39 posts tagged “government”

Retire

Mainstream media continues to state that traditional IRAs are tax deferred until retirement. Well, that depends. If your IRA owns mortgage-leveraged real estate, you owe UBIT.  If your IRA or 401(k) owns an active business structured as a pass through entity (such as an LLC or partnership), you owe UBIT.  UBIT, or Unrelated Business Income Tax, applies to tax exempt organizations including retirement plans. To pay UBIT, Form 990-T must be filed with the IRS.

Gold is a very popular investment these days. Is it possibble to own collectibles such as art, coins, and  physical gold inside an IRA? No. When an IRA purchases a collectible, the amount used to make the purchase is treated as distribution to the owner. It is included in the owner's gross income, and if the owner is under age 59½ and does not qualify for one of the exceptions, a 10% early distribution penalty is imposed on top of the income taxes.

Here is part 1

Coast Guard officials in Duluth Minnesota say they’re planning a major enforcement effort on federally-navigable waters throughout the border country, and the fallout to local outfitters, fishing guides and others who carry passengers could be significant.

Some guides are already worried they could be among those operators forced out of business. Terry Sjoberg, who operates Ace Guide Service, and gets around with the assistance of a cane, worries whether he could pass the required physical or whether he’s mobile enough for the mandatory CPR training. Those requirements are just two on a laundry list of steps that operators will need to take to obtain a federal license and identification card. All boat operators will now have to pass a training course, a background check, and a drug screening. They also must be enrolled in a random drug and alcohol testing program.

Completing the list won’t come cheaply. A Coast Guard document indicates the required training course will cost $750, while the obtaining a federally-issued identification card runs $132.50. In addition, operators will also need to pay for drug testing, physicals, and CPR and first aid training. All together, it’s likely to run $1,200 to $1,300 said Sjoberg,

While the expense and hassle of compliance could prompt some guides or other boat operators to try to skirt the rules, that could prove very costly. If an operator is found operating without a license, or outside the scope of their license, the fine could be as much $27,500. Failure to be enrolled in a required drug testing program is subject to fines up to $5,500.

The Coast Guard has investigative powers that could thwart any efforts to get around the rules. For example, the Coast Guard can obtain an individual’s tax records to see if they reported income from guiding. It’s such powers that concern guides like Sjoberg, who worries he could be investigated if he can’t pass a physical to get licensed. “Will they be looking through my tax returns, or harassing me on the lake, to see if I’m still guiding?” he asked.

Recession-bloggers

A new comprehensive economic survey shows that the recession has plunged 2.6 million more Americans into poverty, wiped out the household income gains of an entire decade and pushed the number of people without health insurance up to 46.3 million.

The nation's poverty rate rose to 13.2 percent in 2008, up from 12.5 percent in 2007, the Census Bureau data showed. That was the first significant increase since 2004 and the highest level in 11 years.

In a measure of the breadth of the decline, median household income -- the amount earned by a family at the exact center of the income scale -- sank 3.6 percent in 2008: from $52,163 to $50,303. In 1998, at the height of the tech stock boom, the comparable income was $51,295. All the figures were adjusted for inflation.

People in their prime earning years, between ages 45 and 54, took the biggest hit during the past two years. Their median income of $64,349 was down almost $5,000, or 7 percent. Everyone younger, plus those 55 to 64, lost 2 percent.

We all have seen the real estate bubble unfold because banks, brokers, buyers, regulators, and Wall Street all looked a blind eye. Less conspicuous, but just as damaging, was the greatest financial crime in history. Today I will attempt to document how governments, regulators, brokerage firms, and foreign banks are crushing the retail investor.

• Deutsche Bank is liquidating the PowerShares DB Crude Oil Double Long ETN (DXO). Deutsche Bank said: “Limitations imposed by the exchange on which Deutsche Bank manages the exposure of the Notes have resulted in a “regulatory event” as defined in the terms of the Notes, which has caused Deutsche Bank to redeem the Notes.”
• In an effort to stem the effect that the seemingly inevitable regulation will have on futures-based commodity funds, multiple ETF issuers have halted share creation. Thus, these securities trade at huge premiums to the underlying commodity (market distortions).
• FINRA announced that it would be increasing margin requirements for leveraged ETFs as of Dec. 1. These changes will require margin for leveraged funds to be  "commensurate" with the degree to which they are leveraged. FINRA's warning set off a domino effect as firms like Edward Jones, Ameriprise, and UBS ceased selling leveraged funds to investors.
• Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the USA. U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities have put Switzerland’s traditional bank secrecy at risk.
• Canada's Royalty Trusts are similar to U.S. master limited partnerships in that they generally pay out a substantial portion of their cash flow in the form of monthly distributions. The Canadian government wants a piece of that. In 2001, in what has come to be known as the "Halloween Surprise" for its announcement on October 31st, 2006, these trusts will have to change their structure and their payouts or face huge tax consequences.

• Lehman Brothers filed for bankruptcy
• Bank of America agrees to buy Merrill Lynch
• The Federal Reserve keeps rates the same
  
• Oil drops below $100 a barrel
• The Dow falls 498.86 points

Leveraged funds such as Direxion Daily Financial Bull 3X(FAS Quote) and Daily Financial Bear 3X(FAZ Quote) as well as ProShares Ultra Short Real Estate(SRS Quote) have also sparked the ire of regulators, skeptical of sales practices. A number of firms, including UBS and Ameriprise, have halted the sales of such products to their clients. The scrutiny of these funds has been led by the Financial Industry Regulatory Authority (FINRA).

Just more nanny government and "prudent man rule" garbage. Every investor should have a good understanding of what they are buying and regulators are supposed to enforce existing rules.

Also called the "fat tax", this tax has been introduced in New York and California. Now President Obama is looking fund a portion of the health care plan with it.

Please understand that I'm no fan of soft drinks ever since I learned they contain benzene! While it may be popular to tax sugary snacks like soda pop, ultimately it will hurt those who can least afford it.

Follow this logic. The government will not stop at soda, it will impose taxes on salty snacks, greasy fast food, and so on. Now the folks who want to live my life for me would say "This is all to make you more healthy". But what about the folks that have limited access to healthy alternatives. The ones who live in  food deserts? A food desert is a district with little or no access to foods needed to maintain a healthy diet, but often served by plenty of fast food restaurants. Until you solve this problem first, only the poor (the ones without adequate heath care) will suffer.

Chi_food_deserts