Investing In An Election Year, the IRS and Tax Tips To Save You Money On ESPN Radio – March 4, 2016 Show

Topics Covered:

1. One Caveat, Two Predictions: Issues that Could Be Affected by the Elections Outcome.

2. Myth-Busting: Clearing Common Misconceptions Off the Table.

3. Hot Tax Tips To Save You Money!

4. Questions from our listeners:

  • I am about to turn 62, and I am thinking of electing my SS benefit. Is this the best thing to do?
  • My family is originally from Cuba and I am interested in investing in that country now that the embargo has been lifted. What do I need to know when it comes to U.S. taxes?

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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.

Gary states:

And this is Licensed Financial Planner, Gary Sussman 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!

Gary 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: Myth-Busting: Clearing Common Misconceptions Off the Table.

Gary states:

Also coming up is:

Segment 3 material: Hot tax tips to save you money!

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

Jeff starts chit chat with Gary.

Jeff states: So for today’s top story:

One Caveat, Two Predictions: Issues that Could Be Affected by the Elections Outcome.

Credit to: Webman, Jerry Ph.D., CFA; Everything Investors Need to Know—and Should Ignore—About the Upcoming Elections, Election 2016 in Perspective, OppenheimerFunds.

Gary starts: Forecasting is not an exact science. It would be easier to predict the weather over a year from now than to predict who’s going to win the next presidential election. That being said, it’s still plausible to form practical expectations about how the November Elections will pan out.

Jeff continues: Let’s begin with prediction number one, shall we? Oppenheimer is predicting the Republican Party will likely retain control of the House of Representatives. At 247 Republican seats versus 188 Democrat seats, it’s difficult to see, but not improbable, that Democrats could win control of the House.

Gary replies: It sure looks that way, Jeff. Every ten years a census is conducted resulting in how the House’s 435 seats are allocated amongst the 50 states, according to the U.S. Constitution. The most recent census was conducted in 2010, resulting in political victories for the Republican Party.

Jeff continues: Even though all seats are up for re-election this year, we can likely be seeing an awful lot of red in coming years leading into the 2020 election. The odds of Democrats being able to win enough seats—218—to take over the majority are dismal at best, based on current projections.

Gary states: Which brings us to the number two prediction. Regardless of who controls the Senate, the next President isn’t likely to have the Filibuster-Proof Upper House. Republicans currently have control of the Senate with fifty-four seats, with Democrats occupying forty-four and Independents a meager two seats.

Jeff replies: In order to take the majority, Democrats have to gain an additional five Senate seats in the 100-member Upper House. Fifty-one isn’t the magic number though, sixty is.

Gary continues: With 34 total seats up for reelection this year, we could possibly be counting Senate seats into the wee hours of the morning on November 9th, with prospects of the Democrats realizing their fifty-one seats. Although, at this point the chance of that happening is doubtful.

Jeff states: Regardless of which party hold the House or the Senate though, there are six truths that won’t be affected by the elections outcome.

Gary replies: The first truth leads us to the understanding that gridlock doesn’t mean nothing gets done. Gridlock doesn’t equate inaction, it only curtails the volume of legislation that can be passed during a point when “the White House doesn’t have a majority in the House of Representatives and a filibuster-proof majority in the Senate”.

Jeff continues: Even during a point when experts remained out-spoken on their view that the extent of hostility between Democrats and Republicans was leading to stalemates, progress was being made. The Federal debt burden is gradually becoming more affordable.

Gary states: Progress on a Budget Deficit Reduction during a period of gridlock resulted in the Federal Budget Deficit being 10.8% of GDP for the 2009 fiscal year. The Budget Deficit came in at 2.3% as of late September 2015.

Jeff states: Number two on Oppenheimer’s list of truths reads, changes in Washington don’t typically come all at once but in increments. This is with few exceptions of course, like ObamaCare or Dodd-Frank.

Gary continues: The United States tends to change policy in small steps, rather than in leaps and bounds. Debates over energy, transportation and immigration policy have long been the top discussed issues, however for decades, we have seen few substantial changes.

Jeff replies: Campaign rhetoric, making number three on the list, doesn’t always influence what occurs during a President’s tenancy in the White House. Take Obama for example and his steps along the way with “The Promise”, “The Reality” and “The Reason”.

Gary continues: In 2008, The Promise was in support of environmental issues. Obama had then promised to limit carbon emissions, along with supporting the development of non-petroleum fuels.

Jeff replies: However, in 2008 when he made this vow, U.S. crude oil production satisfied 25.6% of domestic consumption. By 2015, U.S. crude oil production was satisfying 46.7% of domestic consumption.

Gary continues: The reasoning behind this was mainly the effect of an economic shift. Surges in oil production hit a 45-year high due to the effect of advanced techniques for oil extraction. Additionally, favorable tax treatment from the government had an influencing hand.

Jeff replies: How was Obama supposed to predict any of that happening? Like we said earlier, forecasting is not an exact science. Due to economic forces at work during any president’s time in office, we should not create expectations about any particular administration acting adversely to the petroleum industry.

Gary states: Number four of six brings us to consumers and businesses having a far greater impact on the economy that the government. Private consumption, private investment and foreign trade make up 82.4% of Gross Domestic Product.

Jeff replies: Gary, the greater part of what happens in the U.S. economy is the effect of you, me and the businesses we’re employed by and support. Not to mention the enormous global output that is produced outside the U.S.

Gary states: The state of the economy influences who is president, not vice versa. This is a very important truth. The proof that the state of the economy determines the next commander-in-chief, can be found in decades of historical data.

Jeff replies: Very true, Gary. The fact of the matter is, a strong economy with declining employment and inflation equals a win for the incumbent party candidate. This can be seen in eleven out of the last thirteen elections, with only two exceptions.

Gary states: So what does that leave us with? Well, it leaves us believing that the stock market doesn’t care if the public is happy with whomever is currently president. History has been shown to suggest the market is resilient and even indifferent to a president’s approval rating. From Obama to John F. Kennedy, the ebb and flow of the market never seemed to match to the highs and lows of American satisfaction.

Jeff states: But what could be affected by the outcome of the election? Public Policy for one! On the healthcare front, we are likely to see changes to ObamaCare, even if there’s very little chance of its repeal.

Gary continues: In entitlement programs, it’s doubtful that we’ll see any reverse of policy that have been around for eighty years. On the same topic though, we could expect to see cost control measures for Medicare and Medicaid programs.

Jeff replies: With mandatory cuts to federal programs already being lackadaisical, we can anticipate debates over the best use of defense spending. It’s likely we’ll see a jobs argument added to the national security case in negotiations over whether or not to cut or keep each procurement item.

Gary states: We may see a few compromises on tax policy, such as treatment of offshore earnings, but we’re unlikely to see any changes in our tax code.

Jeff states: The Dodd-Frank regulations put in place to prevent another financial crisis, like in 2008, are unlikely to be repealed despite what many in the financial services industry may want. However, how aggressively the rules are enforced will all depend on the next resident of the White House.

Gary states: Judicial appointments by the next president will occur at least once as Justice Ginsburg is over 80 years old and both Justices Breyer and Kennedy will turn 80 over the next three years. There is a tremendous possibility that the next president will shape the court and its decisions for decades to come by appointing several new justices during his or her term.

Jeff continues: The executive branch of the government has substantial range to decide how to enforce existing laws. Just a few areas that executive direction can influence in the absence of legislative action include financial services, education, defense, healthcare, environmental protection and energy production.

Gary states: All in all though, it’s not wise to let your reaction to the new changes in government leadership shape your investment decisions. Stick with your long-term strategy. Realistically, most of us dislike the opposition more than we approve of our own party anyway.

Jeff states: Well it’s time for a break but stay tuned because we are going to shed some light on Myth-Busting: Clearing Common Misconceptions off the Table.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman 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, Gary Sussman.

Before we start with our next segment, Gary would you tell our listeners about how they can reach you.

Gary states 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, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Jeff resumes:

Myth-Busting: Clearing Common Misconceptions off the Table.

Credit to: www.oppenheimerfunds.com/advisors/article/investors-clear-election-choice-stay-buckled-in

Jeff begins: Now that we’ve reviewed the basics of the market reactions to changes in the political arena, let’s take this time to further explore myth-busting and clear common misconceptions off the table.

Gary states: To paraphrase, Princeton economist Alan Binder once noted that “economic growth and financial market returns during a President’s term are explained by good luck with perhaps a touch of good policy. And even then, good policies might take years to have an impact, benefiting future administrations.

Jeff replies: Realistically speaking, implications of the elections for the global economy and the financial markets aren’t as significant as they seems. If you look at it this way, we are a nation of roughly 125 million households, yet ultimately it’s the other 2 billion some-odd households worldwide that stimulate the direction and strength of the global economy. It’s that vitality that fuels financial markets.

Gary replies: Consider this, in 2009 when Barack Obama was sworn in as the new president, many investors went on record saying they were going to “sit this one out”, given Obama’s positions on policy.

Jeff continues: At that point in time, the S&P 500 was trading at a historically low 12x trailing 12-month earnings; compared to the long-term average of 16x. The Federal Reserve was very accommodating with monetary policy, adopting a 0% interest rate. And the U.S. economic indicators seemed to be regaining their bearings following the worst recession in decades.

Gary states: That being said, how did things work out for all those investors on the sidelines? As we witnessed in the six years post-inauguration, stocks climbed to a 200% return. Reminding all of us, to not base our financial practices primarily on who so ever is occupying 1600 Pennsylvania Avenue.

Jeff states: Now, national elections are important, we’re not saying that they’re not. So are national policies, as they matter over time. When it comes down to four-year election cycles though, they should not be governing your long-term investment decisions.

Gary states: If we look at historical data, say, over a seventy year span of time, we can best see the outcome of your financial plan if you had only invested while your preferred party was in office.

Jeff states: Between 1945 and 2015, if you had been fully invested for the long-term with $10,000 in the Dow Jones Industrial Average, it would now have been worth $1.3 million. The market likes a divided government and provided a 7.0% annualized rate of return over the course of those 70 years.

Gary replies: Whereas, if in the same 70 year time-frame you had decided to only invest when your preferred political party was in office, your $10,000 investment would be worth a much smaller amount. About $1 million less, actually, depending on which party you sided with. The unified government plan only provided a 4.6% annualized rate of return.

Jeff continues: The other one we’re always hearing is that financial markets in general would be far better off if opposing political parties acted more cooperatively and were willing to compromise in order to get things accomplished. This is most definitely myth!

Gary replies: Realistically speaking, markets do better during times of political stalemate. If legislature isn’t getting passed and change is occurring at a very low level, the market reacts in a more confident and steady way, seeing as how no big changes are stirring up market volatility.

Jeff states: The fact of the matter is, our founding fathers designed the government in such a matter to create gridlock. The three co-equal branches of the government, legislative, executive, and judicial, in addition to a commanding federalist system, were created to inhibit tyranny. In the words of Henry David Thoreau, “that government is best which governs least”.

Gary finishes: What should investors do, then? Sit back, relax and enjoy the show. You should be in this for the long-run and be maintaining your long term strategies, regardless of what happens in November. If you’re not sure what that long term plan should look like, call me….

Gary states 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, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Jeff states: Stay tuned because after the break we are going to tell you hot tax tips to save you money!

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman 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, Gary Sussman.

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

Chit chat with Amy

Jeff states: In before we continue with this segment, I want to remind our listeners that…

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

Hot tax tips to save you money!

Jeff states: So now that we at the beginning of March or about half-way through tax season, I thought we would cover today some hot tax tips to save you money.

Home Energy Credits Save Money and Cut Taxes

Gary states: For taxpayers who own their home, consider this – you can trim your taxes and save on your energy bills with certain home improvements. So here is what you need to know about home energy tax credits.
Greg asks Amy: Please explain what is the Non-Business Energy Property Credit.

Amy replies:
Non-Business Energy Property Credit

• Part of this credit is worth 10% of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
• The other part of the credit is not a percentage of the cost. It is for the actual cost of certain property. This may include items like water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
• This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
• Your main home must be located in the U.S. to qualify for the credit.
• Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
• You may claim the credit on your 2015 tax return if you didn’t reach the lifetime limit in past years. Under current law, this credit is available through December 31, 2016.

Jeff comments: With things always tending to break when you least expect it, it is good to keep these tax rules in mind. After all, if you can save $500.00 in taxes it does help offset the cost of that unexpected repair.

Greg asks Amy: Please explain what is the Residential Energy Efficient Property Credit.

Amy replies:
Residential Energy Efficient Property Credit

• This tax credit is 30% of the cost of alternative energy equipment installed on or in your home.
• Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
• There is no dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
• The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.
• This credit is available through December 31, 2016.

Jeff comments: Clearly the Residential Energy Efficient Property Credit has a lot more bang for the buck than the Non-Business Energy Property Credit since you are not dealing with any dollar limitations and we know that installing solar systems and the like can be very pricey. To claim these credits use Form 5695, Residential Energy Credits.

Tax Tips about Debt Cancellation

Gary states: If your lender cancels part or all of your debt, it is usually considered income and you normally must pay tax on that amount. However, the law allows an exclusion that may apply to homeowners who had their mortgage debt cancelled in 2015.

Gary asks Amy: Since a lot of taxpayers who own a principal residence may have benefited from a reduction in the principal mortgage, how does the tax law treat that debt cancellation?

Amy replies:
1. Main Home. If the cancelled debt was a loan on your main home, you may be able to exclude the cancelled amount from your income. You must have used the loan to buy, build or substantially improve your main home to qualify. Your main home must also secure the mortgage.
2. Loan Modification. If your lender cancelled part of your mortgage through a loan modification or ‘workout,’ you may be able to exclude that amount from your income. You may also be able to exclude debt discharged as part of the Home Affordable Modification Program, or HAMP. The exclusion may also apply to the amount of debt cancelled in a foreclosure.
3. Refinanced Mortgage. The exclusion may apply to amounts cancelled on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home and only up to the amount of the old mortgage principal just before refinancing. Amounts used for other purposes do not qualify. The rules are confusing which is why it is best to seek advice from tax counsel.

Jeff comments: This exclusion has been around for a few years and Congress has extended it several times. The current extension expires December 31, 2016 and with a new Presidential administration starting next year who knows if it will be extended beyond 2016. Keeping in mind that these modifications take a long time to process through the lender and get approval, you should be working on this now to make sure you complete the process before year-end.

Gary asks Amy: Does this exclusion apply to any other types of cancelled debt?

Amy replies:
Other Cancelled Debt. Other types of cancelled debt such as second homes, rental and business property, credit card debt or car loans do not qualify for this special exclusion. On the other hand, there are other rules that may allow those types of cancelled debts to be nontaxable so if you are in this situation, you should seek tax counsel.

Gary asks Amy: Are there any particular forms that taxpayers should be aware of?

Amy replies:
Form 1099-C. If your lender reduced or cancelled at least $600 of your debt, you should receive Form 1099-C, Cancellation of Debt, by February 1st. This form shows the amount of cancelled debt and other information that you may need to reflect on your tax return.
Form 982. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. This form gets included with your federal income tax return so you will need to let your tax preparer know to check to see if you qualify for this benefit.

Jeff comments: Again remember that the law that authorized the exclusion of cancelled debt from income was extended through December 31, 2016.

Early Retirement Distributions and Your Taxes

Gary states: Many people find it necessary to take out money early from their IRA or retirement plan. Doing so, however, can trigger an additional tax on top of the income tax you may have to pay.

Gary asks Amy: What are the key points to know about taking an early distribution?

Amy replies:
1. Early Withdrawals. An early withdrawal normally means taking the money out of your retirement plan before you reach age 59½.
2. Additional Tax. If you took an early withdrawal from a plan last year, you must report it to the IRS. You may have to pay income tax on the amount you took out. If it was an early withdrawal, you may have to pay an additional 10% tax.
3. Nontaxable Withdrawals. The additional 10% tax does not apply to nontaxable withdrawals. They include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.

Jeff comments: Now even though you may withdraw from your retirement account, if you rollover those funds to another retirement account that may be a nontaxable event. A rollover is a type of nontaxable withdrawal. A rollover occurs when you take cash or other assets from one plan and contribute the amount to another plan. You normally have 60 days to complete a rollover to make it tax-free.

Gary asks Amy: Are there any exceptions to the additional 10% tax?

Amy replies:
• Death – after death of the participant/IRA owner.
• Disability – total and permanent disability of the participant/IRA owner.
• Education – qualified higher education expenses.
• Homebuyers – qualified first-time homebuyers, up to $10,000.
• Tax Levy – because of an IRS levy of the plan.
• Medical – amount of unreimbursed medical expenses (>7.5% AGI; after 2012, 10% if under age 65). Also health insurance premiums paid while unemployed.
• Military – certain distributions to qualified military reservists called to active duty.

Jeff comments: Keep in mind though that some of the exceptions for retirement plans are different from the exceptions for IRA’s so you will want to check with your tax advisor and make sure you include Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with your federal tax return.

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, Gary Sussman 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, Gary Sussman.

And Gary 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.

Gary states 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, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through Trilogy Capital, a Registered Investment Adviser. Trilogy Capital and NPC are separate and unrelated companies.

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 Gary, what questions have you pulled for us to answer?

Question from Dee of Orange County asks: I am about to turn 62, and I am thinking of electing my SS benefit. Is this the best thing to do?

Answer: Frankly, there is no single “right” answer because it depends on each individual’s unique circumstances. Social Security is supposed to be used in conjunction with other sources of retirement income. Unfortunately, for a significant number of individuals, the decision about when to file for Social Security comes down to “As soon as I qualify.” Even though they know their monthly benefit will be smaller, they may be concerned that it’s not going to be there in the future, so they figure “I’d better get it while I can.”

While there can be no guarantee that the future program will operate as it has in the past, for many people Social Security has historically amounted to a government-guaranteed, inflation-adjusted, lifetime annuity. The decision to file early can have significant lifelong consequences. Filing to begin benefits at 62, the earliest age possible, results in a 25% less benefit than waiting until Full Retirement Age, which for most of us is 66 and 2 months. Delaying until age 70 produces a significantly higher monthly benefit. In fact, waiting until age 70 to begin receiving Social Security results in a monthly benefit that is 76% greater than the amount an individual would receive at 62.

If this is a question about ensuring that you get the absolute most out of the system, that answer will be dictated by your longevity. Unfortunately most of us don’t have that answer. Generally speaking, waiting to elect benefits will probably result in getting more out of the system. This is a complex question and one’s decision should not be taken lightly, and I would recommend making this decision within the entire scope of your overall financial situation.

Question from Carlos of Chula Vista: My family is originally from Cuba and I am interested in investing in that country now that the embargo has been lifted. What do I need to know when it comes to U.S. taxes?

Answer: Since a foreign government will typically charge income taxes earned on income in that country, taking advantage of Foreign Tax Credits allow U.S. taxpayers to avoid or reduce double taxation. You may choose to take a deduction for foreign taxes paid instead of choosing a credit. In most cases, it is to your advantage to take foreign income taxes as a tax credit. The U.S. government until recently did not allow for this tax credit to be available for Cuba but that has all changed because starting January 1, 2016 the Foreign Tax Credit is now available.

File Form 1116, Foreign Tax Credit, which gets attached to your Federal Individual Income Tax Return to claim the foreign tax credit if you are an individual, estate or trust, and you paid or accrued certain foreign taxes to a foreign country or U.S. possession. Now the Foreign Tax Credit provisions are complex as there are limitations and exclusions which are either established by statute or by the tax treaty with that country so you will want to check with tax counsel to make sure you are getting the full tax benefit allowed.

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.

Gary states: Have a great day everyone!

FBI v Apple, Older Women Reshaping the U.S. Job Market, and Self-employed Tax Tips On ESPN Radio – February 26, 2016 Show

Topics Covered:

1. FBI v. Apple: The feud that should get you thinking about providing electronic passwords to your family in case of emergency.
2. How Older Women are Reshaping the U.S. Job Market.
3. Important tax tips if you are self-employed.
4. Questions from our listeners:

  • Considering women are living longer than men and should be looking further, long-term of managing money, how much would be a good base, considering interest income, amount for one to have saved up upon retirement? Say I retire at 65 but end up living until 92?  What if I out live my significant other and end up on my own in a nursing home. How much should I have squirreled away in order to not burden my family?
  • I just incorporated my business and want to elect Subchapter S status. What are the procedures that I must follow?

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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: How Older Women Are Re-shaping The U.S. Job Market.

Windus states:

Also coming up is:

Segment 3 material: Important tax tips if you are self-employed.

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:

FBI v. Apple: The feud that should get you thinking about providing electronic passwords to your family in case of emergency.

Credit to Wall Street Journal: http://on.wsj.com/1XJm12L; http://on.wsj.com/1LDwaXJ; http://www.cnet.com/news/taking-passwords-to-the-grave/

Windus begins: Apple is facing court orders to help investigators in the Justice Department extract data from password protected iPhones. At least a dozen cases nationwide are calling on the tech corporation to assist in investigations where cell phones were confiscated as evidence.

Jeff replies: These disputes are similar to the current battle over a terrorist’s locked phone that has brought to light this on-going feud over privacy and security. The publicized terrorist attack is referencing the December 2nd attack in San Bernardino, where 14 people were killed and 22 were reported injured.

Windus continues: This dispute was funneled to the public after the court ordered Apple Inc. to help the Justice Department bypass security features on an iPhone belonging to one of the shooters, Syed Rizwan Farook.

Jeff states: Now, FBI Director James Comey pinpoints the terrorism case and explains that unlocking said terrorists phone is important to exposing possible other terrorist threats. He further goes on to explain, “We can’t look survivors in the eye, or ourselves in the mirror, if we don’t follow the lead.”

Windus replies: At the same time, Apple CEO Tim Cook is calling the government’s actions “a dangerous precedent that threatens everyone’s civil liberties”, urging prosecutors to withdraw their demands. He suggests that the government form a commission to address situations such as these, brought on by the growing use of encryption.

Jeff states: For now, 51% of the general public is in agreement with Comey’s argument of Apple helping the government to unlock the December 2nd terrorist’s phone, but 38% are in favor of Apple’s stance on preserving privacy and security.

Windus replies: And preserving privacy and security is a position that Cook feels very passionately about. Apple as a whole has hardened its stance over time, adopting more stringent security and encrypted more of its user data.

Jeff states: In a 2014 Charlie Rose interview, Cook elaborated “they would have to cart us out in a box before we would” allow outsiders including the National Security Agency to create a “backdoor” to access users’ personal data.

Windus replies: When meeting in January, both Comey and Cook spoke generally on the issue, but make no significant breakthroughs. If anything, each only solidified their respected stances on the subject.

Jeff states: In the end, it is likely that any legal outcomes of this case will be provisional. Technology evolves at such a rapid pace that Apple and other firms will eventually develop new programs that guard data more securely and out grow old rules.

Windus replies: This includes legislature like the 18th-century law, The All Writs Act, that is currently being pursued by the Justice Department to compel companies to assist with password security by-pass for phones held in evidence.

Jeff continues: However, in most of the cases, prosecutors says that instead of Apple challenging the orders in court, Apple simply deferred complying with them, without seeking appropriate judicial relief.

Windus states: In a letter last week from Apple CEO Tim Cook, “the government suggests this tool could only be used once, on one phone. But that’s simply not true. Once created, the technique could be used over and over again, on any number of devices.”

Jeff replies: When it comes down to it, the government is asking Apple to hack their own users while undermining decades of security advancements.

Windus states: Separately from terrorism, federal prosecutors in New York are disputing with Apple over an iPhone seized during a drug investigation there. But, Apple has continued to stand behind its position that forcing a company to extract data, could threaten the trust between Apple and its customers.

Jeff replies: So where does this leave us on a smaller scale when a relative passes and all of their financial information is eManaged?

Windus replies: I’m so glad you asked Jeff! We’re stuck in the mess but closer to home. If you pass away, so much is electronic; your family may not easily be able to find your assets.

Jeff continues: So, what’s supposed to happen when you lose mom or dad and they just so happen to be managing everything from their portfolios, to their life insurance, to their bank accounts on line?

Windus replies: A fall back is that the state SHOULD report them after one year of missed statements. BUT with technology, that isn’t always the case and sometimes statements aren’t missed because they are emailed, so reporting to the state lost money can take longer.

Jeff replies: In which case, it’s very important to keep a record of all of your accounts and passwords, in case of emergency. Some companies have help desks set up for such an occasion but others cite privacy laws prohibiting them from releasing information regarding anyone’s account, regardless of incident.

Windus completes: From a planning perspective, it’s not a question of privacy rights so much as property rights. You need to have a hard copy of ALL accounts including emails, usernames and passwords, just as much as you needed to have the accounts set up in the first place.

Jeff continues: According to Marc Rotenberg, executive director of the Electronic Privacy Information Center, “The so-called ‘Tort of Privacy’ expires upon death, but property interests don’t. Private e-mails are a new category. It’s not immediately clear how to treat them, but it’s a form of digital property.”

Windus replies: In terms of estate planning, it is much easier if a family member already has user sign on information, like a username and password, as the situation comes up fairly regularly. It would be wise to put all passwords to sites online in an estate planning document, end of story.

Jeff states: Well it’s time for a break but stay tuned because we are going to tell you how older women are re-shaping the U.S. job market

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 states: And before we start on this next segment, Windus would like to tell you of her special offer.

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.

Jeff resumes:

How Older Women Are Re-shaping The U.S. Job Market.

Credit to Wall Street Journal, Bloomberg News and ProPublica: http://on.wsj.com/1XJrbf5; http://www.propublica.org/article/the-impact-and-echoes-of-the-wal-mart-discrimination-case; http://www.bloomberg.com/news/articles/2016-02-17/working-women-a-new-book-stands-up-for-the-single-ladies

Jeff states: More and more female workers are delaying retirement, in a shift that’s helping transform the US economy. There is a wave of American women who are working, or looking for work, longer than any previous generation.

Windus replies: In fact, since the beginning of the December 2007 recession, the percentage of older women working has grown while the rates of all other categories of U.S. worker, categorized by gender and age, has either declined or made no change at all.

Jeff continues: According to historical and projected statistics by the Labor Department, one in twelve women worked past the age of 65 in 1992. Currently, that same number has increased to around one in seven. By 2024, it will escalate to almost one in five, the equivalent of roughly 6.3 million workers.

Windus states: Richard Johnson, director of the Urban Institute’s program on retirement policy, this is “one of the most stunning developments that we’ve seen in the labor market in over the last 50 years.”

Jeff states: While some are extending their careers because they enjoy working late in life, others are doing so under a more fiscal necessity.

Windus replies: That’s right, Jeff. People are living longer, and with that are concerned with outliving their savings. Americans are approaching old age and finding themselves with more debt and less savings. In addition, fewer are receiving pensions than in previous generations.

Jeff states: Consider it this way, Windus. The current growth among older female workers in job market reflects a realignment that began over a half-century ago when women joined the workforce.

Windus replies: The rate of older Americans in the workforce fell every year from the end of WWII to the 1980s, but has since shifted. In the mid-1990s, employers transitioned from traditional employer sponsored pension plans to 401(k) savings plans that shift the responsibility of saving for retirement onto the employee, instead of the employer.

Jeff replies: This shift in funding made it necessary for Americans to continue to work until they could afford to retire and not just when they met a certain age.

Windus states: As a result, older Americans are leaving the work place more slowly than in the past, signifying a greater potential in the labor supply, as well as more slack, than an unemployment rate below 5% would usually entail.

Jeff replies: Last month, when the unemployment rate dropped below 5%, it was a faster drop than any economist had expected and a level that had not been seen since early 2008. This should trigger higher wages as employers search through fewer potential new hires, but it hasn’t yet.

Windus replies: But it’s not just about wanting to work longer, it’s having to work longer. Women out live men and therefor, have a greater propensity to out-live their savings. Older Americans have more debt than in previous years.

Jeff states: For example, in 2013, homeowners aged 65 or older with a mortgage, still owed roughly $88,000 on their loans. That’s up from the average in 2001, which ran about $43,400. The problem could be would-be retirees who were hit hard during the last financial crisis, cannot afford to retire.

Windus replies: Although several economists acknowledge a tie between financial insecurity and later retirement, it is difficult to prove considering that many working later in life are skilled workers with higher incomes.

Jeff states: According to census data maintained by the University of Minnesota, the increase in working women ages 55 to 64 over the past decade have been split fairly evenly between college graduates and those who only finished high school.

Windus replies: In reality, if financial hardship was the primary factor of women working later in life, there would be a greater ratio of those who had lower-skilled occupations.

Jeff continues: Regardless, of those who remain employed, the need for money was the most cited reason for working later into life, exceeding those who are working out of enjoyment nearly two to one, in a survey published in 2014 by AARP.

Windus states: Statistically women live longer and save more conservatively than men. This becomes a problem when the issue of out-living your finances presents itself. How to you remedy this situation? Put together a financial plan that pieces together all the factors that worry you and call me…

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 important tax tips if you are self-employed.

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

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

Jeff resumes:

Important Tax Tips If You Are Self Employed.

If you are self-employed, you normally carry on a trade or business. Sole proprietors and independent contractors are two types of self-employment.

Independent Contractors.

Jeff asks Amy: How does the IRS define who is an Independent Contractor?

Amy replies: People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors.

Windus asks: But I know that many people who work in one of these occupations are treated as employees so how do you differentiate worker who are independent contractors?

Amy replies: Whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

Sole Proprietorship

Jeff asks Amy: How does the IRS define what is a sole proprietorship?

Amy replies: A sole proprietorship allows an individual to own and operate a business by him/herself. A sole proprietor has total control, receives all profits from and is responsible for taxes and liabilities of the business. If a sole proprietorship is formed with a name other than the individual’s name, a Fictitious Business Name Statement must be filed with the county where the principal place of business is located. Generally, there are no other formal requirements to own and operate a sole proprietorship. However, depending on the business venture, a particular license or certification may be required.

Windus states: If either of these situations apply to you, there are a few basic things you should know about how your income affects your federal tax return and of course with our two tax attorneys in the house, let’s have them go over the most important tax tips you need to know if you are self-employed.

Amy and Jeff to read off each tax tip and explanation.

Jeff states:
SE Income. Self-employment can include income you received for part-time work. This is in addition to income from your regular job.

Amy states:
Schedule C or C-EZ. You must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040. You may use Schedule C-EZ if you had expenses less than $5,000 and meet certain other conditions. See the form instructions to find out if you can use the form.

Jeff states:
SE Tax. You may have to pay self-employment tax as well as income tax if you made a profit. Self-employment tax includes Social Security and Medicare taxes. Use Schedule SE, Self-Employment Tax, to figure the tax. If you owe this tax, attach the schedule to your federal tax return.

Amy states:
Estimated Tax. You may need to make estimated tax payments. Try IRS Direct Pay. People typically make these payments on income that is not subject to withholding. You usually pay estimated taxes in four annual installments. If you do not pay enough tax throughout the year, you may owe a penalty.

Jeff states:
Allowable Deductions. You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business.

Amy states:
When to Deduct. In most cases, you can deduct expenses in the same year you paid, or incurred them. However, you must ‘capitalize’ some costs. This means you can deduct part of the cost over a number of years.

To Incorporate Or Not To Incorporate?

Jeff states: So a question that we hear a lot of is whether a self-employed individual should incorporate his or her business.

Amy states: When forming a legal entity, it’s best that it be created separate from the holdings of its owners to ensure limited liability. Historically, the choice has been for owners to form a corporation. Today, however, there may be better choices besides a sole proprietorship or corporation.

Amy continues: Other multiple organization structure possibilities include:
• Limited Liability Company (LLC)
• Partnership
• Limited Partnership
• Limited Liability Partnership

The advantages of incorporating (including forming an LLC).

Windus states: So to help our listeners who are considering this issue, how about I have our two tax attorneys, Jeff and Amy, go over the advantages of incorporating or forming an LLC.

Amy states: Limited Liability. Corporations and LLC’s offer limited liability risks to their owners (shareholders for corporations and members for LLC’s). In most corporate or LLC structures, shareholders or members are not personally liable for the debts and other liabilities (including legal) for the business.

Jeff states: Ease Of Attracting New Investors and Facilitates Exit Strategy. Whether it’s a corporation or LLC, your ownership interest is evidenced by a share certificate for a corporation or a membership interest for an LLC. Either way it is a document or a right that you can transfer to someone else without having to change anything on the business’ operations, assets or liabilities.

Amy states: Lower Audit Risk. It is a known fact that self-employed individuals who file their Form 1040 reporting their business income and business expenses on Schedule C run a higher risk of audit than self-employed individuals who incorporated their business and all of this detail appears on a separate corporation income tax return.

Jeff states: Favorable Payroll Tax Consequences. Corporate income is not subject to Social Security, Workers Compensation and Medicare taxes; and if planned correctly owners do not pay self-employment taxes and this can equate to a big tax savings to you.

The three most popular entities used by self-employed individuals:

Windus asks: What are the three most popular entities used by self-employed individuals?

Amy replies: C-corporation. A corporation is an entity that exists separately from its owners (shareholders). A corporation may be utilized to provide asset protection for its stakeholders, as well as protection for managers, officers and directors. Any corporation that does not elect to be treated under Subchapter S of the Internal Revenue Code is a C Corporation.

Jeff replies: S-corporation. A corporation electing Subchapter S regulation provides limited liability to its shareholders as well as pass through taxation to shareholders (meaning the corporation is not taxed but the corporations shareholders are taxed individually.) In other word, it is the income or loss of the S-corporation that will flow through to its shareholders to be reported on their individual income tax returns.

Amy states: Limited Liability Company (LLC). A domestic limited liability company generally offers liability protection similar to that of a corporation but is taxed differently. Limited liability companies may be managed and operated by one or more managers, or one or more members. In addition to filing the applicable documents with the Secretary of State, an operating agreement among the members as to the affairs of the limited liability company and the conduct of its business is required.

Jeff states: Generally, businesses operating in California will choose to become incorporated in California. However, there may be advantages to incorporating in Delaware or Nevada, and registering the business in California as a foreign corporation.

Jeff continues: Choosing the proper entity when establishing a business is a critical decision so consider this ….

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?

Questions from Anne of Del Mar:

This is a two part set of questions.

Part 1: Considering women are living longer than men and should be looking further out, long-term of managing money, how much would be a good base, considering interest income, amount for one to have saved up upon retirement? Say I retire at 65 but end up living until 92?

Windus answers.

Part 2: What if I out live my significant other and end up on my own in a nursing home. How much should I have squirreled away in order to not burden my family?

Windus answers.

Stephanie from Newport Beach asks: I just incorporated my business and want to elect Subchapter S status. What are the procedures that I must follow?

Jeff Answer: A corporation or other entity eligible to elect to be treated as an S-corporation must use Form 2553 to make the election.

Requirements:
1. Corporation has no more than 100 shareholders. An individual and his or her spouse (and their estates) as one shareholder for this test. Special rules also apply for counting members of a family and other situations which can keep you within this 100 limitation. Note there is no limit on how much assets or income the entity has, only the number of owners.
2. Its only shareholders are individuals, estates, exempt organizations.
3. It has no nonresident alien shareholders.
4. It has only one class of stock (disregarding differences in voting rights).

You have to adopt as your tax year a calendar year meaning that your annual tax reporting will be January 1st to December 31st.
The Form 2553 must be signed by a corporate officer and each individual who is a shareholder at the time of making the election. You must file this form no more than two months and 15 days after the beginning of the tax year the election is to take effect. So that means to have an S-election effective for January 1, 2016, you must file this form with a postmark no later than March 15, 2016. If you wait until after that date for a corporation that was formed on or before January 1, 2016, your S-election would not be effective until January 1, 2017 unless your qualify for relief from late filing of this election.

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!

Estate Planning for the Stars, How to Own a T-Rex, and Your Taxes and the IRS On ESPN Radio – February 19, 2016 Show

Topics Covered:

1. Estate Planning for the Stars.

2. How to Own a T. rex?

3. Tax Scams To Avoid and Tips On Choosing A Tax Return Preparer.

4. Questions from our listeners:

  • What are the different types of trusts and how do the benefits differ? Also, who do I go to in order to set up a trust? An accountant, financial planner, lawyer?
  • If I made a bet on the Super Bowl and I won, is that “taxable income”?

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

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 to Own a T-Rex!

Windus states:

Also coming up is:

Segment 3 material: Tax Scams To Avoid and Tips On Choosing A Tax Return Preparer.

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:

Estate Planning for the Stars: How best to organize your finances so you family doesn’t struggle with estate litigation.

http://www.crainsnewyork.com/article/20150318/CUSTOM/150319825/estate-planning-mistakes-lessons-from-the-stars; http://www.forbes.com/sites/trialandheirs/2014/02/10/five-estate-planning-lessons-from-the-paul-walker-estate/#6e07d11e5ffc; http://wmtoday.com/2015/03/05/5-epic-hollywood-estate-planning-fails/

Jeff states: We’ve had a rough start to 2016 and I’m not just talking about the global economy. We’re not even sixty days into the New Year and we’ve had to bid farewell to quite a few of our popular culture icons.

Windus replies: Our feelings aside, their families and loved one’s have been hit with even stronger grief. Dealing with the emotionally difficult parts of life is very trying and it only makes it harder if you haven’t prepared.

Jeff states: That’s right Windus, but we can learn from some of these epic Hollywood estate planning mistakes. And just in time too! Its tax season after all, time to get ahold of your local wealth management and tax experts.

Windus starts: Let’s look at a few example of estate planning gone wrong. First off, Phillip Seymour Hoffman was a beloved Hollywood icon. From The Big Lebowski to the role that earned him an Oscar in Capote, he was a very talented and versatile actor. Unfortunately after a drug overdose in 2014, his partner and mother of his three children, Marianne O’Donnell was left with a pretty hefty tax burden.

Jeff states: Despite his accountant’s advice, Hoffman decided not to create trusts for his children. Then by not marrying O’Donnell, a $15-million tax burden was tacked on to the transfer of the estate to his beneficiary. That amounts to around 40% of his $35 million net worth.

Windus replies: Not only would the estate have been transferred tax-free to O’Donnell had the two been married, but alternately, by not setting up a revocable trust, Hoffman fated his estate proceeding to probate. This is not only inefficient and expensive, but it also exposes family financial information to the public.

Jeff continues: Hoffman went wrong by relying on a Will rather than trusts. However, he also had not kept his Will up to date. The last revision of the document had been ten years prior to his departure, before his second and third child were born. In addition, he did not mention his mother, brother or any of his philanthropic causes, including non-profit theaters.

Windus states: No one will ever forget this next estate, or the memorable actor whose name headlined. James Gandolfini, aka Tony Soprano, died of a heart attack at the age of 51. No one expected that the IRS would end up being the biggest beneficiary of the estimated $70 million estate.

Jeff replies: Gandolfini also relied primarily on his Will instead of a more sophisticated estate taxing trust. In it he divided his estate between multiple beneficiaries including his friends, two sisters, and his son from a previous relationship, his most recent wife and his toddler daughter.

Windus continues: Regrettably, much of the estate that was being gifted was property and not liquid. When the IRS came knocking for its multi-million-dollars cut, the family had to succumb to fire-sale mode. The sole tax-free inheritance was the $7 million life insurance policy which was left to his teenage son.

Jeff states: The next notoriously eccentric actor, who had once rejected an Oscar because he felt Hollywood had mistreated Native Americans in films, illustrates an estate planning fiasco. Marlon Brando’s estate was already involved in more than two dozen lawsuits, five years after his death.

Windus replies: Most of these lawsuits arose from current and past employees of the actor’s estate who claimed that Brando had promised them particular assets, which were not mentioned in his estate plan.

Jeff states: Brando relied on his Will in this situation, too. The problem with his estate however, was that he had drafted a Will but ultimately his plans remained indeterminate.

Windus replies: Yet another Oscar worthy actor, Heath Ledger. Like Hoffman, Ledger fell to substance abuse in an accidental overdose of prescription drugs in 2008, just a few months after filming as The Joker in The Dark Night. The Australian actor and director did a horrible job at planning for his legacy.

Jeff continues: Once more, like Gandolfini, Ledger failed to update his Will after his daughter, Matilda Rose, was born. After that tragic night in his New York apartment, all of the 28 year old actor’s assets went to his parents and three sisters, in accordance with U.S. law. You guessed it, Matilda and her mother were left without any claim on the estate.

Windus replies: Fortunately, since Ledger was an Australian citizen, Matilda Rose’s guardians have filed for probate in the West Australian Supreme Court so that a judge might carve out a portion of Ledger’s fortune. Ledger’s estate was mostly held in Australian trusts and is more or less worth up to $20 million.

Jeff states: Our next icon never got to finish his last job. The passing of “Fast & Furious” series star, Paul Walker, was an ironically tragic death. The 40-year old actor died in 2013 in a car racing accident, as a passenger in a Porsche.

Windus states: Now Walker had a Will, a trust and $25 million in assets at the time of his passing. The issue was how it was set up. Walker had what you call a pour-over structured Will that had not been updated in 12 years to reflect current intentions.

Jeff replies: This means that his wealth-transfer was not only going to be a public affair but informed the public that his $25 million estate would be transferred to a trust that named his teenage daughter as the sole-beneficiary.

Windus continues: This brings to light key points when estate planning. For one, having a Will is only the beginning. The best estate planning tool for most people is a revocable trust, creating a simpler and less troublesome probate process.

Jeff replies: Furthermore, to be most effective, trusts need to be fully funded during life and not left to be funneled in through the Will afterward. If there is nothing to pass through the Will then the probate court process could be completely avoided.

Windus replies: In the case of Paul Walker leaving everything to his teenage daughter, naming a guardian for a minor is always a good idea. Walker did assign guardianship, but if he didn’t courts still favor custodial parent unless deemed unfit or the parent agrees to relinquish custody.

Jeff states: Most importantly, if all of these tragic young deaths haven’t emphasized this, do not wait until you’re older to have an estate plan in order. It pays to plan for the unexpected and not leave your loved ones with greater burdens.

Windus finishes: Finally, keep your estate plan up to date! So many things happen in life, whether it be marriages, children, grandchildren, close friends or other life events. It’s so very important to keep all of your documents up to date so your family doesn’t suffer the consequences.

Jeff states: Well it’s time for a break but stay tuned because we are going to tell you How to Own a T. rex.

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 states: And before we continue with this next segment, I want to remind you that: 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.

A T. Rex of One’s Own: From movie stars to hedge fund managers to sheiks, how everyone wants their own dinosaur

(Credit: February’s issue of The Week, Vol. 16, Issue 758)

Windus states: Laurie Gwen Shapiro had a very interesting article about private dinosaur collecting in Issue 758 of The Week this month. Definitely not ideal for the humble estate plan, however movie stars, hedge-fund moguls and oil rich sheikhs are shelling out top dollar for dinosaur fossils at auctions.

Jeff replies: Desire for dino bones isn’t a trend either. In the 1870’s, the fossil frenzy began in Great Britain before spreading across the Atlantic, driving westward toward Wyoming. Interest intensified when The New York Journal and Advertiser ran the headline, “Most Colossal Animal Ever on Earth Just Found Out West.”

Windus continues: Although more false than factual, the real findings were of only a single leg bone of a creature. However, this sparked interest from philanthropist Andrew Carnegie who financed great discoveries in Wyoming and Utah.

Jeff states: Following Carnegie’s example, dinosaur collectors today make it difficult for museums to compete financially as the cost of fossils discovered on private lands are being astronomical. After all, who do you think is going to win in a bidding war with Nicolas Cage?

Windus replies: Glad you asked, Jeff. Remember back in 2007 when actors Leonardo DiCaprio and Nicolas Cage were trapped in a bidding war over a 32-inch Tyrannosaurus skull? Well, Cage triumphed over his opponent with a $276,000 offer.

Jeff continues: Other big name collectors include film directors James Cameron and Ron Howard, actor Brad Pitt, and Microsoft’s former chief technology officer Nathan Myhrvold who has a T. rex skeleton in his solarium in his large home in Washington.

Windus states: Keep in mind since these are priceless collectibles, they aren’t exactly liquid investments. What I mean by that is, if you’re in need of funds it’s not exactly easy to just find another home for your dinosaur. Honestly, some people are collectors and some people aren’t.

Jeff replies: Take Sue for example, the largest T. rex specimen ever found. It was offered by a private seller back in 1997 and even attracted the attention of Michael Jackson. After the excitement died down, it was the Field Museum of Chicago that walked away with the highest-priced dinosaur ever, with the closing bid at $8 million.

Windus continues: That kind of sale has never really happened again, though. More recently in fact, a couple of guys who had excavated a tetrapod and a large horned ceratopsian locked in mortal combat, tried their luck at Bonham’s in New York. There was a ton of publicity, the two men thought they’d be relaxing on a beach in the Bahamas for the rest of their lives but the piece didn’t even make reserve.

Jeff states: If by this point you’re thinking, “Man! I have to have a dinosaur!” You may want to consider going to Tucson, Arizona this month for that city’s annual mineral and fossil convention. People come from all over the world and they always have someone from Homeland Security and ICE there to deter the shadier dealers.

Windus replies: It should not be a surprise that in this industry there are sellers out there that knowingly are skirting the law. And when the government finds out that a buyer even in good faith acquired a piece that is contraband, the government will order its return to its rightful owner. Such was the case with the Tyrannosaurus skull that Nicolas Cage won in his bid over Leonardo DiCaprio which unbeknownst to him, had been smuggled out of Mongolia. He had to surrender it for return to Mongolia and so he lost the $276,000 he paid!

Jeff continues: Nevertheless there is still a lot of legal trade going on. As stated in an interview with Mark Norell, the world’s most famous paleontologist, of the American Museum of Natural History in New York, “crazy stuff goes to Dubai, to Qatar, and pretty regularly to Singapore. And there are all sorts of big odd collections in Germany.”

Windus states: Now if you are not able to get to Arizona this month, you can try the Astro Gallery of Gems, located in Manhattan on Fifth Avenue. It is the world’s largest gem and mineral store with a dinosaur dealership on the side.

Jeff continues: Owner Dennis Tanjeloff describes his ideal dinosaur customer as a grown-up boy who never got over the revelation that prehistoric animals were real. Salvador Dali and John Lennon were some of his most devoted clients.

Windus replies: Tanjeloff explains that many of his clients take pride in their collecting choices, most of them eventually donating their collections to research.

Jeff states: Ultimately, these pieces end up at a museum or university after the initial craze wears off. This is actually not a bad thing as it creates a write-off for the owner who is making a charitable contribution and now the public will have access to these pieces.

Windus replies: Looking back thirty years when you compare the prices for these pieces and even taking inflation into account, the increase in value is astronomical.

Jeff continues: Moving forward, Tanjeloff believes very strongly that this isn’t just a craze. He’s selling thousands of fossils a week and is looking forward to the investment opportunity of a relaunch of a section in FAO Schwartz that sells fossils next year. According to Tanjeloff, “boys who love dinosaurs, they’re our future customers.”

Windus concludes: So how are you going to afford all those amazing fossilized investments? You can figure that out by contacting me. At…

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

Jeff states: Stay tuned because after the break we are going to tell you Tax Scams To Avoid and Tips On Choosing A Tax Return Preparer.

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

Scam Calls and Emails Using IRS as Bait Persist

Jeff states: Just yesterday I got a call to my office where the person said in response to a threatening call he received from someone who said he was from the IRS, he sent a $3,000.00 money gram to the person to avoid arrest. He did this even though he did not owe any taxes to the IRS and never received any letters from the IRS that there was a problem.

Windus asks: Jeff then why did he call you if he thought by paying the $3,000.00 he resolved this perceived problem?

Jeff replies: Because he then received another call from the same person acknowledging receipt of the $3,000.00 but saying that he made a mistake and that he should be sending $6,000.00!

Amy states: Scams using the IRS as a lure continue. They take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too.

Amy continues: Be wary if you get an out-of-the-blue phone call or automated message from someone who claims to be from the IRS. Sometimes they say you owe money and must pay right away. Other times they say you are owed a refund and ask for your bank account information over the phone. Don’t fall for it.

Windus asks: Amy what tips do you have that will help our listeners avoid becoming a scam victim?

Amy replies: The real IRS will NOT:
• Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
• Demand tax payment and not allow you to question or appeal the amount you owe.
• Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
• Ask for your credit or debit card numbers over the phone.
• Threaten to bring in local police or other agencies to arrest you without paying.
• Threaten you with a lawsuit.

Jeff states: If you don’t owe taxes or have no reason to think that you do:
• Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
• You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” to the comments of your report.

Jeff continues: And if you think you may owe taxes, you should be calling ….

Jeff states: 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: Now the IRS also warns about phishing scams. What is that all about?

Amy replies: In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.

Amy continues: If you get a ‘phishing’ email, the IRS offers this advice:
• Don’t reply to the message.
• Don’t give out your personal or financial information.
• Forward the email to phishing@irs.gov. Then delete it.
• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

Tax Scams Involving Fake Charities

Jeff states: The IRS is warning taxpayers about groups masquerading as charitable organizations to attract donations from unsuspecting contributors.

Amy states: Fake charities set up by scam artists to steal your money or personal information are a recurring problem so taxpayers should take the time to research organizations before giving their hard-earned money.

Windus asks Amy: What tips do you have for taxpayers making charitable donations?

Amy replies:
• Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities will provide their Employer Identification Numbers (EIN), if requested, which can be used to verify their legitimacy through EO Select Check. It is advisable to double check using a charity’s EIN.
• Don’t give out personal financial information, such as Social Security numbers or passwords to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money. People use credit card numbers to make legitimate donations but please be very careful when you are speaking with someone who has called you and you have not yet confirmed they are calling from a legitimate charity.
• Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

Impersonation of Charitable Organizations Alleging To Help Victims Of Natural Disasters

Jeff states: Impersonation of Charitable Organizations is another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.

Amy states: Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

Amy continues: They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims.

Jeff states: To help disaster victims, the IRS encourages taxpayers to donate to recognized charities. If you are a disaster victim call the IRS toll-free disaster assistance telephone number (1-866-562-5227) if you have questions about tax relief or disaster related tax issues. And don’t forget to find legitimate and qualified charities with Select Check search tool on IRS.gov. (EINs are frequently called federal tax identification numbers, which is the same as an EIN when using Select Check.)

Tips For Choosing Your Return Preparer.

Windus states: It is important to choose carefully when hiring an individual or firm to prepare your return. Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee. Every year, these types of tax preparers face everything from penalties to even jail time for defrauding their clients.

Windus asks Jeff and Amy for tips when choosing a tax preparer.

Amy replies: Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN). Paid tax return preparers are required to register with the IRS, have a PTIN and include it on your filed tax return.

Jeff replies: Inquire whether the tax return preparer has a professional credential (enrolled agent, certified public accountant, or attorney), belongs to a professional organization or attends continuing education classes. A number of tax law changes, including the Affordable Care Act provisions, can be complex. A competent tax professional needs to be up-to-date in these matters. Tax return preparers aren’t required to have a professional credential, but make sure you understand the qualifications of the preparer you select.

Amy replies: Check the preparer’s qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool can help you find a tax return preparer with the qualifications that you prefer. The Directory is a searchable and sortable listing of certain preparers registered with the IRS. It includes the name, city, state and zip code of:
o Attorneys
o CPAs
o Enrolled Agents
o Enrolled Retirement Plan Agents
o Enrolled Actuaries
o Annual Filing Season Program participants

Jeff replies: Check the preparer’s history. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory.

Jeff states: Even using a competent and honest tax return preparer, remember that taxpayers are legally responsible for what is on their tax return 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. 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?

1. Stephanie from Newport Beach asks: What are the different types of trusts and how do the benefits differ? Also, who do I go to in order to set up a trust? An accountant, financial planner, lawyer?

2. Steve from Los Angeles asks: – If I made a bet on the Super Bowl and I won, is that “taxable income”?

Answer: Taxpayers must report the full amount of their gambling winnings (with no reduction for gambling losses) for the year as income on Form 1040, and then deduct their gambling losses (up to the amount reported as gambling winnings) for the year separately on Schedule A (Form 1040) as a miscellaneous itemized deduction not subject to the 2 percent floor. When spouses file a joint return for the tax year, their combined gambling losses are deductible to the extent of their combined winnings. Gambling losses in excess of winnings are not deductible.

Professional gamblers, like casual gamblers, can deduct their gambling losses only up to the amount reported as gambling winnings. However, whereas casual gamblers must claim their gambling losses (up to the amount of their gambling winnings) as an itemized deduction, a professional gambler can deduct his or her losses (up to the amount of his or her winnings) as an above-the-line deduction in arriving at adjusted gross income.

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 Gary Sussman Discusses Next Year’s Federal Budget, Love, Taxes and the IRS On ESPN Radio – February 12, 2016 Show

Topics Covered:

  1. Love And Taxes – How A Wife Was Convicted Of Murdering Husband To Avoid Him Learning Of Their Outstanding IRS Debt.
  2. The Budget the Next President Will Inherit.
  3. The Tax Benefits Of Claiming Your Sweetheart on Your Tax Return Or Writing Off The Costs Of Marrying Your Sweetheart.
  4. Questions from our listeners:
  • My dad told me that term life insurance is the best and I should buy term and invest the rest, but my agent recommended universal life. What should I do?
  • When are individuals of the same sex lawfully married for federal tax purposes?
  • I recently got married. Am I responsible for my spouse’s past taxes?

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

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

Good afternoon! Welcome to this special Valentine’s edition of 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.

Gary states:
And this is Licensed Financial Planner, Gary Sussman 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!

Gary 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: The Federal Budget The Next President Will Inherit.

Gary states:

Also coming up is:

Segment 3 material: The Tax Benefits Of Claiming Your Sweetheart on Your Tax Return Or Writing Off The Costs Of Marrying Your Sweetheart.

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

Jeff starts chit chat with Gary. [Introduce Jeff’s daughter Madison].

Jeff states: So for today’s top story:

Love And Taxes – How A Wife Was Convicted Of Murdering Husband To Avoid Him Learning Of Their Outstanding IRS Debt

www.abcnews.go.com/Primetime/story?id=3546142&page=1

Gary states: That boss was Robert Bosley, owner of Bosley Roofing and Chimney Sweep in Alexandria, Kentucky who was shot to death as he slept in his small cabin in Campbell County. Robert who lived to age 42 was murdered by his wife Amy Bosley.

Jeff states: And you may be thinking what was the reason for this murder? Well Amy did not want Robert to know the huge business debts and IRS debts she had racked up.

Gary states: But let’s take it back to the beginning. Robert and his wife, Amy, were making a name for themselves in their small Kentucky community.

Gary continues: Together they were like local royalty with their million-dollar roofing business and being active volunteers in their community. They had sports cars, horses, their own plane and a 50-ft motor-yacht. They also planned to build a castle-like mansion on their 35-acre estate. It was on this land, mainly remote woods, that the Bosley’s had built their weekend retreat, a luxury cabin.

Jeff states: But that dream became a nightmare at dawn on a May morning in 2005 when 38-year-old Amy rang police in floods of tears to report that an intruder had broken into their remote luxury cabin deep in the woodlands of Campbell County.

Gary states: Moments later a patrolman arrived at the Bosley’s cabin. Amy Bosley told him, “An intruder shot my husband, he shot my husband! She then said that the intruder fled out the back door. The patrolman pushed past her and there, lying on the bed was Robert Bosley riddled with bullets. His lips were blue. He was dead. The room and the rest of the cabin, had been ransacked – possessions and clothes strewn around the doors and windows broken.

Jeff states: The Bosleys’ two sons, Trevor, nine, and Morgan, six, asleep in a first-floor loft bedroom had not been harmed.

Jeff continues: Police searched the house and grounds, but no intruder was found. Amy Bosley in a state of shock was taken to the house of friends. She described the intruder as a white guy in his thirties, very tall and with a pointed very mean face.

Gary states: Police launched a manhunt for the intruder using sniffer dogs and helicopters but no one was found. The lead investigator immediately suspected something was wrong with Amy’s story. You see Robert had been shot seven times while sleeping, and his gun was missing. Also missing were the shell casings, which should have littered the crime scene.

Jeff states: Soon afterwards police investigations began to reveal that the Bosley marriage had not been as idyllic as Amy claimed it to be. Robert spent most weekends on his boat on nearby Lake Cumberland holding parties at which most of the guests were women.

Gary states: Friends said that Robert would be on the lake for days at a time and refuse to tell Amy who he was with and when he would be back. But not all the Bosley’s secrets concerned Robert’s extramarital affairs. A close study of the finances of the roofing company, of which Amy was financial director, showed that the apparently booming enterprise was going bust.

Jeff states: Police also discovered a motive: the Bosley’s were deep in debt, and, unknown to Robert, the IRS was literally knocking at their door over a $1.5 million tax bill. Amy it seemed was destroying the business by embezzling nearly $2 million which should have been paid to the IRS. In fact during the investigation into the murder, police discovered something suspicious in Amy’s car: hundreds of unmailed checks to the IRS totaling about $1.7 million in back taxes.

Gary states: Weeks before the shooting, Amy met with an IRS Revenue Officer who informed her they were investigating Robert for nonpayment of taxes. According to police, Amy went to great lengths to keep the tax problems from her husband even going as far as to impersonate him over the phone. She also got a P.O. Box for the business which Robert did not know about and had all IRS notices go to that box so Robert would not be aware of this problem. But this tax problem was coming to a head and Robert was to hear about it firsthand from the Revenue Officer himself.

Jeff states: Throughout the investigation, police, prosecutors, townspeople and even the Bosley family had their suspicions that Amy committed the crime.

Gary states: Authorities even said the crime scene looked staged. Around the body police found just two bullet shell casings; the others were found in the most unusual of places, like the bottom of the washing machine.

Jeff states: The police came up with their own theory that the day of the murder, the IRS was coming to audit the business’s books, potentially exposing Amy’s secret. Police said Amy might have felt that the only way to make the tax problem go away was to kill her husband.

Gary states: But a week later another piece of incriminating evidence turned up in Amy’s purse — a Glock handgun. It was the same type of gun used to kill her husband. Even though police had no doubt they’d found the murder weapon, authorities couldn’t definitively match it to the lead slugs that struck Robert Bosley because the slugs were too mutilated. Nevertheless, this was enough for police to arrest Amy for murder.

Jeff states: So listen to this surprising outcome. Amy first pleaded not guilty, but her case didn’t hold up well during a dramatic four-hour pretrial hearing.

Jeff continues: While there was a mountain of circumstantial evidence against Amy, prosecutors admitted they didn’t have a slam dunk. But statements Amy’s children, Morgan, 9, and Trevor, 6, gave to police following the murder would become the strongest piece of evidence.
Their testimony was crucial, but no one wanted to force young children who had already lost their father to testify against their mother. As a result, prosecutors reluctantly offered Amy Bosley a deal — the minimum sentence of 20 years if she pleaded guilty — and to everyone’s surprise she took the deal.

Gary states: In November 2005, Amy Bosley was sentenced to 20 years for murder and five years for a tampering of evidence charge. The sentences to be served concurrently. Unfortunately, the IRS would still be looking to collect the over $1.7 million in payroll taxes from Robert’s estate.

Jeff states: Well the love does not end here because after the break but we are going to tell you what new Federal budget that the Obama administration is proposing will have to be embraced for the next President.

Jeff continues: You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is the special Valentine’s edition of 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, Gary Sussman.

The Budget the Next President Will Inherit.

Gary 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, Gary Sussman. The number to call is 858-755-6696 x 3115. That is 858-755-6696 x 3115. Or visit www.guideyourstory.com.

Gary begins: On Tuesday, President Obama released his proposed $4.1 trillion final budget, mapping out his focus for the remainder of his time in office. Although we aren’t likely to see any major budgeting deviations, the document does give way to aspects the next Presidential Office holder will inherit.

www.blogs.wsj.com/economics/2016/02/09/the-budget-the-next-president-will-inherit-in-five-charts/tab/print/

www.wsj.com/articles/economists-thin-fed-will-wait-until-march-to-raise-rates-again-1452783601

Jeff continues: As a matter of fact Gary, the next president will assume his or her duties with spending outpacing revenue, the Wall Street Journal reports. However, it will be within ranges characteristic of the past 50 years, with expenditures more or less where they’ve been in recent decades.

Gary replies: Looking at a graph of the past 50 years, we see that both federal revenues and expenditures have remained between 14% and 25% of Gross Domestic Product, while government revenues have been hovering around 17% and 19% of GDP, according to reports provided by the White House.

Jeff states: Variations from year to year are mainly driven by the health of the economy. For instance, in the late 1990s when the economy was thriving, government revenues were slightly higher than the lower numbers following the 2001 and 2007 to 2009 recessions.

Gary replies: Yes Jeff, more individuals earning more income equals more tax revenue. Likewise, at times when the economy is weakened, for instance in periods of job loss, government revenue plunges.

Jeff states: When government revenue falls, government spending inevitably rises in response to recessions like in 2008 and 2009. This happens as a result of the president and Congress attempting to correct the economy with policies for spending on unemployment and safety-net programs.

Gary continues: Aside from the few years prior to 2000 when the economy was booming, the federal deficit, which is the difference between spending and revenue, has been mostly negative. The next president will inherit just that without any major policy changes or shock to the economy. Coming in at just over 2% of gross domestic product, it is neither exceptionally high nor low in comparison to the average over the past decades.

Jeff states: Aside from moderate deficits, the next president will face a substantial amount of residual debt. With total government debt now above 100% of GDP, let’s take a look at where all of this money is being spent.

Gary continues: Large amounts of this debt are owed to other branches of the federal government, primarily the Social Security trust fund, but the Federal Reserve also owns a large portion of Treasury bonds, used to conduct monetary policies.

Jeff replies: After that, the public own the remaining debt that amounts to about 60% of GDP. Meaning, more than half of the government debt rests on the shoulders of investors, both foreign and domestic.

Gary states: So what makes up this $4.1 trillion budget? Most of the government’s budget reaches out to only a small number of areas, regardless of the wide array of functions it performs. If we single out the Treasury, Defense and Health & Human Services, less than a shrinking 20% of the government’s spending is allotted for the other Cabinets.

Jeff continues: While most of the Health and Human Services spending goes to Medicare and Medicaid, according to the Wall Street Journal, the twelve department budgets that make up that shrinking 20% include: Veterans Affairs, Homeland Security, State, Transportation, Labor, Justice, Interior, Housing, Commerce, Agriculture, Energy and Education.

Gary states: What’s a president to do when a majority of the budget goes to funding Social Security, always a particularly challenging program to overhaul? Plus, there’s not much the future commander-in-chief can do when the second most costly budget, the Treasury Department, goes to paying down interest on the government’s debt.

Jeff continues: The reality of the situation? The winning presidential candidate will have a lot to face in January 2017. Moderate deficits along with the loftiest amount of accumulated debt since World War II, with a budget mostly consumed by defense, interest payments, Social Security and Medicare, creates quite the conundrum for the 45th President.

Gary states: In other news, economists think the Federal Reserve will wait until March to raise rates again.

Jeff states: That’s what they’re saying, Gary. About 66% of those surveyed by The Wall Street Journal predicted the next increase at the March 15-16 policy meeting, while 25% forecasting the increase for the June 14-15 meeting.

Gary continues: Now, the Federal Reserve officials stand by their pre-determined plan to move rates higher at a gradual pace, with expectations for four quarter-percentage-point rate increases in 2016. However, they have added that they “don’t know enough now to know how many there will be”. It all depends on what they predict the economy can take. Which is why you dust off your finances and talk to us….

Gary 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, Gary Sussman. The number to call is 858-755-6696 x 3115. That is 858-755-6696 x 3115. Or visit www.guideyourstory.com.

Jeff states: Stay tuned because after the break we are going to tell you The Tax Benefits Of Claiming Your Sweetheart on Your Tax Return Or Writing Off The Costs Of Marrying Your Sweetheart.

Jeff states: You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is the special Valentine’s edition of 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, Gary Sussman.

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

Chit chat with Amy

The Tax Benefits Of Claiming Your Sweetheart on Your Tax Return Or Writing Off The Costs Of Marrying Your Sweetheart

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 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.

Gary states: Valentine’s Day is all about that special someone in your life, but have you ever wondered if your date across the dinner table might actually be able to save you money on your tax return or if the two of you now decide to get married, whether you can deduct any portion of the wedding and thereafter pay less in taxes?

Jeff states: So here is what you need to know about who qualifies as a dependent.

Jeff continues: Dependents, which can range from a girlfriend to a child or even a friend, are often an area where tax deductions are either missed or misstated on tax returns. To help taxpayers navigate this gray area, here are the tests necessary to claim someone as your dependent—and some of the tax benefits available for claiming the one you love:

Amy says:

First and foremost, whether they are your child or your Valentine:

• You cannot claim them if you can be claimed as a dependent by another person.
• They cannot file a joint tax return (in most cases).
• They must be a U.S. citizen, resident alien, national, or a resident of Canada or Mexico.

Gary asks Amy: What else is required?

Amy replies: In order to claim a child as a dependent, these five additional tests must be met:

• Relationship: Must be your child, adopted child, foster-child, brother or sister, or a descendant of one of these (grandchild or nephew).
• Residence: Must have the same residence for more than half the year.
• Age: Must be under age 19 or under 25 and a full-time student for at least 5 months. Can be any age if they are totally and permanently disabled.
• Support: Must not have provided more than half of their own support during the year.
• Joint support: The child cannot file a joint return for the year.

Gary asks Amy – so for a relative or sweetheart what additional tests apply for that person to qualify as a dependent?

Amy replies:

• They are not the “qualifying child” of another taxpayer or your “qualifying child.”
• Dependent earns less than $4,000 taxable income in Tax Year 2015.
• You provide more than half of the total support for the year.
• The person must live with you all year as a member of your household or be one of the relatives who doesn’t have to live with you.

Amy continues: You can even claim a boyfriend, girlfriend, domestic partner, or friend as a qualifying relative if:

• They are a member of your household the entire year.
• The relationship between you and the dependent does not violate the law, meaning you can’t still be married to someone else. Also check your individual state law, since some states do not allow you to claim a boyfriend or girlfriend as a dependent even if your relationship doesn’t violate the law.
• You meet the other criteria for “qualifying relatives” (gross income and support).

Jeff states: Once you’ve determined who in your life can be claimed as a dependent, be sure to take advantage of the following tax deductions and credits:

Jeff continues:
• Dependent exemption: Have you been supporting your boyfriend or girlfriend? If he or she meets the above tests, this may entitle you to a deduction of $4,000.

• Dependent care credit: Allows you to claim up to $6,000 of your eligible dependent care costs for two or more dependents.

• Child tax credit: Depending on your income, you can claim up to $1,000 per qualifying child—helping to reduce your federal taxes.

Gary asks: Can you get a Tax Write-Off for your wedding?

Jeff states: Tax write-offs are usually the last thing a bride and groom think about when planning a wedding. To the surprise of many, however, wedding purchases and/or rentals can actually save money when it’s time to pay taxes at the end of the year. While there are rules and stipulations to each of these tax write-offs, many newlyweds take advantage of them every year.

Jeff asks Amy: what ideas do you have on this?

Amy replies: The Attire. Brides often wear their wedding dress only once. And while some opt to keep them for whatever reason, others have no idea how to discard them. For a tax write-off, consider donating the wedding gown to a nonprofit organization like Goodwill, MakingMemories.org or CinderellaProject.net. These organizations will take your dress and issue you a donation receipt for your good efforts. While you’re at it, consider donating the bridesmaids’ dresses, flower girl dress, ring bearer’s outfit and any nonperishable decorations.

Gary asks Amy – what about the venue?

Amy replies: The Venue. Believe it or not, some wedding venues are tax deductible. Choose a ceremony or reception venue located at a museum, public-owned park or even a historic house or building of some sort. These places are usually owned by nonprofit organizations who use the money they receive for upkeep purposes only. Speak with the head of the venue sight to make sure that it is a nonprofit organization and what portion of the cost you pay is in excess of the deemed value of the rental of the space (only the excess amount could be deductible as a charitable contribution).

Gary asks Amy – what about the reception costs?

Amy replies: Wedding Favors and Gifts. Charity donations can make thoughtful wedding gifts and favors. They also save you money during tax season. So instead of purchasing a trinket that your guests or attendants may discard later, opt for a donation to your favorite charity on behalf of all those who are a part of your wedding.

Amy continues: Flowers and Foods. You can also get a tax write-off for items that have a short life, such as leftover food and all those floral centerpieces. After the wedding is over, ask a friend or family member to bring the items to a local nursing home, homeless shelter or somewhere similar. You will get a tax deduction for the cost of the remaining food and flowers and you’ll put a few smiles on faces.

Jeff states: But Keep In Mind That It’s Risky Business To Claim Your Sweetheart on Your Tax Return or Deduct Gifts To Your Sweetheart or Take A Tax Write-Off For Your Wedding.

Jeff continues: Writing off wedding costs reduces your tax liability for the year in question and may increase your tax refund but consider whether you are willing to endure an audit for your attempted deductions. Quirky write-offs are red flags for the IRS. So if you are writing off your honeymoon as a business trip, keep a log of activities like appointments and what business was transacted. A paper trail of receipts will back up your case and may provide you with some relief and well-deserved tax savings this Valentine’s Day.

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

Jeff 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, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is the special Valentine’s edition of 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, Gary Sussman.

And Gary and I are 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.

Gary 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, Gary Sussman. The number to call is 858-755-6696 x 3115. That is 858-755-6696 x 3115. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through Trilogy Capital, a Registered Investment Adviser. Trilogy Capital and NPC are separate and unrelated companies.

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 Gary, what questions have you pulled for us to answer?

1. Thomas from San Diego asks: My dad told me that term life insurance is the best and I should buy term and invest the rest, but my agent recommended universal life. What should I do?

[Gary answers]

2. Hugh from San Francisco asks: When are individuals of the same sex lawfully married for federal tax purposes?
For federal tax purposes, the IRS looks to state or foreign law to determine whether individuals are married. The IRS has a general rule recognizing a marriage of same-sex spouses that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages. Generally, your marital status on the last day of the year determines your status for the entire year.

You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests.

  • You are married and living together as husband and wife.
  • You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.
  • You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.
  • You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.

3. Joanne from Newport Beach asks: I recently got married. Am I responsible for my spouse’s past taxes?
Maybe. Your wages and property might be at risk of IRS seizure for your spouse’s tax bill, depending on the state where you live. In most states, property owned by one spouse before marriage remains that spouse’s separate property during marriage. Assets acquired during marriage, however, are generally considered joint property. When couples own property together, IRS problems can arise. The IRS can legally go after jointly owned assets to cover the tax debt of just one spouse. The IRS cannot, however, take the share of the non-debtor spouse.

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.

Gary states: Have a great day everyone and Happy Valentine’s Day!

Jeffrey B. Kahn, Esq. and Gary Sussman Discusses Super Bowl 50, Deals On Big Screen TV’s and Getting Ready To File our 2015 Taxes On ESPN Radio – February 5, 2016 Show

Topics Covered:

1. Super Bowl 50 – The first Super Bowl operated by the NFL as a For-Profit Organization!

2. Household Economics: Finding a deal on that big screen for the big game.

3. Getting ready for your 2015 taxes: Choosing the Correct Filing Status and the Facts on Exemptions and Dependents

4. Questions from our listeners:

a. I’ve heard you can invest HSA funds, is that something that I should look into? At which point, when should I be looking into doing that?

b. Which tax form is best for me to use?

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

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.

Gary states:

And this is Licensed Financial Planner, Gary Sussman 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!

Gary 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: We’ll focus on Household Economics: finding a deal on that big screen for the big game.

Gary states:

Also coming up is:

Segment 3 material: Getting ready for your 2015 taxes: Choosing the Correct Filing Status and the Facts on Exemptions and Dependents.

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

Jeff starts chit chat with Gary.

Jeff states: So for today’s top story:

Super Bowl 50 – The first Super Bowl operated by the NFL as a For-Profit Organization!

Jeff states: You know that with this weekend being the Super Bowl game it seems everywhere I go somebody is talking about this big event.

Gary states: Besides the match-up of the Broncos and the Panthers, people are excited over the entertainment and half-time show, what celebrities will be attending the game and of course – the commercials.

Jeff states: Sponsors present their best commercials during the Super Bowl, and the big game wouldn’t be the same without them. For the advertising community, the Super Bowl is their Super Bowl, and often creates commercials specifically for the enormous viewership that the game provides. For many, watching the commercials is the most entertaining part of the Super Bowl. Advertisers try to get their money’s worth by unveiling their most creative and innovative spots.

Jeff states: So Who’s Buying Commercials in the Big Game?

Gary states: Automakers, who have dominated the ad roster of the game for the last few years, are being more dominant for the 2016 event. Automakers that we have not seen in a while include Acura and Buick. Automakers returning to the line-up: Audi, Honda, Kia, Mini (BMW) and Toyota. But the automaker making the priciest impact with two commercials during Super Bowl 50 (plus a 60-second ad in the commercial pod immediately before kickoff and another earlier in CBS’s pre-game) is Hyundai. Hyundai better be selling a lot of cars in 2016 to pay for this!

Jeff states: In addition to the auto advertisers you know we will be seeing ads from the food & beverage producers, consumer electronics and telecom, personal hygiene, entertainment & gaming, and financial & insurance. Super Bowl 49 had a strong showing of digital businesses which this year is limited to a couple of showings.

Gary states: Somewhat surprising since Silicon Valley is hosting the Super Bowl.

Jeff asks: And so with the Super Bowl 50 coming up, what does taxes have to do with football?

Gary replies: Well as we said one of the things we look forward to are the commercials. The cost to air a 30-second commercial during the 2016 Super Bowl is $5M. That is $500,000 more than Super Bowl 49! Over the last five seasons, the approximate asking price for a 30-second Super Bowl ad has increased by an average of 11.1% each year. The Super Bowl itself has drawn $5.9 billion in inflation-adjusted ad spending since 1967.

Gary asks: How about the cost of a ticket to attend the Super Bowl?

Jeff replies: Well the cheapest seat – and this is face value – is $850.00. The more expensive seats (and I am not even talking about suites) go up to $1,800.00 and up to $3,000 for club seats. The last and only other time the game was in the Bay Area, at Stanford Stadium in 1985, tickets sold for $60. Even factoring for inflation, the cheapest Super Bowl face value ticket is now more than six times more costly than back then, and fans who have to go through the secondary market are paying about 35 to 40 times as much money.

Gary states: For that price I will pass and instead buy one of those 80 inch screen TV’s which I can enjoy every day! I just can’t justify paying that much to go to a game when I can sit in the comfort of my own home and not have to worry about beer sales closing at the end of the third quarter.

Jeff states: Now here is a fact that is not so widely known – the National Football League which you figure makes a ton of money was recognized by the IRS as a tax-exempt entity until last year. You heard me right – for the last 49 years the National Football League did not pay income taxes as any for-profit-company would.

Jeff asks: You may ask, how did this happen?

Section 501(c)(6) of the Internal Revenue Code provides for the exemption from  tax entities which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

Those entities are specifically:
1. business leagues,
2. chambers of commerce,
3. real estate boards,
4. boards of trade and
5. professional football leagues.

Jeff states: It’s obviously notable that only professional football leagues are included here, as opposed to all sporting leagues.

Gary states: It seems inconceivable that the NFL is not “engaging in a regular business of a kind ordinarily carried on for profit”.  How are their efforts to maximize profits any different than those of Major League Baseball, the National Basketball Association or the National Hockey League?

Jeff states: Well professional football leagues were not always included in this list.  This change dates back to 1966, when the tax code was amended to give a professional football league tax-exempt status in order to facilitate the merger of the NFL and the old American Football League. Now keep in mind that even though the NFL has been granted tax-exempt 501(c)(6) status, the 32 teams inside the league are subject to taxes as for-profit businesses.

Let’s Look At The Stats!

Jeff continues: In order to have a tax-exempt status, the NFL must be run as a charitable foundation. In 2012, they gave away a meager $2.3 million. Almost all of it–$2.1 million– went to the NFL Hall of Fame. Oh by the way, last time I checked the price of Adult admission to the Hall of Fame was $24.00 ($17.00 for a child). The average admission price (including free admission museums) for all museums in the United States is $8.00.

Gary states: In 2012, NFL commissioner Roger Goodell was paid $29.5 million to run the organization. More crazy: Goodell’s salary is 1/10th of what the NFL claimed in total assets for 2012– $255 million. Even crazier: Goodell made 15 times what the NFL donated to other charities. Extremely crazier: the NFL only made charitable donations equaling one-one hundredth of their annual income.

Jeff states: The NFL’s most recent Form 990 filed with the IRS ended on March 31, 2012. They claimed revenue of $255 million, up from $240 million in 2011. So, if you were concerned, things are good. The NFL has assets of over $822 million.

Gary states: Under “grants”– meaning donations to other non profit organizations, the NFL did increase the number from just over $900,000 to $2.3 million. Generous right? However: their total salaries increased by $27 million to a total of over $107 million.

Jeff states: Here’s the best part: after all that, thanks to creative thinking, the NFL claims it finished the year in the red with negative $316 million.

Jeff continues: What else did they spend money on? Well, for one thing, new office construction cost $36 million.

Gary states: Just to put all this in perspective: going by numbers in Forbes, Goodell would come in at around number 28 of the highest paid CEOs in 2012. He made more than the heads of FedEx, AT&T, Heinz, Ford Motors, Goldman Sachs, as well as Rupert Murdoch.

Jeff states: So now that the NFL has terminated its tax exempt status, it will have to pay taxes just like every other for-profit corporation does and no longer will it have to disclose its finances and the amounts its executives earn like not-for-profit organizations are required to do.

Jeff states: Well it’s time for a break but stay tuned because we are going to tell you how Super Bowl 50 may be your ticket to that super-sized television.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman 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, Gary Sussman.

Jeff states: Gary is sitting in for Windus and since you both work in the same firm, Gary please tell our listeners of your firm’s offer.

Gary states 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, Gary Sussman. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Jeff states: So let’s continue with the business of Super Bowl 50.

Household Economics: Finding a deal on that big screen for the big game.

http://www.wsj.com/articles/SB10001424127887323628804578344120211713226; http://www.wsj.com/articles/buy-a-tv-like-a-champ-1453921987

Gary states: I agree, let’s consider what you would be looking at spending for a new flat screen for the sporting event of the season. After all, we all know nothing makes up for a lousy TV at your Super Bowl party.

Jeff continues: Good news is, Super Bowl 50 just so happens to coincide with the best time in years to invest in a new television. Considering March the time that most of the TV industry introduces its new product line, the old models are being benched on the clearance rack.

Gary replies: That’s right Jeff. In the next couple of weeks you could score some really great discounts on the previous years’ models. You may be thinking that this doesn’t exactly provide you with the latest and greatest technology, that with new advances models are rendered obsolete after just a year, right? Wrong!

Jeff continues: In fact buying a previous years’ model isn’t going to be all too much of a sacrifice considering television technology has hit a plateau. You may see improvements in the extremely high end later this year, but all together the majority of fundamental technologies like streaming and 4K were surmounted in the 2015 models, according research at the Wall Street Journal.

Gary states: Which brings us back to Super Bowl 50. Sunday’s game would be the ideal test of a TVs capabilities. The live action, nationally viewed program would help you determine if there is clear viewing from anywhere in an occasionally packed room. In addition to whether a 120 clear motion rate can hold a candle to a traditional 120Hz refresh rate.

Jeff replies: In a sea of high definition, how do you know which one to go with? Well, HDGuru.com editor in chief Gary Merson and TV calibration pro Robert Heron have a few suggestions that whittles down the sales to bring you top picks.

Gary states: You don’t have to spend all that much to still get a pretty impressive box. TCL Roku TV is Heron’s inexpensive favorite. Loaded with software and a remote designed entertainment streaming, Amazon.com is advertising the 48-inch model on sale for $350.

Jeff continues: You could also find a good quality 55-inch HDTV for under $700. Not to mention, with the ever slimming frames of newer model flat screens, you could easily fit that new 55-inch TV in the same alcove that’s been dedicated to you old 47-inch from a few years ago.

Gary continues: If we’re looking to spend a little more, you could find an Ultra-HD TV for under $1,700 that has included the “future-proofing” peace of mind for the next generation of TV shows and movies.

Jeff states: Want more? For a $3,000 price tag, you could ruin your friend’s experiences with their own TVs and invest in a high-performance OLED-screen. Then again, your guests may never leave your house.

Gary states: However, if you really what to impress, Robert Heron lends the suggestion of a projector. The LG PF1500 should do the trick! This $950 device will display the big game onto the wall in your living room, or better yet, the side of your house.

Jeff continues: One of the more recent technologies 4K, or Ultra-HD TVs, showcase more than 8 million pixels with four times the resolution rate than ordinary HDs. But where do you have to sit in relation to the set in order to really benefit from this technology?

Gary states: I’m glad you asked that, Jeff. In order for your eyes to appreciate the 4K Ultra-High Definition TV you would have to sit 5 feet and 3 inches away from a 40” screen, 6 feet and 5 inches from a 50” screen, 7 feet 8 inches from a 60” screen and just over 9 feet away from a 70 inch screen. I can tell everyone is visually measuring the distance to see if their viewing is currently being optimized.

Jeff continues: In fact Gary, the analysis by Merson you’re talking about pertains to how much detail the human eye can actually take in. But, if you’re running out to pick up an Ultra- HD flat screen, keep in mind that Super Bowl 50 will not be broadcasting in 4K, nor any other live TV.

Gary states: In which case, if you want that pristine picture quality, you may want to focus on the high dynamic range, or HDR. This is the most visible improvement in technology when it comes to televisions. One of the best on the market for your dollar would be the 55-inch Samsung SUHD J8500 on sale for $1,700, according to Geoffrey Fowler over at the Wall Street Journal.

Jeff continues: Don’t forget the refresh rate! Cheaper sets skimp on motion resolution then fluff by advertising “MotionFlow”, “TruMotion” or even “Clear Motion”. All this means is that to compensate for decreased horsepower. Keep an eye out and make sure when you buy a unit with a refresh rate of 120, its 120Hz.

Gary states: Now you may ask, what’s the deal with those curved models we’ve all seen in stores? Well, the verdict is in. The curved TVs are a gimmick much like their 3D predecessors. While Samsung only sells their top models in the curved style, this is all an up sell and sales tactic.

Jeff replies: You may be thinking to yourself, what if I hold of and wait a year? Black Friday shopping has some pretty good sales, you’re thinking to yourself. Well, on the high end like LG with its new OLED 4K TV, there will be more HDRs. On the lower end, you could find yourself looking at a 55-inch 4K TV with limited HDR content support from up and coming Chinese manufacturer Hisense. Their H8 model will sell for $700.

Gary continues: The most important tip to remember though, whichever you choose to go with, be Smart. Now days, software and apps matter. If you buy a TV that has access to streaming apps you’ve subscribed to, it saves you the hassle of external boxes and extra remotes.

Jeff states: Now, let’s get down to finances. Say you’ve got a nice chunk of change headed your way in the form of a tax refund and you’re already “ghost spending” the funds. However, that little voice in the back of your head starts butting in with a, “To splurge or not to splurge, that is the question”.

Gary replies: That is quite the predicament, Jeff. Let’s face it, for many of us, the mere mention of extra cash becoming available to us would spur thoughts of spending sprees. Perhaps we should rethink this, though. Considering what you’re actually getting back from the government is the money you overpaid all year out of your paycheck, then it’s not the free money you think you’re spending.

Jeff continues: Another way of looking at it, you just got paid back the money you’ve loaned the government “fee-free” all year. Maybe you should put it towards the bills you would have been using it to pay or even boost your financial savings.

Gary states: As Alexa von Tobel, founder of financial-planning site LearnVest.com puts it, “if you have debt, pay down debt; if you don’t have it, fund your emergency savings.” Pay close attention to the order of events, too. If you decide to save the funds, and put them in a high-yield mutual fund for example, while letting you debt collect interest, you’ll be using all those dividends to pay off the interest….and paying tax on the dividends, might I add.

Jeff continues: Now it’s not necessarily a bad idea to put your return toward something fun, just don’t do so if you have to save more money to pay off more debt. Good options for those funds you hadn’t accounted for could be a gym membership, or continuing your education, maybe by taking classes to further your career like learning a new language. When looking back, you don’t want to not be able to remember what you spent it on, so make it count.

Gary finishes: Once the excitement of receiving a tax refund subsides, you should take a moment to figure out what you can do for next year to avoid the government withholding too much from your pay. Wouldn’t it be better to have that money all year? You can find that out and adjust your withholdings accordingly by using the Internal Revenue Service’s “withholding calculator” at www.irs.gov. Need help with further financial planning? You can contact me….

Gary states 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, Gary Sussman. 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 will help you get ready for your 2015 taxes and discuss your correct filing status and the facts on exemptions and dependents

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman 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, Gary Sussman.

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

Chit chat with Amy

Jeff states: 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: Getting ready for your 2015 taxes: Choosing the Correct Filing Status and the Facts on Exemptions and Dependents

Amy states: It’s important to use the right filing status when you file your tax return. The status you choose can affect the amount of tax you owe for the year. It may even determine if you must file a tax return. Keep in mind that your marital status on December 31st is your status for the whole year. Sometimes more than one filing status may apply to you. If that happens, choose the one that allows you to pay the least amount of tax.

Gary states: There are five filing statuses [Gary to read off each one, Amy to describe, Jeff to comment]

1. Single. This status normally applies if you aren’t married. It applies if you are divorced or legally separated under state law.

2. Married Filing Jointly. If you’re married, you and your spouse can file a joint tax return. If your spouse died in 2015, you can often file a joint return for that year.

3.  Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit you if it results in less tax owed than if you file a joint tax return. You may want to prepare your taxes both ways before you choose. You can also use it if you want to be responsible only for your own tax.

4.  Head of Household. In most cases, this status applies if you are not married, but there are some special rules. For example, you must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Don’t choose this status by mistake. Be sure to check all the rules.

5.  Qualifying Widow(er) with Dependent Child. This status may apply to you if your spouse died during 2013 or 2014 and you have a dependent child. Other conditions also apply.

Jeff states: So now that we covered filing status, let’s discuss exemptions and dependents.

Amy states: Most people can claim an exemption on their tax return. It can lower your taxable income. In most cases, that reduces the amount of tax you owe for the year. Here are the facts about exemptions to help you file your tax return.

[Gary to read each fact, followed by Amy explanation and Jeff comment]

1. Exemptions Cut Income.  There are two types of exemptions. The first type is a personal exemption. The second type is an exemption for a dependent. You can usually deduct $4,000 for each exemption you claim on your 2015 tax return.

2. Personal Exemptions.  You can usually claim an exemption for yourself. If you’re married and file a joint return, you can claim one for your spouse, too. If you file a separate return, you can claim an exemption for your spouse only if your spouse:

  • Had no gross income,
  • Is not filing a tax return, and
  • Was not the dependent of another taxpayer.

3. Exemptions for Dependents.  You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative who meets a set of tests. You can’t claim your spouse as a dependent. You must list the Social Security number of each dependent you claim on your tax return.

4. Report Health Care Coverage. The health care law requires you to report certain health insurance information for you and your family. The individual shared responsibility provision requires you and each member of your family to either:

  • Have qualifying health insurance, called minimum essential coverage, or
  • Have an exemption from this coverage requirement, or
  • Make a shared responsibility payment when you file your 2015 tax return.

5. Some People Don’t Qualify. You normally may not claim married persons as dependents if they file a joint return with their spouse.

6. Dependents May Have to File.  A person who you can claim as your dependent may have to file their own tax return. This depends on certain factors, like total income, whether they are married and if they owe certain taxes.

7. No Exemption on Dependent’s Return.  If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person on your tax return. This rule applies because you can claim that person as your dependent.

8. Exemption Phase-Out.  The $4,000 per exemption is subject to income limits. This rule may reduce or eliminate the amount you can claim based on the amount of your income.

Jeff states: 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: Thanks Amy for calling into the show. Amy says Thanks for having me.

Jeff 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, Gary Sussman 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, Gary Sussman.

And Gary 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.

Gary 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, Gary Sussman. 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 Gary, what questions have you pulled for us to answer?

Question from Sara of Irvine: I’ve heard you can invest HSA funds, is that something that I should look into? At which point, when should I be looking into doing that?

[Gary answers]

Question from Eric of Escondido: Which tax form is best for me to use?

Answer: Well it depends on what you have to report. The simpler return choice you use, the easier it is to complete your return and probably provides you with a lower risk for audit.

Here are some tips to help you choose the right forms going from the simplest to the most comprehensive:

You can generally use Form 1040EZ if:

  • Your taxable income is below $100,000;
  • Your filing status is single or married filing jointly;
  • You don’t claim dependents; and
  • Your interest income is $1,500 or less.

Note: You can’t use Form 1040EZ to claim the Premium Tax Credit. Nor can you use this form if you received advance payments of the premium tax credit in 2015.

Form 1040A may be best for you if:

  • Your taxable income is below $100,000;
  • You have capital gain distributions;
  • You claim certain tax credits; and
  • You claim adjustments to income for IRA contributions and student loan interest.

You must use the Form 1040 if:

  • Your taxable income is $100,000 or more;
  • You claim itemized deductions;
  • You report self-employment income; or
  • You report income from sale of a property.

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.

Gary states: Have a great day everyone! Go Broncos!

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Market Changes, Unfair Drug Pricing and the IRS Targeting International Taxpayers on ESPN Radio – January 29, 2016 Show

Topics Covered:

1. Is there any truth to the theory that the Federal Reserve is the root of the cause why markets have plunged?

2. Why you should be outraged that we in the U.S. are paying substantially more for top prescription drugs than other countries!

3. What you need to know to stay out of trouble with the IRS if you live abroad or have foreign assets.

4. Questions from our listeners:

a. I am a U.S. citizen and in 2015 I married a nonresident alien, what should I use for my filing status for my 2015 income tax return?

b. When could we realistically be looking at the Federal Reserve earnestly considering the next rate hike?

c. What type of funds should I be considering for long term growth in say an IRA? Same question for a short-term wealth building individual account for unforeseen 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.

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: Why you should be outraged that we in the U.S. are paying substantially more for top prescription drugs than other countries!

Windus states:

Also coming up is:

Segment 3 material: What you need to know to stay out of trouble with the IRS if you live abroad or have foreign assets.

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

Jeff starts chit chat with Windus.

Windus introduces her guest: Gary Sussman, Managing Partner at Trilogy Financial Services.

Gary says Hi!

Jeff states: So for today’s top story,
Is there any truth to the theory that the Federal Reserve is the root of the cause why markets have plunged?

Jeff continues: This is a question we picked up on various articles in The Wall Street Journal and Bloomberg News.

http://on.wsj.com/1PfzYU0; http://on.wsj.com/1PfxmFC; http://on.wsj.com/1nt5uDJ; http://www.bloomberg.com/news/articles/2016-01-25/deeper-dive-into-market-monsoon-shows-recession-alert-on-mute; http://on.wsj.com/1nwUAgo; http://bloom.bg/1KFGk9O

Jeff continues: The articles note that oil and stocks at their tightest correlation in 26 years. So how could the Federal Reserve’s 0.25% rise in rates this past December tank markets into the New Year and risk pulling us into a recession? You should know that current conditions have very little to do with the Central Bank and more to do with anxieties about China’s economy, emerging markets and oil.

Windus replies: Federal policy operates through a collaboration of financial conditions, i.e. stock prices, corporate bond yields, commodity prices, exchange rates and most of all, the desire for risk. Although the Fed doesn’t command the behavior of these comprehensive conditions, it does stimulate. Peter Berezin of BCA Research explains, “If you are a central bank reliant on increasing risk as your method for stoking spending, you’re going to run into a major problem. You can only increase risk so much. And when investors pull back, they do so in a very sharp way.”

Jeff states: The Fed quarter point rise in interest rates won’t push the U.S. economy into a downfall though, in actuality, short-term rates and bond yields really are not impacted by gradual rate changes made by the Fed. But an overall tightening of financial conditions in the U.S. could tip the scales toward a recession.

Windus continues: This doesn’t mean the Federal Reserve was wrong to begin implementation of such an aggressive monetary policy, considering the return of a low 5% rate of unemployment. So let’s look at the odds.

Jeff replies: Well currently, the unemployment rate is looking good at a seven year low, GDP is forecast at a 2.4% growth rate for 2016, and Goldman Sachs has said this will be a “reflationary year” even with the consideration of some price increasing yielding little to no gains.

Windus replies: This month’s Bloomberg survey of economists measures a median probability of a recession in the U.S. in the next twelve months at 19%. This is the highest probability since February of 2013; however, economists are looking not to 2017 but actually at 2018 for the likeliest year for contraction.

Jeff continues: At the same time Windus, the rough two-week start of the stock market this year, the worst on record, has been enough to shake investor confidence, destroying more than $2 trillion of equity value. Then again, signals are inconclusive if we go by history. The S&P 500, once down by 12% from its high, just made its 42nd correction of 10% since 1927, according to the Wall Street Journal.

Windus states: Looking at history out of the 42 corrections, only 13 of those corrections came within a year of a two quarter contraction in GDP. Chief Investment Officer at Leuthold, Doug Ramsey, is not convinced of the call of a recession. “If we go down to 25% on the S&P 500, then [he] would say, yes, we’ll have a recession. If we bottom here, I think it’s a much tougher call.”

Jeff states: Some might even say the economy is just having ‘digestion problems’. In a Bloomberg Television interview from the World Economic Forum in Davos on Friday, Laurence D. Fink, chairman of BlackRock Inc., the world’s largest money manager, explained that the over the course of the next year we’ll see improving market with global GDP around three-percent. Although, not as high as the IMF is forecasting, he believes “this is a capitulation, not a bear market.”

Windus replies: The S&P 500 would need to fall another five-percent from its January 20 worst low, in order to meet the threshold of a bear market warning. Only four recessions since the Great Depression have come without a bear market warning according to data compiled by Bloomberg.

Jeff continues: Now you should not be thinking that the recent junk bond massacre in the energy sector is signaling a recession, but if the world economy starts to slow down we need to look at U.S. industrial production for any warning signs of a recession. Trends in manufacturing tend to lead the economic cycle, as well as, being an indicator of market swings. Let’s face it, manufacturing is struggling.

Windus states: However Jeff, unlike declines in the past, the current decline in industrial production has been primarily driven by the collapse in the oil industry. The oil industry that just so happened to have been on the rebound this week.

Jeff replies: In fact, investors disregarded yet another sharp decline in Chinese shares as the rally in oil prices gave gain to U.S. stocks. This came about after a better-than-expected earnings report Tuesday.

Windus states: Taking a moment to consider the economic start of the New Year, it’s good to hear that even though the Shanghai Composite tanked to a grand total loss of 22% so far this year, U.S. stocks rallied freeing themselves from being pulled down further alongside the Chinese market.

Jeff states: Other earnings reports released on Tuesday, giving way to an upturn in the market include 3M, reporting profits and sales topping analyst’s expectations for the quarter as well as confirming its profit outlook for 2016. 3M shares gained 5%.

Windus continues: Johnson & Johnson increased 5% as well, despite a drop in quarterly sales, due to confidence in its core business and global health-care market.

Jeff continues: European shares also rebounded with the Stoxx Europe 600 Index gaining 0.9%, as recovering oil and base metal prices reprieved energy and mining companies.

Windus continues: Sprint shares jumped 19% after reporting a smaller than expected quarterly loss and boosted its direction for the year.

Jeff continues: In a recent turn of events, Coach reported quarterly sales gains for the first time since June 2013, and welcomed a share gain of 9.8%. Gold even rose 1.4% to $1,121.70 a troy ounce.

Windus states: Meanwhile, officials at the Federal Reserve announced Wednesday, that interest rates will remain unchanged. The Federal Open Market Committee is “closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook,” the central bank said in the statement following a two-day meeting in Washington.

Jeff replies: “This doesn’t read like a statement from a committee that is expecting to tighten again in March,” according to Johns Hopkins University in Baltimore, professor and a former Fed economist, Jonathan Wright. “Four rate hikes this year is not impossible, but I think it is unlikely and would be unwise.”

Windus makes final comment on this.

Jeff states: Well it’s time for a break but stay tuned because we are going to tell you all about how U.S. consumers pay substantially more for top prescription drugs than consumers in other countries.

Jeff continues: 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.

Consumers in the U.S. are paying substantially more for top prescription drugs than other countries!

Jeff continues: I hope that after listening to this segment you will be outraged just as much as me and Windus that consumers in the U.S. are paying substantially more for top prescription drugs than other countries! But before we start this discussion, Windus wants to tell you about her special offer:

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.

Windus begins: In recent articles by Bloomberg News and The Week, they’ve examined the eight top selling prescription drugs, finding that the cost of these drugs are higher in the U.S. than most other countries. It is speculated that the reasoning behind price gouging Americans, is to presumably fund prescription research and development.

http://www.bloomberg.com/graphics/2015-drug-prices/; http://theweek.com/articles/597868/ecigarettes-generic-drugs-guide-fda-2016

Jeff states: Yes Windus, the cost of brand-name prescription drugs is found to be greater in the U.S. than many other developed countries. However, contentions from the drug industry claim that focusing on the U.S. list prices unfairly excludes the discounts established between insurers.

Windus replies: However, analysts at Bloomberg News have determined that even after these sometimes greater than 50% off discounts, prices are still much higher for Americans then they are abroad. Let’s compare these top eight to see exactly where we are and which ones in specific we are focusing on.

Jeff replies: To start with, after the estimated 60% discount, AstraZeneca still charges the U.S. more than twice as much for its Crestor cholesterol pill than the next most expensive country, Germany.

Windus continues: Sanofi charges 30% more in the U.S. than in China, the second-most expensive country, for its Lantus long-acting insulin. This is after discounts of roughly 50%, according to SSR Health.

Jeff continues: Also striking deals at 50% off on their drug, Advair asthma inhaler, GlaxoSmithKline Plc’s charges at least twice as much in the U.S. as opposed to other well developed countries.

Windus continues: Again according to SSR Health data, the list price of Januvia, Merck & Co’s diabetes pill, has likewise been negotiated to an estimated 50% discount on average. Yet, even considering the price cut, the drug is priced for Americans more than double what it’s costing our neighbors in Canada, coming in second for most expensive, Bloomberg reports.

Jeff continues: To give you a better idea of cost, AbbVie Inc’s lucrative rheumatoid arthritis treatment Humira, is priced in the U.S. at an estimated $2,500 a month after discounts. The runner up Germany comes in around $1,750 a month, Bloomberg reports. The price continues to drop even further in other countries around the world.

Windus: Additionally, price imbalance seems more prominent in cancer drugs. For instance, after an estimated fifteen-percent discount on the Herceptin breast cancer infusion drug from Roche Holding AG, it’s one-third more than the second most-expensive, Saudi Arabia. In addition, the cost of this medication is still 85% higher for Americans than it is for citizens of other high-income nations.

Jeff states: Unfortunately, discounts for the eighth drug, the chronic leukemia/cancer treatment Gleevec, could not be obtained, but its list price is more than $7,000 a month more expensive than the next populace. Americans are being quoted over 70% more, before any negotiated discount for this particular treatment. However, a generic version is anticipated to be available in February 2016, Novartis AG reports.

Windus continues: Finally Sovaldi, the Hepatitis C pill from Gilead Science Inc., actually gives American a bit more of a break with the U.S. ranking second just under Saudi Arabia, only after discounts. However, both Saudi Arabia and the U.S., along with other ranking high-income countries are running fairly neck-and-neck in cost comparison.

Jeff replies: Furthermore, the 22% discount established with the U.S. in 2014 will more than double to 46% in February this year, Gilead released. Finally giving us a decent price-break on at least one of the top eight drugs.

Windus states: Chief Medical Officer Steve Miller of Express Script Holding Co, the largest manager of prescription-drug benefits insists, “We can no longer sustain a system where 300 million Americans subsidize drug development for the rest of the world.” Regardless, the drug industry sees it differently.

Jeff continues: In the U.S., drug companies set their own base price with increases in sticker price over time. Private insurers and benefit managers can then negotiate to strike a deal with the prescription manufacturers, which are rarely ever disclosed. Meanwhile Medicare, one of America’s largest buyers of medicine, is forbidden from haggling prices direct with drug companies.

Windus states: In the interim, given the current race for the White House, election years tend to focus heavily on issues like this. In fact, candidates are already pushing the Food and Drug Administration to lower drug costs. Then again, the agency only has indirect influence in this aspect.

Jeff states: However when we get down to the nitty-gritty, the FDA does have jurisdiction over 20-25% of every consumer dollar. Therefore, it matters what actions are taken and the agency has a considerable amount already on its plate outside of drug prices for 2016.

Windus replies: Lawmakers are turning to generic drugs that account for 88% of all prescriptions at 28% of the price, according to Generic Pharmaceutical Association. Far cheaper than their skyrocketing name-brand counterparts, these will effectively help ease the drain on consumer’s finances.

Jeff states: Currently, more than 4,300 generic medication applications are now awaiting FDA approval. The problem is that many of these applications are ‘deficient’ while “generic drug companies submit reports lacking critical information solely to win a space in the queue, and plan to fix them later,” according to The Week.

Windus continues: In order to expedite the issue, the FDA is expected to permit generic companies to later edit their labels with safety information prior FDA approval. The increased liability in the case of safety issues raises opposition in the industry. Which means, we had better start saving for the hefty cost of those prescription medications you’ll need in your retirement, 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. Or visit www.guideyourstory.com.

Jeff states: Stay tuned because after the break we are going to tell you what you need to know to stay out of trouble with the IRS if you live abroad or have foreign assets.

Jeff states: 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

Jeff states:

What You Need To Know To Stay Out Of Trouble With IRS If You Live Abroad Or Have Foreign Assets.

Jeff continues: The Internal Revenue Service continues its educational efforts to remind U.S. taxpayers living abroad, as well as other international taxpayers, of their tax reporting obligations by launching You Tube Videos on IRS.gov.

Windus states: The videos cover the following international taxpayer topics:

Jeff states: So we have taken the most important points from these videos which we will discuss in this segment as well as provide you with our comments and tips if you have undisclosed foreign bank accounts or need to report foreign income. I will let Windus read off a point and Amy and I will follow up on each point.

Windus states: The U.S. taxes persons on their worldwide income.

Amy replies: By law, Americans living abroad, as well as many non-U.S. citizens, must file a U.S. income tax return. In addition, key tax benefits, such as the foreign earned income exclusion, are only available to those who file a U.S. return.

Amy continues: The Internal Revenue Code requires U.S. citizens and resident aliens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Windus asks: Amy what are the penalties for non-compliance?

Amy replies: Penalties for non-compliance:

Civil Fraud – If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%.

Criminal Fraud – Any person who willfully attempts in any manner to evade or defeat any tax under the Internal Revenue Code or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, can be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution (Code Sec. 7201).

Jeff comments: The term “willfully” has been interpreted to require a specific intent to violate the law (U.S. v. Pomponio, 429 U.S. 10 (1976)). The term “willfulness” is defined as the voluntary, intentional violation of a known legal duty (Cheek v. U.S., 498 U.S. 192 (1991)).

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: The U.S. requires persons to report foreign bank accounts.

Amy replies: Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015 must file with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) ) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). It is due to the Treasury Department by June 30, 2016, must be filed electronically and is only available online through the BSA E-Filing System website. For details regarding the FBAR requirements, see Report of Foreign Bank and Financial Accounts (FBAR).

Windus asks: Amy what are the penalties for non-compliance?

Amy replies: Penalties for non-compliance: The penalties for FBAR noncompliance are stiffer than the civil tax penalties ordinarily imposed for delinquent taxes.

For non-willful violations it is $10,000.00 per account per year going back as far as six years.

For willful violations the penalties for noncompliance which the government may impose include a fine of not more than $500,000 and imprisonment of not more than five years, for failure to file a report, supply information, and for filing a false or fraudulent report.

Jeff comments.

Windus states: U.S. requires foreign financial institutions to report U.S. accountholder to the IRS.

Amy replies: U.S. taxpayers with foreign accounts should also understand their reporting requirements under the Foreign Account Tax Compliance Act (FATCA). Third-party information reporting from foreign financial institutions or through intergovernmental agreements began in 2015.

Windus asks: Amy what are the penalties for non-compliance?

Amy replies: Penalties for non-compliance: Foreign banks that are not certified by the IRS for reporting U.S. accountholders are subject to a 30% withholding tax on all U.S. sourced investments.

Jeff comments.

Windus states: The IRS requires disclosure of foreign financial accounts with your Form 1040.

Amy replies: In addition, under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets.  Generally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad. See the instructions for Form 8938 for more information.

Windus asks: Amy what are the penalties for non-compliance?

Amy replies: Penalties for non-compliance: Failing to file Form 8938 when required could result in a $10,000 penalty, with an additional penalty up to $50,000 for continued failure to file after IRS notification. A 40% penalty on any understatement of tax attributable to non-disclosed assets can also be imposed.

Jeff comments.

Windus states: The IRS has special programs for taxpayers to come forward to disclose unreported foreign accounts and unreported foreign income.

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: Both you and Jeff talked about the penalties and even criminal enforcement for non-compliance. What advantages does a taxpayer have coming into any of these programs.

Amy replies: For taxpayers who willfully did not comply with the U.S. tax laws, we recommend going into the 2014 Offshore Voluntary Disclosure Program (OVDP). Under this program, you can get immunity from criminal prosecution and the one-time penalty is 27.5% of the highest aggregate value of your foreign income producing asset holdings.

Jeff continues: For taxpayers who were non-willful, we recommend going into the Streamlined Procedures of OVDP. Under these procedures the penalty rate is 5% and if you are a foreign person, that penalty can be waived. This is a very popular program and we have had much success qualifying taxpayers and demonstrating to the IRS that their non-compliance was not willful. 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. 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.

So Gary since you are our guest for today, we will let you pull the questions for us to answer on this week’s show.

Question from Paul of Carlsbad: I am a U.S. citizen and in 2015 I married a nonresident alien, what should I use for my filing status for my 2015 income tax return?

Answer: The filing status of a U.S. citizen or resident alien married to a nonresident alien is, in general, married filing separately. However, you can qualify to file Married Filing Joint by making an election on your tax return signed by both spouses. You can also make the election by filing a joint amended return within 3 years from the date you filed your original U.S. income tax return or 2 years from the date you paid your income tax for that year, whichever is later.

With this election in place, you and your spouse can file as married filing jointly but also you and your spouse must report the combined worldwide income and deduct the combined allowable worldwide expenses. Once made, the election applies to all later years until it is properly terminated.

Now if you do not make the election, you may be able to file under the Head Of Household Status if both of the following apply:

You paid more than 1/2 the cost of keeping up your home for the year; and
A qualifying person lived with you in your home for more than 1/2 the year.

Head Of Household Status should still produce a lower tax than Married Filing Separately so it would serve you best to meet with a tax adviser to get your options and make the best choice.

Question from John of LaJolla: When could we realistically be looking at the Federal Reserve earnestly considering the next rate hike?

Question from Brian in Chula Vista: What type of funds should I be considering for long term growth in say an IRA? Same question for a short-term wealth building individual account for unforeseen expenses?

Jeff states: Well we are reaching the end of our show. Gary, thanks for joining us today.

Gary states: Thanks for having me.

Jeff states: 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 Politics And The Market, IMF Cutting Outlook For Global Growth and Taxpayer Rights You Need To Know On ESPN Radio – January 22, 2016 Show

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?

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

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

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

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

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!