Fifteen years ago, The Oprah Winfrey Show made TV history with the iconic “You get a car!” giveaway episode. Oprah surprised her studio audience with 276 brand new Pontiac G6 sedans worth over $7 million. While the surprise went down as one of the show’s most memorable moments, the aftermath of the giveaway left recipients faced with a hefty tax bill.

The segment began with Oprah calling eleven random audience members on stage and announcing that they had each won a car. After their excitement had died down, she told the entire audience to retrieve gift boxes from under their seats and announced that one of the boxes also contained car keys. Upon opening the boxes, every audience member found a set of keys causing pandemonium throughout the studio.

The giveaway was sponsored by Pontiac, a General Motors brand, as a promotional marketing campaign. While General Motors covered the price tag of $28,500 and the sales tax of $1,800, the gift tax was left for the prize winners to handle. The cars were not classified as gifts and instead were considered promotional prizes, similar to the way game show giveaways and lottery wins are treated. The value of the cars was going to be taxed accordingly, at a total of about $6,000 to $7,000. This is in accordance with the tax code which states that “Except as otherwise provided in this section or in section 117 (relating to qualified scholarships), gross income includes amounts received as prizes and awards.”

Although receiving a car at a $6,000 price tag is a significant discount, audience members had been chosen by the Oprah staff based on their need for a car. Most individuals had to scramble to come up with the funds to be able to receive any benefit from the prize. The alternate options were selling the car and paying the taxes or turning the prize down altogether.

While unfortunate, the experience of Oprah’s audience members  provides a valuable lesson about dealing with windfall events you may experience in your own life. Winning the lottery, receiving an unexpected inheritance, and cashing out a retirement plan are all financial events that can be a welcome occurrence, but can raise serious financial questions that you must deal with quickly.

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 can help you to make the most of both your earnings and winnings.

After working hard to create a legacy, most people want to make sure their loved ones will be able to enjoy the benefits. Estate plans and trusts allow individuals to decide how and in what increments they wish to leave gifts, and can help prepare their beneficiaries for the future. Although including stipulations with trust funds is nothing new in the realm of estate planning, incentive trusts are a way to mandate specific conditions recipients must meet before accessing any funds.

While most trusts include an age requirement so that recipients will be old enough to handle their money wisely, incentive trusts take things a step further. Benefactors can stipulate educational, marital, career, philanthropic, and health conditions that an heir must meet before receiving a part of their trust. This form of estate planning may make a beneficiary more inclined to achieve desired life and career goals.

A common condition is that heirs should graduate college. Some are satisfied with an undergraduate education, but others may offer heirs an additional bonus if they pursue advanced degrees such as a master’s degree or a a PhD. Additional payments can be set to occur when an heir gets married or if they have children. Some interesting ways people have used incentive trusts are by making heirs write essays detailing the way they will use funds or by requiring them to pass a drug test.

The main challenge with incentive trusts is that they can be complicated and expensive to create and enforce. Many trust fund recipients have found loopholes around requirements, so consulting a professional estate planner is necessary to ensure the benefactor’s wishes will be carried out. While estate planning experts do not advise anyone to go overboard with their conditions, incentive trusts are just one example of the amount of control individuals have when deciding what to do with their assets.

Though your options are virtually limitless when it comes to estate planning, deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

McDonald’s made several acquisitions this year to improve the customer experience at their brick and mortar stores. To start with, the fast-food giant acquired Dynamic Yield and implemented its personalization and decision technology in over 8,000 of its menu boards. This past month, McDonald’s announced a second deal with a voice recognition leader, Apprente, to improve drive-thru voice ordering systems. Considering the size and success of McDonald’s, the company’s willingness to pursue new technology shows there is always room for system improvements.

Although McDonald’s approach to upgrading their restaurants doesn’t come at a low price, the investment can improve both workflow and customer satisfaction. The Dynamic Yield acquisition is valued at over $300 million, and an additional billion dollars is expected to be spent on other upgrades and renovations. The addition of self-service kiosks, digital menu boards, a new mobile app, and the upgraded voice ordering systems is just the beginning of their Velocity Growth Plan according to McDonald’s CEO, Steve Eastbrook.

Looking at Apprente, the Silicon Valley-based startup provides McDonald’s with a way to automate their drive-thrus and eventually their kiosks. The voice recognition software was specifically created to speed up food ordering lines and can understand different accents and languages using neuroscience-based AI technology. Since drive-thru orders make up 70% of McDonald’s sales, moving cars through lines faster will benefit the majority of their customer base. The Apprente system has already been tested in some Chicago locations with employees overseeing the accuracy of voice generated orders. For now, workers fix any errors, but McDonald’s hopes one day to leave the whole ordering process to the machines.

Fast-food fanatics should only expect more changes to their dining experience going forward. It seems McDonald’s and other restaurant chains hope to drive sales through an increased reliance on technology and AI. The success of these efforts is sure to be tested as their newest acquisitions are implemented.

Talley LLP understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability or build your brand through a business transaction or capital raise, Talley is the premier consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Airbnb has become a great way for property owners to make some extra money while providing travelers with unique accommodation options. As this sector of the hospitality industry has grown, new tax regulations have been implemented to account for the additional income generated. One example is Section 199A of the Tax Cuts and Jobs Act (TCJA), which allows owners to gain tax savings through a qualified business income (QBI) deduction. Unfortunately for many individuals hoping to utilize the deduction, qualifying will take a significant amount of work.

Prior to the TCJA, Airbnb owners preferred not to be classified as a formal business to avoid a self-employment tax of 15.3 percent. The QBI deduction allows owners to claim half of that self-employment tax as a deduction and save up to 20 percent on their business income taxes. Many owners have since decided to change their status but have not kept the necessary records to prove it.

The requirements specify that owners must spend at least 250 hours each year performing rental-related activities. Most individuals do not come close to reaching this threshold and will have to spend additional hours working on their Airbnb rentals. Owners will need to create personal time cards to track their hours and keep detailed records of services performed for property maintenance. Additionally, they will need to file a Form 1099 for payments to service vendors over $600 to comply with other business status protocols.

Airbnb tax regulations may have been lenient in the past, but with many owners expected to take the QBI deduction, the IRS is likely to verify the accuracy of business-related income. There are currently no tax court cases related to the QBI deduction to serve as a precedent, so the penalty for violators is unknown. Having an accurate record-keeping system is essential for business owners in any industry. It is better to be safe than sorry by consulting an expert tax advisor to learn more about reporting regulations.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss the current opportunities available to you. For more information, contact us today.

In 1999, Jack Ma and seventeen partners founded the small e-commerce business Alibaba, which would eventually grow to be worth over $460 billion. In celebration of his 55th birthday this year, Ma made the long-anticipated move to enact his succession plan and step down from his core role as executive chairman. With CEO Daniel Zhang set to take over Ma’s position, Alibaba provides a great example of how to effectively transition your business for future success.

Although Ma is known for his flamboyance and extravagant gatherings, he takes Alibaba’s business decisions very seriously. The official succession announcement was made over a year ago, but Ma had been thinking about his next move for over ten years. In 2010, he created Lakeside Partners, a 36-member governing committee that has nominating power over the company’s board of directors, with consent from shareholders. Ma will continue to be involved as a member of this committee going forward, and will hold a minority position with 6.2% of Alibaba’s shares.

Zhang may be considered a more reserved individual when compared to his predecessor, but his resume is just as impressive. Zhang’s accomplishments include being promoted from COO to CEO in 2010 and inventing Single’s Day, a $25 billion shopping event bigger than Amazon’s Prime Day. Ma has spoken highly of Zhang’s abilities and believes his youth and talent will drive the company forward towards globalization.

By allocating more time to planning than to Alibaba’s current achievements, Ma helped his company avoid speculation, scrutiny, and possible in-fighting among internal candidates and stakeholders. Although business succession planning (both emergency and long-term) can be a complicated process, it positions your company to operate successfully without you as its leader.

Proper business planning is a complex and on-going effort, requiring expert counsel—a professional with knowledge and experience, familiar with the challenges that characterize an entrepreneur’s business ventures. Talley LLP shares the same entrepreneurial spirit that has helped propel our clients to their current level of success. With over 25 years’ experience in helping high net worth individuals and business owners, Talley has the expertise necessary to assist entrepreneurs throughout their entire journey, from formation through succession.

The NFL’s 100th season began last week, and with it, over 38 million hopefuls kicked off their fantasy leagues and betting predictions. With several states legalizing sports betting this year, these player’s potential winnings may be taxed differently come championship time. Whether you’re playing in an official NFL channel or an unregulated one, the IRS expects to be informed of any related earnings since the money is technically classified as taxable income.

Since the Supreme Court overturned existing laws in Spring 2018, thirteen states have legalized the activity, and more are expected to create betting markets in the next few months. Over 7 million individuals are expected to bet in casino sportsbooks this year, while another 31 million people will play in less official forms.

For amateur regulated channels, the IRS places the responsibility of reporting winning on both casinos and players. Successful bets 300x the wager resulting in a win of over $5,000 would face about 24% withheld for taxes. Some betting situations under this amount may also face withholdings depending on the circumstance. After a withholding, the casino may also give you a Form W-2G, particularly with wins over $600 that are 300x your bet. For fantasy sports players the form would be the 1099-MISC which will also eventually be turned into the IRS. To help mitigate some of your gambling related tax bills, players can deduct losses up to the amount of their winnings.

For professional gamblers deductions are different due to their activity being work related. Pro players’ travel expenses can be added to their gambling loss deductions rather than being stated as a separate expense. In most cases, the final tax bill on sports betting can be higher or lower come tax time, so it is wise not to spend your winnings right away. The best option overall is to consult a tax expert to make sure you are accounting for taxes on any win big or small.

With over 30 years’ experience consulting with industry-leading companies, we understand the challenges facing individuals 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.

Most famous figures will find themselves under the public’s microscope from fame until death. With information so easily accessible today, the details of many high-profile individual’s estate plans have come to light from Aretha Franklin to Robin Williams. Looking back a bit further in history to 1799, one of the United States first celebrities, George Washington, left a will commended by many experts. Clear and concise, the founding father’s estate plan teaches many valuable lessons on the correct way to execute your estate planning.

Take your time. Washington’s will contains over 5,500 words or about nine pages of text, which he spent countless hours toiling over. Taking the proper time and steps to draft your estate planning documents is a crucial consideration. Although nine pages may seem excessive for most, Washington’s words left less room for interpretation, and he was able to personalize the outcome of his belongings. Taking the time to consult an estate planning expert’s opinion is also a great way to ensure everything goes according to plan.

Communicate with your heirs. Washington left his estate solely to benefit his wife Martha along with helping friends, family, and the community. When formulating his will, he no doubt consulted his beloved wife on what he wanted to do with his assets. Keeping an open line of communication with your potential beneficiaries can make things more transparent and help avoid surprises. This step is particularly important in families that may have unique situations as well. The subject may be challenging to talk about, but it is better to be prepared than caught off guard. 

Think Big. Washington not only protected his wife and family but was able to fulfill other dreams. He established a school for orphans to help the community and endowed a struggling college with stock. The college eventually became Washington and Lee University, which still stands to this day. When you think about your long-term goals, you can both provide for your immediate loved ones and have the capability to do much more. Doing so can leave a legacy much like the one that lived on after this iconic president’s passing.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

Millionaire real estate mogul Todd Chrisley caught the public eye with the start of his reality T.V. show “Chrisley Knows Best” in 2014 on USA Network. The show follows Todd, his wife Julie, and their children through family drama, problems, and their over the top lifestyle in Georgia. After wrapping season seven last month, Chrisley and his wife Julie may be encountering their biggest scandal yet as they have been indicted for 12 counts of tax evasion, bank fraud, and wire conspiracy and fraud.

The IRS and FBI found that the couple had defrauded numerous banks between 2007-2012. The Chrisleys were loaned millions of dollars and used fabricated documents, including bank statements and credit reports. They used the money for lavish purchases and even rented a new home in California using cut and glued documents. For the years 2014-2016, the Chrisleys failed to submit their tax returns on time and once filed did not make payments promptly. They continued making luxury purchases during this period ignoring their tax bill.

Todd Chrisley posted an Instagram response alleging the situation was caused by a disgruntled former employee who was fired. He stated the employee created the falsified documents, and the couple’s attorneys believe the Chrisleys will be exonerated entirely when the truth comes to light.

Todd and Julie turned themselves in last week to Georgia authorities and were released after posting bail. Their passports were taken, and they are mandated to stay in Georgia and Tennessee unless an exception is granted. The Chrisley’s accountant was also indicted for playing a part in the illegal activity and will have to report to court for tax offenses and lying to investigators. The couple’s son was hit with a tax lien shortly after for a reported $16,886.

If convicted, Todd and Julie could each face 30-year sentences. The U.S. Attorney Byung J. “BJay” Pak has commented that celebrities face the same consequences as any other criminal. The case can find similarities to the mail, wire and bankruptcy fraud committed by “The Real House Wives of New Jersey” reality stars Teresa and Joe Giudice who were sentenced to 15 and 41 months respectively in 2015. Both cases seem to be a part of the crackdown on tax evasion and show the seriousness with which the courts take tax and bank fraud.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.

With the entertainment industry experiencing a shift from traditional paid TV services to streaming networks, production companies are trying everything they can to stay afloat. After three years of negotiations, media giants CBS and Viacom have finally reached a merger decision making them more competitive in a continuously changing industry. The mega-deal has been a long-term dream for vice chairwoman, Shari Redstone and results in combined company value of over $30 billion.

ViacomCBS’s portfolio will include CBS, MTV, Showtime, Nickelodeon, Comedy Central, Paramount Pictures, local tv stations, and international networks in Argentina, the United Kingdom, and Australia. The company will also control production units that create content for outside streaming parties like Amazon and Netflix. Past examples of these kinds of exchanges include CBS producing Dead to Me for Netflix and Viacom’s Paramount Pictures producing Jack Reacher for Amazon. Advertising revenues alone will ring in at about $11 billion, giving the company the upper hand in future negotiations with distributors.

Looking at why now, likely factors include Netflix’s growing 151 million subscribers, Disney and AT&T’s recent acquisitions activities, and the increase in network streaming services overall. Each company is only getting bigger, making the ViacomCBS merger seem like one of their only options to continue contending. Experts predict that the cost of owning and producing content is going to keep increasing making future mergers even more likely.

Although this specific merger took three proposals for the agreement to go through, shareholders on both sides seem to be supportive of the terms. Determining the right conditions for a deal takes time and trial, which allows both parties to find an agreement that satisfies all stakeholders. The last obstacle for ViacomCBS was the share price which board members worked overtime to agree upon, settling on giving 0.59625 CBS shares for each Viacom share.

For customers, the merger seems to be positive news as there will be an increased content library on both sides, and ViacomCBS will offer a variety of free and paid options on its platforms. Overall the entertainment industry will be one to watch as the consolidation of companies is expected to continue.

Talley LLP understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability or 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.

Although establishing an estate plan is the first step in keeping your assets accounted for in the future, keeping it up to date can prove to be more challenging. With any major life events, your estate plan documents should be reevaluated to account for your new situation. In the case of remarriage specifically, individuals may risk accidentally disinheriting their dependents unless they take the proper steps to update their existing estate plans.

After a divorce or spousal death, 17% of individuals remarry, and in those who are over 55 years old, 50% remarry. Considering the 55+ year-olds have already amassed a large portion of their lifetime earnings and are more likely to have had children, their estates tend to be more complicated than their younger counterparts. Insurance policies, family heirlooms, real estate, and more can all be affected by a new spouse.

A good first step is to make sure your beneficiaries are still accurate on your different accounts and policies. Beneficiaries listed will take precedence even over the wishes stated in your estate plan. For 401(k) plans as well, your current spouse will be your beneficiary unless someone else is explicitly noted and your spouse agrees. Even if you intended to have your children inherit some of these assets, without that clearly stated you might not be able to control the result.

For property, jointly owned homes are typical in remarriages, which may change the portion that would be left to your kids. Many homes will be left to the remaining spouse under “tenancy by entirety.” For those who want to leave their portion to someone else like a child, “tenancy in common” is what would need to be established. Evaluating your property title and communicating with your spouse and a specialist will allow you to best determine where your property stands now and in the future.

For physical and other belongings, your estate plan should be as transparent as possible similar to your beneficiary wishes. Being concise will only help your loved ones avoid confusion and stress in an already difficult time. Lastly, it’s important to realize that estate planning rules can differ by state, so consulting an estate planning expert is the most effective solution to make sure your assets are handed down accordingly. 

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.


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