ROGER A. KAHAN
Tax and Business Advisor, Wealth Care Professional
Serving the tax and financial needs of individuals and small to medium businesses
1214 Park St., Suite 203
Stoughton, MA 02072-3738
VOICE: 781.963.RAK-1 (963-7251)
E-mail: kahan@rak-1.com

A light at the end of the tunnel
The “decoupled” train
What is a dividend now?
Alternative Minimum Tax
Purchase of items picked up outside state
Broker of Record
Disability insurance
Who wins in the new tax cut?
Identity theft

Estate planning has never been more of a challenge. The process has aptly been called “a test of trying to hit a moving target,” given the scheduled increases in the federal applicable exclusion amounts and the gradual decreases in tax rates, one-year repeal of the federal estate tax in 2010, and then the restoration of the pre-2001 estate tax law thereafter.
And now, we have been launched into a new dimension of uncertainty and complexity, with Massachusetts, like many other states, has “decoupled” its estate tax from the federal tax. Massachusetts has indeed now shunted its decoupled estate tax train into a whole new track.

If you have not looked at these tax changes or have not reviewed your estate tax plans this year, you may be in big trouble.

Think about it and call us for more information.

Dividend payments have suddenly become a hot topic with taxpayers, and tax practitioners may face some complicated explanations and disappointed clients when it becomes clear that some things really aren't dividends for tax purposes) despite being labeled as such on statements from money market and bond funds and other kinds of investments). The question of what is and what isn't a dividend has not been a critical tax issue since the Tax Reform Act of 1986. But the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003 now makes it required knowledge for both tax practitioners and taxpayers. Among income labeled as dividends that will not qualify for the new tax-favored treatment are interest payments from money market and bond funds, S corporation distributions to shareholders, most REIT distributions, some dividends from foreign corporations, and retirement account distributions. Many taxpayers seeing the word "dividend" on their statements will think this income is subject to the reduced rates, so practitioners should be prepared.

This is perhaps the most confusing tax issue in the tax law. The question is: What is the AMT (Alternative Minimum Tax)? Look at line 43 on page 2 of your Form 1040 for 2002. If there is a figure on that line, you paid AMT in 2002. If there is a figure there, you will find Form 6251 back there somewhere in your tax return. Form 6251 is used to calculate whether the AMT tax is higher than your regular tax (shown on line 42 of your Form 1040). If the AMT is higher, the difference is added to the regular tax to bring it up to the amount of calculated AMT. In other words, you pay the higher of the two calculations .. regular or AMT. If you read your newspaper about the new tax law, you will see that many more of you will see a figure in line 43 of your 2003 income tax return. The two biggest AMT busters are LARGE itemized deductions or LARGE capital gains.

Think about and call us.

BANKS WANT TO LEND MONEY!

We may be able to help you obtain financing to establish, maintain or expand your business.
ABSOLUTE
BUSINESS
CONNECTION
Call Roger Kahan or
Arnie Rosenthal at 781.341.1004

The Massachusetts Society of CPAs represents over 8,800 certified public accountants working in public accounting, industry & business, government and education.

A national retailer of electronic equipment was liable for the collection of Massachusetts’s sales tax on transactions in which customers purchased merchandise at a store in Massachusetts but elected to pick up the merchandise at an alternative store location outside Massachusetts. At issue were alternative location sales in which customers picked up merchandise in New Hampshire, a state with no sales tax. According to the Massachusetts Supreme Judicial Court, such sales were subject to the Massachusetts sales tax because title to the purchased goods passed in Massachusetts.

Planning for the future is a lot like planting a tree. You’ve got to do it today if you want your family to enjoy it tomorrow.

Just because you are happy with your current group insurance plan doesn’t mean there is no opportunity there for me to work with you on behalf of your fringe benefit plans. Many times corporate and other major clients never see the agent that sold them the plan. There is often little or no follow-up by the agent and no value provided for ongoing compensation received. In many cases, statistics have proven that a fringe benefit provider would welcome the opportunity to transfer the agent of record to his or her trusted advisor and allow me to oversee your group benefit plans to ensure the most competitive rates and programs available. If the original plan was sold through an agent, I could receive the ongoing commissions and be the first notified of any proposed changes in the plan premiums. This enables me to work with my affiliates, explore alternative solutions, and present my findings to you perhaps before you are even aware of the pending changes. Call me to discuss how to execute a Broker of Record form. This may not be a “Tax Tip,” but this “Fact” just might save you a lot of money, aggravation, and grief.

Did you know we do more than just prepare, compile, and crunch numbers? We are not just “bean-counters.” We can also advise you on estate and business planning and offer financial strategies to meet your goals. As your CPA, we know your needs better than any other professional.

Think twice before deducting your disability premiums. Most of us know the rules on taxation of the benefit if the premium was deducted or paid by the business.

Your accountant’s insurance carrier doesn't want to see the tape of a deposition when he or she is asked why he or she didn't tell a client that the benefits would be taxable because of the way that they accounted for the premium.
Talk to your accountant or tax professional about disability insurance. If you don't, you may be in for a tax shock.

DON’T FORGET:
“ IT’S NOT WHAT YOU MAKE THAT COUNTS; IT’S WHAT YOU KEEP!”

The good news is that most taxpayers will benefit from the Jobs and Growth Tax Relief Reconciliation Act of 2003 signed into law on May 23. The main beneficiaries of this law are higher-income taxpayers because they are generally likely to be the most heavily invested and because they receive the largest tax rate reductions. Married couples with children and small businesses also benefit significantly from the new law. Conversely, taxpayers in the 10 percent bracket, people without children, and those who do not have investments receive little or no benefit from the changes.

Have Questions? Call Us! We are here to help. If you have any questions please don't hesitate to contact us.