Briefly Noted

    Cash 9-1-1: What to Do When You Need Emergency Money

    When you least expect it, you can lose your job, or face a large unexpected but necessary expense. If you don’t have an emergency fund for unexpected disasters and need to raise money quickly, here’s some helpful advice from the Pennsylvania Institute of Certified Public Accountants.

    • Sell assets you don’t need, such as that second car or the boat that’s been sitting in your driveway.
    • Seek help from relatives and friends, but be sure to keep the loan professional, and put everything in writing. You can use a promissory note form, available at office supply stores, to ensure that you and the lender understand the terms of the loan.
    • Consider borrowing against the cash value of your insurance policy, but remember that the main purpose of life insurance is the death benefit, and your death benefit will be reduced by the amount of the loan plus any unpaid interest if you haven’t repaid the full amount of the loan at the time of your death.
    • Tap your home equity, but be sure you understand that you’re putting your house at risk in the event you can’t repay what you borrow.
    • Use credit card advances with caution. Credit cards are a good alternative when you have a short-term need and are reasonably certain that you can pay back the amount that you borrowed in a month or two.
    • Think long and hard before you borrow from a 401(k), and borrow only as a last resort. You will lose the benefit of compounding on the money you withdraw, and you could compromise your long-term financial security if you do not repay the money. In addition, if you leave your company and still have an outstanding balance on a plan loan, you are generally required to repay the loan in full within 60 days if you are under age 59½; if you do not, you will be subject to a tax penalty in addition to the tax.

    Educational Futures: A New On-Line Learning Program

    The National Futures Association (NFA) has launched a new on-line program for individuals who want to learn about the opportunities and risks inherent in exchange-traded futures.

    The interactive Online Learning Program covers basic concepts, the math of futures, and how to participate in trading. It includes a resource section and takes about an hour to complete. It also features a series of quizzes to help reinforce basic concepts and a complete glossary of terms related to futures trading.

    You can access the program through the Investor Learning Center section of NFA’s Web site at

    Donated Property: The Charitable Way to Tax Relief

    Cash isn’t the only way to help your favorite charity. Many organizations accept gifts of used clothing, household items, and cars, as well as stocks, mutual funds, collectibles, and works of art. In addition to helping out the charity, you are also eligible for a tax deduction. In general, you can deduct the property’s fair market value. However, there are new rules for some types of donated property, so it’s important that to understand the details, according to the Pennsylvania Institute of Certified Public Accountants (PICPA):

    Clothing and household items: You can deduct the fair market value of these items, but they must be in good condition.

    Gifts of appreciated securities: When you donate stocks or mutual fund shares held for more than one year, you may deduct the stocks’ current fair market value. Additionally, you can avoid paying capital gains taxes on the appreciated value.

    Property valued at over $500: These items must be reported to the IRS on Form 8283, including information on how and when you acquired the property and your cost basis. Also, ask the recipient to provide you with documentation specifying how the property will be used. Donated property used to carry out a charity’s work or given to a needy individual may be deducted at its full market value. However, if the property is sold by the charity, your deduction is limited to the property’s sale price.

    Gifts over $5,000: These items require a written appraisal from a qualified appraiser, who must also sign Form 8283. In addition, the donee is required to provide written confirmation of any value that the donor did, or did not, receive in exchange. Also, a new rule for donations of art or other appreciated tangible personal property made after September 1, 2006, states that a deduction claimed for fair market value may be recaptured if a charity sells the property within three years.

    Source: The Pennsylvania Institute of Certified Public Accountants (PICPA).