Ables, Iannone, Moore & Associates, Inc.

No matter which superlative you choose to describe the current economic crisis, “ridiculous, unbelievable, incredible,” etc., the bottom line is that our economy will most likely lag for some time in the future as we pay for the mistakes stemming from the gambles taken in the financial services sector.

We do not wish to opine in the manner of a Monday morning quarterback, rather we are encouraged that the current bill working its way through the Senate and House will offer more stringent rules in the financial sector. We are also pleased to see lawmakers place more emphasis on the enforcement side of the equation, whereby violators will be encouraged to behave more responsibly.

In difficult financial times investors are curious about how deep and how long the cycle might go. No one knows the answer to that question, and while a look back at a similar event in history might offer some insight, we emphasize that the current situation is not a replication of the past. During the late 1980s our country began to hear about the Savings and Loan Crisis. This was a period in our history that many remember, but most had forgotten until now.

What we think is important to remember during this S&L period was how the markets made a comeback shortly after a map to recovery was agreed upon. You may recall that the government developed the Resolution Trust Company (RTC), which essentially took over the operation of the failed savings banks. (As an aside, the most recent projection by the FDIC on current bank failures stands at 117. To put that into perspective, there were almost 800 failures during the S&L Crisis.) Once the government decided to bite the bullet and create the RTC, investors took relief and as confidence built so did the stock market. Granted, the economy slowed for a period following, but the markets (as they often do) accurately predicted the recovery and rallied ahead of the full economic recovery.

One might also conclude that there is a silver lining in the current economic situation. Oil prices have fallen almost without media note. We do not know how long this decline might last, but for now the worldwide slowdown in the economy has caused less consumption of crude which in turn has caused a decline of about 30% in the price of a barrel of oil. Evidence of the declining oil price might be drawn from the most recent meeting at OPEC when the price of oil remained steady to lower, even as OPEC slowed production. A shorter supply should raise the price of crude, but in this case the price remained in a slight downward trend. This reduction in price was even more significant when you consider that U. S. was in the middle of Hurricanes Ike and Hanna.

With almost every economic indicator showing signs of weakness we taxpayers will have a burden to carry for several years. Investors who were not prepared for this downturn are now learning about their real risk tolerance levels. Many lessons will be learned from this economic debacle both by individual investors as well as financial services firms. We continue to monitor and re-balance the equities held in portfolios in an effort to determine the prospects for those companies during this weakened worldwide economy. Adjustments to raise cash or average stock basis’ is done on a case-by-case platform, depending on an investor’s particular strategy, needs and timeframe. We maintain that those who participate in “panic selling” will most certainly lock in losses and may very well miss the entry point on rebounds in the markets.

Many of the financial firms who have failed or have been weakened, by great measure did so by structuring complicated financial products that weren’t often understood by investors. Both investors and firms offering these products are now weakened and some are no longer standing.

While perhaps an oversimplification, one simple lesson to be learned from the current situation is that inventors should invest in what they understand. Financial firms should offer products and services which provide reasonable risk and favorable fees. When we formed Ables, Iannone, Moore and Associates, Inc., we decided that we would not offer products with incentives such as sales charges, nor would we offer complicated investment strategies with arcane philosophies. We decided to offer individual stocks and bonds, with a philosophy of long-term goals coupled with diversification. This simple approach to investing has helped many investors to maintain their focus rather than fall victim to emotionally-driven panic selling. Our firm continues to operate debt free. In addition, our custodian, Pershing LLC, also remains financially stable.

We hope that you will benefit from the tax information provided in the accompanying article. We strive to offer helpful information across many topics, in an effort to provide you with the information which you most frequently ask about. We’d like to thank the many who have expressed satisfaction with our newsletter and who have referred our services to their family members and friends. Thank you for your continued support and in particular the numerous referrals that we have received in recent weeks. Our newsletter is also available for viewing at our website, http://www.aimainc.com/. This simple approach to investing has helped many investors maintain their focus rather than fall victim to emotionally-driven panic selling. Our firm continues to operate debt free. In addition, our custodian, Pershing LLC, through their quarterly financial statement, reports financial stability.

We hope that you will benefit from the tax information provided in the accompanying article. We strive to offer helpful information across the many topics you most frequently ask about. We’d like to thank the many who have expressed satisfaction with our newsletter and who have referred our services to their family members and friends. Thank you for your continued support and in particular the numerous referrals that we have received in recent weeks. Our newsletter is also available for viewing at our website, www.aimainc.com.

Tax Records: What do I Keep?

You’ve just finished filing this year’s tax return. With a sense of relief, you set aside a copy of your return and your supporting documents. But what do you do with them then? Of course, the first step is to keep your tax records in a safe, convenient place. You may need to refer to them for any number of reasons—for example, for future filings or when you are seeking credit. Then, too, you’ll need easy access if you face an audit from the IRS. The following suggestions will help you compile the best and most complete records.

What to Keep

First, there are the basic records that you will want to have on hand. Records of your income: Form(s) W-2, Form(s) 1099 and bank statements. Expense records should include sales slips, invoices, receipts, cancelled checks or other proofs of payment.

Among the investment records that you’ll want to keep are the following: brokerage statements, mutual fund statements, Form(s) 1099 and Form(s) 2439 (Notice to Shareholder of Undistributed Capital Gains). Keep year-end account summaries and deposit receipts for any IRA or Keogh contributions.

Your records should enable you to determine your basis in an investment and whether you have a gain or loss. Records should show the purchase price, sales price and commissions paid. They also may show any reinvested dividends, stock splits and dividends, load charges and original-issue discounts. If you have real estate investments, you’ll need to keep copies of all the regular and extraordinary expenses associated with the properties.

How Long to Keep it

According to the Tax Code, you are required to keep copies of your tax return and all support as long as they may be needed for the administration of any provision in the law. Typically, that means for as long as the IRS has the right to assess additional tax on your return, or you have the right to amend your return to claim a credit or refund (“the period of limitations”).

There are several periods of limitations. One is a three-year period that applies generally. Another is a six-year period that applies when you don’t report income that you should and that income is more than 25% of the gross income shown on your return. If the return is fraudulent, or you fail to file a required return, there is no limit as to when the IRS can require you to provide it with information.

Recordkeeping for Homeowners

Determining your basis (cost) in your home will be extremely important in order to figure the gain or loss when you sell your home (or to calculate depreciation if you use part of your home for business purposes). Therefore, your records should enable you to determine your basis as well as any adjustments to your basis. Your records should show the original purchase price of your home and settlement or closing costs. They also may show any casualty losses incurred, insurance reimbursements for casualty losses and postponed gain from the sale of a previously owned home.

Be sure to keep a file of bills on what improvements you’ve made to your home each year. Generally, the costs of improvements—changes that add value to your home, prolong its life or adapt it to new uses—may be added to the basis in your home. Repairs and general fix-up costs may not.

Securities: Are Not FDIC Insured Not Bank Guaranteed May Lose Value Not Bank Deposits Not Guaranteed by Any Government Agency

UVEST Financial Consultants do not offer tax advice. For tax assistance, please refer to your accountant or other tax professional. Securities are offered by, and Financial Consultants are registered with UVEST Financial Services, member FINRA/SIPC. UVEST and Ables, Iannone, Moore and Associates are independent entities.

This material has been prepared by Merrill Anderson, Co.

Investment advisory products and services are offered by Ables, Iannone, Moore & Associates. Securities are offered by UVEST Financial Services, member FINRA/SIPC. UVEST and Ables, Iannone, Moore & Associates are independent entities. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Ables, Ianonne, Moore & Associates

10 Plantation Park Drive, Suite 200, P.O. Box 870, Bluffton, SC 29910

843-815-6004 phone, 843-815-6104 fax, 866-815-6004 toll free