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Volume Two May 2011
It’s time for the second issue of the Natural Gas 5
As you know the natural gas exploration is moving at a As evidence of this, a bipartisan group of Congressmen
dizzying speed, so there are some areas I wanted to bring to have introduced a “new and improved” natural gas bill to the
your attention. floor. Congressman Kevin Brady (R-TX), John Larson (D-
Taxes is one. If you are getting lease money or CT), Dan Boren (D-OK) and John Sullivan (R-OK) have
royalties, you have first-hand experience the effect taxes submitted H.R. 1380, the “New Alternative Transportation to
can have. There are many things that can be done to save Give Americans Solutions (NAT GAS) Act.”
taxes, but to my amazement most people do nothing. The bill – like its predecessor that was proposed and never
Second area, estate planning. You won’t be here but went anywhere is intended to replace millions of barrels of
your heirs will feel the effect. Start the process, work with foreign oil with domestic natural gas. That would be a real
a knowledgeable attorney. I have included some shot in the arm for the U.S. economy and job market. It
information about the Family Limited Partnership – it is would also put a real positive spin on America’s balance of
just another estate tax planning tool. trade, which fell $48.8 billion into the red in February 2011
I included some info about a company using a new non- alone.
water based tracking technology. Based on current The bill’s first focus is to convert fleet vehicles to natural
fracking problems, this could be good news. gas engines. Congressman Sullivan highlight that
Also in this issue Congress introduces a new and transportation is the primary drive of our dependence of
improved Natural Gas Bill. foreign oil. “Sixty-nine percent of the oil consumed in
If you would like to discuss or get information on any of America is used for transportation, two-thirds of which we
these issues, give me a call or send me an e-mail at import from foreign nations,” said Sullivan.
firstname.lastname@example.org. His colleague, John Larson, added: “If we start making
If you want to get serious about saving taxes, the first 10 cars and trucks that run on natural gas, there’s the potential
calls will receive a free copy of J.K Lasser's book, “1001 to create over a half of million American jobs.”
Deductions and Tax Breaks for 2011.” This bill may actually have a shot at passing since it’s
Till next time, remember if life hands you lemons, make endorsed by a large, bipartisan group of 76 Congressman and
lemonade. Senators, as well as President Obama. “We must move
America off OPEC oil and give our citizens some options at
the fuel pump,” said Congressman Boren. “It is supported by
We would like you to some of the most progressive, as well as by some of the most
meet Annie Dorazio. conservative, members of Congress.”
Source: David Fessler, Investment U
Seems she has the non
paying job of supervisor at
a Towanda drilling site.
Wish we could get help News You Can Use
like that. Do you have any
interesting photos we could
use? Looking for CD Alternatives
Call us for details.
Photo of Annie and the Natural Gas well Provided By:
Ray Dorazio, Towanda, PA
Reasons to consider a Family Limited Partnership:
There are three primary reasons for creating an FLP.
Income tax benefits: Income generated by a
limited partnership is often allocated according
Permits filed in 2011 to ownership. With the limited partners (the
children or grandchildren) owning the majority
Bradford - 166 interest, most of the income generated could
Butler - 53 flow through to them and be taxed at their
lower marginal tax rate.
Lycoming - 78
Sullivan - 17 Estate planning benefits: When the parents
Tioga - 80 contribute assets to the partnership, they are
Wyoming - 41 transferring asset value and shifting asset
growth from themselves to a younger
Clearfield - 38
Cambria - 8
Consider the following hypothetical example in
which a business has a current value of $200,000 and is
expected to grow by 10% per year. Over time, the
parents transfer 90% of the business to the children.
Retain for Parents Contribute to FLP
P) can be used with Current value $200,000 $200,000
Amount transferred $0 $180,000
sets. Their traditional to children
ent income with Amount remaining $200,000 $20,000
ets and increase the in estate
Asset value in 20 $1,345,500 $134,550
ng-range estate years
Federal estate tax $605,475 $60,548
along with other assumed at 45%
and generation Potential estate tax $544,928
s can effectively savings
iness from one
rovides a valuable Often a gifted ownership interest can receive a
tax burdens. discounted value because the interest is either a minority
ps have also been interest or lacks marketability. This minority interest
family assets from issue should be carefully reviewed with your legal advisor.
Protecting assets from lawsuits: Most estate
FLPs to limited partnerships statutes prevent the creditors
re capital is a material of a limited partner from attaching partnership
sted with activities assets. While the creditors may get a charging
rvices. order against the debtor’s partnership interest, as
a practical matter it is very difficult to collect the
a FLP and transfer debt. The FLP may provide one of the most
Within the effective asset protection structures available
ct as the general today.
dren) are the limited
Family Limited Partnerships are not for everyone.
eral partners often
partnership (for Before considering a FLP, there are a number of questions
ners own the majority that the parent or parents must answer. Do they really
e complete want to have a child involved in their business? Will the
rship activities, as well income shared with the child affect the parents’ lifestyle?
s and losses. Will a gift tax be due and payable when the transfer is
ntrol or management made to the child? Will the income tax savings
the amount of their compensate for the increased complexity?
Additionally, legal counsel must be obtained. Because
res of the FLP is its of the complexity involved, FLPs are not appropriate for
rategies must be every situation. The documentation for such a
Once set up, these partnership must be carefully designed to avoid problems
d or undone. By with both federal law and the law of the state under which
modified to respond to the limited partnership is being created.
We have some great ideas. We also work
with some of the best CPA’s in the area to help clients
A Canadian firm, GasFrac Energy Services has come up reduce their burden.
with a process that is equal, or superior, to using water as Email us or call at 1-800-722-0610. See if we can help.
the fracking medium. The firm’s process employs gelled
LPG (liquid propane gas) to fracture the shale.
According to the firm’s website, in their process the LPG You know by now states are having money
is highly soluble and virtually 100% recoverable from the problems. Did you hear about the new
oil/gas production stream. With “conventional” $3,000,000 lottery? The winner gets $3.00 a
hydraulic fracking, as much as 50% of the carrier can year for a million years!
remain in the formation, hindering well performance.
It has been successfully used in 700 Canadian
The additives to propane are patented, openly
published, and approved by OSHA.
There is no (or negligible) flaring. LLC tax deductions can be very confusing and
There are no settling ponds. the advice of a tax professional is strongly urged. The
95% of the propane, along with the natural gas, is problems stem from the fact that an LLC can be treated
in a single gaseous with the natural gas and several different ways for tax purposes. Work with
comes up with some sand and additives. These CPA firm.
are separated, with the propane being used for
the next well, and the NG going into the pipeline.
For a 6 well platform, only 7 trucks are used to
bring in the propane, as opposed to about 30
trucks coming in, and almost 30 going out, with
water. To truly save money on your taxes, you want
This just might be an alternative to the normal fracking a proactive accountant. A proactive accountant
process. recognizes that the best way to cut tax bills is to plan
Disclosure: This is not a solicitation to buy this company. ahead. They do not want to see you in April when it
Source: http://www.gasfrac.com/ is time to prepare last year’s taxes. Instead, they want
to see you in January every year to have a lengthy
It’s not that I’m afraid to die. I just don’t
discussion about your finances, changes you foresee in
want to be there when it happens.
your life that year and your plans for the future. Once
- Woody Allen
they have this information, they can give you
definitive direction on steps to take to cut down on
For most of us, even hearing the word “taxes”
The information presented is intended to serve as a basis for
raises the blood pressure a notch or two. And taxes are further discussion with your financial, legal, tax and/or accounting advisors.
impossible to escape, because they come in so many It is not a substitute for competent advice from these advisors. The actual
application of some of these concepts may be the practice of law and is the
different forms. Income, sales, excise, gift, estate, car, proper responsibility of your attorney. The application of other concepts
luxury, property… the list goes on and on. may require the guidance of a tax or accounting advisor. The company or
To build or keep a sizable nest-egg, you need to do companies listed below are not authorized to practice law or to provide
legal, tax, or accounting advice.
two things: Although great effort has been taken to provide accurate data
and explanations, and while the sources are deemed reliable, the information
that follows should not be relied upon for preparing tax returns or making
1. Maximize the money you are investment decisions. This information has neither been audited by nor
earning. verified by the company, or companies, listed below and is therefore not
guaranteed by them as to its accuracy.
2. Minimize the money you pay in Securities offered through Securities America Inc., Member FINRA/SIPC
and advisory services offered through Securities America Advisors, Inc. Cliff
taxes every year. Cashman and John Zerbee, Representatives. The Cashman Financial Group
Inc. and the Securities America companies are independent entities and are
not affiliated. 3/11
To effectively reduce taxes each year, you must If you wish to unsubscribe to the Newsletter, e-mail us at
have a plan in place. No matter how you handle with your email@example.com.
own tax problem, there are things that you can do today to
dramatically reduce the taxes that you are paying. Ideas, Suggestions or Comments?
Don’t give Uncle Sam a penny more than you need Contact Us:
to in taxes. After all, who knows how to better spend your 1-(800)-722-0610 or
hard-earned money… you, or the government?
An Idea for Grandmas
Help your loved ones retire with $1 million
Retirement may be a strong focus of your financial goals right now, but it might be a distant concern for the
younger members of your family buying their first home or car, starting a family of their own or even just
graduating college. As an experienced family member, you can be an important resource for helping the
younger generations start planning for their retirement. For example, making a $10,000 investment today
has the potential to help your loved one retire a millionaire.
According to a May 16, 2011, MarketWatch article by Jonathan Burton, reaching age 65 with $1 million
saved requires strong discipline and sustained effort – and just $10,000 to start.
“If a 25 year old with $10,000 invested $320 a month at a 7 percent annual compound rate of return until
age 65, he or she would wind up with $1 million,” Burton wrote.
Saving $320 a month can be a challenge for a new college graduate at his or her first job, possibly trying to
pay off student loans. However, if a person waits until he or she is 35 years old, that number increases to
$775 a month, and at 45 it increases to $1,850. While these numbers may frighten younger generations,
they are attainable.
“One way to make the job easier is to rely on your job – especially investing in your company’s 401(k) plan
and enjoying whatever contribution match your employer offers,” Burton writes. “Think of it as free money.”
If a 401(k) is not available, a person can open a Roth IRA and automatically deposit money regularly from
his or her bank account. The longer a person waits to get started, the harder it will be to accomplish. By 55,
a person will need $5,700 a month for 10 years to meet $1 million – virtually impossible. At this point other
strategies beyond savings will be needed.
You may already be set to retire soon or are already enjoying your retirement, but you can still help get
your family members on the right path toward their own retirement. Call our office today for more
information on how you can help younger generations plan for a comfortable retirement.
Brought to you compliments of:
The Bull and Bear Investment Strategies Inc.
A Division of The Cashman Financial Group Inc.
2322 Broad Avenue
Altoona, PA 16601
Clifford R Cashman, John Zerbee, Joe Zerbee
Securities offered through Securities America Inc., Member FINRA/SIPC and advisory services offered through Securities America Advisors, Inc. Cliff
Cashman and John Zerbee, Representatives. The Cashman Financial Group Inc. and Securities America companies are independent entities and are not
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a
price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on
the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is
a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European
and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-
rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America.