Khaas Baat : A Publication for Indian Americans in Florida



By Kamlesh H. Patel, CPA

Hear those holiday bells? Soon they’ll be ringing in the New Year. But before the clock strikes 2013, you have opportunities to reduce your 2012 federal income tax bill. Here’s a grab-bag of suggestions.

1. Plan for the AMT. The annual exemption may change, but the usual triggers – items that can create alternative minimum tax liability such as certain large deductions – are the same.

2. Education incentives. Pre-paying qualifying expenses for the first semester of 2013 can get you a larger credit or deduction this year.

3. Family gifts. Take advantage of the expiring $5.12 million lifetime gift exclusion by sharing the wealth – and the tax burden – with lower-bracket family members.

4. Deferred plans. Maximize contributions to retirement plans such as your 401(k) or IRA, and fund other tax-favored accounts, such as health savings accounts.

5. Charitable contributions. Gifts to qualified charities made on your credit card by Dec. 31 qualify for a deduction this year, even though you’ll receive the credit card statement in January.

6. Itemized vs. standard deduction. Shift expenses such as property taxes between years to “bunch” deductions and get the most tax benefit.

7. Disaster relief. Check for a potential refund, and consider amending your 2011 return to claim your loss if you live in a federally declared disaster area.

8. Investment cost basis. Understand your cost basis choices before capturing capital gains or losses, especially when selling mutual funds.

9. Temporary depreciation deductions. Assets purchased for your business or rental property before year-end may qualify for accelerated depreciation methods that are scheduled to expire on Dec. 31.

10. Kiddie tax. Instead of transferring assets to your children to save for future education expenses, consider contributing to a 529 plan, which can limit exposure to “kiddie” tax on unearned income.


You get an annual checkup from your physician to monitor and manage your personal health. Shouldn’t you do the same for your business? To keep your operation in top shape, consider an annual business review. The benefits of such a review are evaluating current performance to better plan and execute future operations.

Some things you should evaluate in an annual business review:


Appropriately enough, investors may notice a slow trickle in earnings from “dividend reinvestment plans” (DRIPs). But these investments may end up providing a steady stream of income over the long run.

The concept is relatively simple. More than 1,000 companies and closed-end mutual funds around the country offer DRIPs to their shareholders. These programs enable shareholders to purchase stock directly from the company by automatically reinvesting dividends in additional shares. Many DRIPs also allow you to voluntarily make cash payments directly into the plan to buy even more shares.

Here are some of the main attractions of DRIPs.

But that’s not to say that investing in DRIPs is without drawbacks. There is a growing trend within the industry to charge a small fee for acquiring shares. Minimum amounts for purchases may be required. Also, the dividends that are reinvested are treated as taxable income, even though you don’t currently receive any cash.

Consider all of the implications of investments in DRIPs before including DRIPs in your portfolio.

Kamlesh H. Patel, CPA, can be reached at (813) 949-8889 or e-mail or


Complying with Foreign Financial Account Reporting

By Satya Shaw,
and Sagar Patel,

As the middle of the holiday season and the New Year is around the corner, many people are working on tax planning for the current year and the next year. As taxpayers gather their tax documents, they may wonder if there are additional sources of income required to be reported. U.S. citizens and residents are required to report worldwide sources of income, such as income from foreign bank accounts and foreign investments on their tax returns. Furthermore, the Bank Secrecy Act of 1970 requires that Taxpayers file a Report on Foreign Bank and Financial Accounts (FBAR) with the U.S. Department of the Treasury to report their foreign financial accounts with specific account information, annually, in any year that the aggregate value of their foreign accounts exceeds $10,000 at any time during the year.

The focus on investigating large money transactions took on new importance and focus after the 9/11 attacks, with the U.S. government emphasis on monitoring movement of funds from terrorists and criminal organizations. The result of this has led to increased scrutiny of offshore accounts for US Taxpayers1. The IRS in the last several years has been going after offshore accounts and has set up a new unit that specializes in monitoring and investigating foreign and overseas transactions. The United States has expanded international cooperation with a number of other countries through Tax Exchange Agreement Treaties.

If a taxpayer is investigated by the IRS and comes under examination for unreported foreign accounts, he or she may be subject to criminal and/or substantial civil penalties in addition to paying back-taxes for the unreported foreign income. The penalty for failing to file a FBAR each year can carry civil penalties of up to $100,000 or 50 percent of the total balance in the foreign account(s), whichever is greater, per willful violation. For example, if an individual has balance of $300,000 in foreign accounts for each of the last five years the penalty could be a maximum of $750,000 ($150,000 x 5). Criminal penalties can carry a maximum five years in prison and a $250,000 fine. The deadline for filing timely FBAR’s in any calendar year is June 30th of the following year.

Starting in 2009, the IRS introduced the Offshore Voluntary Disclosure Programs (OVDI) program. The program is for taxpayers to come forward voluntarily reporting their offshore accounts to minimize the risk of criminal prosecution. A third version of the OVDI was created for 2012 and the good news is, as of now, the program is open ended. But, the IRS has reserved the right to end the program without any advance notice. The 2012 OVDI Program requires the taxpayer to pay back-taxes and related penalties for the years 2004 through 2011. The FBAR Penalty for the 2012 OVDI program is 27.5 percent of the highest account value in the unreported foreign accounts.

Any taxpayer with offshore financial accounts should consult with a tax professional and then weigh the potential benefits and risks on how to proceed in reporting their offshore accounts.

1R. Sebastian Gibson. "Recent IRS Efforts To Discover The Names Of Owners of Undeclared Foreign Bank Accounts." Avvo.  2010.  the Law Firm of Sebastian Gibson.  26 Nov. 2012 <>.

Satya Shaw, CPA, MBA, of Shaw Tax Advisory Group, can be reached at (o) 813-960-7429, (c) 901-550-2920, or e-mail Sagar Patel, accountant, can be reached at 813-960-7429 or e-mail

Your Annual Review Checklist


Preparing for an annual financial review may be easier with a checklist to help you focus on important matters. With that in mind, here is a list of key considerations that you may want to discuss with your financial advisor.

You may have additional concerns unique to your situation, but this checklist may help you keep your investment portfolio in order.

Seema Ramroop, financial advisor, Morgan Stanley Smith Barney, can be reached at or call (727) 773-4629.

The Tough Conversation All Couples Should Have

By Adi Khorsandian


If asked, most couples would say it's important to protect the financial future of their families in the event of a spouse's unexpected death.

Yet 74 percent of couples rarely or never discuss the topic of life insurance as part of their financial planning strategy, according to a 2010 State Farm® Life Insurance Study. A 2011 study from finance research firm LIMRA revealed that 41 percent of U.S. adults don't even have life insurance.

That doesn't mean it's not on their minds. Sixty-two percent of respondents said uncertainty in the economy makes having life insurance even more important than it had previously been.

Bringing up the subject can be difficult. It may be that discussing the unexpected death of a spouse is awkward. Or that one spouse already feels the pressure of being the primary wage earner. Or that a spouse who has recently lost a job will react negatively to the topic.

But whatever the obstacles, talking about life insurance is critical to both partners – even if one earns substantially more than the other, or one doesn't earn an income. To start the discussion, try these tips:

Adi Khorsandian, a State Farm agent providing insurance and financial services, can be reached at (813) 991-4111 or visit

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