May 2007

Dear Clients and Friends:

Tax season 2006 turned out to be somewhat better than last tax season. More clients were familiar with the e-file process and all in all, tax season was smoother this year. Moving back the due date to receive your information to March 25 was successful. We received a lot of your information earlier this year. Unfortunately, we also received tax information from at least 70 clients after March 25 that had to go on extension. We also had some software issues this tax season which slowed us down. All in all, this tax season went well. The March 25 deadline will be permanent. In addition, in order for you to receive the tax returns that are on extension until October 15, we do need your information by September 25.

To our new clients, I would like to welcome you to the firm. I hope that our relationship will be a mutually beneficial one. To those who have referred these clients, I would like to thank you for the confidence you have shown in us and I hope that your faith and confidence in us continue.

The Alternative Minimum Tax (AMT), continues to rear its ugly head. AMT is a tax that eliminates many of a taxpayer’s deductions and leaves the taxpayer paying more tax. AMT is a special tax that becomes applicable when the AMT calculation of tax due exceeds the regular income tax. Individuals must first calculate the regular tax and then modify that calculation with certain adjustments and add backs. Unfortunately, AMT does not allow a deduction for taxes and miscellaneous itemized deductions. AMT effects taxpayers who live in urban areas since their real estate taxes and state and local income taxes become nondeductible in the AMT calculation. As of 2006, AMT effects more than five million tax returns and in the next five years it will increase to about one third of all taxpayers. By 2010 it is projected that 90% of all households with an adjusted gross income in excess of $100,000 will be subject to AMT.

Many of you have fallen into the AMT trap and the way the present law is structured, AMT eliminates a good amount of tax planning. Congress is well aware of the AMT problem and that it is affecting a much larger portion of the population than it was originally intended to. I would hope that Congress will address the AMT issue.

To the more than 240 clients on extension, please be aware that we are again starting to prepare individual tax returns. We will first work on the backlog of tax returns that we have in the office. For those of you who have not sent us your information, please do not wait until the September 25 deadline to provide us with your tax information.

We are a full service firm, here to assist in all aspects of your business and individual tax planning needs. Before making any financial decisions, please contact us to review your situation.

Please understand that we stay within the realm of our expertise. We utilize the knowledge and ability of other individuals on our team when the need arises. Over the years we have developed business relationships with many competent individuals who can assist you with your business and financial needs. These individuals include investment advisors, mortgage brokers, attorneys and insurance agents. By addressing your needs and giving you the service you require, we know that we have instilled in you a mutual sense of confidence and loyalty.

I would like to take this opportunity to thank my staff for their efforts during this past tax season. We are also actively searching for experienced accountants who have prior CPA firm experience. If you know any candidates who would be interested in an employment opportunity at my firm, I would appreciate you contacting me or having the prospective candidate contact me.

Please remember that the key to financial planning is both communicating with us along with you keeping detailed records of your income and expenses. We thank you for your continued support and look forward to serving you in the future.

Sincerely,

Eliot H. Lebenhart, CPA