Briefly Noted

    Alert: What You Should Know About the U.S. Treasury’s Money Market Fund Guarantee Program

    Recent market events put a spotlight on the money market fund industry—including the U.S. Treasury Department’s announcements on September 19 and 29, 2008, of a temporary guarantee program for the money market fund industry.

    The Financial Industry Regulatory Authority (FINRA), the largest non-governmental regulator for all securities firms doing business in the U.S., has issued an alert on their Web site to help investors better understand money market funds, and to answer some of the questions investors may have about the U.S. Treasury’s guarantee program for money market funds.

    In particular, the alert describes the development of the Treasury’s program.

    On September 19, the U.S. Treasury announced the establishment of a temporary guarantee program to protect shareholders of money market mutual funds—and on September 29 it officially opened the program to eligible money market funds. Eligible funds include publicly offered funds that are registered with the SEC, are regulated under Rule 2a-7 of the Investment Company Act of 1940, and seek to maintain a stable $1.00 net asset value. Both taxable and tax-exempt money market funds may participate. Eligible funds must apply and pay a fee to participate in the program—the program is not automatic. The program is not available to any fund that “broke the buck” (had net asset values that fell below $1) prior to the close of business on September 19.

    The program will insure shareholder assets in participating money market funds as of the close of business on September 19: If a participating money market fund subsequently fails to maintain a stable $1.00 net asset value, the program will provide coverage to shareholders up to the amount they owned on the date the program was announced.

    Investors cannot sign up for the guarantee program on their own. Instead, each money market fund must decide whether to participate in the program—and, if so, must have applied by October 8, 2008. You can find out whether a money market fund is participating in the program by contacting the fund directly or checking their Web site.

    The FINRA alert also notes investors should be aware of several features of the guarantee program:

    Limits on the guarantee: The insurance provided by the guarantee program extends only to the total value of a shareholder’s account in a participating fund as of the close of business on September 19, 2008.

    Tax issues: Participation in the program by a tax-exempt money market fund will not jeopardize the tax-exempt status treatment of payments.

    Duration: Initially, the program will be in effect for three months, beginning September 19, 2008. After three months, the Secretary of the Treasury will assess the program, including whether to extend it (up to September 18, 2009).

    The alert also notes that the Reserve Primary money market funds, which broke the buck prior to September 19, are not eligible for the Treasury guarantee program. Reserve’s board of directors is creating a plan to liquidate assets in the affected money market funds. For more information and updates on the liquidation plan, check Reserve’s Web site (

    For more information on the Treasury’s program and the alert, go to the Investor Alerts section of the FINRA Web site at

    Check Tax Rules Before Donating Gas-Guzzling Clunkers to Charity

    High gas prices may be causing many Americans to think about buying a more fuel-efficient vehicle. But if you think you can donate your old car to charity and take a hefty tax deduction, you need to brush up on the rules, warns the American Institute of Certified Public Accountants. That’s because many taxpayers don’t realize the federal rules changed in 2005.

    Taxpayers have to meet strict IRS requirements in order to claim more than a $500 deduction. Many donated vehicles are clunkers—they don’t have a high resale value, and the charities don’t get much money for them. Under the new rules, the taxpayer’s deduction can’t be more than what the charity received, except under special circumstances:

    • The charitable organization uses it to perform some of its regular charitable activities—for example, using the vehicle to deliver food if providing food is part of the organization’s regular function.
    • The charity makes a major improvement to the vehicle—replacing the engine would qualify, but not a minor repair or routine maintenance.
    • The charity gives the vehicle away or sells it for significantly less than fair market value to someone who is underprivileged, so long as the charity’s purpose is to provide vehicles to poor or distressed individuals who need one.

    If one of these conditions is met, the taxpayer may take a deduction for the vehicle’s fair market value.

    For cars in good condition that will be used by the charity as described above, AICPA recommends consulting a used car buying guide, such as the Kelley Blue Book, to determine the fair market value. However taxpayers must use the private party sale estimate, not the dealer retail value of a similar vehicle, as the basis for the fair market value.

    You also must get the necessary paperwork to substantiate the deduction—taxpayers claiming more than $500 have to get a receipt from the charity substantiating the contribution on IRS Form 1098-C. The form includes the donor’s name and taxpayer identification number, the vehicle identification number and whether any of the three exceptions described above apply.

    The American Institute of Certified Public Accountants (