2020 Tax year deadlines, Biden wins the electoral college, and the Vaccine

Each week that passes and I write this newsletter, I am reminded that the end of the calendar year is upon us. Time is of the essence to meet with SAS and your advisor team for any end of the year planning!

  • Charitable donations are still eligible for deductions against your taxes. However, if you use the standard deduction on your tax return, $24,800 married filing joint filers and $12,400 single filers, then it makes sense for tax planning purposes to exceed the standard deduction when you make charitable donations.
  • Donor Advised Fund* contributions typically need at least a week for securities to be transferred and maybe more. Check with your sponsor NOW for deadlines.
  • *Donor advised funds give you an easy option to exceed the standard deduction because you can make a large contribution in one year and then make grants over many years. 

 

News

President-elect Biden wins the electoral college and the Supreme Court dismisses President Trump’s last chance to contest the election there by reflecting the flimsy arguments made. However, attacks on the election and our democracy continue to put the foundations of our country at risk.

Contributing to that risk is Congress’ failure, so far, in passing legislation giving more assistance to Americans and to prevent the hemorrhaging of the economy. Extended unemployment, eviction protection, PPP, and other important fiscal safety net legislation all expire at the end of the month. Hopefully before the end of the year, SAS will send out the newsletter with news that Congress will have passed this legislation.

The Biden administration plan is to push for a large stimulus package. Within the first 100 days after inauguration or sooner, the best path forward is for the passage of stimulus and not triage. It’s important to note that both a decline in the stock market and negative news on the economy would be highly relevant factors that would force Congress into finally taking more action. Unemployment claims last week exceeded expectations, causing some concern about a slowing employment market.

Rather than anticipating a double dip recession, the stock market continues to move higher based on an expected recovery in 2021 and substantial stimulus. The hope of recovery is reflected in the out-performance of value stocks and small cap domestic stocks. Those two asset classes don’t include recent extreme movers such as DoorDash and AirBNB which both soared after their initial public offerings.

I did see a headline referencing the dot.com bomb in 2001. One difference between back then is that Alan Greenspan was raising interest rates before the dot.com bomb, whereas today the Federal Reserve has lowered rates to their minimum and has assured markets that rates will be kept at their current levels through 2022. That is a tremendous difference in response.

Ongoing Federal Reserve bond purchases keep interest rates low, a leading indicator that is fueling a housing price boom. Further fueling the housing price boom are drastically lower mortgage rates. It’s now common to see 30 year fixed mortgage rates below 3%. Unfortunately, this housing price boom continues to make housing unaffordable for many Americans.

 

Vaccine

The rollout of the vaccine is here! This new development is also lifting the stock market. A vaccine is another light at the end of a long, dark tunnel as US deaths have exceeded 300,000.

Although the company that created the Pfizer vaccine were German immigrants from Turkey, American ingenuity and entrepreneurship were at work in moving the vaccine to market in record time. The 2nd vaccine waiting FDA emergency approval, likely this week, was developed by a Massachusetts company.

This pandemic highlights the best and worst of American culture. Highlights include the best entrepreneurship, science, facts, hard work and capital. The highlights also include the worst in adherence to public health behavioral modification, individualism, and lack of social capital. Onward to the light at the end of the tunnel through a very tough 2020.

For this and all SAS Financial Advisors newsletters, check out our blog at www.sasadvisors.com/blog

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