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“TurboTax Made Me Do It” is not a valid excuse

On May 11, 2017, the Tax Court issued a Memorandum Decision (TC Memo 2017-79) that addressed, among other things, the Taxpayer arguing that the software “lured” him into claiming too many deductions on his tax return.

There were a number of issues on this return that caught the eye of the IRS: alimony paid deduction, interest deduction, and deduction for other expenses. When examined by the IRS, the Taxpayer did not have much in the way of paperwork to support his positon for the deductions reported.

In addition to disallowing the majority of the deductions taken, the Taxpayer was assessed an accuracy related penalty for substantial understatement of income tax. For this penalty, the burden shifts to the Taxpayer to show that his mistakes were reasonable and in good faith. “He admitted during trial that he deducted items he shouldn’t have, and that he overstated certain losses. He tried to blame TurboTax for his mistakes, but tax preparation software is only as good as the information one inputs into it,” the Court concluded.

Tax preparation software must be used correctly to be useful for purposes of showing reasonable cause and good faith as a defense to accuracy related penalties. The majority of court cases have rejected this defense.

It is the taxpayer’s responsibility to review the output as well as the input when using tax software. Remember the old adage: Garbage In Garbage Out.

When preparing your return, ensure you are reviewing the return before filing it. I just received a phone call this week from someone that was asking if his tax software was properly calculating the tax on rental property he had sold. A first for him. I commend him for wanting to understand what he was filing.

Remember: You can’t blame the software!


When is it time to retire? Is it some set age such as when social security or medicare benefits are available? It’s different for everyone. And people are continuing to work later in life. Why? Maybe because they need to (haven’t saved enough – the recession hit them hard) or maybe because they want to (enjoy what they are doing).

The toughest decision to make for many is “when do I have enough?” “When can I stop accumulating and be okay with spending?” It’s a difficult mindset to get around. During our careers we are constantly accumulating. It’s tough for some to flip that switch and say “ok, I’ll be okay. I’ll be able to continue living in the lifestyle I want.”

Lisa Du, in her article “Golden Years Redefined as Older Americans Buck Trend and Work“, provides some real life examples of why people are continuing to work:

  1. Using dollars for discretionary spending, i.e. vacations.
  2. Wanting to maintain their lifestyle.
  3. Worried their lifespan will outpace their wealth.

There are other reasons for continuing to work other than just financial. Some want to keep their mental skills sharp and working is an opportunity to do this. They want to feel they are contributing and have a purpose. This is especially true for owners when they sell their business. They have worked long and hard and kicking back in the rocking chair doesn’t appeal to them.

I recommend that you think through what you want to do during your “retirement” years. Determine what you need to accomplish that. Evaluate what you have. Develop a timeline that fits. Be flexible. You may move it. This is your life plan. Make it happen.

There are many financial planning tools and advisors that can assist you. Utilize them. We have assisted clients with determining if it is “ok” to flip that switch. Feel free to give us a call.




I was intrigued by the article “High Performers and High-Potential Employees Are Not One in the Same” , by Andre Lavoie.  So I did a bit more investigation and found some other references out there. The consensus was:

High Performers achieve your goals today.

High Potentials help you achieve your future.

High-potentials have the ability and aspiration to be successful leaders within an organization. A high-performer may also have high potential but not necessarily. They may be great at their job and take pride in their work and accomplishments, but don’t have the potential (or desire) to assume a leadership role. Lavoie lined out four traits of high potentials vs. high performers:

1. Proactive vs. reactive – High potentials take a proactive approach to problem-solving, planning for the future versus waiting until a problem occurs and reacting.

2. Leaders vs. followers – High-potentials are characterized by their ability to go above and beyond. They don’t leave the office the second the clock strikes five. They don’t focus on themselves but on the team as a whole.

3. Receptive vs. unreceptive to feedback – Employees who are truly receptive to feedback will take immediate action, not to save their own skin, but to become an all-around better worker. Employees with high potential will avoid making the same mistake twice.

4. Knowing the business vs. knowing the job – High performers and high potentials both strive to reach peak performance, but high potentials aim above that peak. They can clearly see how their work contributes to overall success and set out to achieve the company vision through achieving their individual work goals. Whereas high performers seek to do well as individuals, high potentials desire to do well as a company. High potentials have that entrepreneurial spirit.

So what should companies be looking to retain? High performers for today. But high potentials for tomorrow. And we need those future leaders. These are the high potentials you should be identifying and sending to leadership development programs. Everyone need not apply.



Harvard Business Review OnPoint’s Summer 2015 issue includes an article on “How Star Women Build Portable Skills” suggesting that women, in their efforts to maneuver in a male oriented environment, actually build skills that are more portable than men. The research study was conducted on stock analysts starting several years back.

Strategy #1 – Build an external network

Female star analysts take their work environment more seriously yet rely on it less than male stars do. Their decision to maintain an external focus rested on four main factors:

  1. Uneasy in-house relationships: People are most comfortable forging relationships with those most like themselves.
  2. Poor mentorship: Most female analysts who become stars have had mentors. Those who did have mentors received less support from them than male stars did. They missed out on one of the most valuable services a mentor provides: access to a network of relationships.
  3. Neglect by colleagues: Locker-room and sports-bar cultures make it difficult for female analysts to forge strong bonds. Men gravitate to who they tend to think will be around…the men…they think women will leave when they marry or have kids.
  4. A vulnerable position in the labor market: Even female-friendly firms tend to lay off more women than men during economic conditions.

Strategy #2 – Scrutinize prospective employers

Men tend to concentrate on compensation. Women are more likely to weigh multiple considerations such as attitudes of the research director and the existence of female colleagues and role models. Women look at the culture of a department in terms of how women fit in along with its value, atmosphere, and tone.

Have things changed much? Awareness, maybe, resulting in a more concerted effort to develop and implement women’s initiatives within organizations. The HBR story line emphasized what can be learned from this study:

For employees, the decision to change jobs should be made strategically, not only with an eye toward promotions and raises, but also from an informed awareness of the new firm’s resources and culture.

For organizations, the focus should be on building talent from within and taking measures to retain the stars they create.

Balance internal and external relationships. Your life changes as you move up the ladder. To succeed you must develop peer relationships at the firm. That’s how things get done. That’s how trust evolves. Whether they are internal or external “trusted relationships” are the key.


As I get ready to head off on vacation, I ran across a couple of articles on CFOs taking more working vacations. Robert Half Management Resources performed a study as to how often CFOs check in with the office during summer vacation. The percentage of time is increasing from their responses in 2012. It’s so easy now with everyone being so plugged in. Only 32% don’t anticipate checking in at all.

Robert Half Management Resources offers suggestions for allowing yourself to get away:

I’m a bit of an “all in or all out” person. When I’m in town I’m tied to my work. Some call me a workaholic. However, when I’m gone, I’m usually “gone.” Why? Because I do trust my team to take care of things. Our firm involves other staff in client relationships so that they can handle matters when the key contact person is out. I don’t worry when I’m gone.

We promote work-life balance because it’s meaningful to the Millennials, but we all need an opportunity to take some time to recharge. Sure, we may pay for it by putting in extra time before we leave and then on our return. But I do believe it is important to recharge. Your perspective is much better when you’ve had a chance to clear your mind and enjoy some personal relationship time.

I’m heading off to spend some quality travel time with my future daughter-in-law. One to one time. How often will that opportunity happen?

So, even as I feel guilty about taking off, it won’t last long. Until I return.



I always find it interesting to hear the back story of people’s success…men and women.

Over the last few months I’ve read a couple of historical novels: The Aviator’s Wife by Melanie Benjamin and The Paris Wife by Paula McLain. What struck me the most from these novels was the strong influence on their families and the fortitude these women had. Which led me back to thoughts of my youth when I was intrigued by western shows and the strength and fortitude required of the women living in the wild frontier.

Fortitude – strength of mind that enables a person to meet danger or bear pain or adversity with courage. Synonyms – grit, backbone, pluck.

We’ve been doing this for a long time. However, our roles continue to change from a strong supporting role to a strong leadership role.

My last plane trip I grabbed the October issue of Fortune featuring the 50 Most Powerful Women.

  1. Ginni Rometty, Chairman, CEO, and President, IBM
  2. Mary Barra, CEO, General Motors
  3. Indra Nooyi, Chairman and CEO, PepsiCo
  4. Marilyn Hewson, Chairman, CEO, and President, Lockheed Martin
  5. Ellen Kullman, Chairman and CEO, Dupont

The list goes on. The list is impressive. And the issue includes some in depth insight into these power players.

With these leadership roles comes even more of a balancing act. Innately women tend to be better at balancing. We do a lot of it.

Forbes Women Leadership column recently published “The Morning Routines of 12 Women Leaders.” Each routine was different yet similar…very busy.

Women…ourselves, our daughters, our friends, our co-workers…we are all striving to balance our lives. I listen to the stories and they all have a similar theme…not enough time. Both men and women.

As we move into the holiday season, let’s ensure we are using some of that pluck to prioritize and enjoy much needed time with family and friends!



Women, women, everywhere. But are we in the right places? Yes and No. It is interesting that when we focus on something we find it everywhere we look.

Last week I was off to a conference In Portland. I always end up picking up reading material in the airport so I bought the October 2014 issue of the Harvard Business Review. In it I found an interesting article on Hacking Tech’s Diversity Problem. Diversity meaning “looking for more women.” It is widely known that the technology sector has a diversity problem.

This article notes four basic patterns of gender bias that hold women back:

Prove-it-again – Women often have to provide more evidence of competence than men do to be seen as equally capable.

Tightrope – High status jobs are seen as requiring stereotypically masculine qualities, while women are expected to be modest and self-effacing, so women must walk a tightrope between being seen as too feminine to be effective and too masculine to be likable.

Maternal Wall – Researchers found that mothers were 79% less likely to be hired and were held to higher performance and punctuality standards. Mothers considered competent and committed were seen as bad mothers.

Tug-of-war – Gender bias against women fuels conflict among women. Research shows that women who encounter discrimination early in their careers tend to distance themselves from other women, refuse to help them, or even align themselves with men at other women’s expense.

“Housework” vs. “Glamour Work”  In many companies, women are expected to do disproportionate amounts of “housework,” which includes both domestic tasks, like planning parties, and undervalued tasks. “Glamour work” consists of bringing in new business, managing key client relationships, and strategic planning.

So where was I heading? To a Leading Partners Retreat in Portland comprised of 75 accounting firms from around the country.

The emphasis of the conference was on attracting and developing your people. This year also included sessions directed at keeping women in public accounting. One speaker at the conference was Krista McMasters from McMasters Consulting.

Krista became CEO of Clifton Gunderson LLP in 2009 becoming the firm’s fourth CEO and the first female CEO in the history of the accounting profession among the top 50 firms, retiring from the firm in 2013. She ended her session discussing women leaders.

Although the number of women entering the profession from college is greater than the men, the number of equity partners in accounting firms is significantly lower: 86% Male to 14% Female. Why? Similar to Sheryl Sandberg’s Lean In, Krista believes women opt out early and that moving more women into leadership takes commitment and investment. Understand that women are “wired” differently. They may be less confident, may be more emotional, are more collaborative in nature, and have different communication styles. Krista pointed out that women should be mentoring other women.

I had a brief discussion with Krista at the end of her session. Similar to myself, she had been mentored by a man that saw the potential in her and pushed her outside of her comfort zone causing her to take on stretch assignments t providing tremendous growth for her and increased confidence. So my suggestion – men should be mentoring women as well. Deal with the differences. We want to keep women rising in the profession.

So women – Be there to mentor other women. But men….we what and need you as well to be there to mentor us. We want “Glamour Work!” We may need a little push…but remember we are all in this together.






What’s more important: experience or potential? In an accounting firm, experience can sometimes be the focus of a hiring decision. However, potential really is a smart hire. High performing potentials…that’s a win.

In Claudio Fernandez-Araoz’s article 21st Century Talent Spotting in the June 2014 Harvard Business Review, he points out that employers must focus on potential versus experience.

Managers must learn to assess current and prospective employees on five key indicators:

  1. Motivation
  2. Curiosity
  3. Insight
  4. Engagement
  5. Determination

Who wouldn’t want to hire someone with these key attributes? They have the ability to form their own career path and design their future.

Our jobs as employers is to make sure they have opportunities that push them out of their comfort zone…stretch development. We should always be growing and learning at all levels of our organizations.

The CEO of Zoetis prepared for the top job.  He put together a development plan. The first step was identifying a mentor, an experienced CEO from outside of his organization. The next step was to find a communication expert to work with. The audience for an IPO road show is quite different and it requires the skill to communicate your company’s strategy to the outside world. Another step he took was to develop the skills to manage a board.


It all starts with potential.



In trust law, a Protector is a person appointed under the trust agreement to direct or restrain the trustees in relation to their administration of the trust. Historically, the concept of a Protector developed in offshore jurisdictions where settlors were concerned about appointing a trust company in a small, distant country as sole trustee of an offshore trust which is to hold a great deal of the settlor’s wealth. However, Protectors have now moved into the mainstream of more trust agreements.

Do they have fiduciary responsibilities? And what is a fiduciary? A fiduciary is an individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another’s benefit. The duties of a fiduciary include loyalty and reasonable care of the assets within custody.

In Jay Adkisson‘s 2012 article “Trust Protectors — What They Are And Why Probably Every Trust Should Have One”, he states the original idea behind the Protector is to have somebody who can watch the Trustee and terminate the Trustee for any misconduct. Originally that was the only power the protector had: fire the Trustee. Then additional powers were bestowed on the Protector in trust agreements.

Adkisson cautions that if one starts giving the Protector too many powers, they become seriously at risk of being deemed a de facto “Co-Trustee”, with all the fiduciary duty baggage that carries. With Protector provisions, simpler is better. A Protector provision should ideally just have three sections:

  1. Empowering the Protector to terminate the Trustee;
  2. Empowering the Protector to appoint successor Protectors; and
  3. Explicitly stating that the Protector is not a Trustee and owes no fiduciary duties to anybody or has any duty-to-act.

In Adkisson’s recent article in, he raises the question as to whether the trust protector as a fiduciary is a bad idea.

Adkisson’s position is the Trust Protector should not have fiduciary duties, which means that the Trust Protector should be able to exercise wholly independent discretion to fire Trustees without worrying about whether the Trust Protector will be sued by somebody.

If a drafter of a trust agreement is going to make the Trust Protector a fiduciary, then those fiduciary duties need to be clearly and specifically set out — otherwise, the Trust Protector has the potential to be sued if anything goes wrong with the Trust even if the Trust Protector did not know about it, which is another way of saying that here the Trust Protector was implicitly charged with reviewing every slight thing that went on in the Trust.

The inclusion of a Protector in a trust can often avoid expensive and time-consuming court proceedings if their powers are properly and clearly stated. There is some confusion as to whether they in fact have any fiduciary responsibilities.

The word is caution. If you are agreeing to be a Trust Protector, know where you stand. Are you a fiduciary without any fiduciary protections under the trust?



Here is a common question, “when do I have to capitalize an expenditure and when can I deduct it as a repair or maintenance item?”

The difference between expensing and capitalizing can mean the difference between an immediate deduction at full value versus a deduction spread out over the useful life of the asset.

In September 2013, the IRS released final regulations governing when taxpayers must capitalize and when they can deduct their expenses for acquiring, maintaining, repairing, and replacing tangible property. The new “repair regs” are lengthy and complex. Every business with fixed assets must comply with these new rules for its first tax year beginning on or after January 1, 2014.

The IRS’s stated goal is to reduce controversies with taxpayers by moving away from a facts and circumstances determination whenever possible, as well as from the subjective nature of the existing standards in general. All well intentioned; however, with the low threshold safe harbor amounts not particularly favorable for the taxpayer.

Code Sec 263 requires the capitalization of amounts paid to acquire, produce, or improve intangible property. Code Sec 162 allows the deduction of all ordinary and necessary business expenses, including the costs of certain supplies, repairs, and maintenance.

In the regs, five main areas were addressed:

Materials and supplies are defined as a unit of property that has an economic useful life of 12 months or less with an acquisition or production costs of less than $200. Materials and supplies are generally deducted in the tax year first used or consumed.

The regs provide guidelines as to when amounts relating to acquisitions or improvements should be capitalized or deducted. These are tied to whether a taxpayer has an applicable financial statement generally defined as an audited financial statement.

A taxpayer with an applicable financial statement may deduct up to $5,000 of the cost of an item of property per invoice. The required written accounting procedures in effect as of the beginning of the tax year may specify a per item amount of less than $5,000. Taxpayers without an applicable financial statement may elect the de minimis safe harbor and expense up to $500 per invoice/item. Big difference. With an audited financial statement, the amount is $5,000. Without, $500.

These limits are safe harbor amounts. When accounting procedures expense items that exceed the $5,000 limit, it may still make the case with the IRS that a greater amount is reasonable under its facts and circumstances.

To take advantage of the $5,000 de minimis rule, taxpayers must have written book policies in place at the start of the tax year that specify a dollar amount (up to $5,000) that will be expensed for financial accounting purposes.

The de minimis rule is a safe harbor that is elected annually by including a statement with the taxpayer’s tax return for the year elected.

Consult with your CPA. Make sure you have a written capitalization policy in place before the end of 2013. For 2014 and beyond, make sure you are making the proper annual elections.



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