Cincinnati Tax Resolutions - May 2020

MAY/JUNE 2020 VOLUME 4, ISSUE 5

T O P H ’ S TAX RESOLUT ION T I M E S

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How to Survive With Zero Cash Flow

The coronavirus is here, and it has impacted all of our lives. Millions of people are suddenly underemployed or unemployed, and countless businesses have been forced to close their doors. And the unfortunate reality is that many of these businesses will never reopen once the pandemic has passed. I know how stressful things have been for my family because we are a small business and Ashley is currently on unpaid maternity leave. Fortunately, our business is considered “essential” in Ohio and is allowed to continue operating. I’ve been able to keep working, but that does not mean it’s been business as usual for us. Imagine if both you and your spouse are self-employed and co-own/co-manage a business that was forced to shut down because of the coronavirus. (For some of my clients, this nightmare has become a reality.) In the blink of an eye, you literally have no income and no cash flow. How are you supposed to survive? And the survival I’m talking about is not about trying to pay your rent/mortgage and bills. I’m literally talking about how you are going to pay for groceries so you can feed your family. The first thing I recommend is applying for the Paycheck Protection Program (PPP) through your local bank. The PPP is the government’s way of providing small- businesses owners and employees with 2 1/2 months of income replacement in the form of a loan. If you meet the requirements of this loan, then your loan can ultimately be forgiven in the form of a nontaxable government grant. I have heard some people refer to this program as “free”money, but if you are self- employed and currently have zero income, then nothing is “free” given the stress and financial hardship you are dealing with. Nonetheless, this would at least be something that could help you get back on your feet. If the PPP doesn’t work out, then you could apply for an Economic Injury Disaster Loan (EIDL) through the Small Business Administration (SBA). As part of this program, you could qualify for a loan advance of up to $10,000 if you are experiencing a temporary loss of revenue. Similar to the PPP program, this loan advance could ultimately be forgiven so you would potentially not be required

to repay it. Keep in mind that if you receive a loan advance through the EIDL program, then you would have to reduce your allowable PPP loan by this amount.

If your business is set up as an S corporation or a C corporation, then another option is to file for unemployment. Many business owners don’t realize they are eligible for unemployment, but if your business has a corporate tax status and you have been drawing a “salary,” then your business has been paying unemployment taxes (on behalf of the business owner) and you would be eligible for unemployment. I think this option would be best for a business owner who doesn’t qualify for much through the PPP or EIDL programs and is unsure whether they will be able (or even want) to reopen their business. Lastly, there is one additional strategy (that under normal circumstances I would not recommend) worth considering. As a result of the coronavirus, the rules for withdrawing and distributing money from a retirement account — an IRA, Roth IRA, 401(k), etc. — have been relaxed considerably. Any taxpayer is now able to withdraw up to $100,000 from their retirement accounts before Dec. 31, 2020, with zero penalties. Additionally, you’d have up to three years to pay the money back before it would become taxable. There are several other new rules related to this, so be sure to have a discussion with your accountant before taking any action to ensure you do it properly.

Please stay safe and healthy and hang in there! We are all in this together!

–Toph Sheldon

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The client’s name and personal details in this story have been changed to protect the identity of those involved. However, the tax results are 100% factual. An IRS Compromise for the Ages Julia and her spouse found themselves in an incredibly stressful situation with the IRS. Her husband was self-employed, and his business was doing very well. Prior to 2008, they were bringing in a healthy income, but they were making one major mistake: They weren’t paying attention to their taxes. Eventually, the IRS came looking for those unpaid taxes — upward of $250,000. The IRS doesn’t care what you do or do not know about paying taxes. If you owe, then they will come after you. Julia and her husband spent 10 years going back and forth with the IRS trying to resolve their issue with back taxes. Meanwhile, penalties were stacking up, and it seemed that with every passing day, things got worse. Julia admits they weren’t being as proactive as they should have been. They were young, and they didn’t take their situation seriously. Later on, as Julia and her husband tried to apply for loans, they were hit with denial after denial. The IRS placed tax liens on them, and they were unable to buy a car or a house. Soon they realized they needed to get their situation fixed, so they hired a tax “professional”— not Toph Sheldon. This was another learning experience for Julia because this person wasn’t as professional as she’d expected him to be, and he failed to help Julia and her husband. He had no confidence he could help them and, in the end, he delivered nothing.

Do Successful People Enjoy a Digital Detox? 3 Entrepreneurs Share Their Secrets Constant technology use can leave us feeling drained, so it’s good to do a digital detox by unplugging periodically. Digital detoxes have become very popular, but for most managers and business owners, cutting technology out of their lives isn’t just difficult — it can be irresponsible! You can’t throw your smartphone in the sea and expect to have a job next week. While completely quitting tech isn’t realistic, it is possible to enjoy the benefits of a digital detox while sticking to your responsibilities. Here’s how a few successful entrepreneurs manage this balancing act. Arianna Huffington puts her phone ‘to bed.’ HuffPost founder and Thrive Global CEO Arianna Huffington says the first part of her nightly routine is “escorting my phone out of the bedroom.” Huffington doesn’t allow digital devices in her bedroom and relies on an analog alarm clock. “Charging your phone away from your bed makes you more likely to wake up as fully charged as your phone,” she says. Erich Joiner has a hobby separate from his work. Running a content creation company that caters to big brands means Erich Joiner, founder and director at Tool of North America, is plugged in most of the time. To get away from the demands, he races cars on the weekend. During that time, Joiner puts his phone away in order to focus on the race. “While it takes a lot of focus, which can be strenuous, it also mentally cleanses, or ‘digitally detoxes,’me during the weekend,” Joiner says. “By Monday, I can go into work with a clear mindset, ready to take on my week.” Celia Francis tracks her online activity. Sometimes technology can help you cut down on technology. Celia Francis, CEO of online marketplace Rated People, downloaded the app Moment to monitor how much time she spends on social media. This data helped her build healthier habits. “It helps you understand how you use your phone, establish usage goals, and disconnect at the right times,” Francis explains. “My phone is always off by 9 p.m. and isn’t switched back on until after the morning routine.” You don’t have to completely abandon technology to enjoy a successful digital detox. Instead, look for times when you can put your devices away and focus on something else. Even if it’s just for an hour before bed, you’ll reap the benefits.

Finally, Julia called Toph.

“He was what we needed,” says Julia. “From right after the first call, he took everything over. We brought him what we had (documents, receipts, and so on) and from that point on, we didn’t have to deal with the IRS. Everything went through Toph.” It’s now been two years since Julia and her husband hired Toph, and the couple hasn’t had a single issue. Toph went back and forth with the IRS and found a solution. He turned this couple’s tax debt of $250,000 into a settlement of $100. You read that right — $100! He compromised with the IRS and came up with a plan so Julia and her husband could start fresh. What’s the catch? Julia and her husband must file and pay everything required for the next five years or the IRS will come back after the $250,000. “It’s been great,” Julia says, “We can get a car loan now! We’ve been working on our credit and hope to have a house soon! Toph did a wonderful job. He took the reins, and he really knows what he’s doing!”

*This article was written after an interview with “Julia.”

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Welcome, Baby Tess!

On Feb. 27, 2020, we welcomed baby Tess Sheldon into the world!

Over the past couple of months, we’ve been settling into being a family of six. So far, our three older kids have shownTess and I nothing but support. They’re even fighting over who gets to hold her! At first, we were worried about Roz, who was our youngest before Tess. We thought she might be jealous of having a new baby sister, but she’s become something of a little mom. Roz calls Tess her “baby doll”and brings me diapers when we need them. She’s been so helpful, which is much appreciated! I ended up being diagnosed with the flu just 12 hours before Tess was born. Thankfully, the delivery was as easy as any mother could ask for; I was just bummed out I had to go through the delivery with a particularly bad flu. Tomake things even less fun, my illness lasted for weeks after Tess’s birth, whichmeant I was getting even less sleep than I otherwise would have with a new baby in the house. I will say it hasn’t been as crazy as I thought it would be, and I have our three older kids to thank! Mac, Rex, and Roz seemed to have“grown up”overnight. They’ve been playing really well together and aren’t vying for my attention when I’m caring for the baby. I think they know I’ve got my hands full at the moment.

hiccup was me coming down with the flu. Everything else seemed to work out. I think we owe that to planning ahead.

Even baby Tess has been very chill for a newborn. I think she knewMama needed a break and some time to recuperate. And by some miracle, no one else in the house has gotten sick. Toph stayed healthy and the kids powered through! We all made it through tax season, too. Going into May, we’ve regrouped and everyone’s happy and getting adjusted. The kids are excited to have a new sister, andToph and I are thrilled to see our family grow once more. And let me tell you, Tess is so stinkin’ cute!

– Ashley Sheldon

And then there’s the fact that it was tax season on top of all this. There was a little extra craziness trying tomake our schedules work, but we managed! Really, the only real

Sticky and Sweet Pork ‘Ribs’

TAKE A BREAK

Whether you’re celebrating your mom or those who gave the ultimate sacrifice for our country, there’s no better recipe to grill up than these delectable country-style pork ribs.

Ingredients

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2 heads garlic, cloves separated 3 thumbs ginger, chopped

1 cup hoisin sauce 3/4 cup fish sauce 2/3 cup honey 2/3 cup rice wine

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1/3 cup toasted sesame oil 5 lbs boneless pork shoulder, flattened

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3/4 cup brown sugar

1/2 cup chili oil

1 tbsp molasses

1/3 cup oyster sauce

Directions

1. In a blender, purée garlic, ginger, hoisin sauce, fish sauce, honey, rice wine, chili oil, oyster sauce, and toasted sesame oil until smooth. 2. Reserve and chill 1 1/2 cups for later use. 3. In a bag, add the remaining mixture and pork shoulder. Marinate for at least 8 hours. 4. Using a convection plate on the grill, cook pork until the thickest part reaches an internal temperature of 140–145 F. 5. In a large saucepan, simmer brown sugar, molasses, and reserved marinade for 6–8 minutes. 6. Baste the pork with the brown sugar glaze for 2 minutes before serving.

Solution on Page 4

Inspired by Bon Appétit

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Cincinnati Tax Resolution Powered by Toph Sheldon 9200 Montgomery Rd., Ste. 7B Cincinnati, OH 45242

PRST STD US POSTAGE PAID BOISE, ID PERMIT 411

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INSIDE 1

How to Survive With Zero Cash Flow

2

How Entrepreneurs Digitally Detox

This IRS Compromise Will Blow Your Mind!

3

The Sheldon Family Grows

Sticky and Sweet Pork ‘Ribs’

4

The IRS Goes After a Goodfella

Toph’s Tax Nightmares

Martin Scorsese Isn’t a Goodfella According to the IRS Martin Scorsese is the Academy Award-winning director of many memorable films including“Taxi Driver,”“Goodfellas,”“Casino,” and his most recent film, “The Irishman.” Despite his success as a director, Scorsese hasn’t had the most success when it comes to paying taxes to the IRS.

In 2011, he was hit with a huge tax lien: $2.85 million. And this wasn’t the first time Scorsese had run afoul with the IRS. It turns out, he had tax liens going back to 2002. It just happened that the 2011 lien was his biggest yet! So, how does a successful Hollywood director find himself in constant trouble with the IRS? It seems Scorsese got tied up with a financial advisor who was in business to defraud his clients — including Scorsese. The advisor, Kenneth Starr, had reportedly stolen a significant sum from several celebrity clients, includingWesley Snipes and Al Pacino. Not only that, but Starr had also completely mismanaged their accounts. It was one problem after another with this guy! Starr was also found guilty of running a $33 million Ponzi scheme. In 2011, Starr was sentenced to nearly eight years in prison. To complicate matters for Scorsese, Starr’s firm actually sued Scorsese for failing to pay fees related to Starr’s services. This was before Starr was sentenced to prison. Scorsese’s lawyers denied the claim.

Thankfully, the director was able to come to terms with the IRS. He actually already had a plan in place to take care of the previous liens, and the 2011 lien wasn’t warranted. Scorsese says he has addressed the issue and adhered to the previously established payment schedule. Today, Scorsese’s tax issues are a thing of the past.

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