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Medicare Tax Coming

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Interesting Infographic on the Housing Recovery

 

 

 

 

Compliance Checklist

If you are a mortgage lender, Mortgage Success Source has a great 2 page resource you can use to see how compliant you are.

Download Mortgage Success Source Compliance Evaluation Checklist:

Homeownership Rates Declining for the Young

I bought my first home right out of college, it was a great investment and provided equity for my next property.

Overall - the home ownership rates are declining and household formations are starting later in life.

The projections bring into question how will we educate young families on when buying versus renting make sense for them?        

CBS Talk Radio with Joe Arroyo

Had a chance to be on CBS Talk Radio today with Joe Arroyo.  Joe's part of the Dave Ramsey network, and a great example of loan officers that are transitioning to lead clients in understanding the impact of their borrowing decisions.

Part 1:    

Part 2:

The New Landscape for Business Startups and Their Investors

You may have heard that the Jumpstart Our Business Startups (JOBS) Act, which was signed into law by President Obama on April 5, 2012, makes it easier for companies to attract investors, particularly smaller companies. But just what does that mean to you if you're trying to grow your small business? And if you're contemplating making an investment in an early-stage business, what should you be aware of? Though some of the provisions will be subject to regulations yet to be developed, here are the general provisions of the Act. Looser reporting/registration requirements for companies Companies with at least $10 million in assets and fewer than 500 "unaccredited" shareholders (not including employees who hold shares) or 2,000 total shareholders generally will no longer be required to register with the Securities and Exchange Commission (SEC). By exempting smaller companies from registration requirements, the Act enables them to bypass many SEC regulations that are designed to increase transparency and protect investors but that also are demanding and expensive for smaller companies. The Act also enables companies to offer up to $50 million worth of stock annually using streamlined registration procedures; the previous limit required any offering over $5 million a year to file a full federal registration. The Act also permits companies to advertise unregistered private placements to the general public without having to meet the requirements for a public offering; that would represent a major change for a hedge fund or private equity firm in managing its portfolio of companies. However, purchasers of those offerings must be either accredited investors--an individual or couple with at least $1 million in net worth, not counting their primary residence--or qualified institutional buyers. In addition, the Act creates a new category of securities issuer--the "emerging growth company" or EGC--and exempts it from many of the regulatory and reporting requirements that apply to more established companies, such as those imposed by Sarbanes-Oxley. The Act defines an emerging growth company as one that went public after December 8, 2011, and has less than $1 billion in annual gross revenues. An EGC will be allowed to follow a streamlined IPO process, and will generally have up to five years to comply fully with certain accounting and disclosure requirements that apply to other public companies. An emerging growth company that qualifies under the Act needs to supply only two years of audited financial statements instead of three before going public. It also may ask the SEC for a confidential review of its registration materials before its IPO; however, those materials must be publicly filed at least 21 days before the company launches its road show for potential investors. Also, representatives of an emerging growth company can test the waters with potential investors prior to the IPO as long as they are either qualified institutional investors or accredited investors. Broker-dealers may also distribute research reports in connection with an EGC's IPO, and securities analysts may be included in a broker-dealer's discussions with a company's management. Crowdfunding: a new option for capital Companies that need to raise capital but are not ready to go public will be able to raise up to $1 million a year through what's known as "crowdfunding," a term often applied to the concept of raising money from a large number of people, typically using some sort of online mechanism to channel the collective donations or investments. Companies that choose to use crowdfunding will issue restricted securities through either a broker or an online portal registered with the SEC. The financial statements to be filed with the SEC range in complexity depending on the level of a business's offerings during the previous 12 months. Those offering $100,000 or less may file income tax returns and financial statements certified by the principal executive officer. Those with $100,001 to $500,000 must submit statements reviewed by an independent public accountant, and those with more than $500,000 will need audited financial statements. Investing: factors to think about Any advertising for a crowdfunding offering, as well as the offering itself, must be done through a registered portal. However, the funding portal is strictly an intermediary; it may not offer investment advice or recommendations, hold or manage investors' funds, pay its staff commissions on the sale of individual securities on the portal, or solicit sales for any of its listed securities. In addition to the financial information outlined above, a company seeking crowdfunding must make available to prospective investors a business plan along with a description of the corporate structure and the risks involved in the venture. Make sure you get all the information you need to come to a decision. The crowdfunding option isn't authorized for ventures that invest only in other businesses, such as private equity funds or venture capital funds, so beware of any that attempt to use crowdfunding. The amount you can invest in a single crowdfunded company is limited. For investors with either a net worth or annual income of less than $100,000, the limit is either $2,000 or 5% of their annual income or net worth, whichever is greater. Individuals with an annual income or net worth of $100,000 or more can invest as much as 10% of their income or net worth, up to $100,000. Also, there are restrictions on your ability to transfer those investments until you have owned them at least one year. Some regulators fear that crowdfunding and lifting the ban on advertising of private placements could mean an increase in investment fraud schemes and/or an increase in solicitations for investment products you may or may not understand. Before you make a decision about such an investment, make sure it is thoroughly researched, either by you or your financial professional, and that you understand the potential for loss, including the possible loss of your entire investment. The Stop Trading on Congressional Knowledge (STOCK) Act Another recent piece of legislation, the STOCK Act, prohibits federal government officials from profiting from insider knowledge they obtain as a result of their positions. The Act applies to members of Congress; executive branch employees; judicial officers, including justices and certain employees of the Supreme Court, federal courts of appeals, and district courts. It specifically subjects them to all securities laws regarding insider trading, and requires that certain federal officials file a report within 30 to 45 days of a securities transaction unless the security is a widely held, publicly traded, diversified investment fund. It also prohibits participation in IPOs except through offers made to the general public, requires disclosure of personal mortgages under certain circumstances, and requires executive and judicial employees to disclose any negotiations for future employment that might create a conflict of interest.

State-by-State Unemployment

Regional and state unemployment rates were little changed in March. Thirty states recorded unemployment rate decreases, 8 states posted rate increases, and 12 states and the District of Columbia had no change.

Speculating on Federal Estates Taxes

What is the future of the federal estate tax? All we know for sure is that no one knows anything; it's all speculation. So, let's take a look at what could happen.

A quick history lesson
An alphabet soup of tax laws (EGTRRA, JGTRRA, TIPRA, and the others, 13 in total), enacted between 2001 and 2010, created and extended many tax benefits, commonly known as the Bush tax cuts. Provisions affecting estate tax law included a reduction of the top gift, estate, and generation-skipping transfer (GST) tax rates, and an increase in the tax exemptions.

Some of the Bush tax cuts, including the estate tax changes, will "sunset" in 2013. That means they will expire and the tax laws will revert to what they were before 2001, unless Congress extends them again or enacts other legislation.


Current estate tax law
The top federal gift and estate tax rate in 2012 is 35%. This top rate is scheduled to increase to 55% with a 5% surcharge on estates that exceed $10 million, but do not exceed $17.184 million.
The federal GST tax (this is an additional tax on all property or asset transfers you make during your life and at your death to persons who are two or more generations below you, such as grandchildren and grand nieces) is imposed at a 35% tax rate in 2012. This rate increases to 55% in 2013.

Generally, the federal gift and estate tax exemption equivalent amount in 2012 is $5.12 million. This exemption amount decreases to $1 million in 2013.  The federal GST tax exemption in 2012 is $5.12 million. This amount will decrease to $1 million, indexed for inflation (estimated so far to be $1.36 million).

The federal annual gift tax exclusion is $13,000 in 2012 (this figure will likely increase in future years). Each taxpayer is entitled to this exclusion, so married couples can gift up to $26,000 federal gift tax free. This exclusion applies to an unlimited number of beneficiaries. This exclusion does not sunset; it is permanent.

Portability of exemption in 2011 and 2012 only
The last piece of legislation introduced a new concept: portability of the gift and estate tax exemption. That means the estate of the first spouse to die can transfer to the surviving spouse any portion of the exemption that is not used.

Example(s):
In 2012, Husband has an estate valued at $3 million, and Wife has an estate valued at $9 million. Husband dies in 2012, and believing that Wife was well provided for, leaves his entire estate to the couples' children. His estate uses $3 million of the available $5.12 million exemption so that his entire estate can be transferred to the children free from federal estate tax. Husband's estate transfers the $2.12 million exemption amount that is left over ($5.12 million minus $3 million equals $2.12 million) to Wife. Wife now has an exemption amount of $7.24 million ($5.12 million plus $2.12 million equals $7.24 million). Now, say that Wife dies later in 2012. Wife's estate of $9 million is transferred to her heirs. The $7.24 million passes free from federal estate tax and $1.76 million is subject to federal estate tax. If the exemption had not been portable, Wife's estate would have passed $5.12 million estate tax free and $3.88 million would have been subject to federal estate tax. An additional $2.12 million passes tax free with portability. This is assuming no other variables, and no other estate tax strategies (such as a credit shelter trust) in place to reduce the tax further.

Portability is effective for the tax years 2011 and 2012 only. It will not be available to estates in 2013 and thereafter, unless Congress extends this provision or enacts other legislation.

What could happen
Congress could extend all or some of the current provisions for another set time frame (probably two years), so the estate tax laws explained above would remain in effect (i.e., 35% top tax rate, $5.12 million exemption (plus any adjustment due to inflation), and portability of the federal gift and estate tax exemption).

Congress could allow all or some of the provisions that sunset to expire. That means the estate tax laws in effect in 2001 will apply (i.e., 55% top tax rate, $1 million exemption (as indexed for inflation), and no portability).

Congress could pass a compromise bill that would put the figures close to the middle, setting the top tax rate at 45% and the exemption amount at $3.5 million. Whether portability will expire or be extended is up in the air.

Congress could reform the estate tax laws.

Congress could repeal the estate tax altogether.

Retail Sales Down in March

The Commerce Department released it Retail Sales figures earlier in the week rising by 0.8% in March after a 1% gain in February. Consumers spent on building materials, autos, electronics furniture and clothing due in part to a healthier job market and the mild temperatures. Consumer spending accounts for more than 2/3s of the U.S. economy.

The Retail Sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences.

 

Saving For College

Great new resource at the CFPB.

http://www.consumerfinance.gov/payingforcollege/