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About The nugget. (Sisters, Or.) 1994-current | View Entire Issue (Jan. 3, 2018)
Wednesday, January 3, 2018 The Nugget Newspaper, Sisters, Oregon The Bunkhouse Chronicle Craig Rullman Columnist Something for nothing My grandfather warned me a long time ago that “You can’t get something for nothing,” which always sounded like an unassailable bit of wisdom pulled from Stonewall Jackson’s Book of Maxims. But granddad wasn’t around for the inven- tion of Bitcoin. Bitcoin, if you don’t know, is a digital commod- ity invented by a cryptolo- gist whose real identity — he ran under the alias Satoshi Nakamoto before handing Bitcoin off to the world — remains a mystery. In other words, he’s the Wizard of Oz. And it’s at least par- tially because of this, and other unsolved mysteries of its development, that it’s hard to shake off the notion of Bitcoin as anything more than an elaborate con. Which is also what, in 1997, many people feared about a newfangled thing called Amazon, and so missed their golden shot at umbrella drinks and private jets forever when Amazon stock eventually rocketed from $1.50 to over $1,000, where it happily resides today. But even if, someday, we manage to dodge the flying monkeys and cruel witches and finally come dancing into the Emerald City with our Bitcoins, when we tear back the curtain to say “got- cha,” absolutely no one will be there to greet us. Stay with me on this, it’s going to get weird. A Bitcoin transforms from a nothing with no value into a nothing with imaginary value by way of Bitcoin mining. By stringing together a bunch of computers and set- ting them to the task of solv- ing mathematical equations, a Bitcoin squirts into the ether. When more and more people try to mine a Bitcoin, the equations become more difficult to solve, slowing down the birthrate of ghostly Bitcoins, which is impor- tant because the Wizard of Bitcoin arranged this whole scenario so that there can only ever be a finite number of them. Much of the theoretical value of Bitcoin is found in the limit on how many there can ever be of a thing that doesn’t really exist. You may want to read that again. The result of all this Bitcoin mining is meant to be the invention of a new, decentralized currency. Which means it isn’t con- trolled by a central bank, which governments will eventually come to despise because governments, as a rule, are in opposition to freedom. Governments are about control, which they won’t have over Bitcoin, and which was also, by the way, the original genius behind our Constitution. But that is a different column. This stuff is hard to wrap one’s head around because, at this early stage, when it’s still quite difficult to figure LEVEL 5 NEW YEAR’S 30-DAY CHALLENGE! STARTS IN ONE WEEK! Free Registration & $400 in Prizes! Must join Level 5 & register by Jan. 15! Call 541-699-7800 Join Sisters’ Strongest or email coach@crossfi tsisters.com Fitness Community! In the Ray’s Shopping Center • crossfi tsisters.com TEXAS HOLD ’EM 7 PM $20 buy-in, no re-buys. First hand dealt at 7 PM . Late arrivals can buy-in until 7:30 PM Menu at SistersSaloon.net 541-549-RIBS 190 E. Cascade Ave. SEE YOU THERE! out what Bitcoin is, we also can’t properly conceive of its ultimate potential. We can read up on it, and see what smart people say about it, but in the end they can’t know either. Not even crazy John McAfee, who has announced from some bunker in the jungle that if Bitcoin doesn’t climb to $500,000 within three years he will consume a portion of his own anatomy on national television. Perhaps Bitcoin is simply a Big Two-Hearted thing. But at least in Hemingway’s story, Nick Adams knew bet- ter than to wander too far downstream and lose himself in the swampier parts of the river. What’s also striking is the relationship between digi- tal currency, whose value is based ultimately on faith, with our beliefs in God, for which faith is also required. It makes me wonder if faith in Bitcoin and other invisible commodities is the thing that will finally put the lights out on our ancient yearning for some manner of off-planet and universal divinity. It interests me that peo- ple will believe in invisible Bitcoin, but not God, and vice-versa. I suppose there are people who do both but I haven’t met one yet. And anyway, along with artifi- cial intelligence, and the merger of robotics with human beings, we are well on our way to what Yuval Noah Harari calls the age of Homo-Deus, which is the now perceptible drive to achieve immortality through science — no God required. I told you it would get weird. And, of course, the dusty old dollar bill isn’t backed by anything either, not any more — and even when it was backed by something more than a fevered belief in the “growth economy,” Native Americans who watched gold miners cartwheeling around their sluice boxes and yelling Eureka! thought they had gone insane. You couldn’t eat a yellow nugget, and the stream’s real purpose was to make a home for trout. If you are waiting for the part where Bitcoin becomes an actual something, I’m afraid you are going to be disappointed. If you scratch at the air in front of you like a cat swatting at a pen-light, you have held a Bitcoin. Which isn’t really an argument against it, I sup- pose. I’m personally feel- ing agnostic, although I can admit that investing intrigues me because the chance to own an island in the Bahamas and have star- shaped sandwiches and a Mai Tai delivered every 9 time I ring the dinner gong wouldn’t be unpleasant. In the meantime, I’m calling for a currency in Yap Stones. These enor- mous limestone discs, which required about a hun- dred people to carry, were once used as currency in Micronesia. The idea was to quarry the stone on the island of Yap, carry it to Palau by outrigger, then park it in the sand. After that, buying something with a Yap Stone only required an oral agree- ment that the ownership of the stone had changed, and indeed much of the value of a Yap Stone resided in its history. And in one instructive case, an enormous Yap Stone fell out of a canoe and sank to the bottom of the ocean. It was never seen again, but since everyone agreed it had to be there, somewhere under all that deep and dazzling blue, it was still good enough to trade for beadwork and coconuts around a campfire. What a marvelous way to do business. How Your Tax Strategy Can Help Cover Rising College Costs In today’s world, many families rely on more than one strategy to save for the costs of their children’s education. Whether your children are getting ready for kindergarten or graduation, capitalizing on tax-saving opportunities can help make college a reality. Long-term saving strategies: The best defense to rising costs is to save early and often. While there are a variety of accounts and ways to save for college, 529 plans, Coverdell and custodial accounts offer possible tax benefi ts. 529 plans: These plans, named after a provision in the tax code, are one of the most popular ways to build savings over time. A parent or even a non-relative can establish a 529 plan for a student, with the ability to switch potential benefi ciaries any time. The person establishing a 529 account retains control over the assets and how they are used. Any earnings grow on a tax-deferred basis and any withdrawals used to meet qualifi ed higher education expenses of the named benefi ciary are income-tax-free. This is a signifi cant incentive to save for college and offers a great deal of fl exibility due to the high maximum contribution amounts, which vary by state. While contributions to a 529 plan are not deductible for federal income tax purposes, many states allow for deductions/credits on state income taxes. Check your state’s laws and consider making a contribution before the end of the year to claim a deduction/ credit on your 2017 state return. Custodial accounts: The Uniform Transfer to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) custodial accounts offer a way to transfer assets to your minor. A named custodian manages the account until the designated minor is old enough to assume ownership (usually 18 or 21 depending on the laws of your state). However, because the student is the account owner, the assets may affect his or her eligibility for fi nancial aid. The tax benefi ts to the donor include reducing the size of the donor’s estate for estate tax purposes and the ability to exclude earnings on these assets from the donor’s income taxes, though income tax rules still apply to the child (and kiddie tax could have an impact). A Coverdell education savings account, a specifi c type of trust or custodial account, allows you to save for higher education as well as private elementary, middle or high school expenses. Contributions are limited at $2,000 a year for a single benefi ciary, and are only allowed until the minor turns 18. Any earnings in the account grow tax- free, and there’s no federal tax when the money is withdrawn for qualifi ed expenses. The account funds must be distributed before the designated benefi ciary turns 30, and any remaining money will be distributed to the benefi ciary with the earnings subject to tax and penalty unless the account is transferred to another family member. If the Coverdell is established for a special-needs benefi ciary, the rules vary. Tax-saving strategies when you are making tuition payments: Once you transition to paying for college expenses, there are potential tax credits and deductions that may help you save money on your tax bill. Tax credits: Tax credits provide a dollar-for-dollar reduction in taxes due. Credits can be earned in the year tuition is paid, in many cases, even if it is for the academic period beginning in January thru March of the following year. Payments made by the end of 2017 may qualify for a credit on this year’s tax return. Two credits you may qualify for include the American Opportunity Tax Credit and the Lifetime Learning Credit. Income restrictions and other qualifi cations apply, so work with your tax professional who can help you determine the best tax strategy for your situation. Tax deductions: Depending on your circumstances, you may qualify for deductions related to education expenses at the federal and/or state level. For example, a federal income tax deduction of up to $2,500 is available for the interest paid on a qualifi ed education loan, however, certain income restrictions apply. Consult with your fi nancial advisor about the best college saving strategies for your situation, and with your tax advisor on potential tax-saving provisions of the law. Mark Greaney is a Financial Advisor with PacWest Wealth Partners, an advisory practice of Ameriprise Financial Services, Inc. in Bend, Oregon. He specializes in fee-based fi nancial planning and asset management strategies and has been in practice for 17 years. Contact Mark at www.PacWestWealthPartners.com, or call him at 541-382-2354. Mark is located at 35 NW Hawthorne Avenue, Bend, OR. Ameriprise Financial and its affi liates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specifi c situation. Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser. Ameriprise Financial Services, Inc. Member FINRA and SIPC. © 2018 Ameriprise Financial, Inc. All rights reserved.
