Roni Deutch is not a super hero, but she has good record to handle tax problem against IRS and she always won the case. There are many scary and myths opinion in our civil mind, and this influence their bravery to face and claim their right, especially against IRS and fight for something they do not do, moreover we all know that tax is the biggest income for this country. Why must we break this nice city development?

Tax case in the court is so long in queue, and Roni Deutch is there to help people in this case, if you do not know on how to find her, don’t worry, you can find at this article where you should go and you can also find her easily on Google, because now she is just like a star on the internet.

I hope this short article will be a new light of your life, especially when you are facing IRS charge of your tax payment. Find her and get out from any tax charge now!

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

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Taxpayers are usually terrified of the word “capital gains.” You can define capital gains as the profits you gain from the sale of an asset. As per capital gains tax law, you have to pay taxes on the profits you make when you sell an asset. You can make a capital gain on assets such as land, stocks, or bonds. On the other hand, if you made a loss on a piece of property, it is considered to be a capital loss for which you get a tax deduction.

A clause in the capital gains tax law permits you to avoid paying capital gains tax even if you make a huge profit while selling an asset. Real estate in one area in which you can dodge capital gains tax. Real estate is known to be a very profitable venture; its price never goes down as long as you own it. The good news is that IRS has enabled tax payers, who invest in real estate, to avoid paying taxes on the profits they make on it.

As per capital gains tax law, if you are single and make a profit of less than $250,000 or if you are married and make a profit of less than $500,000 on the sale of your primary residence, you don’t have to pay any capital gains tax. So, unless you make a really big profit while selling your residence, capital gains tax is not something you have to worry about. Even if you make a profit exceeding $250,000 or $500,000, you have to pay taxes only on the amount which exceeds that.

If you would like to sell a house that you have been renting, you will be interested to know that you can consider it to be your primary residence, provided you live in it at least two years during a span of five years before you sell it. Several people who invest in real estate use this convenient clause to escape capital gains tax. All they have to do is to live in the property they have been renting for two years just before selling it.

Capital gains tax law has yet another clause that can help you avoid paying taxes on profits made on a place you have been renting even if you don’t live in it for two years. You simply have to invest your profits in more real estate property, and you can escape paying capital gains taxes.

You have to pay taxes on profits made out of selling bonds. If you have held the stock for five or more years, you have to pay a 15 percent capital gains tax . However, if you have held it for less than five years, you have to pay almost double, that is 30 percent.

Your tax professional is the best person to answer any queries you might have on capital gains tax law.

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The capital gains rate for certain taxpayers will drop to 0% for tax years 2008 through 2010. How can you take advantage of this 0% capital gains rate?

First, let’s review the capital gains rate in general.

Gains from sales of personal investments held for more than 12 months generally are taxed at the capital gains rate which is 5% or 15%. The 5% capital gains rate is available only to those whose ordinary income is taxed at 15% or less. The 15% capital gains rate will remain effective through 12/31/10 (barring any changes to the law prior to that time). The 5% capital gains rate will continue through 12/31/07; then the rate drops to 0% for tax years 2008 through 2010.

The 15% income tax brackets will be higher in 2008 as the IRS makes its annual adjustment for inflation, which will be announced later this year. However, to get an idea of who may qualify for the 15% and under brackets, currently in 2007 a married couple filing jointly must have taxable income (which remember is all of the taxpayer’s income less their itemized deductions) of no more than $61,300; and for a taxpayer with a filing status as single, the cutoff is $30,650.

Next, let’s review what is a capital gain.

The reduced rates for long-term capital gains generally apply to the “adjusted net capital gains”, which include net long-term capital gains (the excess of long-term capital gains over long-term capital losses) less any net short-term capital loss (the excess of short-term capital losses over short-term capital gains). This excludes sales of collectibles (such as art work), qualified small business stock (also known as section 1202 stock), and unrecaptured 1250 gains (which result from the sale of depreciable real property). These gains also include qualified dividend income (”QDI”), dividends from domestic corporations that qualify for the 15% tax rate. For most taxpayers the adjusted net capital gains is merely the sum of net long-term capital gains from real estate, stocks, bonds, and mutual funds, plus any QDI.

Now, let’s review how to determine which capital gains rate is used.

In order to find out which capital gains rate (5% or 15%) a taxpayer’s gains are subject to, begin with taxable income and then subtract the capital gains received during the tax year. Subtract the difference from the maximum tax bracket amount (e.g., $61,300 or $30,650). The result is the amount of capital gains subject to the 5% rate (or 0% rate in 2008), with the remainder subject to the 15% rate.

Of course, if taxable income without capital gains is greater then the taxpayer’s 15% ordinary tax bracket, then all of the capital gains are taxed at the 15% rate. Conversely, if taxable income including capital gains is less than or equal to the taxpayer’s 15% ordinary tax bracket, then all of the capital gains are taxed at the 5% (or 0% in 2008) rate.

Let’s take a look at a few examples of how the calculations work.

1. Suppose a taxpayer filing under the “married filing jointly” status has total ordinary income of $36,100 included in taxable income plus adjusted net capital gain income (ANCGI) of $25,000 for a total taxable income of $61,100. Since taxable income is less than the cutoff of $61,300 (see above), all of the ANCGI is taxed at the 5% rate for 2007, and would be taxed at 0% if they had this income in 2008, 2009 or 2010.

2. Suppose, instead, that the taxpayer filing under the ” married filing jointly ” status has total ordinary income of $65,000, and ANCGI of $35,000, for a total taxable income of $100,000. Since the ordinary portion of the taxable income is greater than the cutoff for the lower tax bracket, all of the ANCGI is taxed at the 15% rate.

3. Finally, let’s say the taxpayer filing under the “married filing jointly” status has ordinary income of $43,100, and ANCGI of $60,000, for total taxable income of $103,100. Since ordinary income is less than the maximum taxed in the 15% regular tax bracket, part of the capital gains will be taxed at 5% (0% for 2008). The amount taxed in the lower bracket is $18,200 ($61,300 – 43,100). The remaining capital gains of $41,800 [$60,000 - 18,200] are taxed at the 15% rate.

Let’s go over the cautions to consider in your planning.

Caution #1: The kiddie tax

When Congress first passed the bill to lower the capital gains rates, there was a huge loophole. Taxpayers could gift appreciated stocks and mutual funds to their teenage children, who are usually in a low tax bracket. Then the teenagers could sell the investments at the 0% rate in 2008 and pay no tax on the gains. Lawmakers took exception to this planning, noting that the intent of the bill was to allow retirees to pay a lower rate on investments they may need to cash out.

In response, Congress broadened the “kiddie tax”, which kicks in when a child’s investment income (such as interest and capital gains) exceeds a certain level. This investment income is then taxed at the parents’ top marginal rate. Currently, that level is at $1,700, so any investment income received by children in excess of $1,700 is taxed at their parents’ tax rate. In the past, the kiddie tax applied to children under the age of 14. It has now been raised to include those younger than 19 and up to 24 years old if the child is a full-time student.

Caution #2: AMT

Regardless of the potential benefits possible from the favorable capital gains rates, be aware that the Alternative Minimum Tax (AMT) may eliminate any potential benefit. As a taxpayer “cashes” out investments to take advantage of the favorable rates, the additional income, even if qualifying for lower tax rates, could push the taxpayer’s overall income into a higher bracket, which could trigger the AMT and effectively negate the benefits of the lower capital gains rates. Seem complicated? It is. We strongly recommend you review all AMT and capital gains issues with your CPA/Tax Coach.

What are the planning opportunities? Who stands to benefit the most from the reduced capital gains tax rate?

Adults who provide financial support to their aging or retiring low-income parents. Gifting appreciated capital assets such as stocks or bonds instead of cash, can be a good way to provide them with extra income. Taxpayers can gift up to $12,000 a year per person with no gift-tax consequences. If married, a taxpayer and spouse may give up to $24,000.

Retirees with investment accounts. The capital gains breaks do not affect the withdrawals from tax-deferred retirement savings plans (i.e., IRA’s). But if the taxpayer is retired (retiring) and owns stocks, bonds, or mutual funds, the 2008 tax year may be the time to sell.

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Air filter has an important role in the functions that will keep your vehicles from mud and dust. The presence of air filter is really functional for you because it plays an important role to keep the system of air in your car. If you would like to keep the work system of your car, the installation of this filter is really great because it is designed to give the best help for your car. If you need this kind of product for your car, it is advised to choose the product of air filter that is top-rated so you can save more money because it is durable. Also, the presence of the best air filter in your car will be a good investment for you.

If you are interested to purchase this air filter for your needs, you need to be sure that it will work well for your car. In this case, you are advised to purchase this product that is suitable with the condition of your car so you will not make any mistake that can make you feel sorry. Besides, this air filter also comes with some shapes that you can choose for your needs. There are some shapes which are standard to use such as ring and rectangular.

The installation of air filter will affect the performance of your car so you need to get the best one for your needs. Besides, this product has a function to filter your car from something that can make the condition of your car getting worse. In fact, the use of this air filter will work in an effective way so you can take benefits from it. This unit is designed to give the best protection for the system of your car which is vital so you are advised to have this unit for making your car better.

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Enterpreneurs play very important role in socio-economic welfare of the country. They identify the needs of the business, purchases the other factors of production and coordinates them for some productive purposes. They are the innovators, researchers and risk-takers of the company. Due to the mixed economy in India, both public and private enterpreneurship exists here. Large scale sectors are under the public enterpreneurship. The middle and small scale sectors are under the private entrepreneurship. In order to develop entrepreneurship in this sectors, Government of India has stepped towards the Entrepreneurship Development Programmes. The reason behind the development of entrepreneurship programmes in India are as follows :-

1. Increase in national production and productivity in different sectors : Indian entrepreneurs should work to increase the national production in primary, secondary and tertiary sectors. They should work to increase employment. They must be able to generate wealth from both national and international markets. They should produce such goods and services which can substitute the imports. They should give more effort for increasing export of goods and services.

2. Balanced regional development : Most of the industries are setup in the urban and semi-urban ares. This has led to the migration of people from rural areas to big cities. This has created pressure on the Government to provide housing and other facilities to the people. In order to reduce this imbalance, Government has provided facilities to encourage entrepreneurs to setup new ventures in rural areas.

3. Re-investment of profit : The objective of re-investment of profit can be achieved when their will be developed indigenous enterpreneurs. They invest profits in the business for the betterment of the productivity and welfare of the community.

4. Decentralisation of economic power : The main drawback of large scale enterprises is the centralisation of economic power. In order to achieve equitable distribution of wealth and balanced economic growth, the Government has targeted to develop competent entrepreneurs who can setup the small scale enterprises. This will help in the dispersal of wealth.

5. Solving the problem of unemployment and under-employment : In large scale industries, the problem of unemployment and underemployment is more. It is so due to lack of capital and increase in labour force. The highly educated and technically experienced peoples get dissatisfied and frustrated with their job. In order to solve this socio-economic problem of India, Government has taken step towards the development of such programmes. Besides setting up of large scale industries, small scale industries are encouraged to setup, which can provide large number of employment with the same amount capital investment, compared to the large scale industries.

6. Harnessing youth vigour : When government cannot provide work to the educated and highly qualified youths, to earn their livelihood, they turn up to violent activities. In order to reduce their frustration, anger and disappointment, the development of entrepreneurs is necessary in India. They provide self-employment work to the youth, to earn their living. Thus, they are diverted from destructive activities by entrepreneurial motivation to work for the country.

7. Women as a special needs group : India is a developing country where discriminating attitude towards women is more. They are deprived of the opportunities, employment or payrise or leardership. Therefore, women has started their own ventures in India. Government has also started courses for the betterment of entrepreneurship skills among women. This has increased confidence in the mind of the women. According to the statistical reading, women entrepreneurs are doing better and they are increasing day by day. On the other hand, male entrepreneurs are impatient and over confident to spoil their own ventures. Women entrepreneurs are found to learn their weaknesses and they try to overcome them through hard work and perseverence.

Thus many institutions have been setup to develop the entrepreneurship in India. These institutions provide finance to the entrepreneurs to setup and flourish their ventures.

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Hey all you smart mutual fund investors, listen up!  Check your accounts on line now, or call your broker or investment company,to see if your fund issued any capital gains this month.  That’s right, even though your fund’s value probably took a nose dive, there very well may have been trading in that fund throughout the year that could have resulted in a capital gain.  Mutual funds distribute the bulk of such gains during December to their shareholders, so you COULD owe income tax on capital gains even though your fund is sporting a big fat loss, or even a mild-paunchy loss…

You see, when a lot of novice or nervous investors call 1-800-REDEEM (that’s a joke, not a real number to my knowledge) fund managers have to raise enough capital by 4pm EST each day of trading to satisfy all the redemptions.  Well, quite a few savers sold out of mutual funds when the markets started declining.  (Generally it’s savers, not investors, that panic and sell prematurely incidentally.)  So, quite a few mutual fund managers had to juggle their portfolios, invariably selling out securities that had built-in capital gains.  Yes, I know, a distant memory…over 6 months ago, even…but I digress.

If the mutual fund manager wasn’t able (or interested) to offset those gains with losses, there may have been an excess of gains over losses, resulting in us shareholders having to declare a portion of those gains on our individual income tax returns.

Here’s an example:  Your mutual fund issued a gain to your account in mid December totalling $1,000.  Look through your portfolio (as I mentioned in my earlier blog today) for a security whose value is at least $1,000 less than your basis (fancy term for what you paid for it, including all reinvested dividends, if applicable) and sell that security booking a $1,000 capital loss.  Your losses offset your gains (for the most part it’s that simple, although long-term capital losses-securities held one year and one day–offset long-term capital gains, and short-term capital losses–securities held less than one year and one day–offset short-term capital gains).

Finally, the federal government allows you to deduct an additional $3,000 in excess of all offsetting capital gains and losses each year against ordinary income.  If you have more than $3,000, you get to carry the excess forward to future tax years.  Some states follow the feds in the unlimited carryforward of capital losses, New Jersey, however does not.  Check with your CPA for details on this, to be sure, if you expect heavy losses in 2008.

At the end of the day, its the end of the year.  No sense in paying unnecessary income taxes.  So, while you did not actively sell any securities this year to produce a capital gain, you may be an unsuspecting shareholder who DID receive a capital gain.  There’s still time to avoid paying tax on that by “booking/realizing” an equal dollar capital loss, or even quite a bit more than the amount of capital gains, and deducting your $3,000 excess on your 2008 return and pushing the balance forward.  Yes, Ms. Dubious, there WILL be capital gains in your future, and they JUST might start in 2009!  You’ll be prepared however, with perhaps an ample supply of carried forward capital losses so you won’t have to pay taxes till they’re all used up.  Now THAT’S planning, and THAT’S effective planning.

Consult your broker and/or CPA for details.  (Most likely your fee-only financial planner has already contacted you and handled this for you.)

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Anthony Morrison grew showing potential of becoming a successful in all his endeavors. His family encourages him of becoming intellectual curious, a heart for other people and confidence in what he does. During his young age he already showed his prowess in making money to buy what he wants. He sold candy bars to earn and be able to save and buy the things he wanted. At age seven and eight he set a goal of buying his dad a motorcycle with the help of his other siblings, you see at a very young age one can already set goals and make that dream become a reality.

As he grows he expanded that simple business he has as a teen and was able to establish his own company when his family was into financial atrocity. In a span of one year Anthony Morrison had to work with all part suppliers in the industry and he began manufacturing his own parts and was on the lead just a year after that.

He even launch eleven companies on his own, is involve in many sharing engagements and founded his own charity and operates successful seminar workshops in many part of United States. A. Morrison educate entrepreneurs how to succeed in their respective business and helps them establish their own business with one-on-one coaching. He is presently engaged in several businesses such as online retail, providing workshops, coaching, direct response, book writing and many more. Thus Anthony Morrison advertising profits from home is helpful in generating income

As he travel from one place to another he delivers topics that tackles the basics and core of business. He speaks on enterpreneurships’, internet marketing, economics and online marketing that give better and in depth knowledge on how you should go about your new business. His audience came from corporate world to group of students and he always provide informative messages that will help novice entrepreneur to put up their own business. Anthony Morrison advertising profits from home can help you gain earnings the simpler way.

Anthony Morrison also expanded his business to publishing where he began publishing his first book entitled “The Hidden Millionaire: Twelve Principles to Uncovering the entrepreneur in You” this happen sometime of 2008 and when 2009 came he published another book, “Advertising Profits from Home” with the purpose of educating people how to make use of the techniques and strategies he developed to come up with a successful online and marketing campaign. He also created a plan and proposal for successful marketing campaign. This can help affiliate marketers to generate more income in the most convenient and easy way. These strategies and methods are all shared in his books. He went out of his way by promoting his book on a national level using the medium of television and media.

Anthony Morrison often travels the entire country sharing his story and skills to promising entrepreneurs. He shares what makes him successful in his endeavors. He became a multimillionaire using the techniques he now shares with his followers and students. Anthony Morrison was recognized as a great sample of success. He is young, brilliant entrepreneur and is called the online marketing guru.

As an author Anthony Morrison was able to awaken the minds of new entrepreneur and is able to help them gain financial freedom at the comfort of their own space at home using Anthony Morrison sales techniques and internet marketing strategies. These techniques and strategies can be found in his publish books.

He has reached the top of success and has seen how effective his books, his coaching programs, seminars and speaking engagements are now featured in several national publications like LA Times, Business on the Mound, Success Magazine, Growing Wealth Magazine and Home Business Magazine

Many entrepreneurs and new online businessman are now emulating the steps that A. Morrison has shared in his engagements, books and seminars. One secret is that you find something you enjoy doing, dig in deeper into the project, go for your dreams with confidence and eagerness to materialize the goals. To achieve your goal it is wise to understand what you have been into so you can create avenues for better management and profit. You then are creating your plan and realizing efficiently.

Understand all you have to know about making profit from advertising from home. You can find everything you need right here at Anthony Morrison

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On 3/17/09, IRS Commissioner Doug Shulman told the Senate Finance Committee:

“. . . Thousands of Taxpayers have been victimized by dozens of fraudulent investment schemes.  These too-good-to-be-true investment uses have often taken the form of so-called “Ponzi schemes” (i.e., the fraud perpetrator promises investments returns, some or all of which are fictitious) . . . The Madoff scandal has affected a very large and diverse pool of Investors, some of whom are reported to have lost most of their life savings . . . To help provide clarity and to assist Taxpayers the IRS is today issuing guidance articulating the tax rules that apply and providing “safe harbor” procedures for Taxpayers who sustained losses in certain investment arrangements discovered to be criminally fraudulent.”

In response, the IRS issued Rev. Rul. 2009-9, Rev. Proc. 2009-20 which allows Investors, defrauded by “Ponzi schemes” (including Madoff’s “Ponzi scheme”) to claim an IRC §165(e) theft loss deduction (i.e., ordinary loss deductions not a capital loss deduction for their “qualified investment” (Rev. Proc. 2009-20, Sec 2.06).

(1)  Rev. Rul. 2009-9

Under Rev. Rul. 2009-9 (as stated by IRS Commissioner Doug Shulman, 3/17/09 Senate Finance Committee Appearance):

1. An Investor’s theft loss from a Ponzi scheme is a theft loss, which is not a capital loss (i.e., the theft loss is not subject to the normal limits on losses from investments, which typically limit the loss deduction to $3,000 per year when it exceeds capital gains from investments).

2. “Investment” theft losses are not subject to limitations that apply to “personal” casualty and theft losses (i.e., the loss is deductible as an itemized deduction, but is not subject to the test (10%) percent of AGI reduction or the $500 reduction (2009) that applies to many casualty and theft loss deductions).

3. The theft loss is deductible in the year the fraud is discovered (2008, in the Madoff case) (except to the extent there is a claim with a reasonable prospect of recovery).

The tax year in which the Investor discovers the theft (IRC §164(e)) must be the same tax year in which an indictment or similar allegation is made at the State or Federal level against the promoter of the scheme (i.e., a conviction is not required).

Under Rev. Rul. 2009-9 (Rev. Proc. 2009-20), the amount of the theft loss is the “qualified investment” (i.e., amount of money invested that was lost), plus post-2004 “phantom net income” from the “investment” less reimbursement, or other compensation (see Rev. Rul. 2009-9, Issue #7, limitation on “phantom income post-2004″).

(2)  Rev. Proc. 2009-20

The IRS “Safe Harbor” (Rev. Proc. 2009-20) provides investors with:

1. A uniform manner for determining their theft losses.

2. Alleviates Taxpayer compliance burdens.

3. Avoids evidentiary problems for fictitious income reported (i.e., a return of capital).

Under the Rev. Proc. 2009-20 “safe harbor”, Investors may claim tax deductions in the year that the theft was discovered (in the Madoff case, Tax Year 2008).  If the Investor does not declare the theft loss in their original 2008 tax returns, with extensions, they may declare the loss and amend their 2008 tax returns up to 3 years after their tax returns were filed, with extensions (i.e., up to October 15, 2012).

Under the “IRS safe harbor”, the tax deductions may be claimed in an amount equal to 95% of their net loss (for Investors who do not pursue 3rd third party claims) or 75% of their net loss (for Investors who intend to pursue 3rd party claims against advisors who referred the Madoff investment).

Under Rev. Rul. 2009-9, any recovery is includible in Taxpayer’s gross income, under the tax benefit rule, to the extent the earlier deduction reduced Taxpayer’s income tax (IRC §111, Treas. Reg. Sec. 1.165-(d)(2)(iii)).

Taxpayers who invested in the Madoff scheme indirectly (e.g., through a “feeder fund”) will not directly report the tax loss.  Instead the feeder fund will report the loss and the Taxpayer will report their allocable share of the loss on their individual tax return.

(3)  No “Safe Harbor”

Taxpayers who do not apply the “safe harbor” treatment may deduct pre-2005 “phantom income” and amend prior years’ tax returns.  (However, if there is no safe harbor election, tax returns claiming theft loss deductions from fraudulent investment arrangements are subject to examination by the IRS.)

Rev. Proc. 2009-20: “If the Taxpayer can establish the amount of net income from the investment arrangement, reported on tax returns, consistent with information received from the specified fraudulent arrangement in taxable years for which the period of limitation on filing a claim for refund under IRC §6511 has expired, the IRS will not challenge the Taxpayer’s inclusion of that amount in basis for determining the amount of any allowable theft loss, whether or not the income was genuine.” 

(4)  Tax-Loss Carry Forward (20 years)/Carry Back (5 years)

If the theft losses result in a 2008 net operating loss, the Taxpayer may:

1. Carry the loss forward 20 years.

2. Carry the loss back up to five tax years (and receive tax refunds). The five year loss carry-back rule requires that Taxpayer does not have more than $15M in average gross income for the 3 year period ending in which the loss occurs (IRC §172(b)(1)(H)(iv)), as amended by Section 1211 of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).

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As you continue to follow the basic rules of investing by following a disciplined investment process and staying invested, you may find yourself very dizzy while riding the rollercoaster of life; life affected by Federal Reserve decisions made for your own good, CEO bonuses and golden parachutes, and corruption on Wall Street.  You may be feeling disbelief as you scratch your head wondering “what happened” and “how did I not see this turmoil in the financial markets coming”.  What is a person to do?

The answer is simple.  Find a way to take advantage of times when most of the country is confused and in shock, when confidence is at its lowest point since the great depression, and the market has followed suit.  Since it is near impossible to determine the day the market will hit bottom, I think we can agree that we have not seen the indices at such lows in a very long time. 

Regardless of how your portfolio was diversified, you are very likely experiencing a 15% to 40% loss in your taxable assets.  There has not been a better time in the last few years to evaluate your holdings to make sure you are properly positioned for the day the market turns around.  One way to take advantage of a deeply discounted market is to sell those assets that are least likely to benefit from a turnaround, and buy deeply discounted securities that may benefit most when consumer confidence resumes and the economy flourishes.  This strategy may have you realizing tax losses in the six- to seven-figure range this year as what used to be working well has been decimated. 

Using those losses to offset capital gains this year, and/or future years as they can be carried forward, is the second way to take advantage of a tumultuous market.  For those investors who have held large positions of certain stocks for the last 10 to 20 years and still show a decent profit may want to consider selling a percentage of the holding in lieu of the new trend of old, perceived solid companies such as Enron, WorldCom, and most recently Lehman Brothers and Washington Mutual’s demise.  This has taught us that anything can happen to any company and it is probably not wise to have a large interest in one company.  Therefore, rebalancing your portfolio in chaotic markets allows you to get it properly allocated by repositioning the money the way you want without triggering taxes. 

Other capital gains that would benefit from capital losses are the sale of a family business or the sale of real estate.  If you are in the process of selling a business that will result in a profit in 2008 you will definitely want to assess your losses to offset the gain before December 31st.  If you had planned to sell your business next year, or in later years, don’t fret.  As I mentioned earlier, you may carry forward any unused capital losses to use against future capital gains. 

The same goes for the sale of real estate that results in a capital gain.  The most common real estate gain is the sale of a primary residence.  Although the current tax law allows a married couple to exclude $500,000 in gains from taxes, portfolio losses can be used to offset taxes on the gains greater than $500,000.  Another scenario is a single person who sells a house at a gain as the IRS only allows that person to exclude $250,000 with any additional gains possibly pushing them into a new tax bracket if not for losses to counteract that risk. 

You may be wondering what happens to capital losses if one spouse passes away before the residence is sold.  For 2007, if the residence was not sold in the year of death, the surviving spouse lost the $500,000 exemption and paid taxes on gains over $250,000.  A recent change in the tax code now allows a surviving spouse to sell the house within two years of the date of death and, if sold in 2008 or later, maintain the $500,000 exemption. 

As you can see, there may be advantageous strategies you can use to benefit from a decimated market.  As always, I recommend working with a competent and knowledgeable team of financial professionals and tax advisors who may be able to make recommendations on how to rebalance your assets for a more favorable increase in an upturn in the markets and at the same time generate capital losses you can use for years to come.  Carry forward losses make it easier for your advisors to make recommendations, and for you to make decisions, in the future to divest yourself of assets you should sell in order to keep any gains.

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It is often said that income tax returns are more imaginative than best selling novels. The truth, in both types of documents, is stretched, spun, colored and twisted to make things appear almost unrecognizable. However, new Thailand laws have been developed by the Revenue Department to ensure that capital losses, an area of tax returns rife for unethical deductions, are now fairer. Business legal services in Thailand are also trying to comprehend the effects on their clients.

The Revenue Department in Thailand is now focusing on the Thailand law regarding capital losses, in light of a traditional tax planning technique involving transactions of a circular nature. These circular transactions are entered into by the parties with the main or single purpose of carrying out a series of deals that will generate tax expenditure, eventually.

To be legal under Thailand law, business legal services in Thailand are now advising their clients that the expenditure generated must have the characteristics required in the Revenue Code, that is, it must be spent exclusively for profit or business seeking purposes. Otherwise it will not be considered deductible in calculating income tax for corporations.

An example is where the price of a subsidiary’s shares deteriorates, and a parent company deducts that capital loss of the sale of such shares. This will be allowed provided they are sold at fair market value. If the price they are sold at is lower than market value, the Revenue Department is allowed to revise this up in their tax estimates. However, the motivation of a parent company for engaging in the sale of shares to begin with has bnever really been scrutinized, until now.

A recent revenue ruling of a recent case is being cited by corporate legal services in Thailand. The parent company in this case subscribed to a packet of shares issued by a subsidiary of itself, established to run a mall. When the subsidiary’s business became dormant in the economic crisis of late last century, it owed service fees to the parent company. In order to repay these, the subsidiary increased its capital, and the parent company subscribed to the second lot of shares here. When the debt was repaid, the parent company sold both lots of shares to other companies, at a loss of around 21 million baht.

The Revenue Department ruled in this case that the capital loss attributable to the sale of the second lot of shares, after the debt was repaid, was not allowed as a deduction. This was mainly because iof the parent company’s motivation for selling the shares. It was considered that it was not for genuine investment purposes, but was a blatant attempt to convert bad debt into an investment loss. As it was not spent exclusively for business or profit seeking purposes, it was disallowed.

It seems that the hasty sale of the shares was the aspect of the transaction which gave away the parent company’s intentions. Perhaps if it had waited a while before offloading the shares, it may have been seen as a more legitimate business activity – although perhaps not a wise one.

What business legal advice in Thailand should have told the company to do was to deduct the same amount of expense by following the procedures for bad debt write offs pursuant to the relevant regulation. They should have taken civil action against the subsidiary, with the help of corporate legal services in Thailand, and obtained a court order for the debt to be repaid. Despite the time consuming nature and expense of such a procedure, it would have eventually saved the company money, considering that the deduction was eventually disallowed

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