The quick rule of thumb about what the Internal Revenue Service (IRS) is likely to want to look at or to audit, if so inclined, is the current year plus the prior three years. These are called the “open years.” If fraud may be involved, it is the current year plus six prior years. The timing schedule is called the statute of limitations. It is meant to help compliant taxpayers trying to do the right thing from being subject to audit beyond a reasonable period, hence three open years. However, if items are omitted from a filed return, making the return “false, fraudulent or otherwise represents a willful attempt to defeat or evade tax, the statute of limitations doesn’t start running.”[1] These rules apply to taxes due, interest and penalties.

Woodstock uses pooled investment vehicles for client cash, so we’re watching money market funds. We’re interested to see that of all the categories of investments in the endowment model, private equity seems to be taking an outsized share. And we like to tell Woodstock’s story.

The stock market roared ahead in the first half of 2023, returning +16.9% and defying predictions for another difficult year. The stock market sailed through the demise of four medium-sized banks, a Congressional debt ceiling showdown, higher interest rates, and widespread calls for a recession.

AI has been gradually permeating many aspects of our daily lives. For instance, recommendation engines use AI to suggest merchandise, movies, and music based on what service providers know we already like and what we share in common with other users. AI is used for word suggestion, dictation, language translation, GPS navigation, facial recognition, and fraud detection, to name a few applications. It can read and process forms.

To keep a steady stream of income coming into the US Treasury, your “partner” probably shouldn’t change the rules of the game too many times, should probably be polite and civil, and should probably be fairly clear about what they expect.

We are pleased to shine a well-deserved spotlight on our colleague Julie Phippen, Executive Assistant at our sister company Agawam Trust Company. Julie was recently recognized by the Women’s Federation for Peace USA with their “Her Story Award,” bestowed on her in recognition of her good works with Sewpportive Friends,

Psychology has brought many ideas to financial analysis, but two that stand out are confirmation bias and myopic loss aversion. Confirmation bias is the tendency to find or accept only research that mainly supports an existing thesis.[1] “The more often one looks at a financial account, the more likely one is to see a loss and, since losses bother us more than gains, they spur turnover.” This is called myopic loss aversion.[2] Combatting these two tendencies is important for investors and their advisors to do, especially in volatile times.

A year removed from the Russian invasion of Ukraine and three years from the start of the Covid-19 pandemic, supply chain disruptions and bottlenecks have eased, remote working is on the decline, travel and entertainment businesses are seeing a strong recovery, consumer spending is steady, and inflation is beginning to come down—a return to some sense of normalcy. The equity markets have been aligned with the recovery and, perhaps hoping for a soft landing, have come back strongly for the past two quarters. Investors returned to growth stocks in Q1 following a surge by value stocks in Q4, providing a remarkably balanced positive swing to equity portfolios over the past six months.

Where does federal tax revenue come from? For all the talk about corporations and individuals paying their fair share and estate and gift taxes being important, it is probably a surprise that the Congressional Joint Committee on Taxation estimates that for 2022, corporate taxes will make up 8% and estate and gift taxes will make up less than 1% of total federal revenue. As those who follow these debates will know, our international competition taxes corporate income at rates less than we do and the creation of aggregate wealth taxes in Europe has been reversed, so we’re unlikely to raise our corporate tax burden or estate tax burden, unless suicidal.

Is wealth creation possible amidst irony? We certainly hope so, because the financial world seems intent on placing itself in ironic situations. The business phrase that “you don’t know if you have a great company until it has gone through a near-death experience” is attributed to Jack Welch a former CEO of General Electric Company (GE). The financial crisis of 2008 put GE, which by then had moved from being an industrial company to being a financial company, into a near-death experience. The irony is that the experience is dismantling GE, not strengthening it. The financial arm left long ago. The health care arm left recently. The power sector arm will leave soon, and GE will become its aviation arm.