10/23/2006

Tigers Up/Ford Down

Hello:

The current news in Detroit is a reflection of our overall economy. Their baseball team, the Tigers are in the playoffs for the first time in 22 years; a reflection of the service and entertainment industries that are doing well in the US. In contrast, Ford Motors reports that their losses have widened to $5.8 billion due to restructuring costs, which is an unfortunate reflection of the domestic manufacturing sector. Not surprisingly, the housing sector in the Detroit area has softened recently.

We hope that the Federal Open Market Committee (FOMC) will keep interest rates steady this week, as they digest the news that the CPI report came in at -0.5% for September. We will be watching for the Fed announcement on Wednesday.

The Pension Protection Act (PPA) will make gifts of appreciated property from Subchapter S corporations more attractive to donors. Under the new rule, the appreciated property gift flows through to shareholders, and requires a reduction of shareholder basis only by the basis of the asset, rather than by the fair market value of the donated asset. Be sure to consult, and to have your donor(s) consult, a tax preparer before making a gift of appreciated property from a Subchapter S corporation.

Terri G. Millson, CIMA, CIMC President