March Madness is one of the biggest gambling events of the year: Americans bet $9.2 billion last year on the tournament through office pools, offshore sites and bookmakers, according to the American Gaming Association. But few people realize that if they get lucky, the IRS gets lucky too.
While there are a lot of eyes on Warren Buffet’s employee bracket competition, the battle wages on for millions of others who’ve placed friendly bets in pools that carry much better odds, though of course for much smaller amounts of money. Yet we’re willing to wager that few (if any) of them have been thinking about how winning would impact their taxes. Of course, here at Talley, you know we do just that. That’s because whether there’s $1 million per year for life at stake or $100, March Madness bets are classified as gambling, and gambling is taxable. 
Like with any day at the track, outing to a casino, or purchase of a lottery ticket, cash and non-cash winnings from March Madness bets are taxable. All winnings should be reported on Form 1040 as “Other Income” (line 21). In addition, you may be required to pay an estimated tax on your gambling winnings.  
Special paperwork comes into play only if your winnings are over $600 or 300 times the wager (lucky you, if that’s the case). Gambling winnings in excess of $5,000 could also be subject to a tax withholding requirement before the winning payout is made to the recipient. If luck wasn’t on your side, take heart-some gambling losses can also be deductible if you itemize and keep good records.
If you enjoy the entertainment making a trip to Vegas to try your luck at the slots, or in the rare instance that you make a living as a professional gambler, detailed win-loss records are a must.  
Talley offers a broad spectrum of services to fulfill the needs of high net worth individuals, entrepreneurially driven companies and their owners. Whether you are considering an M&A transaction or experiencing a financial windfall event, the professionals at Talley & Company can make the most of both your earnings and winnings.

While most of the retail industry is focused on scaling back their brick-and-mortar presence, Target said earlier this week that their stores, both existing stores and small-format stores to come, will be critical to the growth of the company’s core business.  Given the current trend of shopper’s focusing more and more on e-commerce websites to satisfy their shopping demands, many analysts wonder if the company should consider first shutting down of its low performing assets to free up funds for the many ambitious projects the retail giant has planned.

During the company’s financial community meeting, Target outlined its strategy for the future, which includes a $7 billion investment over the next three years. In that time, the company plans to revamp more than 600 of its approximately 1,800 locations, and open more than 100 small-format stores.

The small-format stores will be focused on metropolitan areas with large populations and college campuses. Thirty of these stores will open in 2017. Target began rolling out smaller stores in cities in 2012, and opened 13 of them in places like Chicago, New York and Philadelphia in 2016. The company is also revamping its supply chain and the way merchandise moves across its network.

The focus on growing stores is a departure from the store closures we’ve heard from major retailers like J.C. Penney, Macy’s and Sears.   While analysts are generally supportive of the changes that Target outlined, some believe a few closures could be a good thing:

“We do have some concerns that Target should consider more aggressively seeking to prune lower productivity stores despite the fact that they are likely cash flow accretive and profitable on a four-wall basis,” said Cowen & Co. in a note published Tuesday. “If this is conducted thoughtfully, store pruning/closing can drive a better overall brand experience, free up capital investment for more productive stores, and improve resource allocation.”

With over 25 years’ experience consulting with industry-leading companies, we understand 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 capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Tom Brady -who earlier this month led the New England Patriots to a comeback Super Bowl victory- may be 39, but has no plans to retire before next season. He told the Fox pregame show that there was “no way” he’d retire if he won the championship: “This is the time to capitalize. I’ve worked too hard to get to this point.”

The prime of your career is most likely the best time to capitalize on your earnings. Unlike Brady, who is most likely could live quite a comfortable life if he decided to hang up his cleats and pads after winning the big game’s MVP honors, most of us need those prime-year earnings, even if you’ve topped your earnings potential.

We need those prime earning years to shore up our retirement funds. Americans ages 35 to 44 have a median balance of just about $24,000 in their 401(k)s, for ages 45 to 54 it’s $46,200 and from 55 to 64 it’s about $71,500, according to 2016 data from Vanguard. Experts say that’s far too little: Fidelity Investments recommends that by 40 you have three times your salary saved, which for the median household would be roughly $150,000; by 50 it would be six times your salary, or $300,000.

On the other hand, there may be a risk to staying at your job. For example, your performance could decline, as may be the case for Tom Brady. As Brady grows older in age, he is more likely to become injured playing football and some say he could tarnish his reputation with poor performance. A valid point, but having more championship rings than any other quarterback in NFL history (five) would most likely far outweigh any damage he could do to his legacy on the grid iron.

Most of us don’t have such options, like parlaying his success on the field into a broadcasting gig, or Brady’s bank account, so continuing to work during your prime earning years is most likely a solid strategy.

In what can be a harrowing process, many business leaders who do attempt to create an exit 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.

Shares of United Parcel Service (UPS) suffered earlier this month their biggest one-day selloff in two years, as disappointing fourth-quarter results revealed that UPS was still having trouble adapting to the surge in online holiday shopping. The results were also a clear lesson that not all business is good business.
To the surprise of no one, E-commerce business increased sharply during the holiday season, but by a lot more than UPS had anticipated. Chief Financial Officer Richard Peretz said that the normal percentage of business-to-consumer (B2C) revenue to total revenue is 55%, and that spiked to 63% in December, marking the biggest swing in 10 years.
While it might seem like that would be a good thing, B2C shipping is a lower-revenue, narrow-margin business, so it came at a cost to the company’s profits. Peretz said approximately two-thirds to three-quarters of the earnings miss was a result of this big shift in revenue source.
While UPS noted that they are in the early stages of a multiyear effort to adapt operations to meet those challenges, the quarter’s results reflect “more work needs to be done.” Peretz said UPS is increasing capital expenditures in 2017 to $4 billion from nearly $3 billion in 2016, in an effort to speed up its multiyear effort to adapt to e-commerce challenges by increasing capacity and efficiency, including through expanded automation.
With over 25 years’ experience consulting with industry-leading companies, we understand 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 capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Here’s something you might not know: Over 1.33 billion chicken wings and 49.2 million cases of beer will be consumed during this weekend’s championship football game. 

But what happens when the red-hot Atlanta Falcons and the experienced New England Patriots, a team that has played in a record 8 big games, go toe-to-toe in Houston Texas? We’re hoping it’ll be an epic game, but many players involved already have something to be thankful for, a bump in pay due to the big game being in Houston, and Texas doesn’t collect income tax.

Since pro athletes work in numerous states, they’re affected by each state’s different income tax level, which has affectively been termed the “jock tax”. That means that for every game they play in, they have to pay the income-tax rate of the state where the game is played. However players on the Atlanta Falcons and New England Patriots are in luck this year: everything may be bigger in Texas, except the taxes.

What does that mean for each player’s piggy bank? Each player on the winning team will be cut a $107,000 check by the NFL, while the losing team’s players will receive $53,000. Although Texas has no state income tax, Patriots and Falcons players who are residents of states with income taxes will still be taxed by those states as well as the federal government. This means Tom Brady, who reportedly is a resident of Massachusetts (5.1% state income tax rate), and Matt Ryan, who reportedly is a resident of Georgia (6% state income tax rate), will not receive a tax free check, just a slightly higher one than if the game were played in their home state or another state with a higher tax rate.

By comparison, last year’s Super Bowl was in the Bay Area, and many players had faced California’s top tax rate of 13.3% on their Super Bowl paychecks, so Brady and Ryan probably aren’t complaining about the change of venue.

The Pats and Falcons are also lucky they’re not playing in next year’s championship game scheduled to be played in Minnesota, which has a 9.85% income tax.

Like NFL athletes, many entrepreneurs hit new revenue strides and quickly find themselves the decision-makers of an increasingly intricate business playbook facing many additional tax “flags on the play”. We have yet to hear clients complain about quarterbacking in more money, but many soon come to see that having an expert advisory team can help avoid unnecessary fumbles and maximize growth. With a full playbook of services complimenting the needs of entrepreneurs and their closely-held businesses, Talley can offer you an accurate look at financial, tax and legal insights you need in order to call the best plays for you and your business.

Yahoo Inc. announced Monday it will shakeup its board after completing its $4.8 billion deal with Verizon Communications Inc., and several longtime directors, including CEO Marissa Mayer and co-founder David Filo, will step down as directors. After the sale of its core internet business, the company will also change its name to Altaba Inc., according to a regulatory filing by Yahoo.

All those changes depend on whether Yahoo can actually close the sale: The Verizon-Yahoo deal has become less certain after a second breach of one billion accounts was disclosed last month. The highly publicized breaches have caused Verizon to weigh their options, including potentially paying less than the agreed-upon $4.8 billion.

The pending deal marks a dramatic fall for Yahoo, one of the best known names of the internet boom in the late ‘90s. Prior to the dot-com collapse in 2000, Yahoo, then valued at over $100 billion, was in a position to buy a fledgling Google for $1 million but passed on the opportunity. After declining over the next decade, Yahoo famously turned down a buyout offer from Microsoft for an attractive $45 billion in 2008. Yahoo’s market value is currently close to $40 billion, with a large portion of that value propped up  byits 15% stake in Chinese company Alibaba, a company worth close to $241 billion.

Yahoo remains a major force online, but has struggled with an identity crisis and has fell behind rivals in its ability to ‘monetize’ its audience through advertising that is linked to customers’ browsing and other online activities. 

The Verizon deal is the first major step toward unwinding Yahoo. Next up is a trove of about 3,000 non-core patents, which Yahoo is selling in a separate auction that is expected to fetch upwards of $1 billion. 

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 capital raise, Talley & Company is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

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.

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.

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