What does the holiday season mean to you? For many, it is a time where families come together and celebrate their traditions and the spirit of the holidays. It’s also the season for giving: Americans donated a whopping $373.25 billion last year. While giving to your favorite cause means much more than just tax savings, if you decide to donate your time, money or services/products to a charitable cause, understanding how the IRS treats contributions from a tax-deduction perspective can help you maximize your dollars and efforts. Here’s what entrepreneurs and their businesses need to know.
Not Every Charity is Eligible with the IRS. 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.
What You Can and Can’t Deduct. There are many types of tax-eligible contributions, and the IRS handles them all differently. These are some general guidelines:
- Donating Money – Typically, monetary contributions made within the current tax year can be claimed for a deduction and itemized on Schedule A of your return.
- Donating Inventory or Property – You can deduct the fair market value of inventory or property donated, but the contribution must be made to the organization. For example, backpacks made by your company and donated to children at a youth center would not be ineligible, but if provided to the youth center itself to distribute, they would. The fair market value must be assessed for anything over $500, and items over $5,000 generally require an appraisal. A tax attorney can help you properly value and classify all kinds of donations based on very specific IRS rules.
- Volunteering – While the monetary value of services your business renders can’t be claimed, some expenses incurred for performing them can. For example, if your marketing firm has agreed to assist with the design and printing of invitations, t-shirts and flyers for an upcoming charity auction, the cost of t-shirts, printing, and mileage to and from the event can be deducted. However, your normal rate for designing and developing those projects cannot.
- Getting Something in Return – If you receive something as a result of making a contribution, your efforts may be classified as something other than a donation. For example, let’s say your company makes soccer balls and you donate to a local soccer league that, in return, runs an ad for your business at their facility. This is now an advertising expense that can be deducted on Schedule C. Here’s a different scenario: You make a contribution of $1,000 to an organization and, in return, receive admission to a sporting event for which a ticket would normally cost $300. The IRS allows you to deduct the difference, which in this case would be $700.
Limits, Deadlines and Paperwork
No more than 50 percent of your income can be claimed as a tax deduction, and all donations must be paid by the end of the tax year. The IRS also requires a written statement from the organizations you contribute to showing the place, date, amount and nature of the expenses claimed.
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 & Company today.
Amazon first disrupted book stores, then retail chains and electronic stores. Who would they go after next? Earlier this week, in a move that most likely surprised few, Amazon revealed its new vision for the future of grocery stores: Amazon Go. The new service offered by the online retail giant allows customers to walk into the store, grab what they want and simply leave the building, skipping the lines and without pulling out your wallet or purse.
Amazon says the company brought together the most advanced machine learning and artificial intelligence to eliminate cash registers in a new 1,800-square-foot store located at 2131 Seventh Avenue in Seattle. The store is currently open to Amazon employees and is scheduled to open to the public in early 2017.
As seen in a video released by the company, shoppers use their Amazon Go app on their smartphones to login at a kiosk and then proceed to pick up items. The virtual system automatically registers every time a customer picks up or puts down an item and accounts are only charged once someone leaves the store with an item. According to Amazon, the store only offers a selection of ready-to-eat breakfast, lunch, dinner and snack options, as well as essentials such as bread and milk.
Reaction to the Amazon’s latest foray into grocery stores is split between people who welcome the added convenience and those concerned by what this means for cashier workers’ jobs. If this innovation is broadly accepted over time by retailers, it would without a doubt change the landscape of the retail industry, and in a big way.
Talley & Company and its affiliate, Group 11 Advisors, keep clients on track with how to properly leverage technology to meet the needs of their growing businesses. From outsourced accounting solutions to management information, analysis and reporting, we are the premier business consulting practice to entrepreneurs and their closely-held businesses.
Call Talley & Company today to see how technology can be an asset to your business and not just an expense.
Professional athletes aspiring to dethrone Cristiano Ronaldo as Forbes’ richest athlete might have to put in some extra time gym time. News broke last month that Ronaldo inked a contract with Nike that will reportedly yield him an estimated $24 million per year for the remainder of his life. Ronaldo stands to make more than $1 billion from the landmark deal.
Nike’s lifetime deal with global soccer icon Cristiano Ronaldo is only the third deal of its kind for the $31-billion-in-revenue sports giant, and represents the first non-basketball player to acquire one. The two other athletes are LeBron James, who inked his own lifetime contract (for an undisclosed amount) 12 months ago, and Michael Jordan, who is presumed to have a “lifetime” deal as the name and logo of the Nike-owned Jordan brand.
A contract worth a potential dollar amount north of $1 billion might seem like a lot, but according to a news report from Hookit, a firm that measures the social and digital media value for brands, Nike’s contact with Ronaldo is a steal. They found that Ronaldo’s massive social media presence generated a staggering $474 million in value for Nike this year alone.
“Cristiano is one of the top influencers on the planet who has effectively leveraged his social following and engagement into a media powerhouse to drive tremendous value for his sponsors,” says Hookit co-founder Scott Tilton. “He’s been incredibly effective at integrating his sponsors into the content he shares with his over 240 million global followers.”
Ronaldo’s most valuable post from 2016 was on Instagram after Ronaldo led Portugal to the Euro 2016 title as team captain. Nike’s slogan “Just Do It” was the hashtag, while the same slogan as well as the Nike Swoosh were both in the image for a post with 1.75 million likes and nearly 13,000 comments. Acording to Hookit, the payoff was a staggering $5.8 million in media value for Nike.
While social media marketing metrics and KPIs have been notoriously nebulous with respect to their effects on a company’s bottom line, it would appear the value of Ronaldo’s social media presence combined with the cleats/boots and apparel he helps Nike sell is above and beyond the value of Ronaldo’s contract with Nike. Soccer generates more than $2 billion annually in revenue for Nike.
Whether an endorsement contract or an M&A transaction, every negotiation is unique and needs to be approached with the proper strategy and insight. Talley & Company is uniquely equipped to provide the technical and managerial expertise to help you plan, negotiate, structure and execute on your acquisition strategy.
18 Nov 2016
If Obama’s 2012 presidential victory proved big data’s ability to accurately predict elections, Trump’s 2016 win most likely proved the opposite. Prior to Trump’s triumph, the vast majority of national polls showed him as trailing Democratic nominee Hillary Clinton. Many thought Clinton’s win was inevitable, with most political pundits focused on debating how big her victory would be. And when Election Day came and went, voters proved a lot of experts wrong. So what went wrong with the polling data going into the presidential election?
Before you decide to throw all statistics and business KPIs out the window, it’s important to acknowledge a fundamental tenant of data crunching: The results are only as good as the data that is used.
According to a report by The Washington Post, Clinton’s campaign used an algorithm called Ada that staff input a “raft of polling numbers, public and private” to help Clinton’s team decide when and where they should dedicate their resources. In retrospect, it apparently overlooked “the power of rural voters in Rust Belt states.” On the other hand, The New York Times reported that Trump’s campaign seemed to have relied on much more simple methods for determining where best to concentrate resources nearing the end of his campaign, citing that “their analysis seemed more atmospheric than scientific.”
The two presidential candidates utilized very different analytical means to tackle the same challenge: where to devote key resources going into the final stretch of their campaigns.
As an entrepreneur, do you have enough of the right data to make predictions that are important to the growth of your business?
Translating a business’s infinite streams of data into decision-making tools that help increase growth and profitability is no easy task. To get it right, analysts need to sift through and consider a company’s operations from the inside, knowing what to look for in detail. 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.
Talley & Company and its affiliate, Group 11 Advisors, offer a uniquely combined platform of services that give business leaders the ability to both analyze and decipher leading as well as lagging indicators. Talley & Company not only provides timely, accurate historical financial data, (where you’ve been) but also reporting metrics that can anticipate where your business is going. To determine whether your business is taking advantage of all metrics available to make the most informed picks for future success, schedule a time to talk with us today.
07 Oct 2016
If you have been involved in the business world at any point in the last 30 years, you probably have some experience with Microsoft Excel. Afterall, Excel is one of the most common software programs used for creating spreadsheets that businesses use for tracking their financials. However, these same characteristics also make Excel a potential crutch for the entrepreneurially-run business. In today’s fast-paced business world, business owners have become far too comfortable relying on Excel as an effective business solution.
So, how does this affect my business? Excel leaves the creation of spreadsheets and the input of information in the hands of the individual tasked with maintaining key management metrics. Often, these spreadsheets are not reviewed for accuracy by someone else. Any auditor will tell you that this leaves the door open for serious errors in reporting, which can lead to costly fines or, in the worst case, the demise of your business. If this scenario applies to your company, stop and ask yourself two questions:
If the individual assigned the management of your business’ metrics had to leave work unexpectedly, how would that affect your reporting mechanisms?
What is the probability of error within your reporting due to manual input?
If your answers to either of these questions makes you nervous, rest assured there are automated reporting solutions available to give you back control of your key management metrics.
At the end of the day, who has control of your business’ metrics? What is it worth to you to have complete control of your financials and key performance indicators? Talley & Company and its affiliates have helped clients integrate their systems with automatic software solutions that help reduce the likelihood of reporting errors and provide reliable key performance indicators.
In an effort to increase low- and middle-income paychecks that have stagnated for years, the Obama administration earlier this year revealed a long-awaited rule that will make millions of Americans newly eligible for overtime pay, effective December 1, 2016.
The rule essentially doubles the threshold at which executive, administrative and professional employees are exempt from overtime pay to $47,476 from the current $23,660. 4.2 million additional workers are expected to be eligible to receive time-and-a-half wages for each hour they put in beyond 40 a week starting December 1, 2016.
While some businesses welcome the measure, many say it will force them to restructure salaries to avoid the regulation. Others fear it will mean demoting white-collar workers or altering workplace cultures. Here’s what you need to know:
Earning More Than $47,476 Won’t Automatically Exclude a Salaried Employee From Overtime. Highly compensated employees who pass a minimal duties test are exempt. Under the new rules, the salary minimum for highly compensated employees increased from 100,000 to $134,004.
According to the rule, having enough duties that involve independent discretion, including hiring, firing, managing and supervising can disqualify you from overtime. However current regulations aren’t clear about how much of these “executive, administrative and professional” duties somebody has to do in order to be exempt from overtime. In California those must be the majority of a person’s duties in order for the employee to be exempt from overtime pay
Bonuses. For the first time, employers will be able to use nondiscretionary bonuses and incentive payments, including commissions, to satisfy up to 10 percent of the standard salary level of $47,476.
The Salary Thresholds Can Change. Future automatic updates to the Labor Department’s thresholds will occur every three years, beginning Jan. 1, 2020.
Many companies expect to convert salaried workers to hourly employees who will need to punch a clock and track their hours. Some will likely maintain the status of salaried employees, but will still have to monitor their hours and net the extra pay for logging more than 40. Others will either cut or lift workers’ base pay to the new threshold to avoid paying overtime.
Founded in 1989, Talley & Company is the premier consulting and financial services firm dedicated to advising high net worth individuals and their closely held entities with the strategic business solutions that deliver meaningful results.
Ultra high net worth individuals (UHNWI) will transfer an estimated $3.9 trillion to the next generation over the next 10 years, enough to purchase the 10 largest companies in the world, as shown by a Wealth-X and NFP study. Considering the fact the the average UHNWI is almost 60 years old and 64% of this demographic is self-made, many will be dealing with complex estate-planning matters for the first time in the not-so-distant future. Here’s what’s at stake.
The report found that 64% of the UHNWI population (defined as those with $30 million or more in assets), created their own wealth and did not inherit it, making it likely that any given individual within this segment will be considering the transfer of significant wealth for the first time in their lives.
Without proper planning, this group could lose up to half their wealth through inheritance taxes. These assets could be subject to as much as 40 percent of their value in inheritance taxes, with state taxes ranging between zero and 16 percent.
The question is whether UHNWI and their heirs will be prepared. To keep any fortune intact as the baton is passed, effective estate planning has to be a top priority—and early on—to accommodate various types of asset holdings.
For example, private businesses make up the largest category of wealth from HNWI in this study, at 36% of total value. This means decisions need to be made about whether these businesses will be transferred or sold, and succession plans need to be implemented—a process that doesn’t happen overnight.
Other assets such as public holdings (24 percent), cash (34 percent) and real estate (6 percent) require additional tactics for preservation. Philanthropic transfers make up yet another category of planning.
Successful wealth transfer is an effort that doesn’t rest on the shoulders of the affluent individual alone. Educating the future generation and discussing options with knowledgeable advisors are essential to building a strong financial legacy.
And while the UHNWI from this report have enough at stake to warrant immediate attention, so does any family with a business, real estate holdings, household property, liquid savings, or stock investments. Whether your assets make up part of the $3.9 trillion to be transferred over the next decade or not, the only way to make sure more of your money goes to the people and causes you’d prefer to have it (over the IRS) is to plan for it with your advisors.
Source: www.wealthx.com September 15, 2016
The European Union’s main regulatory body, the European Commission, has sent Apple a staggering tax bill of an estimated $14.5 billion for unpaid taxes. While the commission had been expected to rule against Apple, both Apple and the U.S. government had anticipated a much smaller amount. Here is how it happened and why U.S. taxpayers may end up having to pay most of the bill.
Apple, like many other big U.S. tech multinationals, built its European headquarters in Ireland. While there are various reasons Ireland is attractive to U.S. tech companies, the most crucial attraction is Ireland’s very corporation-friendly tax system. Apple located its intangible intellectual property in subsidiaries in Irelend, which earned about 90 percent of Apple’s foreign profit, protecting it from tax authorities outside of Ireland.
Other countries in the European Union are concerned with Ireland’s tax policies, believing that Ireland is stealing business as well as tax revenue. Until now, the European Union had limited authority over taxes making it very difficult for these countries, or European authorities, to do anything about it. Now the European Commission has taken the stance that Irish tax policy for multinationals is a kind of state aid to business, which the European Commission does have jurisdiction to police. The European Commission has decided that Ireland’s tax arrangements are an illegal state subsidy, which would force Ireland to reverse the subsidy and demand back taxes from Apple.
“It’s also possible that the kinds of payments that are contemplated by the EU decision today, at the end of the day, are merely a transfer of revenue from U.S. taxpayers to the EU,” said White House spokesman Josh Earnest in a press briefing on August 30, 2016. “That’s the crux of our concerns about this approach.”
If Apple was required to pay billions in back taxes to Ireland, it could then deduct those payments from what it owes to the Internal Revenue Service (IRS), either retroactively or in future returns. Those deductions, could reduce Apple’s tax bill to the U.S. government, ultimately lowering the amount collected by the IRS. Theoretically, that would mean U.S. taxpayers would have to make up the difference, or the government would simply have to go without those monies.
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 & Company welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.