Elizabeth Campbell and Viaduct/Tunnel Law Suite

September 18, 2009

The Viaduct is not dead.  Or at least not as of yet.  A law suite has been filed by Elizabeth Campbell according to her supporters.  This is in the process of being verified.  However, I had knowledge that this was going to happen two months ago.  The only delay was in the acquisition of funds for the lawsuite.  Stay tuned as to exactly what the specific details are.  Will be getting this information from Elizabeth Campbell as soon as I am able to contact her.

The stigma of the lawsuite should be that an environmental impact statement has not been filed for the Tunnel as of yet.  The Tunnel project has been separated into many different parts so that the necessity for a large Environmental Impact Statement is lessened.  This might be strategic on the construction of the Tunnel but it violates the spirit of the law.  A correction in this endeavor needs to be upheld and thus stop the progress of the building of the Tunnel until a correct and complete Environmental Impact Statement can be completed and evaluated by Federal Authorities and others who would need to make evaluations.

But is this the part of the lawsuite which is being filed.  Stay tuned for complete details on this obvious controversy.

SR 520 construction may be dependent upon these determinations and findings.  Financing of both are tight and could be flipped at any time.  Who is responsible for what and when still needs to be answered.  Again, the costliest roads are being played with.  Your money is at stake again. 

Either through politics or legal maneuvering.


Solar Cells and your IRA

February 3, 2009

An infrastructure built by individuals

Environmentalism. Environmentalism. Environmentalism. Drill. Drill. Drill.
Environmentalists say drilling is detrimental to the environment. The driller claims off-shore and tundra drilling help the animal environment. Friendly drilling needs to continue for the benefit of our society and the animal kingdom.

In the meantime alternative sources of energy “exploration” need to be developed. The solar cell energy industry has advanced considerably. One company claims they can produce a solar cell for $1 and the actual roof-top construction cost is $5 each.

But I have no money. I am working paycheck to paycheck.

You might be saving up some money in a pension plan or in an IRA.
True power lies in the ability of the individual to make decisions. Individual decisions when accumulated collectively can help or hinder a society as a whole. Collectively as the price of “at the pump” gasoline increased the individuals reduced driving habits thus the collectiveness of individual actions reduced the price of gasoline.

In the same sense government actions can help or hinder progress or should I say action or in-action of the individual as well. IRA’s and Roth IRAs have stimulated the non-pension individual to save for retirement. Some individuals have accumulated substantial massive individual account balances tax deferred or tax free. This is good.

But now the government needs to let the individual free up some of their money so the collective strength of the individual can benefit society once again.

An IRA or Roth IRA should be accessible for the individual house construction of a solar panel roof. Costs of solar cells are down and construction workers are looking for work. If the government would allow up to a $25,000 to $40,000 withdrawal from an IRA without a 10% penalty this would be the first step. Step two would be allowing the individual to: 1) withdraw the funds as a loan with payback at the selling of the house; 2) or instead of an ordinary gain charge a capital gain tax on the withdrawal.

If a loan then no monthly amounts would have to be returned to the IRS except monthly amounts received from utilities for excess electricity bought by utilities. In some utility districts the sell back amount might be higher due to the higher cost during daylight hours. The eventual selling of the house would then pay off the difference and the IRS would continue to accumulate wealth at that time with those funds.

If under a capital gain then 2008, 2009, and 2010 with an individual 15% tax bracket no capital gains tax would be paid for the cost of the solar cell roof. This would allow those in lower marginal tax brackets to truly withdraw funds and thus lower their personal costs of living. The lowering of costs may also help in freeing up other funds for IRA or retirement contributions. The higher than 25% tax bracket would enjoy a lower tax on the amount of the withdrawal by not having to pay a tax on the withdrawal of the funds for personal use at the ordinary tax rate but at the lower capital gains rate.

The third way would be the loan and capital gain rate combined. An amount above the 15% tax bracket would be considered a loan and the amount of the loan paid back as previously mentioned. For the amount in the lower tax bracket since capital gains have been calculated this amount would then not have to be paid back. Obviously the calculation would be done at the individual income tax preparation and filing time.

On the Form 1099-R, in Box 7 a code “C” for cell would be used. As with all withdrawals a payment from the trustee directly to the contractor would take place.

The advantage of this would be construction and electricians would get back to work. This collectively would be done in the southern states at first but the construction process might benefit the northern states from reduced solar cell costs. Later on with the lower costs thus this also would make solar cell roofs affordable in the northern states.

When money moves our economy moves. If money does not move our economy is stagnant.

In the meantime let’s drill, drill, drill. Let’s create an oasis for the animal kingdom and stimulate the “freely” using of electricity as previously worded on the mosaic outside of the Seattle City Light Building.

Joe the Plumber

October 17, 2008

Joe the Plumber should stop his purchase of his future plumbing business.  Whether Joe the Plumber owes money to someone else is irrelevant.  That is his business and no one else needs to know about it nor invest their time as a concern of theirs. 

But as a general business principle I would advise Joe the Plumber to stop the purchase of the business until a more stable tax knowledge time has be seen.  If Joe the Plumber buys a business and taxes increase that would be the same as him being required to pay a higher price for the business but much worse.  If you buy a business for $2MM and the government comes along and raises taxes say 20% due to an increase in general income taxes and other health care and social security taxes you have just increased you cost of business.  If the profit on $2MM is $250,000 and the additional taxes are 10% of gross revenue for wages, etc. then this would be an additional $200,000.  This would leave $50,000 in income.  Then the extra 10% in income taxes.  Well now in essence your interest payings on investment debt wipe out any profit potential.  But at a 10% interest rate on $2Mm you would of had $50,000 per year in net profit but now you are in the hole.  

Others might say well his income is lower.  No.  That is not the way it might work.  Just because you have a gross revenue of $2MM you may be forced to pay the extra amounts in payroll taxes anyways.  Do you really think the extra taxes are going to be born by the one man show.  No way.  So after your purchase you might have to downscale your operations and you are the only one working.  The new law may not be in affect for employees under 20 but the purchase of the company has 25 employees.  Now if you downsize to 20 employees you can just barely afford an income for yourself of $30,000.  The interest expense is eating you alive.  Government changed the rules and you were caught in the middle. 

Good luck Joe the Plumber but my advise is to wait until the November 4, 2008 elections are over and then sign the contract or let the contract go and work for yourself. 

One rule of thumb is in the construction trades you will be making more money if you are working for yourself and have no employees until somewhere after you have over five employees.  And having five employees or more only guarantees headaches and in no way does it ever guarantee a profit. 

Beware if the final word.  If you think employees are expensive wait until the government shows you their bill.  They also want to get paid before or at the same time you will be paying your employees.  Beware.

Financial Crisis Short lived.

October 17, 2008

The banking system was put into an upheaval.  Fannie Mae and Freddie Mac virtually disappeared overnight.  Major banks went under.  One day they were vibrant and the next day a bigger bank purchased the remaining assets for small amounts.  An insurance company linked with mortgage securities also went under. 

In the meantime the securities industry or should I say the stock markets in the United States and also abroad collapsed and then the next day they had an all time high for a day.  Joy and sadness, up and down.  Can anything come to the rescue.

Yes, our rescue is coming in November around the Thanksgiving time.  Stories of the turnaround will resonate for milleniums on how quickly the turnaround happened.  Innovations.  Innovations.  Innovations.  Alternative Fuel sources which were being worked on have finally claimed the headlines.  The price of oil thus is plummenting.  Happy are all in the world because the United States is happy.  Well, some in the world who are depending upon oil are not happy.  Is this temporary or this is permanent.   They are speculating.  Some airlines are worried.  They speculated on the price of oil remaining high.  They lost when the price of oil came down.  Their only hope now may be bankruptcy.  Will it work.  Can someone else in the airline industry buy them.  No, the contract is too ironclad.  No one will try.  Can the assets be purchased.  Can the landing rights be purchased.  Can the jets be purchased.  What is the new going rate. 

Detroit is working on advancing production of the GM Volt but production is scheduled for the 2010 model year.  Ford has other ideas which they are ready to put into production for the current model year.  Will this date put the Volt out-of-date.   Are the innovations from Ford going to bankrupt GM.  Will Ford buy GM.  Does GM have other innovations to apply to its list of new car development.  Will the new innovations eliminate the need for tires completely.   

Other innovations are encouraging speculators to invest in new technologies.  Will the alternative fuel industry remain alive if the price of oil goes to “rock-bottom”. 

Funneling of cash to terroist organizations seems to have stopped while individuals attempt to recover personally from years of oil production of which now has a low value.  Terrorist organizations have made advances toward a peace truce.  Can this be real.  The price of oil.  Will it hit $20 or $30 per barrel again. 

The government has started a huge project in solar to build a 20 by 20 miles solar panel in a desert.  Bids are out to the states for cooperation.  Will the final coverage be 10 by 10.  A 20 square mile coverage is supposed to be able to supply all of the electrical needs of the United States.  If 10 by 10 then other sources of electricity will be able to be encouraged for production.  Internal security I believe dictates scattered placement of electrical venues.  Electical cars will demand more and more electrical needs.  Innovative homeowners have now been allowed to pull money out of their IRAs or Roth/IRAs for home solar cell electricity sources. 

A national disaster has turned into cooperation between the political parties.  Everyone is now on board.  The unity was strengthen when two countries tried to rattle their sabers.  The unity was deafening.  They backed off.  The strength of a United United States was too much for them to overcome.

It only took a short time for years of struggling innovations to come in the forefront of completion. 

Medical innovations or alternative medical innovations have also been developed and abundant amount of cures to once struggling medical science will soon be common place cures.  Who needs to worry about health insurance.  It is almost like you just need to eat an apple.  The solutions are readily available. 

The greatest times of the United States are yet to come.  Keep innovation compounding.  And if you don’t believe this then pray God will quickly answer your prayers.  When a nation prays, God listens.   Or better yet look at www.kimclement.com for a more precise knowledge of what “will” happen.

Unconstitutional Bailout!!

October 3, 2008

The Constitution of the United States specifically mentioned that all bills concerning taxes and revenues shall initiative first out of the House of Representatives.  From what I have heard from the radio there are tax and revenue provisions and the Senate has passed and sent a copy of their bill for the Mortgage Interest meltdown to the House of Representatives.  This is Unconstitutional and all members of the House should vote NO-NO-NO!!! on this bill. 

If they do not then this could be considered as a precedence for the Senate writing tax and revenue law in an emergency session because the House does not run fast enough.  It takes less effort for 100 to agree than a massive 400 + to agree.

Beware of the precedence.

Section 7. All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.

Every bill which shall have passed the House of Representatives and the Senate, shall, before it become a law, be presented to the President of the United States; if he approve he shall sign it, but if not he shall return it, with his objections to that House in which it shall have originated, who shall enter the objections at large on their journal, and proceed to reconsider it. If after such reconsideration two thirds of that House shall agree to pass the bill, it shall be sent, together with the objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a law. But in all such cases the votes of both Houses shall be determined by yeas and nays, and the names of the persons voting for and against the bill shall be entered on the journal of each House respectively. If any bill shall not be returned by the President within ten days (Sundays excepted) after it shall have been presented to him, the same shall be a law, in like manner as if he had signed it, unless the Congress by their adjournment prevent its return, in which case it shall not be a law.

Every order, resolution, or vote to which the concurrence of the Senate and House of Representatives may be necessary (except on a question of adjournment) shall be presented to the President of the United States; and before the same shall take effect, shall be approved by him, or being disapproved by him, shall be repassed by two thirds of the Senate and House of Representatives, according to the rules and limitations prescribed in the case of a bill.

Financial Crisis II

October 1, 2008

When the Pilgrims landed at Plymouth Rock they set up a system whereby the strong and the weak shared equally in the bounty produced during the prior year.  After many deaths the next year the families which produced the most kept the most. 

Communism was tried in America.  It has been proven to fail.  This bailout plan is a direct repeat of the first year experiment at Plymouth Rock.  If a set-up from a free market system is set-up this will make America stronger and the individual stronger.  The strong produce and if they want to help the weak then that is up to the individual or private organizations which get contributions by the individual.  At Plymouth Rock the strong produced more and all collectively produced more.       

No bailout for the weak.  They really won’t die but actually they will become stronger and not weaker.

The free enterprise system worked at Plymouth Rock and the weak were stronger and produced a minimum for themselves.  The strong produced more than what they individually needed for their family.  Abundance succeeded from the free market system and abundance failed from the communistic system of sharing equally.

Financial Crisis Alternative Solution – Maybe!!

September 30, 2008
 Financial Crisis Alternative Solution – Maybe!!

The exact inside workings of the “Financial Crisis” I am not fully aware of. Options, sub-prime mortgage alternatives, derivatives and the other likely investment vehicles from the news media seem to be staggering.


I have not heard any specific “free-market” alternatives issued to solve the problem.

Here is my solution based upon the free market:

* Have investors draw money out from their IRA, Roth IRA and pension plans for a sub-prime mortgage investment.

* For maximum risk reduction limit the sub-prime mortgage exposure to 10-20% of the total portfolio value. (It would be more prudent to limit the exposure to 10% or even 5%.

* The limitation of the investment allowed would be a maximum of $20,000. This would allow enough of an investment by an individual who does not have that much in but wants to take a higher risk because of the low amount in the account.

* A new mutual fund industry could exist or in some fashion or like Fannie Mae or Freddie Mac.

* For reduction of risk exposure assumes the value of the investment will fail. Structure the dividend or interest income return so the value of the account will remain even with no return. This is the same technique which is used with high risk investments but with the other portion of the portfolio being in guaranteed no-risk government bonds. The interest from the bonds would over say ten years yield a return on investment equal to the loss of the account. This would affectively zero out any loss from the account but obviously would not return any investment return as well. The observance of BETA management should be strictly accounted for. Examples of rounding out a portfolio through Collar Investing as outlined by Thomas J. Schwab of Summit Portfolio Investing, LLC http://www.summitportfolioadvisors.com may be a good strong way to reduce risk and be aggressive at the same time to help in reducing risk associated with aggressive portfolio management and also lowering the risk aspects generally associated with high risk investment portfolios in other portions of the investment portfolio.

* To offset this potential risk factor the U.S. Government would give an up-front 10% tax credit.

* The tax credit if the investment was inside of an IRA or Roth-IRA or Pension Plan would be able to be taken off on the individuals personal income tax return for 2007 or 2008. The reason for the 2007 is to stimulate activities from an amended return (I do realize that the IRS is loaded down with over 1MM amended returns at the present time from the Economic Stimulus Payments as well at this time.) Or a separate 1040-IRA could be filed at the rate of 15% by the government. The trustees would submit a separate form for the pension holders. An election would be submitted to the sponsoring company if the 2007 was elected. Otherwise the normal course would be for a 2008 tax return for the credit amount.

* If after five years the investment failed then the government would come up with another 10% tax credit or when the investment was sold. The credit would go to the IRA/Pension in this case instead.

* At withdrawal the increase in value of the account would be considered as part of the basis and no income tax would be due on early withdrawal.

* If early withdrawal did happen then no 10% penalty would be accessed against the portion of the interest gain. This would be allowed if the IRA/Pension amounts were kept separate either from an accounting standpoint by the Pension trustee or the IRA trustee. An individual could keep the information separate by opening a separate IRA or Roth-IRA account. If the later is done then the IRS would pay the first five years of the IRA account fees through a tax credit.

* Use of the funds when withdrawn could be used for home construction of solar cell panels on a home. If additional funds were needed beyond the basis and interest income of the invested sub-prime mortgage funds then these funds could be withdrawn without a 10% penalty and the with additional funds would be taxed at the capital gains rate rather than the ordinary rate for the cost of the domicile primary residence solar cell panel investment only.

* The objective here is to leave out the government or at least as much as possible. Tax credits would act as a social manipulation and stimulus.

* This style of stimulation would also leave funds with the United States government to stimulate other sources of alternative energy. An example of this would be the funds could be used to create a 20 X 20 miles solar cell farm in the Arizona or New Mexico desert. Maybe even an algae farm of equal size for the creation of an alternative source of biofuel created from algae. Is there a river close by.

* The available source of Pension, IRA and Roth/IRA funds would not distract from returns on investment but rather a stimulus of ownership would be crucial in resolving world markets. A solution without the possibility of the government going broke would stabilize world markets. This also could stimulate employers to release additional funds to a pension plan because of the enthusiasm of the employees. A restriction of investment through employers pensions could be made if the pension is less than 100% funded. This would be true if the funds were from a defined benefit plan for the tax credit of course.

* Additional funding sources could be from Annuities. A restriction of the March 2007 date may need to be imposed to not allow investment of funds just to get a personal income tax credit.

* Ease of the withdrawal requirements from these types of investments would need to be put in place also. Withdrawal of funds after April 1 of the 70 1/2 birthday would not be calculated for the RMD (Required Minimum Distribution) until after the maturity or the refinancing of the underlying mortgage. Two options would be needed for this calculation by the trustee. Either after all mortgage backed sub-prime mortgages would have to be liquidated (this test may need to be age sensitive) or with a minimum of 5% per year for the withdrawal. Assuming a 20 payout. The other alternative would have to allow a February 15th calculation by the trustee and a withdrawal of additional funds by March 30th for the request. If funds would need to be re-deposited in a 60 day window from April 15th should be allowed. No late fees or penalties for the requirement. Thus older taxpayers would need until June 15th to file their income tax returns.

* States may need to comply and modify their income tax filing seasons and requirements. Most states for state income tax returns take the numbers from the federal returns for purposes of pensions and IRAs. The 10% penalty is usually a percentage of the federal amount. California takes an additional 2.5% of the penalty as an example. Capital gains treatment of pension or IRA withdrawals would need to be changed in the state laws to conform with federal treatment. Federal laws could be adjusted to change the reporting of the capital gains portion under Schedule D rather than the Form 1040 page 1 section. This may be difficult for a federal requirement but the asset would have to be held for one year anyways.

* Again, from the mortgage side of this mess I can see a huge problem but I do not see as much of a down side with this type of a plan as I do with the one-owner concept of the federal government. Administration of existing mortgages would remain a constant. The citizens and world markets may be able to participate in this style or structure of investment. IRA or Roth/IRAs may be considered for foreign investors. If funds were input into a Roth/IRA format and kept separate then a no tax credit would be available for the foreign investor but a maximum of $125,000 could be invested. This would be in essence a foreign cushion and if they are over 59 1/2 at the time of the withdrawal no income tax would be do. An additional withdrawal of the interest and Roth/IRA would have to be allowed due to the restrictions on withdrawal at the border of $125,000 at the present time due to estate tax purposes. Relief of the withdrawal of $10,000 of reporting would have to be waived for transfers of funds out or into the country as well. The 10,000 restriction is in place to detect movement of terrorist funds. An individual to trustee or bank to trustee account should meet this requirement and the receiving trustee would make the appropriate declarations.

* Amounts above the 10% and not inside of an IRA or Roth/IRA up to 20% of ones investment portfolio could be invested in these sub-prime mortgage back securities and the tax treatment would be that of an insurance policy. The maximum amount would could be included would be $10,000,000. The estate tax treatment would be tax free and the gift tax per year would be tax free for the interest income portion.

Let’s knaw on something like the above and keep the government solvent. Many individuals bearing the risk spreads the risk and lowers the individual percentage of loss. We have had numerous large company merge due to large collective amounts being in one place. The last thing we need is for the largest organization to go under. A 5% or 10% loss over ten years by many is less than one large organization which we all depend upon going under. The safer investments from the many will come out even with risks spread and no equity lost or gained over time. The loss by one which depends upon all of us contributing for its stability would be catistrophic for all.


Keith Ljunghammar, EA