Archive for the ‘Finance/ Retirement’ Category

California Governor Reinstates 50% Gain Exclusion on Certain C Corp Stock Sales

Wednesday, October 9th, 2013

Although somewhat limited in it’s application, the California gain exlusion for Qualified Small Business Stock (QSBS) has been retroactively reinstated back to 2008.  See IRC Section 1202 for details regardinng QSBS eligibility.


See for additional planning ideas or call (562) 216-1800.


August 2013 Mega Millions Lottery Winners – Lump-Sum or Installments

Thursday, August 8th, 2013

The three separate lottery winners of this week’s third highest Mega Millions have some tough decisions ahead of the them.

In addition to deflecting requests for money from every person they have ever met (and many who they have never met), they will have some “good” problems to deal with like – taxes, investment options, insurance protection and ensuring their after-tax funds outlive them.  Unfortunately there are more financial horror stories about looery winners than happy endings – mainly attributable to the fact winners seldom have any experience handling even moderate sums of money.

Before claiming their prizes, I recommend that they have some in-depth conversations with a qualified attorney, CPA and investment advisor (best if all are in the same room – and are not a relative).

The most pressing issues are:


1) Can I retain my annonimity?

2) Am I a solo winner, or are there other family members and/ or friends/ co-workers that are entitled to a portion of the winnings (and the related taxes)?

3)) Should I take a lump-sum or installments?


The first issue will be dictated by each winner’s state of residence.  In some cases, the winner can claim the prize through a trust or another legal entity and might be able to stay inder the radar – for at least a short period of time.

The second issue neeeds to be fully vetted before claiming the prize.  There are numerous, and significant income, gift and estate tax advantages of splitting the winnings amongst various family members, if you have established a verbal agreement prior to winning the game.  For example, if a wife bought a $10 ticket and prior to the drawing announced she was sharing any winnings with her husband and 3 children, there is a good case that she made a gift of a a portion of the ticket ($2 to each family member), and the taxability would now be split 5 ways (ignoring joint filing with her husband).  Since we have a graduated tax system, the savings can be dramatic – especially if they take installment payments – thereby gaining rate beenfits each year for the first couple of hundred thousand dollars of winnings.  Splitting the proceeds up front also saves massive amounts of gift tax and estate taxes which would get triggered if a winner moves funds to family members or friends after they claim the prize.

The final and somewhat complex decision is whether to take a lump-sum or installments.  As previously mentioned, installments allow multiple years of lower taxes on the first $200,000 of winnings/ income, before hitting the maximum tax rates which can be as high as 43.4% for federal alone after $200,000 of taxable income.  Installmants also allow multi-year tax planning, which is not possible if a lump-sum is claimed.  The installment approach can allow winners to still access future payments through deferred-taxable private loans or specialty companies that will purchase deferred installments at a discount.

With amounts as large as the current prize ($149M pre-tax each for the three winners), I highly recommend installments for the reasons above and as further discussed in my prior blog post:


It is being reported that the Minnesotta winner is claiming a lump-sum prize which will only leave him with about $54M (about 1/3 of the gross under the installment method) – not a good % by my calcs……

Garden Grove, CA Wins $12 Million Super Lotto Prize – Lump Sum or Installments??

Thursday, March 28th, 2013

Since another local person won a good sized prize – it is worth reviewing the link above.

Larger prizes almost always support taking the winnings in installments since taxpayers will get graduated tax rates, personal exemptions and itemized deductions shaved off their taxable income over the entire installment period (vs. just one year).

It is also important to fully evaluate who the actual owners of the ticket are.  The purchaser?  Other family members?  Friends?  Co-workers?  The tax difference when the income is spread over multiple winners can be significant — and is much better than one person claiming the prize and then gifting a portion to others who may have a partial claim.

More questions? – (562) 216-1800.



Tax Transparency – How Technology, Social Activism and Government Enforcement is Altering the Tax Compliance and Tax Policy Process

Thursday, March 28th, 2013

From the AICPA Corporate Taxation Insider


Corporate tax transparency and corporate tax reform

Trends in technology and increased availability of information have placed a spotlight on corporate and individual taxpayer compliance and financial stewardship.

March 28, 2013 by Blake E. Christian, CPA/ MBT

Last  month I attended the annual University of Southern California Gould School of  Law Tax Institute conference. As usual, the  quality of the presenters, as well as the technical content, was exceptionally  high.

While  there were plenty of presentations covering the American Taxpayer Relief Act  (ATRA) of 2012, P.L. 112-240, a few notable presentations covered some  interesting trends and predictions relevant to business taxpayers.

Following  is a summary of a few tax trends and policy discussions:

Technology and tax transparency (Click the link for the full article):

Issuing or Recieving Stock or Other Equity Interests Can Produce Significant Tax Liabilities and Benefits for the Parties

Monday, July 30th, 2012

AICPA Corporate Taxation Insider Article – IRC Section 83 – Property in Exchange For Services.

Businesses issuing equity interests to employees and service providors results in very significant tax issues for both the company and the service providor. Quick action(30 days) is required by the recipient when restricted stock is issued in order to minimize ordinary income and maximize future capital gain income.

These complex rules are overlooked or misunderstood in many cases and can create huge issues if the value of the equity interests increase significantly after issuance.

Tax Impact From Mid-Term Elections – Good News We Think

Thursday, November 4th, 2010

The voters have spoken and the Congressireonal balance of power has shifted dramatically.  So how will this impact future federal tax policy?    We think the new composition will serve the U.S. taxpayers well in terms of limiting tax hikes and controlling deficit spending.

The following video (Video #4) and other other links will provide you some useful guidance:


Additional Library of tax and economic videos can be accessed at:



The expiration of the Bush Tax Cuts in 2011 will equate to a $138 Billion tax hit in 2011 and $200 Billion in 2012 to wealthy and middle-class U.S. taxpayers.   An extension of the Bush Tax Cuts are predicted to increase GNP by .5% to 1.4%  and the Congressional Budget Office predicts job creation in the 1.3 to 3.5 Million full-time jobs.

Check out the Financial Times’  Op-Ed:

For a full library of my AICPA Tax Articles, click the link below:|1

Off-Balance Sheet Assets Can Benefit Buyers and Sellers of Businesses

Saturday, August 28th, 2010

Unlike Enron’s technique of hiding liabilities in shell entities, some business owners simply overlook valuable assets that can be secured with very little effort in most cases.

These overlooked assets often come in the form of unclaimed tax refunds associated with various federal and state tax incentive programs.  These programs range from:

- Research & Development Credits

- Federal and State Hiring Credits

-Eco/”Green” Tax Credits

- Sales and Use Tax Credits and Exemptions

- Property Tax Refunds/ Exemptions

Current business owners, or buyer’s of these businesses, can obtain a significant economic advantage by documenting these refunds and working them into there business plan, exit strategy, or factor them into their acquisition strategy.

To read all the details, please click on the following link:


For full access to all of my AICPA articles, please click here:


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Obama Must Break His Campaign Tax Promise

Monday, August 9th, 2010

Due to increasing deficits, a languishing economy and horrendous unemployment rates, some experts are saying that President Obama has little choice to break his promise of not increasing taxes on the middle class.

For an interesting analysis by Financial Times’ columnist Clive Cook, please read the following article:


Read more Clive Cook U.S. tax policy analysis:

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Ongoing U.S. Economic Challenges May Cause Muni Bond Chaos

Friday, June 4th, 2010


Warren Buffet Turns Sour on Muni Bonds.  Thanks to Massive Underfunded Pensions, Dwindling Revenues and Inability to Raise Taxes – State and Local Agencies Are in for a Rough Ride.  Over $14 Billion of Muni Bond Defaults in 2008 and 2009.  This may be just the tip of the iceberg.


U.S. Unemployment Continues to Challenge Recovery.  Census Workers Cannot Cure the Problem (WSJ).


Long-Term U.S. Problems Continue (The Economist) -,%5Egspc,tlt,tbt,euo,man&sec=topStories&pos=9&asset=&ccode=

Goldman Sachs Hearings, U.S. Financial Reforms & Unemployment &

Wednesday, April 28th, 2010

Read the following updates regarding:

  •  The Senate grilling of Goldman Sachs’ Executives (WSJ): – Goldman Sachs Senate Hearings – Bruised/ Defiant. Do the Senators Really Understand What Market Makers Do?


  • Proposals to Revamp the U.S. Financial System (FT):

Martin Wolf (Financial Times) Evaluates U.S. Financial Reform Options


  • The Press Spin to Put Lipstick on the Unemployment Pig: 

347 Regions Experience Higher Unemployment.But Press Spins the News as Positive


  • Going Green – The Wind Solution May Just Be Hot Air (WSJ): – “Power Hungry” by Robert Bryce – The Wrong Way To Get to Green


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