Business and Investing Journal

This newsletter will keep you informed of the recent trends and techniques for professionals, managers, investors, and wage earners.  Distribution methods will include facsimile, email, and posting the Bob Parrish CPA, P.C.'s web site.  In the near future, we intend to provide an audio version posted to the website, that you may use while attending to normal routines.  If you have a need for an audio CD, please inform us, so that we will have information about the usefulness to our clients of an audio only production.

In each journal I will attempt to include recent and relevant topics regarding:

1. Tax Notes

2. Scam Alerts

3. Investment Notes

4. Management Notes

5. Personnel Notes

6. Navigation of this site

If any other relevant topic is noticed it will be added as a miscellaneous section.  Time permitting I will include special coverage of topics in between issues.

Tax Notes

As the year draws to a close: one might want to consider writing some “last minute” checks for tax deductions. In addition, credit cards may be used for charging tax deductions — allowing you to take the deduction this year.  

As 2004 draws to a close, there is still time to reduce your 2004 tax bill and plan ahead for 2005. This letter highlights several potential tax-saving opportunities for you to consider. I would be happy to meet with you to discuss specific strategies.

Squeezing in a little time for some year-end tax planning can save you big bucks come tax-return time. Consider it a holiday gift from Uncle Sam — albeit one you are going to have to do a little extra work to receive. Here are tax-saving strategies that may be employed before the ball drops in Times Square.

For Investors

ð         Call me to Consider selling investments with capital losses — I can sell them for you and help to select the items to sell, and replace them with suitable investments and appropriate asset classes and asset sectors for your portfolio and risk profile

ð         Call me to consider a “Bond Swap”.

ð         Call me to make contributions to your Charitable Remainder Trust

ð        Expenses of choosing, accounting, analyzing, investments

ð        Call me to setup a §419 Welfare Benefit Plan – offering tax deductions for those itemized deductions the high income tax bracket taxpayers lose.

ð        Identify which shares of securities are being sold, so that you may keep the capital gain to a minimum, or make the best use of capital losses.

Bills To Pay

If there are bills to pay before year-end that will offer tax deductions, then please consider payment before year-end by check, credit card, or payment by telephone.

Examples:

ð        Property taxes – real and personal

ð        Business car or truck expenses

ð        Charitable contributions

ð        Charitable contributions – non cash

ð        Child care

ð        Education expenses

ð        Employee business expenses

ð        Interest paid

ð        Investment interest expenses

ð        Medical and Dental expenses

ð        Special medical needs Do you have special needs? The medical deductions section of your tax form is also where you account for the cost of a wheelchair, crutches and equipment that enables a deaf person to use the telephone or that provides television closed-captioning.

ð        Moving expenses

ð        Any assessments from partnerships that can increase the basis, when it is needed to claim a tax loss pass-through

ð        Sale of business property when the sales price is less than the tax basis

ð        Business equipment may offer a valuable tax write-off; from 50% to 100% of the cost

ð        Sales tax is deductible for 2004

ð        Alimony payments

ð        Health insurance premiums for self-employed

ð        Accountant fees

ð        Teacher’s classroom materials and expenses of classroom presentations

ð        Home office expenses

ð        Job searching costs – employment agency fees, resume¢ costs, travel

ð        Safety equipment, uniforms, etc.

ð        Professional dues, subscriptions, etc.

ð        Home Mortgage interest — If you actually get your payment to the bank by the last business day of the year (or a day or two early), the extra interest will show up on the lender's official paperwork.

ð        Uniforms, etc. for Fire Fighters, Law Enforcement, Coast Guard, etc. (This includes auxiliary and volunteers)

ð        Small tools or other tools used in business – this works for employees, independent contractors, or employers

ð        “Catch-up” contributions for retirement plans

ð        If you are using, annual gift tax exclusions, then write those checks before year-end

ð        Call me to setup a Tax deductible IRA

Business Costs

ð         In addition to some of the costs listed in other sections consider these tax write-off’s

ð         Pay necessary and useful business expenses by credit card, if the checking balance will not provide sufficient cash to pay it immediately.

ð         Advertising

ð         Internet access

ð         Supplies

ð         Utilities bills received

ð         Licenses

ð         Rent

ð         Insurance

ð         CPA

ð         Repairs & maintenance

ð         Business gifts and promotion

ð         Donating equipment

ð         Call me to setup or fund a retirement account before year-end

ð         Make payments to dependent children who worked for you.  You receive a business tax deduction, and the child may not own any income tax.

ð         Make use of the extra depreciation write-off this year, by placing in use new equipment before year-end.  The deductions may be 50% to 100% of the costs of the equipment.

ð         Discuss with me the current business structure (entity type) you are operating within.  There may be valid reasons to commence using a new business entity structure.

ð         Call me to setup an SEP or other plan that will offer you tax deferrals of income along with a current deduction for the contributions to your own retirement plan.

ð         Call me to setup a Charitable Remainder Trust or Charitable Lead Trust — these offer immediate tax deductions, while providing annual cash flows back to you each year.

Delay Billing or Other Income

ð         If you are self-employed delay billing.  Warning: Simply holding money and not depositing it will not work.  The moment you have the choice of making the deposit it becomes taxable.  Also, this will only work if you are on the “Cash” basis for tax accounting.

In Summary

The normal techniques are to

1.        accelerate deductions into the current year

2.        delay income to the following year

3.        maximize the use of depreciation of equipment

4.        use credit cards to pay for deductions, when cash is not sufficient

1.        make records of non-cash deductions, and claim those in the current year

2.        using tax deferral strategies

3.        purchasing or investing to produce credits to pay taxes

4.        transfer income producing properties to lower tax bracket taxpayers

5.        using trusts where they are beneficial

6.        using family limited partnerships where beneficial

7.        using charitable remainder or charitable lead trusts

8.        using succession planning tools and strategies

Bob Parrish CPA, P.C.

Call Bob Parrish For:

Consultant & CPA For —

ð        Individuals

ð        Shareholders

ð        Partners

ð        LLC Members

ð        Beneficiaries

ð        Trustees & Estate Administrators

ð        Sole Proprietors

License Jurisdictions —

CPA: FL, TX

 - Help To Keep Your Life In Balance

Simply to Help —Helping You To Keep More Of What You Earn and Helping You To Protect What You Keep

5390 Gulf of Mexico Dr Ste 102-103

Longboat Key FL 34228

3205 Kermit Hwy Ste 2

Odessa TX 79762

Telephone —

FL 941/387-0926

TX 432/367-3465

Fax —

FL 941/387-0823

TX 432/367-3465

On the Web: www.pro1040.com

Visit the Bob Parrish CPA PC ConsultingOnLine Web Site http://www.pro1040.com

Prepare for Your Adviser

When we prepare your tax organizer be certain to place those costs in the appropriate section

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