There is nothing quite like winning a prize, so one can imagine the amount of excitement contestants on the popular show “The Price is Right” are subjected to after winning such rewards as brand name appliances, trips to exotic locations, and brand new cars. But what happens to the contestants after their glorious fifteen seconds of fame? Here’s a hint: You don’t drive off the back lot with the brand new car you won, and you might find yourself unprepared for the hefty taxes coming your way before you can even get your fingers around your new set of car keys.

One particular contestant, Andrea Schwartz, found out the hard way when she amassed $33,000 worth of prizes. including a brand new Mazda 2 compact car, a shuffleboard table, and a pool table. Before she could claim her prizes, she first had to pay the California state income taxes in the amount of $2,500. If she had not arranged the paperwork, paid the taxes and picked up her car all within 10 days she would have forfeited her prizes.  When all was said and done, Schwartz had to scramble to come up with the funds or risk forfeiting the prizes she won.  

While it is nothing new that people pay taxes on winnings (in most cases), Schwartz’ experience on “The Price is Right” provides a valuable lesson when dealing with any windfall event you may experience in your own life. Winning the lottery, receiving an unexpected inheritance, cashing out a retirement plan. These financial events can be a welcome occurrence in your financial life, but the fact of the matter is, each of them raises serious financial questions that you have to deal with -and quickly. 

As in the case of any sudden windfall event in life,  the tax professionals at Talley LLP can make the most of both your earnings and winnings.

As fans of the hit show “Shark Tank” can attest, it’s not easy securing funding for your small business.  Since debuting in August of 2009, millions of viewers have watched entrepreneurs try to convince one of the five “sharks” to invest in their business, not just financially but also with advice for long-term growth.  To quote head-“shark” Kevin O’Leary, “Building fast-growing, globally competitive companies is tough.”

In each episode small business owners make their pitch to the five sharks, all well-known millionaires who started out as entrepreneurs themselves, including Mark Cuban (entrepreneur/owner of the NBA’s Dallas Mavericks) and Daymond John (founder of the FUBU clothing line), to convince at least one of them to invest their money and time.  But that isn’t easy.  Like all investors, the “sharks” have heard it all – from failures like the Life Caps Survival Pill (a vitamin and mineral pill that allows you to live without food for up to two weeks) to successes such as Ava the Elephant (an effective medicine dropper for children). Many contestants on the show get eaten alive by the “sharks” for the same reasons entrepreneurs outside of the reality TV show, by not having their financials in order or having a well-thought-out business plan.  As one “shark” put it, “Just because you have a hobby, doesn’t mean you have a business.”  This is a reality show that really is, well, real.

Whether you’re appearing on “Shark Tank”, seeking angel investors, or acquiring financing, you’ll need to do your research and be prepared. Talley LLP can assist you throughout the entire process.  From reviewing and preparing financial statements in a way that interests potential buyers/investors, to uncovering value from areas financials alone won’t reveal, the experts at Talley are here to help your business ventures succeed.

Under the new tax law, small and medium-sized companies may need to consider cutting back on entertainment expenses.

Under the prior law, so long as an expense was directly related to the active conduct of a trade or business, you were allowed a deduction for an activity generally considered to be entertainment, amusement, or recreation. The limit was up to 50% of the expense. Starting in 2018, the cost of many types of entertainment expenses will no longer be deductible.

Additional IRS guidance on this subject is expected, however, below are a few examples of how the Act may impact businesses and their employees:

  • Cost of taking a client to dinner before a baseball game would not be deductible. Prior to the Act, the expense would be partially deductible.
  • Cost of employee lunch on premises will be partially deductible, subject to the fifty percent threshold. Prior to the Act, the expense was fully deductible.
  • Cost of providing parking passes to employees at garages near their office would not be deductible. Prior to the Act, the parking cost would have been fully deductible.

Write-offs for business-related meals with clients haven’t changed; they’re still 50% deductible. Which may mean more dinners, and fewer experiences, for business developers wooing prospective clients. Yet businesses still need to be careful: Going to an expensive restaurant or venue with live music could, for instance, fall under entertainment.

While many businesses will continue to attend events with their clients even if these types of expenses are no longer 50% deductible, the cost of doing business just went up.

Whether you are considering the new tax treatment of M&E expenses for 2018 or evaluating how tax reform will affect your overall tax situation, consult with the tax experts at Talley LLP today.

As American actress Meghan Markle and Britain’s Prince Harry prepare to walk down the aisle this Saturday, most people will not focus on the U.S. tax issues our complex U.S. tax laws inevitably seem to bring. Early in their engagement, Buckingham Palace announced that Markle will become a British citizen after marriage. Yet tax lawyers quickly pointed out that Meghan Markle’s U.S. citizenship could cause tax headaches for Britain’s royal family.

Unless she renounces her American citizenship, she must continue to file U.S. tax returns, plus foreign bank account reports, every year, reporting her worldwide income and disclosing her assets. Even if the newly-weds try to keep their assets separate, disclosing assets may be a particular worry.

Americans living and working abroad must generally report and pay tax where they live. But they must also continue to file taxes in the U.S., where reporting is based on their worldwide income. A foreign tax credit often does not eliminate double taxes. Annual FBARs carry big civil and even criminal penalties if not handled properly. The civil penalties alone can consume the entire balance of an account.

What if Markle decides to renounce her U.S. citizenship? The U.S. charges $2,350 to hand in your passport, a fee that is more than twenty times the average of other high-income countries. One generally must prove 5 years of IRS tax compliance as well. For some, a reason to get into compliance is only to renounce, which itself can be expensive.

Markle reportedly has a net worth of $5 million, which would mean she would likely need to pay an exit tax to the U.S. if she renounces. If you have a net worth greater than $2 million or have an average annual net income tax for the 5 previous years of $162,000 or more, an exit tax most likely applies. It is a capital gain tax, calculated as if you sold your property when you left. A long-term resident giving up a Green Card can be required to pay the exit tax too.

The tax headache raised with the latest royal wedding stands as an example to individuals and families relocating abroad to consult with an experienced tax professional.

Only broadly experienced tax advisory professionals can provide a truly global perspective so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us today.

As American actress Meghan Markle and Britain’s Prince Harry prepare to walk down the aisle this Saturday, most people will not focus on the U.S. tax issues our complex U.S. tax laws inevitably seem to bring. Early in their engagement, Buckingham Palace announced that Markle will become a British citizen after marriage. Yet tax lawyers quickly pointed out that Meghan Markle’s U.S. citizenship could cause tax headaches for Britain’s royal family.

Unless she renounces her American citizenship, she must continue to file U.S. tax returns, plus foreign bank account reports, every year, reporting her worldwide income and disclosing her assets. Even if the newly-weds try to keep their assets separate, disclosing assets may be a particular worry.

Americans living and working abroad must generally report and pay tax where they live. But they must also continue to file taxes in the U.S., where reporting is based on their worldwide income. A foreign tax credit often does not eliminate double taxes. Annual FBARs carry big civil and even criminal penalties if not handled properly. The civil penalties alone can consume the entire balance of an account.

What if Markle decides to renounce her U.S. citizenship? The U.S. charges $2,350 to hand in your passport, a fee that is more than twenty times the average of other high-income countries. One generally must prove 5 years of IRS tax compliance as well. For some, a reason to get into compliance is only to renounce, which itself can be expensive.

Markle reportedly has a net worth of $5 million, which would mean she would likely need to pay an exit tax to the U.S. if she renounces. If you have a net worth greater than $2 million or have an average annual net income tax for the 5 previous years of $162,000 or more, an exit tax most likely applies. It is a capital gain tax, calculated as if you sold your property when you left. A long-term resident giving up a Green Card can be required to pay the exit tax too.

The tax headache raised with the latest royal wedding stands as an example to individuals and families relocating abroad to consult with an experienced tax professional.

Only broadly experienced tax advisory professionals can provide a truly global perspective so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us today.

According to a survey by Deloitte, only 40% of organizations polled consider the information provided by their finance function to be insightful. The report even suggests that smaller businesses glean more benefit from this type of information.  So why would smaller organizations, who are typically resource-constrained when compared to the “bigger guys”, find more benefit from management information? A strong argument can be made that as you continue to grow, so do your management information needs.

If your objective as an entrepreneur is to build a successful business, how do you stay on top of the quality and insightfulness of management information as you experience growth? Here are several key areas to focus on:

Improving data is a good place to start. Accuracy. Reliability. Accountability. Conduct regular reviews of your data and how you collect it to ensure the accuracy and quality of data entering your management reports. By improving and simplifying your systems, you can achieve greater accuracy and reliability in your Key Performance Indicators (KPIs).

Balance KPIs with your strategic objectives. Deloitte found that 60% of respondents do not review KPIs with strategic objectives in mind while only 20% thought they were focusing on the right metrics. KPIs are major insights that make real connections across all departments. Rather than focus on the sheer number of KPIs, hone in and focus on those that have a causal relationship with your strategic objectives. Also, non-financial KPIs are often glanced over but demonstrate how effectively a company is achieving key business goals (e.g. employee retention rates, customer satisfaction, enquiry-to-sales conversion rates, etc.).

Investing in the right team of advisors. Translating a business’s infinite streams of data into decision-making tools that help increase growth and profitability is no easy task. Working closely with the data particular to your business, you and/or your advisors can pinpoint the right key performing indicators and accurately interpret information to ensure your company is on track to meet goals.

With over 25 years’ experience consulting with industry-leading companies, Talley LLP and our affiliate Group 11 Advisors are committed to providing clear, knowledgeable and applicable financial data and analysis solutions, enabling management to intelligently track performance, progress and profits. To determine whether your business is taking advantage of all metrics available to make the most informed decisions for future success, schedule a time to talk with us today.

 

Tax Freedom Day, the day where Americans as a whole have earned enough money in order to pay the nation’s tax burden fell on April 19 this year. The nation’s total tax bill for 2018, taking into account all federal, state, and local taxes stands at nearly $5.2 trillion, representing 30 percent of national income. This figure represents 30 percent of income. It took 109 days to pay off this year’s bill.

Of course, our personal tax freedom days vary depending on where we live, as well as our income, investments, and other holdings. For example, Californians will celebrate tax freedom day several days later, on April 23. And based on individual factors, the day may come even later (or earlier) in the year for each individual.

Most people are interested in reducing the number of days it takes to reach their own personal tax freedom day. For individuals with straightforward tax profiles, this might be accomplished in the weeks leading up to April 15 by looking for ways to maximize deductions and help score the biggest refund check. For high-income earners, business or property owners, estate beneficiaries or holders, and anyone with multiple tax positions that are intricately connected, this short-term, narrowly targeted approach can actually do more harm than good.

In these cases, personal wealth, business portfolios, and long-term investments are all complicated moving parts to take into consideration months and years before tax day. Otherwise, someone may be minimizing their taxes for any given year, but by doing so expose themselves to greater taxes over the long term. Therefore, a holistic approach may help you lessen your tax burden a substantial amount over the long term.

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, your family and business. For more information, contact us today.

A number of ultra-rich tycoons have decided to divvy up their wealth for charity and other benefactors, leaving much less than they could to their children. Microsoft founder Bill Gates and his wife, through the Bill and Melinda Gates Foundation, are major proponents of this personal choice. They started The Giving Pledge, which invites the world’s richest to commit to donating at least half their money to charity. Here are several notable tycoons who’ve either signed The Giving Pledge or have otherwise decided not to leave their amassed fortunes to their children.

Warren Buffet – Berkshire Hathaway

Bill Gates’ good friend Warren Buffet is among the list of affluent who signed the Giving Pledge. He plans to give away 99% of his wealth to philanthropy either during his lifetime or death. Why not leave it all to his three kids? In an interview with Fortune magazine over 25 years ago, he was famously quoted for expressing that he’d like to give his children “enough money so that they would feel they could do anything, but not so much that they could do nothing.”

Gene Simmons – KISS Frontman

Rock legend and bassist for the internationally hot-selling band KISS has been quoted for expressing a similar sentiment in regards to his own two kids and their inheritance. He said in a CNBC interview, “…in terms of an inheritance and stuff, they’re gonna be taken care of, but they will never be rich off my money. Because every year they should be forced to get up out of bed, and go out and work and make their own way.” A self-made man who emigrated from Israel to the U.S. with his mother in the late 50s, Simmons pursued a variety of careers before becoming “The Demon.” His net worth has been estimated at $300 million.

Michael Bloomberg – New York City Mayor

An avid philanthropist with a net worth of $50.7 billion according to Forbes, Michael Bloomberg intends to give away nearly all his fortune or leave it to his foundation. He has signed The Giving Pledge, and in his letter to the foundation said, “If you want to do something for your children and show how much you love them, the single best thing-by far-is to support organizations that will create a better world for them and their children.”

Whether you’d like your children to inherit the whole of your fortune, want most of your wealth to go to charity, or feel like striking a balance between options, an experienced financial advisor can help you structure your estate planning so that more of the money goes to your benefactors and less is eaten up in tax obligations. Call Talley LLP to learn more about important inheritance and philanthropic strategies that can help protect your assets and mitigate your tax burden.

Before Michael Lewis’ 2003 book, Moneyball: The Art of Winning an Unfair Game, most people weren’t familiar with sports analytics. The book chronicled the 2002 Oakland Athletics baseball team and its GM Billy Beane’s analytic approach for assembling a competitive team on a tight budget. Today, it’d be difficult to find a pro sports team that does not have an analytics department or analytic experts on staff.

Sports analytics, like business analytics, will continue to evolve. With an ever-expanding surplus of information, it’s increasingly difficult for organizations to decide where to focus their efforts to deliver meaningful results. Here are three key lessons from sports analytics that can benefit your business.

Data and Metrics: Too Much of a Good Thing?

In professional sports, the supply of data and analytical tools far outweighs the demand. New data sources and the various ways to acquire it, like slow-motion video capture, wearable GPS devices, and fitness trackers, are being developed and released at ever-increasing rates. But just because it’s available, doesn’t mean it’s useful. Determining which metrics have the best effects on business performance remains the more challenging task.

Analyze the Team, Not Just the Individual

Professional baseball pioneered sports analytics because it was easy to measure the performance of individual players on the field. Yet baseball, like a business, is a team sport. Success depends on both individual performance and the overall performance of the group. Variations on this type of analysis can be applied to businesses when you use metrics to identify bottlenecks, measure efficiency, and increase accountability across key departments and personnel.

Success Depends on Strategic Partnerships

Professional sports teams around the world partner with expert data, analytic software, and hardware providers to help them succeed. Choosing the right advisory team can mean the difference between simply spinning your wheels and actually growing your business.

With over 25 years’ experience consulting with industry-leading companies, Talley LLP and our affiliate Group 11 Advisors are committed to providing clear, knowledgeable and applicable financial data and analysis solutions, enabling management to intelligently track performance, progress and profits. To determine whether your business is taking advantage of all the metrics available to make the most informed decisions for future success, schedule a time to talk with us today.

If you own a family-run business, succession planning isn’t simply a decision to not show up to work. Having a well thought-out plan of what will happen when you finally decide to retire seems like it would be a prudent matter, however only 23 percent of family businesses have a robust succession plan in place, according to a report from PricewaterhouseCoopers, with only 52 percent of the family businesses polled intending to pass ownership into the next generation.

Given how dysfunctional families can be, the reluctance of many family business owners to pass the company down to their children or relatives should not be surprising. With family businesses, succession planning can be especially complicated due to the relationships and emotions involved, compounded by the fact most people are not comfortable discussing topics such as aging, death, and their financial affairs -even with their immediate family.

Another problem noted in the report is how a business started 30 or 40 years ago by a father or mother can look significantly different today, and will continue to evolve as time goes on. In a complex business world, the ability to adapt to changes is a skill not appreciated enough, and many would-be family member successors may not be up to snuff.

It is difficult for business owners of any small or mid-sized company to make a serious effort toward succession planning while running day-to-day operations.

In what can be a harrowing process, many business leaders who do attempt to make a plan take on too many tasks by themselves. Others simply don’t start early enough to identify and prepare the right people for future roles. With so much at stake – both emotionally, financially and professionally – the key is simply to bite the bullet, start early, and be thorough. Doing so can create a smooth transition that keeps confidence strong among customers, investors, and employees. This confidence can play a major role in ensuring the success of your company’s future and enhancing your own personal legacy.


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