Apr 13

I’ve been sifting through the proposed 2015 Government Budget and will complete the series in a seven day marathon, an article each day for the next seven days. The tax code is so complex that each bit ranges from applying to most of us, to code so specific, it might hit the top fraction of a percent. So please bare with me if the proposed code changes I’m highlighting have no interest for you.

You may know, the gift tax exclusion permits an individual to gift up to $14,000 each year to another person with no tax consequence. Even if you are not wealthy, when you reach an age that you realize you can’t take it with you, some people like the idea of handing out money to their loved ones each year. In some situations where it’s preferable not to have the recipient gain access to the money until they are adults, or even for adults, when they reach a certain age. This is often accomplished via a trust. The process itself is a bit convoluted. The deposit is made to the trust, and the beneficiary, in theory, is given brief access to the funds, but upon signing (or having their guardian sign) a Crummey Notice Letter, the gift to the trust is considered completed.

The proposed change to the code eliminates some of the paperwork, no more letters to deal with, but caps the gift amount to $50K per year via this method. The normal, real, immediate, $14,000 gifts are not impacted.

My view? This actually simplifies the tax code for many who wish to gift up to $50K per year to a small number of beneficiaries, and avoids the smoke and mirrors of the letter acknowledging the gift. I’m with any rules that help simplify the code.

written by Joe \\ tags:

Apr 11

Gambling responsibly is something that everybody strives to achieve however it can be tricky for some people as it takes quite a lot of self-control in order to achieve it. The reason why this subject is so common these days is because of online gambling and the thousands of online casinos that are now available on the Internet. These casinos are fantastic and offer a huge variety in games that are free to play however since they are open twenty-four hours a day and are available no matter where you are as long as you have an Internet connection it can be quite hard to control yourself when you get the urge to gamble.
There are a couple of ways in which to create a responsible gaming environment for yourself and the first one isn’t really environmental, but more state of mind. You should create a budget in order to make sure you do not overspend when gambling. If you are overspend while gambling it makes the whole experience sour and so you should work out from your monthly budget how much you are willing to spend and then try not to go over it.
Being responsible for yourself online can be tricky to do as you never know whether there is somebody out to try and scam you. An online casino can be quite a scary place to go for the first time as they are asking for real money in order to play. Fortunately for many people there are lots of online casino review sites which you can visit in order to find safe and well regarded casino sites so that you can feel better about playing on them. With this knowledge in your hands you can then find the right casino for you in order to enjoy a safe online environment.

Article by Miles Hughes

written by Joe

Mar 28

We continue our look at the proposed Federal Budget, and today, it’s the 1031 exchange that’s under review.

The good news? Odds are, you’ve never even heard of this. A 1031 exchange is a way of taking an appreciated property, usually real estate (rental, not your home) and after jumping through a bit of tax hoops, you are able to sell one property, and soon after, buy another one at last as costly as what you sold, and defer the gain. It’s a neat trick for real estate investors and I’d never giving it much thought until recently. A friend sold a rental property and planned to use the money to buy a different one in a different location. I’m not an expert on this topic, but I knew enough to tell him to research the 1031 exchange and use the process to avoid a tax bill. Sure enough, it went off without a hitch. Out with the old, in with the new, and no tax bill.

Now, the new Budget limits the flexibility of the 1031 exchange. Specifically, it proposes a $1M limit per taxpayer per year for the value of deferred capital gain. Not a big deal for those with a few rentals, but if you have any larger buildings or expensive houses you rent out, you might kiss your 1031 goodbye.

written by Joe \\ tags:

Mar 24

The proposed 2015 Government Budget is full of tax code changes. Some, bigger and more impactful that others. Today, as the title shows, the budget, if passed will eliminate the stretch IRA.

Stretch IRA? It’s actually a term used by brokers and advisors, but it’s not an IRS term. The stretch refers to the fact that if one dies and leaves their IRA to a non spouse, current law permits withdrawals over the life expectancy of the beneficiary. Here’s the cool thing – if you are, say, 30 years old and inherit an IRA, your first year withdrawal is just under 2% of the account value. To be precise, a $500K IRA and an RMD divisor of 53.3, from IRS Publication 590, result in a required withdrawal of $9381. This small withdrawal will have a small tax impact, for the traditional pre-tax IRA, it’s taxed at one’s marginal rate, but this wont be enough to send the beneficiary into the next bracket or the one after that as would a complete withdrawal of the entire account. Perhaps more important, this withdrawal is far less than one should expect from the market long term, and hopefully the account will continue to grow for years to come.

This may all be in the past. The new budget proposes that a non-spouse will not have the lifetime withdrawals, but must take the assets of the account by the end of five years. What does this mean for our 30 year old? A $100K first year withdrawal. This would easily push a single person in the 15% bracket right into the 25% and 28% brackets, and put the longer term growth in jeopardy.  It’s partially psychological, but money in a non-retirement account is more easily spent.

The impact won’t be on us, but to our loved ones. I Disagree with this proposal and hope to see it deleted from the budget. If the intent is to go after the “Romney” sized IRA accounts, it’s easy enough to offer a maximum account size. Too many people of modest means have trusted the stretch rules to use their IRAs as a “poor man’s” trust, and this should be left in tact.

written by Joe

Mar 23

Even if you have an online business, you should still develop a solid plan for it just as you would with a traditional brick-and-mortar company. Many people might feel as if this is an unnecessary step to take, but there are several key reasons why a business plan should be viewed as a requirement instead of an option.

Get Things Off to a Great Start

One of the most important reasons why you should develop a business plan is to make sure that you get everything off to a good start in a positive direction. Starting with a basic business plan outline will at least set the pace and get the ball rolling for you, allowing you to have a solid idea and full understanding of which steps need to be taken next. Keep in mind that this plan will serve as the blueprint for your business, so do your very best when working through it. Remember, more than 50 percent of small businesses permanently close within 18 months of opening. You don’t want your business to be a part of that statistic. Do everything you can now to lay a good foundation for your future.

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You Need to Have a Game Plan

Think about your favorite sports team. Regardless of the actual sport or venue, they have developed a game plan and playbook beforehand so that they can achieve success and victories during their matches, games, and competitions. The same principle applies to the business world, according to Inc., especially since you are going to be competing against hundreds or even thousands of other competitors within the thriving world of eCommerce.

A basic business plan outline will allow you to have all of the necessary elements of a good playbook that will allow you to win much more than you might think. At the end of the day, the business with the best playbook and execution of those plays is the winner.

Qualify for Financial Loans and Investments

There are not very many businesses that can function and grow without applying and getting approved for some sort of third-party financing and funding. However, one of the first things that many investors and banking institutions request to review from potential applicants is the actual business plan, and you will definitely need to have something ready to show them when they ask for it.

They will want to review the plan thoroughly and will expect for it to cover quite a few main points and pertinent details, according to Entrepreneur Magazine. If you do not have a well-developed plan ready to go, you will discover rather quickly that quite a few doors of opportunity in this regard are closed shut. There are several essential items you should include in your business plan.

  • Executive Summary: This is where you tell the reader what you want so they know right up front what you’re looking for. The executive summary should also be a short synopsis of the rest of your business plan.
  • Market Analysis: How much do you know about your industry and your competitors? You want to come off as an expert in your field so you will be able to establish strategies for success.
  • Service or Product: Here is where you describe what it is that you are actually selling or offering as a service. You need to emphasize what’s unique about your product as compared to other similar ones on the market.
  • Company Overview: You need to have a description of your company, explaining the management structure, qualifications of your employees, and how everyone will work together toward a common goal.

An Effective Assessment Tool for Your Business

Another reason why you need to develop and periodically update your business plan is simply because it is can be used as an effective assessment tool over time. Keep in mind that you will continuously need to recognize your strengths but pay even more attention to your weaknesses. The last thing that you want to do is to open a business that is heavily flawed from the very beginning. If you make a major breakthrough or invention with the product you are selling, you will need to go back to your business plan and put that in. If your management structure or top employees change, that needs to be revised in your business plan too.

Developing a basic business plan outline will at least provide you with a realistic snapshot that identifies your chances of short-term and long-term success. Address any areas of concern and improvement, because doing so will pave the way toward achieving your goals in the future, according to the Wall Street Journal.

The Bottom Line

When it comes down to it, whether you want to create a business plan or not is up to you. However, if you are serious about achieving success and getting the most value from your hard work and diligent efforts, then this should become and remain a top priority.

written by Joe \\ tags: ,