TABLE OF CONTENTS

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HIGHLIGHTS OF THE AMERICAN JOBS CREATION ACT OF 2004" IMPACTING INDIVIDUALS......................................... 1

 

NEW DEDUCTION FOR STATE AND LOCAL SALES TAX........................................................................................... 1

 

EXCLUDING GAIN ON SALE OF PRINCIPAL RESIDENCE.......................................................................................... 1

 

DONATIONS OF MOTOR VEHICLES, BOATS, AND AIRCRAFT................................................................................... 1

 

179 DEDUCTION FOR SUVs REDUCED.................................................................................................................... 1

 

NEW RESTRICTIONS ON NON-QUALIFIED DEFERRED COMPENSATION PLANS...................................................... 2

 

ATTORNEY FEES.................................................................................................................................................... 2

 

SELECTED PROVISIONS OF THE WORKING FAMILIES TAX RELIEF ACT OF 2004"........................................................ 3

 

EXEMPT COMBAT PAY IS EARNED INCOME FOR EARNED INCOME CREDIT CALCULATION.................................... 3

 

INCREASED CHILD TAX CREDIT............................................................................................................................... 3

 

EDUCATORS CLASSROOM EXPENSE DEDUCTION.................................................................................................. 3

 

UNIFORM DEFINITION OF CHILD FOR TAX PURPOSES............................................................................................ 3

 

SELECTED PROVISIONS OF THE MILITARY FAMILY TAX RELIEF ACT OF 2003"............................................................ 3

 

INCREASED DEATH BENEFITS................................................................................................................................ 4

 

HOME-SALE RELIEF................................................................................................................................................ 4

 

TAX RELIEF FOR HOMEOWNERS ASSISTANCE...................................................................................................... 4

 

NATIONAL GUARD AND RESERVE TRAVEL............................................................................................................. 4

 

TAX-FREE CHILD CARE BENEFITS........................................................................................................................... 4

 

SERVICE ACADEMY APPOINTMENTS..................................................................................................................... 4

 

THE MEDICARE PRESCRIPTION DRUG MODERNIZATION ACT OF 2003.......................................................................... 4

 

PLANNING WITH CAPITAL GAINS AND LOSSES............................................................................................................ 5

 

WATCH OUT FOR INCENTIVE STOCK OPTIONS AND AMT........................................................................................ 5

 

YEAR-END CONSIDERATIONS FOR CAPITAL ASSETS............................................................................................. 5

 

STOCK TRADERS MAY SAVE TAXES BY ELECTING MARK-TO-MARKET.................................................................. 5

 

POSTPONING TAXABLE INCOME................................................................................................................................... 6

 

SELF-EMPLOYED BUSINESS INCOME.................................................................................................................... 6

 

INSTALLMENT SALES.............................................................................................................................................. 6

 

REAL ESTATE SWAPS............................................................................................................................................ 6

 

DEFERRED COMPENSATION.................................................................................................................................. 6

 

REQUIRED DISTRIBUTIONS FROM RETIREMENT PLANS AFTER 70  OR DEATH....................................................... 7

 

IRS GRANTS RELIEF FOR LATE IRA ROLLOVERS.................................................................................................... 7

 

TAKING ADVANTAGE OF DEDUCTIONS.......................................................................................................................... 7

 

ACCELERATING DEDUCTIONS INTO 2004................................................................................................................ 7

 

BUNCHING ITEMIZED DEDUCTIONS......................................................................................................................... 8

 

BUNCHING MEDICAL EXPENSES............................................................................................................................. 8

 

DEDUCTION FOR SELF-EMPLOYED HEALTH INSURANCE COSTS........................................................................... 8

 

MAXIMIZING EMPLOYEE BUSINESS EXPENSES...................................................................................................... 8

 

CHARITABLE CONTRIBUTIONS................................................................................................................................ 9

 

MAXIMIZING HOME MORTGAGE INTEREST DEDUCTION.......................................................................................... 9

 

TAX RELIEF FOR HURRICANE LOSSES................................................................................................................... 9

 

TAX-WISE PAYMENT OF STATE AND LOCAL TAXES.............................................................................................. 10

 

CLUB DUES........................................................................................................................................................... 10

 

COMPANION TRAVEL EXPENSES.......................................................................................................................... 10

 

TAX-WISE PLANNING FOR EDUCATION COSTS........................................................................................................... 10

 

COVERDELL EDUCATION SAVINGS ACCOUNTS.................................................................................................... 10

 

SECTION 529 PLANS............................................................................................................................................. 11

 

EDUCATION EXPENSE DEDUCTION....................................................................................................................... 11

 

IRS RELEASES FINAL REGULATIONS FOR STUDENT LOAN INTEREST.................................................................. 11

 

HOPE EDUCATION TAX CREDIT............................................................................................................................. 12

 

THE LIFETIME LEARNING CREDIT.......................................................................................................................... 12

 

TAX PLANNING FOR YOUR HOME................................................................................................................................ 12

 

IRS RELEASES FINAL HOME SALE EXCLUSION REGULATIONS............................................................................. 12

 

THE HOME OFFICE DEDUCTION............................................................................................................................ 13

 

RENTING YOUR HOUSE TO A RELATIVE CAN BE TRICKY...................................................................................... 13

 

PLANNING WITH RETIREMENT PLANS......................................................................................................................... 13

 

CONSIDER CONTRIBUTING THE MAXIMUM TOWARD YOUR RETIREMENT.............................................................. 13

 

THE ROTH IRA - A VALUABLE RETIREMENT SAVINGS OPTION.............................................................................. 14

 

SETTING UP A ROTH IRA FOR A MINOR................................................................................................................. 14

 

OTHER ITEMS TO CONSIDER.................................. 14

 

$250 ABOVE-THE-LINE DEDUCTION FOR TEACHERS............................................................................................. 14

 

ADOPTION TAX CREDIT.......................................................................................................................................... 14

 

CLEAN-FUEL VEHICLES DEDUCTION..................................................................................................................... 15

 

MOVING EXPENSES.............................................................................................................................................. 15

 

SOCIAL SECURITY NUMBERS FOR DEPENDENTS................................................................................................. 15

 

PENALTY FOR UNDER-WITHHOLDING OR UNDER-ESTIMATING............................................................................. 15

 

TAX COURT FINDS TAXABLE PORTION OF NON-TAXABLE PHYSICAL PERSONAL INJURY...................................... 15

 

IRS WARNS AGAINST FRIVOLOUS ARGUMENTS................................................................................................... 16

 

FINAL COMMENTS........................................................................................................................................................ 16

   FINAL COMMENTS

 

Please call us if you are interested in a tax topic that we did not discuss. Tax law constantly changes due to new legislation, cases, regulations, and IRS rulings.  Our firm closely monitors these changes and will be glad to discuss any current tax developments and planning ideas with you.  Please contact us before implementing any planning ideas discussed in this letter, or if you need more information.

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