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Money Management (Distributed by the New Jersey Society of Certified Public Accountants)

A CPA's Guide To Holiday Gift Giving

If you're looking for a gift that gives the term "holiday returns" a new meaning, consider some non-traditional gift options. Here are some gift ideas, courtesy of the New Jersey Society of Certified Public Accountants (NJSCPA), that are likely to provide a return on your investment as well as a lesson in personal finance.

Give Shares Of Stock
 A gift of shares of stock can be the beginning of a tradition that demonstrates the importance of investing and provides the recipient with long-term returns. In order to maximize the educational value of your gift, you may want to select a company whose products or services your recipient is already familiar with.
Parents and grandparents can buy stock and register those shares in the child's name with the parent as custodian. The investment is held in an account under the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Act until the child reaches the age of maturity (18 or 21 depending on the state of residence).
Buying just a few shares in a company can be expensive, but there are ways to do it economically. For example, you can purchase one share of stock on the Internet at www.oneshare.com or www.giftsofstock.com. You receive the actual stock certificate framed, along with annual reports, dividends (if declared), and any other benefits provided to shareholders. While one share may not sound like a lot, according to www.oneshare.com, if you owned one share of Microsoft after its initial public offering in 1987, today you would have 144 shares.
Some companies offer direct purchase plans (DPPs) that allow you to purchase your first share, and all other shares, directly from them without paying a high broker's commission. However, you may be charged a small administrative fee.

Buy Old-Fashioned Savings Bonds
 U.S. Series EE Savings Bonds are one of the safest investments around. These bonds can be purchased in increments of $50 to $10,000. The interest rates change every six months to keep up with inflation and the bonds will earn market-based rates for 30 years.
It takes about three weeks for gift bonds to be delivered. If you need it sooner, your bank can provide a gift certificate to present to the recipient in the meantime.

Help Out With Education And Earn A Deduction
If you are looking to reduce the size of your estate, consider making a tuition payment on behalf of an individual directly to an educational institution. This will allow you to give as much as you want without being subject to gift tax limitations. Note that amounts paid for books and dormitory fees are not eligible for this exclusion.

Give A Gift For The Future With A Retirement Plan
 If you have grown children who are employed but can't seem to come up with enough money to open an Individual Retirement Account (IRA), you can give them a gift that will get them started on their retirement savings. Your child can establish an IRA as long as the contribution is within the limits - $3,000 for 2004 ($3,500 if your child is 50 or older) - and does not exceed the child's earned income.

Lessons That Can Last A Lifetime
 Books, videos, and computer software that teach budgeting, money management, saving, and investing are great gifts. For younger children, educational toy stores often carry games that teach money management skills.

An Appointment With A CPA: A Gift That Keeps On Giving
A consultation with a CPA is an excellent gift for newlyweds or grown children starting a family. A CPA can help young couples outline their financial goals and develop a strategy for attaining them. The CPA can also provide tax advice that will help the recipients keep more of what they earn. If you don't have a CPA, you can easily locate one online using the NJSCPA Find-A-CPA service. Just go to www.findacpa.org and in a few clicks, you can locate a highly qualified professional who is right for you
If you would like to receive more information on various financial matters, subscribe to E-CPA, the NJSCPA's free, monthly email newsletter. To subscribe, visit http:/www.njscpa.org/finances or email a subscription request to e-cpa@njscpa.org.

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Money Management is a weekly column on personal finance distributed by the NJSCPA.

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