This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Financials' Santa Rally Turning Into Cliff Collapse (Update 2)

Since the Republicans have made it clear that they won't even allow tax rate increases on the highest income earners, and the President is insisting on tax rate increases on incomes ov $400,000 or more, it would appear highly unlikely for Senate Majority Leader Harry Reid (D., Nev.) to push the Senate to pass anything palatable to the Republicans.

AMT Time Bomb


Many economists have predicted that "falling off the Fiscal Cliff" will push the U.S. economy back into recession. Another major problem over the short-term is the Alternative Minimum Tax. The AMT was enacted in the 60's, in order to make sure that taxpayers with a large amount of deductions to their taxable income would be forced to pay a minimum federal income tax.

The AMT law is not indexed for inflation. Each year, Congress passes a "patch" in order to address this problem. The patch hasn't yet been passed, and time is short, because the Internal Revenue System needs to know the AMT rules for 2012, in order to do correctly process tax returns and tax refunds, beginning in January.

Acting IRS Commissioner Steven Miller sent a letter to Congress in November and another letter on Wednesday, saying that "the most recent AMT Patch, and the exemption amounts of $74,450 for joint filers and $48,450 for single taxpayers, expired at the end of 2011," and that without a new patch for 2012, "the current-law AMT exemption amounts are much lower: $45,000 for joint filers and $33,750 for single taxpayers."

"This means that 30 million additional taxpayers will become subject to the AMT on their 2012 income tax returns."

Miracles do happen. Our friends in Washington may get their act together and pass the 2012 AMT patch, but if they do not, Miller said that "most taxpayers may not be able to file their 2012 tax returns until late March, or even later." When factoring in the software changes required with no AMT patch and the calculations taxpayers will need to make in order to find out whether or not the AMT will apply to them, Miller said "it is becoming apparent that an even larger number of taxpayers - 80 to 100 million of the 150 million total returns expected to be filed - may be unable to file."

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
WFC $56.92 1.30%
BAC $16.95 1.70%
C $55.65 1.70%
JPM $66.71 1.00%
TSLA $248.83 0.19%

Markets

DOW 18,076.27 +64.33 0.36%
S&P 500 2,114.07 +4.47 0.21%
NASDAQ 5,099.2310 +22.7070 0.45%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs