IRA CONTRIBUTION

Larry, I am 63 and plan on retiring at the end of the year. Can I still make an IRA contribution for 2008? Henry

Henry, the answer is yes. For the 2008 tax year you can contribute $5,000...that is assuming that you have earned $5,000. In addition, since you are over age 50 you can add an additional $1,000 for a $6,000 total. It does not matter when during the year you retire so long as you meet the compensation requirement. But you can no longer contribute to an IRA after you reach age 70 ½.

It is a pleasure serving you.

Larry Kopsa CPA

FIVE REASONS WHY THE ECONOMY MIGHT RECOVER FASTER THAN YOU THINK IN 2009

Here is Some Optimistic News

(U.S. News & World Report) -- There are a number of reasons to think that the economy might, just might, shift back into gear faster than most of us think or hope. One is plunging oil prices. Now they're below $40 thanks to slowing global demand. At the same time, gas prices have plunged from over $4 a gallon to around $1.67 nationally. (And some analysts think they're heading to a buck a gallon.) JP Morgan Chase economist James Glassman estimates that the drop in oil prices represents "a boost equivalent to a $350 billion stimulus." Another reason is falling mortgage rates. Rates for a 30-year, fixed-rate mortgage fell to a low, low 5.19% last week. That should help housing affordability and the ability of current homeowners to refinance their mortgages. Other reasons are the actions by the Federal Reserve, which has made it clear that the Fed will buy various debt securities to unfreeze the credit markets, and President-elect Obama's stimulus plan, as the new Democrat-controlled Congress will likely spend somewhere between $750 billion and $1 trillion over the next two years to boost the economy. The final reason is America's deep fundamentals. Overall, the core U.S. economy is in far better shape than it was in the 1970s, with a higher productivity and a better tax and regulatory system. Even though the U.S. economy finally succumbed to the oil shock and the credit crisis in 2008, it held up longer than many predicted thanks to its deep strengths. Who knows, maybe it will surprise the bears again in 2009.

TEST TIME

This Math test can predict who can give you the best information to help you to be more profitable. Try it without looking at the answers...No cheating!

Ok get your fingers at the ready.....Pick a number from 1-9.....times this number by 3.....then add 3.....then times by 3 again.....You should have a two digit number.....Add these two numbers together.....You then should be left with a single digit number which will tell you who your best business advisor is.

1. The IRS
2. Your banker
3. Your neighbor
4. Your bartender
5. The federal government
6. Your brother in law that has made every mistake imaginable
7. Oprah
8. Your insurance guy
9. Kopsa Otte CPA’s and Advisors :>)
10. Your momma

DEAR PRESIDENT ELECT OBAMA,

Taxing small business will not fix the healthcare crisis.

When it comes to addressing the nation's healthcare crisis, there is a right way and a wrong way to implement change. Unfortunately, many public officials think the easiest way to reduce the number of uninsured Americans is to require employers to contribute toward their employees' healthcare costs. These types of proposals are often referred to as employer-responsibility initiatives or "pay or play" legislation.

As small business owners struggle to stay afloat during difficult economic times, it's unfortunate that some elected officials choose to burden our nation's job creators with more costs they likely can't afford. The reality is that these types of proposals, which set a dangerous example are gaining support in statehouses, cities and courthouses across the country.

HERE IS WHAT'S HAPPENED IN SAN FRANCISCO

Recently, the 9th Circuit Court of Appeals ruled in favor of San Francisco's healthcare security ordinance, which requires employers with 20-99 employees to pay $1.17 per hour per employee for healthcare costs. Employers with 100 or more employees must pay $1.76 per hour per employee. These rates will increase in January 2009 to $1.23 and $1.85 respectively, and will continue to increase annually.

Employer healthcare payments can be made either to the employee through at traditional employer-sponsored plan, directly to employees as reimbursements for healthcare costs or to the city to fund its Health Access Program.

TAX REMINDERS

Here are our final tax reminders for this year to help you avoid problems:

• If you have a flexible spending account balance you must clean it out by Dec. 31 if your employer still has not adopted the 2½-month grace period which is now permitted by the IRS. If your employer has not made the change, any money left in your flex spending account is forfeited.
• Mail checks for deductible items before year end to ensure a 2008 write-off. You get to claim the deduction this year even if the checks do not clear until January.
• Make sure you know the rules if you are charging deductible items.
• For charges that you make with a retail store credit card, you are allowed to claim the deduction for the item only in the tax year in which you pay the bill.
• For transactions made with a bank credit card, you take the deduction in the tax year that you charged the goods, even though you pay the bill next year.

And our final suggestion for this year:

• Have a happy holiday season!

The income tax forms will start to arrive in mailboxes in less than three weeks.

JOE THE PLUMBER

I don’t know how I had missed the following joke during the election season, but thought that you might enjoy. It is about applying the tax policy change philosophy to plumbing bills.

Barack Obama discovers a leak under his sink and calls Joe the plumber to come and fix it.

Joe drives to Obama’s house, which is in a very nice neighborhood where it’s clear that all the residents make more than $250,000 per year (or $200,000 per year or $150,000 per year, depending on who’s speaking and when).

Joe arrives and takes his tools into the house. He’s shown the room that contains the leaky pipe under the sink. Joe figures it’s an easy job that will take less than ten minutes. Obama is standing near the door and asks Joe how much it will cost.

Joe immediately says, “$9,500.”

“$9,500?” Obama replies stunned. “But you said it’s an easy job!”

“Yeah, but what I do is charge a lot more to my clients who make more than $250,000 per year so I can fix the plumbing of everybody who makes less than that for free,” responds Joe.

Obama tells Joe there’s no way he’s paying that much, so Joe leaves.

A week later the leak gets so bad that the Obamas have had to put a bucket under the sink, and it fills up every two hours, so they call Joe back. Joe goes back to the Obamas’, looks at the leaky pipe, and says, “It’ll cost you about $21,000.”

Obama exclaims, “A few days ago you told me it would cost only $9,500!”

Joe explains, “Well, a lot of rich people are learning how to fix their own plumbing, so there are fewer of you paying for all the free plumbing we’re doing for the people who make less than $250,000 - and I refuse to charge the lesser income people for plumbing work.”

Obama tries to straighten out Joe. “But don’t you get it? If all the rich people learn how to do their own plumbing and you won’t charge the poor people, what will you do for money?”

Joe immediately replies, “I guess I’ll run for President.”

YEAR-END TAX TIPS

Here are some year-end tax tips from the IRS. Check out the IRS summary at FS-2008-26.

If you are making year-end contributions to charity, keep in mind several important tax law provisions that have taken effect in recent years. Another good summary is in the IRS release IR-2008-138. Remember that Dec. 31 is the last day for most of these actions to occur.

IF YOU CAN'T GET ENOUGH OF LOOKING AT TRACTORS

Check out this web site. It is kind of like YouTube for tractors. It originates from Ireland. Be careful... I found watching it addicting.

http://www.youtractor.com/

POLITICALLY CORRECT GREETING

For those of you so inclined, here’s a Christmas greeting that will offend no one whatsoever. Well, let me re-phrase that…it might very well offend Christians but no one else.

A Politically Correct Holiday Greeting

Best wishes for an environmentally conscious, socially responsible, low-stress, non-addictive, gender-neutral, winter solstice holiday, practiced within the joyous traditions of the religious persuasion of your particular choice, but with respect for the religious persuasion of others who choose to practice their own religion, as well as those who choose to not practice any religion at all. Additionally, a fiscally successful, personally fulfilling, and medically uncomplicated recognition of the generally accepted calendar of 2009, but not without due respect for the calendars of choice of other cultures, whose contributions have helped make our society great, without regard to race, creed, color, religion or sexual orientation.

(Disclaimer: This greeting is subject to clarification or withdrawal. It implies no promise by the wisher to actually implement any of the wishes for him/herself or others, and no responsibility for any unintended emotional stress these greetings may bring to those not caught up in the holiday spirit.)

The American Legion Magazine, December 2008

WATCH OUT FOR THESE NEW PHONE AND EMAIL SCAMS

Just another reminder to not give out private information to anyone that calls you on the phone.

The latest one is a Jury Duty Scam. I have personally gone out to the FBI website to verify this report.

This scam appears to be spreading fast so be prepared should you get this call. Most of us take those summonses for jury duty seriously, but enough people skip out on their civic duty that a new and ominous kind of fraud has surfaced. The caller claims to be a jury coordinator. If you protest that you never received a summons for jury duty, the scammer asks you for your Social Security number and date of birth so he or she can verify the information and cancel the arrest warrant. Give out any of this information and bingo; your identity was just stolen. The fraud has been reported so far in 11 states, including Oklahoma, Illinois, and Colorado. This swindle is particularly insidious because they use intimidation over the phone to try to bully people into giving information by pretending they are with the court system. The FBI and the federal court system have issued nationwide alerts on their web sites, warning consumers about the fraud.

Don't believe me, check it out here:

http://www.fbi.gov/page2/june06/jury_scams060206.htm http://www.snopes.com/crime/fraud/juryduty.asp

http://www.truthorfiction.com/

FRAUDULENT GRAND JURY SUMMONS CONTAINING MALWARE

04/17/08—The IC3 warns consumers of recently reported spam e-mail containing a fraudulent subpoena notifying recipients they are commanded to appear and testify before a Grand Jury. The e-mail attempts to appear authentic by containing a court case number, federal code, name and address of a California federal court, court room number, issuing officers’ names, and a court seal. Recipients are directed to click the link provided in the e-mail in order to download and print associated information for their records. If the recipient clicks the link, malicious code is downloaded onto their computer.

The e-mail also contains language threatening recipients with contempt of court charges if they fail to appear. Recipients are also told the subpoena will remain in effect until the court grants a release. As with most spam, the content contains multiple spelling errors.

If you receive this type of notification and are unsure of its authenticity, you should contact the issuing court for validation.

Be aware; if you receive an unsolicited e-mail, especially from an unknown sender, it is recommended you do not open it. If you do open the e-mail, do not click any embedded links, as they may contain a virus or malware.

If you have received an e-mail similar to this, please file a complaint at www.ic3.gov.

GULF OIL EXEC SAYS GAS COULD HIT $1.00/GALLON

'Gulf Oil CEO says gas could hit $1 next year'

(Patriot Ledger, Quincy, Mass.) -- Gulf Oil CEO Joe Petrowski said on Wednesday that the price of oil could sink to $20 per barrel, and there is a chance gasoline prices could drop as low as $1 per gallon by early next year. He said that after speculators drove oil prices up, there is a chance that the market will overshoot on the way back down, resulting in much lower prices at the pump. Petrowski said that policymakers should make low-cost energy a goal by investing in alternative energy sources, increasing domestic oil reserves, and diversifying the foreign origins of oil so as to be less dependent on unfriendly countries. While he said he believes global warming is a danger, Petrowski is not sure there is as much of a correlation between carbon and global warming as some environmentalists claim. “Carbon is our greatest threat – there’s another myth,” he said. “I do think economic devastation and reliance on foreign supplies of oil (are).” Gulf opened its first E85 ethanol fueling station at Logan Airport in October – just as gasoline prices sank and the demand for ethanol decreased. “Ethanol’s not a great business right now, but it will be,” Petrowski said. He said that cellulosic ethanol will eventually replace corn-based ethanol, and that he thinks the U.S. should eventually get rid of the import tax on ethanol from places like Brazil.

IMPORTANT PENSION INFORMATION

IF YOU ARE OVER 70 ½ AND HAVE NOT TAKEN YOUR REQUIRED MINIMUM DISTRIBUTION FROM YOUR PENSION, THIS IS IMPORTANT

Required payouts from IRAs and plans may yet be waived for 2008, even though Congress decided not to do anything for this year. In light of the stock market’s decline this year, lawmakers considered not requiring folks who are at least 70½ to take payouts for 2008. That way, they wouldn’t be forced to sell investments in their plans with the market near the bottom. New legislation that may be taken up in Dec. would waive payouts for ’09. That’s no help for 2008. Treasury is still seriously considering providing relief for 2008 payouts. Our advice is to delay withdrawals to late Dec. if you don’t need the money. That way, you can take out less if Treasury decides that it can ease the payout rules.

NEED A CHRISTMAS GIFT IDEA - CHECK THIS OUT

State Ag department offers Nebraska holiday gift, Christmas tree brochures

(NDA Press Release) -- According to Greg Ibach, the Director of the Nebraska Department of Agriculture (NDA), the NDA Nebraska Holiday Brochure is a good resource for Nebraska-made gift ideas. Among the pages of the brochure, consumers will find Nebraska food and meat companies that package food products year-round in a variety of different ways. The products range from Nebraska-made candies, jellies, and wines, to dried fruit, meats, and seasonings. A Nebraska Christmas Tree Growers Directory is also available to help consumers find the right Nebraska Christmas tree farm to visit. Free copies of the brochures are available by calling 800-422-6692 or e-mailing agr.promo@nebraska.gov. The brochures are also available online at http://www.agr.ne.gov/.

ECONOMIC CRISIS AFFECTS NEBRASKA CATTLE PRODUCERS

(KOLN/KGIN TV, Lincoln, G.I.) -- The effects of the rocky economy have been felt around the nation for quite some time. Now, Nebraska's cattle industry is feeling the pinch. As commodity prices fluctuate, and input costs rise, cattle producers are finding it much more difficult to survive the tough economic times. "Outside factors are influencing us in the cattle business," said Todd Schroeder of the Nebraska Cattlemen. Just like other start-up businesses, feeding cattle takes a lot of capital, which is becoming more difficult to get with the nation's current economic situation. According to the Nebraska Cattlemen, Nebraska is the largest producer of beef per square mile. Nebraska also ranks number two in live animal and meat exports, and harvests 7 million head annually.

HITLER ON YOU TUBE

How would Adolf have handled the current financial crisis? Click on Zer Dunkoff to find out.

NEW MILEAGE RATES ISSUED

The Internal Revenue Service has issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

· 55 cents per mile for business miles driven
· 24 cents per mile driven for medical or moving purposes
· 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half.

The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.

BE ON THE LOOKOUT FOR THESE ERRORS

Watch out for an error in the instructions for Forms 1099, 1098 and W-2G, and similar information returns. The correct due date for businesses to give a copy of the form to taxpayers is Feb. 17, 2009; not March 2 as the instructions state. The IRS can slap penalties on late issuers. The earlier date was OK’d by Congress in Oct.

CATTLEMEN OPOSE LIVESTOCK TAX PROPOSED BY EPA

(Grand Island Independent) -- A proposed Environmental Protection Agency tax on livestock operations would be devastating to Nebraska's billion dollar livestock industry, according to Dave Wright, president of the Independent Cattlemen of Nebraska. The EPA proposal would establish a greenhouse gas "tax" of $87.50 on each head of beef cattle produced and $175 per head on each dairy animal and $20 for each hog. The proposal is essentially a tax on livestock operations, Wright said. The EPA is seeking public comments until Nov. 28. To comment directly to the EPA visit www.regulation.gov.

MORE THREATS TO ETHANOL MARKET SHARE

(Lincoln Journal Star) -- Due in part to oil prices and national energy policy, the market penetration of ethanol In Nebraska recently reached an all-time high of almost 90 percent. Now turmoil in the ethanol industry has cast doubt on ethanol marketers' ability to keep the dime advantage they have held at the pump in Nebraska elsewhere for most of the past five years. Gas prices continue to plummet. In its daily report delivered Wednesday, AAA says the Nebraska statewide average sits at $1.81 for a gallon of regular, down from $3.13 a year ago. As of last week, regular unleaded gasoline was the cheaper option at the seven BP stores owned locally by Salem Oil Co. A Journal Star check of other Lincoln service stations gave the price advantage to regular unleaded in eight of 14 cases, typically $1.69 versus $1.79. This suggests that ethanol, despite its connection to Nebraska agriculture, doesn't have nearly the brand loyalty of, say, Husker sweatshirts. But despite recent developments at the pump in Lincoln and elsewhere, Todd Sneller of the Nebraska Ethanol Board said the ethanol industry will stay afloat because ethanol sales nationally are anchored in a federal renewable fuels standard (usage requirement) and clean air initiatives in California and numerous other places. The federal mandate is scheduled to get bigger over the next few years.

HERE IS A GIFT IDEA FOR CHILDREN OR GRANDCHILDREN

If your child or grandchild worked this year and had wages or other earned income, funding a Roth is a great gift. You can give $5,000 or what the child earned, whichever is less. But keep in mind that the gift does count toward the $12,000 annual gift tax exclusion. This does not create a tax deduction but a Roth can grow into a nice nest egg, especially if you keep making pay-ins each year.

IF YOU ARE A SINGLE MEMBER LLC, TAKE NOTE

If you have a single member LLC and you pay wages, you will need to have an ID number starting January 1, 2009. Per new IRS rules, single member/single owner limited liability companies are required to change how they report wages and pay federal employment taxes in 2009.

HAPPY THANKSGIVING!

Click The Pumpkin

US FEEDYARDS SEE SHARP DECLINE IN CATTLE

(AP) — The number of cattle going into feedlots in Nebraska, Kansas and across the nation has taken a steep dive. The latest cattle-on-feed statistics come at a time of high input costs for fattening the beef and deep losses for the nation’s cattle-feeding industry. Kansas has 2.23 million head of cattle in its large feedyards as of Nov. 1. That number is down 8% from the same month a year ago. Cattlemen during October also placed 15% fewer cattle on feed, meaning the available slaughter supply will remain tight in the coming months. The Nebraska inventory of cattle on feed as of Nov. 1 was down 4% from last year and 5% from 2006. Since Labor Day, live cattle futures have dropped $20 a hundredweight because of concerns about domestic and export demand.

NEBRASKA NUMBER ONE IN COMMERCIAL MEAT

(Grand Island Independent) -- Nebraska was the nation's top commercial red meat producer during October as production totaled 666.3 million pounds, compared to 680.3 million pounds in October 2007. Nebraska was the nation's top cattle slaughter state with 614,900 head, but that's down from last October's 635,000 head. Nebraska's hog processing in October was 726,900 head, compared to October 2007's 724,300. According to Erin Daley, United States Meat Export Federation economist, while the world's economy is slowing down, both U.S. beef and pork export levels continued to exceed expectations through the first nine months of the year. According to Daley, U.S. pork exports built on the record set in August, increasing 61 percent in September over totals from a year ago.

FOLLOW THIS ADVICE TO HELP ELIMINATE SPAM

Here is some sound advice from Snopes.com. This may eliminate some spam from your mailbox if you follow it.

1) Any time you see an E-Mail that says forward this on to '10' of your friends, or sign this petition, or you'll get bad luck, good luck, or whatever, it almost always has an E-Mail tracker program attached that tracks the cookies and E-Mails of those folks you forward to.

The host sender is getting a copy each time it gets forwarded and then is able to get lists of 'active' E-Mails to use in SPAM E-Mails, or sell to other spammers.

2) Almost all E-Mails that ask you to add your name and forward on to others are similar to that mass letter years ago that asked people to send business cards to the little kid in Florida who wanted to break the Guinness Book of Records for the most cards. All it was, and all any of this type of E-Mail is, is a way to get names and 'cookie ' tracking information for telemarketers and spammers - - to validate active E-Mail accounts for their own profitable purposes.

You can do your friends and family members a GREAT favor (PLEASE) by sending this information to them. You will be providing a service to your friends, and will be rewarded by not getting thousands of spam E-Mails in the future!

If you have been sending out (FORWARDING) the above kinds of E-Mail, now you know why you get so much SPAM!

Do yourself a favor and STOP adding your name(s) to those types of listings regardless how inviting they might sound! You may think you are supporting a GREAT cause, but you are NOT in the long run. Instead, you will be getting tons of junk mail later! Plus, we are helping the spammers get rich! Let's don't make it easy for them!

Also: E-Mail petitions are NOT acceptable to Congress/Parliament or any other organization. To be acceptable, petitions must have a signed signature and full address of the person signing the petition.

IS YOUR VEHICLE OWNED BY YOUR CORPORATION?

If you are a corporation with a vehicle owned by the corporation, don't forget to add back to your W-2 the personal use of your corporate vehicle. The IRS has charts on how to calculate per use. Check out www.irs.gov for more information.

If you have any questions, please feel free to contact us.

Larry Kopsa CPA

TOP 10 FARMER TAX BLUNDERS

National Sorghum Producers Sorghum Grower magazine published an article I wrote called, Top 10 Farmer Tax Blunders...and how to avoid them! Read the article to avoid making these blunders. Find it in the Fall 2008 Hybrids Issue, or click on this link to check it out: Tax Blunders. Scroll down to pages 18 and 19.

LATE HARVEST - LATEST SINCE 1992

(Nebraska Ag Connection) -- For the week ending Sunday, wet weather once again slowed harvest progress, according to USDA. Corn and sorghum harvests remained over two and a half weeks behind average with 2008 being the latest harvest since 1992. Corn harvested was 67% complete, well behind last year's 96%. Sorghum harvest was 61% complete, behind last year's 96%. Winter wheat conditions rated 66% good and 15% excellent, well above last year's rating. This is the best wheat condition rating in ten years.

JUST HOW BAD IS THE ECONOMY? MAYBE YOU CAN'T BELIEVE ALL YOU HEAR

All we seem to hear is bad economic news. If you read the "real" economic news, the economy is not great, but certainly not as bad as you would think. The "talking heads" on the tube would make you think that the big depression is coming back. As the columnist George Will recently said, "an airplane that lands safely does not make news." Did you know that in October the economy rose by about 3%? That is off from past growth, but is still positive.

Here is an article that I thought might shed a little light on the subject.

(Star Tribune, Minneapolis) -- Suppose that everything you know is wrong.

· Consider the commonly held belief that corporate America is headed into a recession, tapped out for cash. Not so. Cash compared with total corporate debt is near a 50-year high.

· Certainly consumer debt appears unmanageable, with late payments nearing record levels on credit cards and real estate, right? Not true. The percentage of home loans 30 days or more past due, while rising, is nowhere near record levels.

· You say troubled home and auto loans are dragging down the economy as never before? Wrong again. While together such loans lopped 1.5 points off U.S. economic growth in recent quarters, it has been worse. In the final three months of last year, housing and auto pared more than 2 points from the chief barometer of economic progress.

“Most of that, I’ve got to believe, is behind us,” said Jim Paulsen, chief investment strategist at Wells Capital Management. Paulsen argues that the economy has more going for it than popularly believed. Paradoxically, the president, Congress and Federal Reserve officials have stoked fears instead of calming them, in Paulsen’s view. “We’ve never had a fear crisis like this,” he said. “All of our monetary and fiscal tools are to restore economic fundamentals. When it comes to fear, our toolbox is empty.” In earlier economic crises, three of every four problems were fundamental roadblocks to economic growth, Paulsen said. “This one is three-quarters fear.”

FARMLAND VALUES CONTIUE TO INCREASE IN VALUE

(AP) -- The Federal Reserve says the value of cropland in the Plains region jumped 20% in the third quarter compared to the same time a year ago. The Federal Reserve Bank of Kansas City's report released Monday covers Colorado, Kansas, Nebraska, Oklahoma, Wyoming and parts of New Mexico and Missouri. It estimates how much land values have increased over a year, but the report doesn't include an estimated price per acre. The value of Nebraska farmland increased the most in the region. Non-irrigated land jumped 28%, irrigated land gained 26% and ranchland gained 17%.

CHRISTMAS CAKES

The Holidays are upon us...what a busy time of year! If you plan to do any baking in the midst of all the holiday chaos, you might enjoy the following link. Pick A Cake

I thought it was pretty cool. I forwarded it to my wife... I'm not sure if she will get the hint. All you have to do is click on a link and the recipe will come up.
Enjoy!

Larry Kopsa CPA

FARM CREDIT MARKET LIKELY TO ERODE IN 2008

(AP) — Farmers with good credit in the states included in the Federal Reserve Bank’s 10th District have generally still been able to borrow money, but that likely will become harder in the final three months of 2008. The Federal Reserve Bank of Kansas City surveyed banks in the district, which includes Nebraska. During the third quarter, loan demand remained strong and the amount of money available to lend remained slightly ahead of last year. About 20% of banks raised collateral requirements. In the fourth quarter, farm loan demand is expected to increase while banks further tighten their credit standards.

INVESTING IN TODAY'S CHALLENGING MARKET

The stock market has made headlines this year with record volatility, record drops, and even record gains. And while many investors are still sitting on the sidelines, you may already be looking for bargains amidst the wreckage. So, we're writing to alert you to a possible problem with acting now.

Are you considering buying mutual funds in a taxable account (as opposed to an IRA or 401K)? Then you should be aware that most funds distribute capital gains this time of year. These distributions are taxable to you as long-term capital gains, even if you just bought the fund.

The average U.S diversified stock fund is down about 33% for the year. Funds in most other categories are down as well. But many of those funds sold assets for nice profits earlier this year. This means you may get socked with a nasty tax surprise!

There are generally two ways to avoid this bite. The first is to find funds without capital gains to distribute. The second is to wait until a fund actually pays out capital gain distributions. Make sure that you discuss with your broker to see if they expect distributions, and if so, when they will be paid.

Today's challenging market makes it even more important to invest with an eye on taxes.

GRAIN PROCESSORS WANT MORE CRP ACRES IN PRODUCTION

(Brownfield Network) -- The nation’s grain buyers and processors want more CRP acres returned to production. Randy Gordon of the National Grain and Feed Association says the need for grain-based products continues to grow, both in the U.S. and around the world. But he explains that most of the growth in acreage has been outside of the U.S. in the past eight years. “(The U.S. has) only increased our acreage base by about a million acres since 2008, whereas in South America they’ve increased theirs by over 58 million acres,” Gordon says. Gordon says the Grain and Feed Association will ask the new Obama administration to allow farmers to pull CRP acres back into production without paying a hefty penalty, and that there are a number of acres in CRP that can be farmed in an environmentally sustainable way.

CORN HARVEST CALLED 2ND HIGHEST ON RECORD

(AP) — The Nebraska corn crop is expected to be the second-highest on record at 1.38 billion bushels. The latest USDA estimate says Nebraska's corn crop will come in 7% under last year's record harvest of 1.47 billion bushels. Nebraska's soybean crop will come in at an estimated 14% higher than last year. Sorghum production was forecast to be the third-highest on record -- 19% below a year ago. Nebraska production of sugar beets was down 20% from last year, mostly because fewer acres were planted for harvest. Potato production was forecast at 4% less than a year ago.

AG LAND PRICES MAY BE WILTING

(Omaha World-Herald) -- After several years of double-digit growth, agricultural land values might be on the decline. While prices for cropland remain high, some properties are fetching 10 to 20% less than they would have a few months ago, agricultural real estate agents said. Researchers at the University of Nebraska-Lincoln and Iowa State University say they don't yet have data to show a decline, but anecdotal evidence suggests the red-hot markets of recent years may be cooling. State Sen. Kent Rogert of Tekamah, who sells agricultural real estate, seed and other ag services, said land prices in northeast Nebraska -- which had experienced a "land boom'' -- have dropped as much as 20% in three months. Chris Langemeier of Schuyler, another state senator who sells agricultural real estate, said he has not seen a downturn. At a land auction Friday in Leigh, a 40-acre parcel of dryland farm ground sold for about $2,800 an acre, he said. Researchers and real estate agents said the next several months will reveal more about future land values.

CALL TO ACTION

A NEW ADMINISTRATION….NOW WHAT?

As we have heard, “change is coming.” We are concerned that one change that is coming is higher taxes! Given the projected increases in the federal income tax, capital gains, and qualified dividend rates, you may want to take action before December 31st to keep more of your money in your pocket. To determine if you'll be affected, we have prepared the enclosed checklist for you. Please click on this link to review the checklist: Call to Action Checklist.

If you feel that you might be impacted by any or all of these items, contact us! If you already have a pretax appointment scheduled with us, we will be discussing these items at that time.

We are watching the activity in Washington D.C. very closely so that we can best serve you, therefore we will keep you posted. Let us know if you have any questions.

It is a pleasure serving you!

Larry Kopsa CPA

RECALLING OUR FOUNDER'S WISDOM

“A people ... who are possessed of the spirit of commerce, who see and who will pursue their advantages may achieve almost anything.” - George Washington


“Agriculture, manufactures, commerce, and navigation, the four pillars of our prosperity, are the most thriving when left most free to individual enterprise.”- Thomas Jefferson

“To take from one because it is thought that his own industry and that of his father’s has acquired too much – in order to spare to others, who, or whose fathers, have not exercised equal industry and skill – is to violate arbitrarily the first principle of association, the guarantee to everyone of a free exercise of his industry and the fruits acquired by it.”- Thomas Jefferson

“A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned -- this is the sum of good government.” - Thomas Jefferson

"The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government -- lest it come to dominate our lives and interests."- Patrick Henry

“There are more instances of the abridgement of the freedom of the people by the gradual and silent encroachment of those in power, than by violent and sudden usurpation.”- James Madison

“[T]he government of the United States is a definite government, confined to specified objects. … Charity is no part of the legislative duty of the government.”- James Madison


“When the people find that they can vote themselves money, that will herald the end of the republic.”- Benjamin Franklin


“It does not take a majority to prevail ... but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men.” - Samuel Adams

QUESTION ON ENERGY CREDITS

Larry,

I hope you can help me with a personal question. I understand that there are some energy credits that I can get by purchasing energy efficient insulation, etc. I’ve been trying to find what actually qualifies and what doesn’t. Could you help?

Charles

Charles,
There are some energy credits out there that could reduce your income tax bill by $500. Not a big deal, but if at the same time you are making some purchases; you just as well get the credit. One thing you have to remember is that the credits are not in effect until purchasing after January 1, 2009 and ending December 31, 2009. You might want to wait until after the first of the year.There is a web site out there that gives you some good information. You might check out www.ase.org\taxcredits.

Here’s a summary:

· Purchasing insulation, exterior doors or roofs. There’s 10% cost of the product but not the installation of up to $500. This includes seals to limit air infiltrations such as caulking and weather stripping materials as well as storm doors. Roofs must meet certain standards before they qualify.
· Central air conditioner, heat pump, water heater or corn stove. You can receive a credit of up to $300 towards the full purchase price of any qualifying items including the installation cost.
· Exterior windows that meet certain standards, including sky lights and storm windows. There is 10% of the total cost up to $200.
· Furnace and Boiler. Can give you a credit up to $150 towards the full purchase price or $50 for efficient air circulating furnace fans including installation cost for both furnace and fan.Windows, doors, insulation and roof must be expected to last at least five years. A two year warranty is sufficient to demonstrate this.

I hope this is helpful.

Larry Kopsa CPA

BRRRR! SNOW BLANKETS LONDON AS HOUSE OF COMMONS APPROVES GLOBAL WARMING BILL

(The UK Register) -- Snow fell as the UK's House of Commons debated Global Warming yesterday -- the first October snow fall in the London metropolis since 1922. The Mother of Parliaments was discussing the Mother of All Bills for the last time, in a marathon six hour session. In order to combat a projected two degree centigrade rise in global temperature, the Climate Change Bill pledges the UK to reduce its carbon dioxide emissions by 80% by 2050. The bill creates an enormous bureaucratic apparatus for monitoring and reporting, which was expanded at the last minute. In the Commons, there wasn't an out-and-out skeptic to be found. It was 90 minutes before Member Peter Lilley, in amazement, asked why there hadn't been a cost/benefit analysis made of such a major change in policy. He was told to shut up by the Deputy Speaker. Lilley was one of only five out of 653 Members to vote against the Climate Bill in its second reading.

FARM SUBSIDIES MAY BE IN FOR A CHANGE

(Omaha World-Herald) -- Little is being said about farm policy during this year's presidential race, with bad economic news from Wall Street overshadowing most other issues. But Midlands farmers and ranchers are nervously looking for clues about their economic futures. Billions of dollars could be at stake. John McCain says he would eliminate subsidies if he could -- including the ethanol subsidies and mandates that created new markets for corn and raised prices for the grain. Barack Obama supports ag subsidies but says he would shift some dollars from the biggest and richest farms to do more for small family farms, organic farms and young farmers starting out. Farmers said they are craving more details. "We haven't heard enough about agriculture in this country, from either candidate," said Jeff Metz, a wheat farmer from Angora, Neb. who is a Republican supporting McCain because he fears that Obama will raise taxes. Joy Philippi, a 51-year-old Obama supporter who raises hogs and grain on 400 acres near Bruning, Neb., also has questions about inevitable budget cuts. But with a farm bill that will remain in place until 2012, the next president may have little opportunity to significantly change U.S. farm policy, according to Brad Lubben, a policy specialist at the University of Nebraska-Lincoln. Still, Nebraska, Iowa and Illinois each collected more than $1 billion in crop subsidy payments in 2005, a recent peak year for subsidy payments, according to an analysis by the Environmental Working Group, a nonprofit research organization that maintains a Internet database tracking farm subsidies. Metz said farmers' willingness to spend their payments on anything from a new combine to home repairs means that farm payments benefit Main Street as well as the countryside. Meanwhile, the Environmental Working Group contends that subsidies should be directed toward the farms "that are really struggling and really need help." During Senate debate on the 2008 farm bill, both Obama and McCain supported provisions that would have more strictly limited benefits paid to wealthy farmers and landowners. The final version of the 2008 farm bill included a $2.5 million total cap on the income a farming couple can earn and still receive subsidy payments; and a $340,000 total limit on most crop subsidies.

AURORA ETHANOL PLANT OPENING DELAYED

(Lincoln Journal Star) — Aventine Renewable Energy Holdings Inc. will delay the opening of its new ethanol plant in Aurora by roughly three months because of cost concerns. The Pekin, Ill., company had planned to open the 113-million-gallon plant next March but now is shooting for June. Aventine’s Daniel Trunfio says the company is still committed to completing its Nebraska project. But he says the construction delay will help Aventine stretch its resources.

EDITORIAL FROM THE WALL STREET JOURNAL - ARE WE READY FOR A LIBERAL SUPERMAJORITY?

(Wall Street Journal) -- Friday's Wall Street Journal editorial states that if the current polls hold, Barack Obama will win the White House on November 4 and Democrats will consolidate their Congressional majorities, probably with a filibuster-proof Senate or very close to it. Without the ability to filibuster, the Senate would become like the House, able to pass whatever the majority wants. "This would be one of the most profound political and ideological shifts in U.S. history," writes the Journal. "Liberals would dominate the entire government in a way they haven't since 1965, or 1933. ... If the U.S. really is entering a period of unchecked left-wing ascendancy, Americans at least ought to understand what they will be getting, especially with the media cheering it all on." The Wall Street Journal lists several policy proposals that "have very good chances of becoming law in 2009 or 2010" if current polling is accurate. They include: Medicare for all ("The Obama plan would shift between 32 million and 52 million from private coverage to the huge new entitlement. Like Medicare or the Canadian system, this would never be repealed."); Overhaul of the business sector ("The financial industry will get an overhaul in any case, but telecom, biotech and drug makers, among many others, can expect to be investigated and face new, more onerous rules."); and union supremacy ("One program certain to be given right of way is 'card check' ... trashing the secret-ballot elections that have been in place since the 1930s. The 'Employee Free Choice Act' would convert workplaces into union shops merely by gathering signatures from a majority of employees, which means organizers could strongarm those who opposed such a petition.") The Journal also claims that "taxes will rise substantially, the only question being how high" -- adding he wants to lift or eliminate the cap on income subject to payroll taxes that fund Medicare and Social Security.

ECONOMIC GALE BLOWS INTO NEBRASKA CORNFIELDS

(Lincoln Journal Star) -- The financial crisis gripping Wall Street has spilled over into grain markets. It got much of the blame for the corn price falling the daily limit last week on the Chicago Board of Trade and for many of the state’s grain elevators, in the middle of harvest, not to post cash bids. The more immediate concern to corn farmers might be a sustained price slide that had wiped out much of the gain set in motion in 2006 by robust demand from the ethanol and export sectors.

From Oct. 13, 2006, the value of a bushel of corn at Frontier Cooperative in Brainard, Neb. rose from $2.83 to a high of $7.18 on June 27. It dipped below $4 on Oct. 7 and has lost another 30 cents since then ($3.70 on Monday).

A year ago, Auburn Mayor Bob Engles was promoting a 12-mile-long pipeline to the Missouri River as an important step toward hosting an ethanol plant there. Now the sense of urgency for that $7 million to $8 million project has diminished and possibilities for a $200 million ethanol outlet have stalled out with the dirt-work stage. The credit market for ethanol dried up last year, Engles said. “With the recent developments on Wall Street, that certainly hasn’t improved that.” Todd Sneller of the Nebraska Ethanol Board conceded “the most difficult period in recent history to secure new financing for a new ethanol plant.” That’s particularly true if the project team has no other operating ethanol plants. But Sneller said he can feel good about new plants opening at Wood River and Bridgeport, to a third getting close at Atkinson, and to a federal ethanol mandate that calls for 15 billion grain-based gallons by 2012.

SOME THINGS NEVER CHANGE

Did you possibly think that we were the first to have problems? Some things never change!!

“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest we (Rome) become bankrupt. People must again learn to work, instead of living on public assistance.” Cicero — 55 BC

WORDS OF WISDOM

The happiest people don’t necessarily have the best of everything. They just make the best of everything. - Author Unknown

CATTLE AND ETHANOL AN OPPORTUITY FOR NEBRASKA

(High Plains/Midwest Ag Journal) -- Distillers grains, the co-product from ethanol production, has helped strengthen Nebraska's economy and increase the efficiencies in feeding cattle in the state, according to Craig Uden of Darr Feedlot in Cozad, Neb. According to an analysis by the Renewable Fuels Association, ethanol plants across the country produced 23 million metric tons of livestock and poultry feed last year. Uden said the availability of distillers grains has been tremendous for Nebraska. "It's a golden opportunity for this state," he said. "Because we have cattle and corn, we have an advantage over most states." Although distillers grains can be dried and shipped across the country, the biggest economic benefit comes when it can remain "wet" or only partially dried and delivered to nearby livestock operations.

US TREASURY HUMOR

Treasury released the new US Dollar bill today.

EVERYTHING YOU WANTED TO KNOW ABOUT AIRLINE FEES BUT WERE AFRAID TO ASK

Here is the perfect list that puts together all the fees that the airlines now charge their customers.

One click to:

http://www.swabiz.com/travel_center/pod_chart.html

and you can see what each airline charges for everything from making a reservation by phone to checking in oversized baggage.

Here’s how you can pay $702 in fees on your next $120 flight from Omaha to Chicago

If you looked at the chart above at all the fees, you can see how crazy they are. To illustrate, I thought I would build a hypothetical flight to go golfing in Chicago taking my golf clubs on the trip. The cheapest airfare is a bargain for about $120 roundtrip. Now come the extras. First, lets assume you check in two bags each way ($15 for the 1st and $50 for the 2nd = $65 each way = $130 total); select a special seat assignment ($25 each way = $50); have a meal ($5 each way = $10); enjoy a drink ($6 each = $12) plus add $125 each way ($250 total) for an oversized bag (golf clubs) and add $125 each way ($250 total) for one of your bags being over 50 pounds. Add all those fees up and you could actually pay an extra $702 in fees (585%) to fly the friendly skies. Maybe in the future the airlines should give away seats if you pay all the fees.

2008 ELECTION

My dad always said don't talk about religion or politics, but I just had to pass this on.

AUTO DEDUCTIONS

The attached is a good summary of the rules for auto deductions. Let me know if you have any questions: Maximizing Car and Truck Deductions.

It is a pleasure serving you.

Larry Kopsa CPA

MORE ON FDIC

RUMORS

I recently published a blog entry on FDIC. There are a lot of rumors going around regarding FDIC Protection. Snopes.com addresses some of these rumors in their article: FDIC AND YOU. I thought you might be interested.

BAILOUT PLAN

You may have already seen the We Deserve It Dividend, an article by T.J. Birkenmeier, proposing to give $85,000,000,000 to America, instead of using this money to bail out banks and lending institutions.

A client who sent this link to me was all for voting this guy in as President. I read the article and, being a "math guy", noticed that the decimal was off three digits, which totally blew Birkenmeier's plan out of the water. Snopes.com realized the error as well. Check it out by clicking on the link above.

NOAH & THE ARK TODAY

If you ever wondered if Noah could build the Ark today, wonder no longer. Check out the web site below. Unfortunately there is more truth than comedy in this: Noah & The Ark Today.

NEBRASKA ECONOMY NOT FEELING AS MUCH PAIN

'State economy not doing all that bad, Fed economist says'

(Norfolk Daily News) -- Compared to the national economy, Nebraska's economy is doing well. Jason Henderson, Federal Reserve Bank vice president in Omaha, said Monday evening that the Nebraska economy is doing well in many areas, but the farm areas are "putting us over the top." Housing, construction and job growth are some of the areas in which Nebraska's economy has been outperforming the national economy, Henderson said. Part of it has been because Nebraska has been fiscally conservative, he said. Henderson said Nebraska is enjoying a surge in manufacturing exports, specifically food and machinery.

'Nebraska Chamber Shares Economic Status of State'

(KTPH TV, Sioux City, IA) -- While the U.S. economy is in turmoil, the state of Nebraska's economy is holding steady. The Nebraska Chamber of Commerce & Industry presented its annual Legislative Forum to the South Sioux City Chamber on Tuesday. Barry Kennedy, president of the State Chamber, discussed topics like taxes, quality of life and labor laws, and identifying issues facing the Nebraska business community. "Our challenge is to get other people to come here and see what we have, see our work ethic," Kennedy says.

QUESTIONS ON FDIC COVERAGE

Now with the supposed economic crisis, we've been receiving questions on FDIC coverage. One of our accountants, Megan Munsell, researched this subject and came up with answers to some of the questions you may be having.

Find out if you are FDIC Insured with these common questions:

Q: What types of bank accounts are insured?

A: Checking, Savings, Trust, Certificates of Deposit (CDs), IRA Retirement Accounts, and Money Market Deposit Accounts.

Q: What is not FDIC Insured?

A: Investments in mutual funds, annuities, stocks, bonds, Treasury securities and safe deposit boxes. See additional questions and answers below for more on these accounts.

Q: How much is insured?

A: The basic insurance amount is $100,000 per depositor per insured bank. Certain retirement accounts, such as Individual Retirement Accounts, are insured up to $250,000 per depositor per insured bank. If you and your family have $100,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage -- your deposits are fully insured.

Q: What if we have more than $100,000 deposited in the same bank?

A: The FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership. You can qualify for more than $100,000 in coverage at one insured bank if you split up your deposit accounts into different ownership categories.

The most common ownership categories are:

Single Accounts: these are deposit accounts owned by one person and titled in the person’s name only. All of your single accounts at the same bank are added together and the total is insured up to $100,000.

Note: Retirement and qualifying trust accounts are not included in this ownership category.

Certain Retirement Accounts: these are deposit accounts owned by one person and titled in the name of that person’s retirement plan.

Only the following types of retirement plans are insured in this ownership category:

Individual Retirement Accounts (IRAs) including traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs

Section 457 deferred compensation plan accounts (whether self-directed or not)

Self-directed defined contribution plan accounts

Self-directed Keogh plan (or H.R. 10 plan) accounts

All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000.

Note: Naming beneficiaries on a retirement account does not increase deposit insurance coverage.

Joint Accounts: these are deposit accounts owned by two or more people. If both owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $100,000. For example, if a husband and wife share accounts at one bank, the total of their accounts is insured up to $200,000.

Revocable Trust Accounts: these are deposits held in either payable-on-death (POD) accounts or living trust accounts. Deposit insurance coverage for revocable trust accounts is based on each owner's trust relationship with each qualifying beneficiary. While the trust owner is the insured party, coverage is provided for the interests of each beneficiary in the account.

The FDIC insures the interests of each beneficiary up to $100,000 for each owner if all of the following requirements are met:

The beneficiary is the owner's spouse, child, grandchild, parent, or sibling. Adopted and stepchildren, grandchildren, parents, and siblings also qualify. In-laws, grandparents, great-grandchildren, cousins, nieces and nephews, friends, organizations (including charities), and trusts do not qualify.

The account title must indicate the existence of the trust relationship by including a term such as payable on death, in trust for, trust, living trust, family trust, or an acronym such as POD or ITF.

For POD accounts, each beneficiary must be identified by name in the bank's account records.

If any of these requirements are not met, the entire amount in the account, or any portion of the account that does not qualify, would be added to the owner's other single accounts, if any, at the same bank and insured up to $100,000. If the revocable trust account has more than one owner, the FDIC would insure each owner's share as his or her single account.

Note: In applying the $100,000 per-beneficiary insurance limit, the FDIC combines an owner’s POD accounts with the living trust accounts that name the same beneficiaries at the same bank.

Additional Questions and Answers:

Q: What about Mutual Funds?

A: The key point to remember when you contemplate purchasing mutual funds, stocks, bonds or other investment products, whether at a bank or elsewhere, is: Funds so invested are NOT deposits, and therefore are NOT insured by the FDIC – or any other agency of the federal government.

Q: Securities?

A: Securities you own, including mutual funds, that are held for your account by a broker, or a bank's brokerage subsidiary are not insured against loss in value. The value of your investments can go up or down depending on the demand for them in the market. The Securities Investors Protection Corporation (SIPC), a non government entity, replaces missing stocks and other securities in customer accounts held by its members up to $500,000, including up to $100,000 in cash, if a member brokerage or bank brokerage subsidiary fails.

Q: Treasury Securities?

A: Treasury securities include Treasury bills (T-bills), notes and bonds. T-bills are commonly purchased through a financial institution. Even though Treasury securities are not covered by federal deposit insurance, payments of interest and principal (including redemption proceeds) on those securities that are deposited to an investor's deposit account at an insured depository institution ARE covered by FDIC insurance up to the $100,000 limit.

Customers who hold Treasury securities purchased through a bank that later fails can request a document from the acquiring bank (or from the FDIC if there is no acquirer) showing proof of ownership and redeem the security at the nearest Federal Reserve Bank.

Q: Safe Deposit Boxes?

A: The contents of a safe deposit box are not insured by the FDIC. If you are concerned about the safety, or replacement, of items you have put in a safe deposit box, you may consider purchasing fire and theft insurance. Consult your insurance agent for more information.

Information provided by FDIC.gov

DID YOU KNOW???

This beats getting out of the car and looking for the gas cap door. Why doesn't anyone tell us these simple things? Why didn’t the manufacturer make more of a point of this? Seems as if it is reasonably important.

I have been driving for many years... I would think I should have noticed the little secret on my dashboard that was staring me in the face the whole time...I didn't...and I bet you didn't either...Have you ever rented or borrowed a car and when arriving at the gas station wondered...mmmm, which side is the gasfiller cap?

My normal solution was to stick my head out the window, strain my neck and look, try to see in the side mirrors or even get out of the car! Well ladies and gentlemen, I'm going to share with you my little secret so you will no longer look like Ace Ventura on your way to the gas station or put your neck at risk of discomfort or injury.If you look at your gas gauge, you will see a small icon of a gas pump?The handle of the gas pump will extend out on either the left or right side of the gas pump? If your tank is on the left, the handle will be on the left? If your tank is on the right, the handle will be on the right (see photo). It is that simple!

Don't feel dumb, just go out and share the world's best kept auto secret with your friends.

NEW TAX LAW

Correction: The dates of 4/9/08 and 6/30/08 were incorrect when this post was published on 9/15/08. These dates have been corrected and appear in red below.

As I mentioned in my post on August 4th, the New Homebuyers' Tax Credit gives a $7,500 credit to some people buying homes between 4/9/08 and 6/30/09. But beware, this is an interest free loan, not a true credit, and must be paid back over a period of 15 years.

Below are a couple of questions I have received about the new credit, including my responses.

Q - If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

A - Yes, but you must meet certain qualifications in both years. The law allows taxpayers to choose to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. There are some detailed rules on this which you should discuss in person with your tax preparer to make sure that you qualify.

Q - If I purchase a home in 2009, can I choose whether to report the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

A - Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 amounts, then you can choose the year that yields the largest credit amount. There’s also a new special website devoted just to this new credit.

NON CPA TAX PREPARERS CRITICISED

According to the Treasury Department, many returns done by unlicensed paid preparers are riddled with errors. Agents made undercover visits to 28 such preparers and found that 61% of the returns contained mistakes, and in a third of those cases, the preparers acted recklessly.

In one example the preparer added in deductions the taxpayer wasn’t entitled to, or claimed dependents erroneously. One of the problem preparers the Treasury visited prepared over 700 actual returns for taxpayers during the most recent filing season. This information gives legs to a bill forcing unlicensed preparers to register with the IRS.

Preparers who aren’t CPAs, lawyers or enrolled agents will have to pass a test to do tax returns. As Senator Grassley once said, “it does not seem right that you have to have a license to cut hair, but do not need to have a license to do a tax return.”

We at Kopsa Otte know that this is true. We get to see a lot of returns when we do second opinions. Just this week we are amending a return prepared by an unlicensed preparer and the happy new client is getting refunds of over $3,000. If you are not a client of Kopsa Otte, and are interested in having us do a Second Opinion on your tax return, contact Amanda Hansen at ahansen@kopsaotte.com for details.

WILL FALLING PRICES HURT LAND VALUES?

(Des Moines Register) -- Iowa farmland owners and investors should be mindful of Wall Street's current trouble, but they should also watch corn and soybean prices more closely, a farmland broker said this week. Troy Louwagie of Mount Vernon, a land consultant with Hertz Real Estate Services, said the Iowa Farm and Land Realtors survey showed that farmland values rose by 6.6% since the last survey in March and by 17.6% since the same survey a year ago. Land prices have risen because of record commodity prices, Louwagie said, and a continuation of those prices will determine how long the increase continues. The survey released Tuesday showed a slight cooling from an annual average farmland value increase of 20% or more during the last five years because less land is being bought this year for suburban commercial and housing development and recreation. As a result, Iowa is returning to its traditional pattern where farmers dominated land purchases.

HEINEMAN PROMOTES BEGINNING FARMERS PROGRAM

(Grand Island Independent) -- The future of agriculture was on the mind of Gov. Dave Heineman at Husker Harvest Days on Wednesday in Grand Island. One of the many activities on Heineman's agenda at Husker Harvest Days was promoting new opportunities for Nebraska's Beginning Farmers Program. Heineman said the Agriculture Census in 1978 found the average age of state farmers was 49 years old. In 2002, the age rose to 54. Heineman signed a law in April that removes several eligibility restrictions within the Beginning Farmer Tax Credit Program. The new ag property tax exemption allows qualified beginning farmers to claim an exemption on up to $100,000 of personal property used in production agriculture. The exemption can be claimed for three years. To apply for the Beginning Farmer program or get more information, contact the Nebraska Department of Agriculture by calling (800) 753-9396 or by visiting http://www.agr.ne.gov/.

New in 2008
Personal Property Tax Exemption
And Other Changes

Beginning Farmer may receive Personal Property Tax Exemption:

· Up to $100,000 of valuation for agricultural machinery.

· Each year for three years.

· Apply for eligibility certificate from the Beginning Farmer Program.

· Make initial application to county assessor by December 31st of the year preceding the year for which exemptions are sought.

· The County Assessor shall approve or deny the application for exemption and notify the applicant on or before February 1.

Expanded Owner’s Eligibility for the Beginning Farmer Tax Credit Act:

· To include individual or business entity which has an ownership interest in an agricultural asset located in the State of Nebraska.

· To include asset owners and beginning farmers who are related and have developed an approved succession plan.

SOMETHING TO PONDER

What was the reason given for developing the Department of Energy during the Carter administration? We have spent multi billions of dollars in support of this agency and I am willing to bet not one person who reads this will remember the reason given. It was very simple.

THE DEPARTMENT OF ENERGY WAS INSTITUTED TO LESSEN OUR DEPENDENCE ON FOREIGN OIL.

NOTE: IN 2008 THE BUDGET FOR THIS DEPARTMENT IS NOW AT $24.2 BILLION A YEAR. THEY HAVE 16,000 FEDERAL EMPLOYEES AND APPROXIMATELY 100,000 CONTRACT EMPLOYEES.

RECOVERY REBATE CREDIT WORKSHEET

As we have discussed quite a bit, there is a lot of confusion over how the rebates will be handled on the 2008 tax returns, both for people who receive checks and for those who don't.

The IRS has just released this draft of the instructions for the 2008 1040. On pages 18 and 19 are the rebate credit worksheets for computing the amounts to enter on Line 70 of the 1040. Add this in… think this is confusing. Check out the two page, 29 line form that you have to fill out to determine if your rebate is correct.

AT A GLANCE: AMERICA'S FALLING OIL PRODUCTION

According to a report from the Energy Information Administration – a division of the U.S. Energy Dept. – the United States imported about 60% of the oil it consumed during 2006. Our five largest foreign suppliers of crude oil and petroleum products were: Canada (17.2%); Mexico (12.4%); Saudi Arabia (10.7%); Venezuela (10.4%) and Nigeria (8.1%).

The U.S. produces 10% of the world’s oil and consumes 24% -- about 20.7 million barrels of oil each day. Of that amount, 70% is consumed for transportation purposes.

U.S. oil consumption is expected to increase 2.1 MMbd by 2030.

U.S. domestic oil production has fallen significantly in the past three decades – due in large part to Congress’ moratorium on oil and gas leasing in the Outer Continental Shelf (OCS). In 1970, domestic production of crude oil averaged 9.7 MMbbl/d. In 2006, total U.S. domestic crude oil production, including Federal offshore, averaged 5.1 MMbbl/d, a decrease of about 47% from 1970.

The top crude oil-producing States in 2006 (and their percent share of domestic production) were Texas (21%), Alaska (15%), California (12%), Louisiana (4%), Oklahoma (3%), and New Mexico (3%). Production on Federal offshore-leases in the Gulf of Mexico in 2006 was 1.3 MMbbl/d, about 25% of total U.S. production.

(Sources: EIA and Congressional Research Service)

UNL PROFESSOR NOT SEEING REPEAT OF 1980 FARM CRISIS

'(AP) -- A University of Nebraska-Lincoln professor of agricultural economics says the factors aren't stacking up to make for a repeat of the 1980s farm crisis. The big increase in ag land prices may have some worried, but Bruce Johnson says farm real estate conditions are much different today than in the early 1980s. Back then, only 20% of land sales were cash and down payments were also around 20%. Land owners also faced higher interest rates. He says now about 50% of all ag land purchases are in cash and down payments are larger.

EXPLAINING THE TAX SYSTEM

My partner, Candy Otte, just passed this on to me. It is a perfect example of the tax system and the politicians' attempts to "buy votes" by claiming that the Republicans are favoring the rich by giving the people paying the most in taxes the most benefit. My question has always been, "how can you cut taxes for someone that is not paying taxes?"

Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

§ The first four men (the poorest) would pay nothing.

§ The fifth would pay $1.

§ The sixth would pay $3.

§ The seventh would pay

$7.§ The eighth would pay $12.

§ The ninth would pay $18.

§ The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

§ The fifth man, like the first four, now paid nothing (100% savings).

§ The sixth now paid $2 instead of $3 (33%savings).

§ The seventh now pay $5 instead of $7 (28%savings).

§ The eighth now paid $9 instead of $12 (25% savings).

§ The ninth now paid $14 instead of $18 (22% savings).

§ The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!" "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.