Briefly Noted

    Getting Tanked: Oil Patch Scams Remain a Favorite of Con Artists

    Despite falling oil prices, fraudulent oil and gas deals remain a favorite ploy of con artists nationwide, according to the North American Securities Administrators Association (NASAA), the membership organization of state and provincial securities regulators.

    According to NASAA, skyrocketing prices of oil and natural gas in recent years have made a variety of traditional and alternative energy projects attractive to investors. Most of these investments are highly risky and not appropriate for smaller investors. And even where the underlying project is legitimate, any revenues realized can be absorbed by high sales commissions paid to the promoter and dubious ‘expenses’ skimmed off by the managing partner. Most scam deals, according to regulators, are devastatingly simple—not so much high-level fraud but rather a total misuse of proceeds.

    NASAA has issued an alert to investors who may be considering oil and gas opportunities, and it has coordinated a network of representatives from state securities agencies to share information on oil and gas investment schemes.

    Scam artists tend to target individual victims and make an unsolicited contact, usually with a phone call, offering a great business opportunity. NASAA warns that an investor should do three things before buying into any investment in energy or any other industry:

    • First, independently research the background of the promoters;
    • Second, get a clear explanation of the deal in writing; and
    • Third, carefully read all the fine print.

    NASAA notes that businesses raising money by soliciting investors must comply with state or provincial securities laws. Scam artists usually tell prospective victims that they are licensed and their investment is registered, but you should not take them at their word—check for yourself.

    Changing Gears: Downshifting Into Retirement

    Americans approach retirement in a variety of ways, according to a new study by The Vanguard Group. However, a large number of the approaches involve “downshifting”—reducing work hours at an older age or taking a part-time or less stressful job. Nearly two in three respondents age 55 to 69 have downshifted already or plan to do so in the future.

    • The largest group of respondents (35%) left full-time work in their 60s, yet continued with some type of self-employment or part-time work. Financial necessity was cited as an important reason for continuing to work.
    • Nearly 30% of the survey respondents left the full-time workforce in their 50s and did not work again. This group fit the conventional view of retirement, but retired much earlier than is typical. Adequate financial resources were key in making this transition.
    • Some 12% of respondents retired from full-time work in their 50s, but quickly took on high levels of part-time work or self-employment. Generally, this group of semi-retirees resumed working to enjoy themvelves, stay active or to earn discretionary income.
    • The remaining respondents followed several retirement paths, including those who said they never plan to stop working (10%); those who retired early but returned to work for financial and psychological reasons (5%); and those who were not full-time workers in their 40s and 50s and pegged their retirement to that of their spouses (9%).

    Large Gifts and the Gift Tax: Uncle Sam Wants His Share

    Have you recently been inspired to consider making a large gift to your children or grandchildren? Before you do, make sure you understand the tax consequences of your actions.

    Here are some gift tax FAQs, provided by the Pennsylvania Institute of Certified Public Accountants, to help you understand your tax liability and that of your recipients.

    What is considered a gift?

    For tax purposes, a gift is a transfer of property without expecting to receive something of at least equal value in return.

    What gifts are subject to the federal gift tax?

    There are ways you can make a substantial gift without being subject to gift taxes. For starters, you can give any number of people gifts that do not exceed the annual exclusion amount. Paying someone’s tuition bills (but not room and board or books and supplies) or medical expenses is not a gift for gift tax purposes, as long as you pay those amounts directly to the school or medical provider. Under separate marital deduction rules, you can give any amount to your spouse, providing he or she is a U.S. citizen.

    How many annual exclusions can I take?

    The annual exclusion applies to each recipient. If you are married, you and your spouse are each entitled to the annual exclusion amount if your spouse consents to split the gifts on IRS Form 709.

    What if I give more than the limit?

    If you exceed the current annual exclusion amount to one person, the excess amount is applied to your lifetime federal gift exemption, which is $1 million. If married, both you and your spouse are entitled to separate $1 million lifetime gift tax exemptions. You are responsible for filing Form 709 to declare the large gift and to keep a running total of the lifetime exemption used. No gift tax is due as long as there is some lifetime gift tax exemption remaining.

    How do I report the gift tax?

    If you make a gift that exceeds the annual exclusion, you must file Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return, which is due April 15 of the year following the one in which you made the gift. Even if you do not owe a gift tax because you have not reached the lifetime gift exclusion, you are still required to file this form.

    Source: Pennsylvania Institute of Certified Public Accountants,