Silent Night, Holy Night

In 1999, I was traveling with a group on a trip to Salzburg, Austria. One day after a trip to the salt mines in Germany, we were on our way back "home" when the tour guide pointed to a small church on the top of a mountain.

We were passing through Oberndorf, a small village outside of Salzburg, Austria. She said the church was St. Nikolaus Kirche the birthplace of the world's most popular Christmas carol Silent Night. As she explained it, the story goes something like this:

It was days before Christmas, and Father Joseph Mohr the parish priest was preparing for his Christmas Eve Mass. He realized he had a dilemma on his hands. He was expecting a church full of people, and his organ was broken. He really wanted some beautiful music for his Christmas Mass. However, the organ repairman was not a local, and was unable to get to the church in time for Christmas.

Father Mohr thought and thought. As he pondered his circumstances, he wandered around until he came to a hill overlooking the village. He stood there in silence looking at the snow covered village with its lights glowing in the dark and the stars shining brightly in the night sky. The peaceful scene below reminded him of a simple poem he had written two years before about the birth of the Christ Child.

On the morning of December 24, 1818, Father Mohr contacted his friend Franz Gruber the church organist to see if he could set the words of his poem to music. Father Mohr was hoping to have a carol composed which could be accompanied by a guitar. Franz Gruber jumped at the challenge. Within an hour or two, he had a melody which we now know as Silent Night.

The new Christams carol was first performed in St. Nikolaus Kirche on the evening of December 24, 1818. The story does not end there however.

The organ was eventually fixed. However, the original words and music were somehow lost over time. It seemed as though Joseph Mohr and Franz Gruber had been forgotten over the years. At one point, years later, the original words and music were discovered behind the organ. At that time, the carol gained in popularity and eventually spread around the world.

At the end of the Mass on Christmas Eve, it is customary for most churches in Salzburg to turn down the lights and light candles. The organ is silent, and the Mass finishes with a candlelight version of Silent Night, Holy Night, sung in the original German version of "Stille Nacht, Heilige Night."

Silent Night is almost 200 years old. It is sung in more than 100 languages. Just think - this is almost a miracle that this famous Christmas carol survived to this day. It was written by an obscure young priest in a small mountain village and was set to music by an unknown composer. The original manuscript was lost for a number of years, and was rediscovered by accident. Silent Night somehow became the most popular Christmas carol in the world without the benefit of television, a celebrity recording or the Internet.

Have a peaceful Christmas!!!!!!!!!

What Do Brussel Sprouts and Recordkeeping Have in Common????

If there are two things that I have realized that people really hate lately, they are brussel sprouts and recordkeeping. I originally thought that broccoli might be the most hated vegetable after all of the publicity that it received from George Bush years ago. However, I recently took an informal poll, and most people volunteered that they hated brussel sprouts before I could even finish the question.



In working with many clients over the years, it appears that one of the most DETESTED parts of the tax preparation process relates to the recordkeeping. Most people hate it with a passion - if they can even figure out what to keep and what to discard. Consequently, I will be doing an ongoing series of articles on recordkeeping in an effort to ease the pain a little.

Normally, I find that if people keep the proper records, they do not end up paying any more tax than they can afford. However, when there are few or even no records, there are no accurate ways to measure the transactions. In those cases, the taxpayer normally has to report more income than is otherwise required to satisfy the IRS.

I get many questions as to how long people should keep their records. If you look over the internet and listen to some of the financial gurus, there are many "standard" answers to these questions. However, in real life, these canned answers just do not work.

A few years ago, I had a client call me to indicate he was hoping to retire in a few years. He was in the process of determining how much retirement income he would receive from the school system where he had worked for approximately 30 years. That question sounded easy enough. He should just call the school system for this information, since he had been employed there his entire adult life. It turns out that the school system had no record of his early employment because they were either not computerized early on or they had changed computer systems, and the records had become lost in the process.

I suggested that the client just pull out his W-2s from his old tax returns. I generally tell people to save all of their old tax returns, so I thought we were done. He then proceeded to tell me that a financial advisor had suggested that he could discard any tax returns over 4 years old. Needless to say, this relatively simple question became a rather long involved and drawn out process.

I often work with other clients who keep NO records whatsoever. In some cases, I have had to wait through several pay cycles just to refinance a mortgage because the clients shred their pay stubs as soon as they receive them in the mail.

In this day and age, most people are assuming that the information is readily available online. However, that is just not the case. Even though most of the banks are encouraging online paperless banking, just see what happens if you are a renter trying to buy a house. The bank often requires 12 months of rent checks copied front and back to verify the timely payment of your rent. This information is not necessarily easily accessible online. I was working with a couple last year who was buying a new house. They did not have the copies of the bank statements and canceled checks. I had to physically go to the bank myself and help the banker dig through the records to find the checks to the landlord.

A number of years ago, one of my clients was going through a nasty divorce. His ex-wife hauled him back to court in an effort to get more child support. My client was required to document EVERY penny he had spent for the last 5 years. How do you do that if you shred as you go?

I have another client who was self employed for quite a number of years as a real estate agent. She was formerly married to another real estate agent. In an effort to save on the self employment taxes in back in the 1970s, the former accountant put all of her self employment income under her husband's name (a common short-sighted tax planning strategy at the time). When she was trying to determine how much Social Security she would receive at retirement, she was surprised to learn that she had no Social Security earnings for a number of years. In this case, she needed those old tax returns from 30 years before to prove her point

Then there are many cases where records are necessary on a more routine basis. In the coming months, we will explore recordkeeping related to your principal residence. There were tax law changes over 10 years ago that impacted this area that many people still do not understand today.

One of the most misunderstood areas of recordkeeping relates to the purchase and sale of stocks and mutual funds. Many people are SUBSTANTIALLY overpaying their taxes due to recordkeeping failures in this area. Believe it or not, it is sometimes easier to handle the numerous stock transactions of some of the day traders as opposed to the single stock sale of someone who has bought and held a single stock for a substantial number of years.

Employee stock purchase plans and stock option plans are another issue in this area. You can easily be double taxed if you don't keep adequate records. Your former employer just cannot be relied upon to handle your recordkeeping. It is often hard enough to obtain these records in the current tax year. What do you think happens when there are changes in personnel or a merger of the company?

Other places where records need to be kept in detail include business receipts and rental properties. In my own family, I had to go back over 40 years to obtain information a number of years ago.

I guess that brings us to the question of, "Well, how long should I hold on to my records?" At this point, my answer is a very definitive, "It depends." I will continue to explore all of these issues in detail in upcoming blog posts. Since everyone seems to hate recordkeeping so much, I figure I am well over the limit on this discussion today!!!!!

How the Millionaire Mind Works

Here is an interesting item I found on a blog by Robin Bal.

A man walked into a bank in New York City one day and asked for the loan officer. He told the loan officer that he was going to Philippines on business for two weeks and needed to borrow $5,000.

The bank officer told him that the bank would need some form of security for the loan. Then the man handed over the keys to a new Ferrari parked on the street in front of the bank. He produced the title, and everything checked out. The loan officer agreed to accept the car as collateral for the loan.The bank’s president and its officers all enjoyed a good laugh at the guy for using a $250,000 Ferrari as collateral against a $5,000 loan.

An employee of the bank then drove the Ferrari into the bank’s underground garage and parked it there.Two weeks later, the guy returned, repaid the $5,000 and the interest, which came to $15.41.

The loan officer said, “Sir, we are very happy to have had and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a multi millionaire. What puzzles us is, why would you bother to borrow $5,000?″ The millionaire replied: “Where else in New York City can I park my car for $15.41 and expect it to be there when I return?”

Health Insurance Alert - ACTION ITEM!!!!

Do you have a son or daughter who is off at college in another state? Imagine getting a call from your daughter's roommate indicating that she has just been rushed to the hospital. Your first thought is to grab the first available flight so you can get to the hospital to be at your child's bedside.

Even though your daughter is over the age of 18, she is still covered on your insurance, because she is a full time college student. So, you are not worried about the insurance coverage. You then rush into the hospital to inquire as to your child's status. The hospital clerk politely informs you that she cannot confirm your child's status unless you produce a "Health Care Surrogate" form. This is an authorization form that grants you access to the health care information relating to your child who is actually a legal adult.

You are totally confused. She is a dependent covered on YOUR insurance policy. You are her parents, and besides, she asked you to come to the hospital. After all, she is only a college student.

The health care worker is complying with the provisions of the federally mandated Health Insurance Portability and Accountability Act(HIPAA), instituted in 1996. While most people know this law makes health insurance available to many more people, it also contains a number of privacy provisions which are are unknown to the average person until an emergency such as this arises.

Normally, patients are asked a series of privacy related questions at the time they are admitted to the hospital. However, if there is an emergency or the patient is unconscious or otherwise unable to communicate, then the health care professionals on the scene make a judgment call as to whether any information may be released to third parties.

In this age of endless lawsuits, many institutions err on the side of caution and will not release ANY information without the proper signed authorization forms. While the law was enacted to ensure a greater degree of privacy at the federal level, many states have added their own laws on top of HIPAA thereby adding to the layers. Add in a few additional hospital regulations, and no one can say anything about anyone. Many of the laws are confusing at best.

In many cases, the hospitals are only trying to comply with the law and avoid steep fines and penalties. Suddenly, the law as it is being enforced looks nothing like the intent of the original law.

So, what can you do? Here are some practical steps:

1) Have your child complete a living will. This is a document that would indicate that a person does not want to go on artificial life support.

2) Obtain a durable power of attorney. This document gives another person the power to make financial decisions on behalf of the incapacitated person.

3) Obtain a health care proxy or health care surrogate form so that someone can make health care related decisions on behalf of the person.

4) Make sure all of the papers are signed and notarized. Then scan the information into a PDF file and e-mail it to yourself such that you can access it anywhere in the world.

Hopefully, these suggestions, if followed, will allow you to spend your energy focusing on any immediate emergency rather than filling out endless paperwork. This is probably one of those cases that if you actually take the time to do the paperwork, you will never need it.

Who or What Is An American?

A friend passed on a version of this article to me recently, and it really made me think. With the sixth anniversity of September 11 upon us, I thought it was very appropriate.

WHAT IS AN AMERICAN?

by Peter Ferrara, an Associate Professor of Law

George Mason University School of Law.

September 25, 2001 9:20 a.m.

You probably missed it in the rush of news last week, but there was actually a report that someone in Pakistan had published in a newspaper there an offer of a reward to anyone who killed an American, any American. So I just thought I would write to let them know what an American is, so they would know when they found one.

An American is English…or French, or Italian, Irish, German, Spanish, Polish, Russian or Greek. An American may also be African, Indian, Chinese, Japanese, Australian, Iranian, Asian, or Arab, or Pakistani, or Afghan.

An American is Christian, or he could be Jewish, or Buddhist, or Muslim. In fact, there are more Muslims in America than in Afghanistan. The only difference is that in America they are free to worship as each of them choose.

An American is also free to believe in no religion. For that he will answer only to God, not to the government, or to armed thugs claiming to speak for the government and for God.

An American is from the most prosperous land in the history of the world. The root of that prosperity can be found in the Declaration of Independence, which recognizes the God-given right of each man and woman to the pursuit of happiness.

An American is generous. Americans have helped out just about every other nation in the world in their time of need. When Afghanistan was overrun by the Soviet army 20 years ago, Americans came with arms and supplies to enable the people to win back their country. As of the morning of September 11, Americans had given more than any other nation to the poor in Afghanistan.

An American does not have to obey the mad ravings of ignorant, ungodly cruel, old men. American men will not be fooled into giving up their lives to kill innocent people, so that these foolish old men may hold on to power. American women are free to show their beautiful faces to the world, as each of them choose.

An American is free to criticize his government's officials when they are wrong, in his or her own opinion. Then he is free to replace them, by majority vote.

Americans welcome people from all lands, all cultures, all religions, because they are not afraid. They are not afraid that their history, their religion, their beliefs, will be overrun, or forgotten. That is because they know they are free to hold to their religion, their beliefs, their history, as each of them choose.

And just as Americans welcome all, they enjoy the best that everyone has to bring, from all over the world. The best science, the best technology, the best products, the best books, the best music, the best food, the best athletes.

Americans welcome the best, but they also welcome the least. The nation symbol of America welcomes your tired and your poor, the wretched refuse of your teeming shores, the homeless, tempest tossed.

These in fact are the people who built America. Many of them were working in the twin towers on the morning of September 11, earning a better life for their families.

So you can try to kill an American if you must. Hitler did. So did General Tojo and Stalin and Mao Tse-Tung, and every bloodthirsty tyrant in the history of the world.

But in doing so you would just be killing yourself. Because Americans are not a particular people from a particular place. They are the embodiment of the human spirit of freedom. Everyone who holds to that spirit, everywhere, is an American.

So look around you. You may find more Americans in your land than you thought were there. One day they will rise up and overthrow the old, ignorant, tired tyrants that trouble too many lands. Then those lands too will join the community of free and prosperous nations.

And America will welcome them.

Use Certified Mail to Mail Your Tax Returns

If you are among the millions making the annual trek to the Post Office over the next few days, I strongly suggest mailing either your tax returns or extensions by Certified Mail, Return Receipt Requested. Having that receipt in hand will protect your refund or eliminate or minimize any penalties which the taxing authorities try to levy on you for late filing. These receipts do, in fact, hold up under audit.

The returns are required to be postmarked by April 17, 2007 this year. As long as you have a valid post mark, you will be OK. However, since the return will arrive after the deadline, you can protect yourself by using certified mail.

Since I personally find the Post Office forms more confusing than IRS forms, I have provided an example of how to complete the forms in the picture above. If you step into the lobby of a post office late on the night of the filing deadline, you will notice that most people are lost when it comes to completing these forms.

If you double click on the picture above, you should be able to enlarge it enough to see the detail. The form on the left shows the front of the certified mail form. On there, you put the address of the recipient on the left hand side, and check the box as shown for certified mail. At the bottom, put the article number of the letter being mailed. The article number comes from the left hand side of the certified mail receipt shown below in the middle. Just peel off the article number and transfer it to the front of the green card. Then turn the card over and put your return address on the back of the green card. This allows the post office to notify you that the package has been delivered and acknowledged by the recipient.

Please note that the addresses shown above are examples only, and they are not to be used for your personal mailing. I have included the specific addresses in each return or extension which has gone out. In recent years, the IRS has set up about a zillion different addresses for various tax forms. Addresses vary by the state in which you live, whether you have a refund or whether you owe money, whether your return was prepared by a professional or whether you prepared it yourself, etc., etc., etc. The variations never end, so please do not use the addresses shown above for your personal mailings.

Happy Easter???????

Given even a little bit of time, I would have expected to produce a really nice formal Easter post for this blog. However, since we are just a little over a week from the tax filing deadline, and I am working around the clock, you will not be seeing my ideal posts here. Since this blog clearly went to the birds with the last post, I thought I would just continue along the same lines.

Yesterday, I received a call from my 2 and a half year old niece letting me know that she and her 6 year old sister were putting together an Easter basket for me. Since, I could not join in any of the family Easter festivities, I received a call to let me know that they were dropping off my Easter basket on the way home this evening. My older niece walked up to the door and gave me a big smile as she handed me the bag. I could not wait to dive in!!!!! Right on the top, I spotted one of my favorites - Peeps!!!! The girls had previously separated the chicks so that they were in the basket individually. I grabbed one and went to take a bite off of the tail. I had to look twice. There was no tail!!! I just assumed that it got ripped off in the process of pulling apart the peeps. I reached for another one. The next chick was missing both the head and the tail. A third one was in the same condition.

Apparently, the bag was sitting next to the youngest in the car, and she had beaten me to the peeps. I could not stop laughing. The evidence is shown above. I will never forget this Easter basket. To really view the detailed evidence, double click on the picture to enlarge it.

Happy Easter!!!!!!!!!!

Time to get your ducks lined up!!!!!!!!

OK - It is now April 3, and the tax deadline for filing either your personal tax return or an extension for 2006 is on April 17, 2007. So it is time for all of you stragglers to get your ducks lined up and give me a call. Just remember, even if you are extending your return, I still need some time to determine whether or not you need to send in a payment with your extension. For easy reference, my phone number is 301-353-9680.

Last Chance for 2003 Refunds and Amendments

April 17, 2007 will be the last chance to claim a refund for a 2003 return that was not extended. Likewise, if you need to amend your 2003 return to claim a refund, the deadline will be April 17 if you did not extend the return. The statute allows you to claim a refund if you file the return within 3 years of the due date, including extensions. After that, you will no longer receive the refund.

This is true even if you owe taxes for another year subsequent to 2003. Unfortunately, many people wait too long to file those overdue returns and end up paying unnecessarily. So, if you are expecting a refund for 2003 and you have not filed 2004 and expect to owe, get that return in as soon as possible.

If you do end up filing a return for a refund for 2003 at the last minute, make sure you mail the return Certified Mail, Return Receipt Requested. If you do not, they will find a reason to show the return was not filed on a timely basis.

Good News on Option Arms

With quite a few of the sub-prime lenders going out of business in the last few weeks, it certainly feels as though the mortgage market is experiencing a major meltdown. In some ways, it is true, but there is quite a bit of unfounded hysteria floating around. Every time we pick up the newspaper these days, the headlines hit us over the head with someone else who is losing their house, because they did not understand the terms of their current mortgage. One of the most complex mortgage animals out there is the loan often known as an "option arm" or "cash flow arm." This particular type of mortgage has been crucified in recent weeks. However, this type of loan has MANY good points. You just have to know how to use the loan properly before you get into one of these.

These are great loans if you are carrying multiple properties, because they can allow you to make a smaller payment than you would on a "normal" loan. The key to managing your loan properly is remembering the real reason you went into that type of loan in the first place. Many people use these loans to help pay off higher interest credit cards or other "bad debt." If you are making the minimum payment on the mortgage each month and you are continuing to spend as though there is no tomorrow, then you WILL end up in trouble no matter what type of loan you have. However, if you make the minimum mortgage payment and put an extra $1,000 or more toward your credit cards, then you will be working toward your goal of paying off higher interest rate debt.

The minimum payment is set very low at what I often call the "fake rate, " and it can often be as low as 1%. If you choose to make the lowest possible payment, and do not pay all of the interest due each month, then the monthly interest that you have not paid will be added to your mortgage balance. This amount is the difference between the "real" rate as set forth in your mortgage note and the rate of interest you are paying. The monthly interest that you do not pay can be added to your mortgage balance until the loan reaches typically either 110% or 115% of the original outstanding balance. Once the loan tops out at that point, it will begin to amortize over the remaining life of the loan such that you will be required to pay the full interest and principal payment each month. This can often be double of the amount of the payment you have been making. This normally does not happen until several years into the loan, but there is no set time limit in most cases. If you are not prepared to make the full payment at that point, then your loan could blow up on you.

While the loan balance can increase if you do not make the full interest payment, the balance can also decrease if you make any additional principal payments. One major advantage of an option arm is that if you own multiple properties, and then you sell one, you can pay down the mortgage balance on one or more properties with option arms. When you make the large payment, your minimum monthly payment will most likely decrease. So, if you have an option arm that adjusts monthly, and you pay down $200,000 on your mortgage, your subsequent monthly payments will adjust downward to take into account the $200,000 principal payment. This can not happen on a 30 year fixed rate mortgage. Your monthly payment on a fixed rate mortgage will not change if you make additional payments of principal.

If used wisely, the homeowner has the chance to get out of other debt or just refinance when a better deal comes along. It seems that most people seem to refinance every two or three years in any event, so it does not necessarily pay to go into a 30 year fixed rate mortgage, particularly if cash flow is an issue.

Another plus to the option arm is that it does carry an adjustable rate. While many people panic at the thought of an adjustable rate, remember that rates can actually go down. While this has not been true in the recent past, many of the option arms out there contain very favorable adjustment features such that the payment will be very manageable at a point when the rates drop a little.

Please give me a call at 301-353-9680 if you have an option arm that you are uncomfortable with at this time. I can either show you how to make it work for you or find you a new loan that works better for you. We can look at how you are using the loan and determine how you long you have before it potentially "blows up." Many people do keep these loans for the life of the loan. Just remember, that if you don't make the payment, the bank will foreclose no matter what type of loan you have!!!!!!

As always, the advice given here is general, and there are exceptions with every mortgage.

Your brother's, wife's, cousin's accountant said what???

Over the years, I have noticed that most of the tax and financial advice people receive comes from a co-worker, friend or neighbor. This advice MAY have been passed on by the co-worker's accountant. So heaven help you if the person sitting at the next desk has a lousy accountant and you had no clue!!!! The other danger in this situation is that the accountant provided outstanding advice to your friend. However, the advice given by the accountant only applied to your friend's VERY SPECIFIC fact situation. If your fact situation is even SLIGHTLY DIFFERENT from that of the person receiving the advice, you could be totally screwed by following that same advice.

But this situation is not necessarily related to people who don't have accountants. I was talking to one of my clients the other day (you know who you are!!!) who told me she was also taking some advice from another client of mine who had referred her to me. However, it turns out that both of their situations are VERY different, and the advice I give to one of them would not necessarily work for the other. While some advice may seem very general in nature, it may actually be more specific than you think with respect to income levels, timing of the transaction, past history or a million other factors.

Given the above warning, the advice provided on this blog (and on the website) will tend to be general in nature. However, if you like what you see, please feel free to pass on some of the posts to your neighbors, friends, family and co-workers. If nothing else, it will serve as a discussion point. If you think it may apply to your specific situation, please give me a call, so we can discuss your specific needs.

At the bottom of each post, there should be a little envelope that you can click on. It will open up to a page that will ask for your e-mail address and the e-mail address for your friend. It will then send them a link, and they can access a copy of just that particular post. They won't have to search an entire blog to figure out the point of your e-mail.

Mutual Fund Transfers

Over the years, many clients have come in for their annual meeting. I often ask them if they sold any mutual funds. Quite often they say, "No." As I proceed to look through their papers, I see the statement from the stock broker indicating that there was, in fact, a sale.

I will typically pass the statement from the broker across the table, and they will tell me they never "sold" the mutual fund. They just made a telephone transfer from one mutual fund to another in the same family of funds. This happens quite often when one fund is not performing as expected, and the client is looking for a better return.

Most people tend to think of a mutual fund as a bank account. However, you are really purchasing a share in a group of assets. You own shares in the fund, and then the fund invests in various assets including stocks, bonds or money market investments. If you take the time to read your statement, you will notice that the value of the shares moves up or down on a regular basis depending on what the underlying assets are doing on any given day. When you own shares in a mutual fund, you receive an equity position (own a share) in each of the underlying securities.

For tax purposes, since you own a share in the underlying stocks, you are considered to have a sale when you move your money from one fund to another. At that point, you will have to calculate your gain or loss on the sale of your shares. If you are not aware that you had a sale, you can end up with a nasty surprise at tax time when you suddenly have a lot of unexpected gains on your tax return. If you do not report the sale of the mutual fund, you can rest assured that you will receive a friendly letter from the IRS informing you that you now owe them a fortune. The brokers ALWAYS report the sale of the funds to the IRS.

If you own any shares in mutual funds, you need to keep very careful and complete records. You need to keep the records showing the purchase and any dividends you received over the years. If you still have mutual funds today that you purchased in the 1970's, you still need to retain those records. So, if you hold the mutual fund for 30 years, you need to keep those records the entire time you own the fund (and then some!). Failure to keep the records will most likely result in paying taxes twice on the same earnings. This can get particularly complicated when mergers and acquisitions take place with the different stock brokers. It appears that many times, the records with the broker get lost if the broker changes names.

If you are contemplating a large sale of a mutual fund, we should do some tax calculations and planning before the sale to see your potential tax impact. Many times, these sales can throw you into the dreaded Alternative Minimum Tax and produce some nasty results. With a little bit of planning the bad results can be avoided or minimized.

Web Site Is Up and Running

I FINALLY got my web site launched a few weeks ago with the help of a client. The address is www.onlinefinancialcafe.com. As time goes by, it will provide a wide variety of tax, financial and business information. Since I am in the middle of tax season right now, I do not have time to make extensive corrections at this point.

If you have friends or relatives who may need financial help, please send them to my web site. I have put up some detailed reasons why someone might need an accountant. Those are just for starters!!! There will be more added to the list later.

The name of the web site and the blog were chosen to reflect my diverse range fo experience. I have many years of tax and financial experience and also work in the mortgage and real estate areas. After tax season, I will begin offering a WIDE range of financial services which will include everything from long term care insurance to retirement plans and just about anything else you can imagine. I want to make sure that my clients have the full range of financial tools at their disposal so they can live the lifestyle they choose with a little bit of planning.

Since I am right in the middle of tax season, the web site will grow very slowly. I know there is at least one typo there. If you have any suggestions, please let me know. I will be experimenting to find out what works best. It will not be an overnight process.

Please continue to use my e-mail address at sballmann@aol.com. There is a new e-mail listed on the web site, but I do not know how to easily access it at this point. If you send an e-mail, please make sure you put two n's at the end of my last name. Failure to do so may result in a nasty e-mail from one n who refuses to forward anything!!! Once I get past tax season, I will figure out the new address and start using it to eliminate the problem with the two n's on my last name.

Open for Tax Confessions!!!

I always joke that I feel like a priest listening to confessions when I meet with my clients. Everything is we discuss strictly confidential and cannot be discussed with anyone. After a long absence in posting to my tax blog, I wanted to start updating it on a regular basis and get some current information out there. If you have not yet been in to make your annual "tax confession, " please call or e-mail me to set up an appointment as soon as possible so you won't run into the last minute rush. If you have friends and relatives that you are sending over, please try and get them over here as quickly as possible also.

This is actually a picture of an old confessional in Rome. I could not determine the name of the church where it was located, but it appears that it may be somewhere near the Trevi Fountain looking at the sequence of the pictures in my camera.

Save Those Receipts - New Rules for Charities

EFFECTIVE IMMEDIATELY, January 1, 2007, a receipt is required for ANY AND ALL charitable contributions in order to take a tax deduction. In most cases, this is not an issue. However, it is definitely more paperwork.

In the past, you were allowed to estimate a reasonable amount for charitable contributions, including those donated in cash. So, many people were in the habit of saying they gave the same amount as last year, or they typically put $10 a week in the collection basket at church.

The other place where this deduction was abused (although, not by MY clients) was that many people took "the standard charitable contribution." Such a standard deduction never existed. The misconception on this deduction arose from the statistics published by the IRS over the years. From time to time, the IRS conducts very detailed audit programs in which the taxpayers are required to produce a receipt for every line item. Believe me - you do not want to be selected for this type of audit. In some cases, they have even had to produce birth certificates. These audits are used to accumulate these statistics. So, for example, there may be pattern that says the average person who has an income of $100,000 gives $2,000 a year to charitable organizations. Many people have misinterpreted these numbers to assume that they were entitled to these deductions as long as they were within the "limits." The change in the law is designed to prevent that interpretation.

NOW, the rule has been changed. In order to obtain a deduction, only two types of proof are allowable to substantiate the deduction:

a) a bank record OR
b) an acknowledgement from the organization receiving the gift indicating the name of the donee organization, the date of the contribution, and the amount of the contribution.

No alternative records will be allowed to substantiate the contribution under the new rules.

The picture above is a stained glass window inside the Notre Dame de Reims Cathedral in Reims, France. Many of the kings and queens of France have been crowned in this church. Reims is also the home of the famous champagne caves.

Sugar Bowl - Go Irish!!! Beat LSU!!!!

Here come the Irish!!!!! Here come the Irish!!!!!!!!

Watch the Irish clobber (I hope) LSU tonight in the Sugar Bowl!!!!!!! The game will be played in New Orleans in the Superdome and will be televised on WTTG-5 beginning at 8 pm.

Changes, Changes, Changes

It seems that there is never an end in sight to the tax law changes. This is a book from only one of the update classes I took recently to keep current. This class covered only the updates and not the basics. As you can see, all of the pages are single spaced type on both sides of the page. I will provide updates on changes that impact a large number of people, especially now that we are into January, and everyone will be starting to think about taxes a little more each day.

A Warm Ending

As we returned to our car, a Red Cross volunteer practically tackled us and invited us over to have a cup of hot chocolate. This was another pleasant surprise. A Red Cross staff member snapped our picture and chatted with us for quite a while. When we told him that we had met Jack Ford, the president's son, his response was simply, "Well, that's the Ford family for you."

Flag at Half Staff

It took quite a while to get the right angle and the wind blowing in the right direction, but here is a shot of the flag flying at half staff over the Capitol as we mourn the passing of President Gerald R. Ford.

The Crowd Signing the Books

After we signed the book of condolences, we stayed for a while taking a few more pictures. As you can see, sometimes the table got very crowded. As we wandered through the crowd, I heard someone discussing some politics in depth. I thought he might be a good choice to ask who the woman was who was standing next to Jack Ford. He said he never saw Jack Ford or any other one else there from the family. Apparently, our timing was just right. This guy was only a few minutes behind us in line. Someone later told me that no presidential family members have come out to receive the public for these events in over 30 years!!!!

Signing the Book

As we headed out of the building, we were invited to sign the book of condolences for the family. Most people just signed their name, city and date, but my friend and I took a few extra lines and each wrote a note. We even took pictures of our notes!!!

Entering the Capitol

We waited and waited and went through the security clearance. After only 57 minutes, we were actually at the door to the Capitol. It probably took us an extra 10 minutes, because we took so many pictures along the way!

As we approached the door, a woman gave us the commemorative card as shown above. We then proceeded to the bottom of the 33 steps to climb up to the rotunda to see the casket. As we approached the bottom of the steps, the staff asked everyone to lower their voices and keep quiet.

As we got to the top of the steps, the first thing you could see was a room full of reporters and cameras. It was packed. They were covering every angle. There were even cameras aimed at us. The line slowed up a little. Then a man reached out to shake my hand, and there was a camera in my face. He said, "Hi, I'm Jack Ford, and I'm here to welcome you on behalf of the family." I was so shocked, I did not even know what to say. I had no idea that there would be any family members there. I think my mouth probably just dropped open. I did say that I remember him(Jack) coming to speak at my college. Then, a couple of feet away was a woman who reached out and shook my hand. She was clearly a family member, but I did not know who she was.

We then proceeded to pass slowly by the casket in silence. It was an incredible experience.

We then turned to go out. Just then we saw Bob Dole carrying on a conversation with someone. I know I was surprised to see someone there that I actually recognized. I think we both must have stared at him too long, because he turned and gave us a big smile and waved to us. My friend concluded that I was the one attracting the attention here, since I was bundled up like an Eskimo in our mild 50 degree weather!!!

View of the Capitol with the Line Across the Front

This is a view of the Capitol with the the crowd across the front steps and headed inside the building. If you double click on the picure, it will be large enough to see all of the fine details.

The Waiting Begins

After proceeding a few yards across the street, we got in line to begin the wait. We kept walking and walking and walking. This line was looking pretty good!!! It felt like we were pretty close.

The Journey Begins

As we set out to see President Ford laid out in the Capitol, we had no idea what to expect. My friend had waited in line for 3 hours in near 100 degree heat to see President Reagan. She was at the very beginning of the line that day. So, I figured I had a pro with me. We did not leave early Sunday morning, so we had no idea how long this entire process would take.

When we arrived in the vicinity of the Capitol, we headed to the parking lot where my friend has a pass for parking available on a 24/7 basis. It was locked up tight. We decided to try our luck on the street. Between the two of us, we normally have very good luck getting parking spaces, so we figured with both of us in the car at once, we were sure to get a great spot. Sure enough, as soon as we said that we spotted someone folding up a stroller into a car. The spot was at 3rd Street and Independence Avenue, SW. We took a look around, and concluded that we got the CLOSEST LEGAL parking spot to the entrance for the viewing. As we pulled into the spot, the sun came out, and we knew that the rest of the day would go smoothly.

We were so excited about our great parking spot that we took pictures, since we were sure no one would believe us. I just noticed from the picture above that we were given the green light.


We then proceeded to figure out which necessities we should take with us and which to leave in the car. We did not know if we should bring something to sit on, and who knows what would happen with the weather. I did, however, proceed to put on 5 layers of clothing even though it was as warm as I have ever seen January. Since there were some people running around in shorts, I probably looked like an Eskimo in Florida - a sight to be sure!!!

RIP President Gerald R. Ford

Yesterday, I had the rare opportunity to go downtown with a friend to say goodbye to a former President. We went down for the viewing of Gerald R. Ford, the 38th President.

As most of my friends were in college while Ford was president, we were not really tuned in to what was going on in the "real world" at that time. We typically caught up on the world news by tuning in to Saturday Night Live in those early days and watched Chevy Chase as he stumbled across the stage doing his weekly imitation of President Ford.

My college classmates and I also have another interesting recollection of President Ford. We attended St. Mary's College in Notre Dame, Indiana. President Ford was invited to speak at Notre Dame on the morning of March 17, 1975.

As you know, March 17 is St. Patrick's Day. Given the school nickname for Notre Dame is the Fighting Irish, you can imagine the parties that weekend. In addition, this particular year, St. Patrick's Day fell on a Friday, and Spring Break started at the end of classes that afternoon. We were excused from classes that morning to hear President Ford speak. I was only a freshman, so we more or less followed the rules at that point, but many of the older students were filling the bars by 7:00 am that morning.

We finally got over to Notre Dame for the speech, and we got great seats. I still remember the beginning of President Ford's speech. He really did his homework and made an effort to relate to the students. For a little background here, the drinking age in South Bend, Indiana was 21 at that time. South Bend is located 2 miles south of the Michigan border. The drinking age in Michigan was 18. There were quite a few bars located just across the border in Michigan that were frequented by the St. Mary's and Notre Dame students. However, there were generally problems getting transportation up to Michigan, since most of the students did not have cars. Even if there were cars available, then there were the usual drinking and driving issues. In order to alleviate this transportation dilemma, Notre Dame and St. Mary's ran a bus each weekend whose sole purpose was to pick up the students on the two campuses and drop them off at the bars. When the fun was over, the students would once again hop on the bus for a safe ride home. This bus was known as the "Quickie."

Anyway, President Ford started his speech by noting the different methods of transportation in the various communities. He said, "...some communities have the monorail, some communities have the subway, and Notre Dame has the Quickie." The audience roared, and he had our attention.

Another interesting piece of history occurred in conjunction with President Ford's visit. The combination of St. Patrick's Day on the Friday preceding Spring Break and President Ford's speech resulted in an unprecedented party in South Bend that weekend. To this day, when the the proposed academic calendar is issued showing school in session for St. Mary's and Notre Dame, the town residents put up a protest. So, the day that President Ford spoke was the last time that Notre Dame and St. Mary's were in session on St. Patrick's Day. Somehow, Spring Break always fall the week of March 17!!!!

The other unique thing about President Ford for me is that, as far as I know, he is about the only president in recent history that I can remember who did not sign a major piece of tax legislation that I have to deal with on a daily basis. Most of the other presidents have kindly provided us with an annual update to the "Tax Accountants Full Employment Act."

I thought I would share the adventure my friend and I had yesterday. We may have some pictures that are a little different than the ones you have seen hour after hour on TV. Since I am learning the ropes on publishing this blog, I am going to do this story in several posts so I can get a number of pictures included. Please bear with me as I try and figure out how all of this works and getting the pictures published, etc. I hope you enjoy our story.

The picture above is one of those posted right outside the Capitol included in the official exhibit.

HAPPY NEW YEAR!!!!!!!!

Wishing all of my readers (all 3 of them!) a very healthy, happy, successful and fun filled New Year.