November 2018
In This Issue
Welcome to MONTH-2-MONTH, an e-Newsletter from Alexander Financial Planning, Inc. MONTH-2-MONTH is intended to provide you with updates on AFP and timely financial planning and investment information on a variety of topics. You are welcome to forward this e-mail on to others.


Preparing for Positive Holiday Stress

The Holidays have arrived so take a deep breath, inhale and exhale. Try to be mindful of the fact that not all stress is bad. Stress can be a helpful motivator, especially to those who procrastinate. Stress is also created from within as opposed to the outside factors we like to blame. If you are feeling a lot of stress, attempt to delegate your load. It is okay to ask for help and loved ones really do enjoy being useful. It's a win, win. Enjoy the season with those who matter and forget about the tasks that don't!

Happening at AFP:

We are preparing to spruce up the office and replace some equipment. For this reason, the office will be closed December 13-14, 2018. 


Ohio's New Driver License & ID card - Effective July 2, 2018, the Ohio Bureau of Motor Vehicles introduced a new Ohio driver license and identification (DL-ID). Due to new federal travel restrictions requiring secure identification (effective October 2020), a federally Compliant form of identification will be required to fly commercially or to access federal facilities or military bases. You now have the option to choose a Compliant DL-ID or a Standard DL-ID. The two options require different identity documents. Use the link below for details. 

Health Insurance

  • Medicare Open Enrollment - Sign up for Medicare 2019 runs through December 7th, 2018.
  Even if you are still working and age 65, it is important to compare      your Employer coverage with Medicare to determine which option is      most appropriate. 

  • Health Care Coverage for Individuals -  Open enrollment for 2019 runs through December 15th, 2018 for most states. 

On a Personal Note:

Teri's World - It's hard to believe we are nearing the end of November!  Teri started the month with celebrating her birthday at the Financial Transitionist conference she was attending in FL.  It is a small, yet mighty group of forward thinking financial planners from around the world.  She enjoyed taking a few days off around Thanksgiving to spend time with family coming in from NJ and CT. It was such a treasure to connect with the larger family and spend this time together.  Truly was a blessing and the food wasn't too bad either.  Everyone helped and the load was made so much more enjoyable and lighter with everyone chipping in. She ran the 5 miler Turkey Trot in Upper Arlington Thanksgiving morning and after dinner, felt like she should be running it again! Now the focus is back in the office and completing things to be done by year-end. 

Alexander Family Portrait Fall 2018
Photo credit: Ashley Rene Photography (Bob's daughter)

Wh at a bou t Bob? - Bob & Christine had a wonderful but busy Thanksgiving. They had 2 separate parties at their house over the long weekend. With the help of a lot of family, they cooked 3 turkeys totaling over 61lbs. Surprisingly, Bob is not sick of turkey and all the fixins, however, Christine is!!
Their grandchild is growing quickly; she/he is now about 14 inches long and weighs about 2 lbs. This beautiful person can now regulate its lungs and body temperature. Brittany is doing wonderfully and enjoying every aspect of being an expectant mother.

Tracey's Time -
Tracey is ramping up her test preparations to take the Series 65 exam in December. It has taken most of this year to acquire the knowledge and she is beginning to feel test ready. She is looking forward to spending quality time with family over the Holiday Season. Cayleigh has been busy, having started a Ukulele Club at school with another student, started taking guitar lessons, and playing ice hockey. 

(Current Economic and Investment Information)

Oil Chart

The chart below shows the delicate relationship between the price of oil (WTI) and U.S. oil inventories since 2013. As inventories began to increase in 2014, the price of oil declined dramatically. After several years of little change, 2018 was poised to be a very strong year for oil as prices had climbed 20% through the 3rd quarter. However, the price of oil did a total U-turn in October, wiping out this gain and sliding into bear market territory. What happened? Earlier this year, the U.S. reinstated sanctions on Iran to take effect in November and this sparked supply concerns around the world. As a result, the price of oil moved up. Then the U.S. granted waivers to 8 countries that allowed them to continue importing Iranian oil. This created concerns of oversupply and the price began to drop. Looking at U.S. crude oil alone, it is estimated that we will produce an average 10.9 million barrels a day (b/d) in 2018 vs. 9.4 million b/d in 2017. The estimate for 2019 is 12.1 million b/d. While oil prices may recover from these bearish levels, this whip-saw in prices is helping to keep inflation restrained and thus keeping the U.S. economy from overheating near-term.

  • ENERGY - OIL - The price of crude oil closed at $67.59 a barrel on Friday 10/26/18.  From that point, the price of crude oil fell for the next 12 trading days through Tuesday 11/13/18, bottoming at $55.69 a barrel (down 17.6%).  That's the longest stretch of consecutive down days for oil according to records maintained for the last 35 years.  The reason for the price decline: a fear of a slowdown in the global demand for oil (source: NYMEX).
  • EDUCATION - INTERNATIONAL - 60% of the 1,094,792 foreign students studying at American colleges during the last school year (2017-18) are natives of China, India, South Korea or Saudi Arabia.  New York University (NYU) has the most foreign students in the United States (source: Institute of International Education).
  • JOBS - LAGGING ECONOMIC INDICATOR - The number of construction jobs nationally grew by+330,000 in the last 12 months (through October 2018), reaching 7.3 million for the first time since April 2008, just before the global real estate crisis hit (source: Associated General Contractors of America).
  • WAGES INCREASE - Average hourly earnings of workers in the private sector increased by +3.14% on a year-over-year basis in October 2018, the first time the annual increase has been at least +3% since April 2009 (source: DOL).
  • RETIREMENT INCOME - As many as 60% of American households will be unable to generate retirement income equal to at least 75%  of their pre-retirement income, i.e., retirement income from Social Security, employer-sponsored retirement plans and non-qualified accounts established with after-tax money (source: Adam Bee and Joshua Mitchell 2017 study).

  • TAXES - CA & PENSIONS - At least 136 California cities asked its voters in 2018 to approve tax hikes (e.g., sales tax) to pay for the pension benefits previously promised to municipal workers (source:
  • ELECTIONS & PENSIONS - Gubernatorial candidates in 3 US states (Colorado, Connecticut and Illinois) proposed a change designed to alleviate the states' pension funding shortfall, favoring a defined contribution plan structure for future hires.  All 3 candidates lost to opponents that supported a continuation of defined benefit pension plans for state employees (source: Bloomberg News).
  • FORCED SAVINGS - 401K - 401(k) plans with "auto-enrollment" have an average participation rate of 85% vs. 63% for plans that do not have "auto-enrollment" (source: Alight Solutions LLC).
  • IMPORTS VS EXPORTS- In 2017 the United States imported $192 billion of new autos and light trucks (representing 8.3 million vehicles), more than 3 times the $57 billion of new autos and light trucks that were exported out of the United States (source:
  • STUDENT LOAN DEBT - A study of student loan debt and historical repayment data that was released in October 2017 projects that nearly 40% of student loan borrowers will default within 20 years of entering the repayment phase of their student loans (source: Department of Education).
  • EDUCATION - JOB FIT - 43% of college graduates are underemployed with their first job selection out of school, i.e., the job involves work that does not make full use of the graduates' skills, abilities and educational credentials (source: Burning Glass Technologies).
  • MARKET MOVEMENT - The S&P 500 closed at 2633 last Friday 11/23/18, a 10.2% drop from the index's all-time closing high of 2931 set on 9/20/18. That decline represents the stock index's 6th drop of at least 10% during the bull market that began on 3/10/09, i.e., a "10% correction" has occurred once every 19 ½ months during this bull run. Correction # 5 ended on 2/08/18 or just short of 10 months ago. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value
    weighted index with each stock's weight in the index proportionate
    to its market value (source: BTN Research).
  • BEAR MARKET FOR THESE STOCKS - Since the end of September this year, 60 stocks in the S&P 500 index have fallen by at least 20%
    through the close of trading on Friday 11/23/18 (a total of 8 weeks of
    trading), including 3 stocks that have dropped at least 40% (source:
    BTN Research).
  • BONDS ARE DOWN TOO - The YTD total return through Friday
    11/23/18 of 10-year Treasury notes is a loss of 3.1% (source: Ryan
  • WASHINGTON POWER STRUCTURE - In 2019 America will have a
    Republican in the White House, Democrats will control the House of
    Representatives and Republicans will control the Senate. That's the
    first time we've had that combination in Washington since 1981-86, a
    period that covered the first 6 years of Ronald Reagan's 8 years in the White House (source: BTN Research).
  • TAXES - The average tax rate (including federal income taxes, payroll taxes, and excise taxes paid as a percentage of income) for the bottom 20% of US taxpayers has fallen from 7.5% of before-tax income in 1979 to 1.5% of before-tax income in 2015. The average tax rate for the top 1% of US taxpayers has fallen from 38.5% of before-tax income in 1979 to 33.3% of before-tax income in 2015 (source: Congressional Budget Office).
  • MORE ON STUDENT LOAN DEBT - Outstanding student loan debt in the USA was $360 billion as of 3/31/05, doubled to $720 billion as of 12/31/09 and now has doubled again to $1.44 trillion as of 9/30/18 (source: Federal Reserve Bank of NY).
  • PENSIONS - The Pension Benefit Guaranty Corporation (PBGC) was
    forced to take over an average of 9 failed pension plans per month
    over the last 15 fiscal years, i.e., 2004-2018 (source: PBGC).
  • BEYOND MEDICARE - Medicare beneficiaries are still responsible for an average of $5,503 per year of "out-of-pocket" health care spending. That total is projected to increase to $7,877 per year by the year 2030 (source: Kaiser Family Foundation).

Date of Delivery Rules for Charitable Gifts Explained
Timing is Crucial, so consult this comprehensive breakdown.
BY Conrad Teitell, Wealth Management

A charitable gift is considered made on the "date of delivery." Determining that date is important. It determines: (1) the tax year in which the gift is deductible; (2) the value of the gift for assets that fluctuate in value, such as stock; and (3) in close cases, whether a gift is of long-term or short-term property.

Don't wait until the end of December to review these rules. To the ancient saying, "Time and tide wait for no man" add "neither does timely 'delivery' of charitable gifts."

The rules vary-depending on the type of property contributed and how it's transferred.


The delivery date depends on how and to whom delivery is made. Delivery must be unconditional, and the stock certificate must be properly endorsed. If the stock certificate isn't endorsed, the donor should give the charity a properly endorsed stock power with the stock certificate.

Hand-delivered. For securities that are hand-delivered to the charity by the donor (or delivered to the donor's broker or agent who then hand delivers them to the charity), the delivery date is the day the charity receives the securities.

Mailed. For securities mailed by the donor to the charity or to its broker or other agent (or delivered to the donor's broker or agent who then mails them to the charity), the delivery date is the day the securities are mailed to the charity or to its agent; provided that the securities are then received by the charity or its agent in the "ordinary course of the mails." See discussion of "delivered when mailed rule" below.

Reissued in charity's name. For securities that are delivered by the donor to their bank or broker (as their agent) or to the issuing corporation (or its agent) with instructions that the securities be reissued in the charity's name, the delivery date is the day the stock is transferred to the charity's name on the corporation's books. Doing it that way, a donor loses control over the delivery date and the value of the contribution if the securities fluctuate in value.

Depository Trust Company: Electronic Transfers

The Internal Revenue Code and the regulations on date of delivery were written back in the pony express days and haven't been updated. But relying on general principles, the gift is made when the transfer to the charity's account is completed.

Mutual Fund Gifts

The donor should direct the fund's management to transfer their shares to the charity's name; the delivery date is the date the transfer takes place. Depending on the fund, it can take several weeks to complete the transfer, so mutual fund gifts should be planned well in advance.

Gifts by Check

Under the delivered-when-mailed rule, the date of mailing to the charity is deemed the date of delivery if there are no restrictions on the time or manner of payment and the check is honored when presented. Thus, a donor will get a deduction on a 2018 income tax return for a check mailed on Dec. 31 even though it isn't received by the charity until January 2019.
Delivered-when-mailed rule. Until 1996, the delivered-when-mailed rule only applied to U.S. postal mail, not to private couriers. (Leith, 47 TCM 255 (1983).) In 1996, Congress authorized the Internal Revenue Service to expand the timely-when-mailed filing rule for tax returns and other documents filed with the IRS and documents filed with the Tax Court to include designated private delivery services. IRC Section 7502(f).

The IRS issued final regulations regarding to the use of a PDS:

"Thus, these final regulations provide that, other than direct proof of actual delivery, proof of proper use of registered or certified mail (registered or certified mail sender's receipt), and proof of proper use of a PDS duly designated under criteria established by the IRS, are the sole means to establish prima facie evidence of delivery of documents that have a filing deadline prescribed by the internal revenue laws."

The IRS has provided addresses to be used by private delivery services to deliver returns. Private delivery services shouldn't deliver returns to IRS offices other than those designated. See for these addresses.

Caution: The delivered-when-mailed rule applies to filing tax returns and documents with the IRS and Tax Court; the regulations don't extend the delivered-when-mailed rule to charitable gifts of cash and securities sent to charities by PDS.

Caveat: A donor shouldn't rely on a postage meter to establish the date of delivery for a gift that's mailed. In three cases (not in the charitable area), the Tax Court dismissed petitions that weren't timely filed even though the envelopes containing the petitions had been stamped on the proper date by a private postage meter. (Shipley, 572 F.2d 212 (9th Cir.1978); Lindenmood, 566 F.2d 646 (9th Cir. 1978); and Estate of Labovitz, 50 TCM 1325 (1985).) Not only must the date be correct, but: "the document ... must be received ... not later than the time when a document ... contained in an envelope that is properly addressed, mailed, and sent by the same class of mail would ordinarily be received if it were postmarked at the same point of origin by the U.S. Postal Service." Treasury Regulations Section 301.7502-1(c)(1)(iii)(B).

A donor who depends on a private postage meter places herself at the mercy of the post office (not a good place to be). When it's important to establish the delivery date, the gift should be mailed through the post office, certified or registered mail, return receipt requested. (See Correia, 58 F.3d 468 (9th Cir. 1995).)

A certificate of mailing is no substitute for certified mail. Unlike registered or certified mail, a certificate doesn't identify the item sent; it merely vouches that some piece of mail was received by the post office. Haaland, 48 TCM 348 (1984).

The date of mailing won't make any difference if the check is postdated. In Griffin, 49 TC 253 (1967), the Tax Court disallowed a deduction for the year of mailing, stating: "A postdated check is not a check immediately payable but is a promise to pay on the date shown."

Gifts of Artwork and Other Tangible Personal Property

The date the property is received by the charity is the delivery date. Title must also be transferred.

Some donations can present logistical problems when, for example, the donee doesn't have the facilities to store or display the gift. Donors may try to surmount those difficulties by transferring title to the property while keeping possession until the charity is ready. The IRS may deny that a gift was actually made. See, e.g., Bennett, TCM 1991-604 (grand piano) and Estate of Miller, TCM 1991-515 (hunting trophies).

Rules enacted by the Pension Protection Act '06 make it essential that the charity have possession. More about this soon.

Usually, state law determines what sort of legal formalities are necessary to effectuate constructive delivery. Courts will sometimes give credence to constructive delivery, but only with substantial evidence that the donor hasn't kept title, dominion or control over the gift. In Murphy, TCM 1991-276, the Tax Court agreed that the charity had no place to put a 7½ foot sandstone statue of John Wayne's face. Besides, the donee had paid for storage and insurance in the interim.

Nevertheless, as a result of actual and perceived abuses for gifts of artworks and other tangible personal property, make certain that the charity has actual possession.

Physical possession requirement: PPA '06. If the donee of a fractional interest in an item of tangible personal property fails to take physical possession within one year of the initial gift (and within one year of any additional gifts)-for a period equal to the donee's fractional ownership-the donor's income and gift tax charitable deductions for all previous contributions of interests in the item will be recaptured, plus interest.

The related-use requirement: penalties. If the donee doesn't use the property for a use related to its exempt purpose, the donor's income and gift tax charitable deductions for all previous contributions in the item will be recaptured, plus interest.

Additional penalty. If deductions are recaptured under the physical possession or related use rules, an additional tax is imposed equal to 10 percent of the amount recaptured.

Real Estate

The date the charity receives a properly executed deed is the delivery date. But if the deed must be recorded to effectuate title under local law, the delivery date is the date of recording. See Ankeny, TCM 1987-247 and Private Letter Ruling 8901004.


For income tax purposes, pledges are deductible in the year they're fulfilled, not in the year they're made. Revenue Ruling 75-348. Pointer: Satisfying a pledge with property doesn't give rise to taxable gain or deductible loss. Rev. Rul. 55-410.


An option is a promise to sell specified property at a certain price in the future. The gift of an option is treated like a transfer of a donor's own promissory note (discussed below) or pledge. If the option allows the holder to buy property for less than fair market value, it's considered a promise to make a bargain sale at a future date. Even though the promise may be enforceable, it isn't deemed a "payment" for purposes of the income tax charitable deduction. Due to the deductibility rules for options, a donor doesn't know the amount of his deduction until the charity exercises its option. The amount of the contribution is the FMV of the property on the date the option is exercised (the date of delivery), minus the exercise price.

Caveat: The IRS concluded in PLR 9501004 that a donor who transferred an option to a charitable remainder trust wasn't entitled to a charitable deduction. Donors should tread carefully when making gifts of options.

Promissory Notes

The deductibility rules for the gift of a promissory note depend on whether the donor gives a note that they hold as a creditor or whether the donor gives her own note. A gift of a donor's own promissory note may not be deducted until the year the note is paid, even if the charity discounts the note at a bank and gets the money immediately. (Petty, 40 TC 521 (1964).) But if a donor gives a promissory note that they hold as a creditor (a third-party note), the donor may claim a charitable deduction for the note's FMV in the year of the gift. Woodward, 37 TCM 715 (1978).

Credit Card Gifts

Charitable contributions made using a credit card are deductible when the bank pays the charity; it isn't necessary to wait until the donor pays the bank. Because use of a credit card creates the cardholder's own debt to a third party, it's similar, says the IRS, to the use of borrowed funds to make a contribution. Rev. Rul. 78-38. But in a 2006 IRS news release, IR 2006-192 (Dec. 14, 2006), the IRS said "Credit card statements should show the name of the charity and the transaction posting date."

Suppose the charity receives the credit card information on Dec. 31 and the transaction posting date is in the following year.

That same 2006 news release says: "Thus, donations charged to a credit card before the end of the year count for 2006. This is true even if the credit-card bill isn't paid until next year." So what does "charged" mean-posted or giving the credit card information to the charity? When a published revenue ruling is clear, and a not widely distributed IRS news release is ambiguous, the revenue ruling should prevail. Nevertheless, don't wait until the last minute to charge a gift.

Pay-By-Phone Account

A process similar to the use of a credit card, but having the opposite result, is the use of a pay-by-phone account with a bank. If a donor directs his bank to make a charitable contribution, the gift is deemed made as of the date the bank mails, transfers or delivers the funds to the charity. That date is shown on the bank's monthly statement, but it might not be the date (or, more significantly, the year) that the donor directed the transfer. Rev. Rul. 80-335.

Text Message

Another, more recent method of contributing to charity, similar to a gift by telephone, is by text message. Contributions made by text message are deductible in the year the text message is sent. A telephone bill showing the name of the donee organization, the date of the contribution and the amount of the contribution will be proof of the date of the gift.

Watch out for Installment Obligations

A gift of an installment obligation (gain is reportable in installments under IRC Section 453) accelerates any remaining deferred gain in the year of the gift. Rev. Rul. 55-157.

Pay Taxes With Bitcoin? Ohio Says Sure
By Paul Vigna
The Wall Street Journal

Ohio appears set to become the first state to accept bitcoin for tax bills, a show of support for a technology that has garnered lots of hype but failed to gain traction as a form of payment.

Beginning this week, Ohio businesses will be able to go to the website and register to pay everything from cigarette sales taxes to employee withholding taxes with bitcoin. Eventually, the initiative will expand to individual filers.

The idea to accept the digital currency for taxes came from state Treasurer Josh Mandel, who has held the office since 2011 and started taking an interest in bitcoin several years ago. Mr. Mandel, 41 years old, views the new program both as a convenience for filers and an opportunity for "planting a flag" for Ohio in the currency's adoption.

"I do see [bitcoin] as a legitimate form of currency," Mr. Mandel said, adding that he hopes other states will follow suit.

Bitcoin was intended as a currency that didn't require government backing or support when it was introduced 10 years ago. Although it has had success as a tradable asset, it hasn't gained broad acceptance as a form of
payment and has been dogged by concerns that it is used to pay for criminal enterprises.

Ohio's move wouldn't give bitcoin legal status, but it would be a kind of tacit approval bitcoin has so far lacked. Tax offices accepting bitcoin "does help send a message that bitcoin's a technology that can be used by anybody-by bad guys but also by the government," said Jerry Brito, the director of Washington, D.C.-based research firm Coin Center.

Arizona, Georgia and Illinois have considered bitcoin for taxes, but bills addressing the issue have stalled in their state legislatures. Mr. Mandel, who is an elected official, said he can direct his office to accept bitcoin without approval from the legislature or governor.

Ohio filers will technically send their tax payments to an Atlanta-based payments processor called BitPay, which will then convert the bitcoin to dollars for the state treasurer's office.

It isn't clear how many businesses will take advantage of the service, though Mr. Mandel said he has heard from companies asking for it.

Other states are starting to see bitcoin and its underlying technology, blockchain, as a way to attract talent and capital. Wyoming Gov. Matt Mead this year signed legislation to loosen the state's regulatory environment and make it attractive for blockchain-based businesses to
register and operate there. New York developed regulations for cryptocurrency businesses called the BitLicense. Delaware two years ago began a program to use blockchain technology within its corporate registry services, though the initiative lost steam after Gov. Jack Markell, who championed it, left office.

Ohio's Mr. Mandel is confident that won't happen after his term ends in January. "I'm confident that this cryptocurrency initiative will continue," he said.


"Everything you want is just outside your comfort zone ."

-Robert Allen

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