Libman Tax - December 2018

LI BMAN 'S AWESOME LETTER

LIBMAN TAX STRATEGIES

DECEMBER 2018

Tax Season Begins in December

I Can HelpYou Save Big

With the end of the year coming up, your day- to-day routine has likely gone into hyperspeed in order to keep up with the pandemonium that surrounds the holiday season. Between getting your house ready to host those big family dinners and traveling from store to store to get your kids that new action figure they really want, taxes and financial planning are probably the furthest things from your mind. I get it. People think they don’t have to file taxes until “Tax planning is complicated and messy, but taking the steps to get your finances in order in December will help you in the long run.” April, so why would they need to think about finances during December? I’m here to tell you that when it comes to taxes, December is the most important month of the year. If you are hoping to make any meaningful changes before 2019 or save money for the last year, be sure to reach out to me before lighting off those New Year’s Eve fireworks. There’s a wealth of information you should keep in mind in your financial planning, and I’ve included some important steps below. FIRST STEP Before you can even think about getting any cool tax savings, you have to know where your finances stand. December is an ideal time to get your accounting in order. Start by recording your income, then take notes of your expenses and the amount you’ve already paid in taxes. Organizing these details before the end of the year will not only help you eliminate some of the stress that accompanies tax season, but

it might help you find some new ways to save what you didn’t have time to research in the years prior. FOR EMPLOYEES If you are an employee working for a company or corporation, you might want to consider meeting with your human resources representative and increasing your 401(k) withholdings. You could also increase your federal or state withholdings

simultaneously. This would help ensure that you won’t receive a

tax bill or that you might get a larger tax return in April. If this idea seems complex, feel free to give me a call at 626.280.6865.

FOR BUSINESS OWNERS If you are a business owner — whether it’s an S or C corporation — then the process of organizing and assembling your numbers grows significantly more complicated. First of all, because you are both an employee of the business and the owner, you have to give yourself a “reasonable wage,” a task that might seem simple but is actually quite difficult. I’ve seen many cases where business owners underestimate their wage as an employee and cause problems for themselves later on. To add to this complexity, owners also have to establish a 401(k) plan, a charity plan, and a captive-insurance plan. They could also consider buying any of their company machinery on credit in order to get the 179 bonus appreciation. Lastly, with the new Trump Tax Plan, there are several steps you have to go through in order to determine if you can qualify for deductions. In general, tax planning is complicated and messy, but taking the steps to get your finances in order in December will help you in the long run. If you have questions about how you can save money on taxes this upcoming year, give Adam a call at 626.280.6865.

-Adam Libman

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STOP DONATINGTO SCAMMERS How to Spot Fraud This Holiday Season

Inside every office building, there is an employee who arrives before all their co-workers in the morning and is the last to leave at night. They diligently work throughout all the hours of the day, get all their projects done long before their deadlines, and seem to be at least five steps ahead of everyone else at any given time. While this work ethic doesn’t necessarily fit with each individual’s approach to their jobs, I think that most people would admit to being impressed by these seemingly superhuman workers. One individual whose studiousness never fails to inspire me is Ed Barlow. Ed is a real estate genius. He has this uncanny sense of when to invest in a property and when to sell it. I’ve taken to referring to his talent as his sixth sense because, beyond his industriousness, he just seems to truly have phenomenal instincts and understands the market better than anyone else I’ve met. In the 30 years that my dad and I have been able to work with him on managing his finances, I’ve noticed that his exceptional architectural taste and impeccable attention to detail is what has helped him ensure that every single deal he does is successful. During the season of giving, charities receive a much-needed rush of donations as people open their hearts to others. Unfortunately, criminals are all too willing to abuse this goodwill. According to a report from the Justice Department, Americans over the age of 60 lose over $3 billion a year to scams and fraudsters. As charity scams reach their peak, here’s what you need to do to ensure your donations aren’t lining the pockets of criminals. NEVER GIVE BY PHONE OR EMAIL. Charities regularly reach out to past and potential donors through traditional mail, email, phone calls, or text messages. This means fraudsters will mimic their approach with less noble intentions. Because it’s impossible to determine who is on the other end of a call or email, you should never hand over your credit card information to strangers. If you really are speaking to a representative from a legitimate charity, they will direct you to a secure avenue where you can give without worry. FEELING PRESSURED? WALK AWAY. A lot of charities set goals they want to reach before the new year, but even groups that are hoping to raise a certain amount of money

know better than to pressure donors into giving. Donations should always come from the heart, and it’s a bad sign if someone insists there’s a deadline for giving. As the Better Business Bureau says, “Responsible organizations will welcome your gift tomorrow as much as they do today.” ONLY GIVE TO REPUTABLE CHARITIES. Do some research before donating to charities. Look up any prospective charity on Charity Navigator at CharityNavigator. org. This service flags “high concern” organizations suspected of fraud and ranks how reliable established charities are. Even legitimate organizations can be misleading about how they spend their donations. A good rule of thumb is to avoid organizations that spend more than 25 percent of donations on salaries or administrative costs. There are many amazing charities and organizations that do good work. Stay vigilant to make sure you are bringing joy to the world and not falling for a criminal looking to make a quick buck.

Meet Ed Barlow, One of the Best Salesmen I Know Client Spotlight

he thoroughly examines it. For a guy who isn’t a tax strategist or CPA, Ed somehow manages to ask all the right questions — and I love this about him. I also like that he is a diligent planner. In fact, before he starts working on selling a property, he inquires about the tax ramifications and prepays his taxes. To me, Ed is a dream client, and I like to joke that if I could get 10 more Eds, I’d thank God every day!

In addition to Ed’s overall success, his husband, Patrick, also excels in his role as an executive in the health care and insurance industry. In fact, for as good as Ed does in the real estate business, Patrick matches him in his own pursuits. Together, they make up one of the most efficient and hardworking couples I know.

Ed’s attention to detail extends far beyond buying and selling property, though. When I give him back his tax return each year,

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Buttery Roasted Chestnuts

My Best Business!

MEET PHIL, JASON, AND AARON OF KUREIJI, INC.!

INGREDIENTS

2 pounds fresh chestnuts, unpeeled

• • • • • •

2–3 sprigs rosemary

1/2 cup unsalted butter, melted

2 teaspoons kosher salt, or more to taste Pinch of freshly ground nutmeg Freshly ground black pepper, to taste

DIRECTIONS

1. Heat oven to 450 F. 2. Place a large sheet of foil on a rimmed baking sheet. 3. On a large, flat workspace, place chestnuts flat side down. Using a sharp knife, carve an X on the rounded side of each chestnut. 4. In a large bowl of hot water, soak chestnuts for 1 minute. 5. Pat dry and transfer to a medium bowl. Add rosemary, butter, salt, pepper, and nutmeg. Toss to coat and transfer to baking sheet. Arrange in a single layer. Gather the edges of the foil together, leaving an opening at the top. 6. Roast until peels curl up, about 30–45 minutes. 7. Transfer to a platter and serve while hot or warm.

There aren’t many people in the world who wake up every day truly excited about their job and the people they work with. In most cases, employees enjoy one or the another: their job or their coworkers. Very few are lucky to find both! I can confidently say that Phil, Jason, and Aaron of Kureiji, Inc. are three of those lucky few. Five years ago, these young men, all in their mid-20s, decided to create their very own T-shirt company. They take on every responsibility that is associated with owning, running, and operating a business, and they all have their unique roles. Jason oversees the business’s overall operations, Phil takes on the management aspects, and Aaron creates the look of the T-shirts, which often incorporates humorous jokes and phrases along with aesthetically pleasing designs and photos. Even people with the closest relationships might avoid going into business with friends, but these guys make it work. They trust one another to fulfill their own individual roles. The phenomenal growth I watched them experience in the three years I’ve been working with them demonstrates the loyalty they have for their awesome company. They now sell their products on Amazon, Etsy, and other third-party carriers, and they ship to all 50 states. They are even leasing to buy their own brand-new building as well! As it is with any new business venture, a lot of growth relies on one’s ability to learn on the fly, and I couldn’t be prouder of these three young men for

TAKE A BREAK

their ability to take a dream and run with it. I’m excited to see where their creativity, ambition, and innovation takes them!

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Chip and Dan Heath’s ‘Made to Stick’ Uncovers What Makes Ideas Matter

relatively straightforward, they are often subverted in an effort to use business jargon and other neutered forms of language.

Have you ever wondered why certain stories that have no basis in fact get spread around like wildfire? Whether they’re rumors, urban legends, or conspiracy theories, these tales can often gain more traction than important ideas and facts. In their book “Made to Stick: Why Some Ideas Survive and Others Die,” Chip and Dan Heath explore the qualities that give ideas relevance and pass-around value. “An accurate but useless idea is still useless,” they write. This point is key to understanding why people get excited about certain ideas and ignore others. The Heaths argue that the presentation of ideas can have just as much of an impact on their “stickiness” as the content of the ideas. After analyzing hundreds of examples, they note, “We began to see the same themes, the same attributes, reflected in a wide range of successful ideas.” “Made to Stick” explains those attributes using myriad examples to illustrate how stickiness works in the real world. Early in the book, the Heaths share six key principles, demonstrating how good ideas are made valuable and exciting by their simplicity, unexpectedness, concreteness, and credibility; are capable of rousing emotions; and are often presented in the form of stories. While these principles are

The Heaths deploy John F. Kennedy’s famous speech about putting a man on the moon as an example of a compellingly relayed idea. “Had John F. Kennedy been a CEO, he would have said, ‘Our mission is to become the international leader in the space industry through maximum team-centered innovation and strategically targeted aerospace initiatives,’” they explain. Nobody would have been excited about that. If you’ve ever thought that you had a great idea but couldn’t get your employees to buy into it, a lack of stickiness may be the cause. Understanding how to present your ideas in an inspiring way could unlock the key to increased productivity and growth like you've never achieved before. The next time you present an idea to your team, a group of conference attendees, or any other audience, ask yourself if that idea will stick. If it won’t, you’re just wasting your time. If you need a little guidance on how to make your ideas punch a little harder, “Made to Stick” should be on your holiday book list.

Beard Beauty

3 Steps to Being Happy, Healthy, Handsome, and Hairy

Whether you’re the proud owner of a goatee or are shopping for a bearded loved one, it’s important to know the ins and outs of proper facial-hair care. With a few simple steps, you can turn a “no shave November” experiment into a glorious, shining mane. WASH AND SCRUB From tangled knots to last night’s dinner, you don’t want anything hanging out in your whiskers longer than it has to. Scrubbing your beard as you shower will keep your face happy, hairy, and healthy. Don’t worry about investing in specialty beard soap unless you have particularly sensitive skin. For most folks, regular shampoo or facial wash works fine. Just be sure to get all the suds out or things will get crusty. Use a gentle patting technique to dry your face afterward. Scrubbing with a towel is a recipe for face frizz. OIL OR BALM? Just like the hair on your head, your beard and the skin underneath need to stay moisturized. The use of beard oil and utility balm (commonly known as beard balm) will keep your hair and face hydrated and add a little extra shine and fragrance to your facial ensemble. Deciding which product to use depends on your beard length.

Beard oil is quickly absorbed, making it a tonic for itchy new beards. Individuals with extra-dry skin or Civil War-general- length beards should consider switching over to balms. Applying either of these products will keep your beard smooth, shiny, and dandruff-free. GET A BEARD COMB What makes a beard comb so special? While metal or plastic prongs are fine to use on your scalp, faces tend to be more prone to irritation. Wooden beard combs are gentler and absorb facial oils, redistributing them throughout your beard from root to tip. Plus, the lumberjack aesthetic is a nice touch. Remember that beards don’t grow on trees. Regardless of your fashion goals, your facial hair is an important part of your body and needs to be treated with respect! These tips won't just have you looking dapper; they’ll have your face feeling better than ever.

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Multicultural Celebrations Teach Your Kids About Winter Holidays

According to the Pew Research Center, Christmas is the most celebrated December holiday in the U.S. Yet, like the melting pot it is, the U.S. contains many cultures from across the globe, each with their own traditions. Teach your kids about some of the holiday celebrations from different cultures this season.

KWANZAA

DIWALI

Created in 1966 by black studies professor Maulana Karenga during the Black Nationalist Movement, Kwanzaa is a seven-day celebration and reflection period for African Americans. The week offers African Americans the opportunity to connect with African culture and history by celebrating the seven principles of African heritage, which include unity, self-determination, and creativity.

Though celebrated in late fall, Diwali is a Hindu holiday that’s known as the festival of lights. Its main purpose is to celebrate the triumph of good over evil, and the five-day festival includes the lighting of candles or lamps, feasting, and giving gifts to family and friends. Diwali also celebrates the Hindu new year and is the largest, most widely celebrated festival in India. This is not an exhaustive list by any means, but educating your children about holiday practices other than Christmas will give them a broader worldview and inspire them to gain further knowledge about cultures outside their own. Your local library is a great resource for children’s literature on these holidays, and there are also TV programs from PBS that feature episodes on these traditions. Enjoy the winter holiday season, however you decide to celebrate!

HANUKKAH

Hanukkah pays homage to a two-year Jewish rebellion against an oppressive Greek-Syrian government that took them captive in an attempt to eliminate Judaism. The tradition of the eight-day celebration and the lighting of the menorah candles comes from the story of a miracle that happened during the rebellion, when a one-day supply of oil burned for eight days in a temple.

Have You Heard About Our Diamond Club?

WORD SEARCH

Here at Adam Libman Tax Strategies, our Diamond Club is invitation-only and reserved for our top clients. If you have questions about the privileges that come with being a Diamond Client or want more information, make sure you give Adam a call! Diamond Clients

• Randy Gleckman * • Jay & Laine Zuckerman * • Ken Ma & Juliana Tu • Max Keylor • Lynn Adkins * • Ms. X

Candle Cookies Decorations Family

Gratitude Holidays Snowflake Snowman

Snowstorm Tradition Travel Winter

*Founding Members of the Diamond Club

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Hurricane Hero Tony Alsup How One Man Rescued Hundreds of Animals

One of the most interesting — and perhaps funniest — events currently happening in the Libman household is that our oldest son, Evan, has decided to retire at the ripe old age of 8. He started this school year with a far more excited mindset. In fact, he even spent the last couple of weeks of summer break trying to convince his younger brother, Ethan, that starting kindergarten would be a fun experience. But now that the school year is nearly half over, his enthusiasm has definitely tapered off. He has decided that instead of finishing second grade, he wants to get a gaming console to play Minecraft and make Youtube videos so cool that he can get a million subscribers. Beyond trying to convince our kids that second grade is a valuable experience, this month has been both hectic and a good period for all of us to spend time together during the holidays. This year, we celebrated Hanukkah from Dec. 2–10, which is a bit earlier in the month than previous years. For those of you who don’t know, Hanukkah is a Hebrew word meaning “dedication.” It commemorates a miraculous event in the second century BC On Early Retirement and Hanukkah My Wife's Perspective In the wake of destruction, it’s easy to focus on self-preservation. After all, fight-or-flight instincts are hard-wired into our brains so that we can survive dangerous situations. But while fear drives the actions of many in times of chaos, there are a few who find greater strength in compassion. Tony Alsup considered the potential devastation of Hurricane Florence as he sat comfortably in his home in Greeneville, Tennessee. Rather than sit back and watch, the truck driver by trade packed up an out-of-commission school bus he’d bought and set off to South Carolina with one goal in mind: to save as many animals as possible. Stopping by every shelter he found along the coast, Alsup rescued over 60 cats and dogs in both North and South Carolina and took them to Foley, Alabama. The heroic efforts of Alsup saved the lives of many animals, but it wasn’t the first time he’d rushed into danger for a good cause. He’d originally purchased the school bus, which he turned into Noah’s Ark last year, to save animals in Texas and Florida as Hurricane Harvey pounded the Gulf Coast. When he finished there, his mission shifted to helping animals in Puerto Rico after Hurricane Maria ravaged the island.

It’s said that character is

defined by the way someone acts when no one is watching. Many people

heard of Alsup’s bravery after the devastation of Florence, but as news stories turned to sports, politics, and business, America slowly moved on. Victims of the hurricane who lacked supplies received less national attention, but more than a month later, Alsup’s commitment to the cause was as strong as ever. Living out of the back of the bus for weeks, he drove pets out of the persistent flooding and convoyed shipments of desperately needed supplies to the coastal Carolina towns. You can follow Tony’s commitment on Facebook. He’s not asking for money or fame; he’s just a person with a heart to serve, using social media to promote awareness about those who desperately need our help. If you’re wondering what drives such a person, you can find it written at the bottom of every update he posts: “Love y’all, mean it.”

when the Holy Land was ruled by the Seleucids (Syrian-Greeks), who tried to force the people of Israel to accept Greek culture and beliefs instead of mitzvah, observance and belief in God. Against all odds, a small band of faithful Jews led by Judah the Maccabee defeated one of the mightiest armies on earth, drove the Greeks from the land, reclaimed the Holy Temple in Jerusalem, and rededicated it to the service of God. When they sought to light the Temple's menorah, they found only a single cruse of olive oil that had escaped contamination by the Greeks. Miraculously, they lit the menorah and the one-day supply of oil lasted for eight days. Regardless of whether your family celebrated Hanukkah, are anxiously awaiting your Christmas celebration, or you don’t celebrate any holiday this month, I hope you are able to spend some much-deserved time with loved ones and close friends. From my family to yours, happy holidays!

-Maria Libman

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‘I Had to Come to Prison to Be a Crook’ What 'The Shawshank Redemption' Can Teach Us About Accounting

Even if you don’t identify as a film buff, you have still likely seen the classic 1994 film, “The Shawshank Redemption.” Starring Tim Robbins and Morgan Freeman, this phenomenal movie tells the tale of two prison

the movie was set. Much to the chagrin of Red — the character played by Freeman — Andy offers to give the guard financial advice regarding how to get out of his hefty inheritance tax bill. He says, “If you want to keep that money, all of it, just give it to your wife. See, the IRS allows you a one-time-only gift to your spouse. It’s good up to $60,000.” When the guard agrees, Andy takes care of the paperwork, and they all celebrate with buckets of beers. While this is a great scene, that provision in the tax code doesn’t exist. In fact, there has never been a federal inheritance tax, nor has there ever been a limit on what one spouse can give to another. So that entire scene in the movie, as entertaining as it may be, is completely erroneous from a tax-policy standpoint. Even though Hollywood overstretched the truth about taxes when it came to this particular scene, Andy’s encounter with the guard snowballed, propelling him to finagle many good financial dealings. It eventually results in the awful warden getting jailed for alleged money laundering and Andy assuming another identity in order to withdraw the laundered money from several banks. While the writers definitely took some liberties here and there, the lingering success of this film demonstrates its awesome portrayals of friendship, hope, perseverance — and some truly clever tax work.

inmates’ unlikely friendship forged over years of hardship under the brutal hand and watchful eye of a sadistic prison warden. Due to its compelling narrative and nuanced portrait of flawed but likable characters, this film continues to resonate with audiences over two decades after its release. While this may not pique the interest of most other viewers, for me, the most interesting aspect of the film is its emphasis on numbers. The protagonist, Andy Dufresne, is an imprisoned banker who was wrongfully convicted of killing his wife for cheating. He overhears a loathsome guard complaining about the taxes owed on a $35,000 inheritance, which was a good sum of cash during the time in which

Our Prize Giveaway Program Gift Cards, Tablets, andVacations!

Here at Libman Tax Strategies, our mutual relationship with you is what makes our business function at its highest level. I am honored that so many customers trust us enough to recommend our services to others. We can’t possibly express how much these referrals mean to us, but with our new referral PRIZE GIVEAWAY PROGRAM, we hope we are at least coming close! PRIZE NO. 1: If you like reading our newsletter and think that someone you know might enjoy it too, we’d love to add them to our mailing list. Send us their name and address, and we’ll send them a newsletter. To thank you for your referral, we’ll give you a $5 gift card to Starbucks! PRIZE NO. 2: If you get a friend, family member, colleague, or even a stranger in the grocery store to use our services, we will give you a FREE Amazon tablet! Easy as that! PRIZE NO. 3: After we give you the FREE Amazon tablet as a thank-you for your referral, we will enter your name in a quarterly drawing for a romantic weekend getaway to Palm Springs!

These prizes are absolutely real, and they are our FREE gifts to you. For more information about this program, please visit www.AdamLibman.com/Prizes.

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150 N. Santa Anita Avenue, Suite 740 Arcadia, CA 91006 424.253.0200 www.AdamLibman.com

LIBMAN TAX STRATEGIES

INSIDE THIS ISSUE P1 Tax Season Begins in December P2 Scammed for the Holidays Client Spotlight: Ed Barlow P3 TeachYour Kids About Holidays Word Search P4 Hurricane Pet Hero MyWife’s Perspective P5 What ‘The Shawshank Redemption’ Can Teach Us About Accounting Check Out Our Free Prizes! P6 A Guide to Making Ideas Stick 3 Steps to a Better Beard P7 Buttery Roasted Chestnuts Take A Break P8 The Biggest Black Friday Lawsuit in History

Fake Discounts and Angry Shoppers

A Massive Black Friday Lawsuit

Shoppers flock to retailers every Black Friday in hopes of securing the best deals on the year’s hottest products. There are many nasty aspects of Black Friday — the long lines, the overzealous shoppers, the limited stock of items — but phony pricing and fake sales shouldn’t be among them. But that’s exactly what happened to folks in Los Angeles during the 2016 holiday season, leading to the biggest Black Friday lawsuit in history. In December of 2016, the Los Angeles City Attorney’s Office sued J.C. Penney, Sears, Macy’s, and Kohl’s for a practice called “false reference pricing,” a nefarious tactic whereby retailers lie about the original price of an item to make a discount appear bigger than it actually is. For example, Sears sold a Kenmore washing machine at a “sale price” of $999.99, compared to a “regular price” of $1,179.99. The problem was the so-called sale price was actually the price that product was offered at every day. Therefore, it wasn’t actually on sale. Duping your customers is a bad business practice, but what makes it illegal? Well, California law requires that retailers post a retail price no higher than what the product was sold

at within three months prior to the ad. "Families today … are striving to get the very most they can get from an extremely hard-earned holiday shopping dollar," said LA City Attorney Mike Feuer. "They deserve to make an informed decision." After the suit was brought against them, the retailers all quickly moved to settle, promising to never engage in false reference pricing again. Most retailers offer discounts around the holidays to encourage shoppers to come into their stores or visit their websites. Promotions and sales are great tools in any business’s arsenal, provided they aren’t out to mislead customers. Big-box stores may try to manipulate innocent people, and it’s up to aggrieved customers to hold those corporations accountable. Nearly every year, you’ll read about a class-action lawsuit that develops in response to the shady tactics of businesses eager to secure those holiday shopping dollars. Are there great bargains to be had on Black Friday? Of course. But if something sounds too good to be true, it very well might be. Keep your eyes peeled and don’t let retailers trick you into a purchase you wouldn’t make otherwise.

8 • www.AdamLibman.com • Pay Less Taxes by Implementing Tax Reduction Strategies

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