Preface: You say keeping accurate inventory balances and inventory management is complex, click this link…. One Million Watts in the Palm of Your Hand!

Preface: “Of making many books there is no end, and much study wearies the body”. Ecclesiastes 12:12 New International Version Free Kindle Books: Click these links Law Business Biographies and Memoirs

Preface: Proper tax counsel and planning can result in significant tax savings in certain instances.   Abandonment of Partnership Interests: Tax Planning for Ordinary Losses Partnership interests, like any investment, sometimes become more complex than initially planned. Egressing that investment with optimized tax planning can sometime lead to big tax savings for clients. Typically, partnership interests are considered capital assets, e.g. like ownership of stock in SkyPeople Fruit Juice, divestment of that asset via sale is often a capital gain or loss. For certain investors in complex tax situations, an angle is abandonment of the partnership interest. Why would an investor apply abandonment of partnership interest to an investment? Because the loss deduction on abandonment can be an ordinary loss deduction versus a capital loss. Therefore, the tax attributes are significantly greater, e.g. capital losses are limited deductions of $3,000 per year against ordinary gains, while ordinary losses are deductible in entirety, with possible thresholds of creating net operating loss carryforwards. Simply, ordinary losses accelerate the harvesting of tax deductions. Abandonment of partnership interests are commonly applicable only when the fair market value of the partnership investment interest is less than investment basis, e.g. you invested $61,000,000 in an oil and gas exploration partnership and you’ve deducted $40,000,000 of pass-through losses already, but if the investment is worth say $400,000, you’ve got some serious tax planning ahead of you. Properly planning for abandonments is good, but thinking ahead and avoiding it is best, yet, sometimes that is not an option. Say nothing risked, nothing gained? IRC 165(a) requires two threshold questions be met for the ordinary loss deduction on partnership interests. 1. Does the partnership have economic substance, and was it intended to earn a profit, i.e. signed partnership agreement, checking account, tax filings, and book and records? 2. Can the partner…

Preface: Remember the lyrics, monitor your business cash flows carefully, budget conservatively, and save it.   Cash Management   A strong balance sheet should always begin with cash and cash equivalents. Although account groupings for financial statement purposes may often combine all cash accounts into one sum, knowing the forecast and planned allocation of your cash accounts as an entrepreneur, should be considered a high priority.   Cash is the money at your fingertips – it’s what you can write a check to vendors with; or wire funds for payment. Cash is not income, and cash is not sales. Income is the amount of money you plan to earn with time, and doesn’t necessarily translate immediately into cash.   One of the leading problems facing companies, even profitable companies, is the need for cash. After cumulative financial quarters, in the long term, income and cash flow merge, but the crucial difference is timing. For managing your business in a lagging economic or lagging industry conditions, the three key areas to keep income trends rising are to 1) develop customers and clients, 2) curtail expenses, and 3) increase gross and net income margins.   Accounts Receivable Credit   Supervising your customer credit history and your credit policies will assist your business in “flagging” customers who pay late and burden your cash management. If you continue to do business with customers who maintain delinquent credit histories, don’t overextend yourself and your accounts receivable balance with slow payers; or you may risk a cash emergency with an avoidable expense – bad debts.   Invoicing and Payroll   Platinum rule one of business is 1). invoice promptly and 2). incentivize prompt payment. Don’t give your customer the opportunity to think you don’t want paid by delaying invoicing. If you can, be proactive and invoice beforehand; that’s…

Preface: “A word fitly spoken is like apples of gold in pictures of silver”.   Elevator  Speeches   An “elevator speech” is a persuasive précis that is designed to communicate effectively the value and worth of the products or services you provide in your business or profession. Every profession should have an elevator speech. Be prepared for opportunities to build your network and develop market share with an inviting “elevator speech” for those chance encounters. It’s likely your not riding back-up from a fire alarm…wherever you are….. the “elevator speech” is a 30 second commercial to earn that next sale, or locate that next deal for your the business. A properly prepared “elevator speech” can promote your business today or in the future with a third-party endorsement of your product or service. An “elevator speech” should foremost enliven you. Your listener(s) may not currently have an application for your service or product, but if they recall your energized and articulate “elevator speech” at the right moment in the future, it’s the hidden nugget that can build your network and or develop market share for business. What are the steps to build a powerful “elevator speech”? Firstly, make it colorfully memorable. Secondly, if opportune, make sure it invites the listener to experience your product or service. For instance if you’re an accountant and someone asks you what you do, is this your “elevator speech”? “I’m a tax accountant. Although my work is highly confidential, each day we work with entrepreneurs advising on tax and financials decisions that energize business activity. My specialty as a CPA is working on taxes for businesses  from real estate, manufacturing, and agriculture to construction and say all types of businesses.  Our clients receive the highest level of service. We do more than file tax returns and prepare financials statements. We…

Preface: Real estate partnerships require specific and appropriate tax planning to effectively manage tax attributes, i.e. ordinary tax or capital gains?  Ordinary Tax or Capital Gains on Your Real Estate Investment Partnership Real Estate investment enterprises can plan effectively to lower taxes on transfers of real estate holdings, and their increase earnings for investors. Typically the key for determining tax attributes on real estate is the intent for property.   Let’s say a real estate investment partnership with 10 investors purchases a 50 acre tract for $5,000,000. If the value appreciates to $6,000,000 in two years the tax difference between capital gains and ordinary tax rates will likely be a significant difference in the earnings of the partnership. The difference between say a 20% capital gains tax and 39% ordinary tax rate on a $1,000,000 gain is significant. Securing the safeguards for capital gains is where the right tax advice can pay-off big for you.   If the investment partnership is for sale of land to customers, and that sale is the ordinary course of business – real estate development principally – then the IRS will likely say the sales of land lots are ordinary gains. This costs a lot more tax.  The difference between capital assets and assets sold in the ordinary course of business is not a conspicuous definition. These factors should be well documented before IRS audit, to provide substantiation of tax treatment of your business assets, e.g. why the sale of the property is a capital gain.   The tax substantiation should include among numerous items, the purposes that support the capital gains treatment with the nature and purpose for acquiring the asset, i.e. the asset being real estate or land, and anticipated duration of ownership. The extent of improvements on the property, and the transactions involved. What is…

Preface: A captive insurer is an insurance company where the insureds own the business. The owners underwrite insurance policies for their business or group, and place their capital at risk in anticipation of financial gains. For businesses or business group with captive insurance coverage, the business results in an investment company too. Captive insurance is a business, and requires comprehensive due diligence before any decisions should be made with the advice of a captive management firm.   What is a Captive Insurance Business      Some businesses subject to enterprise operating risks may choose to organize and fund a captive insurance corporation. A captive insurance business is simply an insurance company wholly owned and controlled by the insureds, e.g. Equipment Manufacturing, LLC can insure the risks on it’s manufactured trac-hoes with the formation of a captive insurance business.   Captive insurance businesses are distinguished from a mutual insurance business in that captives are not owned by policyholders. Captive insurance involves control of the company by the insureds, e.g. the Equipment Manufacturing, LLC president. In a captive insurance business, insureds put their money at risk with the insurance business completely independent from the commercial marketplace.   So a captive insurer is an insurance company. The owners underwrite insurance policies for their business or group, and place their capital at risk in anticipation of financial gains. For businesses or business group with captive insurance coverage, the business results in an investment company too.   Why would a business form a captive insurer? First, some businesses have risks that are not easily insurable, or premiums are high while claims are likely low, or maybe insurance is not available at all from the marketplace. Captive insurers provide broad coverage of businesses risks. Captive insurance business permit management of cash flow for and greater control on costs…

Preface: Really?  Quote “I have seen something else under the sun: The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all”.  Ecclesiastes 9:11 New International Version  

Preface: This weekend has become much easier, compared to my Grandpa’s threshing days. Thanks to these hard workers their should be plenty of Wheaties to eat until next summer. 2017 probably is not what most are thinking about this long holiday weekend…there are two perspectives.. you can see either a boring summer harvest in process… and, or a $$ opportunity.      

Preface: Dig Your Well Before Your Thirsty is book on networking, the importance of networking, examples of successful networking from real people, benefits of networking, and advice on making networking work for you. This blog is a summary of the book.   Dig Your Well Before You’re Thirsty  Author: Harvey Mackay   Harvey Mackay has been giving great business advice for years, speaking from both the head and the heart. In his book, Dig Your Well Before You’re Thirsty, Harvey gives solid advice on the value of networking, and how to do so effectively.   Building a network is a lot like digging a well. It begins with the realization that, “Guess what? I might be thirsty one day. I just might need a well to draw on. I think I will work on that.” Then the homework begins. “Like all new behavior, the more you practice the skills of networking, the easier it gets.” Up the proverbial creek? If you’ve got a network, you’ve always got a paddle.   “Why should you network? Well first, in today’s economy, talent alone will not save you. Secondly, the traditional advice, more training and education, will not save you. The government will not save you. In fact, the more successful you are, or prepared for the real world, you still cannot save yourself in some situations. You need a network”. Harvey states that he were to name the single characteristic shared by all the truly successful people he’s met, that characteristic is the ability to create and nurture a network of contacts. No matter how smart you are, no matter how talented, you cannot do it alone. A network replaces weaknesses of individuals with the strength of the group.   Your car just gets you to work, your network can determine whether or not…