Blog

  • More Important Than Taxes?!?

    Last month, we wrote that New York money manager AllianceBernstein is moving its headquarters and 1,100 employees from a slick black Manhattan skyscraper to the steaming concrete jungles of Nashville, TN. It’s going to be culture shock for the firm’s employees, who have to trade their harsh winters and corned beef sandwiches for milder weather and hot fried chicken. But AllianceBernstein promises employees they’ll love the financial climate most of all: lower housing costs and no personal income tax. Of course taxes played a big part in that move! But is that always the case? A recent Los Angeles Times article argues that another corporate relocation “gives the lie to all that guff you’ve been fed about taxes being a crucial consideration.” Chipotle Mexican Grill launched in 1993 with a single location in a former ice cream store in Denver. The chain now has over 2,000 locations and 45,000 employees. But growth has sputtered in recent years. This is partly due to competitors like Qdoba, Moe’s, Rubio’s and Baja Fresh. And it’s partly due to ingredients like norovirus, salmonella, e coli, and campylobacter jejuni sneaking into the burritos. (Hard to taste the viruses under all those seasonings, right?) Partly because…

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  • Manly Men Doing Manly Things in a Manly Way

    Back in the early 80s, a group of Democratic legislators decided to room together to cut the cost of staying in Washington for the three nights or so per week that Congress is in session. The motley crew included Representative George Miller of California (owner of the blue-gray house in Southeast DC), Senators Dick Durbin and Chuck Schumer, future Defense Secretary and CIA chief Leon Panetta, and others. We can only imagine whose phone numbers they posted on the refrigerator in a house like that. Pizza delivery? Of course! Liquor guy? Oh yeah. Exterminator? Maybe not a bad idea . . . . Visitors to the house could be forgiven for thinking they had mistakenly wandered onto the set of Animal House. The stove didn’t work, so the group lived mainly on Frosted Mini-Wheats. Durbin stopped making his bed when Bill Clinton was President. Schumer slept on a mattress in the living room, and his wife was so disgusted by the place she refused to stay with him. Still, the unconventional arrangement inspired news stories and even a TV series — Amazon’s Alpha House, starring John Goodman as one of four Republican Senators sharing a much cleaner house. In 2014,…

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  • IRS Scuttles Tax Breaks for Pirate Victims

    It’s 1715 in the Caribbean and the Golden Age of Piracy is at its peak. The War of Spanish Succession is over, and thousands of privateers are left without gainful employment. From bases hidden away in the Bahamas, buccaneers like “Calico” Jack Rackham, “Black Sam” Bellamy, and “Black Bart” Roberts gather those sailors under new commands to terrorize the seas. (Edward Teach, better known as Blackbeard, ties burning fuses into his hair to look more fearsome.) While there are never more than a few thousand pirates active at any given time, their legend will live on for centuries. What do you call a pirate with two arms, two legs, and two eyes? Rookie! Historians generally agree that the Golden Age of piracy “walked the plank” by 1730. At that point, European nations could deploy their navies to protect merchants, rather than fight each other. But pirates never fully disappeared. And our federal tax code — which some foes attack as its own form of piracy — may be making recovery even harder for the victims. (We all know auditors wear suits and skirts to the office. But don’t you think at least a few of them would rather raise revenue…

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  • Guaranteed Winners

    On May 14, the Supreme Court struck down the Professional and Amateur Sports Betting Act that had made Las Vegas the only state where bettors could gamble on college and professional sports. (Sorry, wrestling fans, no betting for you. Spoiler alert — the matches are fixed.) Imagine how much louder your neighborhood sports pub will get when the obnoxious drunk at the end of the bar who won’t stop jabbering about his fantasy team is actually putting his money where his mouth is! Dozens of states are expected to legalize betting within the next few years. Naturally, there will be winners and losers. The American Gaming Association estimated that legal sports betting will generate up to $26.6 billion of economic activity and 152,000 jobs. Walmart and Target will make millions from fans converting their winnings into giant TVs. Even a few old-school backroom bookies will manage to hang on — they can offer credit, so they don’t have to start kneecapping until some poor loser fails to pay. But there’s one group we can count on to win big no matter who else loses, and that’s the federal, state, and local tax collectors sharing the juice from the new action….

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  • She Did It!

    Early on Saturday morning, 29 million Americans woke up to take a break from school shootings, Russian collusion, and partisan gridlock to watch a California woman achieve a rare fantasy. The woman in question watched the sun rise as plain old Meghan Markle. But by the time it had set, she had become Her Royal Highness Meghan, Duchess of Sussex. (When she’s in Scotland, she’s the Countess of Dumbarton. In Ireland, she’s the first Baroness of Kilkeel. What did your grandmother-in-law give you on your wedding day?) Lots of Americans grow up wanting to become a princess. Some of them spend years acting like it’s already true. (The best of this breed used to wind up embarrassing their families and everyone else they know on MTV’s My Super Sweet Sixteen.) But, throwing aside concepts like social mobility and “intergenerational earnings elasticity,” once an American girl picks her parents, it’s pretty much game over. Now Meghan’s parents can debate whether they lost a daughter or gained a son. And the royal wedding fans at the IRS can debate whether they lost a taxpayer — or gained a whole new source of revenue! Markle will become a British citizen, which won’t put…

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  • Have You Taxed a Ford Lately?

    On May 2, fire broke out at the Meridian Magnesium Products of America plant in Eaton Rapids, Michigan. The factory supplies components to Audi, BMW, Daimler, Fiat, GM, Tesla, Jaguar and Mercedes. But their most important product may be the die-cut radiator “front bolster” supports in Ford’s F-150 pickup. Workers pressure-feed molten magnesium into a mold, then rapidly cool it like Jell-O. And Meridian is the only factory that does it. No bolster, no truck. The fire has forced Ford to shut down production of the truck completely while they scramble to come up with the part. The F-150 may look like just another pickup truck rumbling down America’s fast-crumbling roads. It’s not. It’s been the best-selling vehicle in the entire country since M.A.S.H was on primetime and the most profitable vehicle of all time. The average truck sells for $47,000 and you can pay north of $70,000 for a fully-loaded Limited SuperCrew model. Celebrity drivers include Walmart founder Sam Walton, actors John Goodman and Dwayne “the Rock” Johnson, Michael Jackson’s son Prince, and even singer Lady Gaga. So, shutting down production is a big big deal. But we’re not here to talk about about the downsides of just-in-time manufacturing,…

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  • Free Agent Scores Spicy Signing Bonus

    Baseball is back in swing, and several teams have already made it clear that they won’t be contending for playoff berths. The Cincinnati Reds are leading that sorry pack, the first team to lose 20 games in the season. But the Orioles, White Sox, and Rangers are all nipping at their heels. If any of them are serious about winning this year, it might be time to take a look at signing some free agents. Find an unhappy veteran, steal him away with a big salary and signing bonus, and maybe you’ll be at .500 by the All-Star break! Big corporations with thousands of employees generally prefer playing “Hometown Hero,” so long as it suits their business goals. But corporations can play “Free Agent” too. They can even pocket fat signing bonuses when they do it, in the form of rich tax breaks in their new hometowns. AllianceBernstein is an investment manager supervising $550 billion in assets for institutions, individuals, and mutual fund shareholders. (We’re not sure why they spell it as just one word; maybe they just couldn’t afford the space.) You’d expect to find that kind of firm in Manhattan. And you’d be right — their current headquarters…

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  • No Business Like Shvo Business

    The lights of Broadway have long shone bright as the show business capital of the United States. (Hollywood may have the movies, but it’s just not the same. And Vegas? Puh-leaze.) New York theatres attract millions of visitors and billions of dollars every year. Naturally, sharp New Yorkers have co-opted show business tactics to promote all sorts of unrelated businesses. So now, we have fashion-as-theatre, restaurants-as-theatre, and even real-estate-as-theatre. Michael Shvo may be the most theatrical real estate guy of all. He started out as a brash Manhattan broker, squiring buyers in a chauffeur-driven limo and trademarking the slogan, “Let’s Shvo.” He enlisted celebrity designers like Giorgio Armani and musicians like John Legend to help sell showy condos to showy buyers. Now he’s reinvented himself as a developer, with current projects designed to make everyone else’s projects look like college dormitories, or maybe Soviet-bloc worker collectives. Shvo is also a noted art collector who favors paintings by Andy Warhol and sculptures by Francoise-Xavier and Claude Lalanne. He paid $14 million to combine two 68th floor condos overlooking Central Park, then stuffed the resulting 4100 square feet full of treasures. (The living room rug is beaver fur.) He dropped another $6…

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  • Auditors on Deck

    Baseball is back, even as some teams are looking at early-season snow days. Little-leaguers across the land are donning gloves and getting ready to watch their favorite big-leaguers take to the field. Stats geeks are prepping spreadsheets to crunch numbers like WAR (Wins Above Replacement), BABIP (Batting Average on Balls in Play), and LWCT (Largest Wad of Chewing Tobacco). And the umpires at the IRS are watching a new pitch that Washington just threw across their plate, too. Since 1921, code section 1031 has let you exchange property you’ve held for business or investment without paying tax on your gains. These “like-kind” exchanges usually involve real estate. They also include vehicles and equipment — if an up-and-coming CEO wants to swap his company’s tired old Gulfstream IV for a newer, shinier model V, that’s cool, too. The IRS has even ruled that “trades of player contracts owned by major league baseball clubs will be considered exchanges of like-kind property.” But last year’s Tax Cuts and Jobs Act trimmed the roster on like-kind exchanges to real estate only. And that means some teams may already be behind in the count for taxes they owe on their trades! Here’s the challenge: how exactly do you value a…

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  • Where Does Cardi’s Money Go?

    The rapper Cardi B grew up in the South Bronx’s Highbridge neighborhood, where the median family income barely tops $27,000. Cardi, born Belcalis Armanzar, couldn’t wait to get out. She spent much of her time at her grandmother’s home across the Harlem River in Washington Heights. By age 23 she released her debut video and album. Last year she joined the A-list with her hit “Bodak Yellow,” where she raps about being rich and arriving at “the club” in a Rolls-Royce Silver Wraith. Apparently, Cardi really is stacking some nice paper. On March 22, she recorded an angry rant demanding to know where her tax dollars go. “So you know the government is taking 40% of my taxes. And, Uncle Sam, I want to know whatchyou doing with my [gerund favored by rappers] tax money. Because, you know what I’m saying? When you donate, when you donate to a kid from a foreign country, they give you updates of what they’re doing with your donation.” She complained about rats infesting New York City’s subway, and concluded, like any good auditor, “I want receipts.” Cardi does have a point here. If you give to a group like Save the Children, you’ll…

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Testimonials

  • We started our residential real estate business and brought Damon on as our principal adviser for all matters relating to taxes & accounting. We have doubled our business each year and Damon is a critical partner that has allowed us to successfully focus on our business.

    – Dan and Rachel Kendall
    Owners, The Rachel Kendall Team, LLC - Raleigh, NC
  • Damon Yudichak is a diligent and consistent professional. I’ve worked with Damon since 2009 and I’ve felt like a valued customer since the beginning of our relationship. His firm is consistent, courteous, and knowledgeable. He and his firm are a vital link to my business.

    – Al Sullivan, President
    Inspirus Consulting, Inc. – Cary, NC
  • Owning a small business… to me, it’s worth millions! Bringing Damon on for accounting and tax purposes… just a reasonable monthly fee! Keeping our business legal and my business partner sane… PRICELESS!

    – Tonya Baskerville, Owner
    Art on the Fridge, LLC – Raleigh, NC

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