Taxes Enough Already Accounting Agency - Potential Tax Reduction Vehicles

Taxes Enough Already Accounting Agency, LLC

MEMORANDUM

To: Dee Boss,

Vice President, Operations

From: Thomas D. Dotson, Sr.,

Director, Business Department

Date: August 29, 2011

RE: Potential Tax Reduction Vehicles

There are quite a few taxes that our clients are responsible to pay, and in considering this we need to make them aware that there are several different vehicles that can be utilized in order to reduce their income tax liabilities.

We need to encourage our clients to open an Individual Retirement Account (IRA) which would, subject to limits, allow them to make annual contributions that would in turn lower their taxable income. Another vehicle would be fully utilizing the income adjustment deductions, such as a student loan interest credit. (IRA.com, 2010)

Our clients need to be better educated with respect to the various methods available to minimize their capital gains taxes, the most familiar being the capital gains tax generated from the sale of investments and /or real estate. We need to ensure that our clients have an understanding that long-term capital gains taxes are normally taxed at a much lower rate than their regular income would be taxed. We must further explain that when we are talking about long term, as opposed to short term, capital gains we are discussing the holding period for an asset. I believe that it is important that we emphasize to our clients that an asset must be held for over a year in order to qualify as a long-term capital gain. (Ehow.com, 2011)

We should always make our clients aware that our firm can advise them on how to minimize