Tax Insights — Sept 2007

Dear Client, Friends of Clients and Future Clients:
Welcome to Glazer Financial Networks periodic tax update.

"Since the equity and mortgage markets have been on a roller coaster, here are some more things that can make your financial life richer and more relaxed right now."

First, because the sub-prime mortgage market has been hammered, anyone needing to refinance should start doing the paper work early. Connie Hearn of Advanced Mortgage in Dallas (866-991-0080) recently told me only about 25% of all ARMS have been refinanced. That is a shockingly low figure, but understandable considering how volatile things have been.

I should add that anyone buying or refinancing a property in the United States, Mexico or the Caribbean should talk to Don or Connie Hearn about a mortgage. They can be reached in North Texas at 866-991-0080.

Second, all Corporations and Limited Liability Corporations MUST have up-to-date minutes which should include the following:

Officers Salaries;
Officers Bonuses;
Officers loans to and from the Corporation;
Okay for use of personal automobiles and other deductions;
Any other pertinent data.

Third, taking profits from a Sub Chapter S Corporation as a dividend(distribution) instead of a salary to avoid payroll taxes, is going to be reviewed by the IRS.

Fourth, Personal Service Corporations will probably be taxed at 35%, if reviewed by the IRS. There are Alternative Structures for a business, or ways to reduce that hefty tax burden.

Fifth, 2007 is the last year for deducting $25,000 for SUV's weighing over 6,000 pounds. Next year, it is 14,000 pounds so unless you're driving a tank, this deduction probably won't apply to you. (Pickup trucks with separate cargo area of at least six feet in length, Cargo Vans, and Passenger Vans with over nine (9) seats still qualify.)

Sixth, you can get a bigger break for solar energy for home heating systems. From January 1, 2006 through December 31, 2007 – A credit of 30% of the total cost of your new system to a maximum of $2,000. This ceiling will be removed in 2008.

Seventh, if you retire before age 65 with an early retirement package and have a choice of cash or the health benefits, your benefits are taxable.

Eighth, 1031 Exchanges cannot be used on second homes or on foreign properties.

Finally, payments for a Broker's wrong doing are taxed as capital gains. If you are granted $100,000 in an arbitration proceeding with your Broker that judgment will be taxed as a capital gain and offset against any loss carry forwards if applicable.

Suffice it to say, our country's tax code is complex, big and getting bigger. If you have questions on how to navigate it successfully, please call me at 800-999-8931 or Email me at mglazer@glazerfinancial.com for a free "Lifestyle Plan" or to answer any questions. You can also contact us via our web site.

Best Regards,

Maurice M. Glazer, CEO

Glazer Financial Network