Main Street – May 14, 2009

Roger Allen, publisher

Roger Allen, publisher

Fixing the glitch    

We are a capitalist country. If a family opens a little shop and invests all their money in it, hoping to make a living, what happens if it fails?  The owners go broke and out of business, right?  That’s the way it’s always been, and still is, around here.

A different system applies to Wall Street and the credit industry. If they go out on a limb hoping to make $millions, and they don’t do it right, we give them a few $billion to stay in business.

Why the difference? It’s because they are “too big to fail,” meaning if they go down they take the rest of us with them. That glitch in capitalism is fixable by adopting the right regulations so Big Business can’t risk the financial health of the whole nation.

Those big tax-funded bonuses for failed executives should light a fire under all of us taxpayers, whatever our politics. We need to demand that Congress reinstate the regulations that will keep this financial meltdown from happening again.

Notice: will tell jokes for food. Call the Squire.

Fixing the flu

Our H1N1 flu pandemic seems to have fizzled. At least, for the time being. But let’s not get too comfortable about it: keep washing your hands and don’t skip your flu shot this fall. Even though the “pandemic” seems below average, we should follow the Boy Scout motto and “Be Prepared.”

This is a Public Service announcement, brought to you FREE, no taxpayer money needed.

Fixing the urge

If you ever get the sudden urge to run around naked, you should sniff some Windex.

     It’ll keep you from streaking.

Free joke

A young woman brings her potential fiancé to meet the parents. After dinner, her mother tells her father to find out about the young man. The father invites him to the study for a drink.

“So what are your plans?” the father asks. “I am a Torah scholar,” says the young man. “A Torah scholar. Hmm,” says the father. “Admirable, but what will you do to provide a nice house for my daughter?” “I will study,” the young man replies, “and God will provide for us.” “And how will you buy her a beautiful engagement ring such as she deserves?” asks the father. “I will concentrate on my studies,” the young man replies, “and God will provide for us.”  “What about children?” asks the father. “How will you support children?” “Don’t worry, sir, God will provide.”

Later the mother asks, “How did it go, Honey?”

“Well,” says the father, “he has no job and no plans, but the good news is he thinks I’m God.”

What?

I called the “Incontinence Hot Line.”  They said, “Can you hold, please?”

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The Tax Attic – May 14, 2009

Tax treatment of loss in Ponzi schemes

Commissioner Douglas Shulman of the Internal Revenue Service recently testified before a senate finance committee. Commissioner Shulman gave testimony concerning the tax treatment of Ponzi schemes and also how the IRS is dealing with off-shore tax avoidance schemes.

There probably aren’t too many people in Rockford who are involved in off-shore tax avoidance schemes. West Michigan, in the past, however, has had a few Ponzi schemes, with the latest being the infamous Pupler Distributing debacle, and there may be one or two out there that we don’t know about yet. These schemes just seem to come out of nowhere.

The IRS recently published Revenue Ruling 2009-09 and Revenue Procedure 2009-20 that clarify the tax treatment of losses in Ponzi schemes, the computation of the loss, and when the loss is deemed to have occurred. These two publications are meant to help taxpayers take advantage of the tax laws in these very difficult situations.

Revenue Ruling 2009-09 states that investors in Ponzi schemes may treat their losses as theft losses. In the past, the IRS has repeatedly ruled that these types of losses are deductible as investment losses. Investment losses are limited to $3,000 per year of capital loss in excess of capital gains. Theft losses are totally deductible in one year. This is a great ruling in favor of the taxpayers.

Revenue Ruling 2009-09 clarifies that Ponzi scheme losses are not subject to the 10 percent of Adjusted Gross Income reduction nor the automatic $100 per incident reduction. The loss is still deductible as an itemized deduction, but the normal reductions in the loss do not apply. This is another great ruling in favor of the taxpayers.

The Revenue Ruling further states that the loss is deductible when the Ponzi loss is discovered. The loss must be reduced by any amount that the taxpayers may have a reasonable chance of recovering through any and all means, such as SIPC insurance or partial recoveries from the courts.

Revenue Ruling 2009-09 further states that taxpayers are allowed a theft loss deduction for the net amount the taxpayers have invested. In addition to the invested amounts, taxpayers will be allowed a loss for any investment income the taxpayers reported on their previous year’s tax returns that was credited to their account. Quite often, this investment income was really fictitious in nature, especially if the taxpayers did not take any distributions.

In Ponzi schemes, the investors are usually credited with higher than normal returns, perhaps even exorbitant returns, to keep the investors from withdrawing their funds. Since 1099s are issued for these returns as interest and dividends earned, the taxpayers must report and pay tax on the amounts on the 1099s. This is true even though the amounts are just made-up figures by the promoter of the scheme. This is another great ruling in favor of the taxpayers.

Revenue Ruling 2009-09 states that the Ponzi scheme loss can create a federal Net Operating Loss (NOL). NOLs can be carried over to future years or carried back to past years. The election to carry back or carry over must be made at the time of filing the return for the year of the loss. For example, a scheme is discovered in 2009. The NOL is calculated and claimed on the 2009 return. When filing that return, the taxpayer makes an election to carry back the NOL to his previous years or elects to carry it forward to future years. This feature allows taxpayers to maximize their own tax savings based on their personal tax situation.

Revenue Procedure 2009-20 provides taxpayers guidance in determining when a theft loss actually occurs. These Ponzi scheme investigations often take place over more than one year. Does the loss actually occur when the promoter is put into jail, when the media breaks the news, or when the assets of the promoter are frozen? The IRS says the loss can be taken when the promoter is charged with committing fraud, embezzlement or a similar crime meeting the definition of theft; when the promoter becomes the subject of a criminal complaint alleging the commission of fraud, embezzlement or a similar crime; when a trustee is appointed to freeze the assets of the promoter; or when the promoter admits guilt of any of the above crimes. If any of these situations apply, the IRS will allow a deemed theft loss to have occurred.

Finally, Revenue Procedure 2009-20 defines the amount a taxpayer is allowed to claim as a theft loss in the year of the loss. Taxpayers are allowed to claim 95 percent of their invested amounts less any amounts expected to be recovered through SIPC insurance or private insurance.

Revenue Ruling 2009-09 and Revenue Procedure 2009-20 are both valuable publications to taxpayers who find themselves in the middle of a Ponzi scheme. The IRS has definitely given some helpful tax treatment to these taxpayers. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent. He owns

Action Tax Service on Northland Drive NE, Rockford.

His e-mail address is jcoon@actiontaxservice.com.

 

 


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A Message for You – May 14, 2009

Up with love, down with fear

by PASTOR JON HUIZENGA

River Rock Church

“Up with love, down with fear” sounds like something my brother might have chanted in bellbottoms and sandals. I myself am not quite old enough to be a ’60s flower child. However, I’m still groovy with that phrase. In fact, I dig it. It is in the Bible. (OK, enough with the ’60s speak).

Here is how God says it in the Bible: “There is no fear in love. But, perfect love drives out fear…” (I John 4:18).

The love the Bible is talking about is the love that originates from God and is demonstrated when God sent his Son for you. He sent his Son, Jesus, to clear away your sin and the damage it causes to your relationship with God and others. If God loves you that much, you can trust that his love surrounds you completely. His love surrounds your good and bad, your past and future. And, it can drive out fear.

I just spent a few days with my aging mom. She is beginning to have some memory issues and that scares her. She is intelligent, sensitive and wise, and she likes being so. She likes to call you by name and to remember your story. So, if she could choose how to age, she’d choose anything but an iffy memory. Please, not that!

That’s a good test case. How does God’s love drive out that fear? Finally, it must be a trust thing. If God is crazy in love with her, she can trust that her future will be in his loving hands, even if it involves choices she would not make herself. If she is secure in God’s love, that security has potential to drive fear out. As trust goes up, fear comes down.

I am not implying that I have that kind of trust. I would prefer that my superior strength could drive out fear. But my mom and I are trying. We are learning to trust his love. It is a love that surprisingly successfully drives out fear.

Want some of that love? If I can help you search for or find it, I’d be happy to. E-mail me at jonhuiz@iserv.net or call me at the office at (616) 874-0400.

 

 


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Rockford Register – May 14, 2009

Thursday, May 14

Rockford Lions Club Meeting-
6 p.m. at the Community Cabin. Program by Rockford Area Community Foundation.

Saturday, May 16

Community Garage Sale-9 a.m. to
3 p.m. at Resurrection Life Church,
3233 Ten Mile Road, RockfordProceeds go to a Christmas outreach program organized by Lean On Me Outreach Center of Rockford. For more infor-mation, e-mail dcroft@rockfordres.org.

Annual Rockford Garden Club Plant Sale-9 a.m. open sale; 11:30 a.m. live auction of remaining plants at the Rotary Pavilion on Squires Street, downtown Rockford. Funds from the sale will go to community enhancement projects and student scholarships. Open to the public. For more information, call Karen Chickering at (616) 874-0186.

Auction-10 a.m. at Courtland-Oakfield United Methodist Church on Myers Lake Ave., Rockford. Food and beverages available at 11 a.m. For more information, call (616) 866-4298 or visit www.coumc.com.

Bottle & Can Drive-10 a.m. to noon, fundraiser for Dream Riders 4-H Club. Members will collect door-to-door in Rockford. To arrange for pick-up or for more information, call Helen at (616) 755-0105. Proceeds will help send 4-H members and their project animals to the Kent County Youth Fair in August.

National Breakfast Festival-

8 a.m. to noon at the foothills of Cannonsburg Ski Lodge, 6800 Cannonsburg Rd., hosted by the Cannonsburg Breakfast Club. Local caterers and chefs will prepare their specialties. Cannonsburg Grist Mill butchers will attempt to break the Guiness World Record for longest breakfast sausage. All proceeds to benefit Kids Food Basket (kidsfoodbasket.org) and other local charities.

Sunday, May 17

Roast Beef Dinner-11:30 a.m. to
2 p.m. at Rockford Veterans of Foreign Wars Post, 4195 Thirteen Mile Road, Rockford. Cost is $8 for adults, and $3.50 for children under age 12. Enjoy 

all-you-can-eat roast beef, potatoes, corn, beans, roll, dessert and beverage, prepared by Chef Fred Chambers. Bring your papers for recycling! “Best dinner in town… Bring the whole family!” Visit www.rockfordvfwpost3946.org.

Spring Concert-3 p.m. at Rockford High School Fine Arts Auditorium, sponsored by Rockford Area Arts Commission, featuring the Concert Band, the Chamber Orchestra, and the Community Choir. Free-will offering will be taken.

“North Meets West” Fine Art Sale-10 a.m. to 4 p.m. at the new American Legion Hall, 330 Rockford Park Dr.  (off Northland Dr.). Outstanding northern Michigan artists are coming to West Michigan for a one-day-only sale,which includes handwoven items, jewelry, baskets, pottery, prints, pillows, baked goods, and more. A portion of all sales will benefit Rockford High School’s After Grad Celebration.

Monday, May 18

Free Food for Needy Families-
5 p.m. in the Mobile Food Pantry at St. 

Stephen Lutheran Church, 6070 

Kuttshill Drive (corner of Northland Drive and Rogue River Rd.; entrance 

on Kuttshill), Rockford, providing free 

food for needy families in the North 

Kent community.

Tuesday, May 19

North Kent Toastmasters Club Meeting-7 p.m. at Prudential Preferred Realtors, 502 Northland Dr., Rockford. Members enhance public speaking and leadership skills through practice and encouragement. Guests welcome. For directions, call Sue at (616) 866-3509 or visit www.nkctm.org.

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Memorial Day Activities in Rockford

May 25, 2009

8:30 a.m.     Opening Flag Raising Ceremony

at the Community Cabin on

N. Monroe Street

9:00 a.m. Parade

from the Community Cabin on

N. Monroe Street, north to Lewis

Street, west one block to North Main

Street, south to the corner in front of

the Corner Bar. A short ceremony at

this stop. The parade will continue to

the Rockford Cemetery. Guest speaker

Michael Young.

9:45 a.m. Rockford Cemetery Ceremony

10:30 a.m. Open House at the Rockford

American Legion

The Congressional Medal of Honor

will be displayed as well as military

equipment on display. Hot dogs and

  drinks furnished free of charge.

11:00 a.m. Wreath Ceremony at Rockford

American Legion

12:00 p.m. Blythefield Cemetery Ceremony

12:30 p.m. Courtland Cemetery Ceremony

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