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This Week in the iNews:

▲ LUNCH & LEARN SERIES PROGRAM #4 – PART 1 - YEAR END TAX PLANNING

▲ TAX STRATEGY: DEALING WITH YEAR-END INVESTMENT LOSSES

▲ FOCUS ON FRAUD: 2008 REPORT TO THE NATION ON OCCUPATIONAL FRAUD AND ABUSE © ACFE - PART 13 AND CONCLUSION

▲ Lunch & Learn Series Program # 4 – Part 1 - Year End Tax Planning

Please join us for the fourth program of our Lunch & Learn Series at noon on Tuesday, November 18, 2008 in the Prangley Marks, LLP lunch/conference room. It is the first in a two-part series on year end tax planning for individuals, corporations and for the new Michigan Business Tax.

Please contact mripley@pmcpa.com or call (616) 774-9004 to reserve your spot.

Complimentary lunch, program and parking provided.

Seating is limited.

▲ Tax strategy: Dealing with year-end investment losses

This year-end is proving to be one of the most difficult for investors in many years. There’s the uncertainty resulting from the financial credit crisis and government reactions to the crisis. There’s the uncertainty from the presidential election. There is also the uncertainty from the existing tax laws, under which the tax rates for the capital gains and dividends and the top marginal tax rates for ordinary income would increase in 2011 under current law even if nothing were done by Congress.

Faced with this uncertainty, the market has been in retreat, evaporating gains and producing potential losses. While most investment advisors are advising clients to remain in the market,

and even use downturns such as this as an opportunity for further investment, taxpayers facing investment losses should keep in mind some tried and true tax planning opportunities, as well as some potential new developments in the tax law.

CAPITAL LOSSES

Under standard, long-applied rules, short-term capital losses are offset against short-term capital gains and long-term losses are offset against long-term gains. Any net short-term losses are then offset against any net long-term gains and any net long-term losses are offset against any net short-term gains.

Any net capital losses then may be offset against up to $3,000 of ordinary income (or $1,500 for those married individuals filing separately), with the balance carried over to future years, retaining its character as either short-or long-term. From a tax point of view, therefore, having $3,000 of net capital losses creates the best possible tax result for the current year by offsetting ordinary income that otherwise could be taxed at up to 35 percent.

WASH SALES

Taxpayers attracted to the idea of generating capital losses in order to offset ordinary income should be cautioned to observe the wash sale rules, also a long-standing part of the tax law. Selling a stock to generate a loss and repurchasing the same stock within 30 days on either side of the sale date will result in the loss not being recognized for tax purposes.

Taxpayers interested in generating losses while desiring to hold onto their present investments for long-term gain potential must therefore expose themselves to at least 30 days of reduced investment in the stock to preserve capital loss treatment. Some investors feel comfortable “getting around this rule” by repurchasing stock in a similar company with a similar balance sheet in the same industry.

THE PRESIDENT-ELECT'S TAKE

Under current law, existing capital gain, dividend and ordinary marginal tax rates will survive through 2010. President elect Obama has proposed re-establishing the 36 percent and 39.6 percent marginal tax rates and raising the capital gain and dividend rate for those with incomes over $250,00 to 20 percent from 15 percent.

This study is based on data compiled from 959 cases of occupational fraud that were investigated between January 2006 and February 2008 and published by the Association of Certified Fraud Examiners. All information was provided by the Certified Fraud Examiners (CFEs) who investigated those cases.

Executive Summary – Part 13 – The Perpetrators’ Red Flags; Conclusion

The survey collected information about the individuals responsible for occupational fraud in order to better understand the characteristics of those who commit fraud.

Fraudsters often display certain behaviors or characteristics that may serve as warning signs to coworkers, superiors, and other daily contacts. For example, some perpetrators act unusually irritable, some suddenly start spending lavishly, and some become increasingly secretive about their professional activities. It is important to note that the presence of these symptoms does not in and of itself signify that a fraud is occurring or will occur in the future. However, these red flags are often indicators of employee misconduct and an organization’s management and anti-fraud personnel should be trained to understand and identify the potential warning signs of fraudulent conduct.

The most frequently cited behavioral red flag in the cases reported in the survey involved the fraudster living beyond his or her financial means. This warning sign was present in 39% of all cases in the study. Other common warning signs included financial difficulties and a general “wheeler-dealer” mentality.

Schemes in which the perpetrator held an unusually close relationship with a vendor or customer caused the greatest median loss to the victim organization of $410,000. The median loss for cases where the fraudster displayed a wheeler-dealer attitude was only slightly less at $405,000.

Conclusion

Over the last twelve weeks or so of iNEWS we have been pleased to present some of the highlights of the 2008 Report to the Nation on Occupational Fraud and Abuse © Association of Certified Fraud Examiners. It is hoped that this information will further the general understanding of occupational fraud and support the efforts of those who work to deter, prevent, detect, and investigate it.

If you would like more information, please contact Marty Grausam at 616-774-9004 or at mgrausam@pmcpa.com