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Reese Henry & Company, Inc.
Phone 970.925 3771
Fax 970.925.3979

Aspen Office
400 East Main Street
Aspen, CO 81611

Carbondale Office
0326 Hwy 133, Suite 200
Carbondale, CO 81623


The following is a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood.

• Roth IRA - New Opportunity to Convert

This year is a pivotal one for retirement planning, as it is the first year in which taxpayers may convert funds in regular IRAs (as well as qualified plan funds) to Roth IRAs regardless of their income level. Such a conversion may be desirable because distributions from Roth IRAs may be tax-free if several conditions are met, and a Roth IRA owner does not have to commence lifetime required minimum distributions from Roth IRAs after he or she reaches age 70 1/2.

• Net Operating Losses (NOL) - Longer Carry Back Period

A new law enacted last November makes it easier for most businesses to get immediate tax savings from NOLs. It does so by allowing certain NOLs to be carried back to earlier, more profitable years. Specifically, the new law generally permits most businesses to increase the carryback period for an applicable NOL to 3, 4, or 5 years from 2 years.

• Homebuyer Credit - Extended and Liberalized

A new law enacted last November extended and generally liberalized the tax credit for first-time homebuyers, making it a much more flexible tax-saving tool. Before the new law, the credit was to have expired for homes purchased after Nov. 30, 2009. The new law extended the credit to apply to a principal residence bought before May 1, 2010. Also, effective for purchases after Nov. 6, 2009, the new law allows existing homeowners who meet certain conditions to qualify for a reduced credit of up to $6,500.

• COBRA subsidy - New Lease on Life

In December of last year, the 65% COBRA premium subsidy that was enacted in February of 2009 got a new lease on life. The December 2009 legislation added another six months to the maximum period that the COBRA subsidy can run (i.e., to a total of 15 months).

• 2010 Mileage - Standard Rates are Down

The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 50¢ per mile for business travel after 2009. That's 5¢ less than the 55¢ allowance for business mileage during 2009.

• ARC Loans - No Tax Consequences

The IRS has concluded that qualifying small business borrowers who receive an interest-free loan under the America's Recovery Capital Loan Program (ARC Loan Program) don't have income on account of the loan and can't claim interest deductions for the loan.

• Ponzi scheme - Safe Harbor

A letter sent by the IRS to some members of the House of Representatives explains how indirect investors can benefit from an optional safe harbor that was originally designed for direct investors who suffered losses in Ponzi schemes. Indirect investors can now use the optional safe harbor to determine the proper time and amount of their losses as well.

• Stock Reporting Rules - Proposed Regulations

The IRS has issued proposed regulations explaining the complex basis and character reporting requirements that will apply for most stock acquired after 2010, for shares in a regulated investment company (i.e., a mutual fund) or stock acquired in connection with a dividend reinvestment plan after 2011, and other specified securities acquired after 2012.

• Form 944 - How to Opt In or Out

The IRS has explained how small employers eligible to file Form 944 (Employer's Annual Federal Tax Return), should request to file that form instead of Forms 941 (Employer's Quarterly Federal Tax Return), for tax years beginning on or after Jan. 1, 2010.

Please call us for more information about any of these developments and what steps you should take in order to benefit from the favorable developments and to minimize the impact of those developments that are unfavorable.

Reese Henry & Company, Inc.
400 East Main Street Aspen, CO 81611
970.925 3771

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