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HEALTH CARE DEDUCTION FOR SELF-EMPLOYED

Congress has done it again! (So what else is new, you say.) They�ve really 
gone and stuck it to the entrepreneurs, sole proprietors and other self 
employed. Until the end of 1993, all of these people could deduct 25% of the 
cost of their health insurance. But, no more. The following appeared on the 
front page of the Las Vegas Review-Journal (9/27/93) (an AP article):

�The 25 percent tax deduction (for health insurance) for the self-employed 
expired at the end of 1993. Lawmakers in both parties had expected to restore 
it and provide an even more generous break this year as part of health 
reform.�But the tax deduction for the self-employed has been buried for now in 
the wreckage of the health reform bills. ...��It�s a crime,� said John Motley, 
... �Not only is there no health care reform, but we lost even the very meager 
incentive that small, self-employed people had to purchase health insurance.��

The article went on to say:
�Corporations can deduct 100 percent of the costs of providing insurance for 
their employees. ...� 

Probably many self employed individuals didn�t realize they had to pay taxes 
on 75% of their health insurance payments while corporations can deduct 100% 
of such costs. That�s bad enough, but to have Congress take that away, too! 
Well, that�s really the icing on the cake. So, what can you do to obtain 
maximum tax savings on your health payments?. Surprisingly, the answer is not 
that complex. Incorporate in Nevada, which has many benefits, including all 
these medical deductions and much more.

Let�s focus specifically on the health cost issue raised in the newspaper. 
I�ll show you a way to increase your personal spendable income by an amount 
equal to what you would pay in taxes on your medical costs. Each person will 
have different figures, so this example must be adjusted to fit your 
individual circumstances. And, remember, a corporation can offer its employees 
a medical plan which provides 100% reimbursement of _all_ medical expenses. 

For this example, I am going to simplify your taxes. I am only going to 
consider Federal and State income taxes. Let�s assume you live in California 
and are in the 34% federal tax bracket and 11% California tax bracket for a 
total of 45% income taxes. I will ignore all other taxes your business pays 
such as Self Employment taxes [Social Security], FUTA, State Disability, and 
any other local or state taxes. You can add them into the equation, and see 
what percentage of your total income your total tax bite is. So, let�s assume 
you own a business in Los Angeles (it doesn�t matter what the business does) 
with the following facts:

	Total income tax - 45%

	Yearly medical costs:
Insurance premiums	$ 4,800
Deductible		$ 1,000
Drugstore*		$ 1,000
Dental			$ 2,000
Total Costs		$ 8,800

*Drugstore includes all over-the-counter medications such as cold medications, 
aspirin, and any other health care products, including tooth brushes. These 
items are deductible by a corporation if the employees have a 100% 
reimbursable health care package.

In order to have $8,800 available to pay these medical costs, how much must 
our business earn? Well, let�s look. You know that your medical expenses are 
$8,800 and taxes are 45% of the total amount. Therefore your medical costs 
will be the remaining 55% of the total amount the business must earn.

Taxes + Medical costs = Total amount to be earned
45% + 55% = 100%

$8,800/.55(or 55%) = $16,000

Therefore, your business must earn $16,000 to enable you to spend $8,800 for 
medical expenses each year. And, that means that _each year_ you spend $7,200 
needlessly on taxes.

		$16,000 x 55% = $8,800 (medical costs)
		-   8,800
		$  7,200 Taxes paid
		  
If you had a properly structured Nevada corporation you would avoid having to 
pay $7,200 in taxes each year. How would you like to be able to spend that 
additional tax free $7,200 _every year_ and still receive all the medical 
benefits you have now? What can you do with the additional money? Buy a car, 
take a vacation, pay for your kid�s education, all tax free? I am sure your 
spouse or children can come up what a hundred other things to do with that 
extra money. You can do this! 

We can organize a Nevada corporation for you which will give you all the 
benefits described above, and much more. Not only tax savings relating to your 
medical costs, but lower overall income taxes, elimination of state corporate 
taxes, protection of both your business and personal assets, and many other 
benefits.   

For further information, please email or call our 800 line.

Alan Russell
Asset Control, Inc.
incorp@enet.net
1-800-657-6337; 1-702-734-6789; Fax: 1-702-734-7500