After months of rumors, the Ultimate Fighting Championship (UFC) announced on Monday that it would be sold for $4 billion to a group of private investors. The deal represent the largest of its kind in the history of professional sports, topping the $2.1 billion the LA Dodgers were bought out of bankruptcy back in 2012. It also marks a staggering profit for the investors who bought the organization back in 2002.
What is remarkable about the sale is that casino operators Lorenzo and Frank Fertitta bought the nearly bankrupt organization in 2000 for $2 million. The $4 billion sales price represents a 72% annual return, every year, on that modest original investment.
“We saw an opportunity,” Lorenzo Fertitta told CNN’s Rachel Crane late last year. “We felt like there was a void in contact sports. We felt…if we put in the right rules and regulations…we could create an opportunity for business.”
UFC is now the world’s biggest and most successful mixed martial arts league. The sport combines all different types of fighting including boxing, wrestling and martial arts.
While UFC was once considered a violent, fringe sport banned in many states, the Fertitta brothers made great strides making the league more mainstream and accepted as a legitimate sport during the 15 years they have owned it. UFC fights now draw stadium crowds of up to 70,000 fans as well as large broadcast and pay-per-view audiences. Bud Light, Reebok, Harley-Davidson, MetroPCS, EA Sports, Toyo Tires and FRAM auto filters are among their many sponsors.
The price paid for UFC is roughly seven times its gross revenue, as chairman Lorenzo Fertitta told CNN that the organization took in about $600 million in 2015.
UFC is being bought by a group led by talent agency WME-IMG. The group includes major private equity firms Silver Lake, Kohlberg Kravis Roberts, as well as the private investment firms of Michael Dell. The Fertitta brothers will retain an undisclosed minority stake in the company after the sale. President Dana White, who owned 9% of UFC, has signed on for five years with the new ownership group, and will receive 9% of the company’s net profits during that time instead of an ownership stake.
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.
Earlier this week, a Spanish court found Argentine soccer player Lionel Messi guilty of three counts of tax fraud. The charges were related to allegations raised in 2013 that Messi’s father used a series of shell companies in tax havens to shield royalties and other licensing income from tax. In the scheme, which dated back to 2005, income from his many endorsement contracts with such companies as Pepsi and Adidas was reportedly funneled offshore to Belize and Uruguay through an elaborate structure of entities and countries to avoid paying income tax in Spain.
The soccer star has been sentenced to 21 months in prison, though he will likely only face probation due to Spain’s stance on light prison sentences involving non-violent crimes and non-habitual offenders.
Messi’s conviction comes at a time where high net worth individuals are facing increased scrutiny by tax authorities related to their off-shore holdings.
Since 2012, 30,000 Americans have avoided stiff tax penalties by entering into the IRS streamlined program, stating they had innocent reasons for failing to disclose offshore holdings. Those living in the U.S. who voluntarily came forward paid penalties of 5 percent of their undisclosed offshore assets, while overseas residents paid none. Under the program they received no assurances they would not be prosecuted in the future.
With the recent settlements between the U.S. Government and 80 Swiss banks that participated in a limited-amnesty program, the Justice Department has begun scrutinizing information the banks turned over on thousands of U.S. taxpayers’ Swiss accounts to compare that information with what the tax payers have reported to the IRS. The data could expose U.S. tax payers who hid money in Swiss accounts or failed to disclose all their offshore assets after coming forward under the IRS streamlined program.
U.S. Taxpayers who entered int the IRS program that made it easier to disclose their hidden offshore bank accounts may have thought they put their legal troubles behind them. Now prosecutors may be trying to put some of them in jail for not sharing all.
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.

The battle between Michael Jackson and the Internal Revenue Service over what the late entertainer owes rages on. In the years after his death in 2009, Jackson has experienced what some might call a commercial rebirth thanks to the savvy executors who have managed the late musical artist’s assets. Now the IRS wants its fair share, claiming the value of Jackson’s name and image upon death amounted to more than $434 million. The estates own valuation? Only $2,105.

It doesn’t take an estate tax specialist to notice that’s an enormous discrepancy. The stakes will most likely be even higher when it goes to trail at a Los Angeles tax tribunal in 2017. With interest and penalties, the case could be worth more than an estimated $1 billion. 

Howard Weitzman, the estate’s lead attorney, claims the IRS hasn’t explained how its independent auditor determined the valuation of Jackson’s Estate. Executors John Branca and John McClain oversaw a remarkable turnaround after Jackson’s untimely death, eliminating his debt and making enough revenue to generate roughly $100 million in tax payments since his passing. Weitzman estimates that Jackson earned no more than $50 million from the licensing of his name and image was alive, even during his prime “Thriller” days.

What is at issue between the IRS and the estate, is the value of Jackson’s name and likeness at the time of his death, not after his executors worked their magic. Given that this may very well be the first time the IRS is pursuing estate taxes for name and likeness, it’s hard to say how the proposition that many entertainers are more valuable (in an purely economic sense) dead than alive will factor into the outcome of this landmark estate case.

Getting agreement from the IRS on an estate’s value doesn’t just affect the likes of pop stars and celebrities. It’s true very few of us deal will have to deal with the marketability of our name and likenesses after death. -But even so, making sure appraisals of stocks, real estate, businesses, or any other more tangible assets are defensible can make all the difference when it comes to sailing swiftly through a potential audit – and maybe even avoiding one altogether.

Microsoft recently announced that it will scoop up LinkedIn for $26.2 billion in the largest acquisition in its history, placing a bet that the professional social network can rivitalize the tech giant’s software offerings despite recent struggles by both companies.
Microsoft’s Chief Executive Satya Nadella is ponying up a hefty sum of cash for a firm that has suffered its fair share of setbacks. Although LinkedIn is the largest professional social network, with around 430m registered users and 100m visitors to its site each month, some analysts have questioned how much growth is left in its tank. While LinkedIn’s revenue growth has been slower than expected, if Microsoft’s CEO can make this deal worth the money and the effort, he could improve Microsoft’s questionable track record with acquisitions. So what potential challenges are standing in his way?
There are three major hurdles Microsoft will have to deal with:
Many analysts are questioning if the deal makes financial sense. Microsoft is spending the equivalent of approximately $260 for each monthly active user of LinkedIn. To keep shareholders content, it will need to grow LinkedIn’s user base amid concerns about slowing growth, or be more explicit on how Microsoft can capitalize financially from obtaining LinkedIn’s data.
Microsoft’s recent history of acquisitions leaves something to be desired. Its purchase of Skype in 2011 for $8.5 billion has not been as fruitful as once predicted. Microsoft squandered over $6.3 billion on aQuantive, an online-advertising firm that it bought in 2007, and $7.6 billion on Nokia’s handset business in 2014. Nadella, not at the helm when these acquisitions took place, is looking to steer the ship in a positive direction with the acquisition of LinkedIn.
A shift in workplace culture and behavior will be required. Nadella wants LinkedIn to become the go-to hub for news and other details about people’s professional lives, but firms are unlikely to want to give their employees more of an excuse to spend time on a social media site, regardless of its professional nature. It’s not uncommon for large firms to block or restrict access to LinkedIn on their networks, which might have something to do with executives fearing that recruiters scouring LinkedIn are out to poach their staff.
While many are questioning the purchase of LinkedIn, only time will tell if Nadella will be able to capitalize on Microsoft’s latest acquisition.
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.
Last week, John Oliver, the British comedian and host of Last Week Tonight, set his sights on critiquing the largely unregulated debt-buying industry. To illustrate how easy it was to establish a debt-buying company, Oliver did just that, forming Central Asset Recovery Professionals, or CARP (after the bottom-feeding fish) in Mississippi via the internet.
Soon after, CARP purchased $15 million in out-of-statute medical debt for $60,000, acquiring the debt, names, current addresses and social security numbers of nearly 9,000 debtors. While Oliver was permitted to now pursue the owing parties, instead he chose to forgive the $15 million in debt, freeing 9,000 people from the threat of late-night phone calls from creditors, while simultaneously achieving the largest monetary giveaway in TV history.
…But what about the taxes??
The IRS is in the habit of taxing people (surprising, we know) when they are enriched. And in their eyes, being forgiven of an obligation to pay someone $5,000 that you owe them is no different than someone handing you $5,000: in either situation, you should pay tax. However those paying close attention to Oliver’s explanation of the process, noticed he added that the debt would be forgiven “with no tax consequences” to the debtor, but how?
The answer is found in Section 108(e)(2), a provision that offers a host of exclusions to the general rule that the forgivenenss of debt generates taxable income. The section provides that “no income shall be realized from the discharge of indebtedness to the extent that payment of the liability would have given rise to a deduction.”
Because individuals are cash-basis taxpayers, they cannot deduct a liability until it is paid. If the taxpayer has never paid the outstanding debt, they understandably have never taken a deduction for the amount. As a result, when the debt is forgiven, they have not been enriched in an accounting sense because the taxpayer’s net worth was not reduced upon the initial accrual of an unpaid liability.
If Oliver’s forgiveness of $15 million in medical debt causes, as he stated, no tax consequences to the borrowers, then that must mean that payment of those liabilities would have given rise to a tax deduction, right? Yes, and that deduction is provided for in Section 213, which allows a tax deduction for “medical expenses not compensated for by insurance.”
It appears, in this case, the IRS is willing to concede that Section 213 provides a tax deduction for medical expenses, and so you are permitted to exclude the forgiveness of the underlying medical liabilities, even if you don’t itemize your deductions or the sum of the deductions don’t exceed your AGI limit.
Take note Oprah, John Oliver wiped the medical debt of 9,000 individuals, and he may have just successfully* accomplished it without costing them any tax dollars.

Talley & Company

Advice. Solutions. Results.

*Note: “Last Week Tonight” transferred the debt it bought to an organization known as RIP Medical Debt, which has applied for but not yet been recognized as a non-profit under section 501(c)(3) of the U.S. Internal Revenue Code as of 6/10/16.. Should the Internal Revenue Service (IRS) deny RIP Medical Debt’s non-profit status, then the people that Oliver helped could still face a hefty tax bill.

Source: 6/10/16

Game 1 of the NBA Finals, a rematch of last year’s duel between the Golden State Warriors and the Cleveland Cavaliers, kicked off Thursday night with the Warriors coming away with a decisive 104-89 at-home victory over the Cavs.
While the league’s two most popular players, Lebron James and Stephen Curry, battle it out on the biggest stage in the post season, not making it to the finals isn’t the only thing that is causing some elite NBA athletes to feel excluded.  Case in point: New Orleans Pelicans forward Anthony Davis is widely recognized as an elite rising star in the NBA, yet last Thursday the NBA announced Davis would not be selected on any of the three All-NBA teams. His pride was probably wounded by the news, but his wallet took the biggest hit.
Davis had a clause in his contract that would award him $24.8 million as part of a requirement for the “Rose Rule.” Davis needed to make one of the All-NBA teams in order to complete requirements for a big bonus.
The Rose Rule stipulates that a player coming off his rookie contract is eligible for a higher raise structure if he accomplishes two of the following: wins MVP, is selected as an All-Star starter, or is selected for All-NBA. Earlier this year Davis was not selected as an All-Star starter after an injury-plagued season with the Pelicans, and was questionable to make the All-NBA team. Now that the NBA announced the official rosters for the three All-NBA teams, which did not include Davis, he will not earn that extra $24.8 million.
Davis’ five-year deal is now worth $121 million, instead of a possible $145 million. Davis, the No. 1 pick in the 2012 NBA Draft, was a member of the 2014-2015 First-Team All-NBA squad. Had his rookie contract been up last year he would have earned the $24.8 million he missed this year.
While the devil is always in the details, what a missed opportunity for Davis!
Whether a player 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.

Tesla’s CEO Elon Musk is one of the more ambitious entrepreneurs the world has ever seen, routinely drawing comparisons to Steve Jobs, with some even putting him ahead of the late Apple co-founder and CEO. Now Musk is trying to accomplish something few manufacturing companies could ever dream of: Musk recently announced plans to ramp up capital expenditures to support an incredibly aggressive plan to increase the current production capacity of 20,000 vehicles in the current quarter to 500,000 per year by 2018.

“It’s not a question of demand,” Musk said. “Demand is not our issue, production is our issue. We have more demand than we can address and levers we can pull to increase demand, and we’re not doing it.”

Musk’s point was that if Tesla engaged in conventional advertising (they do very little advertising outside of PR events), it could increase demand, but its more prevalent issue now is being able to produce its cars, and build them well.

“It’s worth saying that making one of something is quite easy,” Musk said. “Making lots of something consistently that’s going to last a long time is extremely hard. In fact, it is way harder to make the machine that makes the machine that it is to make the machine in the first place.”

From his perspective, Tesla has people lining up around the block to buy its cars and is far more worried about being able to build the vehicles and properly support them than it is about seeing demand drop off.

Scaling is hard. As many seasoned entrepreneurs will tell you, once you’ve achieved a certain level of success (it might take form of earning a few million in revenue, hiring more than 10-20 employees, etc.), the hard work really begins. A business in growth or scale mode faces a whole new set of different challenges and opportunities that may require a change in attitude and approach. Your ability to recognize this can mean the difference between spinning your wheels and achieving your next milestone.

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.

Forget spending hours laboring over a task you despise month after month, these days there’s hardly anything you can’t outsource online. Call it a by-product of modern technology, or a result of people’s penchant to work smarter not harder…either way this trend will continue.  Here are a few of our favorite examples where ingenuity and effective outsourcing came together.

Customer Service Calls

While many companies are familiar with outsourcing their own customer service, this was a service lacking outside of the corporate world, until now. A Boston-based startup called GetHuman is offering to handle your most-dreaded customer service calls for $5-$25 each. They provide you with a “problem solver” who will call a company’s customer service line on your behalf to resolve issues. Fighting for your airline refund, dealing with the cable company, or cancelling your gym membership just got a whole lot easier.

Personalized Birthday Videos

Stuck for a birthday gift for your best friend or relative? Head to Fiverr, “the world’s largest marketplace for creative and professional services”, where you can pay $5 for videos of people singing happy birthday in random and funny ways — you are only limited by your imagination— all recorded for your special someone.

Your Own Job

One day, “Bob” (his real name has never been disclosed), a software coder, realized that his job could effectively be outsourced to a developer overseas. And he did exactly that. He partnered up with a Chinese firm based in Shenyang (a locality that is known for a rich talent pool in software) and paid it less than one-fifth of his six-figure salary to develop his code write-ups, which he reviewed and handed off to management every day, on time and with high marks in quality. With all of his new free time, Bob engaged in more fulfilling activities, such as watching YouTube cat videos and surfing Ebay (that is…until he was discovered and outed by his employer, yikes).

Thinking of how you might enhance the day-to-day operations of your business?

If bookkeeping, timesheet or payroll technologies are on your list of productivity tools to investigate, Talley & Company can provide you with the assistance necessary to choose the right tool for your business.

For more information on how Talley & Company can help grow your business, give us call today.

The death of Grammy award-winning artist Prince last week ignited worldwide disbelief and mourning for the enigmatic star, but it’s also raised an important issue many people don’t want to think about: estate planning. Prince had 16 platinum albums to his name and tight control over his brand, yet it’s still unclear if he had a will. In the latest turn of events, Prince’s sister, Tyka Nelson, filed paperwork in court saying that Prince, who died on Thursday at age 57, did not leave a will.

On Tuesday, Tyka Nelson filed court documents to open a probate case in Minnesota’s Carver County, which is where her brother’s Paisley Park estate is located. Tyka Nelson is the only full sibling of the late musician. Prince was not married and had no living children or parents who could potentially inherit the millions from his estate.

Prince’s sister has requested a special administrator be appointed to deal with the late singer’s assets. Prince was worth up to $300 million according to various estimates and his estate is expected to grow as sales of his music have grown rapidly since his death.

Without a will, Minnesota law states that his estate would go to his sister and his half-siblings. They would control his brand, including Prince’s NPG record label and thousands of unreleased songs.

While there’s also the possibility that Prince did determine what he wanted to do with his estate in the event of his death by establishing a trust, it is likely a lawyer would have come forward by now if Prince had in fact drafted a trust.

You don’t have to a part of the “Millionaires Club” to face estate planning challenges. Any individual or family with a business, real estate holdings, household property, liquid savings, or stock investments will want to establish a thorough estate plan before unforeseen circumstances intervene. The only way to make sure more of your money is transferred to the people and causes you care about (over the IRS) is to plan for it with your advisors. Talley & Company is here to help.

While it’s nice to get a few extra days to file your taxes this year, the annual chore of handing over money to the government can get people a little grouchy. Businesses have a long-standing tradition of using tax day as a marketing opportunity in hopes of trying to capture some of the refund money tax payers receive each year, with this year being no different. If you’re looking for a distraction from filing your taxes at the last minute, here’s a fun roundup of the best deals and freebies celebrating the end of the tax season on Monday, April 18.
Food and drink
  • Boston Market: On Tax Day, guests can get a half-chicken individual meal with two sides, cornbread, a regular fountain drink, and a cookie1 for $10.40, in honor of the awesome form.
  • Outback Steakhouse: Diners can get 15 percent off their check on April 18 if they go to the web site’s Offers section and sign up for emails to receive a coupon.
  • Hard Rock Cafe: Sing your favorite song on stage on April 18 and your reward is a free Legendary Burger.
  • Bruegger’s Bagels: From April 15 to 18, a bundle including 13 bagels and two tubs of cream cheese costs $10.40, a savings of about $3.50 off the normal price.
  • Sonic Drive-In: Cheeseburgers are half-price on Tax Day.
  • Office Depot & Office Max: At Office Depot and Office Max, download a coupon from their website and get five pounds of bulk bin shredding now through April 23. Staples is offering the same deal, but on April 18 only.
  • Planet Fitness: Guests 18 or older qualify for a free HydroMassage from April 18 to 22 at more than 1,000 of the fitness chain’s locations. Coupons can be downloaded from the Planet Fitness web site starting April 18.


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.


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