Friday Financial Five – December 6th, 2013
Friday, December 06, 2013
GDP revision and jobless claims
Gross Domestic Product was revised from 2.8 percent to an annualized rate of 3.6 percent for the third quarter. The revision was heavily influenced by an increase in business inventories. GDP isn’t expected to sustain this level as businesses curtail spending. The unemployment situation is caught in continued stagnation despite a recent reduction in jobless claims. Entry level positions are getting eliminated and worker hours are getting reduced. This is not only harming individuals, it’s affecting small businesses as consumer spending will continue to lag.
Year-end tax strategies
With the holidays coming, now is the time to put last minute tax strategies into action before it’s too late. For investors, that means reviewing your taxable portfolio to offset winners with losers and reduce capital gains. Consider selling long term bond funds or commodity funds that may have lost this year. Business owners should consider capital expenditures that will qualify for the 179 tax deduction, such as certain SUVs, trucks and vans. For high income earners, it’s time to project 2013’s AGI being mindful of the possible Medicare high-earner tax, the possible investment tax of 3.8% and any itemized deduction limitations.
Bitcoin a “bubble” according to Greenspan
Alan Greenspan opined that Bitcoin pricing is a bubble, due to a lack of intrinsic value. There’s a certain irony as Greenspan has, for the most part, disagreed with the assertions that his easy money policy of the early 2000’s contributed to the housing bubble that burst shortly after his tenure with the Fed ended. His position on Bitcoins would seem to reinforce the legitimacy of the Federal Reserve. Current Fed chairman Ben Bernanke has stated there is no plan for the Federal Reserve to regulate the virtual currency.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTMedicare open enrollment period ends this week
Most retirees don’t pay a premium for Medicare Part A, which covers inpatient hospital stays. Part B, which covers outpatient services, comes with a premium. With open enrollment ending this week, there is a rare bit of good news for retirees. Next year, the Part B premium will remain $104.90 and the annual deductible will remain constant at $147. For those turning 65 who are newly eligible for Medicare, the initial enrollment period may extend past the deadline of December 7th (Larry Bird’s birthday).
The “millionaire’s tax break” coming under scrutiny
The IRS routinely revisits the voluminous tax code for possible revenue streams in the form of unnecessary deductions. Those thinking the ultra wealthy need to pay more will be happy to know that an oldie but goodie tax break is under the microscope, according to Bloomberg. Currently, some real estate owners can take a deduction for a “conservation easement”. The owners keep the land, but donate the value of a perpetual promise to leave the property alone, and then take a deduction for it. It doesn’t sound much like a deduction that benefits the public good, and it overwhelmingly benefits the very wealthy.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].
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