A Professional Corporation

Remember........"You can have everything in  life you want, if you just help enough other people get what they want."  -Zig Ziglar.

Email: bmsarasota@comcast.net  941-387-0926; 432-367-3465 email, USA Mail, Fax, telephone or request a meeting 

  Disclaimer and Warning - From Bob Parrish CPA, P.C.   

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You form a trust and transfer appreciated property to the trust.  The "Sales Price" is an annuity contract for which the trust is responsible for paying to you monthly or annual income for your lifetime..

No Insurance Company is involved.  No physical is necessary.  This annuity Contract is the responsibility of the trust (your trust).

You can transfer appreciated property in return for an income stream - the IRS ruled that because of the uncertainties regarding the transferee's ability to make payments; the transferor was not taxable at the time of the transfer, even though the actuarial value of the annuity exceeded the adjusted basis of the transferred property. Rev. Rul. 69-74, 1969-1 CB 43.

Similar topics are Self-canceling Installment Obligations, Charitable Remainder Trusts, Wealth Replacement Trusts.  If you would like to discuss any of these strategies, please call me.

Nothing is given away to charity as happens with the Charitable Remainder Trust (CRT Client Letter). The Private Annuity Trust allows all the principal and accrued interest to be paid to you.  Moreover there is no need for a Wealth Replacement Trust, because the property does not go to a charity.  {I do a great many CRT's - so do not let my language appear to be against the CRT.  The CRT has some great advantages, and is a fabulous strategy used in the correct manner.) 

Over the following issues I shall briefly discuss the Private Annuity, and a special Trust to be responsible for the annuity, also the grantor Retained Annuity Trust (GRAT) and other tools I can assist you with.

Call Me

941-387-0926

432-367-3465

Like Kind Exchange aka §1031 Exchange

Tax Killer 

SALE A sale will yield a gain or loss depending on the amount realized on the asset and the taxpayer's basis for it.

EXCHANGE Under the like-kind exchange rules of Code Section 1031, an exchange of like-kind property will result in neither gain nor loss recognition, and the new asset's basis will equal the old asset's remaining basis, plus any cash paid to trade up.

TAX KILLER The exchange will kill the tax for the current trade.  The strategy will defer all the tax on the current transaction.  If the property acquired in the exchange is converted to cash in the future, there will be tax due at that event.

If you are contemplating the sale of property which will produce a capital gain, this might be a viable alternative to reduce income taxes - and keep your money.  Call me for assistance.

Related Articles

Like Kind Exchange - aka §1031 Exchange

Scam Alerts

Scam alerts notify you of widespread scams, and help to make your business and personal finances more secure through knowledge of these problems.

Need Money for College? Doesn't everybody? Unfortunately, in their efforts to pay the bills, many students and their families are falling prey to scholarship scams.

The FTC cautions students to look for tell tale lines & language:

"The scholarship is guaranteed or your money back."
"You can't get this information anywhere else."
"I just need your credit card or bank account number to hold this scholarship."
"We'll do all the work."
"The scholarship will cost some money."
"You've been selected by a 'national foundation' to receive a scholarship" or "You're a finalist" in a contest you never entered.

Here are a few links to the Federal Trade Commission web site offering you more education about these scams:

• Press Release: Federal Agencies Release First Annual Report to Congress on College Scholarship Fraud

• College Scholarship Fraud Prevention Act of 2000 - First Annual Report to Congress [PDF only]

• Looking for Student Aid

• OUCH...Students Getting Stung Trying to Find $$$ for College [PDF]

• Scholarship Scams Audio [RAM]   [MP3]

• 6 $igns That Your $cholarship Is $unk
  Poster [PDF only]
  Bookmark [PDF only]

• US Department of Education
  Student Guide
   

Investment Notes

Investments notes provides some of the new strategies - and discuss "tried & true" strategies by using financial knowledge to meet your life objectives.

Roth IRA

When I setup a Roth IRA for you the following advantages are accomplished - including the fact you and I will be working together on using Modern Portfolio Techniques, I will be working with you as your Asset Allocation Adviser and Rebalancing your Roth.  Although a Roth IRA does not provide a tax deduction when you fund the account - just consider all the advantages it does offer.

None of the withdrawals are EVER taxed. Not the principal and not the income.

This makes an excellent strategy for anyone who is relatively young, and normally if you plan to leave the amount in the Roth for at least five to seven years.

Another difference between the two is that Traditional IRAs require holders to withdrawal money at 70 1/2 (but can begin taking money as early as 59 1/2). Roth's have no such mandatory withdrawal age.

Roth IRA Profile -

1. Contributions are not tax deductible

2. No Mandatory Distribution Age

3. All earnings and principal are 100% tax free if rules and regulations are followed

4. As your investment adviser you and I can work closely together to appropriately diversify your investments  (C shares, exchange traded funds, stocks, bonds, certificates of deposits, etc.)

5. Available to

   1. single-filers, head-of-household, or married living aprt for the entire year, making up to $110,000 or

   2. married couples making a combined maximum of $160,000 annually.

   3. married living together up to $10,000

6. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions)

7. You can make a contribution to a SEP-IRA and a Roth IRA

Can You Contribute to a Roth IRA?

• Generally, you can contribute to a Roth IRA if you have taxable compensation and your modified AGI is less than:

  • $160,000 for married filing jointly or qualifying widow(er),

  • $10,000 for married filing separately and you lived with your spouse at any time during the year, and

  • $110,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year.

• You may be eligible to claim a tax credit for contributions to your Roth IRA.

Is there an age limit for contributions?

• Contributions can be made to your Roth IRA regardless of your age.

Can you contribute to a Roth IRA for your spouse?

• You can contribute to a Roth IRA for your spouse provided the contributions satisfy the spousal IRA limit, you file jointly, and your modified AGI is less than $160,000.
   

Not All Investments Move In Tandem

As you are aware, whenever some investments are moving upward, some are moving downward.  Looking at this in a positive attitude, if some investments are moving downward - some will move up!  We offer you Asset Allocation Advice Services, we look for a mix of investments that will complement one another.  I work behind the scenes doing all this work for you -

• I look at correlation analysis

• I look at Asset Classes

• I look at Asset Sectors

{As a side note, I have been doing this since 1982; and finally in 1994 this service was considered so important that a law was written, and now it is law - if interested read the Uniform Law or read my web page on this subject)

I offer you a complementary (no obligation) portfolio evaluation report.  For example a recent case of mine where I designed a portfolio for a married couple resulted in the following:

Measurement	Result
Average return	10.43%
Deviation	+/- 6.67%
From a database of 15 year returns:
1 Year results	Best +23.50% Worst -2.64%
3 Years results	Best +17.97% Worst +2.64%
5 Years results	Best +16.27% Worst +4.58%
10 Years results	Best +14.56% Worst +6.30%
15 Years results	Best +13.8% Worst +7.05%
The above results should not be considered as indicative of the income or capital gains/losses which might be realized from specific investments in the future.  This illustration is designed to assist in the implementation of a diversified portfolio that will attempt to improve your current risk/reward ratio.  The model utilizes modern portfolio techniques and information obtained from sources believed to be reliable; however we do not guarantee the completeness or accuracy thereof.  The confidence level is based upon historical results.  Past performance is not necessarily indicative of future results. This is for educational and information purposes only.  This is not a solicitation, nor a recommendation.  Do NOT implement without consulting a professional.  No securities are advised, nor any allocation is advised herein.

Estate Planning and The Concept of Knowledge

For the average person there was a time when financial matters were limited primarily to a checking account, or perhaps stocks and bonds for people who had money to invest. But times have changed. People have begun to realize that we can no longer just work for our money… our money must work for us. We at Money Concepts study economic trends and advise our clients how to use their money as a force in motion to steadily grow in line with personal financial goals.

Our society places enormous value on the ability to make money, yet very little time is spent teaching what to do with it when we get it.

Whether you and I are discussing tax, management, or financial topics, you are well aware I will make efforts to keep all the planning discussions in perspective.  The estate planning topic is the focus herein.  As you are well aware - I provide:

• Estate plans

• Investments and Insurance to implement the plans

• Monitor the plans

• Tax services, planning, and tax reduction strategies

I encourage all my clients to plan for this costly expense.

HOWEVER - I shall make a point.  The first focus must be for your personal care and life style.  Between married couples the estate tax will never be a factor.  There is the unlimited marital deduction.

Unlimited Marital Deduction

 The "Unlimited Marital Deduction" is an UNLIMITED marital deduction, for estate and gift tax purposes, of any amount passing from a decedent to his or her surviving spouse. However the surviving spouse must be a US citizen or a resident alien.

I shall not discuss the use of trusts (for example a "Marital Deduction Trust"), or how the Uniform Prudent Investor Act influences your trusts, or any other planning opportunities in this edition.  IF I were to cover the other and related topics - my current point would be lost.

I shall cover those in later editions.

Mom and Dad - care for yourselves - THEN care for the kids, the kids will pay the estate tax, not you.

I am available to discuss the most simple to the most sophisticated planning opportunities - and do so with the intention of making certain the recommendations are suitable for you, accomplish your objectives, and are customized for you and your life style.

PS: I have written an article outlining the disadvantages (The Bypass Trust is a very good strategy, however there are times it is not suitable and it should always be monitored - therefore please work with me on this strategy) of a by-pass trust - call me for a copy. Or click on this link  Bypass (Credit Shelter) Trusts Can Be A Disaster Also available in Adobe Acrobat Bypass (Cr Shelter) Trusts Can Be A Disaster

Management Notes

Whether managing a small business or a larger business, current and meaningful topics are covered in this section.  You will find topics of finances, controlling your business, and modern management techniques covered herein.

In the last letter I discussed the use of mathematical tools in my tool belt to assist you with the forward planning of your business or practice.  I shall cover it with a tad more detail in this letter.

The expense item should be between $33,704 and $43,730.  The range is computed to be with a 95% probability.  There is a line labeled "High" and a line labeled "Low" indicating these to low and high limits.

As a manager you now know that within a 95% probability this expense should "run" between approximately $33,000 and $44,000.  You can better plan your management using this data.  (Some items will occur only one time per year and therefore there is no need to apply this type of study on those items.  Some items will be an identical amount each month and there is no need to use this tool.  Examples are insurance premiums paid annually, or a fixed monthly lease payment.)

As a manager, you will notice there are five times during the years (these are two full years) the expenses do not fall within the 95% probability ranges.  Those would be concerns for you and you would need to question the circumstances during those five months to ascertain the causes.

Personnel Notes

Personnel management is a subject in itself.  In this section you will find helpful hints for daily management, defensive hiring and firing, and required documents for the personnel records.

To assist with the Federal Overtime Requirement I am including a few comments this month.  This is not a complete analysis and is not offered as legal advice.

Duties Tests

To be exempt from overtime under the FLSA, an employee must:

• meet the duties test of an Executive, Administrative, Professional, or other position specified herein; and

• be paid on a “salary basis” (see Salary Basis Test).

An employee is generally engaged in management of the enterprise if the employee is engaged in one or more of the following activities for the enterprise:

The Executive

• interviewing, selecting, and training employees;

• setting and adjusting employees’ rates of pay and hours of work;

• directing employees’ work;

• maintaining production or sales records;

• appraising employees’ productivity and efficiency for purposes of recommending promotions or other changes in status;

• handling employee complaints and grievances;

• disciplining employees;

• planning the work;

• determining the techniques to be used;

• apportioning employees’ work;

• determining the type of materials, supplies, machines, equipment, or tools to be used or merchandise to be bought, stocked, and sold;

• controlling the flow and distribution of material or merchandise and supplies;

• providing for the safety and security of the employees or the property;

• planning and controlling the budget; or

• monitoring or implementing legal compliance measures.

The Administrative

• The following are examples of jobs that generally qualify as exempt Administrative Employees.

• An insurance claims adjuster

• A financial services industry worker

• A team leader who leads a team of other employees assigned to complete major projects for the employer

• An executive or administrative assistant to a business owner or a senior executive of a large business

• A human resources manager who formulates, interprets, or implements employment policies

• A management consultant who studies the operations of a business and proposes changes

• A purchasing agent with authority to bind the company on significant purchases

The Professional

The following are examples of jobs that generally qualify as exempt Learned Professional Employees.

• A registered or certified medical technologist

• A nurse

• A dental hygienist

• A physician assistant

• An accountant

• A chef who has a four-year specialized academic degree in a culinary arts program

• A paralegal who has an advanced, specialized academic degree and applies that advanced, specialized knowledge in performing his duties

• An athletic trainer

• A funeral director or embalmer

You are advised not to exclude a staff member from overtime simply because that person's duties appear to be included in one of the above categories.  Failure to pay the overtime when it is owed can be quite expensive and certainly a big headache.  Please call me first.

 I shall always strive to accomplish your goals, and to keep your planning in balance.  You will find no other adviser or groups of advisers that has your potential and your security more in focus than I. 

Call Me

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

 - Help To Keep Your Life In Balance

Very truly yours,

by

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Revised: February 26, 2007 .

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