The Van Tharp Institute |
January 12, 2005 � Issue #202 | |
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Feature Article 1 Financial Resolutions, Part Three, By Van K. Tharp, Ph.D.
F-r-e-e Online Tutorial Maximizing Your Trading Performance With System Backtesting
Tax Tip You Still Have Some Time to Reduce Your 2004 Income, Steve Meredith
Listening In Talk about drawdown...
Financial
Resolutions For the New Year
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This week's F-r-e-e On-Line Tutorial Maximizing Your Trading Performance With System Backtesting By Chris Anderson, PhD
Follow the link below and join us in this fun new way of learning.
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How To Trade Exchange Traded Funds (ETFs) February
4-6, 2005 Register by Next Week, January 19th for a $700 Early Enrollment Discount What are Exchange-Traded Funds? They are funds that reflect the big sectors of the market. For example, you can buy a fund that represents the Internet sector of the market and short another that represents the retail sector of the market. And you can do this in seconds, as soon as you spot what the big money is doing. So while big money might take a week to move money around, you can jump in ahead of them and take advantage of money flowing into the sector you�ve just bought. The advantage is huge. Learn six different strategies that allow you to take advantage of what big money is doing and turn it into big money for you Read More...
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Tax Tip of the Week You Still Have Some Time to Reduce Your 2004 Taxable Income by Stephen S. Meredith, CPA, PLL Now that the year is over, what can be done to reduce your 2004 income? Several things can still be done after the end of the year to reduce your income and lower your taxes. Contribute to your IRA. You still have until April to make your contribution. The limit is $3,000 for 2004 and $4,000 for 2005. You get an extra $500 if you are over age 50 by December 31. The deduction phases out between $65,000 and $75,000 if you have a pension plan at work. Contribute to your Self-Employed Pension Plan. If you own a business you can contribute to your own pension plan. The amount is usually based on the type of plan and the income earned. If you have a SEP plan you have until the time the return is actually filed (including extensions) to make your contribution. Other plans may be limited to the April 15 deadline. Check with your plan administrator or tax advisor. Annual bonuses to officers. Accrual basis corporations may pay a bonus after the year ends and deduct it in 2004 if the corporation has authorized the bonus and actually pays it by the corporation tax return due date (March 15 for calendar year corporations). Inventory and Personal Property. When counting inventory, make sure you allocate an amount to any merchandise that is unusable, whether because of damage or simply out of style. This increases your cost of sales and decreases your profit. Also look closely at last year�s depreciation schedule. Do you really have all that furniture and computer equipment? If not, write off old items and clean up your books now. Anything that is discarded or replaced that has not been fully depreciated may be written off now if it has any basis on your books. Out of Pocket Expenses. If you have a business and pay expenses out of pocket, you may be able to deduct the expense reimbursements made to yourself under an �accountable plan� after year end. Do your expense reports now and see if there is anything you missed for the year. There is a special trick here. Check with your tax advisor. Remember the mileage rate for �04 was 37.5 cents per mile. The new rate is 40.5 cents per mile for �05. Charges on Credit Cards are deductible in the year they are charged (except for store charge cards like Sears or Hechts), not the year you actually pay back the credit card company. Look at your January statements and see if there are December charges you can deduct. Charitable Contributions Extended through January The Senate's top tax writers on Tuesday January 4 proposed legislation that would extend the period in which Americans can claim tax deductions to charities providing aid to victims of the tsunami that hit South Asia. Under the proposal taxpayers would be permitted to claim a tax deduction in tax year 2004 for donations made for tsunami disaster relief until Jan. 31, 2005. The House quickly followed suit on January 6 and the President signed the Bill. This is good only for donations to US charities (not foreign charities) and only through January 31. Don�t forget elections and carryovers. If you previously paid Alternative Minimum Tax (AMT) you may get a refund of part of it this year if your income situation changes. Depreciation rules have changed and the section 179 deduction is larger than it was in prior years for some things, and was reduced for SUV�s bought after October 22, 2004. There was also a change in the way deductions are made for leasehold improvements, start-up expenses, and organizational cost after October 2004. Check with your tax advisor on these issues and make sure that you make the elections if they benefit you. Don�t forget NOL and Capital loss carryovers from last year. Best wishes for a happy and prosperous New Year!Steve. Meredith is a CPA in Richmond Virginia. He specializes in preparing income tax returns for all types of businesses, estates, trusts, and individuals. He also consults with new business owners on how to properly structure their business to get the maximum benefit from current tax laws. Steve deals with many real estate investors and stock market investors. He has clients nationwide and lectures regularly across the country on tax topics. The information contained in this article should not be construed as rendering tax or legal advice. You should consult your own tax advisor as to the applicability of any of this information to your personal situation
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Excerpts from Dr. Tharp's Discussion Forum Talk About Drawdown... In 2003 they bottomed out, REGRF.OB at $.02 per share and RGUS.OB at about $.04 per share. Crazy, to invest half your net worth in pennystocks but, hey, what did I know. What brought them back to life was the fact that a defense contractor, (EASI) Engineered Support Systems Inc. was able to overcome the technical obstacles that previously had impeded their getting the engine into production. They're are now well off their lows and hopefully will eventually erase my losses. Never again will I ever establish a position without first deciding how much (position sizing) and when to get out if I'm wrong (stops). Thankfully, I've been given a second chance. Thanks to Dr. Tharp's tutelage I'll never make that mistake again. What a nightmare it has been. |
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