each year.

In addition, if you sell a stock, you pay 15% of any profits you made over the time you held the stock. Those profits are known as capital gains, and the tax is called the capital gains tax. One exception: If you hold a stock for less than a year before you sell it, you’ll have to pay your regular income tax rate on the gain – a rate that’s higher than the capital gains tax.

The tax treatment of RSU’s are governed by the set of rules under I.R.C. § 83, which apply generally to the receipt of property in exchange for services. Under § 83(a), taxable events occur only when unrestricted property rights vest or when restrictions on the enjoyment of the property lapse. Section 83(a)(1) actually states this in terms of saying that the fair market value of property received for services must be recognized “at the first time the rights of the person having the beneficial interest in such property are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier.” Thus, the receipt of property, whether stock options, stock, or other property, is not taxable if there are substantial restrictions on transfer and it is subject to a substantial risk of forfeiture.

Where you receive RSU’s you may want to consider making an election under IRC Section 83(b). Under this election you recognize as income now the value of the RSU and now when the restrictions lapse. If you expect the value to go up, you would want to make this election to recognize less income.

Jeff PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Jeff states: Well we are reaching the end of our show.

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

Windus states: Have a great day everyone!

Best Year-end Tax Planning Tips and what’s new in 2016 if you are with Covered California on November 29, 2015 Smarter San Diego TV Show

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Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses GOP Bold Tax Plans, The Rift In OPEC, and Year-end Tax Planning Tips On ESPN Radio – November 13, 2015 Show

/0 Comments/in /by

Topics Covered:

  1. Republican Candidates Push Bold Tax Plans.
  2. How investments in oil are being impacted by the rift within OPEC.
  3. More 2015 year-end tax planning tips.
  4. Questions from our listeners:
  • If I’m earning dividend income and my asset value declines, should I be worried about my income?
  • I get invited to charity balls and I have been noticing that each one will advertise the charitable value of the tickets that I purchased. What does that mean?

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

Windus states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.

Jeff states:

And 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:

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: How investments in oil are being impacted by the rift within OPEC.

Windus states:

Also coming up is:

Segment 3 material: More year-end tax planning tips.

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

Windus starts chit chat with Jeff.

SEGMENT 1

Windus states:

Republican Candidates Push Bold Tax Plans

An article in the November 9, 2015 Wall Street Journal touts that proposed changes go well beyond the party’s previous platforms and ensure the issue will play a central role in the general election. http://on.wsj.com/1WNM7Q9

Jeff states: Given that the still rather large number of candidates is driven to stand out in a crowded field, the GOP contenders are defying economic reality going beyond the typical promises to lower rates and expand the tax base.

Windus states: Campaign platforms on taxes matter. Each of the past three presidents ran in part on a tax plan and each got much of it implemented by the end of his first term. And no matter who emerges from the primary season, the contrast between Republican proposals for tax cuts and Democratic ideas about tax increases on top earners will be starker than before.

Jeff states: The article goes on further to state that Democrats are primed to make the case that the bold Republican plans would provide the biggest benefits to the wealthiest households and balloon the federal deficit.

Windus states: And just how much tax cuts can juice the economy is in dispute? Democrats point to the economy’s growth after President Bill Clinton raised top rates in 1993 and President Barack Obama lifted rates in 2013, and to the recession that occurred after President George W. Bush cut taxes, as proof that rates for the top few percent of households aren’t the biggest drivers of economic expansion.

Jeff states: In previous shows we talked about Jeb Bush’s tax plan and Donald Trump’s tax plan. While other GOP candidates have not come out with tax plans as comprehensive as Bush and Trump, they do make some very creative and bold statements.

Windus states: Senator Ted Cruz of Texas wants to eliminate payroll and corporate income taxes in favor of a national tax on consumption, via a value-added tax that would be assessed on businesses and absorbed in wages and prices.

Jeff states: What Mr. Cruz is talking about is let’s have a tax system following the European countries and for that matter most of the world. The more people consume, the more in taxes will be paid. Since rich people do not consume as much as a percentage of their income, it should be apparent that the tax burden will largely fall on the middle class in this environment. It also does not encourage people to take risk and invest in business because they would not be able to write off their losses.

Windus states: I think that Florida senator, Marco Rubio, got your point Jeff and he has proposed eliminating taxes on capital gains and dividends for new investments, and raising tax credits for people with children so that he can appeal to the middle class.

Jeff states: But in Mr. Rubio’s case, he does not say how these tax cuts and raise in tax credits will be paid.

Windus states: Gov. Bobby Jindal of Louisiana wants to scrap the corporate income tax and create a 2% personal tax bracket that would add lower-income people to the income tax rolls, as a way of disabusing the public of the notion that “money grows on trees in Washington.” That would reverse a decades-long bipartisan trend of using the tax system to bolster take-home pay for the poorest households, which generally don’t pay income tax today.

Jeff states: Mr. Jindal has forgotten how mad a lot of people are hearing that multinational corporations are keeping their profits overseas to avoid U.S. taxes and now he is going to completely take away taxes from corporations? Mr. Jindal, the last time I checked, it is people who vote and not corporations.

Windus states: But Jeff people complain how complex the tax code is. Carly Fiorina, former chief executive of Hewlett-Packard Co., says on her website she wants the tax code to be three pages long, which is “about all an individual can understand without having to hire an accountant, a lawyer, a lobbyist.”

Jeff states: I would not call Ms. Fiorina’s statement a plan but instead just a tactic to draw attention to her campaign. Everyone should know that you can’t condense a tac code that covers individuals, corporations and all other types of entities in just 3 pages. As the CEO of HP I wonder if she ever started a movement to make their contacts a lot more understandable and shorter.

Windus states: We have already critiqued former Florida governor Jeb Bush and Donald Trump’s tax plans which the article brought out that Mr. Bush wants to allow companies to write off capital purchases immediately and Mr. Trump has proposed a tax cut that would put federal collections at their lowest level since 1942.

Jeff states: And then there is Ben Carson who looks to the bible for tax guidance. He promotes a flat-tax plan based on the concept of Biblical tithing. His reading of the bible has fostered the idea of having a tax rate of 15%, eliminating all the deductions and all the loopholes and included a tax holiday for U.S. companies to bring back foreign profits stockpiled abroad.

Windus states: It sounds more like a fantasy to me. One thing should be clear is that each presidential candidate’s tax plan fails on how these tax cuts are to be funded. And as President the he or she would have to follow the same standard as prior Presidents and Congress must follow whereby any tax reductions are offset by new tax revenues so that the legislation is “revenue neutral”. No politician is against tax cuts but there is a lack of consensus on how to fund them.

Well it’s time for a break but stay tuned because we are going to tell you how investments in oil are being impacted by the rift within OPEC.

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

Windus 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.

OPEC Rift Exposed as Oman Oil Minister Calls Group ‘Irresponsible’

Another article from the Wall Street Journal stating that the comments from Mohammed Bin Hamad Al Rumhy come as OPEC’s Persian Gulf producers unleashed a broad defense of their strategy. http://on.wsj.com/1WLRAHd

But before we talk about this I call your attention to my 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.

Jeff states: Windus you brought this article to my attention to take the opportunity to discuss oil as a commodity which people invest in.

Windus states: Mohammed Bin Hamad Al Rumhy of Oman whose country produces oil but isn’t a member of OPEC stated “This is a commodity that if you have one million barrels a day extra in the market, you just destroy the market. We are hurting, we are feeling the pain and we’re taking it like a God-driven crisis. Sorry I don’t buy this, I think we’ve created it ourselves.”

Jeff states: The article stated that Mr. Rumhy’s comments came at a conference in Abu Dhabi as he shared a stage with Suhail al Mazrouei, the United Arab Emirate’s top oil official, who is a top advocate of the producer group’s strategy. The remarks also reflect the pressure on OPEC from less wealthy members like Venezuela and Algeria to intervene with production cuts to raise prices, as crude oil trades for less than $50 a barrel—down from more than $100 a barrel in 2014.

Windus states: But on the same day, OPEC’s Persian Gulf producers unleashed a broad defense of their decision to pump full throttle to keep their share of the market, less than a month before the group’s next meeting to decide whether to maintain or cut production. Mr. Mazrouei defended OPEC’s stance, arguing that production cuts would simply subsidize higher-cost producers in the U.S. and elsewhere. Oil in the U.A.E., Saudi Arabia and other Middle Eastern producers is fairly cheap to produce.

Jeff states: The article goes on to state that: The oil-producing group of 12 nations is pumping 31.57 million barrels a day, with Saudi Arabia producing at a record level for much of the year at more than 10 million barrels a day. That level of production, along with record output in Russia as well, has helped fuel a glut of oil supplies that outpaces demand by about 1 million barrels a day, according to OPEC. The production frenzy has occurred even as American output begins to decline. U.S. producers used hydraulic fracturing technology to foster a boom in crude supplies that helped lower prices, but those operations were generally much more expensive than projects in the Middle East.

Windus states: And for people who are invested in oil, they are uncertain where the market is going. Once a commodity we feared we’d run out of is not a commodity that we need to leave in the ground a little bit more then we currently are. You have U.S. production exceeding expectations and OPEC isn’t backing off. So the pressure is being felt in many emerging markets economies like Brazil and Venezuela.

Jeff states: Just a few years ago it was thought that a barrel of oil would cost $200. The views of many large investment banks and oil companies are now predicting oil prices at around $60 a barrel in 2016—far lower than needed to balance the budget in some oil-producing countries, including Saudi Arabia.

Windus continues: We are almost in a game of chicken right now with OPEC.  OPEC does not want to curb its own oil production as that could severely hurt those economies. But flooding the markets with oil is not the solution either.  No one wants to cut, unless everyone cuts is what I am feeling when I read the articles out there. It is very much a game of mistrust and one that impacts economies deeply.

Jeff states: I can imagine that this price of oil impacts other areas that are dependent on oil.

Windus replies: Other assets that are essentially collateral damage for oil prices are investments in the MLP space.  Many clients in dividend paying portfolios have felt the pain in the value of their portfolios as oil investments tend to be good dividend producing investments. Although dividends have mostly been unimpaired, the values of investments have declined.  As is the case in many market cycles, most clients should simply weather the storm as long as the investment was made to their correct risk tolerance, time horizon, and goal.

Which is why … 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.

Windus states: Stay tuned because after the break we are going to tell you top year-end tax planning tips.

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

Windus 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.

2015 Year-End Tax Planning for Individuals

Windus states: Well here we are in November and while many people are now thinking about the year-end holiday celebrations, you should also be thinking about year-end tax planning to perhaps save on taxes and use those tax savings instead on your holiday celebrations and gift giving.

Jeff states: So it really is important that you address your year-end tax planning now and that is where we can help. PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Jeff states: The end of year is also a good time to clean out your closets and garages. You could have some valuable tax deductions in there if the unwanted items are donated to a charitable organization.

Windus asks: Where do you report noncash contributions on your tax return?

Jeff replies: You must fill out Form 8283, Noncash Charitable Contributions, and attach it to your return, if your deduction for a noncash contribution is more than $500. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $500,000, you also will need to attach the qualified appraisal to your return.

Windus asks: So how do you figure what Is Fair Market Value (FMV) of the item you are donating?

Jeff states: To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution.

Fair market value.   Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

Example: If you give used clothing to the Salvation Army, the FMV would be the price that typical buyers actually pay for clothing of this age, condition, style, and use. Usually, such items are worth far less than what you paid for them.

Windus asks: What other considerations are there in determining Fair Market Value?

Jeff replies: Well it depends on what you are donating.

[Windus to read item and Jeff to comment]

  1. Household Goods. The FMV of used household goods, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Such used property may have little or no market value because of its worn condition. It may be out of style or no longer useful. You cannot take a deduction for household goods donated after August 17, 2006, unless they are in good used condition or better. A household good that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal.

  1. Used Clothing. Used clothing and other personal items are usually worth far less than the price you paid for them. Valuation of items of clothing does not lend itself to fixed formulas or methods. The price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value. You cannot take a deduction for clothing donated after August 17, 2006, unless it is in good used condition or better. An item of clothing that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal.

  1. Jewelry and Gems. Jewelry and gems are of such a specialized nature that it is almost always necessary to get an appraisal by a specialized jewelry appraiser. The appraisal should describe, among other things, the style of the jewelry, the cut and setting of the gem, and whether it is now in fashion. If not in fashion, the possibility of having the property redesigned, recut, or reset should be reported in the appraisal. The stone’s coloring, weight, cut, brilliance, and flaws should be reported and analyzed. Sentimental personal value has no effect on FMV. But if the jewelry was owned by a famous person, its value might increase.

  1. Paintings, Antiques, and Other Objects of Art. Your deduction for contributions of paintings, antiques, and other objects of art, should be supported by a written appraisal from a qualified and reputable source, unless the deduction is $5,000 or less.

  • Art valued at $20,000 or more.   If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the signed appraisal to your return. For individual objects valued at $20,000 or more, a photograph of a size and quality fully showing the object, preferably an 8 x 10 inch color photograph or a color transparency no smaller than 4 x 5 inches, must be provided upon request.
  • Art valued at $50,000 or more.   If you donate an item of art that has been appraised at $50,000 or more, you can request a Statement of Value for that item from the IRS. You must request the statement before filing the tax return that reports the donation. Your request must include the following: (i) A copy of a qualified appraisal of the item; (ii) A $2,500 check or money order payable to the Internal Revenue Service for the user fee that applies to your request regarding one, two, or three items of art. Add $250 for each item in excess of three; (iii) A completed Form 8283, Section B; and (iv)The location of the IRS territory that has examination responsibility for your return.
  1. Collections. Since many kinds of hobby collections may be the subject of a charitable donation, it is not possible to discuss all of the possible collectibles in this publication. Most common are rare books, autographs, sports memorabilia, dolls, manuscripts, stamps, coins, guns, phonograph records, and natural history items.
  • Stamp collections.   Most libraries have catalogs or other books that report the publisher’s estimate of values. Generally, two price levels are shown for each stamp: the price postmarked and the price not postmarked. Stamp dealers generally know the value of their merchandise and are able to prepare satisfactory appraisals of valuable collections.
  • Coin collections.   Many catalogs and other reference materials show the writer’s or publisher’s opinion of the value of coins on or near the date of the publication. Like many other collectors’ items, the value of a coin depends on the demand for it, its age, and its rarity. Another important factor is the coin’s condition. For example, there is a great difference in the value of a coin that is in mint condition and a similar coin that is only in good condition. Catalogs usually establish a category for coins, based on their physical condition—mint or uncirculated, extremely fine, very fine, fine, very good, good, fair, or poor—with a different valuation for each category.

Jeff states: So it really is important that you address your year-end tax planning now and that is where we can help. PLUG: The Law Offices Of Jeffrey B. Kahn 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: 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

Windus 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.

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.

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?

Terry from Los Angeles asks: If I’m earning dividend income and my asset value declines, should I be worried about my income?

Windus replies: This is a great question and the answer is both yes and no.

First, dividends are paid as per share that someone owns.  A dividend is declared, for example, as 5 cents per share, therefore if you own 100 shares, you’d earn $5 on that position when the dividend paid.

Now, if a company is not as profitable and the company is under pressure, the dividend may be reduced.   Most companies that pay consistent dividends do tend to maintain that through varying times in the markets but this is not guaranteed.  Also, just because a stock price is down doesn’t mean the company is actually not profitable.  Stock pricing is  more complicated than this.

Needless to say, it has been my experiences that if the investment declines due to market fluctuation, most dividend income can remain stable but you would want to keep an eye on the companies to be sure they are stable and ok.

Kevin from Oceanside asks: I get invited to charity balls and I have been noticing that each one will advertise the charitable value of the tickets that I purchased. What does that mean?

Jeff replies: The tax code states that you can deduct as a charitable contribution only the amount that exceeds the fair market value of the benefit received if your contribution entitles you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance, or sporting event.

So for example, you buy a ticket for $100.00 to attend a charity ball and the ticket says that this has a value of $60.00. That would result in $40.00 being the excess of what you paid over the value of the ball and it is that $40.00 that you can take as a charitable contribution.

Now remember – for a contribution of cash, check or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the amount and the date of the contribution.

Also for any contribution of $250 or more you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services.

Jeff PLUG: The Law Offices Of Jeffrey B. Kahn 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: Well we are reaching the end of our show.

Jeff states: Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com. Have a great weekend everyone!

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Crowdfunding, Social Security Changes and Year-end Tax Planning On ESPN Radio – November 6, 2015 Show

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Topics Covered:

  1. SEC Adopts Rules to Permit Crowdfunding
  2. Big changes that are coming for how you claim social security benefits.
  3. Top 2015 year-end tax planning tips you need to be aware of.
  4. Questions from our listeners:
  • I am interested in investing in a particular company that has corporate bonds, preferred stock and common stock. What are the differences between each of those types of securities?
  • My university requires each incoming freshman to come to school with their own computer. Is there any way to deduct the cost of the computer from my tax liability?

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

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

Good afternoon! 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: Big changes that are coming for how you claim social security benefits.

Windus states:

Also coming up is:

Segment 3 material: We have some top 2015 year-end tax planning tips you need to be aware of.

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

Jeff starts chit chat with Windus.

SEC Adopts Rules to Permit Crowdfunding

Amendments to Existing Rules to Facilitate Intrastate and Regional Securities Offerings Put Out By The SEC. http://www.sec.gov/news/pressrelease/2015-249.html

Jeff states: The Securities and Exchange Commission on October 30, 2015 adopted final rules to permit companies to offer and sell securities through crowdfunding.  The Commission also voted to propose amendments to existing Securities Act rules to facilitate intrastate and regional securities offerings.  The new rules and proposed amendments are designed to assist smaller companies with capital formation and provide investors with additional protections.

Windus states: Crowdfunding is an evolving method of raising capital that has been used to raise funds through the Internet for a variety of projects.  Title III of the JOBS Act created a federal exemption under the securities laws so that this type of funding method can be used to offer and sell securities.  And since then SEC Chair Mary Jo White has stated there is a great deal of enthusiasm in the marketplace for crowdfunding, and she believes these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need. She further states that with these rules, the SEC has completed all of the major rulemaking mandated under the JOBS Act.

Jeff states: So since these rules were made under a delegation of authority by Congress, it should be apparent that they are here to stay and therefore this is something that we should take advantage of.

Windus replies. That’s right. The final rules, Regulation Crowdfunding, permit individuals to invest in securities-based crowdfunding transactions subject to certain investment limits.  The rules also limit the amount of money an issuer can raise using the crowdfunding exemption, impose disclosure requirements on issuers for certain information about their business and securities offering, and create a regulatory framework for the broker-dealers and funding portals that facilitate the crowdfunding transactions. 

Jeff asks Windus: What are some of the highlights of the recommended final rules?

Windus replies: The recommended rules would, among other things, enable individuals to purchase securities in crowdfunding offerings subject to certain limits, require companies to disclose certain information about their business and securities offering, and create a regulatory framework for the intermediaries facilitating crowdfunding transactions.  

Windus continues: More specifically, the recommended rules would: 

  • Permit a company to raise a maximum aggregate amount of $1 million through crowdfunding offerings in a 12-month period;
  • Permit individual investors, over a 12-month period, to invest in the aggregate across all crowdfunding offerings up to:
    • If either their annual income or net worth is less than $100,000, than the greater of:
      • $2,000 or
      • 5 percent of the lesser of their annual income or net worth.
    • If both their annual income and net worth are equal to or more than $100,000, 10 percent of the lesser of their annual income or net worth; and 
  • During the 12-month period, the aggregate amount of securities sold to an investor through all crowdfunding offerings may not exceed $100,000.

Jeff asks Windus: Do these rules do anything to with regards to what a company must disclose when seeking crowdfunding?

Windus replies: Companies that rely on the recommended rules to conduct a crowdfunding offering must file certain information with the Commission and provide this information to investors and the intermediary facilitating the offering, including among other things, to disclose: 

  • The price to the public of the securities or the method for determining the price, the target offering amount, the deadline to reach the target offering amount, and whether the company will accept investments in excess of the target offering amount;
  • A discussion of the company’s financial condition;
  • Financial statements of the company that, depending on the amount offered and sold during a 12-month period, are accompanied by information from the company’s tax returns, reviewed by an independent public accountant, or audited by an independent auditor.  A company offering more than $500,000 but not more than $1 million of securities relying on these rules for the first time would be permitted to provide reviewed rather than audited financial statements, unless financial statements of the company are available that have been audited by an independent auditor;
  • A description of the business and the use of proceeds from the offering;
  • Information about officers and directors as well as owners of 20% or more of the company; and
  • Certain related-party transactions.

In addition, companies relying on the crowdfunding exemption would be required to file an annual report with the Commission and provide it to investors.

Jeff asks Windus: Did the rules establish a marketplace where crowdfunding would occur?

Windus replies: Yes. A funding portal would be required to register with the Commission on new Forum Funding Portal, and become a member of a national securities association (currently, FINRA).  A company relying on the rules would be required to conduct its offering exclusively through one intermediary platform at a time. 

Windus continues [Time permitting]: The recommended rules would require intermediaries to, among other things:

  • Provide investors with educational materials that explain, among other things, the process for investing on the platform, the types of securities being offered and information a company must provide to investors, resale restrictions, and investment limits;
  • Take certain measures to reduce the risk of fraud, including having a reasonable basis for believing that a company complies with Regulation Crowdfunding and that the company has established means to keep accurate records of securities holders;
  • Make information that a company is required to disclose available to the public on its platform throughout the offering period and for a minimum of 21 days before any security may be sold in the offering;
  • Provide communication channels to permit discussions about offerings on the platform;
  • Provide disclosure to investors about the compensation the intermediary receives;
  • Accept an investment commitment from an investor only after that investor has opened an account;
  • Have a reasonable basis for believing an investor complies with the investment limitations;
  • Provide investors notices once they have made investment commitments and confirmations at or before completion of a transaction;
  • Comply with maintenance and transmission of funds requirements; and
  • Comply with completion, cancellation and reconfirmation of offerings requirements.

Jeff asks: When do these new rules come into effect?

Windus replies: The new crowdfunding rules and forms will be effective 180 days after they are published in the Federal Register. The forms enabling funding portals to register with the Commission will be effective January 29, 2016. 

Jeff states: So with the 2015 tax year coming to a close, this is another thing we should keep in mind. Well it’s time for a break but stay tuned because we are going to tell you about the big changes that are coming for how you claim social security benefits.

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.

Big Changes Are Coming For How You Claim Social Security Benefits!

Jeff states: Windus you have spent ages telling clients how to elect social security in order to maximize their benefits and now all of this is likely going to change.

Windus states: That’s right. It looks like new rules will be coming into effect. https://www.kitces.com/blog/congress-ends-file-and-suspend-restricted-application-and-other-voluntary-suspension-social-security-strategies/

Windus continues: Which makes even more sense that you should take advantage of my offer … 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.

Jeff asks Windus: So please go on and tell our listeners what happened.

Windus replies:

File and Suspend Method of Claiming Social Security Benefits to Be Eliminated:  The Bipartisan Budget Act of 2015 (H.R. 1314—the Act), signed by President Obama on November 2, 2015, eliminates the file and suspend method, a popular strategy used by married couples to maximize their lifetime Social Security benefits. Under this approach, a higher earning spouse claims benefits at his full retirement age (currently age 66) but suspends the benefits until a later date (e.g., at age 70 or sooner, if desired), allowing the Social Security credits to continue to grow. The lower earning spouse claims benefits based on the higher earning spouse’s earning record, which are more than the benefits based on his or her own earnings record. In a provision labeled “closure of unintended loopholes,” the Act effectively eliminates this opportunity for claims filed after April 30, 2016 (180 days after enactment). Now for those who’ve been using this method or other eligible individuals who file to claim benefits under this method within the next 180 days, you will not be affected. [Bipartisan Budget Act of 2015, Section 831(b)]

Restricted Application Method of Claiming Social Security Benefits to Be Eliminated:  The Bipartisan Budget Act of 2015 (the Act) also eliminates the restricted application method (sometimes called the claim some now, claim more later method) for claiming Social Security benefits by married couples. Under this strategy, a spouse reaching full retirement age who is eligible for both a spousal benefit (based on his or her spouse’s earnings) and a retirement benefit (based on his or her own earnings) could file a restricted application for spousal benefits only, then delay applying for retirement benefits based on his or her own earnings record (up until age 70). This would allow the Social Security credits to continue to grow. For those who turn 62 after 2015, the Act eliminates the ability to file a restricted application for only spousal benefits. Note that individuals who are age 62 or older in 2015 should still be able to use the restricted application method for spousal benefits only upon reaching full retirement age. [Bipartisan Budget Act of 2015, Section 831(a)]

Jeff asks Windus: So is this another example of how the government giveth and the government taketh away?

Windus: It sure is. You see when Congress passed the Senior Citizens Freedom to Work Act in 2000, it introduced a new concept called “voluntary suspension” of benefits, allowing those who had already started Social Security benefits to stop their payments and earn delayed retirement credits. In the process, however, the new voluntary suspension rules unleashed several additional Social Security claiming strategies, including the “claim now, claim more later” tactics I just described which the recent Budget Act will be eliminating.

Jeff states: So by Congress closing these loopholes they are effectively reducing future social security benefits that would have to be paid out thus putting less pressure on the budget and extending the solvency of the Social Security Trust Fund.

Windus replies: Ultimately, that is the effect if these provisions.

Perhaps most notable for the new Social Security crackdown, though, is the effective date for the rules. While the new limits to Restricted Application will not apply to anyone who is already age 62 or older in 2015, the new crackdown will kick in April 30, 2016, grandfathering anyone currently going through file-and-suspend but limiting anyone who tries to suspend benefits thereafter. Beyond that point, anyone who suspends will find that no benefits will be payable until the individual who suspended chooses to reinstate benefits (either to restart them now, or finish waiting until age 70).

Windus continues: Notably, the crackdown on these voluntary-suspension-related tactics doesn’t actually kill the rules for voluntary suspension itself, which remains on the books. But now, aside from a few esoteric scenarios (including the recent Hold Harmless Medicare claiming strategy), voluntary suspension will be relegated to those unique scenarios where someone truly started benefits early, has had a change of mind and wants to stop them (after a year has passed and it’s already too late to withdraw the application) to earn delayed retirement credits, with the plans of starting benefits again at age 70. Of course, ideally those who wish to delay benefits for the value of earning delayed retirement credits will simply delay from the start to maximize the benefit, which makes voluntary suspension a moot point altogether for most retirees in the future.

Jeff asks Windus: Is there a dollar amount that you can associate with these changes?

Windus replies: Well the maximum benefit that a spouse could claim under File and Suspend was limited to 50% of a worker’s Primary Insurance Amount (PIA), which would be 50% x $2,787.80 = $1,393.90/month, or about $16,700 per year. And at the most, the strategy would only unlock four years’ worth of benefits (from when the retiree reached full retirement age at 66, until age 70 when benefits would have started anyway). Nonetheless, the new rules could cut off as much as about $67,000 of benefits over a 4-year time window for those who planned to engage in File-and-Suspend and as much as 3.5 years of benefits for those who were already receiving File-and-Suspend-based benefits.

Jeff asks Windus: But I would figure that when and how you claim social security benefits is just one aspect of what you would consider when making a retirement plan with a client.

Windus replies with her comments on this.

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.

Stay tuned because after the break we are going to tell you some top 2015 year-end tax planning tips you need to be aware of.

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.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

2015 Year-End Tax Planning for Individuals

Jeff states: Well here we are in November and while many people are now thinking about the year-end holiday celebrations, you should also be thinking about year-end tax planning to perhaps save on taxes and use those tax savings instead on your holiday celebrations and gift giving. So in this segment we are going to discuss some tax strategies that you may want to consider.

Jeff asks Amy: Why is it important to know what tax rate or tax bracket one is in?

Amy replies: Well for one thing, the higher the tax bracket you are in, the more valuable and greater tax benefit you can secure with proper tax planning.

Amy continues: For 2015, the top tax rate of 39.6% will apply to incomes over $413,201 (single), $464,851 (married filing jointly and surviving spouse), $232,426 (married filing separately), and $439,000 (heads of households). However, high-income taxpayers are also subject to the 3.8% net investment income tax and/or the 0.9% Medicare surtax. If a taxpayer is subject to one or both of these additional taxes, there are certain actions he can take to mitigate the impact of these additional taxes.

Windus asks: I am a big proponent of funding for retirement, what tax considerations should one be aware in making retirement plan contributions for 2015?

Amy replies: Fully funding a company 401(k) with pre-tax dollars will reduce current year taxes, as well as increase retirement savings. For 2015, the maximum 401(k) contribution taxpayers can make with pre-tax earnings is $18,000. For taxpayers 50 or older, that amount increases to $24,000. For taxpayers with a SIMPLE 401(k), the maximum pre-tax contribution for 2015 is $12,500. That amount increases to $15,500 for taxpayers age 50 or older.

Amy continues: If certain requirements are met, contributions to an individual retirement account (IRA) may be deductible. For taxpayers under 50, the maximum contribution amount for 2015 is $5,500. For taxpayers 50 or older but less than age 70 1/2, the maximum contribution amount is $6,500. Contributions exceeding the maximum amount are subject to a 6% excise tax. Even if a client is not eligible to deduct contributions, contributing after-tax money to an IRA may be advantageous because it will allow the client to later convert that traditional IRA to a Roth IRA. Qualified withdrawals from a Roth IRA, including earnings, are free of tax, while earnings on a traditional IRA are taxable when withdrawn.

Windus asks Amy: Now if a client already has a traditional IRA how would it work if she converted it to a Roth IRA?

Amy replies: The client will have to pay tax on the amount converted as ordinary income, but subsequent earnings will be free of tax. And if the client has a traditional 401(k), 403(b), or 457 plan that includes after-tax contributions, a new rule allows her to generally rollover these after-tax amounts to a Roth IRA with no tax consequences. A rollover of a SIMPLE 401(k) into a Roth IRA may also be available. As with all tax rules, there are qualifications that apply to these rollovers that practitioners should discuss before their clients take any actions.

Jeff states: PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Jeff states: Not all individuals are aware that they could be hit with an additional 3.8% tax on certain net investment income. Amy please tell our listeners about this.

Amy replies: That’s right. A 3.8% tax applies to certain net investment income of individuals with income above a threshold amount. The threshold amounts are $250,000 (married filing jointly and qualifying widow(er) with dependent child), $200,000 (single and head of household), and $125,000 (married filing separately). In general, investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, non-qualified annuities, and income from businesses involved in trading of financial instruments or commodities. Thus, while the top tax rate for qualified dividend income is generally 20%, the top rate on such income increases to 23.8% for a taxpayer subject to the net investment income tax.

Windus asks: Is there any way to avoid this?

Amy replies: One way around the increased tax rate on dividend income is to invest instead in tax-exempt state and municipal bonds. The bonds generate tax-exempt income which isn’t subject to the net investment income tax and is not included in determining if taxpayers meet the threshold amount for being subject to the net investment income tax. Note, however, that such income may be subject to state taxes and the alternative minimum tax.

Windus asks: Does this investment income tax also apply to someone who owns their own business?

Amy replies: Only if that trade or business constitute a passive activity. An activity is not generally considered passive if the taxpayer materially participates in the activity. If a client is engaged in an activity which may be considered passive and thus has the potential to trigger the net investment income tax, steps should be considered to make this investment active to avoid this tax.

Jeff states: Not all individuals are aware that they could be hit with an additional 0.9% tax on their wages and self-employment income. Amy please tell our listeners about this.

Amy replies: That’s right. An additional Medicare tax of 0.9% is imposed on wages and self-employment income in excess of a threshold amount. The threshold amount is $250,000 in the case of a joint return or surviving spouse, $125,000 in the case of a married individual filing a separate return, and $200,000 in any other case. Employers are required to withhold the extra .9% once an individual’s wages pass $200,000. No deduction is allowed for the additional tax. However, married taxpayers may be due a credit if, for example, they use the married filing jointly status, one spouse had wages over $200,000, but joint wages are less than $250,000. On the flip side, married taxpayers may owe the additional .9% if they file jointly and each made under $200,000 of wages but together made over $250,000 in wages.

Jeff states: Now sometimes getting to aggressive with tax deductions could backfire and you can end up owing more in tax. Amy please explain how this could happen.

Amy replies: That would be true where you are subject to the Alternative Minimum Tax. Because many deductions taken for regular tax purposes are not allowed for alternative minimum tax (AMT) purposes, individuals may be subject to the AMT if he or she has excessive deductions. Deductions which typically throw taxpayers into an AMT situation include high state and local taxes, interest on home equity loans, a high number of dependent deductions, and a large amount of miscellaneous itemized deductions. For 2015, the AMT rate is 26% on alternative minimum taxable income (AMTI) up to $185,400 ($92,700 for married filing separately) and 28% on AMTI over that amount. Taxpayers are allowed an AMT exemption depending on filing status, but the exemption is phased out for taxpayer’s above a certain income level.

Since the calculation of the AMT begins with adjusted gross income, lowering your adjusted gross income by maximizing contributions to a tax-deferred retirement plan (e.g., 401(k)) or tax-deferred health savings account may be appropriate. Additionally, if you use your home for business, related expenses (e.g., a portion of the property taxes, mortgage interest, etc.) allocable to Schedule C will also reduce adjusted gross income.

Jeff asks: Amy is there still any legislation that Congress may enact before the end of the year that we need to keep a look out for?

Amy replies: Yes, additional tax benefits may be available if Congress passes Tax Extender legislation introduced in the Senate last August. That legislation would retroactively extend many tax breaks that expired in 2014. If it passes, the bill will extend various tax breaks through 2016 that include the following:

  • the exclusion from income of imputed income from the discharge of acquisition indebtedness for a principal residence;
  • the tax deduction for mortgage insurance premiums;
  • the tax deduction for state and local general sales taxes in lieu of state and local income taxes;
  • the deduction from gross income for qualified tuition and related expenses; and
  • the tax-free distributions from IRAs for charitable purposes.

Windus asks: Are there any other things to consider before the end of the year?

Amy replies: There are and we call these the “big-picture items”.

Accelerating Income into 2015 – Depending on the client’s projected income for 2016, it may make sense to accelerate income into 2015 if the client expects 2016 income to be significantly higher.

Deferring Income into 2016 – There are also scenarios (for example, if the client thinks that his or her income will decrease substantially next year) in which it might make sense to defer income into 2016 or later years.

Deferring Deductions into 2016 – If a client anticipates a substantial increase in taxable income, practitioners may want to explore pushing deductions into 2016

Accelerating Deductions into 2015 – If a client expects his or her income to decrease next year, accelerating deductions into the current year can offset the higher income this year.

Jeff states: So it really is important that you address your year-end tax planning now and that is where we can help. PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

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.

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.

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 Patricia from San Diego: I am interested in investing in a particular company that has corporate bonds, preferred stock and common stock. What are the differences between each of those types of securities?

Answer: Common stocks are ownership interests in a publicly traded business, and owners of it are called shareholders. If a company liquidates or goes bankrupt, common stock shareholders likely won’t see any equity distribution.

Preferred stocks are less volatile than common stocks, and pay dividends at a regular interval. However, with reduced volatility comes reduced reward, and there is very little chance that a preferred stock will ever produce large capital gains for an investor. On the plus side, if a company becomes insolvent, preferred stockholders are entitled to assets before common stockholders.

Corporate bonds are debts issued by companies. When you buy a bond, you are lending money to the corporation that issued it. The corporation promises to return your money, or principal, on a specified maturity date. Until that time, it also pays you a stated rate of interest, usually semiannually. The interest payments you receive from corporate bonds are taxable. Unlike stocks, bonds do not give you an ownership interest in the issuing corporation. If a company becomes insolvent, bondholders are entitled to assets before any stockholders.

Question from Jose from Chula Vista: My university requires each incoming freshman to come to school with their own computer. Is there any way to deduct the cost of the computer from my tax liability?

Answer: Autos, Computers and other Electronic Devices fall into a category that the IRS calls “Listed Property”. With Listed Property, you not only have to document the cost of the property but also document the business use. The cost of a personal computer is generally a personal expense that is not deductible. However, you may be able to claim an American opportunity tax credit if you are required to have a computer to enroll or attend your university.

The American Opportunity Tax Credit is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40% of any remaining amount of the credit (up to $1,000) refunded to you.

Be on the look-out for a Form 1098-T Tuition Statement, from your school by January 31. This statement helps you figure your credit. The form will have an amount in either box 1 or 2 to show the amounts received or billed during the year. But, this amount may not be the amount you can claim as it will not include qualified education expenses you paid such as buying that personal computer.

To claim the American Opportunity Tax Credit, you must complete the Form 8863 and attach the completed form to your Form 1040.

Jeff PLUG: The Law Offices Of Jeffrey B. Kahn 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.

Jeff states: Well we are reaching the end of our show.

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

Windus states: Have a great day everyone!

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses New Budget Deal, Federal Reserve and IRS Tax Saving Tips On ESPN Radio – October 30, 2015 Show

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Topics Covered:

  1. House Passes Two-Year Budget Deal
  2. Fed Stays Rates But Keeps December Rate Hike in Play
  3. How to make Halloween candy and costumes deductible.
  4. Questions from our listeners:
  • What are the most important indicators of a stock’s health?
  • The IRS corrected my return and sent me an additional refund. Does this mean I am also entitled to an additional refund on my state tax return?
  • The IRS audited my return and charged me with additional tax, interest and penalties. Does this mean I will also owe additional monies on my state tax return?

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

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

Good afternoon! 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: Fed Stays Rates But Keeps December Rate Hike in Play

Windus states:

Also coming up is:

Segment 3 material: How to make Halloween candy and costumes deductible.

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

Jeff starts chit chat with Windus.

So for the top story:

House Passes Two-Year Budget Deal

An article announcing this from the Wall Street Journal brought up some interesting points. http://on.wsj.com/1GxPTuY

Jeff continues: While the legislation must still be approved by Senate which by all accounts it likely should, Congress has once again succeeded in avoiding a government shut-down that could of happened as early as next week.

Windus states: The agreement has drawn GOP opposition in both chambers and on the presidential campaign trail from conservatives upset that it raises spending by $80 billion through September 2017 and extends the government’s borrowing authority through mid-March 2017.

Windus continues: The Article included a quote the House Freedom Caucus, a group of conservatives who opposed the bill, calling it a “fiscal monstrosity” and objecting to secret talks between top lawmakers and President Barack Obama that produced it.

Jeff states: But senior Republicans said the agreement was preferable to the alternative: raising the debt ceiling with no policy strings attached, known as a “clean” increase. Our new speaker of the house, Rep. Paul Ryan (R., Wis.), said he would support it despite his objections over the last-minute deal-making with the administration. The bill passed with the support of 79 Republicans and 187 Democrats.

Jeff continues: The agreement lifts federal spending above limits established in a 2011 law that have been in effect since 2013, known as the sequester. It would increase spending by $50 billion in fiscal-year 2016 and $30 billion in fiscal 2017, evenly split between military and domestic spending. The big take-away here is that the stick of “sequester” is gone for two years.

Windus states: The legislation also incorporates fixes to two federal safety-net programs lawmakers wanted to address well before next year’s elections. The agreement would extend the solvency of the Social Security program used to help support disabled people. The deal also would prevent an expected 52% increase in premiums for roughly 30% of the people enrolled in Medicare Part B, which covers outpatient care such as doctor visits.

Here’s What’s In the New Budget and Debt Ceiling Deal

http://blogs.wsj.com/washwire/2015/10/27/heres-whats-in-the-new-budget-and-debt-ceiling-deal/?mod=capitaljournalrelatedbox

Jeff states: So Windus let’s do a rundown of the key provisions of the agreement.

[Jeff to read off an item followed by Windus discussing the details.]

Debt Limit Increase

The agreement effectively raises the debt limit, which had been suspended until last March. The Treasury Department has been using emergency cash-management measures to remain below the $18.1 trillion borrowing ceiling since then. It says those steps will be exhausted by Tuesday November 3rd, leaving the U.S. very close to running out of cash and being unable to pay its bills.

The agreement would again suspend the debt limit until March 15, 2017. After that, the debt limit would be reset to include any borrowing done before then. Remember this legislation suspended the “sequester” for two years so Congress now can merely press the reset button and there now is that much more debt accumulated by the U.S. Raising the debt limit doesn’t approve new spending programs, but instead allows the government to pay for things that Congress has already agreed to spend money on.

Budget Agreement

The deal sets out the top-line numbers that lawmakers will use later this year to round out spending bills before government funding expires on December 11th. It also establishes overall funding levels through Sept. 30, 2017. It adheres to two principles that President Barack Obama laid out earlier this year: it boosts spending above sequester caps previously set by Congress, and it ensures that spending rises equally for defense and domestic budgets. Discretionary spending will increase $50 billion in the budget year that began October 1st and $30 billion in the following fiscal year.

It also boosts military funding, a top priority of Republicans. There’s an additional $16 billion in each of the next two years for the Pentagon and State Department for war funds that aren’t subject to the sequester.

Settling the Tab

Jeff asks: How will the government pay for this extra spending?

Windus replies: Most of the $80 billion in higher discretionary spending for the next two years is covered by various revenue increases and spending cuts that don’t materialize for several more years. For example, discretionary spending in 2025 will be cut $14 billion from current levels, and certain cost cuts for Medicare are extended two years from current law, through 2024.

Jeff states: Since budgets are formulated by looking forward ten years, Congress justifies an increase in spending now because in the 9th and 10th years of this forecast, Congress is cutting spending.

Jeff continues: Although we know that just as easy as it was for Congress to suspend sequester for two years, it is also could be just as easy for Congress to delay or avoid spending cuts in 2024 and 2025.

Windus states: The budget reduces subsidies on crop insurance purchased by farmers, which could save $3 billion – but with the unusual weather patterns we have been facing it seems that crop insurance will be more important.

Windus continues: The budget also authorizes the sale of oil from the Strategic Petroleum Reserve, which could raise $5 billion over the next 10 years – but with oil prices at an all-time low and supply plentiful that oil would likely be sold at a loss.

Jeff states: The budget also makes it easier for the Internal Revenue Service to audit large partnerships, including private-equity firms and hedge funds, by updating a 33-year-old law that sets the rules for partnership audits and requires the IRS to pass additional taxes to each of the partners.

What Isn’t Included

Jeff states: The budget doesn’t address a few other outstanding pieces of business facing Congress, including refilling the highway trust fund, which could exhaust its latest short-term extension this winter, and reauthorizing the Export-Import Bank, a priority of most Democrats and dozens of Republicans. It also doesn’t resolve a series of temporary tax provisions that businesses and households have come to rely on and which have regularly been extended.

Well it’s time for a break but stay tuned because when we come back we will talk about the Fed’s Decision To Stay Interest Rates.

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.

Federal Reserve Stays Rates And Keeps December Rate Hike in Play

Jeff states: And before we hear Windus’ comments on this, Windus has a special offer to tell our listeners:

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.

Windus continues: In an article published by the Wall Street Journal Federal Reserve officials explicitly said they might raise short-term interest rates in December but omitted any mention of concern over the direction of overseas markets.  http://on.wsj.com/1GxNVe0

Windus continues: Top Fed officials have been saying for months they believed the economy was nearly strong enough to tolerate an increase in the benchmark short-term rate from near zero, where it has been since December 2008. But they have hesitated to move.

Jeff asks: I know that over the last few months that you have been covering the Federal Reserve, you and many others figured that by now there would have been some movement up in interest rates. What happened?

Windus replies: Well you should recall that last September the Fed pointed to worries about turbulence in financial markets and uncertainties about growth overseas—particularly in China—as reasons to stay put.

Windus continues: Since then market and international developments have turned in the Fed’s favor in recent weeks. The People’s Bank of China last week cut short-term lending rates in an effort to boost growth in the world’s second-largest economy. European Central Bank President Mario Draghi suggested he might extend a bond-purchase program in an effort to stimulate his region’s economic growth rate.

Windus continues: These moves sparked a global stock-market rally and could support world-wide growth. The Dow is up 6% since the Fed met last month; a sign financial-market stress has dissipated.

Jeff asks: So with this recent perception that global things could be getting better, where does that put the Fed?

Windus replies: The Fed responded Wednesday by playing down its earlier-stated concerns. Officials struck from their policy statement a sentence introduced in September that pointed to market turbulence and global developments as potential restraints on U.S. economic activity. As those concerns recede, the Fed has fewer impediments standing in the way of a rate increase.

Windus continues: Officials pointed specifically in the policy statement to their Dec. 15-16 meeting as a moment when they might act on rates. Individual officials have signaled before that they expected to move before year-end, but the Fed’s policy-making committee hadn’t previously pointed so explicitly in an official statement to the potential timing of a rate increase.

Windus continues: You see that inflation has been persistently low; in part because the Fed has already delayed several times; and in part because economic data appeared to take a turn for the worse since September. Most notably, the Labor Department reported early this month that hiring slowed in September and was less than previously reported in August and July.

Jeff asks: Now Windus I know that you cannot predict the future on when rates will raise and by how much, but is there anything coming up that the Fed may be looking at that could impact their decision making?

Windus replies: Officials repeat regularly that their decision is “data-dependent.” The Fed will see two more monthly jobs reports—including one next week—before officials need to decide whether rates should be increased in December.

In so with the certainty that at some point interest rates will increase, you need to be prepared …

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.

Jeff states: So I trust that our listeners are getting ready for Halloween. Well, stay tuned because after the break we are going to talk about how to make Halloween candy and costumes tax deductible.

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.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

How to make Halloween candy and costumes deductible

So Amy, with Halloween coming up, I understand that you have some ideas on how to make Halloween candy tax deductible.

Amy replies: It is true. You can in fact deduct Halloween candy if you figure out a way to make it business related. The IRS doesn’t say a lot about this topic because they don’t want to give you “permission” to deduct these items, but they also have not specifically stated that you cannot deduct Halloween candy.

Windus asks, so how can you deduct those over-priced bags of snack size chocolates?

Amy replies – will I have five different ways!

1. Make a promotion out of it. Attach your business card or a promotional flyer to packets of M&M’s and voila! Deductible.

2. There are many companies who will print candy wrappers with your logo on it. An even better and more advanced way to promote your business and still have something for trick-or-treaters.

3. Send a box of candy to potential or existing clients during October. This promotes your business and would likely not be questioned as a business deduction.

4. Donate any leftover candy to the US troops. “Charitable organizations with 501(3)(c) status like Operation Gratitude (EIN 20-0103575) and Soldiers’ Angels (EIN 20-0583415) collect leftover Halloween candy to include in care packages for soldiers. They are two of many 501(c)(3) organizations on the IRS-approved list to donate tax deductible charitable goods. Always be sure to check the IRS list before claiming your donations are tax deductible, as status can change.”

5. Make it a party. You can deduct a portion of a Halloween party if the party is to conduct or promote business. Typically this looks like an open house of some sort where you mingle with current and potential clients, play a few Halloween games, give out candy and treats, and discuss business. The IRS does not specify how much time you must spend discussing the business to claim a deduction but you must invite people that you do business with or are looking to do business with.

Jeff says: Amy those are some great ideas.

PLUG: You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. We 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 our 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.

Jeff says: Now when I think of Halloween, I look forward to seeing all of the different costumes that people wear. Some are very extravagant and I am sure pricey. And for some they would like to know how that can be deductible. Since costumes fall under the category of clothing or uniforms, Amy please explain what the tax law requires.

Amy says: The tax law requires three elements for clothing useful only in the business environment to be deductible. They are:

  1. The clothing is required or essential in the taxpayer’s employment;
  2. The clothing is not suitable for general or personal wear; and
  3. The clothing is not so worn for general or personal wear.

If these three requirements are satisfied, not only is the cost of the closing deductible but also its upkeep.

Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc.).  Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear.

Windus asks: How about a white cap, white shirt or white jacket, white bib overalls, and standard work shoes a painter is required by his union to wear on the job and there is nothing on any of the clothes that indicate the company this person works for? 

Amy replies: No that would not be deductible because it is not distinctive.  Similarly, blue work clothes worn by a welder are not deductible even if the foreman requires them.  However, required protective clothing like safety boots, safety glasses, hard hats, and work gloves are deductible.

Amy continues: But consider this – by adding the company’s logo on the clothing will make it deductible even if it can be worn outside the scope of employment because you are advertising your company. In that case you are a walking billboard.

Jeff asks: We have a large military presence here in San Diego County. How about Military Uniforms?  

Amy replies: You generally cannot deduct uniforms if you are on full-time active duty in the armed forces.  However, reservists can deduct the unreimbursed cost of uniforms if military regulations restrict wearing it except on duty.  Still, you must reduce your deduction by any nontaxable allowance you receive.  If local military rules don’t allow wearing fatigues off duty, you can deduct the amount by which your uniform cost exceeds your uniform allowance. 

Windus asks: Given today’s dot.com and casual era environment, people are not coming to work as dressed up as they used to. So could lawyers and others argue their suits are just like uniforms and therefore ought to be tax deductible?

Amy replies:  No. Where business clothes are suitable for general wear, there’s no deduction even if these particular clothes would not have been purchased but for the employment. 

Jeff asks: Being on the radio, our listeners cannot see what we are wearing but would being on TV be any different?  

Amy replies: While these tax rules are pretty circumscribed, they are also intensively factual.  Someone is always pushing the tax envelope.  Such was the case with an Ohio TV news anchor, Anietra Y. Hamper. She was claiming approximately $20,000 a year in 2005, 2006, 2007 and 2008 in clothing expense that included not only what she wore for each broadcast but also lounge wear, a robe, sportswear, lingerie, thong underwear, an Ohio State jersey, jewelry, running shoes, dry cleaning, business gifts, cable TV, contact lenses, cosmetics, gym memberships, haircuts, Internet access, self-defense classes, and her subscriptions to Cosmo, Glamour, Newsweek, and Nickelodeon.  Her argument was that as a TV anchor she was required to maintain a specified appearance described in the Women’s Wardrobe Guidelines.  These guidelines say the “ideal in selecting an outfit for on-air use should be the selection of ‘standard business wear’, typical of that which one might wear on any business day in a normal office setting anywhere in the USA.”

Windus asks: Was that enough? 

Amy replies: No.  Where business clothes are suitable for general wear, there’s no deduction even if these particular clothes would not have been purchased but for the employment.  For this TV anchor, that was no help.  She claimed the requirement to dress conservatively made the clothing unsuitable for everyday use, and that’s how she treated it.  She wore the business clothing only at work and even kept it separate from her personal clothing.  But the IRS and Tax Court denied her wardrobe deductions.  And they added penalties.

Jeff asks: Well in the history of tax law is there anyone who prevailed in getting their costumes deducted?

Amy replies: Well Jeff you remember the Swedish disco group ABBA?

Jeff replies, I sure do – I know there songs well. Maybe we can get our engineer to play one for our break.

Amy continues: Well according to ABBA: The Official Photo Book, released to commemorate the 40th anniversary of the group career-making Eurovision victory for Waterloo, the Swedish foursome adopted their outlandish dressing style in order to ensure they could deduct the cost of their costumes under Swedish tax code. Like U.S. tax law, Swedish laws allowed work wear to be tax deductible so long as it was demonstrably apparel that couldn’t be worn on the street – which, with its garish coloring and liberal use of sparkle, ABBA’s certainly was.

PLUG: Now while you will find no one on the kahntaxlaw team wearing outrageous costumes you should know that 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.

Thanks Amy for calling into the show. Amy says Thanks for having me.

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.

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.

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 Stephanie of Carlsbad: What are the most important indicators of a stock’s health?

Answer: Whether a stock is “healthy” often relies on your objective. If you seek high returns and high risk, you’ll want stocks with a relatively large price range over a short time period. If you are looking for less risk and moderate growth, stick to stocks whose price ranges over the past 52 weeks are narrow. All publicly traded companies issue quarterly earnings reports to the Securities and Exchange Commission (SEC). You can find a few key pieces of data in the reports to evaluate a stock’s health:

  • Earnings per share (or EPS): Ratio of total earnings divided by the total investor shares. You can compare stocks with this number.
  • Price/Earnings ratio (P/E): What customers are paying for a dollar of the company’s earnings. There is no magic number to look for, though according to the Financial Industry Regulatory Authority, the long-term average number has been about 15. A stock with a high P/E might mean that the future looks bright — but it has to work harder to keep the performance. A low P/E might mean that a price increase is on the way — or that a company is in trouble.

You also need to ask some commonsense questions, like whether the company’s products and industry are in demand, what its past performance is like, and how much debt it carries. All of these issues are addressed in a company’s annual financial report, which is usually available via its website in a section labelled for investors.

Question from Sergio of San Diego: The IRS corrected my return and sent me an additional refund. Does this mean I am also entitled to an additional refund on my state tax return?

Answer: Whether you are entitled to an additional state tax refund depends on the change that was made to your federal return. For example, if you used the wrong line on the tax tables to figure your tax on your federal tax return, this may not affect your state tax return. However, if the change was made to the amount of your taxable income, it may affect your State tax return.

Question from Steven in Los Angeles: The IRS audited my return and charged me with additional tax, interest and penalties. Does this mean I will also owe additional monies on my state tax return?

Answer: Like the previous question, whether you need to amend your State income tax return depends on the change that was made to your federal return. Keep in mind that the results of the audit do get reported to your State. If the change does require a State amended income tax return, you have up to six months after the close of the IRS audit to file the State amended income tax return. If you do not file the State amended income tax return, the State will use the information it received from the IRS audit to generate a tax bill that could include penalties and a greater amount of tax due than if you filed a State amended income tax return. So that is why we recommend that you should prepare and file a State amended income tax return promptly after the close of the IRS audit.

Jeff 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.

Jeff states: Well we are reaching the end of our show.

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

Windus states: Have a great day everyone and Happy Halloween!