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