Paul Ferraresi

If you keep a detailed list of personal property it will be easier to claim a deduction on your taxes in the event of casualty or theft losses. In addition, you will need this detailed information to file with your insurance company.

Losses can come about because of burglaries and vandalism. In addition, losses from fires, floods, tornados, terrorist attacks and tsunamis more than meet the criteria.

Unfortunately, the IRS imposes several convoluted restrictions on the allowable amounts for theft and casualty losses. Moreover it knows that many taxpayers misunderstand the complex rules and overstate their deductions.

IRS examiners learned long ago that most people are unable to substantiate their loss deductions because they neglected to keep adequate records. So, the usual response of the Feds is to throw out or trim unsupported estimates. This is a strict approach that has been sustained by the courts in countless decisions.

The IRS agency offers a free guide, Publication 2194, Disaster Losses Kit for Individuals, available at www.irs.gov or (800) TAX-FORM (829-3676).Publication 2194 includes a handy workbook with schedules for listing clothing, jewelry and a residence’s contents on a room-by-room basis. Schedules for rooms have separates sheets for the entrance hall, living room, dining room, kitchen, bedrooms, garage and other sections.

Alongside each property item are seven columns in which to record details: the number of items; date acquired; cost; loss; decrease in value; and amount deductible as a loss.

Publication 2194’s workbook will help you inventory household goods and personal property. That list can prove indispensable when, for instance, you want to reconsider inadequacy of your insurance coverage, file insurance claims, plan to move – or even create a household inventory for heirs.

Still, creating a list in advance is incomparably easier than trying to remember all those details after property is stolen or destroyed. It is prudent to keep a copy outside the home in a secure location.

Following are highlights of some of the confusing restrictions on who can claim casualty and theft losses and what and how much is allowable.

File claims and account for settlements. The IRS requires itemizers to reduce their losses by insurance settlements or other reimbursements they received or expect to receive. They also may not receive deductions if they fail to file claims.

Subtract $100 per loss. The IRS usually mandates another subtraction of $100 for each loss. But it orders only one $100 reduction when the same event damages several items, say, the same flood damages a person’s home and detached garage or a year-round home and a summer cottage.

Make sure losses exceed 10% of AGI. The big hurdle is that losses are deductible only to the extent that their total exceeds 10% of adjusted gross income. AGI is gross income reduced by specific outlays, such as alimony payments and contributions to retirement plans, and before itemizing or using the standard deduction and claiming dependency exemptions.

Claim losses in the year they are discovered. Casualty and theft losses can be claimed only on the 1040 for the year in which casualties occurred or thefts are discovered.

MORE COMPLEX CASES

Wait, it gets more complicated. The IRS routinely requires you to prove that deductions take into account what missing or damaged items originally cost and what they were worth before and after the incident. In the case of theft, count the value of stolen property as zero.

Do the listing now. In addition, take photos and/or videos to further back up your claim. Remember, the insurance company will demand you “prove” to them that you owned it.

Financial Personality Worksheet

This study was conducted by Allianz Insurance Company. Although it was created for women it is okay for men to take the quiz. If you are married then each person should take it separately.

When done compare your points with your personality type and then with your partner.

This questionnaire was designed to help identify your financial personality. Understanding your particular needs also will allow your financial professional to better understand your decision-making process and personal approach to planning for your financial future. Please take your time and carefully answer each of the following eight questions.

Using the following scale how much do you agree or disagree with the following statements?

Strongly Agree (5 pts)
Somewhat Agree (4 pts)
Neutral (3 pts)
Somewhat Disagree (2 pts)
Strongly Disagree (1 pt)

1)_____ I feel I am confident when it comes to managing money and investing.
2)_____ I feel I have adequately planned for retirement savings/security.
3)_____ I feel I am educated when it comes to managing money and investing.
4)_____ I feel I have sufficient knowledge about money and investing, and I am very involved in the management of my long-term savings, and investments.
5)_____I feel I am clear about my financial goals and my plans to achieve them.
6)_____ I feel I am highly responsible and take initiative when it comes to money and investing.
7)_____ It is very important to me that I always have a complete understanding of my household financial situation.
8)_____ When in a relationship, I like to collaborate with my partner in financial decisions.

_____Total Points

Total Points Financial Personality
35-40 Financial Initiator
27-34 Financial Analyzer
20-26 Financial Collaborator
14-19 Financial Avoider
8-13 Financial Dreamer

The Emerging Roles of Financially Empowered Women

Now that you have completed the financial personality worksheet you will have a better understanding of your unique financial personality. You can become more in tune with your behaviors as they relate to money and finances. This knowledge will position you to take the next step of working with a financial professional, and will help you assume control of your financial future.

When interpreting your results, please keep in mind that you are the best judge of the accuracy of a personality description that reflects your financial behavior. If your point score falls toward the end of a range of points for a particular financial personality, and you feel that behavior description does not adequately portray you, read the personality that follows it to determine if it’s a better fit.

Percentage of Respondents

Financial Dreamer “Cinderella” 8%

You haven’t had a confident history with money. In fact, you may not have had the opportunity to be responsible for your own money and investing in the past, and as a result may feel intimidated when it comes to managing your own finances. Because you lack experience and knowledge, you may feel helpless and hope that someone else will “take care of you”. In fact, if you’re in a relationship, you usually defer all financial matters to your partner. You have the most to gain by consulting a financial professional with whom you feel comfortable and can trust.

Financial Avoider “Alice in Wonderland” 17%

You’re concerned about your current finances and your financial future. However, you don’t feel confident enough with your financial knowledge to make informed, independent decisions to resolve your financial problems. You often feel overwhelmed by all the choices and potential solutions available to you. You know that you would benefit by seeking the help of a financial professional. You just have trouble taking the first step.

Financial Initiator “Wonder Woman” 8%

You’re self-assured, empowered and optimistic in most of your endeavors. Specifically, you’re extremely sophisticated in your financial knowledge and confident in your ability to make independent, informed financial decisions. You’re quite clear about your financial goals and typically know how to achieve them. You take the initiative to work with a financial professional who you feel has the necessary industry experience to provide you exceptional advice and guidance.

Financial Collaborator “Belle” (from Beauty and The Beast) 17%

You’re extremely balanced in your life. When in a relationship, you’re healthy, happy, and cooperative. You provide your family financial comfort and stability. You are confident with your ability to understand and resolve financial issues. However, you prefer not to be the primary decision-maker. Even though you may not always choose to be in the forefront, you and your partner share equally in all financial decisions and actions, including working with a financial professional.

Financial Analyzer “Goldilocks” (Comparison shopper) 35%

You have a good understanding of household finances and take initiative in thoroughly researching investment opportunities and tracking financial results. You’re a comparison shopper, an avid saver, and rarely purchase something you can’t afford. Your behavior is reflective of an analytical and disciplined approach to making decisions. Chances are you’ve worked with a financial professional in the past. However, when selecting a financial professional, it’s important to you to work with someone who is inclusive and collaborates with you.

Now you know who you are. It is time to get on track, or, will you be like Scarlett O’Hara … “I’ll think about it tomorrow”.

These new deductibility level increases the value of a little-known secret: The cost of long-term care protection for small businesses is tax deductible.

The Internal Revenue Service (IRS) has announced increased deductibility levels for long-term care insurance policies purchased in 2008. Small business owners should take heed, because millions of small and mid-sized business owners are still aware that the cost of long-term care insurance protection for themselves and their spouse may be fully tax deductible. It’s amazing how few accountants understand tax deductibility and discuss it with their clients. It’s very rare that an accountant brings up the tax advantage of long-term care planning, so, it’s really an opportunity for your investment professionals and insurance agents to bring up the topic.

To get the tax benefit, small business owners can, just like large businesses, set up a C corporation, which offers tax planning and liability advantages. Once the C Corp is established, the small businesses can create what’s called an executive carve-out plan. The business sets up a provision in their minutes that the [LTC] benefit is provided for a specific group. For example, you could say you have to be an officer of the company and have been employed for 6 years; that would exclude any other employees. So now the business is using pretax dollars to buy LTC insurance for the owner and his or her spouse, and it’s fully tax deductible.

In addition to the federal tax deduction, many states now offer tax incentives for individuals purchasing tax-qualified long-term care coverage.

According to AALTCI, the deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term “medical care” are as follows:

A slowing economy has investors worrying about past, present and future stock market returns. After a huge upward move that saw American stock values double from October 2002 to October 2007, everyone seems to be worried about the future.

This may surprise most people, despite the recent 5 year rally; the entire new decade has not been kind to U. S. stocks. Since the end of 1999, a popular starting point for this decade, cash accounts and Treasury Securities have beaten stock returns (keep in mind I am referring to indexes. Individual securities may have beaten out the indexes. For example; we bought Apple Computer about 5 years ago at $7/share and have sold out portions of shares on the way up at $50, $75, $100, $150 and $200. Fantastic returns.)

The average annualizes returns from 12/31/99 to 12/31/07 for various asset classes have been;

30 year Treasuries 8.77%

10 year Treasuries 6.45%

Dow Jones Industrial 3.95%

Cash 3.24%

S & P 500 Index 1.66%

NASDAQ -4.70%

During this same period foreign securities have outperformed the U.S. securities (in some part due to the 40%+ drop in the dollar). The S&P 500 Index is in 57th position out of 60 global markets this decade. As 2008 started markets were down even more due to the subprime mess. Actually, the Dow Jones average is about where it was prior to the 9/11 bear market. If you factor inflation into the return the situation is even more dire.

Oh, is this the end, you ask? NO! Markets like the weather move in cycles. The 1982-2000 bull market was the largest gain in history. You made a fortune during this run and like all excesses the markets are digesting the gains. Classically, long drawn out bear markets follow big bull markets. Overall, things average out. It may take a few more years to finish the cleansing of the “Indexes”.

U.S. shares do not look good as of late, but, in the most recent 50 years it does look fantastic. Since 1950, a period that includes some severe bear markets, stocks have risen 50 times!! Yet, in the first half of the 20th century, that is, up to 1954, which includes the worse quarter century in market history, stocks were up just10 times. The more recent past has been characterized by lack of global wars, great moves in industrialization, trade, technological knowledge and increasing education levels, reducing commissions and the increase in the work force.

Even if the next few years prove dull, the above positives, and many more, will help equities. I am very optimistic long term, and, isn’t that why you invest … for the long term.

Here is a thought for you. The S&P 500 has averaged an annual rate of return of around 13% since 1925. That 13% took place in good and bad years, World War 2, a depression, Hitler, mass murders, on the brink of thermonuclear extinction in the Cold War, Nixon resigning and even Elvis dying (Yes, he is dead). Through all of that, and, whatever the media will create as the “Crisis de jour”, the markets have averaged 13% per year. Here is a summary of the S&P 500 returns by decade.

S & P 500 Decade Returns

You will note some periods produced below and some above the 13% average. Overall the market averaged 13%. Look at the ‘80s and ‘90s. The returns were WAY above 13%. You knew this current decade would have to be sub-13% just to average out the wild ‘80s and ‘90s. So don’t be upset if your returns have been paltry the past 8 years. Since 1980 to today how have you averaged? I am willing to bet you did fantastic.

I am carefully loading up my personal portfolio and all my clients with good quality low priced stocks. The benefit will be to enjoy the decade starting in 2010 and after –

Do your research, layout a plan and execute the plan. What am I saying …?? Discipline now or regret it later.

One of the major events that can ruin your credit rating and bring on months of aggravation is Identity Theft. I have found some great material from the Federal Trade Commission on this subject. Take heed.

Identity theft is a serious crime. It occurs when your personal information is stolen and used without your knowledge to commit fraud or other crimes. Identity theft can cost you time and money. It can destroy your credit and ruin your good name.

Deter identity thieves by safeguarding your information.

Shred financial documents and paperwork with personal information before you discard them.

Protect your Social Security number. Don’t carry your Social Security card in your wallet or write your Social Security number on a check. Give it out only if absolutely necessary or ask to use another identifier.

Don’t give out personal information on the phone, through the mail, or over the Internet unless you know who you are dealing with.

Never click on links sent in unsolicited emails; instead, type in a web address you know. Use firewalls, anti‐spyware, and anti‐virus software to protect you home computer; keep them up‐to‐date. Visit OnGuardOnline.gov for more information.

Don’t use an obvious password like your birth date, your mother’s maiden name, or the last four digits of your Social Security number.

Keep your personal information in a secure place at home, especially if you have roommates, employ outside help, or are having work done in your house.

Detect suspicious activity by routinely monitoring you financial accounts and billing statements.

Be alert to signs that require immediate attention:

Bills that do not arrive as expected

Unexpected credit cards or accounts statements

Denials of credit for no apparent reason

Calls or letters about purchases you did not make

Inspect:

Your credit report. Credit reports contain information about you, including what accounts you have and your bill paying history.

The law requires the major nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to give you a free copy of your credit report each year if you ask for it.

Visit www.AnnualCreiditReport.com or call 1‐877‐322‐8228, a service created by these three companies, to order your free credit reports each year. You also can write: Annual Credit Reports Request Service, P.O. Box 105281, Atlanta, GA 30348‐5281.

Your financial statements. Review financial accounts and billing statements regularly, looking for charges you did not make.

Defend against ID theft as soon as you suspect it.

Place a “Fraud Alert” on your credit reports, and review the reports carefully. The alert tells creditors to follow certain procedures before they open new accounts in your name or make changes to you existing accounts. The three nationwide consumer reporting companies have toll‐free numbers for placing an initial 90‐day fraud alert; a call to one company is sufficient:

Equifax: 1‐800‐525‐6285

Experian: 1‐888‐EXPERIAN (397‐3742)

TransUnion: 1‐800‐680‐7289

Placing a fraud alert entitles you to free copies of your credit reports. Look for inquires from companies you haven’t contacted, accounts you didn’t open, and debts on your accounts that you can’t explain.

Close accounts. Close any accounts that have been tampered with or established fraudulently.

Call the security or fraud departments of each company where an account was opened or changed without your okay. Follow up in writing, with copies of supporting documents.

Use the ID Theft Affidavit at ftc.gov/idtheft to support your written statement.

Ask for verification that the disputed account has been closed and the fraudulent debts discharged.

Keep copies of documents and records of your conversation about the theft.

File a police report. File a report with law enforcement officials to help you with creditors who may want proof of the crime.

Report the theft to the Federal Trade Commission. Your report helps law enforcement officials across the country in their investigation.

Online: ftc.gov/idtheft

By phone: 1‐877‐ID‐THEFT (438‐4338) or TTY, 1‐866‐653‐4261

By mail: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Ave., NW Washington, DC 20580

COMMON WAYS ID THEFT HAPPENS:

Skilled identity thieves use a variety of methods to steal your personal information, including:

Dumpster Diving. They rummage through trash looking for bills or other paper with your personal information on it.

Skimming. They steal credit/debit card numbers by using a special storage device when processing your card.
Phishing. They pretend to be financial institutions or companies and send spam or pop-up messages to get you to reveal your personal information.

Changing Your Address. They divert your billing statements to another location by completing a “change of address” form.

“Old Fashioned” Stealing. They steal wallets and purses; mail, including bank and credit card statements; per-approved credit offers; and new checks or tax information. They steal personnel records from their employers, or bribe employees who have access.

If your community has you place your trash for pick up on the curbside….do not place it at night. Thieves travel up your street going through your trash bags. Wake up 2 minutes earlier in the morning and put it on the curb before going to work.

Ah yes discipline or regret!