"For behold, the winter is past; the rain is over and gone. The flowers appear on the earth, the time of singing has come, and the voice of the turtledove is heard in our land."~~Song of Solomon 2:11-12 (ESV)
Kansas City has experienced some beautiful spring weather lately - we hope you have too! Spring is a wonderful reminder of our new life in Christ Jesus. Ministries around the world aim to share this message of new life with unreached and hurting people. You can be a part of their work by helping to support your favorite ministry's future.
For more information on how to support the future of your favorite ministry, please reply to this email or contact us by phone at (913) 577-2983.
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Blessings,
Kenneth R. Roney, J.D.
President
PERSONAL PLANNER
Gifts with Life Income
Many friends of charity have acquired appreciated property over time. A great way to use this appreciated property is for a charitable gift. A donor of appreciated property receives a charitable tax deduction and also benefits from bypassing capital gains tax on that gift property.
But some friends also want to increase their income. Two agreements that are popular for this purpose are a gift of appreciated stock for a charitable gift annuity or a gift of real estate into a special trust called a charitable remainder unitrust.
If you make a transfer into a gift plan that pays you income for life, you may receive both a charitable tax deduction and favorable capital gains benefits. Because you receive income, your charitable deduction is for a portion of the value in your property.
With most life-income gifts, your selected charity will need to wait until you pass away until it receives the actual gift. The IRS has periodically approved these plans in letters and rulings.
Therefore, a gift annuity or charitable remainder trust is a very good way to combine a charitable deduction now, income for one or two lives and an eventual significant benefit to a favorite charity.
Susan Seeks Secure, Fixed Payments
After taking her car in to have it repaired, Susan looked at the cost of the parts for that repair and thought that the auto parts business would be a good investment. She did some research and purchased stock about 10 years ago in a mid-sized company that had auto parts stores throughout the nation.
Susan thought that people will always need replacement parts for their autos and other vehicles. She proved to be a good investor, and the stock increased from the $20,000 she paid to its present value of $50,000.
Because Susan is now in her 70s and not getting as much income from her CDs and other investments that she desires, she is exploring ways to increase her income. The stock has increased in value to $50,000, but pays a dividend between 1% and 2%.
Susan read about a charitable gift annuity. It appeared to her that based on her age she could receive fixed payments of 6.3%. She was quite excited and called her CPA Margie to discuss setting up a gift annuity.
Susan: "Margie, I bought this stock 10 years ago after I had a car repair done. It was a bit of a shock to me when I saw the cost of the auto parts. But I thought about that and decided that an auto parts store might be a good investment. I invested $20,000 in a mid-sized company and that stock is now worth $50,000. I was reading the website of my favorite charity and it seems that I can set up a charitable gift annuity with this stock."
Margie: "Yes, a charitable gift annuity is a contract between you and the charity. I ran your $50,000 number on the website calculator and you will receive a 6.3% payout for life. That's $3,150 each year."
Susan: "That's great! Do I also get any tax savings? I sure could use a deduction this year."
Margie: "There is good news about tax savings. You get a charitable tax deduction of about $20,000. In addition, around 30% of your annual payment will be tax free."
Susan: "So this is going to increase my income and at the same time reduce my taxes. It sounds like just the right plan. I will call the charity today."
Steve and Linda are Tired of Tenants
Steve and Linda bought a rental home 10 years ago. They're both 65 now and would like to retire.
Because they want to travel, they hope to sell the rental property and be freed of the management responsibility. Last month they finished paying off the mortgage and the property is now debt free.
Steve and Linda called their attorney Bill to discuss the best way to sell so they can start traveling.
Steve: "We bought this years ago and actually have not taken income. All of the rental payments have gone to pay off the debt. Our CPA says that the original $200,000 cost has now been depreciated down to around $125,000. But the home has gradually increased in value and we think it is worth about $300,000."
Bill: "I understand why both of you are ready to sell. It certainly is an effort to manage tenant issues. You could sell the property, invest the proceeds and have greater freedom to travel."
Steve: "We heard that you can sell tax free and we don't want to pay any tax. How does that plan work?"
Bill: "Several of my clients have set up a special charitable trust to sell property tax free. You and Linda could transfer your rental home to the trust. The trustee then will sell tax free. Plus, you get a charitable deduction of around $100,000 if you take a 5% payout. That's the minimum payout, but it is a very good idea. Most of my financial planner friends recommend a 5% payout for the best long-term investment security. So I usually suggest a 5% trust. We have a special name for that trust. It is called a unitrust."
Linda: "So we can sell tax free and get 5% payments for both our lives. If Steve passes away, will I receive the full 5%?"
Bill: "Yes. The income will be paid jointly to you during life and then to the survivor for his or her lifetime. Hopefully, the trust will earn more than 5% and will grow. If the trust principal grows, your 5% income can grow and give you some inflation protection. Because you might live for 25 years, 30 years or even longer, that is quite important."
Linda: "After we both pass away, then my understanding is that the trust will be given to one or more favorite charities."
Bill: "Yes, you can select the charity or charities to benefit from your unitrust."
Steve: "This sounds like quite a good idea. Bill, go ahead and draft the charitable trust. We already have a stack of travel brochures on our coffee table. We're ready to start moving now."
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SAVVY LIVING
Health Strategies for Preventing Alzheimer's Disease
Are there any proven strategies to preventing dementia? My 80-year-old mother has Alzheimer's which has me wondering if there is anything I can do to protect myself.
While there's currently no cure for Alzheimer's disease, new research indicates that there are a number of healthy lifestyle strategies that can help most people reduce the risk of getting it.
According to the Alzheimer's Association, the key factors that increase the risk of getting Alzheimer's are advanced age, family history and heredity, but research shows that our general health plays a factor too. While we can't do much about our age, family or genes, we do have control over how we treat our body.
Some medical experts even estimate that by following these healthy tips now in middle-age you can actually reduce your risk of developing Alzheimer's by as much as 50%, or at least delay its onset by a few years. Here are the recommended strategies.
Manage Health Problems: Studies have consistently shown that Alzheimer's disease is closely related to conditions like diabetes and heart disease. Consequently, if you have high blood pressure, high cholesterol or diabetes you need to treat them with lifestyle changes and medication (if necessary) and get them under control.
Left untreated, these diseases will cause damage to the vessels that feed blood to the brain making them more vulnerable to further damage and increasing your risk of dementia.
Exercise: Aerobic exercise increases blood flow to all parts of your body, including your brain, to keep the brain cells well nourished. So choose an aerobic activity that you enjoy and elevates your heart rate like walking, cycling, dancing or swimming and do it for at least 30 to 40 minutes three times a week.
Eat Healthy: A heart-healthy diet, like the Mediterranean diet, will also help protect the brain. A Mediterranean diet includes relatively little red meat and emphasizes whole grains, fruits, vegetables, fish, shellfish, nuts and olive oil. Also, keep processed foods and sweets to a minimum.
Sleep Well: Quality, restful sleep also contributes to brain health. Typically, adults should get between seven and nine hours of sleep daily. If you have persistent problems sleeping, you need to identify and address the problem. Things that can interfere with sleep quality include medications, late-night exercise, alcohol, arthritis pain, sleep apnea and restless leg syndrome.
If you need help, make an appointment with a sleep specialist (see sleepeducation.com) who will probably recommend an overnight diagnostic sleep test.
Challenge Your Brain: Research shows that mind challenging activities can help improve memory, slow age-related mental decline and even build a stronger brain.
However, be aware that mind-challenging activities consist of things you aren't accustomed to doing. In other words, crossword puzzles aren't enough to challenge your brain if you're already a regular puzzle doer. Instead, you need to pick up a new skill like learning to dance, playing a musical instrument, studying a new language or doing math problems – something that's challenging and a little outside your comfort zone.
Brain-training websites like Lumosity.com and BrainHQ.com are excellent mind exercising tools because they continually adapt to your skill level to keep you challenged.
Socializing and interacting with other people is another important way to stimulate the brain. So, make a point to reach out and stay connected to friends, family and neighbors. Join a club, take a class or even volunteer – anything that enhances your social life.
Reduce Stress: Some stress is good for the brain, but too much can be toxic. There's growing evidence that things like mindfulness, meditation, yoga and tai chi are all good ways to help reduce stress.
For more tips, call the National Institute on Aging at 800-222-2225 and order a free copy of their booklet "Preventing Alzheimer's Disease: What Do We Know?"
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Senior" book. The articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070.
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YOUR PLAN
Capital Gains Tax Bypassed
Peter and Gail were nearing retirement. Over the years, with the help of their financial advisor, they made solid investments in securities and built a sizable portfolio. While their investments increased substantially in value, their potential capital gains tax bill was rising. Now with retirement on the horizon, they were looking for a way to sell their highly appreciated stock, generate income for their future and avoid paying high capital gains tax.
Peter: For many years we had supported the work of our favorite charity. Through an e-mail we learned that we could make a gift of our appreciated stock to charity and bypass the potential capital gains tax cost we were facing. I was thrilled to learn that after transferring our portfolio to a charitable remainder trust, the trust would sell the stock tax free.
Gail: I liked the fact that the trust would provide us with income for our retirement years. If something happened to Peter, I would still be taken care of for the remainder of my life.
Peter and Gail decided to make a gift of their appreciated stock to establish a charitable remainder unitrust. They were thrilled at the prospect of creating future income while bypassing capital gains tax.
Peter: When I heard that in addition to the other benefits we would receive a charitable deduction for our gift, it was just icing on the cake! I wondered why everyone nearing retirement doesn't set up a charitable trust.
*Please note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your unitrust benefits may be different, you may want to click here to view a color example of your benefits.
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WASHINGTON NEWS
Average IRS Refund of $2,917
The IRS has recently published an update for 2013 tax return results as of March 14, 2014. The average refund for 2013 taxes is $2,917. This is up from the average refund of $2,863 for the prior year.
In IR-2014-32, the IRS noted three important tax changes for 2013. First, the standard business mileage rate for that year is 56.5 cents per mile. Second, a home office that is used for a qualified business purpose may benefit from use of the simplified option for determining the deduction.
Third, upper income persons face a potential new 0.9% Medicare tax. This tax applies to wages, railroad retirement compensation and self-employment income. The tax is applicable for individuals with over $200,000 of income, married persons over $250,000 and married filing separately with incomes over $125,000. Additional information is available by logging on to www.irs.gov and searching for "Additional Medicare Tax."
The IRS published the latest statistics on individual tax returns.
| 2013 | 2014 | |
| Returns | 74.8M | 75.1M |
| E-Filed Returns | 68M | 70M |
| Web Visits | 218M | 196M |
| Refunds | $172B | $180B |
| Average Refund | $2,863 | $2,917 |
| (B – billion, M – million) | ||
FINANCES
Stocks - Adobe is on Cloud Nine
Adobe Systems Inc. (ADBE), an international software company, reported its quarterly earnings on Tuesday, March 18. The company impressed investors with strong earnings.
Adobe reported quarterly revenue of $1 billion. The company reported revenue of about $1 billion during the same quarter last year as well.
The company reported net income of $47.05 million for the quarter. This represents a decrease from the comparable period last year when Adobe reported net income of $65.12 million. The company reported earnings per share of $0.09, a slight decrease from the same quarter in Fiscal 2013 when the company reported earnings of $0.13 per share.
Despite the drop in net income, Executive Vice President and CFO of Adobe Systems, Mark Garrett, was optimistic about the company's performance. "We achieved a significant milestone with our transition to the Cloud in our first quarter with more than half of Adobe's total revenue coming from recurring sources such as Creative Cloud subscriptions and Adobe Marketing Cloud adoption. In our Creative business, reported revenue from subscriptions exceeded revenue from legacy perpetual licenses for the first time."
Investors were impressed with the revenue generated by Adobe this quarter. Adobe's first quarter revenue of $1 billion beat Wall Street analysts' expectations that the company would generate revenue of $973 million. Most of the credit for such a strong showing is due to Adobe's Marketing Cloud revenue, which increased by 24% year-over-year. Adobe's future success will be closely linked to how well its customers adopt its Cloud-based software products.
Adobe Systems, Inc. (ADBE) shares ended the week of 03/17 at $67.14, down 1.1% for the week
Nike Continues to Impress
Nike, Inc. (NKE), an iconic retailer of sports apparel and accessories, reported its Fiscal 2014 third quarter results on Thursday, March 20. The company reported increased sales in the months leading up to the World Cup this summer in Brazil.
Nike reported third quarter revenue of $6.97 billion. This represents an increase of about 13% from the same quarter last year when the company reported revenue of $6.19 billion.
The company reported quarterly net income of $685 million. This represents a decrease of about 21% from the comparable period last year when the company reported net income of $866 million. Earnings per share came in at $0.76 for the quarter, which is an increase from last year at this time when earnings per share were $0.73.
"Our strong Q3 results demonstrate our relentless focus on delivering innovations that resonate with consumers," said Mark Parker, President and CEO of Nike, Inc. "Despite macroeconomic challenges, Nike delivers consistent results because we focus on the biggest opportunities for growth while we manage risk across our diverse global portfolio. This is how we continue to drive long-term value for our shareholders."
Nike noted in its conference call following the earnings release that they have seen a noticeable increase in sales leading up to the World Cup this summer in Brazil. In addition, they also saw a sales spike in Western Europe where it competes with sports retailer Adidas. Finally, sales in China continue to increase. All of these signs bode well for Nike and for investors.
Nike, Inc. (NKE) shares ended the week of 03/17 at $75.21, down 4.64% for the week.
Tiffany & Co. Earnings Disappoint
Tiffany & Co. (TIF), a well-known jewelry retailer, reported its fourth quarter and annual results for Fiscal 2013 on Friday, March 21. The retailer disappointed investors with earnings that missed Wall Street expectations.
Tiffany & Co. reported fourth quarter and annual revenue of $1.3 billion and $4.03 billion, respectively. These are both increases from last year when the company reported fourth quarter revenue of $1.24 billion and annual revenue of $3.79 billion.
The company reported a net loss of $103.6 million for the fourth quarter and net income of $181.37 million for the year. Both of these figures are decreases from last year when the company reported net income of $179.64 million for the fourth quarter and $416.16 million for the year. The company reported earnings per share of $1.41 for the year.
"We are proud of our performance this past year," said Michael J. Kowalski, Chairman and CEO of Tiffany & Co. "Sales and operating earnings – excluding the arbitration-related charge – rose to record levels. Sales growth was led by fine and statement jewelry, new or expanded jewelry collections including the ATLAS, ZIEGFELD, and HARMONY collections, and continuing strength in our iconic jewelry designs. Tiffany's marketing communications more effectively engaged global consumers wherever they shopped, our distribution network was expanded by 14 additional stores, and everywhere the store experience was enhanced by improved visual merchandising. And we made important additions to our management team to strengthen our ability to capitalize on the global growth opportunities before us."
Tiffany & Co. had to pay a sizeable amount this quarter after receiving an unfavorable ruling in an arbitration. However, even if one removed the charge the company would still have missed Wall Street estimates for earnings per share. Without the arbitration charge earnings per share were $1.47 per share, which missed analysts' estimates that earnings per share would be $1.51. As stated by CEO Michael Kowalski, the company did much this year to move Tiffany & Co. forward. Time will tell whether these efforts will improve the company's bottom line.
Tiffany & Co. (TIF) shares ended the week of 03/17 at $90.69, down 1.75% for the week.
The Dow started the week of 3/17 at 16,066 and closed at 16,303 on 3/21. The S&P 500 started the week at 1,843 and closed at 1,866. The NASDAQ started the week at 4,274 and closed at 4,277.
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Bonds - Treasury Yields Rise on Fed Outlook
Treasury yields rose and prices fell this week following Federal Reserve Chair Janet Yellen's first post Federal Open Market Committee meeting press conference. Her comments caused markets to fluctuate.
The press conference was held on March 18, following the FOMC's March meeting. When pressed about a timetable for increasing the federal funds rate, Janet Yellen said that rates might rise in around six months when monthly bond purchases end. This six-month time period is much shorter than many analysts had expected. As a result, Yellen's comments caused investors to sell their bonds in fear that they will lose value if interest rates begin to rise.
While Yellen did set a possible timetable of six months for increasing the federal funds rate, she also tied the decision to increase the federal funds rate to the level of inflation the country is experiencing. "If we had a substantial shortfall in inflation, if inflation is persistently running below our 2% objective, that is a very good reason to hold the funds rate at its present range for longer," said Yellen.
In addition to giving some interest rate guidance, the Fed announced that it will reduce bond purchases by $10 billion in the month of April to $55 billion. This is the third monthly decrease.
The sell-off generated by Yellen's comments caused the 10-year Treasury note yield to rise to 2.78% on Wednesday. The 30-year bond yield rose to 3.67%.
The 10-year Treasury note yield finished the week of 3/17 at 2.75% while the 30-year Treasury note yield finished the week at 3.61%.
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CDs and Mortgages - Interest Rates Decrease Slightly
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, March 20. The results show mortgage rates decreasing slightly after last week's increase.
The 15-year fixed rate mortgage averaged 3.32% this week. This represents a decrease from last week when it averaged 3.38%. One year ago at this time, the 15-year fixed rate mortgage averaged 2.72%.
This week, the 30-year fixed rate mortgage averaged 4.32%. This represents a slight decrease from last week when it averaged 4.37%. Last year at this time, the 30-year fixed rate mortgage averaged 3.54%.
"Mortgage rates eased this week as housing starts declined 0.2% in February to a seasonally adjusted annual rate of 907,000, below consensus forecast. The rate on the 10-year Treasury note rose following the Fed's announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week."
The money market fund finished the week of 3/17 at 0.4%. The 1-year CD finished at 0.6%.
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Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, KS 66220 United States
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