Archive for December, 2010

Year 2010 – A Recap

Year 2010 is going to end in another few days. It has been an eventful year to many extent whether for an ordinary person or high official like US President Obama. It surely added some unforgettable chapters and interesting pages in the history book. 2010 especially have been very vulgur and cruel with natural disasters like earthquakes in many parts of the world, volcanic ash formation, unexpected snow storms in many european countries which really scares us with a thought that whether the world is really going to end soon.

Also many man made disasters like Deep water oil rig explotion, Coal mine explosions and many flight crashes. Apart from disasters this year was momentful starting from journalism aspect when wikileaks disclosed many US private cables to  FIFA world cup win by Spain to Canada Winter Olympics extravagenza and so much more.  

When comes to financial and money matters, it has been really roller coaster ride with major talks about European Zone credit crisis spreading from Greece to Ireland, US Unemployment still lingering at 9.8%, US stock market slowly creeping upward with bleak future growth and better growth in Asian markets. No one can surely predict the future trend very strongly in the current market condition.

I listed below some of the eventful days which I felt are important and talked a lot all over the world.

January 12 – A 7.0-magnitude earthquake occurs in Haiti, devastating the nation’s capital, Port-au-Prince. With a confirmed death toll over 230,000 it is one of the deadliest on record.

February 12–28 – The 2010 Winter Olympics are held in Vancouver and Whistler, Canada.

February 27 – An 8.8-magnitude earthquake occurs in Chile, triggering a tsunami over the Pacific and killing 497. The earthquake is one of the largest in recorded history.

March 23, 2010 – Affordable Healthcare Act signed by US President.

March 2010  – Eurozone Credit Crisis started from Greece and spreaded to  Ireland.

April 13 – A 6.9-magnitude earthquake occurs in Qinghai, China, killing at least 2,000 and injuring more than 10,000.

April 14 – Volcanic ash from one of several eruptions beneath Eyjafjallajökull, an ice cap in Iceland, begins to disrupt air traffic across northern and western Europe

April 20 – The Deepwater Horizon oil platform explodes in the Gulf of Mexico, killing eleven workers. The resulting oil spill, one of the largest in history, spreads for several months, damaging the waters and the United States coastline, and prompting international debate and doubt about the practice and procedures of offshore drilling.

May 22 – Air India Express Flight 812 overshoots the runway at Mangalore International Airport in India, killing 158 and leaving 8 survivors.

June 11 – July 11 – The 2010 FIFA World Cup is held in South Africa, and is won by Spain.

July 25 – Wikileaks, an online publisher of anonymous, covert, and classified material, leaks to the public over 90,000 internal reports about the United States-led involvement in the War in Afghanistan from 2004 to 2010.

October 13 – Thirty-three miners near Copiapó, Chile, trapped 700 metres underground in a mining accident in San José Mine, are brought back to the surface after surviving for a record 69 days.

October 22 – The International Space Station surpasses the record for the longest continuous human occupation of space, having been continuously inhabited since November 2, 2000 (3641 days).

November 22 – A stampede during Bon Om Thook (Khmer Water Festival) celebrations in Phnom Penh, Cambodia, kills 347.

November 28 – WikiLeaks releases a collection of more than 250,000 American diplomatic cables, including 100,000 marked “secret” or “confidential”.

December 17 – Extension of Bush Tax Cuts

To see more events happened in 2010, go to wikipedia

Obviously every year has its own good and bad events. But we all can only hope for a better 2011 which less disasterful events and more happy incidents for the wellness of the human being.

Happy Newyear 2011 to all of you!!!

Free PDF of The 4-Hour Workweek by Tim Ferriss

I have heard about this 4 hour week book and never get to read it. Now I see this free offer which was posted by

If this interests you, you can currently download a digital PDF version for free. Supposedly to promote his new book The 4-Hour-Body (of which I know nothing about), he’s now offering free digital versions of The 4-Hour Workweek and The Slow-Carb Cookbook, a companion book to the 4-Hour Body. I’m still not sure if this is fully intentional, but Ferriss is both tech-savvy and a crafty marketer so I can only assume it is. Instructions via SD:

Click here:
Hit the ‘Checkout’ button.
Fill out the form with your name and email address, then hit the ‘Complete Free Checkout’ button.

On the final page, you’ll have access to The 4HWW and Slow-Carb Cookbook.
Expires December 26, 2010. The e-mail doesn’t to have to be “real”, as the download links appear immediately on the next page. However, I did enter mine and received an alternative download link.

Gifting and Cost Basis

In the last post, we saw how tax plays a important role in gifting to charity or a family member. We saw the tax consequence like deductions and exclusion from donor’s perspective. After that post, I got a request to explain about cost basis in relation to gifting. At times we do recieve gifts or inherit properties from our family members so we need to look  at tax implications from donee’s perspective to declare gains or losses from those gifts. In order to report gain or loss from the gifts or inheritance, cost basis is an important factor needs to be considered.

What is Cost Basis?

Cost basis is the original cost paid for the property including any commission or fees involved to acquire the proeprty whether its tangible(home, equipments) or intangible (stocks, bonds). If a property is purchased, the cost basis is the cost associated with the property including all the expenses related to the purchase.   In this post we will see more about the cost basis involved with gifting or inheritance.

Why cost basis important?

When you inherit/get gifts of property, starting cost basis is set according to the acquired method. When those properties are sold, the selling price is usually different from the original purchase price. Either a capital gain or a capital loss is realized during this transaction which needs to be reported to the IRS by the taxpayer. In order to calculate the amount of capital gains and losses the cost basis of the stock must be determined.

It can be a short term or long term capital gain depends on the holding period of the property. For gifted property, holding period various depending up on the length property owned by donor and donee. If you are using stepped up basis for inheritance property, it is always long term holding period.

Cost basis – Gifted Property

If the property is received as a gift then the basis is various depending on the FMV of the gift at the date of gift  or original cost of the property bought by the donor.

The donee’s starting cost basis is the lesser of either:

cost basis of the person who gifted the property which is called carryover basis, or the market value of the stock on the date the gift which is called  stepped up basis. It depends on the property value at the time of gift and property sale value by the donee.

If the FMV of the property gifted is more than original cost, donee should use the cost basis of the donor. That means donee carry’s over the donor’s cost basis. On the other hand if the FMV of the property is less than original cost, then dual basis rule comes in to play depending on the sale price. That is, if the donee sells above donors cost basis, then donee takes donor basis and report gain. If the donee sells below of the donors cost basis, then donee takes the FMV as the cost basis. If the donee sales between FMV and donors cost basis, no gain or loss need to be reported. I know its bit confusing but look at the example below and it will be clear. 


An example of basis in which a gift results in a gain would be as follows:

Anna gives Sara a  painting. Ronald paid $10,000 for the painting, and the fair market value (FMV) of the painting is $20,000 at the date of the gift. If Sara sells the painting for $20,000 she will use Anna’s cost basis of $10,000 is used to report the capital gain. Thats carryover basis.

However, the example above does not apply if Anna had gifted his painting to Sara when its FMV was $8,000, which is less than his original basis of $10,000. The capital gain or loss reported by Sara depends on whether she subsequently sells the stock for a gain or a loss.

Let’s look another example in which the same gift could result in a loss:

If Sara sold the painting for $15,000 then Sara would report a capital gain of $5,000 using Anna’s original basis of $10,000 to calculate her gain. However, if Sara sold the painting for $5,000 she would report a loss of $3,000 using the stock’s FMV basis of $8,000 to determine her loss. Note that if Sara sold the stock for $9,000 she would not report a gain or a loss in this situation.

Cost Basis – Inherited Property

If you inherit a property, the cost basis will depend on when you inherited it and who you inherited it from.  In general, if you inherit it before 1/1/2010, the cost basis is “stepped up” from the  original cost paid by the deceased owner to the fair market value on the date it was bequeathed to you. This is called a stepped-up basis. Stepped basis is when the donee(who recieves the stocks) gets the  FMV (fare market value) as their starting basis instead of donor’s original basis.

You can use the free calculator available at

Costbasis Reporting

You might have recently received an email or mail from your broker about Cost basis reporting. It was part of the “Bailout Bill” signed in 2008. This bill is $11 billion cost basis reporting.  Starting from 2011, every broker or agent should track the cost basis of the investments and report at the end of year to help the investors to easily track their cost basis and fill the taxes properly. For more details, you can check out the article at
WSJ. It will surely save you time and money for the government.


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