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Financial Independence is NOT Just for Wealthy People--10 Steps to Get You There PDF Print E-mail
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Written by John Vento   
Monday, 13 May 2013 13:57

Journey to Point X (Financial Independence):

Ten Steps to Get You and Your Finances Where You Want to Go

Financial independence is the point at which you stop working for your money and your money starts working for you.

John Vento provides ten steps to help get you there.

Hoboken, NJ (May 2013)—As a result of the 2008 economic meltdown, it became stunningly obvious that many Americans had not managed their finances well. What we learned as the economy slipped into a Great Recession was that many people lived paycheck to paycheck. Many had mortgages they couldn’t afford. Many took unnecessary investment risks. And far too many weren’t saving a dime let alone putting money away for their kids’ college or their own retirement. Financial advisor John Vento says it’s time for Americans to get their financial houses in order. He says everyone should make reaching financial independence—or their Point X, as he calls it—a top priority.

“Financial independence isn’t something that’s just for wealthy people,” says Vento, president of his New York City-based Certified Public Accounting firm, John J. Vento, CPA, P.C., and Comprehensive Wealth Management, Ltd., as well as the author of the new book Financial Independence (Getting to Point X): An Advisor’s Guide to Comprehensive Wealth Management (Wiley, 2013, ISBN: 978-1-1184-6021-4, $40.00, www.ventocpa.com).

“And it’s not something that’s guaranteed just because you’re a top earner. Financial independence, or Point X, is literally and fundamentally the point at which we can stop working for our money and our money starts working for us. It is the spot at which our savings and investments alone generate enough income to support our chosen lifestyle, and allow us to continue to live that lifestyle without having to work for a paycheck. It is the place where we have achieved true financial independence.”

A CPA and CFP® with decades of experience, Vento knows exactly what it takes to sustain and build wealth. His new book is a complete resource for anyone concerned with building wealth and financial security in today’s no-guarantee financial environment. Authoritative, comprehensive, and up to the minute, it is an essential financial guide for every individual and every family.

“Of course, no one—not even the super wealthy—can just snap their fingers and reach financial independence,” notes Vento. “No matter how you define your particular Point X, whether it is an annual income of $25,000 or an estate of $250 million, you need to not only understand but effectively deal with ten fundamental wealth management issues.

“Throughout our lives, we will encounter many questions and problems relating to money, but every one of them will fall, in some way, under one or more of these ten key wealth management issues. It is important that you understand them and work within them productively—that you become financially literate.”

To that end, Vento covers each of the ten key wealth management issues in great detail in his new book. Read on for an overview of each one of them:

Live within your means. “Living within your means” is living on less than your take-home salary and any other resources you receive, such as income from an annuity or a trust. Living within your means does not mean existing from paycheck to paycheck. Living within your means does not mean living on credit or on loans. Living within your means does not mean turning to parents or friends to pay the tab when you cannot quite meet the rent or need to buy a new computer. It means not only figuring out how to pay for your needs and wants, but budgeting your income so that you still have a little money left over.

“The single most important step any individual must take to become financially independent is to commit to living within his or her means,” says Vento. “In addition to living within your means, if you are ever going to get to Point X, you must also save money. Therefore, ‘living within your means’ includes not only such necessities as shelter, food, utilities, and clothing, but also payment into your personal savings. Ideally, that payment should be 10 percent or more of your gross pay.”

Understand taxes. The average American family pays more than one-third of its income in federal, state, and local income taxes—and even more in property taxes, excise taxes, sales taxes, and other hidden taxes, such taxes on cigarettes, liquor, and certain luxuries. In other words, for just about everyone, taxes are our biggest personal expense, by far.

“In order to reach Point X, it is imperative that you understand the basics of our tax system, and that you practice careful and strategic tax preparation and planning so your personal tax burden does not deplete your income unnecessarily, and your wealth accumulates quickly and safely,” explains Vento. “Tax laws are incredibly complicated, and there is no reason for you to read up on or understand the virtually infinite ins and outs of the often arcane U.S. Tax Code. Most people do need help from professional tax advisors to benefit from tax strategies; however, you should have enough basic knowledge about taxes and the tax system to ask the right questions and find the appropriate help to suit your own unique financial and tax needs.”

Determine your financial position. Determining your financial position does not mean simply knowing your annual salary or identifying how much you take home in every paycheck—although that is definitely part of it.

“In order to live within your means, you must have a precise understanding of your financial assets, liabilities, and net worth, by preparing a Statement of Financial Position,” notes Vento. “You also need to know—and to track on a regular basis—where all your personal funds are coming from and going to: This is your Statement of Cash Flow. Finally, after taking a careful look at your current financial position, you must determine your financial goals, whether for five years, ten years, or throughout your retirement years. Only then can you realistically budget for the future—and of course, reach Point X.”

Manage debt. For many people, debt is a scary concept, although it need not be. The fact is there is good debt and there is bad debt. Understanding the difference between bad debt and good debt is imperative to becoming financially literate and financially independent. Basically, good debt is money that people borrow for purchases and situations that, in the long term, will help them amass wealth and ultimately reach Point X. Some examples of good debt include student loans, business loans, certain investment asset loans, and some personal-use asset loans (such as an affordable home mortgage). In contrast, bad debt is money that people borrow (usually on a credit card) for the purchase of nonessential expenditures as well as many personal-use assets.

“When you do not use debt properly, that can lead to significant financial hardship and can prevent you from ever becoming financially independent,” says Vento. “However, when you use debt to leverage yourself in the pursuit of accumulating wealth, it can be a very powerful tool.”

Insure your health and life. Even a sound, carefully planned investment strategy can fall apart if you have not prepared properly for unforeseen problems concerning health and life. If you or a member of your family is hit with a prolonged illness, a severe injury, a disability, or death (especially of the primary wage earner), the planning and investing you have so carefully developed can quickly disintegrate.

“Health insurance and life insurance help protect you and your family from the unexpected,” explains Vento. “The premiums you pay will provide you with the peace of mind that comes with knowing that your assets and family will be protected, if and when the unexpected happens. Having the right kinds of health and life insurance at the appropriate stages of life is as important as the insurance itself. Your particular situation will determine what type of insurance you need, what kind of policy or policies will work best for you, and the amount of coverage you should carry.”

Protect your property with insurance. Protecting your property by implementing the proper risk management strategies is critical to achieving and maintaining your financial independence. The type and extent of insurance you need will change throughout your lifetime, as will the types of assets and the extent of wealth you have accumulated. The three major personal property risk management issues include homeowner’s insurance, automobile insurance, and umbrella liability insurance.

“You should consult with your property liability insurance agent or broker to fully evaluate your needs so that you can determine proper coverage to meet those needs,” asserts Vento. “It is critically important to remember you should always secure your new insurance coverage before you drop your old policy. You never want to leave yourself unprotected without proper coverage in between policies. Obtaining the proper homeowner’s, auto, boat, and personal umbrella liability coverage can provide you with the peace of mind of knowing you and your property will be protected. Being unprepared for the unexpected can rob you and your family of your pursuit of financial independence.”

Pay for college. If you are like most parents, one of your biggest concerns is, How am I going to pay for my children’s education when the time comes to send them off to college? Some parents hope their child will receive academic or athletic scholarships or grants. But for most parents, the reality is they will have to pay the majority of the cost of college from their savings—or even worse, they may have to go into debt.

“With the skyrocketing cost of college, it’s important that you start planning early,” says Vento. “Be open to your children about financial decisions and what consequences these decisions will have on the family’s future. Take advantage of college savings programs such as Internal Revenue Code Section 529 plans, Coverdell Education Savings Accounts, savings bonds, financial aid (such as federal grants, loans, and scholarships), as well as education tax deductions and credits. Understanding how scholarships, government grants, and student loans can help is essential.”

Plan for retirement. Everyone should be planning financially for retirement, regardless of how old or young they are. Especially given that people coming into retirement are facing concerns that retirees did not face 20 or 30 years ago, including living longer and supporting themselves throughout turbulent financial times.

“The longer you wait to start saving for retirement, the harder it will be to accumulate the amount you need to be financially independent,” says Vento. “Remember, one of the most valuable investment assets you have is time; the more years you save the greater your chance of financial success. By far the easiest way to do this is by contributing to your employer’s retirement plan, or if that is not available, to an individual retirement account (IRA). Implement a retirement saving strategy that allocates a specific dollar amount or percentage—I recommend at least 10 percent—of your salary every pay period. Therefore, you are paying yourself first, as though saving for retirement is your number one required expense. In fact, saving for retirement is not an expense because it adds to your investable assets, but treating it as such is of utmost importance to your success.”

Manage your investments. The rewards of proper investing can be very generous when investors adopt an investment discipline that allows them to purchase quality investments and then allows those investments to take their course. This may have been best said by Warren Buffett, the primary shareholder, chairman, and CEO of Berkshire Hathaway who is also considered by many to be the most successful investor of the twentieth century.

“It is critically important that you select an investment model that you are willing to stay with, even in the worst of markets,” notes Vento. “The appropriate investment plan for you should be the one that provides you with the highest potential rate of return in the long run that is within your risk tolerance.”

Preserve your estate. If you do not take the necessary steps to preserve your estate, unintended beneficiaries may take a significant amount of your estate instead. These unintended beneficiaries include the federal and state governments, the state administrator, attorneys, and perhaps even relatives you have not spoken to in decades. The money you may spend today on a qualified estate attorney may save your estate significant dollars in both estate taxes and administrative costs down the road.

“Estate planning, which I should stress is not just for the wealthy, can give you peace of mind by assuring your family’s financial security will continue even after your death,” says Vento. “It can significantly reduce estate taxes, administrative costs, and assure that your loved ones will be taken care of. It allows you to dispose of your assets as you see fit, with consideration given to your heirs’ individual needs.”

“Financial independence—the point at which we can stop working for our money and our money starts working for us—or Point X, as I call it in my book, is the financial ideal that we all seek,” says Vento. “With the right plan and a commitment to making the necessary life changes, anyone can reach their Point X…but you have to be dedicated to making the lifestyle changes and taking the necessary steps to achieve financial security.”

# # #

About the Author:
John J. Vento is author of Financial Independence (Getting to Point X): An Advisor’s Guide to Comprehensive Wealth Management (Wiley, 2013, ISBN: 978-1-1184-6021-4, $40.00, www.ventocpa.com). He has been the president of the New York City-based Certified Public Accounting firm John J. Vento, CPA, P.C., and Comprehensive Wealth Management since 1987. His organization is focused on professional practices, high net worth individuals, and those committed to becoming financially independent. He has been the keynote speaker at various seminars and conferences throughout the United States that focus on tax and financial strategies that create wealth. John has been ranked among the most successful advisors of a nationwide investment service firm and has held this distinction since 2008.

Mr. Vento brings with him his vast experience from working with KPMG, one of the big four Certified Public Accounting firms, where he specialized in audits of the medical and dental professions and the financial services industry. He has been an adjunct professor at St. Francis College in Brooklyn, NY, as well as Wagner College in Staten Island, NY. John has also been an advocate for promoting financial literacy and has been a lecturer throughout the New York City Public Library system.

John J. Vento graduated from Pace University with a bachelor’s degree in business administration in public accounting, and continued on to earn an MBA in taxation from St. John’s University. He is a Certified Public Accountant (CPA) and a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. Mr. Vento is also a Certified Financial PlannerTM (CFP®).

About the Book:
Financial Independence (Getting to Point X): An Advisor’s Guide to Comprehensive Wealth Management (Wiley, 2013, ISBN: 978-1-1184-6021-4, $40.00, www.ventocpa.com) is available at bookstores nationwide, from major online booksellers, and direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797. For more information, please visit the book’s page on www.wiley.com.

 
Governor Quinn Honors Mothers Across Illinois PDF Print E-mail
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Written by Brooke Anderson   
Monday, 13 May 2013 13:28
Celebrates 2013 Mother’s Day by Walking for Breast Cancer;Thanks Mothers and Grandmothers Across Illinois for Making a Difference
CHICAGO – Governor Pat Quinn today reminded sons and daughters across the state to celebrate their mothers today – and every day – for making a difference in their lives. The governor spent Mother’s Day by joining thousands of participants in the Susan G. Komen Mother’s Day Race for the Cure in Grant Park.
“Our mothers are often the most important figures in our lives – shaping the people we become and always encouraging us to be the very best,” Governor Quinn said. “Whether our mothers are with us today or deep in our hearts, I am reminding everyone in Illinois to take time on this special day to celebrate and thank them for their love.”
This year’s Race for the Cure honored Chicago’s former first lady Maggie Daley, who dedicated much of her life to improving the lives of Chicago’s children and is an inspiration to breast cancer fighters and mothers everywhere.
A national holiday since 1914, Americans across the country spend this day honoring the impact their mothers have had on their lives.
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Transitioning from CEO to Retiree: Why You Need a 5-Year Plan PDF Print E-mail
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Written by Ginny Grimsley   
Monday, 13 May 2013 13:26
3 Steps You Can Take Now to Realize Your Goals

Today’s 50-something CEOs tend to have vague dreams of  more fishing, traveling or sailing  when they retire, but they don’t know when that might be so they haven’t begun planning for it.

That’s a mistake, say a trio of specialists: wealth management advisor Haitham “Hutch” Ashoo, CPA Jim Kohles, and estate planning attorney John Hartog.

“Whether you’re selling your company, passing it along to a successor or simply retiring, that’s a potentially irreversible life event – you’ve got just one chance to get it right,” says Ashoo, CEO of Pillar Wealth Management, (www.pillarwm.com).

A 2012 survey of CEOs by executive search firm Witt/Kieffer found 71 percent of those aged 55 to 59 have no retirement plan, although 73 percent look forward to more recreational and leisure activities when they let go of the reins.

“A lot of baby boomers have the idea that they’re just going to work till they stop working,” says Kohles, chairman of RINA accountancy corporation, (www.rina.com). “If they hope to do certain things in retirement and maintain a certain lifestyle, they’re likely to end up disappointed.”

Planning for the transition from CEO to retiree should incorporate everything – including what happens to your assets after you’re gone, adds John Hartog of Hartog & Baer Trust and Estate Law, (www.hartogbaer.com).

“Many of my clients worry about what effects a large inheritance will have on their children – they want to continue parenting from the grave. You can, but should think hard about doing that,” he says.

The three say smart planning requires coordinating among all of your advisors; that’s the best way to avoid an irrevocable mistake. With that in mind, Ashoo, Kohles and Hartog offer these suggestions and considerations from their respective areas of expertise:

1. Ashoo: Identify your specific lifestyle goals for retirement, so you can plan for funding them. To determine how much money you’ll need, you have to have a clear picture of what you want, Ashoo says. Do you see yourself on your own yacht? Providing seed capital for your children to buy a business? Pursuing charitable endeavors?

Each goal will have a dollar amount attached, and you (or your advisor) can then determine whether it’s feasible and, if so, put together a financial plan.

“But you can’t just create a plan and forget it. You need to monitor its progress regularly and make adjustments to make sure you’re staying on course, just like you would if you were sailing or flying,” Ashoo says. “We run our clients’ plans quarterly.“

It’s also imperative that you don’t take any undue risks – that is, risks beyond what’s necessary to meet your goals, he says. “You may hear about a great investment opportunity and want in on it, but if you lose that money, you may not have a chance to make it up.”

2. Kohles: Don’t sell yourself short when selling your business. “If you’re banking on money from the sale of your business, know that it’s unlikely you’ll have investors just waiting with the cash for the chance to buy it when you’re ready to sell,” Kohles says.

Buyers are more likely to offer to pay over time from the company’s future earnings -- which leaves the retired CEO with no control over the business and utterly reliant on the new owners to maintain its profitability.

A good alternative is to establish an S corporation combined with an employee stock ownership plan (ESOP), Kohles says.

“You’re selling the company to the employees while retaining control until you phase yourself completely out,” he says. “The ESOP doesn’t pay income taxes – the employees do when they retire. And you don’t pay taxes on the money or the stock that you contribute.”

3. Hartog: What do you want your kids’ inheritance to say? If you have children, this decision can change their lives for the better – or the worse.

“How your assets are disposed of should reflect your values,” Hartog says. “A lot of people prefer to think in terms of taxes at the expense of values. I advise against that.”

For children, incentive trusts can encourage, or discourage, certain behaviors.

“If you’re concerned your adult child won’t be productive if he has a lot of money, set up a trust that will make distributions equal to what the child earns himself,” Hartog says.

“Or, if you want to be supportive of a child who’s doing something socially responsible, like teaching in an impoverished area, you can set it up to pay twice his salary.”

There are many creative ways to establish trusts, Hartog says. Plan about five years out and change the trust as life events dictate.

About Haitham “Hutch” Ashoo

Haitham “Hutch” Ashoo is the CEO of Pillar Wealth Management, LLC, in Walnut Creek, Calif. The firm specializes in client-centered wealth management for ultra affluent families.

About Jim Kohles

Jim Kohles is chairman of the board of RINA accountancy corporation, Walnut Creek, Calif. A certified public accountant for more than 35 years, he specializes in business consulting, succession and retirement planning, and insurance.

About John Hartog

John Hartog is a partner at Hartog & Baer Trust and Estate Law. A certified specialist in estate planning, trust and probate law, and taxation law, he has been selected to the Super Lawyers Top 100 list for nineconsecutive years.

 
Retirement Celebration for Dr. Glenn M. Pelecky PDF Print E-mail
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Written by Whitney Smith-Bringolf   
Monday, 13 May 2013 13:24

The Mississippi Bend Area Education Agency Board of Directors cordially invites you to attend a gathering given in honor of Dr. Glenn M. Pelecky. Dr. Pelecky is the Chief Administrator at the Mississippi Bend AEA and is retiring after 25 years of service. An open house is being held on Friday, May 17, 2013 from 3-5:30 p.m. at the Mississippi Bend AEA Bettendorf office, located at 729 - 21st Street.

 

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Grassley Reminds Agencies of Key Whistleblower Protections, Seeks Compliance Details PDF Print E-mail
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Written by Grassley Press   
Friday, 10 May 2013 15:08

Friday, May 10, 2013

Grassley Reminds Agencies of Key Whistleblower Protections, Seeks Compliance Details

WASHINGTON – Sen. Chuck Grassley of Iowa today wrote to 15 government agencies, reminding them of recently enacted whistleblower protections and seeking information on their compliance with the new law.

“Whistleblowers risk their careers to point out government waste, fraud and abuse,” Grassley said.  “Without them, the public wouldn’t know about a lot of problems that had to be exposed to get fixed. Our government would be the weaker for it.  Protections for whistleblower communications with Congress and agency watchdogs are critical for whistleblowers’ good work to continue.”

Grassley wrote to the major executive branch agencies about the recently enacted Whistleblower Protection Enhancement Act, which codified an “anti-gag” provision he introduced every year.  The provision makes explicit that agency nondisclosure agreements do not apply to communications with Congress or reporting violations and/or misconduct to an Inspector General, or any other whistleblower protection.  Agency nondisclosure agreements must include specific disclaimers to that effect, and those disclaimers must be posted on agency websites.

Grassley asked each agency for information including all forms, policies, or agreements mentioning communications with Congress used within the last five years and a detailed statement of the various efforts taken to post the “anti-gag” provision on the agency website.

Grassley wrote to the Department of State, Department of the Treasury, Department of Defense, Department of Justice, Department of the Interior, Department of Agriculture, Department of Commerce, Department of Labor, Department of Health and Human Services, Department of Housing and Urban Development, Department of Transportation, Department of Energy, Department of Education, Department of Veterans Affairs and Department of Homeland Security.

Grassley is a long-time advocate for whistleblowers.  He was the Senate author of the 1986 whistleblower updates to the federal False Claims Act.  Since 1986, these provisions have recovered more than $30 billion that otherwise would be lost to fraud.

The text of Grassley’s letter follows here.  The text is the same for each of the 15 agencies.

 

May 10, 2013

VIA ELECTRONIC TRANSMISSION

The Honorable Eric K. Shinseki

Secretary

U.S. Department of Veterans Affairs

810 Vermont Avenue NW

Washington, D.C. 20420

 

Dear Secretary Shinseki:

Time and again, whistleblowers courageously identify, often at great risk to their professional careers, waste, fraud, and abuse.  Unfortunately, as a result of their actions, whistleblowers often face intimidation, retaliation, and are subjected to prohibited personnel practices despite proscriptions against such action under federal law.[1]

As part of my efforts to protect whistleblowers, starting in 1988 I introduced an amendment known as the “anti-gag” provision to the Treasury, Postal Service and General Government Appropriations Act.[2] This provision was adopted and has been included in every appropriations bill signed into law since 1988,[3] most recently in March 2013 as part of the Consolidated and Further Continuing Appropriations Act of 2013.[4] In addition the recently passed Whistleblower Protection Enhancement Act (WPEA) codified the anti-gag provision as a prohibited personnel practice and thereby eliminated the need for annual revision.[5]

The new federal law now requires every U.S. Government nondisclosure policy, form, or agreement to contain an explicit statement notifying employees that nondisclosure requirements do not supersede their rights and obligations created by existing statute or Executive Order relating to classified information, communications to Congress, reporting violations and/or misconduct to an Inspector General, or any other whistleblower protection.[6] Moreover, the law requires any agency using a nondisclosure policy, form, or agreement to also post the aforementioned statement on the agency website, as well as a specific list of controlling Executive orders and statutory provisions.[7]

As the author of this rider and an original cosponsor of the WPEA who worked closely in drafting this provision with Senator Akaka, I want to ensure that this law is fully implemented.  Accordingly, please provide the following information:

1)      All forms, policies, or agreements which mention communications with Congress used within the last five years, including those with either non-disclosure or non-disparagement provisions.

2)      All forms, policies, or agreements which include the statutorily-defined statement informing employees of their rights on every nondisclosure policy.

3)      All forms, policies, or agreements which purport to limit a current or former employee’s ability to communicate directly with Congress, whether explicitly or as a part of a general prohibition without a specific Congressional exemption.

4)      A detailed statement of the various efforts that your department has taken to post the “anti-gag” provision on its website, along with a specific list of controlling Executive orders and statutory provisions.

Thank you in advance for ensuring your response arrives no later than May 24, 2013.  Should you have any questions regarding this letter, please contact Chris Lucas of my Committee staff at (202) 224-5225.

Sincerely,

Charles E. Grassley

Ranking Member                               

Committee on the Judiciary

 

See 5 U.S.C. § 2302(a) (2006) (outlining prohibited personnel practices).

Treasury, Postal Service and General Government Appropriations Act, 1989, Pub. L. No. 100-440, 102 Stat. 1756 (1988).

See generally Consolidated Appropriations Act, 2012, Pub. L. No. 112-74, 125 Stat. 932 (2011); Omnibus Appropriations Act, 2009, Pub. L. No. 111-8, 123 Stat. 685 (2009).

Consolidated and Further Continuing Appropriations Act, 2013, Pub. L. No. 113-6, Div. F, Title I, Sec. 1105 (referencing back to Pub. L. No. 112-74, Div. C, Title VII, Sec. 715).

Whistleblower Protection Enhancement Act of 2012, Pub. L. No. 112-199, 126 Stat. 1465 (2012).


[1] See 5 U.S.C. § 2302(a) (2006) (outlining prohibited personnel practices).

[2] Treasury, Postal Service and General Government Appropriations Act, 1989, Pub. L. No. 100-440, 102 Stat. 1756 (1988).

[3] See generally Consolidated Appropriations Act, 2012, Pub. L. No. 112-74, 125 Stat. 932 (2011); Omnibus Appropriations Act, 2009, Pub. L. No. 111-8, 123 Stat. 685 (2009).

[4] Consolidated and Further Continuing Appropriations Act, 2013, Pub. L. No. 113-6, Div. F, Title I, Sec. 1105 (referencing back to Pub. L. No. 112-74, Div. C, Title VII, Sec. 715).

[5] Whistleblower Protection Enhancement Act of 2012, Pub. L. No. 112-199, 126 Stat. 1465 (2012).

[6] See id. § 104(b)(1).

[7] See id. § 115(a)(2).

 
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