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Sunday, October 31, 2010

WATCH THIS INFORMATIVE BUT SCARY VIDEO BEFORE YOU VOTE NOVEMBER 2

HALLOWEEN GREETING!!!


(Note: Facebook has banned me from posting a link to this article for up to a few days -- in other words, until AFTER the election!!! So, PLEASE forward a link to this article to EVERYONE in your address book, Facebook friends, and Facebook "likes".  THANK YOU! -- JC Leahy)



If you are a US Citizen and are, or hope to become, a Senior Citizen in  the US then this six minute video will provide all of the "scariness" that you need for the holiday.  Unlike Halloween's festivities where we all remove our masks and laugh, the consequences highlighted in the video will impact everyone of us and several generations to come and is backed by over three thousand pages of federal legislation (which our congressional and political expenditures and umpteen more trillions in future "unfunded obligations" leadership were "too busy to read") and over a trillion dollars in immediate The doctor speaking in the video is the medical partner of  Dr. Steele, who is running for Congress in Michigan against long-term Congressman Dingell. He refers to two major Bills, the Stimulus legislation and the Obamacare legislation.  He makes it clear that the authorization, funding, and structure for rationing health care are all contained in the Stimulus Bill and NOT in the Obamacare legislation.  His description of how it is intended to work on January 1, 2013 is truly SCARY!!!!
If you dare, view this video: CLICK HERE

Ed D.
New Smyrna Beach, Florida

CONGRESSMAN CHRIS VAN HOLLEN, WHAT DO YOU SAY ABOUT THIS??  HOW ABOUT CONGRESSMAN STENY HOYER??  SENATOR BARBARA MIKULSKI???

Friday, October 22, 2010

WHAT ARE THE SIDE EFFECTS OF THE FLU SHOT?

By JC Leahy, RN, BSN, MA
When you get an influenza shot, your body reacts.  It’s supposed to react.  The flu shot makes your body produce defenses (antibodies) for fighting the flu.  That way, you will be less likely to actually get sick with the flu.  That’s the good bodily reaction.  It’s the intended reaction.
There are also some potential unwanted reactions to getting a flu shot.  These are called “adverse reactions” or “side effects.”  Adverse reactions to getting an influenza innoculation are uncommon, and when they do occur they are almost always minor.  Minor side effects of getting a flu shot include:
  • Slight redness and soreness at the injection site
  • Rhinorrhea (nasal congestion)
  • Sore throat
  • Cough
  • Slight fever
Minor side effects, if they occur at all, usually last for no more than a couple of days.



More serious adverse reactions to getting a flu shot are rare. Usually their onset is immediate or within a couple of hours after receiving the influenza shot.   Some adverse reactions include allergic reactions to things contained in the flu vaccine.  For this reason, you should consult your physician before getting a flu shot if you are allergic to eggs,  Thimersal or phenol.    Rare but more serious side effects include:
  • Difficulty breathing, hoarseness, wheezing
  • Hives
  • Significant swelling
  • Paleness
  • Weakness
  • Fast heart beat
  • Dizziness
If you experience any of these serious side effects, phone your physician right away or go to the nearest emergency room.
FYI, there is a Federal program to compensate anyone injured by a vaccine.  It is called the National Vaccine Injury Compensation Program.  Their phone number is 800-338-2382.  Their website is www.hrsa.gov/vaccinecompensation
For more information: FURTHER READING


NO CONGRESSIONAL OR SENATORIAL INCUMBENTS ON NOVEMBER 2 !!!

Monday, October 18, 2010

2010 FLU SEASON: DO I NEED TO GET MY SWINE FLU SHOT THIS YEAR?

by JC Leahy, RN, BSN, MA
Sigma Theta Tau's "100 Most Extraordinary Nurses" Award

In 2009, you asked yourself whether or not you needed your Swine Flu (H1N1) flu shot in addition to the regular, seasonal flu innoculation.  This year, however, the H1N1 (Swine Flu) shot is included in the 2010 seasonal flu shot. The 2010-2011 flu vaccine protects against an influenza A H3N2 virus, an influenza B virus and the 2009 H1N1 virus.

For information for more information about getting a flu shot, see our earlier article.

Thursday, October 14, 2010

FORECLOSURE CRISIS: HOW CONGRESS RIPS OFF DISTRESSED HOMEOWNERS

 Income Tax Effects of Foreclosure or Deed in Lieu of Foreclosure
THE "FORECLOSURE WINDFALL PROFITS TAX"
By JC Leahy, MA Accounting

I arrived home from work and noticed my neighbors sitting on the curbside in front of their house.  They were a middle aged Hispanic immigrant couple.  She was an attractive woman who generally dressed well and drove off every day to some job.  He was a small contractor hard hit by the recession.  His biggest prime contractor had failed to pay him, toppling his finances like a row of dominoes.   His bank had repossessed the family home.  He didn’t even manage to remove all their belongings. The were locked out.  I approached them to talk.  He was friendly but avoided my eyes and hesitated when he talked, giving the impression of being ashamed and crushed – emotionally demolished.  She seemed horrified, involuntarily fidgety, trying to be stoic, unsuccessfully fighting back the tears.  Their son was nowhere to be seen.  I offered to put them up at my house.  He thanked me but said that their son had been sent to a relative.  He said there were good tools in his shed and I should grab what I wanted because he had no way to transport them and nowhere to store them.  He didn't realize the shed was already padlocked.  He, himself, would bunk at another relative, and she would go somewhere else.  He still had some tools and he said he would work hard and  try to rise from the rubble and pull his family back together.  He didn’t yet realize that he had  big potential problems with the Internal Revenue Service  – courtesy of the clowns who represent us in United States Senate and House of Representatives. 
The income tax problem for the down-and-out property owner is twofold:  First, when the bank snatches your house – whether your home or your rental property – the tax law views that as a SALE of the house.  Viewing a foreclosure as a sale can crush you with big capital gain tax, especially if you have owned the house for a long time.  The second problem is that after you lose your house and the bank sells it at auction and the paltry proceeds don’t satisfy the mortgage – if the bank doesn’t come after you for the unpaid mortgage balance, the Internal Revenue Service views that as a big windfall for you  –  which means income that is fully taxable.  In summary, not only do you get to lose your house, but in the process you may realize a big capital gain and a huge windfall other “income” leading to a giant tax bill and the wrath of the IRS.  Sigh….I kid you not!!  So pay close attention.  Here are the details.  I like to call this set of problems the "Foreclosure Windfall Profits Tax."


There are 2 kinds of foreclosure: judicial and non-judicial.   Judicial is when the bank goes to court and gets a foreclosure through the court.  A trustee foreclosure is when the property is held by a trustee and a trustee sale is made without having to go to court.  There is also a way to avoid the hassle of an actual foreclosure called a “deed in lieu of foreclosure.”  This is when the property owner signs the property over to the bank in exchange for the bank’s agreement to let him off the hook for the mortgage balance in excess of whatever the house brings in at auction.  The property owner might prefer the deed in lieu of foreclosure because he can be sure the bank won’t be dogging him for years for the unpaid mortgage.  The bank, on the other hand,  might prefer NOT to take a deed in lieu of foreclosure for exactly that same reason.  More likely, however, the bank might prefer NOT to take a deed in lieu of foreclosure because it does not wipe out any second or third mortgages – home improvement loans, lines of credit, or similar junior loans secured by the house.  A foreclosure, on the other hand, will effectively wipe out the junior secured loans.  But from the IRS’s point of view, judicial foreclosure, non-judicial foreclosure, and granting a deed in lieu of foreclosure are all treated exactly the same.
To calculate your Foreclosure Windfall Profits Tax, you will need three key numbers: (1) the adjusted basis of your house, (2) the fair market value of the house at time of foreclosure, and (3) the balance of your mortgage at time of foreclosure.  Of these numbers, the easiest one to obtain is your mortgage balance.  Just look at your mortgage statement or ask the bank.  The fair market value of your house is trickier.  After all, who can say?  Generally, the FMV of your house is measured by what the bank is able to sell it for after foreclosure – THAT figure is the fair market value of the property. 
Probably the hardest number to come up with is the adjusted basis of your property.  This takes a little fact-gathering and arithmetic.  Here’s the formula for computing the tax basis of your home or rental property:
Original basis + capital improvements + selling costs – past depreciation on your house – past depreciation on your capital improvements = adjusted basis
The “original basis” in the above formula is what you paid for the house plus certain closing costs.
Here’s a link to a handy calculator for your property’s adjusted basis:  ADJUSTED BASIS CALCULATOR
Now that you have the 3 key numbers, you are ready to compute your capital gain and your “foreclosure windfall income” – which the literature calls “cancellation of debt income.”
CAPITAL GAIN OR LOSS
Capital gain from a foreclosure is equal to amount realized minus the adjusted basis.  It’s that simple. In a foreclosure involving a non-recourse mortgage, the amount realized is the mortgage balance.   In a foreclosure involving a recourse mortgage, the amount realized is the lesser of the fair market value of the property or the mortgage balance. If the result of the subtraction is negative, then it is a capital loss.  If you have a capital gain, then you parse it as such.  This means that if the capital gain is from the “sale” your principal residence, you may be able to use your $250,000/$500,000 exclusion to avoid taxes.  If, however, the house was your second residence, or vacation home, or rental property, you must pay income tax on the full capital gain.  If you have a capital loss, you may not claim ANY of it EVER, unless the house was a rental property - in which case it is treated as an investment.  For a  rental property, your capital loss may offset other capital gains if you have any.  If not,  you may claim $3,000 per year every year until you use up the total amount of the loss. 
FORECLOSURE WINDFALL INCOME – AKA CANCELLATION OF DEBT INCOME
Your cancellation-of-debt income is equal to the cancelled balance of the mortgage minus the fair market value of the property.  It’s that simple.  This can be a very big number and a rude shock to the down-and-out erstwhile homeowner, who thought he lost everything but is now told that he has huge chunk of windfall “income” and a consequent huge chunk of income tax liability.
 Fortunately,  in 2007 President Bush signed the Mortgage Forgiveness Debt Relief Act which allows many, but not all foreclosed, homeowners to avoid a crushing tax bill.  Under present law, you do not have to include your “foreclosure windfall income,” (aka cancellation-of-debt income or forgiveness-of-debt income) in your tax return if you fit under one of these exceptions:
  1. The house was your principal residence and the mortgage money was used to buy or improve it.  See my recent Journal article for the details of this exception.
  2. The mortgage was discharged in a bankruptcy
  3. You were insolvent at the time of foreclosure.  Insolvency is a technical term that simply means that the sum of your debts exceeds the sum of the fair market values of your assets.  To the extent of this excess, your cancellation of debt income will be non-taxable.
  4. Certain farm debts
  5. The mortgage was a non-recourse debt.  Forgiveness of non recourse debt does not result in cancellation of debt income.  “Non-recourse” means that under the terms of the particular original mortgage or related state law, the bank has no final recourse besides taking the house and selling it for the proceeds.  In other words, you aren’t liable for the remaining balance.
  6. There is also an exception for certain business property, but rental property is NOT business property, so this exception does not apply to repossessed houses.  It would apply, for example, to a repossessed retail store.

REAL LIFE EXAMPLE

You have all the information you need to make Foreclosure Windfall Profits Tax calculations.  To show you how this all works, here's a real life. actual example.  Obviously, the names have been changed to protect privacy.

Mag Scratch is in her late 60's. She wanted to retire to Florida. She bought a condo there for $175,380, which, at the time,  seemed like a great bargain. She made a $30,000 down payment on the condo, using a recourse mortgage.  Unfortunately, she was subsequently unable to sell her home in Maryland, so she was burdened with 2 mortgages.  She couldn't retire at all.  Need for employment kept her in Maryland.  To help cover the mortgages, she rented out the condo in Florida.  She had trouble renting the condo, so even with what rent she could get, she could not afford the 2 mortgages.  As a result, in 2009, the bank foreclosed on the Florida condo.  The bank took the "deed in lieu of foreclosure" route.  The bank then sold the condo for $30,000.  Mag's investment was wiped out.  She was depressed.   Then she went ot see her tax advisor.

ADJUSTED BASIS OF MAG SCRATCH'S FLORIDA CONDO

The adjusted basis of Mag's condo is $175,380 original basis minus $12,549 of depreciation she claimed on her income tax returns in 2007 and 2008.  Thus, the adjusted basis comes to $162,831

CAPITAL LOSS

The fair market value of the condo will be specified on the 1099-C that the bank sends to Mag.  It will probably specify a fair market value was $30,000 -- the amount the bank got with it resold the house.   Do you think the bank would admit selling the condo for less than fair market value?  I think not.  So the 1099-C will give us a fair market value of $30,000.  We know from the above calculation that the condo's adjusted basis if $162,831.  Therefore, Mag has a capital loss equal to the $30,000  amount realized, or "sales price," minus the adjusted basis of $162,831.  The capital loss is $132,831.  If this were Mag's personal residence or vacation home, she could NOT claim the capital loss AT ALL on her income tax return.  However, since this is a rental property, she has a long-term capital loss of $132,831  that counts.  Unfortunately, like all capital losses, Congress only lets you claim $3,000 of it in any year. The rest of the $132,831 has to be  written of yearly at $3,000 per year.  So Mag can write off $3,000 every year until her $132,831 is used up -- if she lives that long.

CANCELLATION OF DEBT INCOME

Mag's initial mortgage amount on the condo was the $175,380 purchase price less the $30,000 down payment. This comes to $145,380.  Since that time, she has only managed to pay interest on the mortgage, so the balance is still $145,380.  Her cancellation of debt income is therefore $145,380 minus the fair market value of $30,000: $115,380.  Unlike her capital loss, this cancellation of debt income needs to be included in her income tax return right away.  In reality she has a $132,831 loss and a $115,380 income -- which altogether is a net loss.  But since all but $3,000 the loss needs to be spread out to future years and ALL the cancellation-of-debt income needs to be recognized immediately, Mag Scratch, who has worked and scrimped and saved at near poverty levels for her whole life, is now going to have a 2010 "Foreclosure Windfall Profit" of $112,380 ($115380 minus $3,000 capital loss write-off) and an extra income tax bill of over $20,000.  What a way for Congress to kick her while she's down!!   She folded her arms and looked sullen at the conclusion of this calculation -- and rightly so.

EXCEPTIONS THAT COULD SAVE MAG SCRATCH

Even after President Bush's signature of the Mortgage Forgiveness Debt Relief Act of 2007, the exceptions to the Foreclosure Windfall Profits Tax are limited.  For details on exceptions, see our earlier article. Let's run through the big ones:

QUALIFIED PERSONAL RESIDENCE DEBT: Nope, this is not Mag's personal residence.

QUALIFIED BUSINESS PROPERTY DEBT: Nope, rental is NOT A BUSINESS to the Congress.  If Mag were running a retail antique shop out of house, she would have an exception -- but there is no exception for a rental property.

BANKRUPTCY - Nope, Mag didn't file for bankruptcy.

NON-RECOURSE DEBT - Nope, Mag had a regular mortgage on a regular house or condo.  Even though the bank agreed, as part of the "deed in lieu of foreclosure" process, to NOT pursue her for any unpaid balance over and above what resale of the condo brings -- the the original underlying mortgage was a recourse debt.

INSOLVENCY -- Ah!  Here's a good one.  If at the time of the foreclosure Mag's debts exceed the fair market value of her assets, her cancellation of debt income is non-taxable to the extent of the excess of debts over assets.  So let's add up Mag's assets and liabilities:

Assets:
Condo        $30,000
Home         285,000
Savings        50,000
Car              11,500
TOTAL ASSETS: $376,500

Liabilities:
Home mortgage $57,000
Condo mortgage $145380
Credit cards  None
TOTAL LIABILITIES:  $202,380

Mag's assets exceed her liabilities.  Mag is therefore not insolvent.  She does not qualify for the insolvency exception.

Mag has suffered an actual loss. The net effect of all of the above is that Mag lost her $30,000 plus all the worry and cash she poured into the place while she had a negative cash flow.  In 2010 tax terms, she lost the $30,000 down payment less the depreciation she had claimed on her rental Schedule E. ($30,000 down payment minus $12,549  of depreciation equals the net loss of  $17,451, just as $132,831 capital loss less $115,380 forgiveness-of-debt-income equals the same net loss of $17,451.)   In an emotional sense, she also lost her hard work and emotional investment in her retirement planning. She lost her whole retirement strategy. To add insult to injury, Congress is going to tell Mag that she MADE $112,380 extra in 2010 and she therefore OWES an extra income tax amount of more than $20,000, plus extra state income taxes.  Because of Congress' Alice-in-Wonderland tax rules, Mag will not be retiring any time soon.  All of this rubbish is courtesy of Mag's Congressman Chris Van Hollen and Senators Barbara Mikulski and Ben Cardin -- and all the other clowns of Capitol Hill.  You get what you vote for, friends!!!

Please note: These crazy tax laws were made by the clowns we have sent to represent us in the Senate and House of Representatives.  I say that it is time to send Mr. Smith to Washington with a crowbar.   VOTE FOR NO INCUMBENTS IN 2010 PLEASE!!!  Vote wisely on November 2!!!!


PS -- If you've been reading carefully, you have a question.  If the bank foreclosed in 2009, why will Mag include this in her 2010 tax return?  Answer: the bank didn't resell the condo until 2010.  Until they know how much money they will get from the condo sale, they don't know how much unpaid mortgage will have to be forgiven.  Also, they don't know the fair market value of the property so that a capital gain or loss can be computed.  Therefore, the bank will wait until tax year 2010 to send out the 1099-C and it is in 2010 that Mag will report the capital loss and cancellation of debt income.


CONTACT EMAIL ADDRESSES FOR US SENATORS

JC Leahy, MA Accounting
Maximum Legal Refund (tm)
JC Leahy and Company, LLC
Silver Spring, Maryland

Wednesday, October 6, 2010

2010 ELECTION -- FOOD FOR THOUGHT

Submitted by Steve Monje, Federal Police Officer, Silver Spring, Maryland

While walking down the street one day a corrupt Senator was tragically hit by a car and died. His soul arrived in heaven and was met by St. Peter at the entrance.
 
"Welcome to heaven," said St. Peter. "Before you settle in, it seems there is a problem.  We seldom see a high official around these parts, you see, so we're not sure what to do with you."

"No problem, just let me in," said the Senator.

"Well, I'd like to, but I have orders from the higher ups. What we'll do is have you spend one day in hell and one in heaven. Then you can choose where to spend eternity."

"Really? I've made up my mind. I want to be in heaven," said the Senator.

"I'm sorry, but we have our rules."

And with that, St. Peter escorted him to the elevator and he went down, down, down to hell. The doors opened and he found himself in the middle of a green golf course. In the distance was a clubhouse and standing in front of it were all his friends and other politicians who had worked with him.Everyone is very happy and in evening dress. They run to greet him, shake his hand, and reminisce about the good times they had while getting rich at the expense of the people. They played a friendly game of golf and then dined on lobster, caviar and the finest champagne. Also present was the devil, who really was a very friendly guy having a good time dancing and telling jokes.They were all having such a good time that before the Senator realized it, it was time to go.Everyone gave him a hearty farewell and waved while the elevator rose.

The elevator went up, up, up and the door reopened in heaven where St. Peter was waiting for him, "Now it's time to visit heaven."

So, 24 hours passed with the Senator joining a group of contented souls moving from cloud to cloud, playing the harp and singing. They had a good time and, before he realized it, the 24 hours had passed and St. Peter returned.

"Well, then, you've spent a day in hell and another in heaven. Now choose your eternity."

The Senator reflected for a minute, then he answered: "Well, I would never have said it before, I mean heaven has been delightful, but I think I would be better off in hell."

So St. Peter escorted him to the elevator and he went down, down, down to hell. Now the doors of the elevator opened and he was in the middle of a barren land covered with waste and garbage.He saw all his friends, dressed in rags, picking up the trash and putting it in black bags as more trash fell from above.The devil came over to him and put his arm around his shoulders.

"I don't understand," stammers the Senator. "Yesterday I was here and there was a golf course and clubhouse, and we ate lobster and caviar, drank champagne, and danced and had a great time. Now there's just a wasteland full of garbage and my friends look miserable. What happened?"

The devil smiled at him and replied, "Yesterday we were campaigning, Today, you voted."

Vote wisely on November 2, 2010. 




Tuesday, October 5, 2010

Wedding Banquet Prayer

Wedding Meal Prayer for Claudia and Jason, 10/3/2010


Most gracious God, we ask that Claudia and Jason's love grow like a beautiful tree, sending roots deep and branches high, with new beauty for every season of life.

For the feast before us, Lord, we thank you,
And for all your blessings.
Lord, we ask for your presence in our lives,
And and even that you take your place at this table, here and now,
And as this food feeds our bodies,
We pray that you would nourish our souls.

Amen




Photo by Rebecca Monje

A WEDDING TOAST - FATHER OF THE BRIDE

Speech by JC Leahy for Claudia and Jason’s wedding, Oct. 3 2010

THANKS FOR COMING

Ladies and gentlemen, as father of the bride, it is my privilege to make the first speech, and I would like to start by saying what a pleasure it is, on this joyous occasion, to welcome Gary and Ramona, Jason’s parents, together with relatives and friends of both families.

Today, we find ourselves surrounded by relatives and friends who have been so important to us during our lives. All have traveled to be here. On behalf of Claudia and Jason, and Gary and Ramona, and Adalia and me: We welcome you and thank you for your friendship and support over many years – and for sharing this special day with us. By your presence you show your friendship and love, and bring even greater joy to us all.

WORDS FOR THE BRIDE AND GROOM

We are proud to see Claudia – who looks so radiant – now married to Jason. During the time we have known Jason, we have come to realize how special he is to Claudia, and we can see – as anyone can -- that they were made for each other. Jason is likeable, sincere, focused, and steady, and we are very happy to welcome him into our family.

JOY OF BRINGING UP CLAUDIA

It was in 1986 that Claudia made her entrance into the world. We have loved her more than she even knows. She has excelled in many ways from a very early age. She was able to not only walk, but run, at the age of seven months – much to the amazement of her pediatrician. She thought nothing of swimming in the 11-foot-deep section of the pool when she hardly looked old enough to swim at all – which made the lifeguards at the YMCA very uneasy. ………. Now she has excelled again in her choice of Jason a partner for life.

We have loved Claudia even more than she, as a non-parent, may yet realize. It is very emotional for a father to see his little girl go off to another life in another season. We men, many of us, keep our emotions to ourselves as much as we are able; but I’ll tell you a secret. After Claudia’s older sister’s wedding – after Theresa’s wedding, every day for more than two weeks I would find a private place and just cry. I am afraid it will be much the same this time. But there is a season for all things.

PLEASURE OF GETTING TO KNOW NEW FAMILY

It has been a joy getting to know Jason and his family.

THOUGHTS ABOUT LOVE AND WHAT MAKES A HAPPY MARRIAGE

It is customary at this point for the bride’s father to offer some marital advice for the new couple. I would say this: Mom and I have found that it is very important to never go to bed angry. Angry disagreements are NOT made better by sleeping on them. It is much better to stay up and fight --- and to reach whatever resolution is possible before sleeping. And if no resolution is possible before sleeping, at least you can agree to disagree CALMLY --  until such time as Jason may come to his senses.


DECLARATION OF CONFIDENCE

As we who are married all know, there are times in ANY marriage that are challenging. I want to state emphatically that Dali and I have complete confidence that Claudia and Jason will rise to this and meet the challenge successfully.

WEDDING TOAST

And on that note, ladies and gentlemen, will everyone please stand and raise a glass to Claudia and Jason…..Jason and Claudia, we wish you happiness that grows, love that deepens, and peace that endures.


Photos except #1 by Rebecca Monje