Steven A. Branson, Esq. - Financial Strategies

For Gift Tax Purposes in years 2006, 2007 and 2008 the Unified Credit is $345,800, the Applicable Exclusion Amount is $1,000,000. For Estate Tax Purposes in years 2006, 2007 and 2008 the Unified Credit is $780,800 and the Applicable Exclusion Amount is $2,000,000.

Going green – as we advise on socially conscious funds, investing “green” may not be the best solution; investing well and contributing charitably or politically to “green” causes may have a better impact on both your personal wealth and the environment

That being said, the attention surrounding Al Gore’s documentary, “An Inconvenient Truth,” and his new Nobel Prize, has resulted in a growing number of mutual funds and ETFs claiming to have green credentials. However, identifying the strongest investment options among this growing fund and ETF niche is a challenge as you may be surprised that not all green funds fit your needs.

There are some funds, and some stocks, that do well and others that do not. We are reviewing these to see what works well for investing.

A related comment comes from some mortgage work we do, as seen on the Marblehead Savings Bank webpage:

If all U.S. households received and paid their bills electronically, the country would:

Save 16.5 million trees each year, or the amount of lumber needed for 216,054 typical single family homes;
Reduce toxic air pollution by 3.9 billion tons of carbon dioxide equivalents, akin to taking 355,015 cars off the road; and
Reduce by 1.6 billion pounds the solid waste generated in a year, equal to 56,000 fully loaded garbage trucks.

At our firm, we are doing what we can: filing tax returns electronically and saving files as PDFs rather than printing them.

[See also our comments posted later.]

As with each year, you will want to push income into 2008 while using the remainder of 2007 to make charitable contributions, pay home mortgages, and pay miscellaneous deductions, such as investment fees or a retainer for legal services (i.e., the deduction that is allowed in 2007 saves total taxes between 2007 and 2008). To begin your planning, you will want (a) to coordinate tax planning with the review of your investments for tax loss harvesting or repositioning (see below) and (b) to review the alternative minimum tax (“AMT” – See below). When you pay the AMT, you lose the value of your deductions. Therefore, you need to reverse the general rule from above. To find out what steps to take, you need to create a projection for both 2007 and 2008 to minimize total taxes paid. Here are actions you should consider now to put income and deductions in the proper year for optimal impact:

• Take income out and push deductions into the year subject to the highest tax rate.
• To move income, defer salary and bonus not yet earned or delay collection of self-employed receivables. You can also buy treasuries or CDs to shift interest income into 2008.
• To move deductions, pay the balance of your state taxes or pay sales taxes on car purchases, pre-pay mortgage interest and real estate taxes, make charitable donations, pay job-related moving expenses or other non-reimbursed business expenses, and pay alimony by December 31. Note that gifts of autos to charities are limited to the amount for which the car was sold.

Come back for more updates.