When I was a kid one of the treats that I really looked forward to was buying a box of Cracker Jack. For you neophytes, Cracker Jack, which is still around, is a caramel/popcorn/peanut snack that comes in a soft box with a prize inside.
The small toy is hidden among the pieces of Cracker Jack. There were two ways of eating Cracker Jack. One was to keep putting pieces in your mouth until you found the toy. The better and more impatient way was to turn the box over and open it from the bottom figuring that was where the toy resided. If that failed, I would spill the Cracker Jack into one hand until I found the prize.
The toys were about two inches in size and my favorite was the little plastic clown face. You had to get four metal miniature balls in the eyes, nose, and mouth of the clown. It usually took me quite a while, but it entertained me just as much as PlayStation 2 excites kids today.
This joy of treasure hunting continues in my present work as I search for interesting items of value. For example, I came across two IRS letter rulings that may be worth their weight in gold to some accountants.
In Ltr. Rul. 200311043, the IRS rules that an employer’s (a local governmental entity) contribution of employees’ unused vacation pay to a defined contribution profit-sharing plan is not a cash or deferred election described in Section 401(k).
The Service also holds that the contribution is not includible in the employees’ gross income or wages for federal income tax or FICA purposes. What a great tax-efficient use of unused vacation!
Then you have Ltr. Rul. 200311034 in which the IRS approves, as a Section 529 plan, a prepaid tuition plan for a number of private colleges and universities acting as members of a consortium. Prior to the ruling, private colleges were each creating a separate plan. This new type of 529 plan will be a very attractive alternative for private colleges and parents who want to prepay college expenses for such schools within the consortium.
The key to treasure hunting is knowing where to look. I have found letter rulings always to be a trove of terrific information. Hidden among the pro-forma rulings are requests for approval by the IRS of innovative new tax-saving methods or strategies. Although a letter ruling counts only for the one taxpayer making the request, an astute practitioner knows when to give it additional meaning.
I am still far away from retirement, but my beautiful wife brought me a metal detector to scour the beaches here on the East coast when I do stop working. I'll be looking for find coins, jewelry, and maybe some sunken pirate's treasure chest. And if you come across me walking the beach, I will gladly share a box of Cracker Jack with you subject, however, to one proviso. I get to keep the toy.
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