Accounting firm Marks Paneth & Shron has unveiled a series of recommendations for coping with the tightening economy.

The firm warns that hedge fund investors should look out for Tax Code abuses. "Taxation watchdogs may miss the point when they claim hedge funds get unfair breaks," said the firm. "There is, indeed, abuse in the current Tax Code when it comes to hedge funds, but it affects investors. They're often subjected to taxes that wipe out nearly all - or more than all - of the income they made from the fund."

The firm noted that the Tax Code severely limits hedge fund investors' ability to deduct expenses - such as investment fees, legal fees, etc. - that are necessary for the fund to earn income. Careful attention to how these deductions are claimed may help mitigate the damage.

MPS advised considering taking dividends and capital gains soon. After 2010, the beneficial tax rate of 15 percent on dividends and capital gains is scheduled to jump due to a sunset provision in the current law. Dividends would be taxed at ordinary income rates, currently up to 35 percent.

The firm also advised thinking twice about like-kind exchanges of property and not settling for a bad property in order to avoid taxes. In the quest for lower taxes, people often wind up overpaying or getting an inferior property. Paying the tax on a current property may end up costing less in the long run.

MPS also recommended stopping and taking a "safety check" before joining a nonprofit board. Even minor conflicts of interest and governance gaps on nonprofit boards can result in embarrassing, time-consuming situations for board members.

Hope Goldstein, a partner with the firm's nonprofit group, encouraged potential not-for-profit board members to exercise due diligence. "Board members are getting a lot smarter and are looking for more in order to commit to being a member," she said. "It's not as feel-good as it used to be. They're doing the interviewing of management. They are not going to get associated with an organization that has risk. It's not so much financial risk, but reputational risk that comes with it. Board members are doing more due diligence because they want to serve the organization."

Before signing on, MPS recommends understanding the board's true mission; reviewing its governance policies, including whether the organization has a whistleblower policy; knowing what type of conflict-of-interest guidelines are in place; and checking to see if there is D&O insurance.

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