May 2008

Dear Clients and Friends:

The purpose of this letter is to update you with current tax information and to thank you for a successful tax season.

We have about 240 clients on extension. We will first work on the backlog of tax returns 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.

To our new clients, I would like to welcome you to the firm. I hope 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 hope that your faith and confidence in us continue.

There are several tax related issues that I would like to mention. In February 2008, Congress passed the Economic Stimulus Act of 2008. Generally, single individuals with a federal tax liability and an adjusted gross income of below $75,000 should receive a one time $600 payment. Married couples filing jointly with a federal tax liability and an adjusted gross income below $150,000 should receive a one time $1,200 payment. These payments start to phase out above those income thresholds. The IRS will also send a rebate to individuals who receive $3,000 or more in social security. In this case, the rebate will be at least $300 per individual. To be eligible for the rebate in 2008, you must file a 2007 tax return. The Internal Revenue Service has started electronically depositing into recipients bank accounts their tax rebate. The IRS should start mailing checks on or about May 16. If you review the instruction letter that you received with your tax return from our office, you can find an estimate of your rebate.

The Act of 2008 provided a significant tax incentive for businesses to make capital investments by adding a special 50% depreciation allowance for qualifying purchases. This special “bonus depreciation” allowance is available to all businesses and applies to most types of tangible personal property and computer software acquired and placed in service in 2008. It allows taxpayers to deduct 50% of the cost of qualifying property in addition to the regular depreciation allowance that is normally available.

The Act also increases the Section 179 expense ceiling from $128,000 to $250,000 in 2008. The enhanced expensing option can be a valuable tax deduction for your business. Please contact us if you need more information on both the 50% Bonus Depreciation and the Section 179 depreciation expense.

Given the up and downs of the stock market so far in 2008, I would like to briefly remind you of several facts regarding capital gains and losses. A long term capital gain or loss is on securities that are held for greater than one year. Short term capital gains or losses are on securities held less than one year. Generally gains from the sale of long term capital assets is subject to a Federal maximum capital gains tax rate of 15%. Please note, in 2008 there is a 0% rate for taxpayers who are in a 10% or 15% bracket. Individuals will be in a 15% or less tax rate in 2008 if you are single and have a taxable income of less than $32,550. If you are married filing a joint tax return, the 15% bracket is on taxable income of up to $65,100. You can only deduct up to $3,000 per year in capital losses. If your current losses exceed $3,000 it will be carried forward and utilized in future years to offset gains plus $3,000.

Given the changing economy in 2008, I urge you to contact me with revised income projections throughout the year. For most of you, your 2008 estimated tax payments were based on your 2007 tax information. If your 2008 income from work and investments change, please contact us.

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.

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.

Very truly yours,

Eliot H. Lebenhart, CPA