Tax Planning and Stock Investment Strategies - II

We've been looking at how Tax planning can have an effect in your tax preparation. In the first one of the series, we saw the difference between Tax Planning and Tax preparation. We also started digging in deep on how the cost basis and stock selling strategy can save you some money. In the Tax Planning - Stock Investment Strategies - I, I started explaining about different types of determining cost basis and will complete in this post. At the end of this article, you will know which methods helps on different situations. So read on.
Check out the previous article to learn about cost basis using FIFO method before moving on to read so you can better understand and appreciate the difference.Average cost is another method for determining cost basis and is only used with investment/mutual funds. To determine the average cost, the total cost of all shares purchased including any invested dividends is divided by the total number of shares held.Once this method is used, it must be used each time the taxpayer sells shares in a mutual funds. This method is most effective if the shares purchased first have the lowest cost basis.
Average cost has 2 different ways of calculating according to the stock purchased periods. The single category method is when the investor takes all of the purchase amounts and divides by total number of shares owned. The double category method sorts the total shares owned into a short-term and a long-term holding period. Then, the average cost for each category is identified.

For example, Jan buys the Vanguard growth fund

* 200 shares on January 3, 2001 at $20/share
* 300 shares on September 5, 2002 at $25/sh
* 200 shares on April 20, 2008 at $22/share

On Oct 15, 2009 she sold 500 shares at $20/share. What is her cost basis according to the average cost method?

According to the single category average cost method, she would take an average of the purchase prices and divide by the total number of shares owned:

* 200 shares at $20 = $4,000
* 300 shares at $25 = $7,500
* 200 shares at $22 = $4,400
* Total cost = $15,900
* Total shares = 700
* Average cost per share = $22.71

So the gain/loss for this sale was:

* 500 shares ($20 - $22.71) = -$1135.50

Therefore, Jan had a net loss of = -$1135.50

The specific share identification method implies that specific shares are used to apply against the shares sold.

Before selling shares, the shareholder must inform the broker or fund company regarding which shares are to be sold. These instructions must be given at the time of sale or transfer, not later. The broker or agent must confirm this request within a reasonable time after the sale.This method can be used effectively only if the shareholder has kept accurate records and has followed through on the receipt of confirmations from the broker. It allows the shareholder to control the capital gains taxes that he or she has to pay because this can be determined by selecting the shares to sell. You can tell your broker to sell your highest-cost shares when unloading part of your holdings in a stock. Using this "specific ID method" requires you to identify the shares to be sold by specifying their cost and purchase dates. You must also receive a written confirmation of your instructions from the broker or keep a record of your oral instructions. Put this in your tax file for safekeeping.

Which method is suitable and when?

Specific ID method is the best method for tax purposes because the investor has absolute control over how much the gain from a sale would be. Long term or short term gains can also be controlled. This is the preferred tax basis method for investors who actively manage their portfolio for tax efficiency.It is also not the most cost effective because of all of the effort that is required for proper record-keeping.

If you don't follow th procedure, you must use the first-in, first-out (FIFO) method, meaning the shares you bought first are considered sold first. Those were likely the cheapest - giving you the biggest possible tax hit. The point to remember is that you must take action at the time of sale to use the specific ID method.

Short term Vs Long Term

If you have both unrealized gains and losses in your portfolio, but want to make some sales in a certain way matching them property to get the best effect. First, the general rule is try to sell long-term holdings (held over 12 months) first to benefit from the 15% maximum long-term capital gains rate. Then, unload your short-term holdings.

Then in order to offer offset those gains, you can sell the loser stocks for loss to balance it out. You will generally get the most tax-saving for the buck by selling short-term holdings for a short- term loss by taking advantage of short-term losses offsetting short-term gains which would otherwise be taxed at the regular income tax rate and any leftovers then offset long-term (15%) gains.
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Tax Calculation and Online Finance Management Tools

Paying your tax can be the most significant part of your finance every year. But to tell you the truth, it is the most irritating part too. You will have to sit down and make hundreds of calculations so that you make the required tax payment and also to make sure that you make enough savings from the tax.

This can be one of the most hectic jobs as I have said. A very few of you may be able to do this fine, but mostly of you may end up in complete confusion if you start with the tax calculations. So it is always better to take the help of some resource.

The best option I can advice is the online personal finance software. You have a very good option in the personal software that helps you to calculate your tax and other concerned things. If you do not have a family or any investment, your calculations of tax can be simple. You can easily deal with your tax. But for all those people who has got a family and lots of investments and looking for some good budgeting are totally facing a complex situation and you are definitely in need of a good tax calculating software.

So remember to make use of your tax calculation part of your online personal finance management software or tool to make your work easy. They can be very helpful not only in calculating tax, but also in helping you get enough benefits from your tax payments.

Dischargeable Debts in Bankruptcy

What are Dischargeable Debts?

Through bankruptcy, many debts can be "discharged." Discharging a debts means that it is completely eliminated. required to repay You will not be required to repay the debt, and your creditors are legally prohibited from attempting to collect the debt. That protection is guaranteed once a liability has been discharged through bankruptcy.

Many liabilities can be discharged when you file for a bankruptcy. However, there may be some liabilities that you will be responsible for paying off, even after filing bankruptcy. These types of liabilities are non-discharging liabilities. A person with these types of debts will be required to pay these debts regardless of filling bankruptcy.

Discharging liabilities through bankruptcy will allow you to get out from under the crushing weight of debt. An experienced bankruptcy attorney can make sure that you can get on with your life after you file for bankruptcy.

Non-Dischargeable Liabilities in a Bankruptcy

In general the following debts will not be cleared through a bankruptcy:

Alimony
Child Support
Recent Taxes
Debt from a fraud conviction
Debt from a DUI conviction
Debt from a malicious injury conviction
Debt from other criminal activities
Most student loans
Meet With a Bankruptcy Attorney

The laws affecting dischargeable and non-dischargeable debt can change. To make sure that you are eliminating all of the debt that you legally can you need to speak with an experienced bankruptcy attorney. Your attorney will sit down with you and help you evaluate your situation and make sure that you get everything you can out of your bankruptcy.

Performance Metrics - Guiding Management Action

Performance metrics measure chosen dimensions of an organization to allow management to assess its position and take appropriate actions to move it toward target. The key goal is performance improvement along a whole host of dimensions as selected by the organization's leadership. Additionally, performance metrics assist management, increase an organization's effectiveness, efficiency and internal control.

To be of most value to management, performance metrics should ideally be specific, simply measurable, inexpensive, easy to communicate, and capable of guiding action. Various software packages are available to help management collate, analyze and report data required for the task.
The use of performance metrics requires four steps - select key issues, important processes and customer outcomes that necessitate measurement; develop relevant metrics; define targets; and, finally, move performance towards those targets.

Perhaps the best-known performance metrics are those that relate to financial performance. For this purpose, management has available all the line items included in the externally reported statutory financial statements plus its internal management reports. Financial statement line items include well-known concepts such as total revenue, profit before interest and tax, interest expense, profit after tax, total liabilities, and net cash flow.
These financial line items, in turn, are used for financial ratio analysis. This technique involves relating two or more line items together in order to examine key areas of financial performance. These areas include revenue and cost behavior, balance sheet strength, capital structure, cash flow generation and profitability. The main audience for financial metrics is management and the owners of the organization, that is, the shareholders.

Beginning in the 1980s, organizations and their various stakeholder groups began to articulate a need for a broader set of performance metrics that reached beyond financial performance. They called for metrics that measured an organization's performance with respect to customers, employees, and the broader community.

To fill the gap, a performance metric framework known as the balance scorecard emerged during the early 1990s. Its metrics cover four areas - finance, customers, business processes plus learning and growth. The balanced scorecard was rapidly adopted by many organizations in the private sector, government authorities as well as the non-profit sector. It remains an important performance management tool today.

Corporate governance, the environment, carbon emissions, and climate change have all became areas of particular focus over recent years prompting organizations to respond by developing metrics to communicate its performance on these matters.

Performance metrics quantified for an organization need to be routinely compared against its past values to ensure improvement is being achieved. Additionally, those metrics should be compared against peer group organizations. This latter comparison is known as benchmarking and represents an important method for an organization to understand and monitor its relative competitive position.

Kevin is a published author in the electronic security world, as well as a former owner in baseball and radio. He currently consults for tech and media businesses and also writes articles, blogs, and other creative things all over the web.
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Financial Directors and Business Owners Should Be Clear About Their Break-Even Point

A vital number that every business owner and finance director should know is their monthly Break-Even. This is the point where the business generates sufficient profit from sales to exactly cover its fixed overhead costs. Higher sales and the business will make a profit; lower sales and there will be a loss.

Fixed overheads, as the name suggests, are the costs that tend not to vary in line with turnover. These include administrative staff salaries, property costs, insurances, stationery, equipment rental, motor expenses, depreciation, bank charges etc. When calculating the monthly fixed overhead, always remember to allocate a portion of financial costs such as accountant's fees which are billed to you once a year.

To work out your profit Break-Even sales point, you only need two pieces of financial information:

1) Total fixed overhead costs
2) The gross profit percentage (GP% or gross margin)

The gross profit percentage is calculated from the average profit that a business makes on each sale. So if you sell a product or service for £250 and your variable costs are £175, then the gross profit is £75 and the GP% 30%. If you made ten sales, the gross profit would be 10 x £75 = £750 but the GP% would still be 30%.

Now let's assume that total fixed overhead costs each month average £25,000. To calculate the sales required to Break-Even, divide the overhead costs by the GP%. £25,000 divided by 30% = £83,333.You now know that the business has to generate at least £83,333 of sales each month to avoid making a loss.

Note that the Break-Even point is not set in stone. It is a financial information tool for the business owner to use and react to. If the business is struggling to consistently generate more than the £83,333 sales needed to generate a profit, then the business owner aware of Break-Even knows that he is losing money and can immediately take remedial action.

The quickest way to reduce Break-Even is to reduce costs. If you could reduce fixed costs from £25,000 to £20,000 per month, Break-Even sales would fall from £83,333 to £66,666, a significant difference.

Clearly the other way to reduce the Break-Even point is to increase your gross margin. Ways to do this might include putting up your prices, finding cheaper suppliers or introducing higher GP% product or service lines. If the GP% could be increased from 30% to 33%, then Break-Even on fixed costs of £25,000 would be £71,428.

Combining both strategies ie cutting fixed financial overheads to £20,000 and increasing the GP% to 33% would result in a new Break-Even sales of £60,606.

What we have discussed above is PROFIT Break-Even. A variation of this, one which most business directors do not understand or appreciate, is CASH Break-Even. This can literally make the difference between business success or failure.

Break-Even recognises that fixed overhead costs include non cash items such as depreciation. More importantly, it also picks up other cash outlays that do not appear within overheads, indeed they do not appear within the profit and loss account of the business at all!

Take for example a Road Haulier who buys a lorry for £100,000. The lorry has normally has a working life of 10 years so is depreciated in the profit and loss account at £10,000 per year. The haulier can't afford to buy the lorry outright and enters into a finance agreement to pay for the lorry over 4 years.

Ignoring the impact of interest on the loan, cash repayments against the finance agreement are £25,000 per year. In this situation cash outlays of £25,000 exceed the depreciation overhead by £15,000. Based on a GP% of 30%, this means that sales have to be £50,000 per year higher to achieve CASH Break-Even than PROFIT Break-Even. Something worth knowing don't you think?


To conclude, calculating the PROFIT and CASH Break-Even sales points for your business is vital for helping manage cash flow. Making Break-Even as low as possible achieves two great outcomes. It maximises the opportunity to make profit/generate cash and, just as importantly in harder economic time, it considerably reduces the risk of business failure.

Refinancing Closing Costs

Refinancing in general is a tricky decision as you may have to do some math to see if it is a good idea for you or not. The main idea you should keep in mind in order to choose the right deal is to search for the lowest possible rates. Ask multiple brokers and compare what each one charges and then make a decision. Many people are lately choosing to refinance because of the low rates currently available.

If you manage to lower your outlay you will save thousands of dollars and will make refinancing more profitable for you. But be aware that low expenses usually mean highest rates. It can be very easy to completely escape closing cost, but the downside is that you will pay more on a monthly basis. Lenders may even pack up the closing costs as a singular fee of a certain amount. In this case examine carefully what types of closing cost are included in the package and if it includes all the costs.

Consider the time you have had the mortgage. If most of it is over and there are left only a few years, closing costs will be higher than your overall savings. If your mortgage is newer then the benefits will not exceed your savings. This is a relative comparison so be sure to calculate exactly.

Refinancing costs may vary from one type of refinancing to another. For example a home equity loan or a line of credit will not have standard mortgage closing costs, but the rate will not be lower either. Do some online research and ask for quotes from different lenders either by asking a broker or by contacting all the preferred lenders individually.

In order to compare the refinancing option correctly leave out all the closing costs that are not from the lender, like costs from local government or from seller`s title company. This will give you a clear image and allow you to compare similar types of fees to reach a safe conclusion. Examine closely how the refinancing closing costs are listed and if they all included. Some lenders will not show all of them because it makes it all look more expensive and people would avoid them. Analyze the price of each item. Even if they show it to you it might just be an estimate.

Finally, don't fall for no cost refinance loans as they can make you spend more in the long term.

Services Offered by Appraisal Management Companies

For the appraiser that is looking for the appraisal work he or she needs to support his or her family, appraisal management services can provide income. Appraisal management companies, or AMC's, as they are often referred to, provide the best source of income. This is true especially since the rules and laws have brought about so many changes for the appraising industry. Now, according to law, it is necessary dues and appraising management company for over 90% of the business that deals specifically with appraising.

The good news for appraisers is that there has been a sharp decline in the amount of appraisers coming into the business, and many appraisers leaving due to the decline in finances. This leaves much more room for the appraisers that want to stay in the business to make more money. The easiest way to do this is by going through an appraisal management company. Since the laws have changed, AMC's have become more friendly, helping appraisers earn an income and providing for their needs.

The new laws, given in 2009 by HVCC, made it necessary for appraisers to deal with appraisal management companies, a group that has traditionally carried a bad reputation. Their demands for high commissions and quick turnaround times had many appraisers running the other way. However, there are many appraisal management companies in good standing, with reputations that have been established over the course of 10 or more years.


Plus, due to the change in laws, many appraisal management service companies have opened their doors, providing services that are helpful to new and experienced appraisers. The newer appraisal management companies now have more generous commissions and greater turn around times. The older companies have had no choice but to change their old policies to stay competitive.

The services offered to appraisers under new laws have opened doors that were not previously there. The services provided to appraisers now can actually help appraisers in accomplishing personal goals by giving them the incentives and income to help them prosper.

For those appraisers that have heard of some doing well with appraisal management companies, while others have not, there are some factors to consider. There is certainly no lack of work right now due to the appraisers that have quit and the new trainees that did not want to meet the newer, more stringent educational requirements. This has led a drop in the available appraisers able to do work. But with appraisal management companies, there are factors to consider, such as the specific coverage areas that these companies service. These areas can grow or shrink with the number of clients an appraisal company has. Keeping that in mind, it depends on how many clients a company has in one area as to how many appraisers they will need.


The best option of any appraiser in any area is to sign up with several AMC's at one time. This can be done online, or in person. When an appraiser signs up with more than one company at one time, he or she gives himself or herself the option of different business opportunities for multiple sources. These companies, although a negative source of help in the past, have become the principle support for many appraisers. They now offer positive income opportunities, with more friendly terms to work with.

Cheap Homeowner Loans - Cheaper Then Ever

There are so many choices in the market when it comes to applying for a loan. There are some basic requirements which a user wants when it comes to taking a loan. The common needs are that the interest rates of the loan should be low. Also the verification process and the loan approval process should be as short as possible. Also the payment options should be simple and UN complicated.

These loans are applied by complete imbeciles and thus these loans should have such payment options which can be understood by 5 year old. Just wish this was a joke but it ant. The penalties or other charges like processing charges should be low as well. The paperwork should be easy and understandable to the common fool on the street.
Homeowner loans are thus a fine example of such kind of loans. Cheap Homeowner Loans are an interesting option for those who have a collateral to offer to the bank. Also that loan should be the loan applicants home. Through this option the interest rates can be lowered by the bank as now this loan has become a low risk financial product for the bank. Also the processing rates and other charges can also be lowered by the bank. One needs to understand that the bank needs a few reasons before they can actually create cheap loans for the customers consumption. These kind loans are perfect for those who do not have a saturated home when it comes using them as collateral for loans.

Couples Taught How to Plan For Their Financial Future

Financial woes cause stress in partnerships

Job security and monthly financial budget plans are two increasingly common topics that couples might be discussing over dinner. Given the ongoing financial turmoil, a laissez faire attitude to personal finance that many couples adopted in the recent past is seen by experts as an increasingly risky move. An article in the Atlanta Journal Constitution advises couples to communicate openly about financial concerns and seek outside help if needed to effectively collaborate on financial budget plans and financial security expectations.

Financial budgeting, spending plans, job security, and retirement planning are some of the pressing issues couples are discussing in an effort to weather the financial downturn, says the article. As a reminder to couples working on personal finance issues, this week is recognized by many companies and government organizations including the IRS and Federal Reserve Board as America Saves Week.

America Saves Week, coordinated by savings coalitions America Saves and the American Savings Education Council, seeks to encourage individuals to take steps to "build wealth, not debt." Through a variety of events, programs and press releases the participating organizations are using this savings campaign as a way to educate individuals and households on the importance of financial security, ways to improve their current standing and how to plan for their financial future.

Mounting credit card losses spell trouble for financial services company, investors

Investors fear a lower dividend as mounting credit card defaults wreak havoc for Capital One. The McLean, VA-based financial services company reported an increase in its annual net charge-off rate for U.S. credit cards as well as a spike in loans delinquent for at least 30 days, according to a Reuters article. Both of these credit metrics could spell bad news for investors as Reuters is reporting some analysts now expect the company to slash its 2009 dividends.

Capital One, a large issuer of Visa and MasterCard credit cards, will need to set aside money to pay for the expected losses. Some cash-strapped consumers struggling to make ends meet due to layoffs and tumbling stock prices are turning to credit cards as a means of last resort spending, often unable to make the minimum payments. Many are aware that these missed due dates will have a lingering effect on credit scores and credit reports, but are caught up spending regardless.

In Times of Economic Troubles the Price of Gold is Rising

The price of gold is rising. Not so amazing if you see that the value of the euro is going down. And all of this thanks to the European country Greece that was not able to implement national budget restrictions and recently had to be rescued by the rest of the European Union (EU). Billions and billions of dollars are going to Greece in order to save the country. In times of economic troubles - and this is a biggie - gold becomes a last resort for investors to put their money safe.

The countries in the European Union are obliged to keep their budget deficits within 3 percent. This way the euro would keep its strength. That agreement has been infringed right from the beginning. Not every country is able to control its political forces though. Since the European Parliament has no real power, fines cannot be handed out; only pleas...

It is not only Greece that is in trouble; Spain and Portugal are the next countries the EU has to rescue. The Mediterranean countries tend to pay their civil servants far too much salary - together with jobs for life - and do not put away enough money to pay out the pensions to their seniors. So it are the West- and North European countries that have to bail these countries out.

You can imagine that the rest of the EU is not in favor to hand out billions here and billions there. At least not without any strict guarantees; although everybody knows guarantees are worth nothing when it comes to the point. They look nice on paper though.

The financial markets know all this as well and that is why the euro is going down like a brick in the water. Together with the European governments having to rescue Greece and possibly Spain and Portugal that means that all European people are now fearing for their private finances. Those who have been scrimping and saving can wave their money partly goodbye; our pensions will not be what they promised to be when we started the pension plan.

This is where gold comes in as our last resort too... Not only for the rich and famous, but also for the common man. Everyone can buy gold on the internet or through sales persons these days. Just remember that you buy bullion gold. Coins are very nice for collectors but not worth as much in the future as the good old physical gold. With the value of gold being stable for centuries and climbing in worth as well the owners of physical gold secure their financial future.

Gold-to-Go is a Way to Save Money For the Future

We are all used to taking money out of a "machine". Ever since the ATM's were installed we enjoy the luxury to withdraw cash whenever we want to. A convenience that is now also possible for people who want to save physical gold for their future. In several countries in the world gold machines make this possible.

Taking out newspapers, drinks, tobacco, snacks, condoms, chewing gum and even fresh flowers out of a machine is as natural for us as a Nintendo is for 7 years old. Taking out some cash for the evening or for shopping for groceries as well - we do that for decades already! But physical gold... putting in money, getting back gold... is kind of new to us all.

Although not in Hong Kong. A friend of mine has been there a couple of years ago and reported you can buy bullion gold there out of a machine. And why not? Everybody knows paper currency is getting worth less and less; as long as governments think they can print money like newspapers are printed, their national currency goes down in value. Apparently they do not care too much about that. It is more important to keep your own citizens happy, that is if those citizens do not understand how the world economy functions.

Gold on the contrary is a very stable commodity to have. Ever since gold exists the value has stayed the same or has risen. So buying one or two grams of gold from the machine is a very sensible thing to do if you want to provide for your family in the years to come. Small quantities are always exchanged by banks worldwide - they are obliged to do so. Not a big bar of gold (then they have to call the cops) but small quantities.

Now last week a gold machine is also installed in Abu Dhabi by the German entrepreneur Thomas Geissler. Gold-to-Go the machine is called, and the Gulf area is of course a nice spot to launch his machine, which was tested in Germany in 2009. Geissler's timing could not be better with all the economic troubles the world is going through. Gold is a safe haven for both investors and the common man.

Three countries where you can buy gold through a hole in the wall... you just have to wait a little while till that number is doubled, tripled and what not. Soon every country will have its own golden gold machines, thus keeping their citizens happy as they now can put away money for the future safely. No risk of evaporating pensions, worthless saving accounts, ignorant or crooked politicians and stupid bank managers who all together make a country's economy go bankrupt.

Those who go for bullion gold - bought through a sales person, a Gold-to-Go machine, the internet - are sure of a golden situation once they need the money. That is what gold does: making you feel secure, especially in unstable times.