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• Mutual Fund Terminology
• Why Do I Need a CPA?
• Record Retention
• "C" vs. "S" Corporation
• IRS Unreasonable Compensation
• Features Wanted
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• Tax Tip of the Week
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Under the provision, taxpayers were required to pay the full amount of the taxes assessed before they could appeal the assessment. Some taxpayers have suffered credit and cash flow problems, financial hardship, and even loss of their businesses because they had to pay the full assessment before they could appeal. We congratulate Senator Brian Joyce, the Massachusetts Senate, the Massachusetts House of Representatives and Governor Cellucci for this overdue and much-needed action.

• Mid cap fund.     A fund that specializes in the stocks of midsize companies.
• Price to book ratio.     The latest closing price of a stock divided by the revenues per share.
• Price to earnings ratio.     The current market price of a stock divided by some measure of earnings per share.
• Sector fund.     A fund that focuses on one particular economic segment such as health care, financial services, computers, technology or natural resources. Sector funds are an ideal way to invest in a specific industry without sacrificing diversity.
• Small cap fund.     A fund that specializes in the stock of smaller companies.
• Turnover ratio.     A representation of how frequently a manager trades a fund's portfolio. This could lead to short-term capital gains if the ratio is too high.
• 12(b)-1 fee.     Named for the SEC rule that permits it. This is the yearly fee charged for a fund's promotion, marketing and distribution expenses. It can be in lieu of commissions or markups when you purchase a no-load or low-load mutual fund.

Whether you're saving to buy a house, send your children to college or secure your retirement, you need a member of the Massachusetts Society of CPAs to assist you. Roger A. Kahan is an active member of the Massachusetts Society of CPAs.

Keep the tax returns and the proof of mailing indefinitely and the supporting records usually for six years (seven years for legal and collection purposes). In general, except in cases of fraud or substantial understatements of income, the Internal Revenue Service can only assess tax with respect to a year within three years after the return was due for such year (or, if filed later, three years after the return was filed).

A "C" corporation should use up any carryover items before electing "S" corporation status. A corporation that becomes an S corporation generally cannot use any carryovers from any year the corporation was a C corporation (an exception applies for the "built-in gains" tax). Each year the corporation is an S corporation counts as a year for the purpose of determining the number of years to which an item may be carried forward. This includes the net operating loss of a C corporation that changes into an S corporation. If the corporation does not terminate its S corporation status before the end of the 20-year net operating loss carryforward period, the net operating loss incurred in its first tax year, when no S corporation election was in effect, may not be used.

Someone once said: "Timing is everything." How true here, huh?

Where it says "Short Date Sample" look to see if it shows a "two digit" year. Of course, it does. That's the default setting for Windows 95, 98 and NT.

This is the date that feeds application software and WILL NOT rollover in the year 2000; it will roll to 00.

Click on the drop down arrow and select the option that shows mm/dd/yyyy (be sure your selection has four Y's showing, not two).

VERY IMPORTANT:
Click "Apply" and then click "OK."

Easy enough. Do this on every computer you have with Windows 95, 98 and NT on it.

How many people know about this? Who knows? How big of a problem will it be? I don't have a clue.

Thanks to my friend JEC for this suggestion.

TAX TIPS AND FACTS will appear on our World Wide Web page, at http://www.rak-1.com making it available the WORLD.

The new provision, Section 352 of the bill, cleans up the ambiguity in the tax code about providing such benefits to workers and encourages employers to address workers' needs for retirement planning.

An almost identical provision is included in Section 1259 of the House tax bill, H.R. 2488, the Financial Freedom Act of 1999. That bill passed the House on July 22.

The provision has been endorsed by the Financial Planning Coalition, a body of seven financial planning and asset management advocacy groups, for which the CFP Board is acting as an educational consultant. Members of the Coalition include the American Institute of Certified Public Accountants, the Consumer Federation of America, the Institute of Certified Financial Planners, the International Association for Financial Planning, the Investment Company Institute, the Investment Counsel Association of American and the Society of Financial Service Professionals. A press release about the provisions is available on the CFP Board's Web site at www.CFP-Board.org. We are encouraged that Congress has recognized the growing importance of financial and retirement planning for Americans and taken these steps."

If your accountant isn't a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters?

If your accountant isn't a CPA, it's time to seek professional help.

TAX TIPS AND FACTS is published periodically by Roger A. Kahan, CPA. Subscription is free to clients, prospective clients and friends of Roger A. Kahan, CPA. If you know of someone interested in a subscription to TAX TIPS AND FACTS allowing him or her to obtain valuable comments on national, Massachusetts or local tax issues, call (781) 963-RAK-1.