Friday Financial Five – October 2, 2015

Friday, October 02, 2015

Dan Forbes, GoLocalPDX Contributor

Good riddance to the 3rd quarter

The third quarter was unkind to equity investors in a variety of ways. Domestically, the S&P 500 experienced its first correction of 10 percent since 2011, while Apple fell over 12 percent for the three month period. Small company holdings, represented by the Russell 2000 index, also fell over 12 percent. After a solid first half of the year, emerging markets fell victim to a 29 percent drop in China’s Shanghai index. Fittingly, September 30th, a notoriously poor day for investors, ended the quarter on a positive note for U.S. holdings with over one percent gains.

House avoids government shutdown

The fiscal impasse that consumes Congress until the final hour on an almost yearly basis saw resolution on Wednesday in both the Senate and the House. The agreement provides another stop-gap solution allowing government officials to continue negotiations until December 11th. The funding of Planned Parenthood continues to be a major point of contention between the two political sides, but both parties hope discussions will lead to a longer term spending plan, possibly lasting until the end of 2017.

Trump tax plan revealed

The Tax Foundation conducted a review of the Trump tax plan. Their projection show dramatically decreased revenue, starting with four individual income tax brackets ranging from 0% to 25%. Capital gains and dividends would be taxed at either 0%, 15%, or 20% and the estate tax would be repealed. On the business side, the corporate tax rate would drop from 35% to 15% and companies would face a one time “repatriation” tax of 10%. This is money that was earned outside of the U.S. and remains in foreign countries for fear of double taxation. The Foundation anticipates the plan will reduce tax revenue by over $10 trillion over the next decade, while increasing after-tax income across all taxpayers by over 10%.

IRS adjusts rules on estate closing letter

For those that lose loved ones, administering the decedent’s estate could be slightly more work thanks to a recent clarification from the IRS. Formerly, the IRS automatically issued closing letters four months after receiving the Form 706, which is the estate tax return. The IRS reviewed the form and upon acceptance, the letter got issued. Now, as of June 1st of this year, the estate’s executor or representative will need to request the estate closing letter, possibly delaying the estate’s closing. The administration of an estate, already an unenviable task, may be even more cumbersome.

Forbes 400 lists America’s richest people

Bill Gates continues to give away money and Bill Gates continues to be the richest person in America. For 22 straight years, Gates has topped the Forbes (no relation) list. Still sitting at number two is Warren Buffett, while Mark Zuckerberg broke into the top ten with an estimated wealth of over $40 billion. According to Forbes, this list of wealthy Americans is $50 billion wealthier than the top 400 a year ago. Not even paying $2 billion for the Clippers was enough to hurt Steve Ballmer’s standing as the country’s richest owner of a sports team.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].

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