<THE DRIP PORTFOLIO>
A Trip in the Wayback Machine
by Vince Hanks (TMFElwood@aol.com)
NORTHVILLE, MI (Dec. 11, 1998) -- Stepping into the Wayback Machine for a moment, I'd like to zip back twenty-four hours to revisit last night's column. In it I pointed out a possible method to contribute to the education costs of a child by gifting money to a potential donor. I received a note from a good Fool and tax attorney who informed me that in order for a gift to be tax-free, it must be given without any preconditions, and that any attempts to circumvent the tax laws may be frowned upon by the IRS. This was not my intent, nor would I encourage anyone to take any action that would not meet the approval of the government.
I was also remiss in not mentioning that the $500 annual contribution limit is separate from the limits of traditional and Roth IRAs. While your combined contributions to IRAs must fall within the $2,000 limit, the Education IRA is not a part of that limit and an additional $500 may be invested above the $2,000 limit for IRAs.
Another Fool named Mary also wrote to remind me that Fools everywhere should also consider the tax-favored vehicle of a Roth IRA for working teens. The Roth requires that contributions be limited to the annual earned income of the child, but can indeed be opened for minors with an earned income.
A final trivial note on IRAs for tonight. It's said that one of the founders of the IRA was actually named Ira -- Ira Cohen. Mr. Cohen was an actuary with the Internal Revenue Service and working with a committee to find a suitable acronym for the new retirement vehicle. Ira came up with IRA, which at that time stood for Individual Retirement Arrangement.
Touchstone Friday. Good news out of New Brunswick this week. A study in the New England Journal of Medicine found that Johnson & Johnson's (NYSE: JNJ) antifungal drug Sporanox (sold under the Janssen Pharmaceutica brand) prevents the reoccurrence of fungal complications in AIDS patients, which has been especially problematic in Asia. The study's authors concluded that Sporanox should be the standard of care for patients suffering from this particular fungal infection.
Mellon Bank (NYSE: MEL) customers in the Pittsburgh area will be treated to discount offers for Penguins' games on the back of their automated teller machine receipts. This follows the announcement of a marketing alliance between Mellon and the Pittsburgh franchise of the coolest game on earth. Financial terms were not disclosed.
A variety of topics graced our monitors as this week dripped on by. On Monday, Brian "J.R." Graney led us prospecting for technology used in oil exploration. I wonder if that 4-D imaging technology Brian spoke of comes with 4-D glasses? Back at it Tuesday, Brian took us drilling for dollars as he led us through innovations in the process of extracting oil and gas.
Wednesday brought the return of an old friend, George Runkle (TMF Runkle), to the Dripfolio. George provided an excellent reflection on the value in finding and investing in franchises. Tune in Monday for the second part of this interesting topic.
Finally, on Thursday we talked about the Education IRA and how it can help young Fools with college expenses.
Next week our quest for a base of knowledge in the oil industry continues. We'll hear from George again on Monday, then the return of our fearless leader, Jeff, later in the week. For those of you who missed it, Jeff sent word from France that our next purchase of $100 will be sent to Mellon. He's wrapping up the check and launching it out into the Bay of Biscay in a bottle. Payment should hit Chase-Mellon in a few weeks, give or take a decade or so.
Have a Foolish weekend!
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