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6 posts from November 2012


So You Want to Invest in Art, Watches, and Motorcycles

With the big swings in the stocks and bonds market, some investors are diversifying their portfolios by buying other rarities, as Charles Passy of the Wall Street Journal reported earlier this fall.

Rolex watch pictureAccording to Chris Ivy, a director with Heritage Auctions, it’s the purest form of simple supply and demand.But before you run out and buy a Rolex, Harley or guitar once owned by Willy Nelson, do your research.

Investors are better off purchasing antique or vintage bikes for investments not for weekend rides.

Watches are all about brand, with Rolex and Patek Philippe being the most prized.  While some experts such as Mr. Van der Vorst of ValueMyStuff.com believes the guitar market has cooled since the 2007 frenzy, other experts say the popularity of the music from the ‘50s to ‘70s will ensure guitar sales will remain hot.

Do your research and learn the market.


Tax Code Ripe to Be Revised at Last

The departing commissioner of the Internal Revenue Services, Douglas Shulman, agrees that the tax code is too complex and ripe for an overhaul, in a Wall Street Journal article published Nov. 13.

Shulman says lawmakers have “loaded up” the current tax code with breaks, and ‘in some ways they’re the definition of complexity’ and could be paired back.


Just How in Debt is America?

In case you missed the final 2012 federal budget release,  the feds spent another $1.1 trillion more than they collected during the fiscal year that ended September 30. This is the biggest deficit since World Ward II, other than the past three years.


Federal spending remains at a new high at about $3.54 trillion, or some $800 billion more than the last pre-recession year of 2007. In its article The Hard Fiscal Facts, the Wall Street Journal reports that even were President Obama to get all the tax-rate increases he wants to levy they would only create $82 billion in extra revenue while slowing the economy’s growth. Many experts agree improving economic growth is the only solution to the extreme deficit.


When Settling Tax Debt: “If it seems to good to be true, it probably Is.”

You Owe Tax Sign on BackThe continuing slow economy has put many taxpayers behind on their bills and taxes.  If you owe back taxes, read this post before seeking help from a late-night television advertiser promising they can help you pay less that you owe to the IRS. 

According to the MarketWatch article, Who Wouldn’t Want to Pay ‘Pennies on the Dollar’, there are numerous civil lawsuits filed against tax-resolution companies that have promised consumers relief after pocketing thousands of dollars in fees, but have not delivered.  In the last 12 months, three such firms have shut down – TaxMasters, JK Harris, and Roni L. Deutch.

Many of these tax-resolution companies employ commissioned telephone sales persons rather than tax experts to “advise” clients, putting the delinquent taxpayer further in the hole for services that do not resolve their problem.

What to Do?

If you owe a significant amount of back taxes, research your options before writing anyone a check.  If you owe $50,000 or less, you may qualify for an installment agreement with the IRS. Talk to your tax adviser first.



Are You Spending Too Much on Your Medicare Plan?

If you are paying top-dollar for your Medicare, it is just as important to review your coverage as it is to rebalance your investments. And because the federal health-benefits program for older adults and the disabled has started it’s annual open-enrollment period now through December 7, now is a great time to take a closer look at your coverage and costs.

However, few people do according to a Wall Street Journal article, Lowering Your Medicare Bill. Only 15% of 1,000 Medicare beneficiaries say they had changed their Medicare plans in the past year or plan to do any time soon.

For a chart listing the brackets and premiums in the Social Security Administration publication “Medicare Premiums: Rules for Higher-Income Beneficiaries” go to Social Security website.


What's the Plan, Tax Man

It’s hard to plan for income taxes with the outcome of the presidential election still undetermined. Whether the Democrats remain in office or Gov. Romney wins the election determines how many Americans will be taxed and also if tax credits that will or will not expire by the end of the year. According to Tom Herman in his Wall Street Journal article, Tax Tips for the Next Two Months, the best strategy may be simply to procrastinate.


Here are 6 more ideas to consider.

1. Tax-loss harvesting. If you own stocks or securities that are worth less than your costs, consider using the capital losses to offset capital gains.

2. Don’t be penalized for wash-sale rules. If you sell a stock at a loss, be careful not to buy the same stock within the wash-sale period (usually 31 days or more). See Internal Revenue Service Publication 550 or seek advice from your CPA.

3. Consider donating highly appreciated stock to charity. Rather than selling and donating the proceeds, think about donating stock that you have owned for more than a year and that has risen in value. You may have no taxable gain on the appreciation while you may claim the entire value as a charitable contribution.

4. Watch mutual fund purchases now. Many funds distribute capital gains to shareholders late in the year, especially December. Sometimes it can pay to delay investing in a fund until after the date on which investors qualify for distribution.

5. Consider bunching deductions. You might consider combining charitable donations and deductions into a year when they will be worth the most to you.

6. Cash in on long-term winners. Upper-income investors could benefit from divesting big investment winners before December 31 to take advantage of this year’s unusually low capital-gains tax rates. Consult your CPA.

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