The Exuberant Accountant - Scott Heintzelman

One of my goals is to educate my clients and friends as to what is really happening in the economy and what steps they should take in order to place themselves and their organizations in the best position for success.  In that light, where are we?  We are nearing the bottom of this recession, but still have very high unemployment, a government with huge debt, falling commercial real estate prices, a stock market on a speedy recovery from March lows, consumers making a shift in value, and a dollar that is down 20 percent since March.

 People continue to ask me if I believe we will fall into a depression and/or another massive economic meltdown…I think that scenario is unlikely (however, if our government does not slow down spending - all bets are off).  It is why I am writing this post to give some positive insights and hope for the future. All is not lost. 

First we had Cash for Clunkers, then we had More Cash for Clunkers, and now we may have Cash for Caulkers! Yesterday, President Obama proposed a new program that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy and reduce energy consumption.  The program is expected to provide homeowners with up to $12,000 in rebates and is part of a larger spending plan that includes incentives for small businesses, renewable energy, and infrastructure.

The plan will create a new program where private contractors conduct home energy audits, buy the necessary gear, and then install it. Large items such as air conditioners, heating systems, washing machines, refrigerators, windows, and insulation would likely be covered. Consumers likely would be eligible for a 50% rebate on both the price of the equipment and the installation, up to $12,000 (meaning you spend $24,000 and get a $12,000 rebate).

To date, there has been no indication if an income or AGI limitation will apply.  This program is expected to cost taxpayers about $10 billion.  But faced with a huge deficit, does our government have this money to spend? There is no doubt that if this $10 billion program is put in place, people will spend money and jobs will be created.  It also should reduce the US energy consumption.  But who pays for this and is it the best use of our tax dollars? What is the Return on Investment (ROI) and how many jobs will be created?  I would love to hear what you think on this.  Please contact me and let me know your thoughts.

This past week the House lawmakers approved the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Bill of 2009.  The legislation would permanently extend the current exemption for estates up to $3.5 million per individual and $7 million for married couples and set a maximum rate of 45 percent on estates above this threshold.

Lawmakers are suggesting that the bill would provide certainty for businesses. In addition, the measure would repeal the enactment of carryover basis rules that would have required many heirs to pay additional taxes on built-in gains of property inherited starting in 2010. This bill simply continues present law at current rates and exemptions.

If you remember way back in 2001 as part of EGTRRA (Economic Growth and Tax Relief Reconciliation Act), the federal estate tax was set to repeal in 2010 (meaning if you died in 2010, your estate would pay no tax).  At that time all accountants and attorneys chuckled and said, “When pigs fly” will that ever happen. Well, with only a few weeks to spare, the house is closing that repeal.

Most experts believe this is not the last time we will hear about the estate tax.  Many believe that congress will review this again in 2010.  Do stay tuned.  With this change, now is an excellent time to review your estate plan, as change is coming.

Today the IRS published their standard mileage rates for 2010. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The 2010 rates are:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The business mileage rate is down $.05 from 2009, the medical and moving rate is down $.075, and the charitable mileage rate has stayed the same.

The IRS states that “The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.”

On the business side, take the next few weeks to update your internal policies for items affected by these mileage rates i.e.:

·     Travel billed to customers

·     Reimbursement to employees

·     Travel amounts charged to you by vendors