Last week’s question and answer

Based in the United Kingdom, I’m the world’s most global hotel company and the largest by number of rooms. I own, manage, lease or franchise more than 3,500 hotels and 536,000 guest rooms in nearly 100 countries and territories around the world. My brand names include Crowne Plaza, Holiday Inn, Staybridge Suites, Candlewood Suites and Hotel Indigo. I also manage the world’s largest hotel loyalty program, Priority Club Rewards, with more than 23 million members worldwide. More than 120 million people stay with me each year. Who am I?

(Answer: InterContinental Hotels Group)

Tax changes

Here’s a brief summary of some major tax law changes that may affect your 2004 tax return.

• Mileage rates. The business mileage rate is 37.5 cents per mile for 2004. For medical, moving and charitable travel, the rate is 14 cents per mile.
• IRA contributions. The maximum IRA contribution for 2004 (either traditional or Roth) is $3,000. If you’re 50 or older, the additional catch-up contribution is $500.
• 401(k) and 403(b) plans. The maximum contribution for 2004 is $13,000, with a catch-up contribution for employees age 50 or older of an additional $3,000.
• Health savings accounts. These are new and very powerful tax-reduction vehicles. An HSA allows qualified taxpayers to put away, tax-free, up to $2,600 (single) and $5,150 (families), to be used to pay for qualified medical expenses. If you’re older than 55, those limits move up to $3,100 and $5,650, respectively. Contributions for 2004 still can be made until April 15, 2005. But there are other qualifications that must be met in order to secure this deduction.
• Child tax credit. This credit was scheduled to drop in future years, but new legislation retained the credit amount as $1,000 per qualifying child through 2010.
• Sales tax deduction. A brand-new deduction for 2004, this will allow many taxpayers to reduce their taxes significantly, especially those residing in states without a state income tax. In effect, you can deduct the greater of your sales taxes or your state income taxes as an itemized deduction. The IRS has issued sales tax tables to be used in computing your sales tax deduction. And, to those table results, you can add any big-ticket items you bought, such as a car.
• SUV depreciation deduction. Trucks and vans with a gross vehicle weight greater than 6,000 pounds and used more than 50 percent for business were allowed a maximum first-year depreciation deduction of up to $102,000. For such vehicles placed in service after Oct. 22, though, the deduction is reduced to $25,000.

If you don’t want to pay more than you need to, learn more at www.fool.com/taxes and www.irs.gov.

A constellation of wines

Constellation Brands (NYSE: STZ) is the largest wine producer and marketer in the world. It has a broad portfolio of wines, spirits and imported beer, with wines generating 71.3 percent of sales. Its just-completed $1.3 billion purchase of Mondavi soon will boost sales.

A sober Wall Street greeted the Mondavi deal with distaste and sent Constellation shares down 8 percent to $36.25 a share on the day of the initial offer in October. What a difference a few months makes, though. Investors are now willing to buy Constellation for $48 a share — a 34 percent increase. Hear, hear!

In Constellation’s latest quarter’s earnings report, net income, minus one-time events, increased 9 percent on a 10 percent net sales gain. Operating margins came in at 16.5 percent for wine and 22.9 percent for beer and spirits for the most recent quarter

For its 2005 fiscal year, ending this month, Constellation expects to earn between $2.29 and $2.34 a share, up considerably from fiscal 2004’s $2.06. For 2006, the company expects to earn between $2.77 and $2.92.

Constellation is trading with a forward price-to-earnings (P/E) ratio of around 18. For similar P/Es, you can buy slower-growing spirits giant Brown-Forman (NYSE: BFB) or Anheuser-Busch (NYSE: BUD), the biggest in beer. Constellation seems to have the growth advantage, at least for now.

The wrong team

As a former teamster, I was employed at Transcon Inc. I was encouraged to enroll in the company’s employee stock ownership plan (ESOP) to keep the company afloat. The ESOP took a percentage of my earnings and gave stock in return. As of Oct. 31, 1998, I had 406 shares at $3.375 per share, worth a total of about $1,370. By mid-2003, my shares were worth about 80 cents each, totaling about $324. Transcon went out of business eventually. — G. Mammel, Bay City, Mich.

The Fool Responds: If you’re being urged to buy company stock just to keep your employer afloat, that’s a big red flag. In fact, even if your employer is healthy and growing, it’s not a good idea to have a large percentage of your savings in its stock. Even large, respected companies fall on hard times, sometimes temporarily and sometimes permanently — think of Polaroid, Pan Am and Kmart, as just a few examples. Invest in an ESOP only if you have faith in the firm’s management, growth prospects and financial heath. And do so with only a portion of your nest egg.

Get Buffett savvy

Can you recommend any good books about Warren Buffett? — S.R., Panama City, Fla.

One of the best is Roger Lowenstein’s “Buffett: The Making of an American Capitalist” (Main Street Books, $19). It not only covers his fascinating life (so far), but also offers a great introduction to his way of thinking and his approach to investing. Andrew Kilpatrick’s “Of Permanent Value” (Andy Kilpatrick Publishing, $30) also is insightful. To learn about other great investors, check out John Train’s “Money Masters of Our Time” (HarperBusiness, $16).

Do you have any money-saving tips for weddings? — E.G., Jackson, Mich.

Sure. Here are a few:

• Have your reception in a nontraditional place, such as a park or a beach.
• Buy a less-expensive wedding dress. You’re going to wear it only once, so why spend so much? Consider borrowing or even renting one.
• Have a morning wedding. Expenses for food, transportation and hall rentals tend to be lower in the morning. Guests might guzzle less at an earlier wedding, too, reducing your liquor tab.
• Avoid Saturdays and June, popular times when couples are often charged more.
• Consider having an expensive wedding and inexpensive honeymoon, or vice versa.
• Make the most of gift registries. Instead of registering for expensive luxuries, register for necessities. If you receive them as gifts, you won’t have to buy them later.
• Consider eloping. By saving the cost of the wedding, you can spend more on a honeymoon and still have some savings left over for investments.