|
C�
<br />•
<br />Black gold still glitters
<br />Prices of energy stocks are up sharply. But as a group, they don't appear over-
<br />priced, says Jeremy Siegel, a columnist for Kiplingers Personal Finance and a
<br />professor at the University of Pennsylvania's Wharton School. Siegel argues that
<br />rising demand for energy worldwide, combined with diminishing supplies, will
<br />keep prices high for some time, and that will keep earnings of energy companies
<br />high as well. You should not go overboard investing in this sector, he says, but it
<br />is not unreasonable to hold 10% to 20% of your stock portfolio in energy and nat-
<br />ural resources. Looking at the bigger economic picture, Siegel predicts that lofty
<br />energy prices could hurt economic growth in the short term. But they're also "the
<br />greatest incentive we have to conserve and improve energy efficiency" and to
<br />find solutions to America's energy needs. That, he says, will benefit the economy
<br />over the long run.
<br />Endowing a scholarship takes more cash
<br />If you plan to endow a scholarship at your alma mater, be prepared for a higher
<br />minimum donation than may have been required in the past. Colleges have been
<br />raising the bar on scholarship endowment funds. For example, Johns Hopkins,
<br />which had previously required a minimum donation of $20;0.00 to endow a scholar-
<br />ship, upped the ante last year to $100,000. And Duke has raised the amount needed
<br />to fund a restricted scholarship from $100,000 to $250,000. The minimums are ris-
<br />ing in part to make sure that scholarships funded by endowments keep pace with
<br />escalating college costs. Schools usually spend only about 5% of a gift each year to
<br />• ensure the endowment's continued growth.
<br />Tax relief for hurricane victims and donors
<br />This year, extra tax breaks go to the victims of recent Gulf Coast hurricanes as
<br />well as to hurricane -relief donors. Families who have opened their homes to storm
<br />victims rent-free for 60 days or more can claim an additional personal exemption
<br />of $500 for each evacuee, up to a maximum of $2000. And by special decree of
<br />Congress in response to Hurricane Katrina, residents of the affected areas are
<br />allowed to deduct the full amount of their uninsured casualty losses; rather than
<br />applying the usual restrictions. Residents of any presidentially declared disaster
<br />area can claim their casualty losses on their 2005 return next spring, or they can
<br />file an amended 2004 return (Form 1040X) to speed up the refund process.
<br />The amount on your 1099 may not be taxable
<br />If you can show that the 1099 was wrongly issued, you needn't report the income
<br />shown on it. In a recent case, an individual who purchased a car with zero percent
<br />financing was informed the next day by the car dealer that the car didn't really
<br />qualify for the no -interest loan. The dealer demanded that the car buyer sign a new
<br />contract with a market interest rate, but the buyer refused So the car dealer sent
<br />the buyer a 1099-INT form showing interest income of $3000, the amount of
<br />interest forgone because of the dealer's error. But the IRS sided with the individ-
<br />ual, saying the interest didn't have to be reported Not only that, but the car dealer
<br />• can be sued for issuing an intentionally false 1099.
<br />Appeal of Dividends
<br />In a sideways stock market, it's
<br />easy to become restless and bail
<br />out. A better way to deal with
<br />short-term languor, though, is to
<br />buy,companies that pay healthy
<br />dividends. That way, you can
<br />..collect some welcome income
<br />while you wait for the market to
<br />come;to its senses;' says James
<br />K. Glassman, a Kiplinger's Per-
<br />sona/ Finance columnist. And
<br />dividends are becoming more
<br />fashionable,*dIassman notes.
<br />: `The:current maximum 15% tax
<br />.:rate helps, as does the impend-
<br />ing .retirement of baby boomers,
<br />who will demand more invest -
<br />merit income. A few dividend
<br />payers to consider: Allstate
<br />" (ALL),. Chevron (CVX), McDon-
<br />'ald's`(MCD), VF Corp. (VFC), '
<br />IngeFstiil-Rand OR) and Wells
<br />Fargo_(WFC). You can also buy
<br />dividend stocks through a mutu-
<br />al fund, such as. Thornburg
<br />Investment Income Builder A
<br />(TIBAX.; Maximum'sales fee;
<br />.'4.sQ,'or,6n exchange -traded
<br />fund,'such as iShares Dow Jones
<br />' Select,giyidend Index (DVY).
<br />B4 ndws for volunteers who
<br />drive their cars for'charity. The
<br />IRS has changed its tune: Only
<br />reimbursements up to the chari-
<br />table'mileage rate now escape
<br />tax. That means reimburse-
<br />.meats are taxable to the extent
<br />they.exceed 14 cents a mile (34
<br />cents for dr,.iving related to Katri-
<br />na relief). In 2000, the IRS ruled
<br />that a charity could reimburse
<br />vblimteers at the higher busi-
<br />ness mileage rate taic free, if
<br />they, substantiated the miles
<br />driven for charitable purposes:
<br />;:. But the agency says that ruling
<br />is no, longer in effect.
<br />For more Information, call 202-887-6488. Quotation for commercial purposes not permitted without written approval. Duplicating an entire issue for sharing with others, by any means, is illegal.
<br />Copyright 2005, The Kiplinger Washington Editors, Inc The Kiplinger Letter and Kiplfngerrorecasts are published weekly for $117 one year/$199 two years/$263 three years. To subscribe, call 800-544.0155.
<br />
|