• A Tax Trap for Investors
• Y2K Scams
• Why Do I Need a CPA?
• IRS Audits
• Beneficiary Designations
• Y2K (again)
• Features Wanted
• Auto Mileage Allowances
• Internet Access
• Tax Tip of the Week
• We Need Your Support
• Temporary Job Location
• Educational Expenses
• Certified?
• Charitable Deductions
• Tax Planning Now
• Business Real Estate
• Thank You

If you buy the shares right before the record date, you will receive a taxable distribution, which may NOT reflect an increase in the value of the fund. This means you pay a tax on a "phantom" gain. Consider waiting until the record date to invest taxable accounts (i.e. non-IRA).

If you are not sure, call the fund and ask about the record date for capital distributions.

• A caller who asks for information about your bank accounts or credit card accounts, including name, address and account numbers. There is NO reason for anyone to ask you for this information unless you are making a purchase over the phone.
  
• Do not fall for the newest scam of asking you to transfer your money to a "special" account so you can access it on or about January 1.
  
• If you receive a call and the deal "sounds to good to be true" or the caller asks for your bank or credit card information, hang up and call your local police department. If you have a Caller ID box, write down the phone number. DO NOT REVEAL YOUR ACCOUNT INFORMATION TO ANYONE UNLESS YOU KNOW HIM OR HER PERSONALLY.

Thanks to the Randolph Savings Bank for this suggestion.

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.

Each of those plans require you to designate at least one beneficiary for payment of benefits in case of your untimely demise. When was the last time you checked to make sure your beneficiary designations are up to date? When was the last time you checked to make sure your administrator still has your beneficiary designation on file? With all of the mergers, buy-outs, consolidations and changes of personnel and computer systems, do you know if their records are up to date? The question is: Who will get your money?? Will it be to whom you intended??

Joe:    The standard mileage allowance for a car used in business (either as a self-employed person or as an employee) was 32½¢. On April 1, 1999, the standard mileage allowance decreased to 31¢ per mile traveled.

Other standard mileage rates are: 14¢ per mile for charitable work, and 10¢ per mile for medical purposes or as a moving expense. Recently, we received a notice from the Internal Revenue Service stipulating the year 2,000 mileage rates. The optional rate for deducting or accounting for expenses for business use of an automobile will be 32½ cents, 14¢ as the optional rate as a charitable contribution and 10¢ as the optional rate for medical or moving expenses.

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My answer: Subject to "modified adjusted gross income" limits ($40,000 to $50,000 single or $80,000 to $100,000 joint), there is a Hope Credit for up to $1,500 of the first two years of postsecondary education, and the 20% Lifetime Learning Credit (annual dollar limit of $1,000) when the Hope Credit is not used. Additionally, education expenses are generally deductible (even if they lead to a degree) if the education that is undertaken (1) maintains or improves a skill required by the individual in the individual's employment or other trade or business, or (2) meets the express requirements of the individual's employer, or the requirements of law or regulations, imposed as a condition to the retention by the individual of an established employment relationship, status, or rate of compensation.

However, educational expenses that are personal or constitute inseparable aggregate of personal and capital expenditures are not deductible, even though they may maintain or improve a skill or may meet the express requirements of the taxpayer's employer. Unreimbursed expenditures for such items as tuition, books, laboratory fees, dues paid to professional societies, fees paid for professional journals, etc., are deductible by an employee as an itemized deduction, subject to the 2% floor. The cost of technical books of relatively permanent value used in connection with professional work is a capital expenditure and must be depreciated.

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.