Frank Wealth ManagementGroupStephen Frank, AIF®Wealth Management Adviser3771 Attucks DrPowell, OH 43065614-791-4806sfrank@sfwmg.comwww.sfwmg.com

March 2017Why Diversification Matters

Buying a Fuel-Efficient Vehicle

Do I need to file a gift tax return?

What are some tips for creating a homeinventory?

Frankly SpeakingMarch 2017

Due Date Approaches for 2016 Federal Income Tax Returns

See disclaimer on final page

Our Team:

Stephen N Frank, AIF®Wealth Management Adviser

Benjamin H. KylerWealth Management Adviser

Kathy EvansClient Relationship Specialist

Holly FrankClient Relationship Specialist

Contact Us:

Local: (614) 791-4806Toll-Free: (877) 791-4806

Find us on the web:www.sfwmg.com

Tax filing season is here again. If you haven'tdone so already, you'll want to start pullingthings together — that includes getting yourhands on a copy of last year's tax return andgathering W-2s, 1099s, and deduction records.You'll need these records whether you'repreparing your own return or paying someoneelse to do your taxes for you.

Don't procrastinateThe filing deadline for most individuals isTuesday, April 18, 2017. That's because April15 falls on a Saturday, and Emancipation Day,a legal holiday in Washington, D.C., iscelebrated on Monday, April 17. Unlike lastyear, there's no extra time for residents ofMassachusetts or Maine to file becausePatriots' Day (a holiday in those two states) fallson April 17 — the same day that EmancipationDay is being celebrated.

Filing for an extensionIf you don't think you're going to be able to fileyour federal income tax return by the due date,you can file for and obtain an extension usingIRS Form 4868, Application for AutomaticExtension of Time to File U.S. IndividualIncome Tax Return. Filing this extension givesyou an additional six months (to October 16,2017) to file your federal income tax return. Youcan also file for an extension electronically —instructions on how to do so can be found in theForm 4868 instructions.

Filing for an automatic extension does notprovide any additional time to pay your tax!When you file for an extension, you have to

estimate the amount of tax you will owe andpay this amount by the April filing due date. Ifyou don't pay the amount you've estimated, youmay owe interest and penalties. In fact, if theIRS believes that your estimate was notreasonable, it may void your extension.

Note: Special rules apply if you're living outsidethe country or serving in the military and onduty outside the United States. In thesecircumstances you are generally allowed anautomatic two-month extension without filingForm 4868, though interest will be owed on anytaxes due that are paid after April 18. If youserved in a combat zone or qualified hazardousduty area, you may be eligible for a longerextension of time to file.

What if you owe?One of the biggest mistakes you can make isnot filing your return because you owe money.If your return shows a balance due, file and paythe amount due in full by the due date ifpossible. If there's no way that you can paywhat you owe, file the return and pay as muchas you can afford. You'll owe interest andpossibly penalties on the unpaid tax, but you'lllimit the penalties assessed by filing your returnon time, and you may be able to work with theIRS to pay the remaining balance (options caninclude paying the unpaid balance ininstallments).

Expecting a refund?The IRS is stepping up efforts to combatidentity theft and tax refund fraud. New, moreaggressive filters that are intended to curtailfraudulent refunds may inadvertently delaysome legitimate refund requests. In fact,beginning this year, a new law requires the IRSto hold refunds on all tax returns claiming theearned income tax credit or the refundableportion of the Child Tax Credit until at leastFebruary 15.1

Most filers, though, can expect a refund checkto be issued within 21 days of the IRS receivinga return.1 IRS.gov (IR-2016-117, IRS Urges Taxpayers toCheck Their Withholding; New Factors IncreaseImportance of Mid-Year Check Up, August 31, 2016)

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Why Diversification MattersWhen investing, particularly for long-term goals,there is one concept you will likely hear aboutover and over again — diversification. Why isdiversification so important? The simple reasonis that it helps ensure that your risk of loss isspread among a number of differentinvestments. The theory is that if some of theinvestments in your portfolio decline in value,others may rise or hold steady, helping to offsetthe losses.

Diversifying within asset classesFor example, say you wanted to invest instocks. Rather than investing in just domesticstocks, you could diversify your portfolio byinvesting in foreign stocks as well. Or you couldchoose to include the stocks of different sizecompanies (small-cap, mid-cap, and/orlarge-cap stocks).

If your primary objective is to invest in bonds forincome, you could choose both governmentand corporate bonds to potentially takeadvantage of their different risk/return profiles.You might also choose bonds of differentmaturities, because long-term bonds tend toreact more dramatically to changes in interestrates than short-term bonds. As interest ratesrise, bond prices typically fall.

Investing in mutual fundsBecause mutual funds invest in a mix ofsecurities chosen by a fund manager to pursuethe fund's stated objective, they can offer acertain level of "built-in" diversification. For thisreason, mutual funds may be an appropriatechoice for novice investors or those wishing totake more of a hands-off approach to theirportfolios. Including a variety of mutual fundswith different objectives and securities in yourportfolio will help diversify your holdings thatmuch more.

Mutual funds are sold by prospectus. Pleaseconsider the investment objectives, risks,charges, and expenses carefully beforeinvesting. The prospectus, which contains thisand other information about the investmentcompany, can be obtained from your financialprofessional. Be sure to read the prospectuscarefully before deciding whether to invest.

Diversifying among asset classesYou might also consider including a mix ofdifferent types of asset classes — stocks, bonds,and cash — in your portfolio. Asset allocation is astrategic approach to diversifying your portfolio.After carefully considering your investmentgoals, time horizon, and risk tolerance, youwould then invest different percentages of yourportfolio in targeted asset classes to pursueyour goal.

Winning asset classes over timeThe following table, which shows how manytimes during the past 30 years each asset classhas come out on top in terms of performance,helps illustrate why diversifying among assetclasses can be important.

Number of winning years,1987-2016

Cash 3

Bonds 5

Stocks 10

Foreignstocks

12

Performance is from December 31, 1986, toDecember 31, 2016. Cash is represented byCitigroup 3-month Treasury Bill Index. Bonds arerepresented by the Citigroup Corporate Bond Index,an unmanaged index. Stocks are represented by theS&P 500 Composite Price Index, an unmanagedindex. Foreign stocks are represented by the MSCIEAFE Price Index, an unmanaged index. Investorscannot invest directly in any index. However, theseindexes are accurate reflections of the performanceof the individual asset classes shown. Returns reflectpast performance and should not be consideredindicative of future results. The returns do not reflecttaxes, fees, brokerage commissions, or otherexpenses typically associated with investing.

The principal value of cash alternatives may fluctuatewith market conditions. Cash alternatives are subjectto liquidity and credit risks. It is possible to losemoney with this type of investment.

The return and principal value of stocks may fluctuatewith market conditions. Shares, when sold, may beworth more or less than their original cost.

U.S. Treasury securities are guaranteed by thefederal government as to the timely payment ofprincipal and interest, whereas corporate bonds arenot. The principal value of bonds may fluctuate withmarket conditions. Bonds are subject to inflation,interest rate, and credit risks. Bonds redeemed priorto maturity may be worth more or less than theiroriginal cost.

The risks associated with investing on a worldwidebasis include differences in financial reporting,currency exchange risk, as well as economic andpolitical risk unique to the specific country.

Investments offering the potential for higher rates ofreturn also involve higher risk.

Diversification and assetallocation are methods usedto help manage investmentrisk; they do not guaranteea profit or protect againstinvestment loss.

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Buying a Fuel-Efficient VehicleYou're searching for a new car and interested infuel-efficient vehicles. On the surface, theysound like a good idea: You may save moneyby making fewer trips to the gas station, andyou'll help protect the environment. However,there are pros and cons to owning and driving afuel-efficient vehicle, particularly when it comesto your finances.

Know your optionsMany different vehicles fall into the fuel-efficientcategory. There are electric vehicles (EVs),which run solely on electricity. One or moreelectric motors are powered by rechargeablebattery packs. Some EVs have built-inchargers, whereas others must be plugged intoexternal chargers. EVs produce zero emissionsand run quietly.

Another kind of fuel-efficient vehicle is thetraditional hybrid, which exists in two forms:parallel and series. Parallel hybrids have asmall internal combustion engine as well asbatteries that power an electric motor. Thevehicle's transmission and wheels can bepowered by both the engine and electric motor.Series hybrids use an on-board generator toproduce electricity which, in turn, chargesbatteries or powers the electric motor. Thevehicle is never directly powered by thegasoline engine.

Plug-in hybrids are very similar to traditionalhybrids, but plug-ins rely on a different primaryenergy source. The battery-powered electricmotor functions as the main source of power.When the battery reaches a certain level, theinternal engine's power kicks in and the vehicleuses gasoline to extend its range. The batteryis recharged by plugging the vehicle into anexternal charger, hence the name.

In addition to EVs and hybrids, vehicles that runon alternative fuel are also consideredfuel-efficient. Alternative fuels include diesel,bio-diesel, ethanol, compressed natural gas,and hydrogen fuel cells.

Weigh the advantages against thedisadvantagesOne of the biggest factors in deciding whetherto buy a fuel-efficient vehicle is cost. Generally,fuel-efficient vehicles come with a higherpurchase price that can be off-putting whencomparing them to standard vehicles. And ifyour fuel-efficient car is equipped with anexpensive battery, you must be prepared to payeven more when the battery eventually needsto be replaced.

Other drawbacks include scarcity of publicchargers, limited driving range, and fewermodel options to choose from (as opposed totraditional vehicles).

On the other hand, driving a green vehiclecould add some green to your wallet. Many EVsand hybrids qualify for a federal income taxcredit. Depending on your vehicle's batterycapacity, you could earn a credit ranging from$2,500 up to $7,500. However, certainrestrictions do apply. For more information, seeIRS Form 8936, Qualified Plug-in Electric DriveMotor Vehicle Credit.

Your auto insurance provider may also offerdiscounts if you drive an EV or hybrid. It's worthchecking to see whether you will save oninsurance by driving a fuel-efficient vehicle.

Chances are good that a fuel-efficient vehiclewill save you money at the gas station.Fuel-efficient vehicles typically have superiorfuel economy, which means you'll likely betaking fewer trips to refuel your car. Over time,the savings from reduced gas station stopscould be significant.

Decide what suits your lifestyleFinancial considerations aside, think aboutwhat kind of car best fits your needs. To helpdecide, ask yourself these questions:

• Can you afford a more expensivefuel-efficient vehicle, or does it make moresense to buy a conventional vehicle?

• How much driving do you do in a typicalweek?

• Do you want an EV or a hybrid? Or do youwant to consider an alternative fuel option?

• If you choose an EV or plug-in, are you ableto charge it at home? If you frequently drivelonger distances, will you be able to rechargeit easily on the road?

• When will you need to replace the battery inyour vehicle? How expensive will it be?

• What kind of gas mileage should you expectto get from an EV or hybrid?

• Are there any reliability or safety issuesassociated with EVs or hybrids?

If you don't drive your vehicle on a consistentbasis, you might consider sticking with aconventional vehicle. For example, after justone week of not driving an EV or hybrid vehicle,the battery could be affected and may notfunction properly.

Fuel-efficient vehicles aredesigned to help reducepollution emissions andfossil fuel dependence,which can limit the effectsof climate change. Thesefactors make fuel-efficientvehicles appealing to driverslooking to be more green.But there are pros and consto consider before buyingan electric or hybrid car.

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Frank WealthManagement GroupStephen Frank, AIF®Wealth Management Adviser3771 Attucks DrPowell, OH 43065614-791-4806sfrank@sfwmg.comwww.sfwmg.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

The accompanying pages havebeen developed by an independentthird party. CommonwealthFinancial Network is notresponsible for their content anddoes not guarantee their accuracyor completeness, and they shouldnot be relied upon as such. Thesematerials are general in nature anddo not address your specificsituation. For your specificinvestment needs, please discussyour individual circumstances withyour representative.Commonwealth does not providetax or legal advice, and nothing inthe accompanying pages should beconstrued as specific tax or legaladvice. Securities and advisoryservices offered throughCommonwealth Financial Network,Member FINRA/SIPC, aRegistered Investment Adviser.Fixed insurance products andservices offered through FrankWealth Management Group.

What are some tips for creating a home inventory?Imagine having to rememberand describe every item inyour home, especially afteryou've been the victim of afire, theft, or natural disaster.

Rather than relying on your memory, you maywant to prepare a home inventory — a detailedrecord of all your personal property. This recordcan help substantiate an insurance claim,support a police report when items are stolen,or prove a loss to the IRS. Here are some tipsto get started.

Tour your property. A simple way to completeyour inventory is to make a visual record ofyour belongings. Take a video of the contentsof each room in your home and spaces whereyou have items stored, such as a basement,cellar, garage, or shed. Be sure to opencabinets, closets, and drawers, and pay specialattention to valuable and hard-to-replace items.You can also use the tried-and-true low-techmethod of writing everything down in anotebook, or use a combination approach.Mobile inventory apps and software programsare available to guide you through the process.

Be thorough. Your home inventory shouldprovide as many details as possible. For

example, include purchase dates, estimatedvalues, and serial and model numbers. Ifpossible, locate receipts to support the cost ofbig-ticket items and attach copies of appraisalsfor valuables such as antiques, collectibles, andjewelry.

Keep it safe. In addition to keeping a copy ofyour inventory in your home where you caneasily access it, store a copy elsewhere toprotect it in the event that your home isdamaged by a flood, fire, or other disaster. Thismight mean putting it in a safe deposit box,giving it to a trusted friend or family member forsafekeeping, or storing it on an external storagedevice that you can take with you or on acloud-based service that provides easy andsecure access.

Update it periodically. When you obtain avaluable or important item, add it to yourinventory as soon as possible. Review yourhome inventory at least once a year foraccuracy. You can also share it annually withyour insurance agent or representative to helpdetermine whether your policy coverages andlimits are still adequate.

Do I need to file a gift tax return?If you transfer money orproperty to anyone in any yearwithout receiving something ofat least equal value in return,you may need to file a federal

gift tax return (Form 709) by the April tax filingdeadline. If you live in one of the few states thatalso impose a gift tax, you may need to file aseparate gift tax return with your state as well.

Not all gifts, however, are treated the same.Some gifts aren't taxable and generally don'trequire a gift tax return. These exceptionsinclude:

• Gifts to your spouse that qualify for themarital deduction

• Gifts to charities that qualify for the charitablededuction (Filing is not required as long asyou transfer your entire interest in theproperty to qualifying charities. However, ifyou are required to file a return to report giftsto noncharitable beneficiaries, all charitablegifts must be reported as well.)

• Qualified amounts paid on someone else'sbehalf directly to an educational institution fortuition or to a provider for medical care

• Annual exclusion gifts totaling $14,000 or lessfor the year to any one individual (However,you must file a return to split gifts with yourspouse if you want all gifts made by eitherspouse during the year treated as madeone-half by each spouse — enabling you andyour spouse to effectively use each other'sannual exclusion.)

If your gift isn't exempt from taxation, you'llneed to file a gift tax return. But that doesn'tmean you have to pay gift tax. Generally, eachtaxpayer is allowed to make taxable giftstotaling $5,490,000 (in 2017, up from$5,450,000 in 2016) over his or her lifetimebefore paying any gift tax. Filing the gift taxreturn helps the IRS keep a running tab on thetaxable gifts you have made and the amount ofthe lifetime exclusion you have used.

If you made a gift of property that's hard tovalue (e.g., real estate), you may want to reportthe gift, even if you're not required to do so, inorder to establish the gift's taxable value. If youdo, the IRS generally has only three years tochallenge the gift's value. If you don't report thegift, the IRS can dispute the value of your gift atany time in the future.

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