• New 10% Tax Bracket
• New Standard Deductions
• Increased Personal Exemption
• More New Stuff
• Education IRAs – Now Called Coverdell Education Savings
  Accounts
• Section 529 Plans
• Deduction for Student Loan Interest
• Deduction for Education Expenses
• Pension Changes
• New Depreciation Options
• Tax Strategies for Today's Market
• Don't Sell for Tax Only Considerations
• Down Market IRA Strategies
• Gift and Estate Tax Ideas for a Down Market
• Other Down Market Strategies

• Joint = $7,850 (was $7,600)
• Single = $4,700 (was $4,550)
• Head of Household = $6,900 (was $6,650)
• Extra For Over 65 Years Old = $900 Each (Married) or $1,150 Single

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INCREASED PERSONAL EXEMPTION

• $3,000 – Up From $2,900

Education IRAs – Now Called Coverdell Education Savings
Accounts

• Up To $2,000 Per Year Per Beneficiary. Formerly Only $500
• Phaseout Ranges For Contributors
  • $190,000 - $220,000 Married Filing Joint
  • $95,000 - $110,000 All Others
• Higher Education Tuition, Fees, Books, Supplies, Equipment ( Including Computers, Internet Access for Student and His or Her Family), Room & Board
• Elementary & Secondary Schools OK
• Private & Religious Schools OK
• Contributions Can Be Made Up Until April 15
• Can Also Have a 529 Plan For The Same Student

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• Earnings Are Tax Free If Used For Education
• Taxable And 10% Penalty If Not Used For Education (Some Exceptions)
• May Buy From Any State Program
• Can “Bunch” 5 Years Worth Of Gifts

• Up To $2,500 Per Year Is Deductible
• Phaseout Range Is $50,000 - $65,000 Single – Was $40,000 - $55,000
• Phaseout Range Is $100,000 - $130,000 Married Joint – Was $60,000 - $75,000
• No More 60 Month Rule

• $3,000 Maximum
• AGI Limit Is $130,000 Married Joint & $65,000 Single
  

• $3,000 per year – up from $2,000
• $500 more for people over age 50

• $4,000 per year
• $500 more for people over age 50

• $4,000 per year
• $1,000 more for people over age 50

• $5,000 per year
• $1,000 more for people over age 50

• 2002 = $11,000 - $12,000 if over 50
• 2003 = $12,000 - $14,000 if over 50
• 2004 = $13,000 - $16,000 if over 50
• 2005 = $14,000 - $18,000 if over 50
• 2006 = $15,000 - $20,000 if over 50

• No Annual Paperwork
• No Need for 2 Plans
• Maximum Contribution is $40,000 (was $35,000)
• Loans to Owner-Employees Permitted

• Purchased Between 9/11/01 And 9/11/04
• In Addition To $24,000 Section 179 Writeoff
• Must Be Original Use Of Property – Not Used

Better Auto Depreciation – First Year:

• Maximum Increased From $3,060 To $7,660
• Must Be Used More Than 50% For Business To Qualify
  

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Non IRA Assets:

• Use Losses To Offset Other Gains
  • Stocks Held Many Years
  • Rental Homes
  • Personal Residence
  • $3,000 Against Any Income
  • Capital Gain Dividends
  • Call Installment Sales If Possible
  • Sell Gain Positions and Begin New 5 Year Holding Period To Take Advantage Of 18% Rate – Assets Must Have Been Purchased After 12/31/2001 To Qualify For 18% Rate.
    

• No Loss Allowed On Sale If Same Or Substantially Identical Security Is Purchased Within 30 Days Before Or After The Sale

• FIFO Is The Default Method
• Specific Identification Methods That Have Held Up In Court:
  • Deliver Certificates
  • Specify Which Shares To Sell To The Broker & Get Written Confirmation From Broker
  • Orders To Broker To Sell Most Expensive Shares
  • Orders To Sell Shares That Were Purchased On Certain Dates
  • Orders To Sell Shares That Were Purchased At A Particular Price
  • Standing Written Orders – Sell Shares With Highest Cost First Or With Longest Holding Period First.

• Must Have AGI Under $100,000
• Cannot Be Married Filing Separate (Unless Living Apart All Year)

• Figured On Dec 31 Value
• Minimum Required Distribution Is Figured On All IRAs, But May Be Actually Withdrawn From Any Combination Of Accounts

• Use $11,000 Annual Gift Exclusion In Depressed Stock Instead Of Cash
• Transfer a Large Number Of Shares
• Transfer To Children Who Can Sell Later At A Lower Tax Rate Than Yours
• Remove Future Growth From Your Estate
  (Be Aware Of Basis Issues First!)
  
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If Moving To A Cash Position:

• Consider Tax Free Investments Over CDs Or US Treasury Obligations
• Consider Using Annuities For Tax Shelter

If You Are Going To Settle For A Lower Rate Of Return, The Tax Implications Become Very Important!