Good news from the IRS: Because of the coronavirus, all the amounts shown for meals as ordinary and necessary business expenses will be deductible this year. In the past and future, because this is a temporary measure, only half of the meal expenses were deductible.
Bad news from the economy: Most of the family restaurants that were closed, off and on, this year and last, have gone out of business. Good news from the U.S. Department of Agriculture: The Food Stamp's Food Basket has increased to $835 monthly for a family of four. This compares to only $537 average four-person household expenditures last year. Work requirements for recipients have been waived until the public health emergency is over, which may be never.
California housing costs: Los Angeles reached a new high for individual homeless shelters, An 8'X 8' storage shed B4 square feet about the size of most laundry or bathrooms, has fetched a cost of $130,000 when installed with plumbing. This is a great price for sheds without lawns or garages, However, it is still a bargain, as the LA Times reported last year that it cost $531,000 on average to build a single unit of housing for a homeless person. One project cost $746,000 per unit after installing underground parking lots to satisfy zoning restrictions.
Estate and death taxes are facing reviews: The Federal estate tax exclusion is currently $1 1,580,000 and very few people pay the 40% tax beyond that figure. The proposed new $3-5 triilion spending package has offered a drop on the exemption to $3-5 million per person. An additional tax increase would also tax stepped-up unrealized capital gains with a million-dollar exclusion upon death. This means that the family home, business, farm, or portfolio would need to be sold to pay the huge tax bill. A study by Texas A&M Agricultural Center found that 98% of farms in their 30-state database would be impacted with average additional tax liabilities of $726,000 per farm. This proves you can,t take it with you, and maybe your family as well.
Death taxes are another matter: Instead of taxing the estate, the death tax extracts funds from the beneficiaries. So, Uncle Ahab passes and leaves his estate to his only heir, Young Ahab. Maybe there is no estate taxes due to the small size of the estate, but in Ahab's state, there is a new death tax which taxes recipient heirs based on age, relationship, and amount. This has been kicked around the halls of statehouses recently as a back door estate tax. These people are most creative when backed against the big spending wall.
National oil prices are rising: The While house national Security advisor Jake Sullivan, recently prodded the Arab Oil OPEC Cartel to increase production to keep world prices in line with increasing demand for oil. That is a strange note from the U.S. because we were the largest producer of oil in the World before the last election and the new government crushed oil production. OPEC now controls world production and prices as a result of being the new [old] swing producer. Both U.S, crude and Brent benchmarks are up 40% in 2021.
Black Lives Matter: This national movement had meaningful origins because of the deadly treatment of black prisoners by police officers. Now it appears to be a political crutch for anti-nationalistic radicals. The only reason I mention it here is that the White House State Department advised all our embassies and consulates overseas to fly the BLM flag at their posts. There is only one flag to be flown for this country and people who don't honor it or debase it should leave, in my opinion. Recently the BLM Marxist organization supported the Cuban repression of protests erupting across Cuba and that the US was to blame. Shame.
Medicare benefits expansion: current proposals are floating around Congress to increase the benefits paid to Medicare recipients to include dental, eyes, and hearing. As we grow older, we all need assistance and these items have always been a personal expense. The proposals also include lowering the age of Medicare recipients below 65 for benefits. As you probably know, many people need good care including the above items and everybody usually puts off the expense as long as possible. There is a problem, however. The Medicare program, which most of us paid into all our lives, is slated to be bankrupt within the next five years and probably sooner after the Covid virus. lf the benefits are expanded or the eligibility age lowered for this program, the impending BK will be greatly shortened, Eventually, going to medical school will not be the fastest road to become a professional millionaire. According to today's Wall Street Journal, Sept 2nd, Social security is now expected to be illiquid alter 2033.
Chinese position as a world power: The Chinese have remarkably provided material goods and services to the rest of the world these past years. That has placed them in a formidable position as a World power as they have recently discarded their defensive military posture with the addition of a new ICBM offensive complex under construction. The use of slave labor is also controversial but not new to many countries who used political and military prisoners to do the dirty work in mines and factories during the Second World War by the Germans, Russians, Japanese, and other parties. China and North Korea presently use people in this manner.
Recall election: This month we will have a chance to eliminate a Governor who appears to be from another planet, There are many choices for his replacement. I will not tell you who I voted for, but it was for a change. We should keep in mind that as a European newspaper stated, "the future of our country depends not on the actions of the elected Prince of fools, but the supporting electing fools", He was referring to the debacle in Afghanistan where another fool presides.
Our tax practice: We have been busy scanning and shredding our old records; over a million copies handled, to the Cloud somewhere in a "computer room in the sky", We have finished the transition and are now ready for the many extension clients who have delayed or procrastinated their way to the end of the extension period of October 15th for personal returns. There is a month to go and please, if you are one of these, do not wait until October.
China Long, our neighboring paralegal: she is still available for many legal form filings, she is also a notary, and this may be the time to review your legal documents. Her number is 951-694-4460 and her fees are very reasonable, She can meet with you in our office.
Please visit or call if you have any tax questions or wish to buy a book, we still handle insurance annuities for those conservative folks who need them.
Best wishes, Phil Chute, EA & Staff.