IRS Releases List of Possible Tax Scams to Watch Out for in 2014

Yes, April 15th has come and gone, but tax scams take place all year long. As such, the video below lists the tax scams that the IRS is alerting taxpayers to watch out for. 

Michael Jackson May Have Been the King of Pop, But He Struggled with His Personal Finances

In a new book out this month, "Remember the Time: Protecting Michael Jackson in His Final Days," two of Jackson's security guards reveal what it was like working with the artist during the final years of his life.

About halfway through the book, it is revealed how Jackson wanted the iPhone when it first came out in 2007.

One security guard stood for two and a half hours in line to make the purchase, and he was asked by Jackson to set up the phone for himself and his mother. However, upon giving Michael Jackson's social security number to AT&T, it wanted a $1,500 deposit. His credit was so bad, the security guard went ahead and set up the accounts in his name. Eventually Jackson's number was changed and the bill for both phone accounts was never paid and the phones were disconnected.

The book details how poorly Jackson's financial situation was handled with Jackson being heard saying that he had no idea where his money was or how much he had and how both guards weren't paid for months on end.

Ironically, during all of this financial chaos, the star still managed to drop thousands of dollars on FAO Schwarz toy trips and miscellaneous purchases ranging from a nearly seven-foot-tall Tinkerbell replica to $1,000 on a theater display for "The Simpsons Movie." 

It is sad to see someone so gifted, also be so unaware and/or vulnerable at the same time. It appears that Michael Jackson's lifestyle and lack of financial and possibly even parental oversight lead to a very sad ending. Celebrities may appear to have it all, but in reality they have greater financial and personal struggles than you or I. Bottom line, it is important to align yourself with competent and honest professionals, along with loving and straight-forward friends and family members, whom aren't afraid to confront you when there is a problem. This may prevent you from following in other's more famous and disastrous footsteps.

Current Economic News

Consumer Prices

Consumer prices in May rose the most in more than a year, the Labor Department said. That reflected higher household costs for everything from groceries and gasoline to rent and medical care. Core prices, which strip out volatile food and energy costs, climbed the most since August 2011.

Still, both measures suggest inflation picked up in the spring after two years of sluggishness.

"We have an unemployment rate that's been falling faster than the Fed expected and now we've got an inflation rate that's been rising more than the Fed expected," said John Ryding, chief economist at RDQ Economics LLC.

Oil Price Swings are Much Less Than in the Past

The latest rounds of violence in the Middle East has sent crude-oil prices climbing in recent weeks, a familiar action-reaction that frequently has proved to be a drag on economic growth. However, price swings have been much more muted than in the past. 

This is the result of increased U.S and Canadian oil production and better fuel economy vehicles on the road.

"The U.S. is less vulnerable to oil shocks," said Brian Levitt, senior economist at OppenheimerFunds. "Over time, there's going to be less and less vulnerability to events in the Middle East."

Lines Crossed

Bottom line, we are not invulnerable to higher oil prices, but due to factors previously noted above, here in the U.S. we have more energy independence and security than we have in probably the past 40 years.           

China Surpasses U.S. in Corporate Borrowing

China has overtaken the U.S. as the world's largest issuer of corporate debt, and China now has more corporate debt outstanding than any other country. However, a slowing Chinese economy, the weakened financial health of its companies along with the possibility that the Chinese government may be less willing to bail out troubled firms are creating risks globally, according to Standard & Poor's Ratings Services.

I have noted in the past, that China has been and may continue to be a great economic power and growth story for years to come. That being said, it has some very large challenges ahead of it, without a history of dealing with financial crises like we've had here in the U.S.  As such, diversifying into international stocks and bonds is desirable for one's portfolio. However, I have no appetite for individual Chinese stocks or bonds, mutual funds or ETFs at this point, because I believe it is too risky to assume that the Chinese government will be able to address this and other economic and geopolitical challenges without investors feeling some pain.

Quotes

"Drop by drop the jug is filled."

          Greek Proverb

 "If you make decisions for the right reasons, it is never wrong."

          Steve Kragthorpe

 

Tony Moeller, CPA

The information listed in this commentary is a compilation of various publicly available sources and is for informational purposes only. It is not a recommendation or solicitation of any particular investment or strategy. A risk of loss is involved with investments in the stock and bond markets.

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