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Dear Clients: During the course of the year, we will be adding additional notes, commentaries, and information on various topics as we hear about them. Please call us for additional information at (815) 363-0808.

I will have a Booth set up at the McHenry County Fair, August 5th through august 9th, from 10:00 AM to 10:00 PM. Please come and visit so we can discuss your questions and concerns. We will also have a Free Prize Drawing!
I am pleased to announce that my affiliated broker-dealer, AIG Financial Advisors, Inc. has been re-named SagePoint Financial, Inc., effective January 20, 2009. Soon, you will begin to see SagePoint Financial on your account statements, transaction confirmations and business documents. The name change to SagePoint Financial will have no impact on your investment account with our firm. All information related to your accounts including your account numbers will remain unchanged by this action.
Please let me know if you have any questions regarding this announcement or if you would like to discuss your investments or related financial matters at this time.Please note that Pershing, LLC has announced: On Tuesday, December 23, 2008, the President signed into law H.R. 7327, the "Worker, Retiree, and Employer Recovery Act of 2008", which waives Required Minimum Distributions (RMD) for 2009. This means that if you are turning 70½ in 2009 you are not required to begin taking your RMD from your retirement account in 2009. If you are over 70½, you are not required to continue to take your RMD for 2009. You may still choose to take a distribution although it is not required. As a reminder, if you turned 70½ during 2008, then you must continue to meet your RMD for 2008. You have until April 1, 2009 to take your RMD. Please note that Pershing does not offer tax or legal advice." Please consult with your financial or tax advisor concerning the impact of this change to your specific circumstances.
With the U.S. economy evolving so quickly, I continue looking for information that can help you focus on and understand the activities that may impact you financially. Below is a summary of key legislative items included in the new American Recovery and Reinvestment Act (aka- the Stimulus Bill) recently passed by the U.S. Government. I encourage you to review this information to become more familiar with how its benefits may apply to you. You can also find additional information about this new legislation online at: www.recovery.gov

The American Recovery and Reinvestment Act (aka- The Stimulus Bill) On Feb. 17, President Obama signed into law the American Recovery and Reinvestment Act of 2009. This new law is intended to jump-start the U.S. economy through direct spending and tax incentives. Most of the tax incentives are retroactive to Jan. 1, 2009. The individual incentives included in the law are as follows:
- Making Work Pay Credit This allows a credit against income tax in an amount equal to the lesser of 6.2% of an individual’s earned income or $400. This credit applies in full for individuals whose modified adjusted gross income does not exceed $150,000, married filing jointly, or $75,000, filing single. This credit effectively offsets an individual’s FICA payroll taxes.
- $250 economic-recovery payment This is a one-time payment of $250, for 2009 only, to individuals on fixed incomes; i.e., Social Security recipients, railroad retirees and disabled veterans.
- AMT patch The 2009 alternative minimum tax exemption amounts are $70,950 for joint filers and surviving spouses and $46,700 for singles and heads of household.
- First-time homebuyer tax credit The current credit is increased to $8,000, from $7,500, and extends the eligible use until Nov. 30, 2009. It also eliminates any required repayment to the Internal Revenue Service after 36 months in the home. This credit applies to purchases made after Dec. 31, 2008. The credit phases out at $75,000 for single filers and $150,000 for joint filers.
- 5. New-car deduction This allows for an above-the-line deduction on purchases of new vehicles for state and local sales taxes or excise taxes paid on the purchase. There are two limits on the deduction: 1. Deductible sales or excise taxes cannot exceed the portion of the tax attributable to the first $49,500 of the purchase price of any one vehicle; and 2. Any deduction will be phased out to the extent the purchaser has adjusted gross income exceeding $125,000 for single filers and $250,000 for joint filers. This deduction is allowed only on purchases made after Feb. 17, 2009.
- 6. Education credit The HOPE Education Credit has been renamed the American Opportunity Tax Credit. The credit has been increased from a maximum of $1,800 to $2,500 and also makes 40% of the credit refundable.
- 7. Child Tax Credit The income threshold has been set at $3,000, thus effectively increasing the refundable portion of the credit for 2009 and 2010.
- 8. Earned Income Tax Credit This credit has been increased to 45% of the first $12,570 of earned income for taxpayers with three or more qualifying children.
- 9. Unemployment compensation For 2009, $2,400 of unemployment compensation will be excluded from gross income.
- 10. Transit benefits parity Currently, $120 per month of qualified transportation fringe benefits are excluded from gross income. The new law increases that amount to $230 per month.
- 11. Qualified tuition programs (Section 529 college savings plans) Historically, under the qualified tuition program, beneficiaries of a 529 plan would be taxed on distributions that were not used to pay qualified education expenses. For 2009 and 2010, the new law allows beneficiaries tax-free distributions to pay for computers and computer technology, including Internet access.

The business incentives included in the law are as follows:

1. Bonus depreciation The new law extends the 50% first-year bonus depreciation that was allowed under the 2008 Economic Stimulus Act through Dec. 31, 2009. There is also a higher cap on vehicle depreciation ($8,000).
2. Internal Revenue Code Section 179 expensing The new law retains the 2008 Section 179 expensing amounts of $250,000 and $800,000 for the cost threshold on purchases.
3. Net operating loss carry-back The new law provides a five-year carry-back of 2008 NOLs but only for qualified small businesses with average gross receipts of $15 million or less. The new law gives these businesses the choice to carry back NOLs three, four or five years.
4. Work Opportunity Tax Credit Two new categories of targeted groups have been created: unemployed veterans and disconnected youth. According to a February Government Accountability Office report, disconnected youth are those “14 to 24 who are not in school and not working, or who lack family and other support networks.”
5. Cancellation of indebtedness The new law will allow certain businesses to elect to recognize cancellation of indebtedness income over five years, beginning in 2014, for specific types of business debt purchased by the business after Dec. 31, 2008, and before Jan. 1, 2011.
6. Qualified small-business stock Investors may exclude 75% of the gain from the sale of certain small-business stock after Feb. 17, 2009 and before Jan. 1, 2011.
7. S corporation built-in-gain period The new law shortens the holding period for assets subject to the built-in-gains tax imposed after a C corporation elects to convert to an S corporation to 7 years, from 10. This applies to C corporations that convert to S status in tax years beginning in 2009 and 2010.
8. Estimated taxes Individuals whose income is primarily from small business in 2009 may calculate their estimated tax payments on 90% of their 2008 tax liability.
9. COBRA Benefits Individuals involuntarily separated from employment between Sept. 1, 2008, and Jan. 1, 2010, may elect to pay 35% of COBRA coverage and have it treated as paying the full amount. The former employer will be required to pay the remaining 65% but will be reimbursed by crediting those amounts against income tax withholding and payroll taxes it is otherwise required to remit to the federal government.

As always, if you have any questions about this information, please contact me at your convenience at: (815) 363-0808.

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Securities offered through SagePoint Financial, Inc., member FINRA/SIPC. Investment advisory services offered through Frank D. Olesuk, a registered investment advisor not affiated with SagePoint Financial, Inc.

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A Broker/dealer, investment advisor, BD agent, or IA rep may only transact business in a state if first registered, or is excluded or exempt from state broker/dealer, investment adviser, BD agent, or IA registration requirements as appropriate. Follow-up, individualized responses to persons in a state by such a firm or individual that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without first complying with appropriate registration requirements, or an applicable exemption or exclusion. For information concerning the licensing status or disciplinary history of a broker/dealer, investment adviser, BD agent, or IA rep, a consumer should contact his or her state securities law administrator.

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