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?

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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: 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!