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Recent Tax Court decision could wreak ha

Glover v. Comm, a recent tax court decision, presents several issues to Merchant Mariners. Mr. Glover worked for Reinauer Transportation. His tugs pushed oil coastwise as far as Virginia. The tugs wou

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Recent Tax Court decision could wreak havoc on Mariners

State Taxes and Mariners

Suz asked this question So, what about if you live in one state (TN) and work as a merchant mariner in another state (HI), 45 days on/45 days off rotation? Do you pay HI state taxes, or does the payro

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State Taxes and Mariners

Mariner Tax Update January 2011

E-Filing alert! How many times have you read that mariners cannot E-File? How many websites have posted this. Year after year. And then all of a sudden preparers start proclaiming “mariners can

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Mariner Tax Update January 2011

Employee vs. Non-Employee LLC and S-Corp

I’ve been a client of yours for a few years now and I had a general tax question concerning my wife’s job status. She currently works full time for a marketing firm in “Deleted”

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Employee vs. Non-Employee LLC and S-Corp Planning for Mariners and their families

Maritime Tax Preparers and the Alternati

What they don’t want you to know… This video points out the tremendous effect of the AMT on merchant mariners. Seamen taking business deductions and offsets may very well be realizing litt

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Maritime Tax Preparers and the Alternative Minimum Tax

Making Gifts From Your IRA

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by on December 28, 2010 at 5:45 pm

Wish I had this problem…

The provision itself is simple–at least as tax rules go. It allows a taxpayer who is 70½ or older to contribute a total of $100,000 in IRA assets to one or more qualified charities. The payout can satisfy the required minimal distribution. The donor gets no deduction, but neither does he or she have to report the payouts as income.

That last point is key: If the donor had to claim the payout as income and then deduct it, there could be problems. The deduction itself could be limited because of other tax rules, or else the donation might swell the donor’s reported income, possibly raising Medicare premiums or taxes on Social Security payments. Instead, the donation bypasses tax calculations altogether.

via Tax Report: Making Gifts From Your IRA – WSJ.com.

New Customer At Helga’s House of Pain

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by on November 22, 2010 at 7:44 pm

Billionaire Warren Buffett rebutted claims that the Obama administration is unjustly hurting business orders with high taxes by saying that in fact, the wealthy have never had it so good.”I think that people at the high end, people like myself, should be paying a lot more in taxes. We have it better than we’ve ever had it,” he told ABC’s Christiane Amanpour in a clip played on “This Week” on Sunday.When Amanpour pointed to critics’ claims that the very wealthy need tax cuts to spur business and capitalism, Buffett replied, “The rich are always going to say that, you know, ‘Just give us more money, and we’ll go out and spend more, and then it will all trickle down to the rest of you.’ But that has not worked the last 10 years, and I hope the American public is catching on.”

via Warren Buffett: I ‘Should Be Paying A Lot More In Taxes’.

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Why the housing bulls are wrong

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by on November 22, 2010 at 5:15 pm

Four reasons by housing is still not a good investment

A number of notable investors presented thoughtful and well-researched ideas at the Value Investing Congress last month. The one idea that we would take the other side of, though, was one from Bill Ackman of Pershing Square Capital, which was unveiled in a presentation titled “How To Make a Fortune”: to go long U.S. housing. To state it bluntly, we think Ackman is wrong on housing.

According to several reports, his thesis on U.S. housing focuses on a few key points. First, affordability is at its highest level in decades due to low mortgage rates. Second, household formation will rebound and go back to long-term trends, which suggest growth in demand. Third, supply of housing, which Ackman admits is high, will start to decline since builder production rates are as low as they have ever been. Finally, he believes the downside in housing is limited because at a certain price, institutions could step in and soak up the excess inventory.

via Why the housing bulls are wrong – Fortune Finance.

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Municipal Bonds Falter After a Long Winning Streak

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by on November 18, 2010 at 4:12 pm

That is the question investors are asking after munis — those old faithfuls of investing — took their biggest hit since the financial collapse of 2008.

Concern over the increasingly strained finances of states and cities and a growing backlog of new bonds for sale overwhelmed the market last week. After performing so well for so long, munis and funds that invest in them fell hard. One big muni fund, the Pimco Municipal Income Fund II, for instance, lost 7.5 percent. The fund is still up 6.75 percent so far this year.

While the declines were relatively small given the remarkable gains in these bonds over the last two years, the slump was swift enough to leave investors wondering if this was a brief setback or the start of something worse. For months, some on Wall Street have warned that indebted states and cities might face a crisis akin to the one that brought Greece to its knees.

“I think it’s too early to say that it’s more than a correction,” said Richard A. Ciccarone, the chief research officer of McDonnell Investment Management.

via Municipal Bonds Falter After a Long Winning Streak – NYTimes.com.

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The Growing Popularity of Preferred Stocks

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by on August 13, 2010 at 1:54 am

The Growing Popularity of Preferred Stocks

Appeal Tied to Dividend Priority, Low Correlation to Common Stock

Companies that are seeking to raise money usually have two basic options: They can sell equity shares or they can borrow by issuing bonds. However, an increasing number of companies are turning to a less-used option: issuing preferred stock.

Preferred stock is becoming more popular among certain types of companies, especially banks, because it can be less expensive than issuing equity and it helps keep debt off the balance sheet.1

Investors may be attracted to “preferreds” because they are a potential source of dividend income. Preferreds also enjoy a low correlation with common stock returns, and they offer yields that are typically higher than those available from bonds, short-term debt instruments, and common stock.2

The essential difference between preferred stock and common stock is that preferreds convey additional rights to shareholders, although not all of these additional rights translate into guaranteed advantages.

First in Line for Dividends

Preferred stockholders are first in line when the company decides to issue a dividend. Preferred stocks generally offer a fixed dividend, usually a percentage of earnings, which must be paid before any dividends can be paid to common shareholders. Although the company is not generally required to pay a dividend (and may elect not to offer one when its earnings are below a certain level), some preferred shares are designated as cumulative. This means if the company fails to issue an expected dividend, the obligation to preferred shareholders accumulates and must be satisfied before the company can issue future dividends to common shareholders.

Low Volatility vs. Limited Upside

Preferred stocks tend to be less volatile than their common counterparts, but this is a sword that cuts both ways. If a company enjoys an accomplishment that causes the price of its common stock to rise, the preferred shares may not experience the same appreciation. Yet if the price of the stock falls for some reason, preferred shares are not as likely to experience a corresponding loss of value.

The return and principal value of stocks fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.

Sometimes Convertible, Usually Callable

Preferred stocks that are convertible can be exchanged for a certain number of common shares according to a conversion ratio set by the issuer. A conversion might make sense if the common shares are worth more than the preferred shares for which they can be exchanged. Of course, after a conversion, the preferred shareholder is no longer entitled to preferred dividends.

Keep in mind that most preferreds are callable at the option of a company. This gives the issuer the right to buy back the shares according to terms outlined in the prospectus. Callability is among the reasons why preferred shares are sensitive to interest rates. When interest rates fall, the issuer may be able to reduce costs by calling its preferred shares and issuing new shares that better reflect market conditions.

When interest rates increase, the value of preferred shares will usually decline as a result. If rates fall, outstanding preferred shares typically become more valuable, but they are also subject to an increased call risk. Preferred stocks have evolved in recent years as the demands of investors have changed. Call to learn more about the role that preferred stocks could play in your portfolio.

via Integrated Financial Partners – The Growing Popularity of Preferred Stocks : Newsletter: The Growing Popularity of Preferred Stocks.

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