Presentation to Independendent Jewelers Organization in Charlotte, NC July 18, 2009

1. Making the Tax Laws Work for
YOU
Independent Jewelers Organization
Charlotte, North Carolina
July 18, 2009
Brian T. Whitlock CPA, JD, LLM

2. Tax Law Overview
•Economic Stimulus Act of 2008
• Heros Earnings Assistance and Relief Act of 2008
• Housing Assistance Act of 2008
• Food, Conservation and Energy Act of 2008
• Emergency Economic Stabilization Act of 2008
• Energy Improvement and Extension Act of 2008
• Tax Extenders and AMT Relief Acts of 2008
• Worker, Retiree and Employer Recovery Act 2009
• American Recovery and Reinvestment Act of 2009

3. Economic Stimulus Act
– Rebates to low- and middle-income
– Incentives to stimulate business
• Increased Limits on §179 Expense - $250,000
• 50% Bonus Depreciation
• Good for 2008 only

4. Heros Earnings Assistance
and Tax Relief
• Tax Relief for Military Families
• Tax Increase on Expatriates - leaving
the Country

5. Housing Assistance Act
• First Time Homebuyers Credit - FLOP
• Property tax deduction for non-itemizers
• 1099 Reporting of Electronic Sales Data
– Closing the “Tax Gap” - $345 Billion each year
– Credit card issuers and electronic payment
systems like PayPal to report data to the IRS
• Section 121 Limitation
– Closes loophole on vacation or rental converted
to Principal Residence after 2008

6. Emergency Economic
Stabilization Act of 2008
• Bank Bailout (TARP)
• One year AMT Patch
• R&E Credit Extended
• Midwest Disaster Relief
• 1099 Basis Reporting for Brokers
– Effective January 1, 2011
– 1099 deadline was moved from Jan 31st to
Feb15th to help brokers deal with meltdown

7. Worker, Retiree and Employer
Recovery Act of 2009
• Required Minimum Distribution Holiday
– Taxpayers over 70 ½ will not be required to take
RMD in calendar year 2009
• Defined Benefit Plan Funding Relief
– Employers maintaining DB Plans faced bankruptcy
without relief to required funding for 2008
– Single Employers may “smooth out” plan losses
– Multi Employer (union plans) may Freeze Plan
Status of one year

8. Obamanomics
• The First 100 days – Cries for Change
– “No Need for Congress to exercise Fiscal
Responsibility”
– “GET ME OUT OF THIS MESS”
– Create Jobs
– Save the Auto Industry
– Punish Wall Street Executives with Bonuses
– Get the Banks to make loans

9. American Recovery and
Reinvestment Act of 2009
• One Year AMT Patch
• Extend First Year Bonus Depreciation
• Extend $250,000 Expensing
• Improve First Time Home Buyer Credit
• Sales Tax Deduction for New autos
– Purchased after 2/17/09
– Offsets AMTI and available if you don’t itemize
– Phase out for high income taxpayers
• Create COBRA Coverage credit
• Infrastructure Investments – Shovel Ready ?

10. Coming Attractions – What’s Next
• Cash for Clunkers - PASSED
– $4,500 dealer assistance for trade-in
• Health Care Reform
– Rangel Bill introduced in House
– Blue Dogs want Fiscal Responsibility
• $1 Trillion over 10 years
• Credit to encourage small employers to cover

11. Coming Attractions – What’s Next
• Fiscal Responsibility – more tax
– 1932 marginal rate increased from 26% to 62%
• The Flinch Test
– Tax Employees on health care premiums paid by
employer - $1.3 Trillion over 10 years
– 4% Surtax over $200,000 - $832 Billion
– Limit deductions to 28% over $250,000 - $260 Billion
– 2.5% Medicare tax on interest & dividends - $800 Bill
• Time to Tax Internet Sales ?

12. Coming Attractions – What’s Next
• International Tax Reform
– Lower C Corporation Tax Rates
• 34% top tax rate currently
• Top Rate of Other Industrialized nations – 17%
• Most Countries us a Value Added Tax
• Simplify R&E Credit
– Close Certain International Provisions

13. Coming Attractions – What’s Next
• Estate Tax 2010
– One year fix if economy unclear
– $3.5 Million for 2010
• Raise Individual Income Tax in 2011
– Allow Bush rate cuts to expire in 2011
– Top rate from 35% to 39.6%
– Top rate effective over $250,000

14. 2009 Tax Planning Opportunities
• Individual Options
– Parents with Adult Kids
• Kids Homes
– First Time Home Buyer Credit
– Low Interest rate Mortgages
– Real Estate Deduction for non-filers
• Autos
– Cash for Clunkers
– Sales Tax Deduction whether you itemize
– Hybrid Auto Credit (first 60,000 units - Chrysler
& GM still available)
• Income Splitting through Gifts of Stock or LP
– Clear Rules for shareholders at next generation

15. 2009 Tax Planning Opportunities
• Individual Options
– Parents with Younger Kids
• Students under 24 years of age
– Same Tax Bracket as Parents
– Kids Trusts
• Autos
– Cash for Clunkers
– Hybrid Auto Credit
• Income Splitting through Gifts of Stock or LP
– Position for post age 24
– Impact on Buy-Sell Agreement

16. 2009 Tax Planning Opportunities
• Corporation Options
– C vs. S Corporation
• S Corporation still preferred for
Mature family businesses
• Lower C Corporation Rates
– “One Good Dog and one Good C Corp”
– Schedule M Corporation
– Spread the Risk