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 STRATEGIC ISSUES...ONLINE    
For week of June 19, 2005, Issue #217
Featured Articles:
1.  A 'Must Read' for First Time Home-Buyers
2.  Fraud Footnotes: Don't Let it Happen to You
3.  Tech Tip Weekly: Melissa's Long Gone, but Lessons Remain
4.  Compliance Calendar
5.  Archived Articles
 
1.  A 'Must Read' for First Time Home-Buyers
The tax code offers a couple of tax breaks for first-time homebuyers. You might think you qualify only if you’ve never bought a home before. Not true! You’d be surprised who counts as a first-time homebuyer.
Penalty-free IRA withdrawals. The first tax break allows you to make a penalty-free withdrawal from your IRA to use for house purchase expenses. In most cases, a 10% penalty would apply to IRA withdrawals before you reach age 59½, but if you’re a first-time homebuyer, you can withdraw up to $10,000 without penalty. You must use the money for acquisition or closing costs on a principal residence.

The good news is that you qualify as a first-time homebuyer if neither you nor your spouse has owned (had an ownership interest in) a principal residence within the last two years. It doesn’t matter if you owned houses before that time.

Another benefit is that the home you’re buying doesn’t have to be your principal residence. It can be for your child, grandchild, or any ancestor of you or your spouse.

A word of caution, though. Think very hard before dipping into your retirement savings. Make sure you understand the financial implications of what you’re doing.
 
2.  Fraud Footnotes: Don't Let it Happen to You
 
It can be every business owner's worst nightmare.
 
Perhaps you may have stumbled across it by accident.  Maybe you have been somewhat suspicious for a while seeing expenses for items that you cannot seem to remember ordering, identifying dubious transactions that no one is able to trace, or midlevel employees living a lifestyle that would seem to be out-of-reach.
 
Or, maybe you have heard horror stories from other business owners, still in disbelief that their employees could ever do something like that, and now you seem to think that it could be happening to you.
 
The fact is that many cases of cash misappropriation, especially in small businesses, happen simply because basic internal controls have not been implemented.
 
Internal controls are processes and procedures that are adopted within an organization to safeguard assets, check for the accuracy and reliability of accounting data, promote operational efficiencies and encourage adherence to prescribed managerial policies. 
 
More on small business internal controls next week.
 
3.  Tech Tip Weekly: Melissa's Long Gone, but Lessons Remain
 
It has been more than six years since the Melissa macro virus first got loose, but we still have lessons to learn from it.
 
The virus started spreading in March 1999 and traveled quickly throughout the Internet using the macro functions in Microsoft Word to dig into victim computers who opened the document.  After just three days hundreds of thousands of PCs were infected.
 
Melissa was the second most successful e-mail worm, but it caught the world's headlines because it showed how easy it was to use e-mail to quickly spread a malicious virus across the world-wide web.
 
Even though macro viruses are no longer threats on the Internet, and most Internet users have grown to a state of healthy distrust of their e-mail in-boxes, mass-mailing computer viruses are still among the top Internet dangers.  And the trickery used to get users to open the Melissa file have been vastly improved which has given such vibrant lives to e-mail attacks of phishing and spamming.  Recent studies have indicated that one in every 40 e-mail messages daily has a mass-mailing threatening pest.
 
More on Melissa's legacy next week.
 
4.  Compliance Calendar
 
June 21
-Deadline for tax-shelter participants to come forward to accept terms of the IRS's Executive stock Option Settlement Program.
 
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