Go to Jeff Salisbury LWGate Home Page.From: persfin-digest <owner-persfin-digest@shore.net>
Subject: persfin-digest V4 #125
Date: Sat, 14 Feb 1998 14:27:58 -0500 (EST)
Articles sorted by: [Date]
[Author]
[Subject]
persfin-digest Saturday, February 14 1998 Volume 04 : Number 125
IN THIS ISSUE:
ADVERTISEMENT: MCI FAX REPLY SERVICE
How Do You Know If You're Part Of NASDAQ Class Action Suit?
Re: Tax Question - Work Related Expense Deductability?
Loan to Buy Land, Drill Well, and Build House?
Re: Trust Taxes, Capital Gains, Credit Card Interest Calcs...
Re: AT&T online service question
Re: YUM stock tax issue
Re: Social Security Question
Re: transferring stock for college expenses
Re: How To Calculate Gain/Loss on Mutual Funds in Excel?
Dana's mother and assisted living
Re: BizPlan
Credit Card vs. Credit Union Loan
Roth Thoughts
Re: Transfer of stock to minors for college expenses
Re: Q's on mileage ded., honorariums, etc.
Re: Can You Cash a Check That Isn't Signed?
Re: Geodesic dome mortgage?
Re: affordable health insurance for my mom
Re: Work Related Expense Deductability?
Re: Shopping for Insurance
Taxes on Bonus ?
Re: Social Security Question
Re: Roth IRA Conversion
Tax question
Buying Tax Liens?
Are Infomercial Endorsements Real?
Re: Shopping for Insurance
companies that buy homes?
[none]
Should SEP-IRAs be included in Roth Conversion Calc?
Short Term (30 day) interest bearer needed
Best Calling Card?
====================================================================
Neither Clearview Associates, Inc. nor Persfin-Digest is responsible for
the content of any Persfin-Digest Sponsor Ad. Posting a Sponsor Ad does
not indicate endorsement of the product or service by Clearview
Associates, Inc. or Persfin-Digest. You're on your own.
This issue is sponsored by:
Oppenheimer Software - An Official MCI Messaging Agency. Features:
MCI Fax Broadcasting Service
MCI Fax Reply Service
MCI Connect for cc:Mail
MCI AutoForward
internetMCI
Lan Access to MCI
Telephone: 800-390-9379
FAX: 800-492-6862
E-Mail: Connect-Sales@mcimail.com
Also sponsored by Wholesale Products. Why pay retail?
The new HP360LX palmtops (Windows CE 2.0 and 8MB RAM) can be ordered.
Price $650 + shipping.
Specialists in HP320LX palmtops - the hot new HP palmtop that runs
Windows CE. Pocket versions of Internet Explorer, Excel, and Word are
included. Connectivity to PC applications. It's in stock and
orderable. Price: $470 + $15.95 shipping (in USA).
Check out our ProScan wide screen TVs and satellite receivers!
Motorola 56KB MobilSURFR PC Card/Fax Modem with Cellular capability -
$189.99
Visit our PAL/NTSC/SECAM electronics site, featuring VCRs, converters,
TVs, appliances, etc., geared to the international marketplace, at:
http://www.wholesaleproducts.com/non-usa.html
Calculators:
HP 48GX: $180.28 + s&h
HP 48G: $ 91.78 + s&h
HP620LX color palmtop with Windows CE 2.0. $850 + shipping.
Visit our newly updated and expanded Web site, at:
http://www.wholesaleproducts.com
Special Orders: wholesal@shore.net
Phone: 1-617-438-8622 (24 hours)
Fax (24 hrs): 617-438-8307
For information on placing a Persfin-Digest Sponsor Advertisement, e-mail
ikrakow@shore.net
====================================================================
Ira Krakow's Mall: http://www.krakow.com
Personal Finance Web Sites: http://www.tiac.net/users/ikrakow/pagerefs.html
To post a question or an answer, send email to: persfin-digest@shore.net
The messages posted to the Persfin-Digest are opinions and are not
intended to substitute for qualified professional advice. Subscribers
should seek the services of qualifed professionals for such advice. The
publisher, Internet provider, advertisers, and Digest contributors cannot be
held responsible for any loss incurred as a result of the application of any
of the information provided here.
Copyright (c) 1995, 1996 Clearview Associates, Incorporated
REQUESTED SUBSCRIPTION FEE: $20/year. Monies will go directly to defraying
publication costs, compensating for the time and effort of the Publisher,
and enabling the Publisher to create additional useful sources of
information on the Internet. Send cash, check, or money order (U.S.
funds), payable to "Clearview Associates, Incorporated", to:
Clearview Associates, Incorporated
12 Clearview Road
Stoneham, MA 02180-1918
Contribution will be acknowledged by e-mail if you include an e-mail address.
To Subscribe: e-mail majordomo@shore.net, text: subscribe persfin-digest
To Unsubscribe: e-mail majordomo@shore.net, text: unsubscribe persfin-digest
----------------------------------------------------------------------
Date: Sat, 14 Feb 1998 13:41:32 -0500 (EST)
From: Oppenheimer Software <Connect-Sales@mcimail.com>
Subject: ADVERTISEMENT: MCI FAX REPLY SERVICE
MCI Fax Reply Service
A Flexible, Low Cost, Fax on Demand Service
Distribute Your Information When They Really Want It -
Not When You Think They Want It
New Rules/Regulations, Advertisers Deadlines, Investor
Relations, Media Information, Technical Support, Late
Changes, Newsletters, Profressional Advice, RFPs, Project
Updates, Application Forms, Schedules, Catalog Revisions,
Political Announcements, Product Updates/Recalls, Legal
Class Action Notifications, Special Events, Brochures,
Inventory Availability, Mortgage Rates, Product Datasheets
Supports Multiple Catalogs
Multiple Retries on Busy Numbers
Toll Free 24X365 Customer Support
Detailed Transaction Reporting Provided
Fax Transmitted Within Seconds of Request
Professional Actor Voice Prompts Available
Update Documents Directly From Your Fax Machine
Rates as low as $.31/minute for select customers
Oppenheimer Software Authorized MCI Messaging Agency
Tel:800-390-9379 E-Mail:Connect-Sales@mcimail.com
Fax:800-492-6862
------------------------------
Date: Sat, 14 Feb 1998 13:42:33 -0500 (EST)
From: dmak@tma-net.org
Subject: How Do You Know If You're Part Of NASDAQ Class Action Suit?
Does anyone know how to get more information to determine whether
you're a part of the NASDAQ class action lawsuit? The Wall Street
Journal reported on 1/5/98 that investors who traded NASDAQ
securities as late as 7/96 may be eligible.
------------------------------
Date: Sat, 14 Feb 1998 13:47:17 -0500 (EST)
From: "L. Chen" <am302@FreeNet.Buffalo.EDU>
Subject: Re: Tax Question - Work Related Expense Deductability?
> My son is working in NY for a TV production company. His position is
> characterized as a "freelance production assistant" even though he works
> there 4-5 days a week. He is paid a day rate ($75!) which doesn't vary -
> his shifts vary between 8 and 15 hours, and he can easily put in a 65 hour
> week. He is not considered a part- or full-time employee, and doesn't
> receive any benefits. He is paid on a W2. My question is this: Can he
> deduct work- related expenses for Income Tax purposes?
If he is getting a W2, then he is an employee. If he is not an employee,
he should get a 1099. So if he is getting a W2 and a flat rate of $75/day,
then you might want to look into whether he has any overtime wage due to him
(although he might no longer have a job after you do that).
If he gets a 1099, he is self-employed and can deduct work-related expenses on
schedule C. If he is am employee, he can deduct those expenses on schedule A
- -- if he itemize his deductions -- subject to 2% floor.
The key is the definition of work-related expenses. e.g. transportation
expenses between home and work is generally not deductible, even though one
may think it is work-related.
You should consult a tax professional, read the relavant IRS publication,
and/or post more specific questions in misc.taxes.moderated newsgroup.
Chen
------------------------------
Date: Sat, 14 Feb 1998 13:49:19 -0500 (EST)
From: Jesse Wellman <jesse@wellman.reno.nv.us>
Subject: Loan to Buy Land, Drill Well, and Build House?
I have a question for the list. We would like to know the reality of
getting a loan that would buy the land, drill a well, and build a house.
I am recently married. We have a combined income at this time of about
32k a year(current increase of 5% CLA). I am working (3 months) to have
my monthly debt payments to the $250.00 range. We want to buy place in
the country(at least an acre). At an informal interview with a mortgage
lender he said that with the above circumsatances I could qualify for a no
money down, $100,000.00 loan.
$80,000.00 at 8.5%, and $20,000.00 at 12%, with a no-refinance-for-2-years
clause. We are looking at properties outside of town as I would like some
acreage. Should we go for a lesser neighborhood, and get a prebuild
house/moblie home, or buy vacant land and deveolop our selves. There are
10, and 40 acres parcels available in an area with $200,000+ properties.
These acreages go for the $30,000.00 to $40,000 range, with a 25 minute
(some dirt) commute to town. What are our possiblities for a loan that
would buy the land, drill a well, and build a house(I can finish it from the
sheetrock out). How would I comparison shop for the mortgage? What are the
thoughts on house lending interest rates for the next year or so?
Thank you for your thoughts.
Jesse and Martha Wellman
jesse@wellman.reno.nv.uv
------------------------------
Date: Sat, 14 Feb 1998 13:52:20 -0500 (EST)
From: Harry Matthews <matthews@panix.com>
Subject: Re: Trust Taxes, Capital Gains, Credit Card Interest Calcs...
> Gigi Kent said....
> <<
> The letter I received states that I will be responsible "for paying taxes on
> the increased value of the securities and dividends distributed to you after
> that date (of death)." What does this mean? Certainly I'd be responsible
> for increases related to dividend and interest, but what do they mean by
> "value of the securities"? What is the cost basis in a living trust?
> >>
Having been the beneficiary of a large trust, I can give you a few
pointers. The principal is treated as if it were a bequest in a will --
i.e., free from all taxes to the beneficiary (though it may be subject to
estate taxes, mainly if the trust is badly constructed). If the
securities you inherited have gained a lot of value since you inherited
them (and last year was very hot on the stock exchange), the difference
between the value of the shares at the time you inherited them and their
value on 12/31/97 might well be taxable income. Talk this out with a good
accountant.
> From: Jim McGrath <jimm@hi.com>
> Subject: Re: Capital Gain Distributions, Massachusetts, and Vanguard
>
> I got a sheet in the mail from Fidelity yesterday breaking out the
> percentages for all of their funds. Has anyone seen anything of this
> sort from Dodge & Cox?
>
Every mutual fund corporation issues a similar report. I have half a
dozen in hand....
Harry
> I have several offers from credit cards with APRs around 3.9 to
> 4.9% for at least 6 months.
>
> I also have a auto loan at a credit union at 7.5%.
>
> If I transfer the amount (I will be paying back the amount before the
> 6 months) to credit card, will I save? Is the interest calculating
> method at credit cards is any different from the method at
> credit unions?
First off, read the fine print: you may not qualify (in terms of when
certain debts were contracted) for the discount rate at all. Next you may
find that the rate will run out before it does you much good. Also, many
athletes will endorse short-term "trial offers" which do little for your
real situations.
Briefly put, nothing that looks "too good to be true" can be true....
> Does anyone have any experience with the Bank One Platinum MasterCard.
> It's put out by First U.S.A. Bank. Would appreciate any good or bad
> experiences you might have had. I'm thinking about applying and am just
> being cautious. Feel free to email me directly.
>
> Thank you, John
Bank USA uses a "forward method" of calculating finance charges that tends to
double your financing costs in any month in which you incure a new charge. I
experimeted with them briefy and found that, in addition to the
exorbitant finance charge, the company offers really crummy customer
service: the people who answer the phone are rude, stupid, and generally
unforgivable. Rip up the offer and recycle the paper is the best advice I
can offer.
Harry
> I recently read in a Money magazine that you can cash a check even thought
> it is not signed. They said all you needed to do is write 'OVER' on the
> blank signature line and on the back of the check write "LACK OF SIGNATURE
> GUARANTEED" and they your signature.
>
> Does anyone know if that will work?
Only if you're depositing the check in an account whose title matches or
comes close to the title written on the "Pay to:" line. Of course, if the
check is written to "CASH,": the maker deserves whatever he gets.
------------------------------
Date: Sat, 14 Feb 1998 13:53:20 -0500 (EST)
From: Joe Cabrera <toonheadnospam@tiac.net>
Subject: Re: AT&T online service question
>I use AT&T online service and Netscape Communicator to scan the Web for
>financial info. While I was away on a trip, my son decided to try MSN
>(the free diskette they send via the mail) and changed my AT&T mail and
>news servers to the MSN ones. My news server now says something like
>msnnews.msn.com instead of the AT&T code. I want to get my AT&T mail and
>news server (including Usenet acess) up and running again. Can someone
>provide the mail and news server codes to type into the setup screens for
>Netscape? Thanks.
For mail:
SMTP Server=mailhost.worldnet.att.net
POP Server=postoffice.worldnet.att.net
For news:
NNTP Server=netnews.worldnet.att.net
On a related note, I signed up for AT&T Worldnet service on their "first
month free" trial membership that I got in the mail. I found out when I got
my first bill that it's NOT free for the first month after all. They give
you a free month for the first FULL month in your billing cycle. For
example, I signed up for service on the 1st of the month, but my billing
cycle begins on the 15th of the month. So they billed me the 2 weeks from
the 1st to the 15th, even though all their signup info clearly states
"first month free". If any of you decide to try out the service on this
trial basis as well, keep that in mind. I called and complained (after
being on hold for an hour) and they deleted the charge.
------------------------------
Date: Sat, 14 Feb 1998 13:53:47 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: YUM stock tax issue
> As some of you may know Pepsico (PEP) divested resturant
>business and shareholders got YUM stock. PEP gave you whole shares and
>paid and fractional share amounts in cash. The fractional share amount
>was reported to IRS as a cap gains distribution. The questions is Where
Was it reported on a 1099-DIV or a 1099-B? If the latter, it is a sale,
not a capital gains distribution.
>and how should this be reported? Schedule D under short term with the
Do whatever Pepsi said to do (seriously). There's no single right answer
since spinoffs can have differing tax treatments depending on what choices
the parent company made.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Feb 1998 13:54:25 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Social Security Question
[Disclaimer: this is my opinion, not advice. I am not a professional.]
>Question:
>I know there is a limit on your yearly income upto which SS + Medicare
>is taxed. I believe in 1997 it was on the income up to around $63K
>(yearly) you pay SS and any income above it, you just pay medicare (which
>is around 1.45% (or something like that).
Correct. I believe for 1998 it's up to $68,200.
>Now, who is supposed to take care of this limit and deduct from
>your pay accordingly. In my case I switched job in Oct'97 and both
It depends. It is up to your employer to check this for the wages
that he pays you. However, he cannot take into account what a
previous employer in the tax year pays you.
>employer decucted total 7.65% of my gross as usual. How do I calculate
>what I should have paid and how do I get my money back, if I overpaid?
If you look closely near the end of Form 1040, there's some line where
you can claim a credit for the excess SS tax. The instructions for
that line will show you how to figure it out.
>How should I take care of this for the next year (assuming I will
>surpass whatever is the new limit for SS)?
If you only work for a single employer in tax year 1998, it should
just happen (when you hit the $68,200 mark for the year, SS deductions
will stop). If it doesn't, you claim it when you file your tax return
as described above.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Feb 1998 13:54:54 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: transferring stock for college expenses
[Disclaimer: this is my opinion, not advice. I am not a professional.]
>Say my parents wanted to fund my college expenses by transferring $20,000
>worth of highly-appreciated stock to me every year, beginning 1 year before
>I started school. I would sell the stock to pay my school fees and only
>incur a low (<15%) tax compared to my parents long-term capital gains rate
>of 20%. One could extend this to mutual funds as well.
Yes, that's absolutely true. Each of your parents is free to give you
$10,000 per year each in gifts with no tax consequences to them or you.
Also, they don't have to do it the year before, at least if you're
worried about holding period. You will receive your parents' basis
as well as their holding period.
>If this is legal, what would stop parents from transferring ownership of their
>mutual funds to their children to pay for college expenses? (Abiding by the
>$10k/person/yr limitation) One can realize potentially significant savings due
>to lower tax rates imposed on the child.
Yes, this is perfectly legal, and yes, there's nothing stopping people
from doing it. Of course, it has to be a bona fide gift, so there's
nothing the parents can do (aside from refusing to give the kid any
more money) if the kid decides to blow it on a car or something.
Also, don't forget possible finaid consequences.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Feb 1998 13:55:21 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: How To Calculate Gain/Loss on Mutual Funds in Excel?
>Using Excel, what formula would I use to determine the percentage increase
>or loss of my mutual funds? I hope my old math Teacher isn^Òt reading
>this...
Well, for a single year in which you made no deposits or withdrawals it
would simply be something like
=(END - START)/START
where "END" is the cell reference containing the ending value of the
portfolio and "START" is the cell reference containing the starting value
of the portfolio.
If you went multiple years with no deposits or withdrawals and want
your average return for those N years, the formula is
=(END/START)^(1/N) - 1
where END and START are as before and N is a reference to the cell
containing the number of years in questions.
Now, if you made deposits and withdrawals during the period in
question you'll have to get a bit more complicated. In one column
list the starting value of the portfolio, followed by all deposits and
withdrawals for the period in question, followed by the end value of
the portfolio *expressed as a negative number*. In another column put
the start date followed by the dates of the deposits/withdrawals,
followed by the end date.
Next install the "Analysis Toolpak" add-in. It comes with Excel but is
not installed by default. You may have to run Office/Excel setup to
install it. Once installed, activate it as you would any other add-in.
You'll now have access to the financial functions. Read the help page
for the XIRR() function. That function along with the data you entered
will give you your average rate of return over the period in question.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sat, 14 Feb 1998 13:57:55 -0500 (EST)
From: "Jim Reed" <jreed1@airmail.net>
Subject: Dana's mother and assisted living
>Subject: Moving relative to rest home
>
>Within about a month I will be assisting my mother in relocating
>to an assisted living center (she suffers from presenile dementia).
>
>'ve never been faced with this situation before - could those
>of you who have post your experiences and "learning experiences."
>Any issues I should keep in mind? I'm especially concerned with
>selling her house and property - I've never bought or sold a
>house before and I have little idea apart from an auction on how
>to best sell her furniture and other personal property.
>I do have all the legal authority necessary (durable POA, trustee
>of living trust, etc.)
>
Hi Dana, it sounds like you have already done some good planning with
the legal work you've done. Congratulations! With the direction you're
heading, it sounds like you've be successful.
I've recently gone through a similar situation. Regarding the home,
depending on the length of time your mother has lived in it, my best
advice is to be very careful how you handle this. In my own situation,
when this was being done, there was always this nagging feeling that I
was doing something wrong. May parents had lived in their home for over
40 yrs.
As I went through this, I came to realize how much temptation there was
to make the decisions in a way that had more to do with me than with my
mother. Once I started focusing on compassion for my mother's needs (in
terms of where she found herself in this phase of her life), I found
myself making better and more healthy decisions.
The decisions I ended up making may not have been the most prudent
decisions from a financial standpoint, but I can certainly rest easier
from an emotional standpoint.
My best suggestion on the home would be to look at it from the
standpoint of three separate issues, which you've already
identified......the home, her furniture, and her personal belongings.
You may find that each of these need to be treated much differently from
one another. It's very likely that your mother does not see them as a
single issue.
Also, if you have brothers or sisters, they most likely have their own
ideas on how things should be handled. The larger the family, the slower
things should happen. Everyone needs time to adjust.....including
yourself.
>I also will need to rebalance her portfolio for income
>production - I am planning on working with a local fee-only
>planner on this one, but again are there any hidden issues
>anyone else has run across.
>
Working with a fee-only planner is a great idea! He or she will likely
will have a good handle on this. Just so you will know, ask the
financial planner to project points in the coming years where you're
mother may run out of cash.....if this is applicable. This most likely
will help you make decisions about when you may need to sell assets.
Also, read up on issues relating to Medicare and its relationship to
Medicaid (or your whatever your state's program for medical assistance
may be). Even if your mother may not qualify for state assisted medical
programs now, she may in the future. There is a formula the state
programs use to determine eligibility.
Also, go to your local bookstore.....browse through the section on elder
care and taking care of aging parents..... buy the one that looks best
to you......and devote a weekend curling up on the sofa to give it a
good read.
I can assure you that you'll be glad you did this. And....if it's
appropriate, buy the same book for all your brothers and sisters and
send it to them as a gift.
>I am also interested to hear the responses on the deductibility
>of her monthly fees - didn't the Kennedy-Casslebaum bill make
>these long-term care expenses explicitly deductible?
>
>Please share your experiences. Thanks!
I don't know much about the Kennedy-Casslebaum bill. I'd be interested
in what you learn about this, however. At this point in time, my
parent's health care bills are so high (everything is paid privately)
that at tax time, there isn't much to worry about.
We were able to re-balance my parent's portfolio (in terms of income
flow vs unrealized gains) to the point where their use of itemization
pretty much takes care of everything. Although it may different in your
situation, federal income taxes are, in many cases, no longer an issue
when the high costs of private medical care are taken into account.
Kindest regards.....and good luck!
Jim, in Texas
jreed1@airmail.net
------------------------------
Date: Sat, 14 Feb 1998 13:59:57 -0500 (EST)
From: "Jim Reed" <jreed1@airmail.net>
Subject: Re: BizPlan
>I have been looking for a way my small business (my wife and I) could
>save on taxes with respect to our health insurance premiums and our
>annual health expenditures. I was recently introduced to
>AgriPlan/Bizplan which apparently sets up a plan so that small
>businesses that is structured like mine (my wife is my only employee)
>can deduct health insurance premiums and medical expenses. I would
>appreciate it if anyone who is familiar with this program could give
>me some idea of his experience with it. Please respond to my e mail
>address as well as resonding here.
Hi Al, I'm in my third year with BizPlan....and.....no problems so far.
As you probably know, it is being tactfully supported by the National
Association for the Self-Employed. BizPlan's method of record keeping
appears to work pretty smoothly, and they have been responsive to all my
questions.
I believe, however, that the the process they use to make the expenses
deductible within a corporation is more solid from an IRS reg
standpoint....so you may want to consider the corporation route.
The BizPlan people will, most likely, agree to help you set it up either
from a sole propietorship or corporation standpoint. I believe the sole
proprietorship route appears to fit their needs a little better.
However, this may not be best way to fit *your* needs.
Give some thought to whether the corporation route fits your needs
better than using a sole proprietorship. BizPlan should be able to give
you some pro's and con's in each direction.
The decision you make regarding how your business is structured is very
important. Each person's situation is unique.
The master cookie cutter has not been found yet....... <smile>
Kindest regards,
Jim, in Texas
jreed1@airmail.net
------------------------------
Date: Sat, 14 Feb 1998 14:00:46 -0500 (EST)
From: "George Podhiny, Jr." <georgep@chesco.com>
Subject: Credit Card vs. Credit Union Loan
>If I transfer the amount (I will be paying back the amount before the
>6 months) to credit card, will I save? Is the interest calculating
>method at credit cards is any different from the method at
>credit unions?
Stay with your credit union loan. The credit union calculates a true
simple interest calculation of principal times rate times days divided by
365. The credit card uses an average balance method at best, or a two
month average balance at worst. I have a bias toward credit unions since
they operate for the benefit of the members. The credit card banks are
making fortunes every day and continue to cry about how rough it is to get
by. I'm sure one of our readers will calculate the interest and may find
an advantage to switching. As for me, I'd prefer to help the credit union
with any additional interest.
George Podhiny, Jr.
Coatesville, PA
------------------------------
Date: Sat, 14 Feb 1998 14:01:32 -0500 (EST)
From: Peter & Karen Diamond <diamond@vsi.net>
Subject: Roth Thoughts
All of the Roth IRA postings got me thinking about another aspect of
this.
Most of the decisions to convert or not are based on the question of
whether your tax rate will be higher or lower in retirement than it is now.
But, if a sizable portion of your retirement income is coming from a Roth
IRA, wont you be reducing your income with the tax-free withdrawals and
therefore reducing your tax rate, negating the benefits of the Roth in
the first place!!!
Does this sound correct or am I misunderstanding this?
Peter Diamond
------------------------------
Date: Sat, 14 Feb 1998 14:02:47 -0500 (EST)
From: "Louis J. Schwarz, CFP, RFC" <sfc@deafcfp.com>
Subject: Re: Transfer of stock to minors for college expenses
>>Say my parents wanted to fund my college expenses by transferring
$20,000 worth of highly-appreciated stock to me every year, beginning 1
year before I started school. I would sell the stock to pay my school
fees and only incur a low (<15%) tax compared to my parents long-term
capital gains rate of 20%. One could extend this to mutual funds as
well.
<snip>
If this is legal, what would stop parents from transferring ownership of
their mutual funds to their children to pay for college expenses? (Abiding
by the $10k/person/yr limitation) One can realize potentially significant
savings due to lower tax rates imposed on the child.
Of course, this all assumes the child is responsible enough not to spend
the $20K on something else. And it also assumes that the family is not
eligible for financial aid as well. (Fin aid expects 35% of a child's
assets and 5.64% of parents' assets to count as family contribution, so
giving lots of money to a child hurts chances for financial aid).
Thanks in advance.
- --
If your parents are very comfortable with their assets and wish to help
their minors with college expenses, go for it, as long as you do not
want to spend time filling out forms and typing essays (or required
information), let them do for it. I do same thing with my daughters and
they appreciate us, their parents, for helping preparing education funds
for their higher education needs - as well as - making them aware to
plan not to fail their future, rather than to fail to plan their future.
I do same advice for my clients!
Louis J. Schwarz, CFP, RFC TTY 301-587-5996
Schwarz Financial Concepts FAX 301-587-5997
814 Thayer Avenue, Suite 301 Voice Relay 800-735-2258
Silver Spring, Maryland 20910-4500 Mailto:sfc@deafcfp.com
------------------------------
Date: Sat, 14 Feb 1998 14:04:14 -0500 (EST)
From: "Louis J. Schwarz, CFP, RFC" <sfc@deafcfp.com>
Subject: Re: Q's on mileage ded., honorariums, etc.
(Gina Leong wrote)
1. The first question I have is regarding mileage deductions. I have
heard that if I use my car to help pick people up for church or other
ministry-related activities, the mileage is deductable. I am not
employed by the church but am just a member. Also, are the miles I
drive to get to a soup kitchen at which I am volunteering deductible?
*** you can deduct mileages or prorated car expenses as volunteer
expenses under "charitable section" in Schedule A.
2. I received an honorarium for a project I did for an educational
competition. How do I report this? Or do I even need to report this?
It was for $250.00.
*** if no other income, you can put this on line 17 of Form 1040
3. My husband and I (no children) both work full-time. These last two
years, we've each been claiming "1" on our W-4s. We wind up owing
almost $2000 in federal and state taxes combined. What's the best way
to avoid owing taxes? Should one of us claim "1" and the other "0"? Or
both claim "O"? Or have extra money taken out each paycheck?
*** it sounds like you may not own the house (property taxes and
mortgage interests) - then it is wise to claim "0" for both. You both do
need to see the tax planning professional at earliest convenience or you
will never see the return of your some income taxes forever (in other
words, not being able to reduce taxes as much as allowed by laws).
- --
Louis J. Schwarz, CFP, RFC
------------------------------
Date: Sat, 14 Feb 1998 14:04:46 -0500 (EST)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: Can You Cash a Check That Isn't Signed?
It largely depends on the payee's relationship with his bank and how
careful the bank is. A store that accepts checks may also do this if they
are careless -
I can recall several occasions when the payor's bank (mine) has called me
at home and asked if they should "return" the check to the payee's bank
because a check was missing a signature (or one of two). I have also had
checks to a utility mailed back to me because of a lack of signature.
Avrum Lapin
Upland., CA
------------------------------
Date: Sat, 14 Feb 1998 14:05:10 -0500 (EST)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: Geodesic dome mortgage?
>I own and live in a 2 level geodesic dome. Despite the fact that it is
>more structurally sound than most 'conventional' homes, it does not
>qualify for 'normal' mortgage programs. Does anyone know of a lender
>who will refinance ?
>
See a local S&L which would be willing to carry the mortgage for life (as
opposed to reselling it). Unless your credit is immpecable expect to pay
more.
"Normal" mortgage programs operate on the assumption that you may default
and they will have to foreclose and sell the property. Your home while
structurally sound may be difficult to sell for the amount owed on the
mortgage.
Avrum Lapin
Upland., CA
------------------------------
Date: Sat, 14 Feb 1998 14:06:03 -0500 (EST)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: affordable health insurance for my mom
>I'm hoping someone can help me out there. My mother is retired
>and her COBRA health coverage is running out. She has 14 months
>before she's eligible for Medicare. Can anyone out there
>give me some suggestions as to what our options are for
>affordable health care and what approach would make the most
>sense.
Affordability is in the eye of the beholder. Expect to pay at least twice
what she is paying for COBRA coverage (based on what I see here in Southern
CA).
Her COBRA carrier may offer a conversion policy. Other ideas are local Blue
Cross or commercial HMOs providing that your mom doesn't have a
preexisting condition.
Other possibilities are adding her as a dependent to your coverage or
paying her premiums with pre tax dollars if your employer has a parent care
plan.
If your mother has no assets she could go without coverage and depend on
welfare to cover her in case of serious illness.
The choices frankly suck
Avrum Lapin
Upland., CA
------------------------------
Date: Sat, 14 Feb 1998 14:06:31 -0500 (EST)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: Work Related Expense Deductability?
>He is paid a day rate ($75!) which doesn't vary - his shifts
>vary between 8 and 15 hours, and he can easily put in a 65 hour week
It appears that his hourly rate varys from day to day. When he works over
40 hrs he is eligible for O/T. So in a week that he works say 60 hours his
gross for the week exceed (70 times the minimum wage) where 70 = 40 + 1.5*20
> He is paid on a W2. My question is this: Can he deduct work-
>related expenses for Income Tax purposes?
Non-reimbursed work related expenses are deductable on Schedule A (means he
has to be able to itemize) subject to a 2% deductable. Tax preparation,
union dues, safe deposit box rental all fit on that line on Schedule A.
Small hand tools, stationary and special work clothes (ones he would not
use in private life), mileage between job sites all fit the descriptionof
work related expenses but not lunch/dinner on a long day.
Avrum Lapin
Upland., CA
------------------------------
Date: Sat, 14 Feb 1998 14:07:15 -0500 (EST)
From: "Cal Lester" <cal_lester@email.msn.com>
Subject: Re: Shopping for Insurance
>
>I'm exploring getting disability and more life insurance, and had a visit
>from someone recommended to me.
>
>In their effort to get estimated pricing for these services, they are
>seeking to talk to my doctor (again, they are getting me estimates, not
>acually signing me up).
>
>>>> It sounds to me that you are working with a QUALIFIED Insurance
Agent. One that seeks to gain as much underwriting information as possible,
prior to contacting one or more carriers to learn of thier best offer. This
would normally occur when you have mentioned to the agent, that you have
some prior medical problem, or have had some negative results with one or
more carriers.
One does not get estimates of Life or disability insurance
premiums. A qualified agent will provide the most accurate underwriting
information to the carrier, who will then make ( or not make) an OFFER. That
offer will be based on the carrier conducting it's own investigation as to
your insurability.
>No prior insurance sales rep has every wanted to talk to my Dr. until we
>were ready to purchase.... which is normal practice?
>
>Also.... if anyone has any thoughts on companies offering esp. good
>prices/services on Term Life and Disability, that info would be
>appreciated too.
>
>Thank you,
>Gary
>>>> Every carrier will offer "good prices" for thier products. Whether
or not you agree that it is a price will depend on you. Remember, the
insurance company is in business to make a profit for it's stockholders, not
just to provide cheap insurance for the public. Having said that, let me
assure you that all of the major carriers offer both good service and
commensorate prices. They have too or they would not stay in business.
Cal Lester CLU
Insurance Corordinator
Broward Community College
Cal_Lester@msn.com
------------------------------
Date: Sat, 14 Feb 1998 14:08:07 -0500 (EST)
From: Jim Steelman <jasman@theoffice.net>
Subject: Taxes on Bonus ?
I was fortunate enough to get a bonus from the company I work for this
year. However, rather than compute the state and federal withholding taxes
they simply withheld 28 percent for the fed and 6 percent for the state.
Both of these rates are easily double what my normal withholding rate is
set. Does anyone know if my employer is obligated to only withhold the
"correct" amount or can they do what they like?
------------------------------
Date: Sat, 14 Feb 1998 14:08:49 -0500 (EST)
From: Shankar.Prasad@Eng.Sun.COM (Shankar Prasad)
Subject: Re: Social Security Question
> Now, who is supposed to take care of this limit and deduct from
> your pay accordingly. In my case I switched job in Oct'97 and both
> employer decucted total 7.65% of my gross as usual. How do I calculate
> what I should have paid and how do I get my money back, if I overpaid?
Because you have two employers in 1997, you can claim the excess
social security tax on Form 1040, Line 58. See the instructions
and Pub 505. Note that this applies only to the So.Sec. 6.2%
tax which has an annual limit of 4054.80 in 1997. The medicare
tax of 1.45% has no limit.
> How should I take care of this for the next year (assuming I will
> surpass whatever is the new limit for SS)?
If you are with a single employer in 1998, the employer should
automatically stop taking out so.sec. (6.2%) after the 1998
annual limit (will be a little aove 1997 limit of 4054.80) is
reached. So, there is nothing you need to do, except keep an
eye open to see that your employer does this correctly. If you
have more than one employer in 1998, you will claim the excess
as a credit in your 1998 Form 1040 (in Apr 1999).
- --
Regards
Shankar Prasad
------------------------------
Date: Sat, 14 Feb 1998 14:09:26 -0500 (EST)
From: Shankar.Prasad@Eng.Sun.COM (Shankar Prasad)
Subject: Re: Roth IRA Conversion
> Hello everyone,
> I am trying to find out some specific details about the calculation of
> the tax on a Roth IRA Conversion. No one I have talked to so far has any
> paperwork on exactly how the calculation will be done. All I've been
> able to get is that it is basically the same as the 8606 calculation and
> it is done at the date of conversion.
I would also like to get details on this. I plan to be converting an
existing non-deductible IRA to Roth in 1998, and also make a deductible
IRA for 1998. I want to make sure that the conversion will use up all
the basis (from 8606), and leave me with a Roth IRA & a deductible IRA
which is all pre-tax (i.e. no basis on 8606)
> My problem is that I have a non-deductible and a rolled over deductible
> IRA (that I do not contribute to). According to the 8606 numbers it
> seems to make more sense to make all my 1997 and 1998 contributions to
> the non-deductible IRA before converting it. It looks like that will
> reduce the percentage of the distribution that is taxable.
If you are going to convert ALL of your existing IRAs to Roth, then
the way you do it does not matter. Making the 1998 contribution
deductible and converting to Roth, will let you spread the tax on
the 2000 over the next 4 years - but I do not think it makes a big
difference.
If you are converting only a part of your IRAs to Roth, please run
the numbers to make sure about your 1997 & 1998 contribution. Making
the 1997 contribution deductible (and making your 1998 contribution
directly to a Roth, instead of "contribute-to-regular-and-rollover-to-Roth")
will INCREASE the percentage of the distribution which is taxable, but
DECREASE the total amount which is taxable - because you will get a
full 1997 IRA deduction and also need to rollover a smaller amount from
the IRA to Roth (remember, you are making a direct contribution to Roth
for 1998)
Assume you have an IRA of value 8000 with a total basis of 2000 (as of Dec 96)
Option 1: make a 1997,1998 non-deductible contribution, and rollover 6000
to Roth, leaving 6000 in traditional IRA.
Trad. IRA (before rollover) value = 12000, basis = 6000
Rollover distribution of 6000 is 50% taxable = $3000
Roth IRA value & basis = 6000
Trad. IRA value = 6000, basis = 3000
Net effect on 1997 Income = 3000 taxable
No effect on 1998 Income
Option 2: make a 1997 deductible contribution, rollover 4000 to Roth, add
a $2000 1998 contribution directly to Roth
Trad. IRA (before rollover) value = 10000, basis = 2000
Rollover distribution of 4000 is 80% taxable = $3200
Conversion Roth IRA value & basis = 4000
Contribution Roth IRA value & basis = 2000
Total Roth value & basis = 6000
Trad. IRA value = 6000, basis = 1200
Net effect on 1997 Income = 3200 (taxable from distr) - 2000 (1997 IRA ded.)
= 1200 taxable.
No effect on 1998 Income
So, Option 2 looks better. Of course, with option 2, your 8606 basis is
now lower (i.e. 1200), instead of the basis of $3000 with option 1. Pay
now or pay later .... we prefer to pay later !!
There is also an option 3 of making 1997 & 98 deductible contributions
- - I think this will work even better to reduce the net taxable income.
- --
Regards
Shankar Prasad
------------------------------
Date: Sat, 14 Feb 1998 14:10:28 -0500 (EST)
From: "Sudhakar Vemuri" <vemuris@hotmail.com>
Subject: Tax question
Dear friends,
My CA state tax bill is 6000$, while my employer deductions are
7300$. I have the following scenerios depending whether I choose
to itemize my state taxes or not.
Scenerio 1: Itemize 7300$ as state taxes, instead of standard deduction
of 6900$. I will shave 400$ from Taxable income reported.
But, I have to add state tax refund(7300-6000=$1300) to this year's
income.
Scenerio 2: Go for standard deduction and forego 400$ at 28% tax
break, but do not add the refund of 1300$ in this year's income.
I think Scenerio 2 is more profitable than 1 since we will be taxed
at 31% marginal rate for 1300$ next year than saving 400$ to be taxed at
28% in this year's tax bill.
I request you to review my logic and respond.
Thanks,
Sudhakar Vemuri
------------------------------
Date: Sat, 14 Feb 1998 14:10:56 -0500 (EST)
From: Jim Garcia <jimgarci@pacbell.net>
Subject: Buying Tax Liens?
There is an infomercial currently running several times a week
about getting rich by purchasing tax leins.
Not that anybody on this newsletter would fall for such stuff, BUT my
local paper (the Orange County (CA) Register) had an article today
regarding how that in California there is NO WAY that an individual
should expect to make any money OR get ownership of the property by
paying off a tax lein. BUT, the people who own the property and owe
the taxes may appreciate what amounts to a GIFT from the person who
pays the taxes.
It may (or may not) work in some states, but if you pay money for this
program's get rich plan with hopes of using it in CA, think again.
Jim Garcia jimgarci@pacbell.net
------------------------------
Date: Sat, 14 Feb 1998 14:13:19 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Are Infomercial Endorsements Real?
>Subject: Any success with Ken Roberts commodities course?
>Is there anyone that has used the Ken Roberts course on commodities
trading?
>I would be interested to know what kind of results you have acheived. I
>have received his marketing book several times over the years. Of course,
>it contains several pages of positive endorsements from his students.
>F. Searcy
>Roswell, GA
As a hobby, I sometimes try to see if endorsements in advertisements are
real. There are several phone books on the INTERNET that contain every
listed phone number in the U.S. So if I see an advertisement that JOHN DOE
of Kansas City lost 50 pounds in 1 week or JOHN DOE made $100,000 in 1 day
in the commodities market, I look up in the Kansas City phone book to see
if there is a JOHN DOE. In 99 percent of the cases, there will NOT be a
JOHN DOE in the phone book. In the 1 percent of the cases where there is
a JOHN DOE in the phone book, when I call, it is not the person listed in
the advertisement.
Isn't it strange that ALL of the people you see endorsing a product have
unlisted phone numbers.
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Sat, 14 Feb 1998 14:14:35 -0500 (EST)
From: 485119N@knotes.kodak.com
Subject: Re: Shopping for Insurance
This is not a response to Gary's question, just a request for further
insurance advice.
Info:
I am 31 yrs old, employed full-time, 30 yr old wife working full-time. I
have Life insurance of 4x my current salary through my employer for a very
small payroll deduction each month, and I also have coverage for my wife
through the same plan (50K on her). We just purchased our
first home in November, and took out a $180,000 mortgage. Since we built
the house ourselves, and had previously purchased the land,
we've got about $75,000 in equity. We own both of our vehicles outright, we
have about 15k in 401 plans, about 10k in the bank for
our savings, and earn about a combined 80k per year gross. I am the
primary salary, and consider that I would need more insurance
coverage on myself than on my wife.
I have recently been considering Life insurance outside of my employer. The
company I work for is
going through a serious downsizing, and is having major cutbacks. One way
or another, I do not anticipate being with this company for
very long, and therefore have been trying to decide which insurance to
purchase externally.
My Nationwide insurance agent that I have my homeowners policy through has
offered me several alternatives.
(1) A joint decreasing term policy for the full $180,000.
(2) A joint decreasing term policy for $125,000 and a $50,000 Universal
Life policy on me.
I have never shopped for insurance before, so I am not very knowledgable in
this area.
(1) I would like opinions on insurance in general, including the various
types such as U/L, VU/L, Term, Joint decreasing term.
(2) I would like opinions on which would be the best alternative for
someone in my situation.
Please comment on my situation and/or answer any of the questions that I
have. I welcome private responses as well as responses posted
to the digest.
Also, if anyone knows of any good websites that will show the pros and cons
of insurances (unbiased), please forward them to me.
Thanks for any and all replies in advance.
Regards,
RMW
email: 485119N@isbpgate.kodak.com
------------------------------
Date: Sat, 14 Feb 1998 14:15:16 -0500 (EST)
From: Linda De Muro <Demuro.1@osu.edu>
Subject: companies that buy homes?
I am interested in selling my home, but would prefer not
to do the extensive renovations it would take to make it more
attractive to the average home buyer. I am curious about
those ads in the paper that say "We will buy your home any
condition. Fast cash." and similar ads. Has anyone on this list
had any personal experience with these types of transactions?
I would be interested in learning more about this alternative.
Thank you.
Linda De Muro
Demuro.1@osu.edu
------------------------------
Date: Sat, 14 Feb 1998 14:16:59 -0500 (EST)
From: Diana Rubin <rubin@cadsys.enet.dec.com>
Subject: [none]
It just occured to me that I might not have all the information I need to
report 28% gain distributions on Schedule D. I own several non-Fidelity
funds within a Fidelity brokerage account. When they report my total of
28% cap gains distributions on my 1099-DIV form, can I be sure that they
are including the 28% amounts from my non-Fidelity funds also?
I'll call and ask, but often I don't get correct information from their
telelphone representatives.
Just thought someone might have run into this problem already and might
know the answer.
Thanks.
Diana
------------------------------
Date: Sat, 14 Feb 1998 14:17:45 -0500 (EST)
From: Pete Hazen <hazenpa@wmvx.email.dupont.com>
Subject: Should SEP-IRAs be included in Roth Conversion Calc?
My wife contributed to a SEP-IRA several years ago, since she was
self-employed at the time. Now that we're looking at converting all of our
outstanding regular IRAs to ROTH-IRAs, the question has come up about
whether or not we need to include the deductible SEP-IRA contributions (and
earnings) in the calculation used to figure the tax incurred as a result of
the conversion? Anyone know if we need to do that, or is the SEP-IRA
considered as its own "type" of IRA, separate from "regular" IRAs.
Thanks in advance for the help...
- ---
Pete Hazen
Wilmington, Delaware
------------------------------
Date: Sat, 14 Feb 1998 14:18:49 -0500 (EST)
From: David Neal <dneal@gnuplanet.com>
Subject: Short Term (30 day) interest bearer needed
My Credit Union only offers 90 day cds. But I'll need the cash Apr 15.
Is there a 30/60 day interest bearing investment vehicle I can
get into quickly? Otherwise, the money will be socked away
in a savings account that pays something like 3% APR.
------------------------------
Date: Sat, 14 Feb 1998 14:19:30 -0500 (EST)
From: dmak@tma-net.org
Subject: Best Calling Card?
I recently found a company offering a calling card at 14 cents/min
(anytime). That's the best I've seen or heard of yet. Does anyone
have anything that beats this rate?
Darrell
------------------------------
End of persfin-digest V4 #125
*****************************
Articles sorted by: [Date]
[Author]
[Subject]