March 6, 2017

Weekly Market Commentary
March 6, 2017

The Markets

Happy upcoming Easter everybody and I hope most of you are having the warm weather that we are currently receiving in Atlanta!

Major U.S. stock markets were euphoric following President Trump’s speech on February 28. Optimism about the new administration’s pro-growth policies propelled the four major U.S. stock indices to new highs, despite a dearth of policy details, reported Financial Times.

Financial Times reported pessimism prevails in the bond market. This is due to the pending interest rate increase that has been alluded to by the Federal Reserve for March. One bond market professional said, “The bond market is taking a different view from the equity market. So, is strong economic growth ahead? Do bond investors or stocks investors have it right? Only time will tell.

DON’T THINK SO! Tax season is upon us. That means we can all use some entertainment. While many folks dread the process of completing and filing taxes, some see it as an opportunity to test the boundaries of the system. Here are a few deductions Americans have taken that have failed to pass muster in tax court, courtesy of Kiplinger.com:

• You cannot deduct the cost of a good night’s sleep. A tax preparer who worked from home escaped to a hotel because her clients were calling in the wee hours of the night and causing her to lose sleep. When she attempted to take a business deduction for the hotel expense, the tax court ruled a good night’s sleep is a non-deductible personal expense.

• You cannot take a theft loss deduction for poor construction. A couple moved into their newly built dream home only to realize the builder had cut some corners. The house had some serious issues, including its foundation. The couple claimed the builder had defrauded them and took a large theft loss deduction. While taxpayers can deduct losses from a home-related theft, shoddy construction doesn’t qualify.

• You cannot take a depletion deduction for bodily fluids. A woman earned $7,000 a year donating blood plasma because of her rare blood type. She took a depletion deduction, claiming “the loss of both her blood’s mineral content and her blood’s ability to regenerate,” wrote Kiplinger. While companies that take coal, iron, and other minerals from the ground can take a depletion deduction, the tax court ruled that individuals cannot claim depletion on their bodies.

• You cannot deduct a business trip if there are no formal business meetings involved. A repo firm sponsored a trip to Las Vegas for its bank customers. The firm’s employees chatted with clients about business on the way to Vegas, but no formal meetings were held. The tax court denied the deduction.

Before you get creative with your taxes, consult with a tax professional!

Weekly Focus

“Because of your smile, you make life more beautiful.”
–Thich Nhat Hanh, Vietnamese Buddhist monk and peace activist

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