Toph CPA - February 2021

Toph CPA - February 2021

FEBRUARY 2021 VOLUME 5, ISSUE 2

TOPH’S TAX RESOLUTION T IMES

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Don’t Forget About Your ‘Why’

Anytime you decide to take the plunge and make a major change in your life, there’s a very good chance you have a “why.” For instance, if you decided to become self-employed, you had a reason for doing it. It was the driving force behind the decision. But as you build your business, you may lose sight of your “why.” It’s easy to get distracted when you’re building a business, especially when you’re self-employed. You may be tempted to chase after new ideas, new technology, new ways of doing things, and anything else that sparks your interest (call them “shiny objects”) that aren’t directly related to what you’re trying to accomplish here and now. Or you simply may lose sight of why you started your business in the first place. You may become so wrapped up in figuring things out, building a customer base, and constantly working that your “why” completely vanishes. Instead, you get trapped on another hamster wheel, going through the motions, but not having that same drive you had when you decided to start your business. I know, because I’ve been there. I went into business for myself for several reasons. I was in debt — pretty significantly — and I had worked for nine different companies over seven years. I was in a difficult place personally

and professionally. I was stuck on yet another kind of hamster wheel, and I was sick of it.

One of the biggest motivators in starting my own business — my “why” — was I wanted financial independence. I didn’t want to be in debt anymore. Instead, I wanted to control my own destiny. It took me a while to realize that — and after accumulating a lot of credit card debt in the meantime. Fast forward to today, and I’ve realized my “why.” There are times when I fall back into the hamster wheel in running my business, but I’m a lot better at snapping back into reality and remembering why I do what I do. I think about the financial independence I wanted, and I think about the ability I have to spend time with my family. With four young kids, that’s more important than ever. The next time you find yourself forgetting why you do what you do, try what I do when I need to refocus my “why.” I put work on the backburner. I set down my phone and turn off the computer. I put a mental block between myself and my work. Now, I will admit, as somewhat of a workaholic, doing this is easier said than done. But it’s important to take steps that allow you to regain your perspective. For me, it’s disconnecting for a day. That’s how I get off the so-called hamster wheel. It might work for you or maybe you need a little more, or maybe a little less. You may need something else entirely, like a vacation. My point is when you do lose sight of “why,” it is important to get it back. Only you know what your “why” is and why it’s important to you. You got into business for yourself for a reason, so don’t let yourself forget what that reason was.

–Toph Sheldon

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TOPH GOES HEAD-TO-HEAD WITH THE IRS IN A CELEBRITY CASE

WELL, THAT WAS FAST Advertising in the Time of COVID-19

The client’s name and personal details in these stories have been changed to protect the identity of those involved. However, the tax results are 100% factual!

Almost a year ago, most of the United States entered a period of lockdown in an attempt to thwart the spread of COVID-19. For marketers facing an economic crisis, this presented a conundrum unlike any they’d seen before. On the one hand, it was likely that spending would drop, although the increase in nationwide unemployment payouts helped mitigate that. On the other hand, they now had a “captive audience” like never before, with people streaming movies and television from home at a record rate.

Archie is a well-known entertainer. He called Toph about a year ago. He was in debt with the IRS to the tune of about $2.5 million. Or

at least, that was what the IRS claimed he owed. On top of that, the IRS was levying the entertainer’s royalties. They took it all, which amounted to $400,000 a year.

The lifestyles of those consumers had changed dramatically — could advertisers meet the challenge?

Archie was still working at the time and had three streams of income. He’s older and taking Social Security, plus he had the money he received from performing, as well as the royalties. Or, at least he would have had

They certainly tried.

For retailer Carvana, the virus was almost a boon. The Tempe, Arizona-based auto seller had already gained fame for its “car vending machines” in several large American cities, but it had yet to crack the national market. As their ads put it, they wanted to be a coast-to-coast solution for new car sales, and our newly confined circumstances meant many more Americans were interested in Carvana than before. The company dumped money into its streaming ads, and the results speak for themselves: Bottoming at $30 million in March, their stock was valued at more than $200 million just a few months later. Some advertisers settled for merely reflecting the new norms of remote life and work in their advertising, with mixed results. If we weren’t tired of the Zoom-focused Progressive ads featuring Flo and cohorts back in spring 2020, we’ve surely grown tired of their hard-to-parse antics by now. No matter who’s doing the advertising, studies done as early as April 2020 found that many consumers were tired of being reminded of the pandemic every time they sat down to watch TV. With national anxiety at an all-time high and mental illness spiking during the pandemic, that’s no surprise. People didn’t want to face the reality of the virus every 10 minutes due to advertisements. On the other hand, some businesses were just hampered by circumstance. Carnival and Norwegian Cruise lines both ran aground with their streaming ads focused on spring and summer getaways. These seemed especially tone- deaf given that cruise ships made headlines at the time as vectors for massive COVID-19 spread.

the royalties if the IRS wasn’t taking them.

By the time he called Toph, the IRS had been taking the entertainer’s royalties for about 10 years. He was paying his bills with his Social Security income and the performance money. On the surface, being a well-known entertainer seems like a pretty glamorous gig. But because the IRS was taking such a large amount of money every year, the reality of the situation was very different. His business came with a lot of expenses. He may have two sources of income, but a bulk of it went right back into performing. So, once all the bills were paid, he was struggling. The IRS also wanted him to file tax returns and pay taxes on his royalties — money that never entered any of his accounts. How is someone expected to pay tax on money they never received in the first place because the IRS was already taking it? To make matters worse, the IRS was sending agents to Archie’s shows to seize his money. They were, in essence, trying to take another source of his income. Toph went to work. First things first, Toph successfully stopped the IRS from levying the $400,000 in royalties. He then set up a payment arrangement the entertainer could afford to pay back the $2.5 million debt he still owed. When all was said and done, Archie agreed to pay the IRS $8,000 a month — instead of the $400,000+ per year. While it was still a lot, it was a far cry from what it was. Archie was in a much better place to regain control of his finances, and his future with the IRS is looking much better!

But the true loser of 2020 advertising was Corona beer. The poor beverage company never stood a chance.

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Together for 10 Years! Toph and I met on Jan. 8, 2011. Since then, we’ve gotten married, had four kids, and owned a couple of houses together. You could say things worked out. About six weeks after we met, we decided to take a trip to Tennessee. In fact, this particular trip was just after Valentine’s Day. Looking back on it, you might say, “What were they thinking?! They’ve only known each other for six weeks!” Well, it turned into a great weekend adventure as we explored a town in Tennessee. It became one of our great early memories together. It would be great to take another trip like that. It seems like it’s been such a long time since we’ve been able to travel. I think taking a trip together would make a perfect Valentine’s Day getaway, but like everyone else, it’s one of those things we’ll have to take one step at a time. Let’s just say, we can’t wait until the vaccine makes its way to the general public.

We’re quickly approaching the one-year mark for the pandemic, and it’s definitely getting harder to come up with new ideas. I’m sure many families have found themselves in a similar predicament. But we manage!

For Valentine’s Day itself, I’m kind of hoping Toph makes this scallop pasta dish he made for our first Valentine’s Day together. He got the recipe from his parents, and it was fantastic. It’s been a while since he last made it, but I think it may be time. We’ll see!

Ultimately, it’s the quality time we get to spend together that really matters. That’s

what Valentine’s Day is really about. Good food, chocolate, flowers, and everything else that comes with Valentine’s Day is just a bonus. You can get that stuff whenever you want, but quality time? You have to make that yourself.

With Valentine’s Day, like many of the recent holidays, people have been trying to figure out how to have fun while celebrating at home.

Take a Break

STRAWBERRY KISSED ALMOND BUTTER MUFFINS

Enjoy this Valentine’s Day-themed muffin with your Valentine or treat yourself!

Ingredients

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1 cup ripe bananas, mashed 3/4 cup natural creamy almond butter (can substitute creamy peanut butter)

• • • •

1 cup oat flour

1 tsp baking powder

1/4 tsp salt

1/4 cup strawberry fruit spread, divided (we recommend Bonne Maman INTENSE)

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2 large eggs

1/4 cup pure maple syrup (or honey)

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1 tsp vanilla extract

Directions

1. Preheat oven to 350 F. 2.

Line a 12-cup muffin tin with liners and spray with nonstick cooking spray. 3. In a large bowl, mix bananas, almond butter, eggs, maple syrup, and vanilla extract. 4. Stir in oat flour, baking powder, and salt until smooth. 5. Evenly divide batter into liners. Add 1 tsp strawberry fruit spread to the top of each muffin.

6. Use a butter knife to gently swirl the spread into the batter. 7. Bake for 22–27 minutes until a toothpick comes out clean. 8. Transfer muffins to wire rack to cool and enjoy!

Solution on Page 4

Inspired by AmbitiousKitchen.com

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

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INSIDE 1 What’s Your ‘Why’?

2

Lockdown Ads: Have You Seen These Ones?

The IRS Took $400,000 a Year From Toph’s Client!

3

Together 10 Years

Strawberry Kissed Almond Butter Muffins

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The Biggest Settlement Between the IRS and a Taxpayer — Ever!

TOPH’S TAX NIGHTMARES

The IRS Goes After One of the Wealthiest People in America

Robert Smith was one of Time magazine’s “100 Most Influential People of 2020.” He’s one of the wealthiest people in America with a net worth of about $7 billion. He’s known for numerous philanthropic endeavors — including his pledge to eliminate the student debt of the entire 2019 graduating

on more than $200 million in assets. These were assets earmarked for charities but were filtered through offshore accounts. Smith admitted to fraud and settled with the DOJ and IRS. He was upfront about admitting liability regarding the taxes he owed and for failing to accurately file reports related to his foreign bank accounts. To make good with the DOJ and IRS, Smith agreed to pay $140 million in fines, back taxes, and interest ($85 million in penalties, $30 million in back taxes, and $25 million in interest). He would also avoid prosecution. According to the Wall Street Journal, the DOJ and IRS agreed not to prosecute Smith in exchange for his assistance on another major tax fraud case, arguably the biggest tax fraud case in U.S. history. This other case was a story that broke wide open in late 2020 — the case against Robert Brockman, a billionaire and CEO of Reynolds & Reynolds accused of hiding $2 billion in offshore accounts. Brockman is also known for helping finance Smith’s investment firm, Vista Equity Partners. Coming back to Smith, when all is said and done, his case will represent the biggest tax settlement between the IRS and an American taxpayer — ever. At least for the time being.

class at Morehouse College in Atlanta, Georgia.

He was also under investigation by the U.S. Department of Justice and IRS for tax evasion.

Last year, the Department of Justice and IRS concluded a four-year investigation into Smith. They alleged Smith had failed to pay taxes

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WHEN THE IRS COMES KNOCKIN’ ... LET US ANSWER THE DOOR!