Roth IRA Conversion...
by Mike Engleman, CPA
 

Taxpayers who converted an individual retirement account (IRA) into a Roth IRA are subject to income tax based on the value of the account at the time of conversion. Individuals who converted early in the year and then saw the portfolio value decline as the market dropped were able to convert the Roth IRA back to a traditional IRA, then reconvert back to a Roth IRA at a lower value. This tax planning technique resulted in a lower tax liability based on the last conversion.

Prior to November 1, 1998, there was no limit on the number of times a taxpayer could convert and reconvert between a traditional IRA and a Roth IRA. Effective November 1, 1998, the Internal Revenue Service issued regulations restricting taxpayers to one reconversion to a Roth IRA in 1998 and one in 1999. Anyone who reconverted multiple times before November 1 will be unaffected. After November 1, investors can undo a conversion to a Roth IRA and then convert back to a Roth IRA only once before the end of 1998. The 1998 conversion can be reversed prior to the April 15, 1999 tax return due date or the extended due date. A reversed 1998 conversion can also be reconverted one more time in 1999. The following example illustrates the new regulation:

Taxpayer converts a traditional IRA to a Roth IRA on November 9th, and on November 27th reverses the transaction back to a traditional IRA. The taxpayer is then eligible to convert the account back to a Roth IRA only one more time before December 31, 1998. In 1999 the taxpayer will have another opportunity to reconvert.

NOTE: If you would like to discuss issues regarding the Roth IRA in more detail, feel free to call Mike Engleman, who has received the AICPA's Certificate of Education Achievement in Tax Planning and Advising for Closely Held Businesses.

New Jersey Audit Program Focuses on Use Tax
by Michelle Harvey
 

When the New Jersey Division of Taxation conducts tax audits, it often reviews the reporting and remittance of use tax. Any taxpayer residing in New Jersey is required to pay a use tax when taxable goods or services are purchased and the vendor does not charge sales tax. This generally occurs in mail-order situations and whenever an out-of-state vendor is used to place an order that is subsequently mailed or shipped to New Jersey. The New Jersey Sales and Use Tax Act (N.J.S.A. 54:32B-1) does not exempt items purchased out-of-state for use in New Jersey (such as office supplies, furniture and equipment) from sales and use tax.

Use tax is calculated at the same rate as sales tax, currently 6%, and can be reported and remitted on several different forms. The most common are Forms ST-18 and ST-50. Certain non-vendor taxpayers may qualify to report and remit use tax annually on Form ST-18B. Individuals may elect to report and remit use tax on Form NJ-1040. If you would like more information on use tax reporting requirements, please give us a call.

Alloy Happenings
 

Speeches and Presentations
Partners and staff are available as speakers on a variety of tax, accounting and financial topics for community, civic, nonprofit or business organizations. For more details or to reserve a speaker, please contact Ren Cicalese.

Visit us at our Web Site: www.alloysilverstein.com

Employee of the Quarter
By: Brad Sears

Our employee of the quarter is Dave Maedel, a staff accountant at the firm. Dave is a native of Cherry Hill, NJ but has recently moved with his wife of three years, Allyson, to Medford Lakes, NJ. Dave graduated from Drexel University in 1990 with a degree in Accounting. He started his accounting career with a small Center City firm and joined our staff in March 1997. The majority of his summer workload involves auditing clients' 401(k) plans.

In his spare time, Dave has been diligently studying for the CPA exam. He enjoys the company of his wife, a research coordinator and mental health clinician at the University of Medicine and Dentistry in Stratford, NJ, and his two "children", Maggie and Molly, actually a Dachshund and Maltese. He is a novice golfer and has been nicknamed "Double Par" by other staff members.

Current Events
By: Len Lewis, CPA

Steven L. Shapiro, CPA, PFS
Appointed to Sallie Mae Board of Directors' Executive Committee and named Chairman of the Board's Operating Committee. Sallie Mae, listed on the New York Stock Exchange as SLM Holding Co., is the nation's leading provider of financial services for post-secondary education needs and is the largest provider of funding for education loans.

Harry 'Bud' Wilson, CPA
Re-elected to the Board of Directors for the "Alzheimer's Association, South Jersey Chapter" and appointed Treasurer for 1999.

Ren Cicalese, CPA
Attended the New Jersey Society of CPA's Sports and Entertainment Conference.

George E. Barrett, CPA
Lectured on "Year End Tax Planning Strategies" at an investment advisor's client appreciation day.

Anne D'Amico, CPA, Kelly Raso, CPA, Kim Sheehan, CPA,
Debbie Spector, CPA and Nancy Zemlak, CPA
Hosted the firm's exhibit at:
1) The Governor's Conference on Women: Economic Pathways to Power, Sponsored by the New Jersey Chamber of Commerce.
2) The Success of the Female Entrepreneur Conference, presented by the Small Business Association of Delaware Valley.
Announcements

Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co., in conjunction with Sallie Mae, has established a scholarship at Rutgers University.

We are pleased to announce the addition of the following employees to our firm:

Heather Kettell, transferred from a Cherry Hill, NJ firm

Lois Prichard Shinkunas, CPA, transferred from a Millville, NJ firm

Patricia Ann Pierznik, transferred from an Ocean City, NJ firm

Kim Capalbo, transferred from a Jenkintown, PA firm

Thuy H. Le, Intern, attends Rutgers University

Chris Cassino, Intern, attends Rowan University

Duane Miller, Intern, attends Rowan University

Geri D'Ambrosio, Administrative Assistant

Alloy Holiday Schedule and Tax Season Hours

The office will be closed on the following dates: December 24th, December 25th, December 31st, January 1st and January 2nd.

Office hours starting January 4th will be:

Monday to Thursday 8:00 am to 8:00 pm

Friday 9:00 am to 5:00 pm

Saturday 9:00am to 5:00 pm

Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co. celebrates its 40th anniversary in 1999. We remain dedicated to providing our clients with the highest quality of services. Thank you for your support over the years.