We know that deciphering the relevance and nuances of new tax laws is, for most people, about as much fun as drinking castor oil. None-the-less, there have been two major tax bills passed this year that have important implications for taxpayers. The bills, TIPRA (Tax Increase Prevention and Reconciliation Act) and PPA (Pension Protection Act), offer enormous tax savings—if you respond appropriately. This letter focuses on both new strategies for 2006 and our favorite oldies but goodies. Out of consideration for both your time and attention, we have tried to provide a manageable summary of the best strategies. Rest assured, however, that if you read the appropriate portions of this year-end letter and follow the advice given, you can save thousands of dollars and potentially much more in the long run.

Some ideas can save you tax now and some involve multi-year strategies. There have also been some changes to the Pennsylvania income tax laws that may be significant to PA residents.

These first nine ideas are the ones that we think will have the most significance to the most people that we typically work with. Please, however, review the entire table of contents and read the sections that are relevant for you.

Table of Contents

Nine Ideas Particularly Relevant for Many Taxpayers

Roth IRA Conversions Will Be Available to More Taxpayers

TIPRA permits all taxpayers to make Roth conversions beginning in year 2010, regardless of their income level. For the family, the long-term benefit of a Roth IRA conversion is simply phenomenal. The new provision will particularly benefit high-income taxpayers who have not had the opportunity to make significant contributions to a tax-free Roth account. High-income taxpayers are likely to have the longest time horizon to grow the funds tax-free and may not have to pay a higher marginal tax rate on the conversion income. Roth IRA conversions have been a valuable tool for many of our clients in maximizing financial security for the family. While each individual’s case will benefit from an individualized analysis of the merits of the conversion, the critical feature of the Roth is that, once the initial taxes are paid on the conversion, income taxes will never be due on the growth, capital gains, dividends, interest, etc.

Rolling a Pension Plan into an IRA— Multi-Year Planning for a Roth IRA Conversion

Until 2010, however, the modified adjusted gross income (MAGI) limit still poses a significant problem. To qualify for a conversion, your MAGI must be under $100,000, so many higher income taxpayers are prohibited from making them. Income from an owner’s minimum required distribution (MRD) from an IRA is not considered part of your MAGI, while the MRD from a pension plan is considered income for the purpose of whether you are allowed to make a Roth IRA conversion. (There is some controversy on this point, but my source is the Internal Revenue Code, not things that have been written about the code.)  This presents a multi-year planning opportunity for retirees to qualify for a conversion. If you receive income from a retirement plan that causes your MAGI to be over $100,000, other things being equal, plan to rollover your retirement plan into an IRA account before year end so that during the next year, the minimum distribution does not count as part of MAGI so you can do a conversion in 2007.

Sleeper idea for the wealthy: If you currently cannot even make Roth IRA contributions because your income is over $160,000 (joint filers) or $110,000 (single filer), consider making nondeductible traditional IRA contributions now and then convert the IRA to a Roth IRA in 2010. If those are your only IRAs, you may pay much less in tax on the conversion since you will have basis equal to the amounts contributed.

The PPA has also made permanent the laws allowing higher contributions to your retirement plans and the catch-up contributions for individuals over age 50. In 2006, individuals can contribute $15,000 per year ($20,000 per year if age 50 and older) to their retirement plans. If you have not, now is the time to review your 2006 year-to-date retirement plan contribution opportunities. In many instances, your employer plan will allow you to make changes for the remainder of 2006 to contribute more if you have not maximized your 2006 contributions to your desired level. Even more liberal savings opportunities exist in 2007 with the increase in the contribution limit to $15,500 per year ($20,500 per year if age 50 and older). These elective deferrals can be made on a pre-tax basis or, if your employer offers them, through the new Roth 401(k) and 403(b) Plans (see below).

Keep in mind that contributions to elective deferral retirement plans and self-employed retirement plans will reduce your adjusted gross income. See the partial list of tax deductions and tax credits above that are directly affected by adjusted gross income.

Many readers will have capital loss carry-forwards to use in 2006 and possibly beyond. Using losses to reduce taxable gains by offsetting the losses against the gains is referred to as “tax-loss harvesting or tax-loss selling.”  Now is the time to review your investment portfolio and make some decisions that will generate tax savings.   

It is required for income tax purposes to match your short-term gains with short-term losses and your long-term gains with long-term losses. If you can avoid it, you do not want to end up with short-term taxable gains because you failed to sell, prior to year-end, securities that would have created a loss to offset these short-term gains. Short-term gains are taxed at ordinary income rates that are as high as 35% in 2006. Ideally, you want to generate losses because you can deduct up to $3,000 per year of losses against ordinary income. That adds up to an $840 tax savings for an individual who is in a 28% tax bracket. Be careful to avoid a wash sale, i.e., buying the same security within 30 days of the time you sell the shares—the tax rules will disallow the loss.

Also, keep in mind that it may not always be the best decision to recognize losses in the current year. For example, you have a net long-term gain that is going to be taxed at 15% and you also have unrecognized long-term losses in your portfolio, you may be advised to sell the stock and offset the long-term gain with the loss and pay no income taxes. But,   what if you knew prior to the end of the year that in January of the following year you were about to recognize a nice short-term profit on a stock? If you postpone taking your losses this year, and pay the 15% tax on the long-term gain,  then next year you can offset the short-term gain (with the large tax bite) with the long-term losses. You could save income taxes of up to 20%.

Many investors fail to maximize the benefits by specific lot selling. Keeping track of your stock purchases at lot levels (instead of the First-In, First-Out default method) allows for greater control when instructing your broker to sell shares.

Harvesting your investment losses can reduce your capital gain income to zero. It’s a great way to increase the after-tax rate-of-return on your portfolio without the risks of active trading. In combination with a good asset allocation and reallocation strategy, you can add value to your investment portfolio without increasing your investment risk.

Effective January 1, 2006, employers were able to add a Roth feature to 401(k) and 403(b) retirement plans to their employees. The Roth 401(k) and/or Roth 403(b) plans were originally scheduled to last only through 2007 so employers were hesitant to make the changes to their plans to allow this option. However, the PPA has now made these plan options a permanent addition to the tax code. Therefore, more employers have now adopted these features, and many employers who did not offer these in 2006 will now begin the feature in 2007.

This really is a great new addition to the retirement plan arena. By now most taxpayers have heard of the Roth IRA and we are advocates of using them, when possible, to take advantage of the tax-free growth of the account. Unfortunately, many of our clients that make too much money to qualify for Roth IRA contributions. Well, that statement is old news since all taxpayers whose employers offer Roth 401(k) or Roth 403(b) plans are now eligible to make Roth 401(k) or 403(b) contributions to these plans regardless of their income.

The differences between a Roth 401(k) and a traditional 401(k) are that with the Roth 401(k), you use after-tax dollars to fund your elective contributions and that the Roth 401(k) grows income tax free. For example, if your salary is $100,000 and you contribute $10,000 to your existing 401(k) or 403(b), you must pay taxes on $90,000 of wages. Keep in mind though that when you eventually withdraw those retirement funds, you will be taxed on the $10,000 in the retirement plan plus all the accumulated investment earnings. What happens if you contribute the same $10,000 to the Roth 401(k) or Roth 403(b)?  Your taxable wages will be $100,000 for 2006, thus increasing your current year tax liability. The advantage, however, is that the Roth 401(k) and 403(b) will grow income-tax free for your life, your spouse’s life, and the lives of your beneficiaries.

That is an advantage that may be difficult to evaluate in relation to the tax-deductible traditional 401(k)/403(b) contribution. Does the fact that the same $10,000 plus all accumulated earnings will be tax-free when withdrawn help ease your pain? Consideration of many factors should be made to address the issue including current and estimated future financial and tax situations of you and your family members. Though every case is different, in general for many clients, we prefer the Roth 401(k) to a traditional 401(k).

If you are over 70½, under the PPA, effective for years 2006 and 2007,  you can make a qualified charitable distribution directly from your IRA to the charity of your choice (subject to some restrictions). This provision applies to IRAs only and not qualified plans. The money transferred from the IRA does not count as income. You don’t get a charitable deduction, but for many taxpayers, this is a good trade. A key provision of this new law is that the IRA amount donated in this fashion counts toward your minimum required distribution (MRD). Also, if you have after-tax dollars or nondeductible IRAs,  the donated part comes only out of the taxable part and does not diminish your after tax or nondeductible portion of the IRA. This may set you up for a more favorable Roth IRA conversion in future years since fewer dollars would be taxable.

Although on the surface, it appears that reducing your income and your charitable deduction by the same amount should have no effect on you, and in some cases it may not, but it can save you money in many ways, as follows:

For people who use the standard deduction and make charitable contributions, this new rule is a windfall. Instead of contributing your after-tax funds, you can use pre-tax IRA funds and have no taxable income from the IRA.

For people who take only their minimum distribution, they can reduce their adjusted gross income by the amount of the direct IRA donation because the direct IRA donation counts toward the MRD, and you only include as income the additional withdrawal needed to cover the MRD. There are several other potential tax advantages of lowering your adjusted gross income, even if you itemize deductions, such as lowering phase-outs of deductions and income limitations.

• For the large number of people in a somewhat lower income situation, less than the full 85% of your social security income is taxable. By lowering your income, less of your social security income is taxable.

• For individuals donating large amounts to charity, you may find another potential tax advantage of donating your IRA directly to charity. You can only deduct up to 50% of your AGI amount to charity, and if the contribution is large enough, using this method will circumvent this limitation altogether.

• Another potential advantage for lowering your AGI for some individuals is that you may then qualify for Roth IRA contributions. If you have taken your MRD for the year, using the IRA to prevent a further increase in you AGI may also allow you to qualify for a Roth IRA conversion.

Please note that lowering your income using this method will not work if you have already withdrawn your MRD. If that is the case, and you itemize deductions, you may be better off donating after-tax funds like cash or appreciated securities.

The PPA also made a significant number of rule changes on the requirements of charities and individuals claiming non-cash contributions. Among other things, the IRS now will only allow donations of clothing and household items in “good used condition or better.”  Although the IRS cannot define exactly what that means, it is an indication that they are cracking down on a much abused deduction. In order to better document your contributions, we suggest keeping a detailed list of what was donated, with values of individual items and original costs, if known. Taking a picture of donated items is also suggested. Deducting the gift of your old underwear with holes in it no longer flies.

For money denominated contributions over $250, the IRS now requires a cancelled check or credit card statement as backup in addition to the letter from charities. Cash contributions that do not have this backup are no longer deductible. Therefore, we suggest using checks for all contributions instead of cash. This new rule change discourages the age old gifts to the collection plate at a church, synagogue or other organizations that pass around a collection plate.

TIPRA rules now will classify children as those through age 17 – not just young kids through age 13, as before. This means that if your child under age 18 has investment income over $1,700 in 2006, the child will pay tax at the parent’s tax rate and must file Form 8615.

It is still a good tax planning strategy to transfer investments to your child up to the point where the income from them is $1,700. If your child is 18 years old, it is still prudent to transfer investments earning over $1,700 to him/her. For example, assume you are in a 25% tax bracket and are planning to sell some appreciated long-term stock to pay for your 18 year-old’s education. Consider making a gift and transferring the stock to your child who subsequently sells the stock. You have effectively shifted long-term capital gains from a 15% taxation rate to your child’s long-term capital gains tax rate of 5%. You should keep in mind that there are no strings attached to these types of gifts. Keep in mind that with this type of transaction, the money becomes your child’s money.

I also like making Roth IRA contributions for your kids if they have any earned income.

Beginning in 2006, there are tax credits available for purchasing Alternative Technology Vehicles, the most common of which are the hybrid vehicles that use both gas and electricity to propel the vehicle. This credit reduces federal tax bills on a dollar-for-dollar basis and replaces the clean-fuel vehicle deduction allowed in prior years. Unlike many tax credits in the Internal Revenue Code, these energy tax credits are not phased out for higher-income individuals.

Caution is needed in quantifying the benefits, however, for two reasons. One is that its apparent benefit may be offset by AMT. The other is that the full credit is only available until the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000 vehicle. The two quarters thereafter, you only get 50% of the full credit. The two quarters after that, you only get 25% of the full credit and after that, nothing.

The largest seller of hybrid vehicles is Toyota, and they are the only manufacturer to exceed the 60,000 vehicle limit to date. Because of this, the full credits could only be applied for purchases through September 30, 2006.

The applicable credit amounts during the phase out period for the 2007 model-year vehicles are as follows:

If you are planning to buy a Toyota hybrid vehicle, you may want to do so before March 31, 2007 to get the higher credit. Other vehicles still qualifying for the full credit amounts are:

• Ford Escape 2WD, Model Years 2006 and 2007 — $2,600
• Ford Escape 4WD, Model Years 2006 and 2007 — $1,950
• Mercury Mariner 4WD, Model Years 2006 and 2007 — $1,950 
• Saturn Vue Green Line, Model Year 2007 - $650
• GMC Sierra (4WD) hybrid pickup truck Model Year 2006 and 2007 - $650
• Chevrolet Silverado (4WD) hybrid pickup truck - Model Year 2006 and 2007 - $650
• GMC Sierra (2WD) hybrid pickup truck Model Year 2006 and 2007 - $250
• Chevrolet Silverado (2WD) hybrid pickup truck - Model Year 2006 and 2007 - $250
• Honda Insight, Model Year 2006 — $1,450
• Honda Civic Hybrid, Model Year 2006 — $2,100
• Honda Accord Hybrid, Model Year 2006 — $1,300 *
• Honda Accord Hybrid Navi, Model Year 2006 — $1,300 *
• *2006 Honda Accord Hybrid and Navi without updated calibration qualify for a credit of $650.

On a personal note, everyone I know that bought the Toyota Prius says great things about them. I would buy a Prius myself except I want a 4 wheel drive for my downhill and cross country ski trips.

A tax credit is also available for the purchase of energy-efficient improvements to existing homes located in the United States. Qualifying property includes insulation, windows, doors, furnaces, and hot water heaters. A qualifying purchase will be mainly based on manufacturer certifications in the materials that come with their products. The credit is based on a percentage of the cost of the qualifying item. For example, you will take 10% of the cost of qualifying windows up to a maximum credit of $200.  There is a maximum lifetime credit of $500 for all of the qualifying purchases mentioned above.      

In 1969, Congress enacted the Alternative Minimum Tax (AMT) to grab the 155 super wealthy taxpayers who were going to escape income tax altogether using tax shelters and the like. Roll the clock forward and now we have millions of taxpayers hit with AMT.

TIPRA provisions have provided a small increase in the AMT exemption amount from 2005 to 2006. The exemption amounts will decrease in 2007 unless another new law is passed. The exemption amounts are as follows:

Legislative lawmakers are in a bit of a quandary, as the AMT has become a money machine. The cries for AMT repeal are louder than ever on Capitol Hill.  According to treasury data, repeal of the AMT would reduce federal tax revenues approximately $348 billion dollars over the fiscal year periods 2006 to 2010. If the 2001/2003 tax cuts were extended, then repealing the AMT would reduce federal revenues by over a trillion dollars between 2006 and 2015. In fact, the treasury department has estimated by 2013, it would be less expensive to repeal the regular income tax than it would be to repeal the AMT.

Because of the complexities of the AMT calculation, traditional tax planning to minimize taxes can backfire when you are subject to AMT. For example, if you are subject to AMT at all, paying additional state and local income taxes or unreimbursed employee business expenses prior to year-end will waste these itemized deductions.

Planning for the AMT is complex.   Running the numbers prior to year-end can be advantageous.   For most of those taxpayers who were subject to AMT in 2005, be prepared to be subject again in 2006 and consider “running the numbers” and deciding on appropriate action.     

Prior to TIPRA, the maximum dollar amount for eligible property that could be expensed under Section 179 was $108,000 (if certain other provisions were met). This amount was available for 2007 (adjusted for inflation), but only a lower $25,000 was permitted for 2008 and beyond. Under the new TIPRA rules, the maximum dollar amount for eligible property that may be expensed under Section 179 is $108,000 (if certain other provisions are met) and the higher amount (adjusted for inflation) will also be available for years 2008 and 2009. However, unless a new law is passed, they will revert to the lower $25,000 level in 2010 and beyond.

These rules allow taxpayers to reduce income taxes by fully expensing purchases of qualifying assets used in business (such as computers and other equipment) in the year of purchase. Multi-year plans can be made with knowledge that acquisitions 2-3 years from now can still use the higher deduction limits.

Many taxpayers have some ability to reduce or increase their adjusted gross income. Projecting your current year adjusted gross income and taking steps before year-end to lower this amount can result in reducing your overall tax liability by thousands of dollars. Reducing your adjusted gross income helps preserve certain tax breaks you may otherwise lose or avoids additional taxable income you would not otherwise have such as: 

• Deductions for higher education expenses and student loan interest.
• Child tax credits for qualifying children.
• Hope and Lifetime learning education credits.
• Personal exemption amounts for you and your family.
• Avoiding phase-out of itemized deductions.
• Losses from certain rental real estate activities.
• The ability to make a deductible IRA or Roth IRA contribution or a Roth conversion.
• Various other tax credits.

Reduced overall taxability of social security benefits.

If you delay taking your first minimum required distribution during the year you turn 70½ (which is permissible), you will be required to take two minimum distributions during the following year. Although this is a good strategy for delaying taxes if all other factors are equal, lower income taxpayers may discover that taking two distributions in the same year pushes them into a higher tax bracket, or even worse, increases the taxable amount of their social security benefits. For higher income taxpayers, the delaying process may be more prudent.

Analyze your situation to see which strategy benefits you the most. For help in determining how much your minimum distributions are, please see our Minimum Distribution Calculator on our web site, http://rothira-advisor.com/calculator/

Pennsylvania Tax Law Changes

Qualified Tuition Programs

The most significant Pennsylvania personal income tax law change is that, beginning with 2006, contributions to qualified tuition programs (as defined in Section 529) are deductible from taxable income. A separate deduction of up to $12,000 for each beneficiary (the annual gift tax exclusion limit) is available to all such plans, including plans offered by other states. As the funds grow and when the funds are used for qualified higher education expenses, they are not taxable. If subsequent distributions are not used for qualified higher education expenses, they will be taxed. I have long been a fan of Section 529 plans. I do not, however, like Pennsylvania’s offerings and would recommend you take a look at www.savingforcollege.com for alternatives.

Also beginning in 2006, HSA and MSA accounts will be taxed for Pennsylvania purposes following federal rules. Allowable contributions will be deductible from income and any distributions not used for qualified medical expenses will be taxable as interest income.

Favorable new Pennsylvania income tax rules affecting businesses include:

• Pennsylvania Subchapter S status will be automatic if the business elects Sub-S for federal purposes
• Beginning in 2006, the capital stock and franchise tax is lowered to 4.89 mills and is lowered by a mill each year thereafter until it is phased out in 2011. Beginning in 2007, the capital stock and franchise tax fixed formula deduction will increase from $125,000 to $150,000.
• Small business may receive a research and development tax credit equal to 20% of the qualified research and development expense for credits awarded after June 30, 2006.

Other Tax Reducing Ideas

Oldies, But Goodies

Make or Increase IRA and Self-Employed Retirement Plan Contributions:  Business owners can reduce AGI by increasing contributions to pre-existing retirement plans or establishing a new plan such as 401(k) plans, SIMPLE pension plans, SEPs, Keogh plans, or regular (deductible) IRAs. Most self-employed retirement plans allow for deductions in tax year 2006 even for contributions which are made after year-end but before the extended due date for filing the return. In other words, payment of 2006 deductible retirement plan contributions can be postponed until October 15, 2007 with an automatic extension. There is no extension on the IRA contributions, however, they must be made by April 15, 2007. For many retirement plans, however, you must establish the plan, even if you don’t fund the plan, prior to year end. Of special interest for many sole proprietors with no or few employees, consider the “Super-K” which is really a 401(k) plan on steroids.

Maximize Loss Situations: If you are experiencing an unusual tax year where you may be in a much lower tax bracket than usual or even in jeopardy if wasting itemized deductions and personal exemptions, careful tax planning can be more crucial than ever. Make sure you project your taxable income before the end of the year and examine all your alternatives. There may be steps to take to avoid wasting deductions such that taxes can be lowered in future years.

Enroll in a Cafeteria or Flexible Spending Plan: If the 2006 enrollment period is still open, please consider enrolling in your employer’s Cafeteria or Flexible Spending Plan. This strategy allows you to pay for medical, child-care and other qualified expenses with pre-tax dollars. Medical expenses are rarely fully deductible on Schedule A due to the 7.5% of AGI limitation. Medical costs paid for through your company’s cafeteria plan will allow you to fully deduct your medical expenses from your taxable W-2 federal and social security wages.

Make a good estimate of your projected qualified expenses for the year. If you set aside more pre-tax dollars than you will be able to claim, the unused portion is forfeited subject to the IRS rule described further below. Don’t let the forfeiture risk deter you from participating, just be a little more conservative in your estimate. If you are currently enrolled in a program, review your outstanding balance, and if necessary, schedule a dentist, doctor, optometrist, chiropractor, etc. appointment before December 31st.

IRS previously extended the deadline by which participants in an Internal Revenue Code Section 125 cafeteria plan must incur medical expenses to receive reimbursement under the plan. Contributions that can not be applied to expenses incurred by 2 ½ months after the calendar year end are forfeited under the IRS “use it or lose it” rule. For example, a participant in a calendar year plan may pay for medical expenses incurred on March 15, 2007 with health care flexible spending account contributions made in 2006.

Take Advantage of Pre-Tax Parking Breaks:  If your employer offers pre-tax dollars to be used for parking, mass transit or van pools, take advantage of the tax savings. Many individuals are not afforded the luxury of being able to deduct personal parking costs. Using this fringe as a component of employee compensation can create tax savings for both parties.    

Preserve Student Loan Interest Deduction:  Consider obtaining student college loans in the student’s name instead of the parent’s name where the parent’s income is too large.  Deferring the payment of student loan interest until after graduation may preserve the deduction for payment of interest on student loans. Most college grads start out with salaries that would allow a full deduction for the interest paid. Conversely, if the loan is in the parent’s name, there is a higher possibility that the interest would be non-deductible.  The parents can always make monetary gifts to help repay the loan interest.

Make a Roth IRA Contribution:  If you qualify, making an annual $4,000 Roth IRA contribution for 2006 (up to $5,000 if over the age of 50 by the end of 2006) both for you and your spouse will help you accumulate tax-free wealth. You have until April 15, 2007 to fund a 2006 Roth IRA.

Donate Appreciated Stock Instead of Cash to your Favorite Charity:  If you hold appreciated publicly traded stock for more than one year, you can donate the stock and get a charitable deduction for the full market value of the stock and avoid paying any capital gains tax. You must give the stock directly to the charity. The opposite is true for stocks that have gone down in value. Never donate stocks that have declined in value, but rather sell the stock at a loss and donate the cash to charity.

Self-Employed Individuals Should Consider Employing their Child(ren):  Employing your child (age permitting) offers great tax-saving opportunities. Assuming your child has no unearned income, the parent could pay the child wages up to $5,150 in 2006, and the child would not have to pay any federal income taxes. The next $7,550 would be subject to a 10% tax rate. If the parents’ marginal income tax bracket were 28%, the $12,700 wage deduction would generate $2,801 in federal income tax savings. Furthermore, when you employ a child under 18-years-old, neither the employer nor the employee is subject to social security tax on the child’s wages. The wages your child earns will qualify as earned income for the purpose of establishing a Roth IRA. A Roth IRA will provide your child with an exceptional opportunity to accumulate money with tax-free growth.

Self-Employed Individuals with No Employees Should Consider Employing Their Spouse:  A self-employed individual may be able to deduct all of his or her health insurance premiums and medical expenses by setting up a medical reimbursement plan with his/her spouse as the only employee of his/her business. Self-employment taxes could then be saved on all the deductions under the medical reimbursement plan. Your spouse must become a bona fide employee of your business. Theoretically, that means your spouse will be working under your control. Good luck.

If you want personal attention for income tax planning, I urge you to see whoever prepares your tax return. If you are not currently an income tax preparation client and considering using our firm for tax preparation, I would recommend setting up a meeting with one of our preparers before year-end.

If you have been meaning to come in to see me because there is a problem with your wills and trusts (like you don’t have one) or you are feeling uneasy about your investments, or if you were wondering if a Roth IRA conversion is appropriate for you, I would urge you to come in soon. For clients considering life insurance (I prefer guaranteed universal life that has low premiums and a high face value) or a life insurance review of an existing policy, I would urge you to see us for an independent analysis.

I wish you and your family a joyful holiday season and a healthy, prosperous new year.

Warmest personal regards,

James Lange
CPA/Attorney

P.S. If you need to see either me or your tax preparer, please don’t put it off. Call and set up an appointment.

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).