For the week of January 19, 2009
In its last week of trading under the administration of George W. Bush, equities markets posted losses
across the board. Strength in the energy sector and other recession-resistant industries could not offset
investor concern about the banking sector after the government gave Bank of America another $20
million in capital. For the week, the Dow lost 3.66 percent to finish at 8,281.22. The S&P dropped 4.50
percent to close the week at 850.12, and NASDAQ fell 2.69 percent to end the week at 850.12. Markets
were closed Monday, Jan. 19, in observance of Martin Luther King, Jr. Day, which happened to fall on the
day before Barack Obama’s inauguration as America’s first African American president.
Source: Morningstar.com. * Past performance is no guarantee of future results. Indexes are unmanaged and
cannot be invested into directly. Three and five-year returns are annualized. The S&P, excluding “1 Week”
returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.
Free Tax Returns – On Friday, the Internal Revenue Service debuted a new service that lets taxpayers
complete forms online and file their taxes at no charge, regardless of income level. The new Free Fillable
Tax Forms allow taxpayers to enter their data, perform basic calculations, sign the returns electronically,
print copies for their records, and electronically file their return. According to the IRS, taxpayers who file
electronically with direct deposit can receive their refund in as few as 10 days.
Less Crude – U.S. petroleum deliveries, a measure of demand for crude oil, dropped 6 percent in
2008, its lowest level since 2003. Record high prices and a declining economy created lower demand
for major crude products, reducing deliveries to 19.4 million barrels a day. That’s not surprising: From
November 2007 to October 2008, Americans drove 100 billion fewer miles than the previous year,
according to government numbers.
Shrinking Gap – The U.S. trade deficit dropped to $40.4 billion, a significant decline from October’s
$56.7 billion and well below the $51 billion gap that economists had expected. The deficit hasn’t been
this small since November 2003, when it was $40 billion, according to the Department of Commerce.
Economic Giant – The U.S. has an economy of nearly $14 trillion, three times as large as second-place
Japan. Third-place China and fourth-place Germany each have economies of about $3.5 trillion a year,
according to Kiplinger Business Resource Center.
WEEKLY FOCUS – Keep An Eye On Estate Tax
The federal estate tax exemption – the amount of your
assets that is not subject to taxes at your death –
increases this year from $2 million to $3.5 million.
(Married individuals can pass an unlimited amount of
assets to their spouse without paying estate taxes.)
Amounts in excess of the exemption are taxed at a
maximum rate of 45 percent.
The federal exemption has been increasing since the
passage of the Economic Growth and Tax Relief
Reconciliation Act of 2001. In 2010, the federal estate
tax is scheduled for a complete repeal, but unless
Congress extends that repeal, the exemption will revert
to its 2001 level of $1 million, with 55 percent tax on the
excess. So the difference between dying on Dec. 31, 2009, or Jan. 1, 2010, or Jan. 1, 2011, could be
hundreds of thousands of dollars in taxes.
Meanwhile, the 2001 act has unraveled the connection between the federal estate tax system and that of
many states, which previously got a cut of the IRS collections on estates. The increase in federal
exemption levels decreased the amount the state gets, causing many states to begin collecting their
estate tax separately from the IRS.
According to the Wall Street Journal (Jan. 12, 2009), incoming President Barack Obama and
Democratic leaders in Congress will take action this year to prevent the federal estate tax repeal
scheduled for 2010. Obama’s proposal would make permanent the exemption cap of $3.5 million and
the maximum rate of 45 percent, eliminating the 2010 repeal and the 2011 return to 2001 exemption and
Because none of us know exactly when we will die, staying on top of the estate tax, both federal and for
your state of residence, can make a dramatic difference in the amount of tax paid and the amount of
assets left for your heirs. Those issues can, in turn, affect your investment plans. We can work with your
estate attorney to keep you abreast of important changes and keep your estate plan up to date. Call our
office to schedule a joint appointment to review your estate plan and your options under various
scenarios of the future.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of
the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-
chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common
stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan
Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized
benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies
representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all
dividends. Written by Securities America. SAI# 292815
Copyright © 2010 The Money Alert.com. All rights reserved.
All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to
participate in any particular trading strategy. The Money Alert does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any
information prepared by any unaffiliated third party, whether linked to this web site or incorporated herein, and takes no responsibility. All such information is provided solely for
convenience purposes only. The Money Alert is not affiliated with any of the firms or entities listed unless specifically stated. The Money Alert does not provide investment, tax or legal
advice. Please consult the appropriate professional regarding your personal situation.