In the past two years, large cities and tourist hot spots have been exposed to the growing micro-mobility services industry, including electric scooters, bikes, and mopeds. Bird, Lime, Spin, Scoot, Skip, Jump, and Motivate remain the biggest names in the business, with several other smaller brands popping up on a more local scale. With differentiation being minimal, many believe that the industry only has room to shrink, particularly as more prominent names like Uber and Lyft begin to invest. In line with this theory, the industry leader Bird announced its acquisition of competitor Scoot for an estimated $25 million, a far cry for a company valued at $71.5 million.

Although Bird is the powerhouse of the industry founded in 2017, and now operating in 100+ cities worldwide, the number of competitors continues to be the biggest challenge for all groups involved. Scoot, on the other hand, has functioned on a much smaller scale since 2012, only operating in San Francisco, Barcelona, and Chile. San Francisco rejected a Bird permit bid to operate in the city last year, so this new deal will ultimately allow Bird to get its foot in a previously closed door. The addition of Scoot’s mopeds and scooters will also grow the Bird range of vehicles even more after the introduction of its Bird Cruiser, an e-bike/scooter crossover, from earlier this year.

San Francisco’s denial of Bird’s permit bid did not surprise many, as cities feel the electric transportation devices may cause more harm than good. Add this to the list of challenges facing the growing micro-mobility services industry, which includes damage and theft of fleets, irresponsible use by riders, annoyed residents, pollution, and the risk of public transportation obsolescence. Overall, the Bird acquisition of Scoot may just be the beginning of the industry’s consolidation. It will be interesting to watch which bigger players will buy out smaller sized firms in the coming years. Ultimately, industry specialists believe that many of these micro-mobility companies may finally be able to turn a profit if this is the case.

Talley LLP understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability or build your brand through a business transaction or capital raise, Talley is the premier consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

The year has been off to a rocky start for Uber, as they are experiencing the highs and lows of going public. Although their tumbling share price is currently a main worry for the company, it seems that the rideshare giant may be facing even more problems regarding their tax situation. This week, Uber’s SEC filing showed that the company is currently under audit by the IRS as well as other foreign authorities.

The main tax returns under question are for the year 2013 and 2014, with the primary cause related to Uber’s transfer pricing positions. These are essentially how Uber allocates the locations of its different incomes and costs. Additionally, in many countries, including the United States, the United Kingdom, Mexico, Brazil, Australia, India, and others, the company’s 2010-2019 returns are still open and under question. Although Uber has stated they are prepared for the additional tax liability, the company cannot estimate the total liability at this time.

It is entirely possible that in the next year Uber’s gross unrecognized tax benefits will be subject to substantial changes, with the company noting they estimate that the reductions will be at least $141 million. Considering Uber has had tax issues in the past, particularly regarding international activities since its start in 2010, this might not be the end of the company’s struggles with the IRS and many foreign tax jurisdictions.

For the future, many predict that these audits may also lead to more problems for Uber’s tax situation with respect to the classification of its drivers. Over the years the company has tried to categorize its workforce as independent contractors rather than employees to save on tax liabilities. The increased attention on their financials and tax returns may lead to a larger investigation on this matter as well.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.

Stephen M. Ross has become the University of Michigan’s biggest donor, having given over $378 million to his alma mater over his lifetime. In what has become a sixteen-year development, the federal appeals court has reaffirmed a 2017 ruling that the billionaire had grossly overstated a charitable donation of $33 million on his 2003 tax returns.

From 2002 to 2003, Ross and his associates at RERI Holdings LLC bought and then gifted commercial real estate worth an estimated $3.9 million but claimed the same donation as a $33 million deduction. An audit in 2017 led the IRS to discover the massive $29 million difference in value. The Tax Court judges ultimately concluded that Ross and RERI Holdings’ donation was “a sham for tax purposes” and “lacked economic substance.” This year in an attempt to fight that judgment, the group decided to take their case to appeals court, which failed for a few of the following reasons.

At the time, Ross and RERI attempted to reason the write-off valuation was accurate, claiming their appraisal was based on future interest on the real estate. Some believe that the group may have reached this calculation using the Section 7520 rate, which was about 4% at the time, to value the interest on the charitable donation. Unfortunately for Ross and RERI, the 7520 rates were not applicable, and the value of the real estate could never reasonably reach that high of a markup.

Additionally, they incorrectly prepared their Form 8283 Noncash Charitable Contributions. They filled out the fair market value as $33 million as well as the date but failed to state the basis, which would have been approximately $3 million. On one hand, if the number had been included, the IRS would have most likely been suspicious, but on the other, by leaving it blank, this became a red flag of failure to substantiate.

With the case finally closed, Ross and RERI’s final ruling leaves them unable to claim the deduction and liable for a 40 percent penalty on the tax underpayment. As in most tax fraud cases charitable or not, when attempting to deceive the IRS, you will most likely come out as the loser.

No matter the amount, your generosity in gifting time and money to worthwhile causes can have a significant impact on your tax liability. While tax considerations should never drive your charitable giving, it makes sense to structure your gifting to maximize the tax benefits. If you have questions regarding your gifting or estate plan, please contact Talley LLP today.

In October of 2017 famed singer-songwriter, Tom Petty passed away from an accidental drug overdose at the age of sixty-six. Leaving behind a wife and two daughters, Petty’s family members have been embroiled in several legal battles concerning his estate over the past two years. Most recently, Petty’s daughters, Adria and Annakim Violette have filed a lawsuit against his widow, Dana York Petty, for $5 million based on the theft, misuse, and misallocation of his assets.

Petty’s estate was set to be divided between the three women upon his death under the Petty Unlimited LLC. The entity was to be run by the three individuals with equal power to maintain and preserve his legacy. Recently the daughters claim to have found that Dana failed to create Petty Unlimited LLC and instead created a separate entity called Tom Petty Legacy LLC. The sisters have said that this has prevented them from obtaining their full shares of their father’s estate since Dana along with several other co-named defendants diverted more than their established 1/3 share. The two are seeking damages of $5 million, the creation of a “constructive trust” for the assets they were deprived of, and further measures to prevent future interferences from Dana and her associates.

The current allegations come months after Dana accused Petty’s daughters of trying to prevent her control of the estate as the directing trustee. Being that when decisions would come to a vote Petty’s daughters would be able to gain the 2/3 majority, Dana felt the two would be exerting primary control over the Petty businesses. At the time, Dana was also said to have deemed Adria’s actions erratic concerning Petty’s posthumous music releases. In return, the sisters alleged Dana was preventing them from making decisions concerning the estate in an equal manner. This accusation, along with the LLC issue, is what has ultimately caused the two to file their most recent lawsuit.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

In recent years, health scientists have begun emphasizing research related to preventing illnesses and diseases before they become harmful. The Stanford University School of Medicine is a particular champion of the cause, dedicating studies to what they call precision health, or “predicting, preventing, and curing disease precisely.” In their most recent study, the group utilized “Big Data” on over a hundred patients to preemptively identify sixty-seven issues including high blood pressure, lymphoma, diabetes, infections, sleep apnea and more.

Researchers started by creating a biological baseline of participants health. Using wearable trackers, microbial and molecular profiles, blood and stool samples, and genome sequences, they determined what being “healthy” for each person meant and began tracking the metrics daily over a three to eight-year period. Like all data, the information meant little without the ability to distinguish between what was important and what was not. As they observed changes in the different variables, the group began seeing abnormalities that could be matched to potential health problems.

The genetic sequencing found thirteen disease-related concerns including heart defects, which were later confirmed with cardiac testing. One individual’s spleen was enlarged which led doctors to identify lymphoma and allowed the patient to get treatment early. Heart rate monitoring led to the discovery of sleep apnea, and elevated heart rates showed the beginnings infections. High blood pressure was found in eighteen individuals, while other irregularities indicated precancers, low hemoglobin, and arterial plaques all before the patients exhibited symptoms. 

Additionally, with all the collected information the scientists were able to make preliminary determinations on biomarkers and molecular markers for diseases and cardiovascular disease risk. With positive results, the research team is looking to continue and expand the study in the hopes of helping more people. The important lesson of Stanford’s findings, applicable to most businesses large or small, is seen in how the team converted “Big Data” into proactive data that can ultimately save lives.

From technology-based accounting solutions to management information, analysis, and reporting, Talley LLP is the premier business consulting firm for entrepreneurs and their closely-held businesses. For more information on how to leverage your business’s data technology, contact Talley today.

In 2012 the Golden State Warriors announced their desire to relocate from Oakland’s Oracle Arena, and by 2017 commenced construction on the team’s brand-new facility, the Chase Center in Mission Bay. With the massive multi-purpose arena set to open before the 2019-2020 season, the Warriors revealed that they would be selling memberships in the $15,000-$35,000 range to help finance the billion-dollar project.  The sales of these memberships are estimated to total about $300 million in interest-free loans and bring into question if the Warriors would be required to pay income taxes on the membership fees.

After analyzing the terms, the IRS determined that the Warriors will not have to pay taxes on the money received from the memberships. This ruling was in the Warriors favor as the tax code would not classify the loan proceeds as a part of the team’s gross income, a benefit related to their federal income taxes.

On the other hand, the IRS ruled that those who purchased memberships will not be able to deduct the loan from their taxable income. Looking at the loan details, the thirty-year season ticket memberships are paid either in full without interest, or in installments with interest. By the end of the membership period, the Warriors state they will repay the fees to buyers, under the stipulation that the team will not have to pay interest.

In response to the ruling, the team wanted to inform their potential ticket holders, and have clearly stated in the membership agreements that the loan amount is not deductible on members’ income taxes. Not surprising for a team that’s won three out of the last four NBA championships, the news hasn’t deterred their diehard fans with the membership waiting list having over 40,000 individuals.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.

While you might eat McDonald’s, See’s Candy, or Dairy Queen as an infrequent cheat meal, Warren Buffett enjoys his McNuggets and Coke at least three times a week. The 88-year-old is the third richest man in the world and recently told the Financial Times, “I’m not bothered by the thought of my death.” Although not the best option for those trying to keep their weight down, Buffett’s viewpoint can teach us valuable lessons on avoiding burnout and succession preparedness.

Avoiding Burnout.  As the leader of the billion holding company Berkshire Hathaway, Buffett oversees the activities of the conglomerate’s many entities in many different industries. The job no doubt comes with challenges and stress that he has had to adapt to over the years. As with any entrepreneur, learning to enjoy life while pursuing success in business is a delicate balance to find. Many hard workers are too afraid to take vacation days, won’t appreciate their accomplishments, and will run themselves into the ground. Being able to take time for yourself whether that’s eating your favorite junk food meal or taking a vacation is vital to maintaining your mental health as well as your company’s longevity.

Succession Preparedness. Although Buffett’s succession plan for Berkshire Hathaway is still unknown, he is very aware of the upcoming need to choose a successor. In the company’s’ recent letter to shareholders, Buffett praised three of the company’s executives, and many surmise these are his top picks for the next CEO. Like Buffett, being aware of your company’s and your own future can help ensure that your business will continue to succeed. Proper business planning is a complex and on-going effort, but with the help of expert counsel, your legacy will be able to remain intact and flourish.

Talley shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 25 years of experience helping high net worth individuals and business owners, Talley has the expertise necessary to assist entrepreneurs throughout their entire journey, from formation through succession.

This year, Netflix released the new show “Tidying Up with Marie Kondo” that follows organizational expert Marie Kondo’s quest to help American families clean up their homes. As Kondo visits a new family each week, she focuses on evaluating all their belongings and only keeping those that “spark joy.” In each episode, the piles of “non-joy sparking” items continue to grow and with it the potential opportunity to make tax-deductible donations. Although April 15th may have already passed, consider donating over dumping to work on your tax position proactively.

When donating to charitable organizations such as Goodwill and Out of the Closet, make sure you obtain a donation receipt from the charity. You should also make an itemized list with the items’ estimated fair market values, also known as the price someone would potentially pay for your goods. This step is especially crucial if you think the total monetary value of the donation given is over $500. Remember to write down the name of the organization you donated to and the date of your donation for your records. In cases where your contribution is valued at over $5,000, an appraisal may be required, and you should always have the charity acknowledge the item that you donated in writing. You may be able to claim up to 50 percent of your income as a tax deduction based on your donations. A tax attorney can help you properly value and classify all kinds of donations based on very specific IRS rules.

Keep in mind that when making any charitable donation you won’t receive the deduction until the items or cash are turned in, and all donations must be given by the end of the tax year. You should also always research organizations you donate to, confirming they are legitimate and a qualified tax-exempt organization. If you have a cause in mind, you can determine if it’s an eligible 501(c)(3) for tax-deduction purposes using this IRS search tool.

No matter the amount, your generosity in gifting time and money to worthwhile causes can have a significant impact on your tax liability. While tax considerations should never drive your charitable giving, it makes sense to structure your gifting to maximize the tax benefits. If you have questions regarding your gifting or estate plan, please contact Talley LLP today.

Has the thought ever crossed your mind that smart devices are becoming too smart? Recently, Amazon admitted their Alexa devices collect speech recordings that are later listened to and analyzed by employees across the globe. As smart products infiltrate more and more genres from doorbells to lighting, the amount of data intercepted may leave some curious as to what companies are doing with their information.

Amazon stated that employees listen to, transcribe, and annotate conversations had with the device to improve Alexa’s speech recognition. Workers may hear everything from a request to play a popular song to your trivia answers with the hubs built-in games. In one case, there were reports that two staff members even believed to be hearing a domestic violence situation occurring but legally could not take action. When they may encounter upsetting conversations like this, workers may use the internal group chat room to release stress, since interfering in these matters would breach security.

Amazon’s response to the public’s worries of their conversations being tracked was to assure customers that there are policies in place that hide user’s personal information and that they do not tolerate any system abuse. To protect identities, they use several forms of authentication and a controlled environment for their workers. Although in this case, Amazon has told the public the information is solely for performance improvements, as seen in the reports of Roomba’s robotic vacuum tracking floor plans or Target analyzing baby product purchases to market to pregnant women, who’s to say this big data won’t be leveraged some other way in the future. For now, the information seems secure, but with the new found knowledge in hand, Alexa users may be more careful with what they are asking the smart device.

Now more than ever, the small to mid-sized business owner can develop the same Big Data analysis as larger corporations—an important step in achieving a competitive position in your industry. From technology-based accounting solutions to management information, analysis, and reporting, Talley LLP is the premier business consulting firm for entrepreneurs and their closely-held businesses. For more information on how to leverage your business’s data technology, contact Talley today.

With the marriage of Meghan Markle and Prince Harry last year, the citizenship of the American actress brought tax implications of dual citizens to light. As Markle took on her role as a British royal, many were curious to see if she would renounce her American citizenship, a choice she ultimately ended up deciding against. Not long after the pair officially tied the knot, they announced they were expecting their first child. Although the family is excited as their suspected due date looms, tax experts believe the couple should start planning their child’s tax strategy sooner rather than later.

Although not all newborns have assets, as a royal, Markle’s baby will likely receive some that will begin earning income immediately. As seen in the complications with Markle’s tax situation, the baby will be obligated to file U.S. taxes on those assets since they are categorized as a dual citizen at birth.  Parents are unable to renounce citizenship for their children, so as long as Markle is an American citizen when any of her kids are born, they will become dual citizens as well.

The Foreign Account Tax Compliance Act of 2010 requires the filing of a Form 8938, which would involve the royals’ financials, and mandates that non-U.S. banks and governments give up necessary financial information about their American account holders. In response to the stringent tax income and reporting laws of the IRS, many dual citizens have renounced their American citizenship. On average over the past two years over 5,000 American renounce their citizenship although many others are unaccounted for officially.

For Markle to do this for herself, she would have to prove five years of IRS tax compliance, pay a $2,350 fee, and most likely pay an exit tax on her estimated $5 million net worth. Fortunately for the royal child, if they give up their citizenship having not lived in the U.S for ten years and before reaching the age of eighteen and a half, they will be able to avoid the hefty exit tax. Having handled Markle’s IRS tax situation, the Sussex Royals will no doubt consult a team of tax experts.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.


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