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Issue 3 – December, 2007

Helpful Information from the National Association of Estate Planners and Councils

Urban Myths

A False Story: If you should ever be forced by a robber to withdraw money from an ATM machine, you can notify the police by entering your Pin number in reverse. Sorry, it is a nice idea, but it does not work.

Another False Story: Not using the IRS-provided pre-printed address label removes you from the potential IRS audit base.

Another False Story: The US Post Office is going to start taxing emails.

Another False Story: The federal income tax was never properly adopted. If you write “Unconstitutional” on the front of your return and send it to the IRS, they will never tax you again. Nice way to gain attention from the IRS though.

Another False Story: African Americans can claim a $5,000 reparation credit on their federal income tax returns.

Perhaps the Best Urban Myth: The IRS has moved its headquarters from Washington DC to Costa Rica.

A TRUE Story: In 1987 when the IRS starting requiring dependent social security numbers on taxpayers federal income tax returns, approximately 7,000,000 dependents mysteriously disappeared.

Wondering About Another Urban Myth? Try for the answer.

Helpful Websites

Wondering About your Life Expectancy? Try for your mortality down to the second.

Retirement Plans: The Department of Labor has a new interactive web tool for employers to learn about plan reporting, fiduciary issues, common errors and rules for providing investment advice. See

Consumer Life Insurance Information: For helpful consumer information on purchasing various types of insurance go to

Social Security

Social Security Wage Base: In 2008, the Social Security wage base will increase to $102,000 from $97,500. It is estimated that nearly 12 million taxpayers will pay higher taxes as a result of the increase.

Social Security Benefits: The Social Security Administration announced that the 2008 monthly Social Security and Supplemental Security Income benefits paid to more than 54 million Americans will increase by 2.3%.

Social Security Trustees’ Report: The 2007 Social Security Trustees’ Report noted that annual cost of the social security program will exceed its income in 2017, resulting in an increased demand on the federal budget. Without reform, the Report projects that the entire program will be unable to fund benefits in 2041. A copy of the report is in this month’s NAEPC Journal.

2008 Tax Adjustments

Estate Planning Related Inflation Adjustments. On November 5, 2007, in Revenue Procedure 2007-66, the IRS released the new inflation adjusted figures for 2008. Some of the areas impacting Estate Planning are noted below:

The income tax rate brackets for estates and trusts will be:

  • 15% of taxable income not over $2,200.
  • 25% of taxable income over $2,200 but not over $5,150.
  • 28% of taxable income over $5,150 but not over $7,850.
  • 33% of taxable income over $7,850 but not over $10,700.
  • 35% on taxable income over $10,700.

A parent may elect to include in his or her own gross income the net unearned income of a child to whom the kiddie tax applies, as long as that income is at least equal to $900 (the same as the standard deduction that may be claimed for a dependent child), and does not exceed $9,000.

The aggregate decrease in the value of the gross estate of a decedent pursuant to the special use rules of IRS section 2032A will be $960,000.

Neither the federal gift tax exemption equivalent nor the estate tax exemption equivalent changed from 2007 to 2008.

The gift tax annual exclusion will remain $12,000 per donee per year.

The gift tax annual exclusion for transfers to the donor’s non-U.S. citizen spouse shall be $128,000 per year.

The 2-percent portion of the interest on deferred estate taxes attributable to an interest in a closely held business will be $1,280,000.

New Form 706. The IRS has revised form 706 for decedents dying in 2007. Note that the form wants preparers of the higher penalties imposed in miscalculating estate taxes.

Mileage Allowance. In Revenue Procedure 2007-70, the IRS has announced that the 2008 optional mileage allowance is 50.5� for business travel. That’s 2� more than the 48.5� allowance for 2007. The taxpayer can still claim separate deductions for parking fees and tolls connected to business driving.

The mileage rate for using a car to get medical care or in connection with a move is 19� per mile, down 1� from the allowance of 20� per mile in 2007.

The mileage rate for driving an auto for charitable use will remain unchanged at 14� per mile ( it is a statutory rate that’s not adjusted for inflation).

Employers that require employees to supply their own autos may reimburse them at a rate that doesn’t exceed 50.5� per mile for employment-connected business mileage. The reimbursement is treated as a tax-free accountable-plan reimbursement if the employee substantiates the time, place, business purpose, and mileage of each trip. Additionally, an employee’s personal use of lower-priced company autos during 2008 may be valued at 50.5� per mile if the conditions specified in Reg. � 1.61-21(e)(1) are met.

Getting Rid of Junk (except spam)

Get Off the Junk Mail List: Tired of Junk Mail and Emails? Go to these websites to learn how to get your name off the lists:

Phone Solicitations: To get off those annoying phone solicitations you can register your home phone number(s) on the national Do-Not-Call list by phone or by Internet at no cost. To add your home phone number to the national Do-Not-Call list via the Internet, go To register by phone, call 1-888-382-1222 (voice) or 1-866-290-4236 (TTY). For more information on the rules for fax advertisements, see the FCC consumer fact sheet at, or visit its Web site at

Check your Credit: The Fair Credit Reporting Act requires each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months. The law promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission, the nation’s consumer protection agency, enforces the law with respect to consumer reporting companies.

The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, visit, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print it from Do not contact the three nationwide consumer reporting companies individually. You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

Trends Worth Knowing

Sale of Closely Held Businesses. It will be a buyer’s market for small businesses for several years, with baby boomers starting to cash out of their businesses in increasing numbers. Over 750,000 business are expected to be sold by 2009, a 15 fold increase from 2001. Only 15% of businesses are sold to families. Source: Kiplinger Letter, October 26, 2007.

Like-Kind Exchanges. The IRS recently issued a report indicating that it has not provided enough scrutiny of like-kind exchanges. Expect more focus and audit attention in the years to come.

Raising Children is Costly. The average cost of raising a child from birth to age 21 is about $300,000. If you add the cost of a public college, the costs increase to $338,000, while a private college bumps the cost to $370,000. Source: Business Week magazine.

Do you have some Information which might be Helpful to other Estate Planners? Send an email to the Editor at