The following video (Video #4) and other other links will provide you some useful guidance:

 http://www.losangelesbtv.com/BlakeChristian.html

Additional Library of tax and economic videos can be accessed at:

http://www.hcvt.com/Resources-Links/media.html

and

http://www.youtube.com/user/bchristiantax1

The expiration of the Bush Tax Cuts in 2011 will equate to a $138 Billion tax hit in 2011 and $200 Billion in 2012 to wealthy and middle-class U.S. taxpayers.   An extension of the Bush Tax Cuts are predicted to increase GNP by .5% to 1.4%  and the Congressional Budget Office predicts job creation in the 1.3 to 3.5 Million full-time jobs.

Check out the Financial Times’  Op-Ed:

http://www.ft.com/cms/s/0/74fc990a-e79a-11df-8ade-00144feab49a.html

For a full library of my AICPA Tax Articles, click the link below:

http://www.cpa2biz.com/search/results.jsp?mode=content&N=79&Ns=P_UpdatedDate|1

These overlooked assets often come in the form of unclaimed tax refunds associated with various federal and state tax incentive programs.  These programs range from:

- Research & Development Credits

- Federal and State Hiring Credits

-Eco/”Green” Tax Credits

- Sales and Use Tax Credits and Exemptions

- Property Tax Refunds/ Exemptions

Current business owners, or buyer’s of these businesses, can obtain a significant economic advantage by documenting these refunds and working them into there business plan, exit strategy, or factor them into their acquisition strategy.

To read all the details, please click on the following link:

http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2010/CorpTax/M_and_A_Transactions_Enhanced.jsp

For full access to all of my AICPA articles, please click here:

http://www.cpa2biz.com/search/results.jsp?N=79&mode=content

To obtain daily tax and economic updates, please follow me on Twitter @:

www.twitter.com/taxcredits_cpa

www.blakechristian.com

For an interesting analysis by Financial Times’ columnist Clive Cook, please read the following article:

http://www.ft.com/cms/s/0/cffa56fa-9d97-11df-a37c-00144feab49a.html

Read more Clive Cook U.S. tax policy analysis:

http://www.ft.com/cms/s/0/1b4c44d8-a32e-11df-8cf4-00144feabdc0.html

For weekly tax updates, sign up to follow me at:

www.twitter/taxcredits_cpa

Warren Buffet Turns Sour on Muni Bonds.  Thanks to Massive Underfunded Pensions, Dwindling Revenues and Inability to Raise Taxes – State and Local Agencies Are in for a Rough Ride.  Over $14 Billion of Muni Bond Defaults in 2008 and 2009.  This may be just the tip of the iceberg.

http://www.moneynews.com/StreetTalk/warren-Buffett-Municipal-Debt/2010/06/03/id/360924?s=al&promo_code=A01D-1

U.S. Unemployment Continues to Challenge Recovery.  Census Workers Cannot Cure the Problem (WSJ).

http://online.wsj.com/article/SB10001424052748704764404575286263535019280.html?mod=djemalertNEWS

Long-Term U.S. Problems Continue (The Economist) -

http://finance.yahoo.com/tech-ticker/%22longer-term-issues-for-america-are-really-really-serious%22-bishop-says-498808.html?tickers=%5Edji,%5Egspc,tlt,tbt,euo,man&sec=topStories&pos=9&asset=&ccode=

•  The Senate grilling of Goldman Sachs’ Executives (WSJ):

WSJ.com – Goldman Sachs Senate Hearings – Bruised/ Defiant. Do the Senators Really Understand What Market Makers Do? http://on.wsj.com/95hr1G

• Proposals to Revamp the U.S. Financial System (FT):

Martin Wolf (Financial Times) Evaluates U.S. Financial Reform Options http://www.ft.com/cms/s/0/cca02e40-522d-11df-8b09-00144feab49a.html

• The Press Spin to Put Lipstick on the Unemployment Pig: 

347 Regions Experience Higher Unemployment.But Press Spins the News as Positive   http://bit.ly/bXPwD6

• Going Green – The Wind Solution May Just Be Hot Air (WSJ):

WSJ.com – “Power Hungry” by Robert Bryce – The Wrong Way To Get to Green http://on.wsj.com/8ZIW2r

For all my Twitter Updates, please follow me at:

http://twitter.com/taxcredits_CPA

Read the Business Week Coverage of the AT&T Impact:

http://www.businessweek.com/news/2010-03-26/at-t-to-take-1-billion-charge-on-health-care-reform-update1-.html

Read the Marketwatch Summary on the full Industry Impact:

http://www.marketwatch.com/story/deere-says-health-reform-will-hit-its-bottom-line-2010-03-25?dist=afterbell

Obama Struggles in Polls and On the Public Relations Trail:

Read the Fox News transcript of President Obama’s challenges in selling the healthcare reform to skeptical Americans:

http://www.foxnews.com/story/0,2933,590007,00.html

Get the REAL facts from Accounting Web and the U.S. Chamber about how the healthcare bill will impact you and your business:

http://www.accountingweb.com/topic/tax/how-health-care-bill-will-impact-individuals-businesses

http://www.uschambersmallbusinessnation.com/take-action/myths-vs-facts—-its-time-to-get-the-facts-on-health-care-reform-straight

Senate Budget Report Provides Interesting Insights Into The Senate Bill:

http://budget.senate.gov/republican/pressarchive/2009/2009-11-19HealthCareFactSheet.pdf

Read how your congressman voted:

http://clerk.house.gov/evs/2009/roll887.xml

Other recent links:

http://www.foxbusiness.com/story/markets/industries/health-care/resend-house-approves-historic-overhaul-health-care/

U.S. Chamber Web Site: 

http://www.uschamber.com/chambers/healthcare.htm

http://budget.senate.gov/republican/pressarchive/2009/2009-11-19HealthCareFactSheet.pdf

Read how your congressman voted:

http://clerk.house.gov/evs/2009/roll887.xml

Other recent links:

http://www.foxbusiness.com/story/markets/industries/health-care/resend-house-approves-historic-overhaul-health-care/

U.S. Chamber Web Site: 

http://www.uschamber.com/chambers/healthcare.htm

Now that the House has narrowly passed (220-211, including a single Republican vote from Cao-LA in support) the 2,400 page  Senate version of the Healthcare Bill (which was passed by the Senate on Christmas Eve last year), it is a good time to review how the Senate version is projected to impact businesses, individuals and the U.S. Government.

In addition to income and payroll tax increases, and penalties,  of nearly half a trillion dollars

While the House  also narrowly passed (220-211) their Reconcilaition bill late this evening, the Senate will very likely not agree with all of the House’s suggested changes to the Senate Bill.   The Senate will take up that task later this week.

Read how business owners (but not union shops) will be penalized with a 40% tax on “high cost”/ “Cadillac” medical insurance policies.  File that provision under:  No Good Deed Goes Unpunished.

Also read how taxpayers making more than $200,000 will be be “rewarded” with a .9% addition Hospitalization Insurance (HI) on wages and self-employment income.

Flexible Spending Accounts (FSA) will now be subject to limitations on tax-free contributions and spending limits.  In addition, deductibility of medical costs will now rise to 10% of Adjusted Gross Income from the current 7.5% thresshold.

D&T Tax Provision Summary :

http://www.deloitte.com/view/en_US/us/Services/tax/112a52f1b5277210VgnVCM100000ba42f00aRCRD.htm?id=email

Reuters’ summary timeline of the healthcare roll-out:

http://www.reuters.com/article/idUSN1914020220100322

Hold onto your wallet.

“Should I take a lump-sum or installments?”

Take the installments!  

Despite everyone telling you to take the lump-sum.  Your heirs will receive the balance if you die before collecting all the payments and at least 65% of your lump-sum amount will be gone within the first year due to discounting and taxes.

A lump-sum winning will typically get reduced by 45% or more for the time value of money (acceleration by 2o+ years) and then the net amount is further reduced by approximately 35% or more for taxes — leaving a net amount of 35% or less of the gross winnings.

Installment collections will only generally only be subjected to the federal tax hit (depending on state rules) and the taxes are paid over the collection period.  In effect, each payment includes a layer of interest earning and once the amounts are received, the recipient is free to make their own investment decision on those funds.

For jackpot allocations under $10 million, a lump-sum might be considered, but in the vast majority of larger prize winnings, installment payments offer significant benefits, including:

 - greater income, gift and estate tax planning opportunities,

  - significantly reduced  income, gift and estate tax rates,

  - increased budgeting and retention of winnings,

 - reduced probability of family, friends and scammers accessing your winnings.

Following is a summary of the key points to consider:

Up until a few years ago, California Lotto players were forced to make that election at the time they bought their Lotto ticket – which was all the more difficult since the player had no idea of what specific prize they might win (e.g. sole winner, vs. shared prize, etc.).  Now both SuperLotto and MegaMillions winners can make the election within 60 days of winning – so there is time to evaluate options.  The default payout if no election is made is a 26 year payout.

Installment payouts are made annually over a 26 year period beginning at 2.5% of the gross Lotto prize and then increasing to 5.1% in the 26^th year.   And despite general confusion on this issue, if you die before receiving your entire payout, your heirs are entitled to receive it – unless the Sacramento legislators decide they might be more worthy recipients.

For a number of economic and tax reasons, my advice for the vast majority of taxpayers winning more than $10 million dollars is to take the winnings in installments.

There are a couple of negatives to installments:

1) If interest rates and/ or tax rates jump up, having your pay-out locked into an annuity format may work against you,

2) If the winner (and their spouse if married) pass away during the first few years of the payout, a large estate tax obligation may materialize before funds are accumulated.  Life insurance and loans may be structured to mitigate this issue.

The first advantage of an installment payout is saving yourself from the grief of  the double-whammy of:

-           A “present value” discount from the state of 45% to 55% off the jackpot winnings to take into account the fact that the state is accelerating the payments for up to 26 years.  Therefore a $100 million jackpot becomes a much less exiting  $50 million (before taxes). 

-          Some good news – the state does not tax the Lotto winnings (but will tax interest and dividends earned on your winnings). However, the IRS will withhold at least 25% in taxes (applied after the present value discount)  before you get your net check.  Now the $100 million is sitting at approximately $37.5 million ($50M x 75% after-tax).  And things will get worse when you end up paying another 10% ($5 million in this case) or more in federal taxes when you file your return for the year you won – since the maximum federal rate is 35% and the IRS may have only withheld 25%.

1. Since the vast majority of winners end up  blowing most or all of the money for a variety of reasons, electing installment payments forces discipline for the winner to preserve their winnings and not go out on a spending (and/or giving) binge  – although even an installment winner can accumulate large mortgages and other debt.

2. Another advantage of installments  is effectively locking into a guaranteed rate of return on the deferred winnings.  The specific rate of earnings is dependent upon what the bond market yields are at the time the state purchases the underlying bonds to support the payout.  Therefore, current investment yields will be less than a few years ago.  The downside of locking into an installment payout is that if rates rise or you believe you can consistently make better investment decisions, a lump-sum payout will give you that option – but be forewarned your investable to secure future investment earnings will be a fraction of what it is by leaving the winnings in the installment form.

3. If the above reasons are not enough, then another huge advantage of the installment option is the ability to apply long-term tax planning to your new-found wealth.  For example, if you receive a net $50 million in 2010, there is not much you can do to shelter such a large amount of money in a single year.  However, if you receive $2.5 Million to $5.1 million per year, which would be the case for a $100 million winner, there are various legitimate ways to mitigate the annual tax bite by offsetting the annual payments with retirement plan contributions, possible operating losses from active businesses the winner may be involved in, as well as mortgage interest, property taxes and charitable contributions.  While full sheltering will seldom be possible on large winnings, a material reduction in overall tax liability is often possible.  Even with likely rising tax rates, having time to implement these strategies is well worth the exposure to (future) higher tax rates.

 4. Many families and some groups of employees have a history of playing the Lotto under a verbal (or in rare cases written) agreements to split winnings amongst participating members.   The conclusion as to whether there was a pre-arranged “partnership” to share the winnings is very fact specific, but the courts routinely uphold these verbal arrangements to split winnings.  This can offer very significant income, gift and estate tax advantages within a family unit – but can also raise huge issues within the family or co-worker ranks.  Depending on the size of the group and the amount of the specific Lotto prize awarded, a determination can be made whether the installment method or lump-sum makes the most sense for the group or specific winners.  This can get complex and it is unclear which specific fact patterns the Lottery Commission will honor and when “master” elections and “sub-elections” can be made by the winners.

 5. There are numerous issues (including pre- and post- win residency status, estate and gift planning, verbal contracts, etc.) which arise for these lucky winners and before too many promises and plans are made, before claiming the prize and making the lump-sum or installment election the winners should contact a qualified attorney, investment adviser and tax adviser and meet with them as a group to insure that all the options  and complexities are fully evaluated.

For daily tax and financial updates, please follow me @:  www.twitter.com/taxcredits_cpa

http://www.calwatchdog.com/2010/02/23/new-pensions-push-state-to-insolvency/

Katy Grimes shines a light on the chasm between public and private sector vacation and sick day payouts which are coming to light as state employees head for the exits.

http://www.calwatchdog.com/2010/03/02/public-versus-private-different-sets-of-rules/

For an excellent website covering these public pension issues, bookmark the following site:

http://www.pensiontsunami.com/

Related Twitter:

http://twitter.com/pensiontsunami

Supervisor Moorlach’s webpage:

http://egov.ocgov.com/ocgov/Government/Elected%20Officials/Supervisor%20John%20M.W.%20Moorlach%20-%20Second%20District/Biography

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/05/AR2010030502974.html?hpid%3Dtopnews

For an eye-opening look at the U.S. and world debt landscape, below are two very useful interactive links to evaluate worldwide and U.S. public debt loads now and in the past.

http://buttonwood.economist.com/content/gdc

http://www.usgovernmentspending.com/federal_debt_chart.html

Current record levels do not bode well for interest rates and financial stability.

California’s $20 billion budget deficit and long history of high taxes, unfunded pension obligations and massive entitlement plans has creditors worried.  Recent debt downgrades and political gridlock will likely drive up future borrowing costs:

http://www.huffingtonpost.com/2010/03/01/californias-debt-now-risk_n_481058.html

http://www.treasurer.ca.gov/

To save some of your hard-earned taxes, check out tax planning strategies at: www.blakechristian.com

Also, for daily tax and financial updates, please follow me: http://twitter.com/taxcredits_CPA