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

Topics Covered:

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

2. Top Housing Trends Coming Your Way in 2016.

3. Valuable Tax Breaks Of The Past Are Extended To The Future.

4. 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!