Erin Andrews recently was awarded a $55 million verdict in her peephole lawsuit, but unsurprisingly, the IRS may be the real winner in the case. The perpetrator, Michael Barrett is on the hook for $28 million whereas the Marriot franchisee and operator, West End Hotel Partners LLC and Windsor Capital Group Inc., face the remaining balance of $27 million.  Though the verdict will likely face an appeal by the hotel franchisee and operator and the perpetrator will unlikely have the funds to pay up, taxes may be the biggest thing standing between her and a big pay day.
The IRS treats damages for physical injuries (e.g. broken bones from an auto accident) as tax-free. So are damages for physical sickness. But since 1996, your injury must be “physical” to be tax-free. The IRS says your injuries must be visible, so Ms. Andrews may have trouble treating the damages awarded to her as tax-free. She was understandably humiliated and clearly suffered emotional distress. But without being able to argue something considerably more ‘physical,’ it is all subject to tax.
Ms. Andrews may have more tax-mitigating options available by choosing to settle out of court. In a settlement both parties can attempt to iron out the tax issues and tax reporting, with varying amounts of success. 
Attorney fees can be a tax trap, too. If you are the plaintiff and use a contingent fee lawyer, you’ll usually be treated (for tax purposes) as receiving 100% of the money recovered by you and your attorney, even if the defendant pays your lawyer directly.
Ms. Andrews did the right thing and showed an enormous amount of courage by standing up for herself in court. From a financial viewpoint, her case presents an excellent example of the significant tax implications revolving around settlements/judgments that not everyone is aware of.
If you’re planning on doing estate planning for the first time in 2016, or want to make sure your current planning documents aren’t out of date, staying on top of the latest changes is important. Here are several updates to keep in mind if you need to establish or revisit your estate plan in 2016:
The estate-tax exemption. For 2016 you can leave bequests (gifts to other individuals upon your death) worth up to $5.45 million (up from $5.43M last year) free of any federal estate tax. If you’re married, both you and your spouse are entitled to separate $5.45 million exemptions. If one spouse dies and does not use up his or her full exemption, the leftover exemption amount can be transferred to the surviving spouse.
The gift-tax exemption. You can also give away a cumulative total of up to $5.45 million to whomever during your life without owing any federal gift tax. If you’re married, both you and your spouse are entitled to separate $5.45 million gift-tax exemptions. If one spouse dies and does not use up his or her full exemption, the leftover exemption amount can be transferred to the surviving spouse.
The $14,000 annual gift tax exclusion remains the same. For those with large estates, the $5.45 million estate-tax exemption isn’t enough. That’s where the $14,000 annual gift tax exclusion rule can help. Gifts made under the $14,000 annual gift tax exclusion rule (more on that below) will not trigger any federal gift taxes, nor will they reduce your federal gift-tax or estate-tax exemptions. However, gifts in excess of the $14,000 will reduce both your federal gift-tax or estate-tax exemptions dollar for dollar.
The benefit of making gifts up to the exclusion amount: they reduce your taxable estate, and they shift any taxable income generated by the gifted money to your kids, who are probably taxed at a lower rate than you. Gifts under the annual gift tax exclusion rule don’t cut into your $5.45 million gift-tax or estate-tax exemptions, but they chip away at your taxable estate. So your estate tax exposure can over time be reduced by taking advantage of the annual gift tax exclusion.
For a full list of the must-know facts that will affect estate planning in 2016, contact Talley & Company today.
Last week the IRS warned that email and texting scams aiming to trick U.S. taxpayers into providing personal data have surged 400% in 2016 so far. The schemes involve phishing (“fishing” for information and “hooking” victims) messages designed to trick taxpayers into believing the emails and texts represent official communications from the IRS, tax software companies or others in the tax industry. Here’s what you need to know.
What to Look For in These Scams
You may receive an official-looking email or text message from what appears to be an official source, whether the IRS or someone in the tax industry. The messages typically ask for data related to tax refunds, filing status, or seek confirmation of personal information, including ordering IRS transcripts or verification of IRS Personal Identification Numbers.
When you click on the links (which you shouldn’t be doing), you are sent to what appear to be government websites that ask for Social Security numbers and other personal information that identity thieves can profit from filing false tax returns. The sites may also contain malware that infect taxpayers’ computers and enable cyber-thieves to gain access to files or track consumers’ keystrokes to get personal data.
It is important to keep in mind the IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.
Also Note That the IRS Will Never:
  • text/email you demanding immediate payment, nor will the agency call about taxes owed without first having mailed you a bill;
  • demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe;
  • require you to use a specific payment method for your taxes, such as a prepaid debit card;
  • ask for credit or debit card numbers over email/text/phone; or
  • threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
Accounting Today recently released a summary of the IRS’ “Dirty Dozen” list of the top tax scams for 2016. You can view it here.


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Who is Martin Shkreli? If you google “most hated man in America”, he is the top hit -in fact, the entire first page of results is devoted to him. So why the animosity? Most of it stems from his controversial decision as former CEO of Turing Pharmaceuticals to increase the price of a medication produced by the company by 5,000 percent. His actions have drawn the ire of many already, but now you can add the IRS to that list as well.
The Internal Revenue Service has filed a tax lien for $4,628,928.55 against Martin Shkreli, the former CEO of Turing Pharmaceuticals. The tax lien against Shkreli comes from unpaid 2014 taxes of $4,625,496.70 and unpaid 2013 taxes of $3,431.85, according to which broke the news first.
Shkreli became infamous last year when he and his company Turing Pharmaceuticals increased the price of Daraprim, a lifesaving HIV medication produced by the company by 5,000 percent, from $13.50 to $750 for each pill. A decision he said he regretted, not because of what he did, but because he didn’t raise the price higher. Democratic presidential candidate Hillary Clinton denounced him: “Price gouging like this in the specialty drug market is outrageous.” Republican opponent Donald Trump also attacked Shkreli. “He looks like a spoiled brat to me,” Trump said.
Heat coming from the IRS may be the least of Shkreli’s worries at the moment though: In an unrelated securities fraud case, Shkreli is accused of using money from a pharmaceutical company that he founded, Retrophin, to pay off investors in his hedge fund. Retrophin filed suit against him last August for $65 million. His other drug company, Turing, replaced him as CEO last December following his arrest.
This may be one of the rare occasions where most individuals will be rooting for the IRS.
Talley & Company
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John Elway: 2004 Inductee to the Pro Football Hall of Fame. Back to back Super Bowl wins. It would be hard to argue that the number one pick of the 1983 NFL Draft did not have an illustrious career as a football player. One thing he wasn’t quite as good at apparently though, was investing his money.
Back in 1998, Broncos owner Pat Bowlen proposed a no-brainer deal to Elway. In the deal Bowlen offered Elway the right to buy a 10 percent share of the Broncos for $15 million. But that wasn’t all. Elway would also be given the option to buy another 10 percent of the franchise by forgoing the deferred salary Bowlen owed him on the condition Elway would become a special assistant to Bowlen, which would lead to a COO position. The amount of deferred salary on the table? $21 million.
If Elway wasn’t pleased with his investment in the Broncos, Bowlen offered him the opportunity to back out by selling back his interest in 2-5 years for $5 million more than the original purchase price. In addition, Elway would receive eight percent interest on his investment a year. He would also have right of first refusal to buy any other stake in the team if the family sold to another interested party.
So, what did Elway decide after having nine months to mull over this seemingly no-lose deal? He walked away from it and decided to invest his money elsewhere, often with mixed results.
Fast forward to 2011: Elway is named Executive Vice President of Football Operations and General Manager for the Denver Broncos but has no stake in the franchise. According to a Forbes estimate, the 20 percent stake he passed on, based on a Forbes 2015 valuation of the team at $1.94 billion, is now worth $388 million, which would have been a whopping 646 percent return on the 1998 investment, adjusted for inflation, had Elway accepted Bowlen’s offer.
While only John Elway and his closest advisors can say for certain why he would pass up what seemed to be a “touchdown” deal, it sounds like he fumbled the snap on a very good investment opportunity.
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.
Here’s something you might not know: Over 75,000 beers and 21,500 hot dogs are expected to be served during this year’s Super Bowl. But what happens when you mix the Denver Broncos, Carolina Panthers and a host stadium located deep in the heart of Silicon Valley? You get the most technologically advanced Super Bowl to date.
This Sunday, Levi’s Stadium plays host to the biggest prime time football event of the year: Super Bowl 50.  Given the fact that it is located in an area with a rich history of innovative technology, it’s only natural that the Santa Clara stadium would want to flex its technological muscles.
Levi’s Stadium has 400 miles of fiber and copper cable and 1,200 WiFi access points ready and waiting to  handle the data needs of a sold out crowd, all so fans at the big game can post selfies with their friends, snapchats of the latest play, and order food straight from their smart phones with the Super Bowl app. “We built this stadium based on three pillars,” Al Guido, the 49ers’ chief operating officer said, “technology, sustainability and the fan experience.”
Levi’s Stadium boasts 10 times the bandwidth the NFL mandates at other stadiums, and was battle tested last March when the stadium played host to WrestleMania 31. The “Super Bowl” of wrestling saw more than 76,000 fans take to their smart phones to the tune of 4.3 terabytes of data. That’s the data equivalent of downloading more than 68,000 hours of music. Stadium officials predict that this year’s data usage during the championship game will top last year’s Super Bowl record of 6.4 terabytes set in Arizona.
Everyone remembers the power outage during Super Bowl XLVII (aka the “Blackout Bowl”) that lasted more than half an hour.  On this Super Bowl Sunday, we’ll see if Levi’s Stadium’s network can handle the data-storm caused by all the smartphone-wielding football fanatics.
We’ll keep our fingers crossed.
Leading-edge businesses are partnering with The Talley Group to leverage technology to meet the needs of their growing businesses.  From IT infrastructure solutions to management information, analysis and reporting, we are the premier business consulting practice to entrepreneurs and their closely-held businesses.
For more information on how Talley can help your business leverage technology, contact us today.
After years of resisting, eBay has finally broken the silence on what it earns from StubHub, the popular ticket-selling marketplace it required for a reported value of $307 back in early 2007. While the e-commerce giant continues to guard StubHub’s impact to its overall business by choosing not to disclose the profit StubHub generates, or its margins, the information released highlights the ticket reseller’s strong performance at a time eBay’s marketplace business is slowing down
It turns out StubHub is eBay’s fastest growing business, generating 34% year-over-year sales growth and annual revenues of $725 million, roughly 9% of total sales. In the fourth quarter of last year, StubHub generated over $1 billion in gross merchandising volumes (GMV), a 30% year-over-year rise.  During the same quarter, eBay’s total GMV remained flat at $21.8 billion.   
The disclosure of StubHub’s strong performance also comes six months after eBay spun off its highly profitable payments arms, PayPal. Carl Icahn, billionaire activist investor, successfully campaigned for eBay to spin off its PayPal business, a move that already appears to be bearing fruit for investors. 
Talley & Company knows how critical structuring and financing buy/sell transactions are to entrepreneurs and family-owned businesses. We are here to help connect you to the right lender or equity group to fit your unique growth plan, present your company’s financials and “story” in a manner that increases favorability with lenders/equity groups and structure the transaction in the most tax-efficient manner. 
For more information about how Talley & Company and its affiliates can help you plan, negotiate, structure and execute on your growth strategy, contact us today. 
Depending on where you call home, you may have noticed lately that more and more items ordered from are being delivered by fleets of white trucks with the Amazon logo emblazoned on their sides.  In a move signaling a bigger push into the shipping industry, Amazon is expected to acquire French shipping company Colis Privé, as part of a plan to go head to head with FedEx, UPS and DHL according to The Seattle Times.
Amazon’s acquisition of Colis Privé is part of a bigger move by Amazon to rely less on multinational shipping companies to ship their products.  The potential benefit of owning the shipping network could potentially have a substantial impact for Amazon’s bottom line when taking in account rising shipping costs. In 2014, the company spent over $8.7 billion on shipping, up from $6.6 billion in 2013. It seems likely that after managing the logistics of its core revenue-generating, Amazon could then extend their logistics capabilities as a service to other organizations. 
This move would not surprise many, as Amazon is no stranger to disrupting industries. What started as the computing infrastructure that powered the company’s website (the largest retailer in the world) became the building blocks to what would transform into the biggest business in cloud computing by far. Amazon has transformed the way organizations utilize computing power by allowing clients to purchase computing power on an hourly basis which is ideal for projects whose capacity needs fluctuate at certain times. 
With the pending acquisition of Colis Privé, Amazon appears ready to disrupt another industry.
Growth through acquisition, is often mistakenly considered the exclusive domain of the largest companies. However small and midsize company looking to achieve substantial growth can benefit just as well. For more information about how Talley & Company can help you plan, negotiate, structure and execute on your growth strategy, contact us today.
Have you ever wondered where your favorite traditions came from? For example, the American term “Santa Claus” is derived from the Dutch word for old St. Nick, Sinterklaas. Did you know Germany is credited with starting the Christmas tree tradition as we now know it in the 16th century when Christians brought decorated trees into their homes? It only became popularized throughout the rest of Europe and North America after Queen Victoria and her German Prince, Albert were sketched in a newspaper standing with their children around a Christmas Tree. Here are other ways countries celebrate during the winter holiday season.
Jamaicans dress in elaborate costumes and celebrate with parades and “Junkanoo” dancers, based on African dance. The festival, which occurs on Boxing Day, the day after Christmas, may have started as early as the 16th century. 
Thirteen jólasveinarnir, or “Christmas Lads,” deliver presents to children in Iceland. Originally, the Christmas Lads were pranksters. Each showed up on a specific day around Christmas and performed a trick or prank.
Children in Japan receive their Christmas presents on their pillow during Christmas night. And a traditional Christmas meal in Japan is fried chicken.
In the Ukraine, it’s traditional to hang spider web-shaped decorations on the tree. This reflects the Ukrainian legend of the poor widow who didn’t have enough money to decorate her tree, but when her children awoke on Christmas day, the tree was covered in webs that glistened gold and silver in the morning light.
The Spanish dish, turrón, a confection made from honey, egg white, sugar, and toasted almonds, is served during Christmas. Recipes date back to the 16th century.
Mistletoe was first hung as a Christmas decoration in Great Britain. However, the tradition of kissing under the mistletoe is most likely of Scandinavian origin.
Children in Holland receive presents from Sinterklaas on December 5, not Christmas Eve or day. And if they leave carrots for Sinterklaas’s horse, he’ll leave the kids sweets.
Here, people hide all the brooms in the house on Christmas Eve to prevent witches from stealing them for a midnight ride. And it’s also a Christmas Eve tradition to leave a bowl of porridge in the barn for the gnome who protects the farm.
In Germany, it is traditional for children to decorate their Christmas lists with pictures and then leave them on the windowsill overnight. And the Christkind delivers gifts at Christmas. Also in Germany, it’s a tradition to leave a shoe or boot outside the front door on December 5th.
Here, Christmas is celebrated on January 7th, and Babouschka brings gifts to children. Babouschka, meaning old woman or grandmother in Russian, is based on the biblical story of the woman who didn’t give a gift to the baby Jesus. So, to repent, she gives gifts to children.
The traditional Christmas meal in Poland is called the Wigilia. Held on Christmas Eve, Wigilia is derived from the Latin phrase “to watch.” Families here believe that what happens during Wigilia festivities predicts the coming year.
Italian families celebrate Christmas Eve with the Feast of the Seven Fishes and eat lentils during the holiday season to ensure luck and wealth for the following year. The children in Italy receive gifts from La Befana during Christmas.
It’s traditional for Irish families to leave out mince pies and Guinness Ale as a snack for Santa.
In Finland, families decorate the holiday tree with geometric mobiles made out of straw. And it’s customary to enjoy a sauna before Santa’s visit.
The latest reports from Yahoo indicate that it plans to spin off its core business and leave little else behind, while allowing Yahoo shareholders to keep their stake in Chinese e-commerce giant Alibaba. Yahoo’s most recent move underscores the profound changes the internet environment has underwent and how Yahoo failed to adjust to change. Why does this all matter? Entrepreneurs can learn a valuable lesson from Yahoo’s inability to reinvent itself in the smartphone age.
For many people in the mid-1990s, Yahoo was the hub of the internet. After all, who didn’t have a Yahoo email address that we’re now too embarrassed to disclose the name of? (I’m sure a support group exists for all of us out there!)  Fast forward twenty years later and the internet environment is almost unrecognizable when compared to Yahoo’s heyday. Since then, it has been overshadowed by internet companies (Google, Facebook, Amazon, etc.) better able to keep pace with the times.
Taking a Reactive vs. Proactive Approach to Change. Yahoo wasn’t turning a blind eye to the obvious changes the internet was experiencing. Google and Amazon rose to prominence during the same dot-com boom as Yahoo, yet they now look radically different. Whereas Yahoo focused on its core business and tried to reactively adapt it to the change, other internet companies forged ahead into uncharted territory: Google took a proactive approach and expanded past search, building successful smartphone software, email and word processing services, and the very popular browser, Google Chrome. Amazon, not satisfied with being the largest e-retailer in the world, became a streaming video/music provider and a provider of global internet infrastructure that other businesses pay to utilize.
The lesson being that failure to innovate and keep up with the changing times can humble even the largest of companies. While Yahoo concentrated on its core business, these other companies were pioneering new services and products. Google, Amazon, and Facebook have all taken a proactive approach to the rapid pace of online change, in part because they have been helping drive that change themselves by constantly innovating.
Talley & Company understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction, or wish to guarantee a legacy for your family, Talley & Company is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

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