August 2000

BRIEFS:

Social Security Base 1996........................ $ 62,700.00

1997........................ $ 65,400.00

1998....................... $ 68,400.00 6.20 %

1999........................ $ 72,600.00 6.20 %

2000........................ $ 76,200.00 6.20 %

Medicare 1998....................... No Limit 1.45 %

1999....................... No Limit 1.45 %

2000....................... No Limit 1.45 %

FUTA 1999........................ $ 7,000.00 .8% Max $ 56

2000........................ $ 7,000.00 .8% Max $ 56

New Jersey SUI 1998........................ $ 19,300.00

1999........................ $ 20,200.00

2000........................ $ 20,200.00

Employee rate.............. .925%

UI/DI base week amount..... $ 144

Maximum weekly benefit..... $ 407

New Jersey State W/H .......................... 1.4%-6.37%

New York SUI 1998........................ $ 7,000.00

Pennsylvania State W/H 2.8% SUI Base $ 8,000

Household Employee social security reporting threshold

1999........................ $ 1,100.00

2000........................ $ 1,200.00

Minimum Wage Fed'l, PA, NJ ....................... $ 5.15

Exclusion for elective deferrals under 401(k) plans

1999........................ $ 10,000.00

2000........................ $ 10,500.00

Important Age Information as they related to tax provisions

Age 55: Penalty-free withdrawals from company retirement plans upon

separation from service.

Age 59_ No penalty on any withdrawals from IRAs and retirement plans/accounts

Age 62: Earliest age that Social Security retirement benefits can be collected. (Widows and widowers can receive these benefits as early as age 60).

Age 65 to 67 Full Social Security benefits. The exact age depends on the year in which you

were born.

Age 70: Earned income no longer reduces Social Security benefits-if you are under

Age 65, $1 is cut from your benefit for every $ 2 earned above threshold

1998........................ $ 9,120

1999........................ $ 9,600

2000........................ $ 10,000

From ages 65 to 69, $ 1 is cut for every $ 3 earned above Threshold

1998... $ 14,500

1999........................ $ 15,500

2000........................ $ repealed no limit (was $ 17,000)

 

 

Benefits upon Retirement During Year at Age 65(And always earned maximum wage)

 

Primary Insurance Amount

1999........................ $ 16,476

2000........................ $ 17,196

Maximum Family Benefit

1999........................ $ 28,833

2000........................ $ 30,093

 

Age 70_ Minimum distributions must be withdrawn from most retirement accounts. But-you can continue to invest tax-deferred in a Roth IRA. No penalty on >any withdrawals from IRAs and retirement plans/accounts

 

Maximum Defined benefit plan

1999........................ $ 130,000

2000........................ $ 135,000

Maximum Deferred contribution plan

1999........................ $ 30,000

2000........................ $ 30,000

 

Maximum Defined benefit and Deferred contribution plan

1999........................ $ 160,000

2000........................ $ 170,000

Maximum Annual Compensation for Highly Paid Individuals

1999........................ $ 80,000

2000........................ $ 85,000

 

 

Exclusion from Federal Estate Taxes

1999........................ $ 650,000

2000........................ $ 675,000

2006........................ $ 1,000,000

 

Automobile optional standard mileage rate

1999........................ $ .31 (Charity .10; Med .14)

2000........................ $ .325(Charity .10; Med .14)

Automobile Leased standard automobile cost

1999........................ $ 27,100

2000........................ $ 27,300

 

Consumer Price Index

Starting in January 1999, the Bureau of Labor Statistics(BLS) will use a new formula, called the geometric mean estimator, to calculate the price changes for several categories in the consumer price indexes(CPI). The CPI is widely used as an economic indicator (measure of inflation); as a deflator for other information (adjusted for price changes); as a means for adjusting income payments and tax brackets. This formula takes into account the fact that consumers typically respond to higher prices by making substitutions in their purchases. The BLS estimates that the new formula will reduce the CPI by .2% per year. The Categories that will not use the new formula include certain housing, utility and medical costs.

Stock Purchases

Do not make large purchases of stock or balanced-share funds for taxable accounts between October and year end. Funds typically distribute capital gains late each year, usually in December. If you buy shares right before the record date, the days on which current holders become eligible for payouts, you typically will receive a taxable distribution.

IRC Section 1031

The majority of IRC Section 1031 exchanges today are "delay" meaning the date of the existing property and the acquisition of a new one take place at different times, which require the services of a qualified intermediary("QI")(see Note on Qualified Intermediary). When an investor (the exchanger) sells property, the QI coorindinates the necessary paperwork and holds the sales proceeds. The exchanger then has 45 days after the sale to identify a list of potential replacement properties and 180 days after the sale to acquire one of those properties. At that time, the QI coorindates certain paperwork and forwards funds to pay for the acquisition; the exchange is then complete. The deferred exchange regulations referred to above apply only to so-called forward exchanges in which an investor first sells the property before closing on the new property. However, if the investors finds the prefect replacement property before relinquishing the original property, then a reverse or parking exchange must be utilized. Under this method, a third party unrelated to the exchanger purchases and holds("parks")the replacement property. Once the investor sells the relinquished property, he purchases the warehoused property from the third party as the replacement property completing the exchange.

Qualified Intermediary

A qualified intermediary is one who is not otherwise disqualified. A "disqualified" party is anyone who is or has been the taxpayer’s agent by acting as his or her employee, attorney, accountant, investment banker/broker or real estate agent in the two years before the closing of the relinquished property. An investor also may not use a blood relation as an intermediary. So many choose a professional QI, which may be found through the referral source such as the Federation of Exchange Accommodators ("FEA") 916-388-1031 or through its Web site www.1031.org.

Multiasset Exchanges

This type of complex exchange is a combination of a standard exchange and a personal property exchange. Some investments, such as hotel and restaurants, include both real estate and a significant amount of personal property.(Sale of personal property that has been aggressively depreciated requires recapture of depreciation at ordinary income rate and not lower capital gains making a personal property exchange especially beneficial) With careful planning, taxpayers can use a 1031 exchange to defer taxes on both types of property in one coordinated transaction. But the definitions of like-kind property that govern personal property exchanges are strict. A multiasset exchange is worthwhile if the acquired property includes personal property items in the same product or asset class as the relinquished property.

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