One day back in March, 2002, Us Weekly editor Bonnie Fuller
spotted a photo of actress Drew Barrymore bending over to pick a coin
off the ground. A light bulb flipped on over her head, and on April 1,
her magazine debuted a brand-new photo feature that changed the
paparazzi game forever. We're talking, of course, about "Stars — They're
Just Like Us." (Of course, they're still not quite just like us . . .
how many photographers are fighting to catch pictures of us picking up our dry cleaning, filling up our gas tanks, or trying to pick the ripest avocado at Whole Foods?)
Here's something else the stars share with us. They don't want to
waste money on taxes they don't have to pay. And since they tend to make
more money than we do, they tend to owe more taxes. So that pain over
unnecessary tax is greater for them than it is for us! (Who says money
solves all your problems?)
But sometimes they go a little too far to pay less. And that's when
they discover our friends at the IRS lying in wait. Here's the problem:
the IRS doesn't have nearly enough money to make sure everyone is paying
their legal share. Audit rates are down to historic lows. So when they
get a chance to make examples of bold-faced names, they're sure to jump
on the case — even if Us Weekly won't be combing Tax Court filings and Justice Department press releases the way we do.
Our first story this week involves boxer Floyd Mayweather, who's made
as much money with his fists as any man alive. Back in 2015, he earned a
reported $220-230 million for defeating Manny Pacquiao in the Fight of
the Century. (Granted we're less than one-fifth into the century,
but the payday itself lived up to the hype even if the fight didn't.)
Unfortunately, Mayweather doesn't have anyone to withhold taxes from
that paycheck.
Mayweather isn't disputing how much he owes. He says he just doesn't have the cash
to cover it. ($15 million worth of cars in his garage, sure. Cash in
the bank, not so much.) So he's asking the Tax Court to grant him a
short-term installment agreement and waive his failure-to-pay penalties.
He's argued that he has "a significant liquidity event" coming up in
approximately 60 days, by which he means his next fight of the century, a potential $400 million payday against MMF superstar Conor McGregor.
This isn't Mayweather's first bout against the IRS. In 2008, they
filed a $6.7 million lien against him for 2007 taxes. Mayweather won
that fight on points, settling for $5 million. Last year, the Tax Court
ordered him to pay $1,627,563 for 2006. Also last year, he sent a Las
Vegas strip club a 1099 for $20,323 he spent on strippers on May 25,
2014. Apparently he understands that "making it rain" is a taxable
event, but thinks it's the club's responsibility to cover the taxes for
the dancers who actually took home the cash.
Rapper DMX (real name Earl Simmons) is also feeling some summer heat
from the IRS. On July 13, he was arrested on 14 counts of tax fraud.
Feds say he turned the tables by using bank accounts in other peoples'
names while fronting his expenses in cash. The haters at the IRS say he
didn't pay $1.7 million in taxes he owed from 2002-2005, and failed to
file returns entirely from 2010-2015.
Look, we know you don't want to pay more tax than you have to. And we
know you're not willing to risk an appearance in the news (or court!)
to pay less. But you don't have to feel stuck between a rock and a hard
place. You just need a plan. So call us when you're ready to lace up
your gloves, and let us take your corner!
Tuesday, July 25, 2017
Monday, July 17, 2017
Caliente
Summer is here, and in most of the country, it's hot! The All-Star game has come and gone, dog days are right around the corner, and if your air conditioner makes a funny noise, the hair stands up on the back of your neck. Now, we can't help you if your air conditioner breaks, but we can try and put a smile on your face with a few tax quotes to start your day. Try and spot the summer references hidden inside — they might not be quite as easy to find as you think!
- "A dog who thinks he is man's best friend is a dog who has obviously never met a tax lawyer."
Fran Lebowitz
Lawrence Summers
Will Rogers
Franklin D. Roosevelt
Gerald Barzan
Dave Barry
Ronald Reagan
Harry BlackmunNot many of us are thinking about taxes after April 15. But the reality is, there's never a bad time to stop wasting money on taxes you don't have to pay. The sooner you start planning, the sooner you'll rescue those dollars from your paycheck or quarterly estimates. So call us before the heat gets too high and see if we can bring you some cool relief!
Tuesday, July 11, 2017
Accountants Behaving Badly
Actress Alyssa Milano first gained fame playing Tony Danza's daughter on the television sitcom Who's the Boss. The show ran for eight seasons, snagged ten Emmy and five Golden Globe nominations (winning one of each), and established Milano as a bone fide teen idol. While her star has dimmed since then, she continues to work in Hollywood and seems to be one of the few child stars in recent memory to grow into adulthood without well-publicized trips to rehab or jail.
Today, Milano is as busy as a bumblebee. So she and her husband, agent David Bugliari, employed a business manager to handle "the details." Usually those relationships proceed without trouble. But that's not the case with Milano, who just sued her manager, CPA Kenneth Hellie, for $10 million.
Milano says the relationship first soured with "a home improvement debacle." She and her husband bought their Ventura County home in 2013 with plans to spend $1.1 million remodeling it. They wound up spending $5 million on the house which is now worth $3 million. (That odd math may not sound implausible to anyone else who's done a gut rehab!)
But Milano soon discovered that Hellie had made eight late mortgage payments in a 13-month period. That destroyed her credit, which meant she couldn't refinance the house. She also says:
He failed to pay her 2013 and 2014 income taxes,
He used scotch tape to attach her signature to wire transfers to make unauthorized withdrawals, and
He failed to pay her employees or their taxes, and
His reassurances that the finances were in shape gave her the confidence to pass up a $1.3 million paycheck for starring in a third season of ABC's "Mistresses" series.
Of course, every story has two sides (especially in Hollywood). Hellie's response basically throws her husband under the bus, arguing that he approved additional remodeling expenses and may have been "intentionally or negligently keeping Milano in the dark regarding the couple's deteriorating finances." He blames the couple for their own lavish spending, including "a second home in the mountains, private planes, a country club membership, a boat, and numerous personal staff such as multiple nannies and housekeepers."
Milano is hardly the only Hollywood celebrity to break with her manager. Actor Johnny Depp, who spent $3 million to shoot author Hunter S. Thompson's ashes out of a cannon, has sued his manager for $25 million for a similar series of offenses. And singer Alanis Morissette's so-called business manager has ironically just reported to federal prison in Oregon for embezzling millions from her and other clients. (She said he would literally cry when she asked where her money had gone!)
Here's the lesson from today's sad stories. Choose wisely! Don't ask us for advice on remodeling your home or managing your household staff. But do count on us to help stop wasting money on taxes you don't have to pay. And remember, we're here for your co-stars, too!
Today, Milano is as busy as a bumblebee. So she and her husband, agent David Bugliari, employed a business manager to handle "the details." Usually those relationships proceed without trouble. But that's not the case with Milano, who just sued her manager, CPA Kenneth Hellie, for $10 million.
Milano says the relationship first soured with "a home improvement debacle." She and her husband bought their Ventura County home in 2013 with plans to spend $1.1 million remodeling it. They wound up spending $5 million on the house which is now worth $3 million. (That odd math may not sound implausible to anyone else who's done a gut rehab!)
But Milano soon discovered that Hellie had made eight late mortgage payments in a 13-month period. That destroyed her credit, which meant she couldn't refinance the house. She also says:
He failed to pay her 2013 and 2014 income taxes,
He used scotch tape to attach her signature to wire transfers to make unauthorized withdrawals, and
He failed to pay her employees or their taxes, and
His reassurances that the finances were in shape gave her the confidence to pass up a $1.3 million paycheck for starring in a third season of ABC's "Mistresses" series.
Of course, every story has two sides (especially in Hollywood). Hellie's response basically throws her husband under the bus, arguing that he approved additional remodeling expenses and may have been "intentionally or negligently keeping Milano in the dark regarding the couple's deteriorating finances." He blames the couple for their own lavish spending, including "a second home in the mountains, private planes, a country club membership, a boat, and numerous personal staff such as multiple nannies and housekeepers."
Milano is hardly the only Hollywood celebrity to break with her manager. Actor Johnny Depp, who spent $3 million to shoot author Hunter S. Thompson's ashes out of a cannon, has sued his manager for $25 million for a similar series of offenses. And singer Alanis Morissette's so-called business manager has ironically just reported to federal prison in Oregon for embezzling millions from her and other clients. (She said he would literally cry when she asked where her money had gone!)
Here's the lesson from today's sad stories. Choose wisely! Don't ask us for advice on remodeling your home or managing your household staff. But do count on us to help stop wasting money on taxes you don't have to pay. And remember, we're here for your co-stars, too!
Tuesday, July 4, 2017
IRS Slapshot Misses
Summer is here, so naturally, everyone's thinking about
hockey. The Pittsburgh Penguins have just taken their second Stanley Cup
in a row, and the rest of the NHL is working to make sure there's no
three-peat. But one of those teams just won a different sort of contest,
in Tax Court of all places. So let's go to the tape . . .
Jeremy Jacobs is the owner and chairman of Delaware North, a concession company operating at places like stadiums, racetracks, and national parks. (Sounds like he's as much to blame as anyone for the $14 beers you bought at your last ballgame.) He also owns the Boston Bruins, which finished 2017 with a 44-31-7 record in the league's Eastern Conference. Forbes magazine pegs his net worth at just $4.4 billion, which means he's barely a billionaire and still has to watch his pennies.
The Bruins play half their games on the road. Those road trips can get expensive, especially when it comes to feeding everyone: "between 20 and 24 players, the head coach, assistant coaches, medical personnel, athletic trainers, equipment managers, communications personnel, travel logistics managers, public relations/media personnel, and other employees." The team actually requires everyone to attend breakfast, where players meet with coaches to talk strategy, review film, discuss media inquiries, and make roster changes.
The Bruins spent $255,274 on team meals in 2009 and $284,446 in 2010. Now, we all know those are deductible: you can write off 50% of the cost of meals you eat while traveling for business. But Jacobs wasn't satisfied deducting just 50%. He (or at least his accountants) wanted to deduct 100% of those expenses as de minimis fringe benefits.
Here's the problem. For employee meals to qualify as a de minimis fringe benefit, they have to be served at a facility "owned or leased by the employer." But the team served half of those meals on the road. So the IRS iced half of those expenses, and the parties wound up facing off in court.
Judge Ruwe sounds like a hockey fan. His opinion runs a full 34 pages, which is the Tax Court equivalent of overtime for a case that size. The main issue was whether the hotel meeting rooms where the team served meals qualified as their "business premises" under code section 132(e)(2). And thereferee judge, exercising some much-appreciated common sense, ruled for the team.
In short, he said, league rules require the team to play half of its games away from home, and even arrive at least six hours before game time. Wherever the team hosts those meetings is its "place of business," sat least for that contest, so the meals the team serves are 100% deductible de minimis fringe benefits. The decision saved Jacobs $45,205 for 2009 and $39,823 in 2010.
NHL Hall of Famer Wayne Gretzky once said: "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be." We agree with Gretzky, and we don't settle for playing where the puck is. So call us when you're ready to suit up against the tax code, and let's put some Ws on the board!
Jeremy Jacobs is the owner and chairman of Delaware North, a concession company operating at places like stadiums, racetracks, and national parks. (Sounds like he's as much to blame as anyone for the $14 beers you bought at your last ballgame.) He also owns the Boston Bruins, which finished 2017 with a 44-31-7 record in the league's Eastern Conference. Forbes magazine pegs his net worth at just $4.4 billion, which means he's barely a billionaire and still has to watch his pennies.
The Bruins play half their games on the road. Those road trips can get expensive, especially when it comes to feeding everyone: "between 20 and 24 players, the head coach, assistant coaches, medical personnel, athletic trainers, equipment managers, communications personnel, travel logistics managers, public relations/media personnel, and other employees." The team actually requires everyone to attend breakfast, where players meet with coaches to talk strategy, review film, discuss media inquiries, and make roster changes.
The Bruins spent $255,274 on team meals in 2009 and $284,446 in 2010. Now, we all know those are deductible: you can write off 50% of the cost of meals you eat while traveling for business. But Jacobs wasn't satisfied deducting just 50%. He (or at least his accountants) wanted to deduct 100% of those expenses as de minimis fringe benefits.
Here's the problem. For employee meals to qualify as a de minimis fringe benefit, they have to be served at a facility "owned or leased by the employer." But the team served half of those meals on the road. So the IRS iced half of those expenses, and the parties wound up facing off in court.
Judge Ruwe sounds like a hockey fan. His opinion runs a full 34 pages, which is the Tax Court equivalent of overtime for a case that size. The main issue was whether the hotel meeting rooms where the team served meals qualified as their "business premises" under code section 132(e)(2). And the
In short, he said, league rules require the team to play half of its games away from home, and even arrive at least six hours before game time. Wherever the team hosts those meetings is its "place of business," sat least for that contest, so the meals the team serves are 100% deductible de minimis fringe benefits. The decision saved Jacobs $45,205 for 2009 and $39,823 in 2010.
NHL Hall of Famer Wayne Gretzky once said: "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be." We agree with Gretzky, and we don't settle for playing where the puck is. So call us when you're ready to suit up against the tax code, and let's put some Ws on the board!
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