What do you do when your tax records are lost and destroyed.

What happens if you lose your records in US or Canada? Ok, your hard drive crashed or you had a a big flood or tornado destroy all your records, and you get audited. No where in the Tax Code does the word MERCY occur. You MUST still have back up or you can reconstruct your records. If no documentation and no basis for reconstruction: tough luck!
It is thus VITAL that you always back up your hard drive ( especially if it contains valuable tax documentation such as scanned documents) on the web or store a back up in a fire proof safe or safe deposit box. Remember NO documentation for any reason= no deductions

Big Tip: Video everything that you own. Make sure that you speak into the video describing the items such as “sony 51 inch trinitron.” Make sure you note the serial numbers if there is a burglary so that the police can track down your items. Take a picture of all kitchen appliances, art, decorations, furnishings and clothing in case of fire or tornado. You will REALLY thank me for this information if a disaster happens to your home

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What I learned from law school admission

My son just finished applying to over 13 law schools and heard from all except one. I wanted to share what we learned about the admission process,which should help a lot of people.

1. Unlike undergraduate studies where the SAT is about 50% of the admission process, the LSAT represents about 65-75% of the admission process. I can’t emphasize this enough. It is the king, queen and prince of admission. A super GPA and bad LSATs are NOT going to get you into a top school. A fabulous LSAt and mediocre GPA will way outperform the reverse. You might question the reason for this significant importance of the LSAT. The main reason is the rankings. 25% of rankings take LSAT score, median GPA and percentage of appicants accepted into account. Thus, law schools will do anything to raise these factors.

2. Because the LSAT is so important, I recommend not only taking a course but preparing for it at least 6 months before you actually take the test and preferably a year or more. It is really that important. Be advised that the LSAT, unlike that of other standardized tests, is very hard to finish. It is a very time sensitive exam, almost like an IQ test in some ways. Amazingly, a few points on the LSAt make HUGE differences in admission chances, similar to the ACT. Seriously, there might be a three or four point difference between those in the bottom 25% of admitted applicants and the top 75% of admitted applicants.

3. If your LSAT is below the median shown for the school, your GPA should be substantially above the median.

4. Only the undergraduate GPA counts in admission. Graduate school grades are irrelevant. Yes, grad school grads might count as a decent soft factor,but they honestly don’t filter much into the admission equation regardless of how well you did in grad school.

5. Soft factors such as peer tutoring, college athletics, student body representation and work experience, even with a law firm, internships, and charitable endeavors are pretty much irrelevant. Although the longer you have been working , the less the undergrad GPA may be counted.

6. Some “soft” factors might have a slight effect on admission. Examples might be designations such as CPA, CFA etc. Other decent soft factors are superlative grad school grades, awards from employers ( with proof), written published books etc. Even with these, they only have marginal benefits. Your overall GPA and LSAT should be enough to make you competitive,which means near the median of accepted applicants. They won’t make up for low LSATs. Again the LSAT and GPA are kings and everything else is almost irrelevant. Say that five times. This includes work experience. Now if you were applying to a very top law school, these factors might give a slight edge at best.

7. I do want to say something about the personal statement. A well written, interesting personal statement can be worth a few points ( such as one or two) on the LSAT. Spend some time writing a strongly written statement.

8. Law school admission officers LIE. Make no mistake. If they can decrease their admitted student percentages based on total applications, they will because it factors into the rankings. We went to a law school career fair. We gave the admission officer my son’s stats along with other factors. Every school that noted that my son had a good chance for admission, rejected him. These admission officers lied right to our faces in order to increase their statistics. Yes, you can argue that I didn’t tell them everything, but I really did tell them alot. Also, he had great recommendations and had a strongly written personal statement. Trust me, many of these admission officers’ statements can’t be trusted.

Also, attending a top undergraduate school seems to be irrelevant. The main factors are LSAT and GPA and Personal Statement. Most other things , especially the cache of the school name, doesn’t matter. Please repeat this five times

9. Be aware that the legal market is particularly bad. Many kids from lower tier schools are not getting jobs or not getting decent paying legal jobs. If you don’t attend a top 10 school, you better do VERY well at the school that you are in. Even with a fabulous GPA,if you don’t attend a top school, you will have a hard time finding employment. It certainly is doable ,but you will find it tough. Make every connections that you can while in law school. Network like crazy or you will regret it.

10. many people think that they can transfer to a top school if they do well in law school. It is VERY hard to transfer to a much higher tier school from a lower tier school for several reasons.

First, most top schools will only take kids from lower tier schools who are in the top 1-5%. Moreover, the lower tier schools know that their top performers may want to transfer. Thus, law school grading, especially at schools in the mid to lower tiers, is abysmal. Thus, the grading is horrible and few achieve top grades. It is MUCH, MUCH harder to get top grades from a mid tier law school than that of undergrad. The only good news is that if you do well, law schools do tend to give out decent scholarships to their better performers at both mid tier and lower tier schools. This is obviously very different from undergraduate studies who won’t give out large scholarships regardless of performance

11. Your major is irrelevant. It is only the GPA and LSAT that really matters. Thus, a 3.6 in an easier major is better for admiossion than a 3.5 in a very hard major. Law schools do NOT factor in the hardness of the major or the cache of the school, as strange as that sounds.

Likewise, post college experiences such as grad school, work experience, etc. don’t count much either. It’s mainly about a formula that each law school uses which combines in some way the undergraduate GPA and LSAT. Each law school has a different formula that is usually kept secret. Baylor , however, has noted that they take the LSAT score and add ten times the GPA to achieve their formula. This is probably used by other schools as well.

Although I said this above in post one, it bears repeating. The LSAT is king. I know several people who graduated with a 3.9+ but a poor LSAT and didn’t get admitted into any top school. I know folks with a 3.3 but stellar LSATs that got into top 15 law schools. LSAT is king.

However, don’t think that because you didn’t do well on the LSAT or the reverse that this will be indicative of your law school performance. There are LOTs of outlyers where kids with low LSAT do well in law schools and kids with amazing LSATs don’t. Yes, there is a corelation,but I have found from the people that I know that the corelation isn’t as great as you would think.

In several cases where top GPA kid were rejected because of low LSATs, they all did very well in the law school that they attended, although it was a lower tier school. The LSAt is a strange test to say the least

12.Four options for law school admission.
Most people think that there are primarily three options for law school admission: accept and reject and waitlist. However, there is a fourth option. It goes by many names such as AAMPLE (Alternative ADmissions Model for Legal Education) among other names.

Basically some law schools recognize that the LSAT isn’t always the best way to evaluate applicants. Thus, they have an alternative program. This is an intensive summer program where kids take two law school courses. If they pass each course and get an overall 2.5 GPA or better, they are admitted to the law school

In addition, there is no minimum number of kids that must pass or fail. Traditionally, depending on the school, between 20%-50% of the AAMPLE kids get accepted to the law school.

Moreover, you don’t apply for it. Generally it is offered to applicants who might be a points or two below their standard lower 25% median for LSAT but who have an above average GPA or other compelling factors.

Is it worth it? Well, if you don’t have other good options, it is not a bad option. However, you would need to quit any job that you have in order to take this 6 week intensive program, and it is VERY intensive. It will also allow entry into schools that the student would not qualify for via the LSAT score alone.

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Bad Credit can kill your job chances among other things.

Bad Credit can harm Job chances? Yes, you read it right. Most folks know that poor credit, as shown by your FICO score, can affect your ability to rent an appartment or get utilities. Sadly, however, a poor credit score can also prevent you from getting a job,which is the one thing many people need to improve their credit. Congress is considering blocking credit inquiries for job applicants.

While we are discussing unrelated things that could harm job chances, I should also mention Facebook accounts. Employers are using Facebook to check on applicants. They check on what is being written and the language being used. They also check on what pictures are posted on Facebook. Be VERY careful what you write on Facebook, what pictures you use on Facebook, and who has access to it.

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Update on Roth Conversions: Great secret tip

Income tax strategies of the Rich: Roth Conversions: As readers of my blogs, you know that I have strongly urged you to consider converting your regular IRAs into Roth IRA in order to get tax free money forever! Here is a twist that I would BET that 99% of you don’t know. You have 21 months after the conversion to recharacterize the transactions. See comment for elaboration on this topic.
Here is the problem: if your roth loses money, you can only take the loss as an itemized deduction,which isn’t that good. If you have a large IRA or SEP, here are the steps you should take: First, divide this into several traditional IRAs. …Step 2 Convert each IRA to a Roth. Step 3. Wait up to 21 months to see how the investments did. Step 4. For the IRA that had its investment drop, recharacterize it so that it won’t be a roth IRA. This way, you will maximize both your gain and losses since losses will result in your not paying tax on lost assets.

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The borrow-sale technique

Estate planning and Income tax strategies fo the rich and Famous: Here is the first installment. It is called the Borrow-Sale Technique. Say, you have a stock portfolio of 50 million or even more. Step 1. Borrow most of the value from the bank using stock as collateral. Step 2. Buy both puts and calls to lock in value. Step 3 give the stock to the bank several years later to pay off the loan. The effect of this is that you have use of the cash for several years and only pay capital gains taxes when you give the stock to the bank. Thus, you have your money working for you for several years without paying taxes

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In-State tuition for illegal immigrants?

“The Maryland House of Delegates passed a bill to allow in-state tuition rates for illegal immigrants in the state’s community colleges.

Wait……Forgive my stupidity on this one….

so, illegal immigrants get in-state tuition (without proof of residency) and are therefore rewarded for illegal behavior, but legal out of state US citiz…ens pay OOS tuition? am I missing something here

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Traits of multimillionaires: Strong Belief system

Traits of multimillionaires: Because I strongly believe that making money is more than just making money, in the next few days, I will be covering what traits I, and other tax lawyers, have seen in very wealthy people. I think you will find this VERY illuminating and helpful.
The first trait is BELIEF: Multimillionaires have an incredible belief system in themselves. Mark Victor Hanson, who co-wrote the Chicken Soup series told me that most people don’t believe that they deserve to be rich. I didn’t believe this until I heard a lottery winner say, ” I didn’t think I deserved it
Having this strong belief system is CRUCIAL. If things don’t go well or the businesss fails, this strong belief system allows them to pick themselves up and start over. It is the basis for attempting risk in order to start up a business or seizing opportunities.
Daily exercise: Every day, I want you to point to yourself in the morning and say, “I deserve to be rich.” ” I also want you to say, “I want to be rich.” If you do this everyday, it will help overcome the obstacles and challenges that we all have. It’s a very important exercise and doens’t take much time to do

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Eliminating your taxes with equipment purchases

Equipment purchases: Do you have a business? Would you like to eliminate taxes on that business?
New law: You can deduct 100% of the cost of any new equipment even if it creates a loss in business. There is no limit on this either.
You can even deduct up to 500K of used equipment purchases,but it can’t create loss
Big Tip: you can financ…e equipment purchases and still deduct 100%
Elaboration: You buy $150,000 worth of equipment for your buisness. You pay $15,000 as a down payment and finance the rest. You get to deduct the full $150,000 this year.
Caution: you need to keep the equipment in your buisness between 5-7 years, depending on the equipment, or you will have to pick up part of your deprecation as income.

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Why You Should Consider Having a Side Business.

Why you should have a business: We have two tax systems: one for employees designed to take your wealth and one for business,which is designed to create economic growth. If you have a buisness you can deduect your loses against any form of income as long as you run your business like a business and materially participate in running it.
Moreover, if your self-employed business loss exceeds your income for the year, you can either carry the loss back up to two years, and offset the last two year’s taxes paid to the state and federal government or carry forward all business losses up to 20 years. thus, you never lose a properly documented business deductions.
Materially participate means that you either put in substantilly all the hours necessary in running your business or you put in at least 100 hours and more than anyone else, or you work in your buisness for at least 500 hours per year.
If you were to see who were the multimillionaires in this world, probably 85% of those had buisnesses. I am stunned at how many people work “like dogs” trying to get ahead in their company. Frankly, I would recommend doing enough not to get fired and starting a side business with the extra time. Who knows, you might make enough to leave that business and dump the boss ,which is spelled backwards…
People always ask, “What type of business should I set up.” My answer is to follow your passion. Find what you are good at and master it and learn to market it. There are many proven opportunities through successful franchises and network marketing opportunties that don’t require a lot of cash.
I’ll finish up with the following statement said to me by my father:
“People get rich doing things that others aren’t willing to do and doing it exceedingly well.”

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Eliminating commuting

Clarification of Question: A frequent question that keeps arising is,”If I have a home based business, and I sell some products to my coworkers at my job, can I eliminate my commute?” The answer is NO. You can NOT eliminate your commute by simply selling products to coworkers on the job.
However, there is an old saying in Wash DC where I live. Where there is a will……there’s a lawyer.
Instead, go to their house on the way to your home and make a presentation to them or deliver product. The trip from the job to a prospect or a meeting and back home will make that one way trip deductible.

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