It's a good thing that the windows no longer open in most of today's office buildings! We have seen a bona-fide meltdown. Part of it is well deserved based on what had been an overvalued NASDAQ; but much of it is in my opinion, an overreaction, exacerbated by the presidential follies. I believe that we are at the bottom... in the sludge with the rest of the survivors. I expect two significant events in December to start a rally. One is the end of the presidential election issue (finally!), the other is a potential change in posture, or even an interest rate cut by Allen Greenspan on December 19. Although it may take some chutzpa, we believe that this is a BUYING OPPORTUNITY.

In our managed accounts, we are looking to take tax losses before any significant distributions hit. But, we are reluctant to sit out of the market. The first move back up in a turnaround market is often the strongest one, and we do not want to be left at the altar. To avoid wash sales, you should ensure that any reinvestment would occur in a similar security (do not repurchase the same stock). For the less daring, an alternative to jumping right back into the equity market would be bonds. I expect bonds to fare well next year with the aforementioned potential interest rate cut. Talk to me about your portfolio. This is why you hired me as your advisor. I can help you with both your taxes and your investments.

If you use a bank credit card to pay your medical bills or to make your charitable donations in 2000, you may record those items as itemized deductions on your 2000 income tax return, even though you actually pay for it in 2001. You can put the tax refund related to these prepayments into a savings account until April 2002 (when you would have obtained a refund if you waited until after December 31, 2000 to pay that bill) and see how much you earned by playing the "tax planning game." Only "play" the game for medical bills if you know you will have sufficient medical expenses to exceed the 7½% of adjusted gross income limitation.

In Massachusetts and some other states, the 2001 real estate tax bill, although paid in quarterly or semi-annual payments during both 2000 and 2001, is really a liability as of July 1, 2000. If you have already made two quarterly payments in 2000, consider paying the other two quarters before December 31, thereby getting a tax deduction in 2000. Again, you can put the tax refund related to this prepayment into a savings account until April 2002 (when you would have obtained a refund if you waited until after December 31, 2000 to pay that bill) and see how much you earned by playing the "tax planning game." By the way, this will not work if you are paying your real estate taxes through an escrow payment made to your bank.

If you think you will owe income taxes to the state, consider filing and paying an estimated tax payment by December 31, 2000. Again, you can put the tax refund related to this prepayment into a savings account until April 2002 (when you would have obtained a refund if you waited until after December 31, 2000 to pay that bill) and see how much you earned by playing the "tax planning game."

There is a possibility that Congress will pass legislation that will increase the standard deduction for married couples. If that happens, many married taxpayers will no longer list itemized deductions, but will use the new larger standard deduction. If you feel you are on the borderline to file itemized deductions, moving them into 2000 may be a benefit as they may not be usable in 2001.

Pushing deductions into 2000 may not always be worthwhile. If you will not be able to itemize deductions on Schedule A in 2000, these "extra" amounts will be wasted. It might be better to hold them off until 2001 when you may have enough deductions to allow you to itemize as opposed to using the standard deduction.

If we can help with any of these tax-planning measures, call my office.

Due to a hike in gasoline prices, the standard mileage rates for using a vehicle for business, medical or moving expenses has increased by two cents a mile, according to the Internal Revenue Service.

Starting Jan. 1, 2001, the standard mileage rate for the cost of using a vehicle for business purposes is 34.5 cents a mile, up from 32.5 cents a mile in 2000. The standard mileage rate for operating an automobile for medical reasons or deductible moving expenses has jumped up to 12 cents a mile, compared to 10 cents a mile. The standard mileage rate for using a car when giving services to a charitable organization remains at 14 cents a mile.

The standard mileage rates for business, medical, and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. An independent contractor conducted the study on behalf of the IRS. The charitable standard mileage rate is provided by law.

Roger A. Kahan is a Certified Public Accountant, Business Advisor and Financial Services Provider with an office in Randolph, serving the tax and financial needs of individuals and small to medium sized businesses almost anywhere in the United States.  And with the advent of the Internet, professional consultation extends to several other countries. 

Roger is always seeking additional clients and professionals wishing to save money and better manage their own, a friend, a relative or a client's personal or business life.  

Please let us know if we can use your name in an introductory letter to the prospective client.  Thank you.

Do your checks indicate that you are signing in your official capacity as an officer of your corporation or Limited Liability Company? Do you know you could be held personally liable for a check that does not? By placing the words "Authorized Signature" just under the signature line, it may prevent that breach of the corporate veil. We strongly suggest you look at each company check and have those words added to the check at the next printing. Until then, be sure to write your title next to your name.

This tip is not given to you as legal advice. It is from years of experience with clients.

Have your child work for you in your business and pay him or her a reasonable wage for time spent. Instead of paying a nondeductible allowance, you may be paying an "ordinary and necessary" business expense. Tasks such as answering the phone, filing papers and doing simple maintenance jobs for a parent's business may qualify.

By the way, hiring an over age 14 family member and paying a reasonable wage may also be a benefit to the family as a whole by allowing you to deduct the wages at your HIGHER tax rate.

The information contained in this publication has been obtained from sources I believe to be reliable at the time of writing, but I do not guarantee its accuracy or completeness.   Neither the information nor any opinion expressed constitutes a solicitation by me of the purchase or sale of any securities or other investment.   This material, or any portions thereof, may not reproduced without prior written permission of Roger A. Kahan, CPA.