Dear Friends and Family,

Year-end planning carries more importance this year as the Bush Tax Cuts are scheduled to expire December 31. Unless Congress intervenes, tax laws will revert to pre-2001 levels. With a $1.5 trillion deficit this year, higher tax rates are likely.

Long-term gains, currently taxed at 15%, are scheduled to rise to 20%. It may make sense to take profits now. Roth IRA conversions may also be beneficial depending on your situation.

Donor-advised funds can benefit your favorite causes and offset tax implications from Roth conversions or AMT exposure.

Some current points of interest:

• Obama favors increasing the 33% tax bracket to 36%, and the 36% bracket to 40%.
• Mortgage Bankers Association sees mortgage rates rising from 4.4% (Q4 2010) to 5.1% by end of 2011.
• Third quarter earnings growth is 36%—the best in 20 years.
• Smartphone growth in 2010 was 55%, compared to overall cell phone growth of 10-15%. Positive for AT&T and Verizon.

Many new families have joined us recently, thrilled by the personalized communication we provide. If you know others seeking this experience, feel free to refer them—by referral only.

From our family to yours, we wish you Happy Holidays!

Sincerely,

Katz Family Financial