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Show Page 24 - THE HERALD. Provo, Utah. Sunday, March 8, 1987 ortgage points Durable goods orders hit slump, not a red flag some read that as key indicator for IRS auditors JOHN CTNNIFF AP Business Analyst Economic NEW YORK (AP) forecasters received a jolt somewhat akin to the shock from a B By CHANGING TIMES The Kiplinger Magazine As you look ahead to your tax strategies for 1987 and beyond, you also have to look back to 1986 and the old tax rules to grapple with the return that's due April 15. Perhaps an answer here will ease that task. We had to pay nearly $2,500 Q. in points to get the mortgage for the house we bought last summer. Schedule A calls for the points to be reported separately from mortgage interest. I've been told this is a new requirement that puts a "red flag" on our return, begging for an audit. Is that so? A. The IRS says no and that although the line on Schedule A is new, points were never supposed to be included with mortgage interest. The reminder on the form is supposed to prevent unnecessary questions from the IRS when it matches the amount taxpayers report they paid in mortgage interest with the amount lenders report they received. Some suspicious minds, however, think the emphasis on listing points separately may be an attempt to enforce the controversial ruling last year that points paid to refinance a home mortgage are not deductible in full in the year paid. Schedule A does not ask whether the points were paid in connection with the original purchase or a refinancing. But there's a new question on the front of the Form 1040 that might offer the IRS a hint. You're asked whether you have a new address since you filed last year. You and other taxpayers who purchased a new home will say you moved. Those who stayed put and refinanced won't report a changed address, and that combined with a deduction for points could raise some eyebrows at the IRS, says Changing Times magazine. Get $3,000. a copy of IRS Publica- tion 521, "Moving Expenses." more details. for My growth stock mutual fund reported a $430 capital gains distribution to me for 1986. I know cattle prod the other day. The message, some believe, may be that the soothsayers strayed too Q. have to report the income even though I had it reinvested in additional shares. But do I have to go through the trouble of filling out Schedule D just to report the $480'' A. Not if there's no other reason for you to use the form. You can simply report 40 percent of the distribution on line 14 oi your 1040. Regardless of how long you owned the mutual funds shares before the distribution was made, it is considered a long-tercapital gain. That means 60 percent of it is e tax on your 1986 return reform eliminated the capital gains exclusion starting in 1987. If you have to file Schedule B to report other dividends, you should also report the capital gains distribution in Part II of that form. The money will not be taxed twice because it is both included and subtracted on Schedule B. I followed all the advice to Q. sell appreciated property before 1986 and the 60 percent capital gains exclusion disappeared. Because my profits were healthy, so is my tax bill. The instructions suggest that since I owe more than $500 with my return, I may be penalized. Is that so? A. Not necessarily. If what you paid in taxes during 1986 via withholding and estimated tax payments equals 80 percent or more of your tax bill, the IRS will assess no penalty. Or, if your tax payments during the year equaled what you owed in taxes for 1985. then the penalty cannot be applied in your case. However, if neither of those exceptions protects you and you owe more than $500 with your return, you probably lace a penalty. It may not be too severe, though, if the excess liability was due to yearend trading. In that case, the tax bill wasn't due until Jan. 15, so the penalty meter didn't start ticking until alter that date The penalty is figured at the rate of 9 percent annual interest on the shortfall. Get a copy of Form 2210, "Underpayment of Estimated Tax by Individuals," to determine whether you owe a penalty. I tax-fre- After I got out of graduate Q. school, I got a terrific job offer. One condition was that I start right away. I took the position in Los Angeles, but in the rush I had to forfeit a $500 security deposit for breaking the lease on my Boston apartment. Can I include the $500 with my other moving expenses? A. Yes. Such costs are considered indirect moving expenses and are deductible up to a total of far from economic reality, into the realm of wishful thinking. The shock was in the form of a precipitous decline in orders for durable goods, such as the big manufactured items that people put in their kitchens or which businesses use in the production of goods. This area of industry had been in its own recession for many months, a result of the dollar's high value in international trade. That high value had enabled foreign goods to enter the United States at relatively low prices: but it had made U.S. goods prohibitively expensive in foreign countries, thus hampering American sales efforts abroad. But then the dollar fell sharply, enabling Americans to ship their at more competitive prices, and making foreign goods a or less combit more expensive in the U.S. market. petitive It was a formula designed to resurrect the U.S. manufacturing sector and it seemed to do so. Export volume inched higher. The durable goods sector grew stronger, expanding from a 1.6 percent rate in the first half of the year to a 3.5 percent rate in the period. And if defense orders hadn't collapsed, the rate would have been double again to about 6.9 percent. With the dollar falling, logic dictated that U.S. manufacturing would grow somewhat stronger. And when the numbers seemed to back that contention, the econo" mists declared that the manufacturing recovery had begun. Then came the January report from the Commerce Department that orders for manufactured goods plunged 7.5 percent from December. And now, puzzled economists ask if they are mad, or the figures July-Decemb- er "long-awaited- ciation allowances on capital investments by businesses would be reduced. Therefore, it is reasoned, individuals and businesses bought items in December that they might not have purchased until January. In effect, December "stole" order's from January. Maybe. But that would then leave unexplained the mystery of why a falling dollar hasn't had" the impact that everyone says it should have. If American prices decline abroad, and the prices of foreign-mad- e goods rises in the United States, shouldn't sales of American manufactured goods improve? .And shouldn't production of American manufactures rise m response? Don't be surprised if the problem lies with the numbers. It wouldn't be the first time they were wrong. Never forget, almost all economic statistics are subject to revision a month or so later often quietly, and unnoticed except by the economists who got burned. one-mon- Reagan's management style not faulty By JOHN CUNNIFF AP Business Analyst - In the NEW YORK (AP) opinion of an authority on leadership, Ronald Reagan's strength helped produce his weakness, very much in the manner portrayed in classic drama. The thesis is that the president's strength was his vision, one so strong it detracted from his management performance. "His strength led to his weakness." said Professor Eugene Jennings, who has observed the flaw again and again among corporate chief executives whom he has counseled for decades. Jennings, a Michigan State University professor of leadership and prolif ic author of management and leadership studies, draws a major distinction between role and style, between vision and management. "If Reagan hadn't so emphasized his leadership role, he might have paid more attention to management." he said. He contends that the Tower commission report fails to identify this as the root cause of Reagan's problems. Instead. Jennings says, the re on manageport focuses on style but "there is no ideal ment style management style; any style from autocratic to consensus can be made to work if meshed properly with people and processes." Jennings asserts that every chief executive must assume a dual role as leader of the nation and manager of government. Most have a greater capacity for one or the and other. Reagan's priority is leadership. strength "You lead people, you manage processes,' he said. "Reagan never, ever, believed enough in management; he took that belief into the White House. he de"He viewed himself as that of a person fined his role who should cast a vision of a preferred future for Americans." And he enacted that role so intensely "he failed to fuse enough of management into it." In fact, Jennings said, "he didn't even see how the management role could enhance his effectiveness as a leader." To say Reagan's great flaw was in management style, and ignore his perception of the leadership role, is to fail to uncover the root Stouffers names project engineer Ronald W. Roettger has been named Manager, Project Engineering for the Stouffer Foods Corporation. In his new position, Mr. Roettger is responsible for overseeing the company's capital improvement projects. Mr. Roettger joined Stouffer's in 1982. Since then he has held a number of engineering manage are. or maybe the whole world. It could be one or all. Economists often interpret the economy incorrectly, since theirs is an inexact science at best. Depressions and even wars, it is sometimes claimed, can be traced to economists' misunderstanding of economic events. The numbers also are inexact, no matter that they have that precise, chiseled look. They are especially inexact indicators over short periods of time, such as one month. Almost always they are subject to revision. But to economists trapped by the numbers, it matters little whether the problem lies with them, with the numbers they rely upon, or with a crazy world. The numbers still are shocking, and they must be explained. One explanation offered, alis that the though manufacturing improvement late last year was a consequence of changes in tax policy. The sales tax deduction would be canceled for households in 1987; and depre goods abroad ment positions at Stouffer's Gaff-neSouth Carolina and Spring-ville- , facilities. Prior to Stouffer's. Mr. Roettger was with the Campbell Soup Co. rently live in Orem. The Roettgers plan a move to Solon, Ohio in the near future. Stouffer Foods Corporation is the nation's leading manfuacturer of premium quality frozen prepared Mr. Roettger holds a bachelor of science in electrical engineering from Ohio Northern University in Ada. Ohio. He and his family cur foods. With headquarters in Solon. Ohio. Stouffer products are available in supermarkets across the United States. said. In this sense, he contends the Tower commission failed. "They were wrong in failing to acknowledge that Reagan's values and skills were so strong in the leadership role that they led to his failure to observe even the minimum requirements for managing," he said. That minimum management requirement, he said, is simply this: "Spell out the vision in precise of the problem, Jennings nl3r" B Model 8 tain the necessary oversight make sure the vision served." ly In fulfilling these requirements. 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