Illegal Bookkeeping

Donald Trump, as is his wont, sucked all the air out of the news room tonight when he was found guilty of 34 felony counts by a Manhattan jury earlier today. (Mercury News early Friday edition front page, right.) If you need a summary, dear reader, here's a link to the Wall Street Journal.

Since everyone's pontificating on the story, your humble non-lawyer blogger will add a few observations.

Improper bookkeeping was the first crime on which the entire case hinges, and the Manhattan D.A. got to 34 felonies by counting individual checks as separate crimes all related to the same subject. From the D.A.'s summary: [bold added]

After winning the election, TRUMP reimbursed the Special Counsel [blogger's note: Michael Cohen] through a series of monthly checks, first from the Donald J. Trump Revocable Trust – created in New York to hold the Trump Organization’s assets during TRUMP’s presidency – and later from TRUMP’s bank account. In total, 11 checks were issued for a phony purpose. Nine of those checks were signed by TRUMP. Each check was processed by the Trump Organization and illegally disguised as a payment for legal services rendered pursuant to a non-existent retainer agreement. In total, 34 false entries were made in New York business records to conceal the initial covert $130,000 payment. Further, participants in the scheme took steps that mischaracterized, for tax purposes, the true nature of the reimbursements.

Were I a bookkeeper in the Trump organization I would have routinely classified all payments to lawyers as "legal expenses." That satisfies both accounting and tax requirements, while protecting my employer because the payments, the invoices, and supporting documents would fall under attorney-client privilege. So far there's been no assertion by anyone that a Trump accountant below the level of CFO would know that this was wrong.

The Manhattan D.A. asserted that the CEO (Donald Trump) and the CFO (Allen Weisselberg) knew that the payments to Michael Cohen should have been called "campaign contributions" but purposefully misclassified (or let the accounting system misclassify) them as legal expenses. This is the first crime that led to another unspecified crime (there had to be two crimes in order to make this a felony, else the purported legal-expense misclassification was at worst a misdemeanor on which the statute of limitations ran out years ago).

I'm a humble retired accountant who thinks it's crazy that an alleged accounting mistake on $130,000 could cause me to be thrown in prison seven years later, but again I'm no lawyer.

Sentencing is on July 11th, so this story will recede in a few days, then come back in early July. Meanwhlle we have a debate to look forward to, and possibly the naming of Donald Trump's running mate.

Waiting for the Money

I double-paid the DMV license fees two months ago to prevent late-payment and license-expiration penalties.

On Saturday the refund check from the State of California came in.

On the one hand the elapsed time was really not that long if the State had to verify that the double-payment was not mistakenly made for another one of my vehicles or that I didn't have any other bills outstanding.

On the other hand the check was printed on the 11th and received on the 21st. Large organizations' payables departments often print their checks once or twice a week. Signing them mechanically, stuffing and stamping could take another week before they're actually delivered to the postal service.

Tediously slow, I know, but that's how most of accounting is--checks and signature plates must have physical safeguards--and why an easily bored generation avoids a career in accounting.

The rush to issue COVID relief payments is over (when $billions were stolen) and we're back to normal having to wait for the money.

Accountants Go Where It's Greener

(Rasmussen image)

Last year the WSJ noted that accountants were finally getting their due: [bold added]

A deepening shortage of accountants is driving a growing number of companies to raise salaries or seek temporary help to strengthen their finance teams amid a slowing economy

But companies aren't moving fast enough to reverse the exodus.

More than 300,000 U.S. accountants and auditors have left their jobs in the past two years, a 17% decline, and the dwindling number of college students coming into the field can’t fill the gap...

The huge gap between companies that need accountants and trained professionals has led to salary bumps and more temporary workers joining the sector. Still, neither development will fix the fundamental talent pipeline problem: Many college students don’t want to work in accounting. Even those who majored in it.

Accountancy requires hard work, long hours, attention to detail, and skill with numbers. People who have the ability and motivation to succeed in the field can earn more in other professions while working normal hours. (Son, let me tell you about the New Year's Eve I had to take inventory in a warehouse in the middle of nowhere...)

Conditions have improved since I was a junior auditor back in the 1970's, but apparently not that much.

Not Tending to Basics

Check 5378 for $320 mailed on 8/5, bank account not cleared as of 8/21

The license and registration fees were due by August 22nd so I mailed the check to the DMV's Sacramento post office box two weeks early.

I do pay bills electronically, but for payments that have tax consequences (part of the license renewal is personal-property tax, which may be deductible on Schedule A) I like to write an old-fashioned check. It's nice to have a copy of the cancelled check to show the IRS in the event of an audit.

Aware of the security risk from dropping off a letter at a mailbox, I mailed the DMV payment from the Foster City Post Office on August 5th.

On August 21st I checked the bank account online. The check still had not cleared the bank.

The problem lay with the DMV cash receipts system or the U.S. Postal delivery system, but it wouldn't be wise to invite a late-payment penalty and try to appeal it. So I paid the fee on 8/21 directly using a Discover credit card.

Sure enough, California and the USPS didn't lose the check. It was deposited on August 31st (above) and I have a credit balance that I hope will get back in a month or so.

People disagree about many aspects of government, but the vast majority, I suspect, want government systems to work quickly, effectively, and honestly. An accurate cash receipts system is basic to organizations, and the structural principles were known decades before electronic data processing (EDP) was ubiquitous.

I worry about a California government that's always working on the next big thing and not tending to basics, like handling checks or verifying unemployment claims (EDD fraud is $32 billion). No one pays the penalty for the systems falling apart, and no one gets promoted for tending to them.

Accountants Get Their Due

(Rasmussen image)

Accountants are in demand:

A deepening shortage of accountants is driving a growing number of companies to raise salaries or seek temporary help to strengthen their finance teams amid a slowing economy...

But, the problem for companies isn’t just the tight labor market. The profession is also attracting fewer job entrants, with the number of U.S. students who completed accounting degrees falling by 2.8% for bachelor’s and 8.4% for master’s in the 2019 to 2020 academic year compared with the prior year.

As it was 45 years ago when your humble blogger was a new CPA, accounting still is seen--rightly, IMHO--as an unglamourous profession. Many accountants labor in the back room, re-checking reams of data and summarizing them in bite-size chunks so that executives can understand them.

What accountants do is unnoticed when things are running smoothly. but like when something goes wrong with the out-of-sight electrical or plumbing systems, the problem often must be fixed immediately. (When payroll or cash collections or vendor payments stop, it soon becomes a crisis.)

In an age of self-aggrandizement, it isn't surprising that diligent detail work in the backroom doesn't appeal to young people. Fortunately, we live in a market economy where prices (wages) rise so that supply meets demand.

It's nice to see accountants get their due.

The Days Are Long But the Years Are Short

Before entering retirement the priority had to be on finances, that is, making sure that income covered expenses, not only immediately but for the long-term.

Physical changes due to aging have needed to be addressed, too, and more consideration and planning had to be given to diet, exercise, and sleep. Of course, these "burdens" are nothing compared to life while working.

What I didn't think about was how I would respond to removal of the necessity to keep a daily calendar, with its prioritized task list and careful scheduling of due dates.

To the extent I thought about it at all, it seemed that I would be even more productive and efficient, tending to long-deferred home and learning projects. Taking to heart the accounting concept of depreciation, "remaining useful life" of, say, 20 more years instead of 50 years that it was just yesterday, I would surely be more productive now that I'm working for myself instead of others.

But that's not how it's turning out to be. In a corollary to Parkinson's law, retirement activities have expanded to fill the time available for completion. Visits to the gym used to take an hour. Now two- and three-hour walks burn the same number of calories as one-hour workouts, yet I do the former because I find them more enjoyable.

Managing time has become less important though paradoxically the time remaining is shorter.

One of the major joys of retirement has been the luxury of spending more time on those things I look forward to doing, with no deadlines to rein me in, no obligations that require me to make those hard choices about how to spend each day. What continues to surprise me is how many of those activities turn out to be exactly the ones I have been advised to cut back...

While grinding away on an exercise bike or in a gym is always an option, hourlong walks up and down the hills in my neighborhood is my favorite go-to exertion. They stimulate new ways of looking at a particular challenge, including something as simple as coming up with the words to help reconnect with a long-lost friend...

Meal preparation is another area ripe for shortcuts...I could assemble a dinner with almost no prep work to be ready at whatever hour I punch in. It’s easy, but it defeats one of the most enjoyable aspects of cooking—preparing meals with implements that might have been used hundreds of years ago whose sturdiness and texture I can feel as I begin dicing, grating and mixing.

I know these idyllic days won't last. There will come a point when a health scare will force me to dust off the daily planning calendar with its hard deadlines and concomitant stress. Meanwhile, I shall live as if these days will go on forever.

Because we don't know when we will die,
we get to think of life as an inexhaustible well.
Yet everything happens only
a certain number of times,
and a very small number really.
How many more times will you remember a certain afternoon of your childhood,
some afternoon that's so deeply a part of your being that you can't even conceive
of your life without it.
Perhaps four or five times more, perhaps not even that.
How many more times will you watch the full moon rise?
Perhaps twenty. And yet it all seems limitless.

--Paul Bowles, The Sheltering Sky

&copy 2022 Stephen Yuen

Switching Back to Cash

Mailed on June 29th. Still no acknowledgment.

Upon receiving donation requests from charities to which I want to make a token contribution, I'll throw a $10 or $20 bill into the pre-addressed mailing envelope.

Gone are the days when this former auditor would write checks for even small amounts; the cost of printed checks and the additional bookkeeping weren't worth the money and time.

But what if the cash gets misdirected? Well, if the charity doesn't return an acknowledgment then I'll never donate to them again, but for the record all of them have returned a letter, and it's comforting to know that their cash receipts systems appear to be working.

I also now pay cash for magazines that offer very low starting rates.

(I made the mistake of registering online with two periodicals, which I couldn't do without giving them a credit card, and, you guessed it, they automatically renewed the subscription at a much higher rate. They did so once, I cancelled after the renewal period, but they got me.)

Recently Wired started mailing its issues after being sent $10, but Forbes hasn't acknowledged the $10 that was sent in June. In fact Forbes just sent another request yesterday, July 18th.

I'll give Forbes a few more days to initiate the subscription before concluding that this venerable icon of capitalism has leaky internal controls.

The Other Dismal Science

(Image from the balance)

I never gave a thought to actuarial science until I went to business school. One of the smartest guys in the class had been an actuary, which I came to understand was too tough a career choice if I had to be as smart as he was and pass difficult, technical exams. (BTW, he's now CFO of a well-known company.)

Digression: so I became a CPA, which meant sitting for two days of exams and working for two years in the audit department of a CPA firm. The latter path was easier, and besides, I've never had to pay anybody to do my taxes.

Apparently, becoming an actuary is even tougher these days: [bold added]

Among people taking at least one exam from the Society of Actuaries—the field’s biggest U.S. credentialing body—15% eventually pass the multiple tests required to become an Associate, one of two designations allowing them to practice. Just 10% pass those and additional tests to become a Fellow, the group’s higher designation, which affords bigger responsibilities and salaries.

It’s such an arduous process that the number of test-takers has been declining in recent years, and the society is making changes to keep candidates from dropping out of the gantlet. It is also adding new “predictive analytics” tests to adjust to the massive amounts of data insurers now have...

There is no limit to how many times a candidate can take the tests. It took one man 50 years to become a Fellow, says Stuart Klugman, an official at the society. The society says a candidate typically takes seven to 10 years to become a Fellow. They must pass 10 exams plus other coursework and requirements.

Every profession is being inundated with oceans of data, and being familiar with data science has become essential to being an actuary. Knowing how to filter, analyze, and model the data is crucial to success. (We noted the importance of predictive analytics three years ago.)

If one is not thorough, knowledgeable about statistics, and honest, one can easily promulgate misinformation by biasing the data sets, selecting or not selecting variables to be analyzed, finding causation in correlation, and not "showing the work" so that results can be replicated.

Why must an actuary be honest? Because as the analyses become more complex, and as the demand for risk assessment (not only for insurance purposes) explodes, there are fewer people who are available to check the work; actuaries must be trusted not to force through results that please the powers that be.

I was glad that I didn't try to become an actuary.

Just for fun: the article presents a sample question involving rudimentary statistics and algebra. Without using a calculator, I could still solve it. (My high school self could have figured it out much more speedily but would also have snickered throughout at the phrase "blue balls.")

“An urn contains 10 balls: 4 red and 6 blue. A second urn contains 16 red balls and an unknown number of blue balls. A single ball is drawn from each urn. The probability that both balls are the same color is 0.44. Calculate the number of blue balls in the second urn.”

STEM + A

(Graphic from poetsandquants)

Your humble blogger has always been in awe of the STEM (science, technology, engineering, and mathematics) professions. The feeling started in college; the classmates who majored in these courses were very smart and, frankly, worked harder than I did. They didn't necessarily become scientists or engineers; many became doctors, which requires lots of STEM.

Sufficient aptitude in math and statistics enabled me to enter the fields of accounting and business finance and, as they say, put food on the table. But I never thought that accountancy was as technically demanding as engineering, biochemistry, or computer programming.

However, some politicians do. The House of Representatives bill HR 3855 proposes [bold added]

To amend the Student Support and Academic Enrichment Grant program to promote career awareness in accounting as part of a well-rounded STEM educational experience.117th Congress (2021-2022)

(Image from Mindy Barker Assoc.)

Ever since STEM was identified as a national priority in the early 2000's, STEM education funding has steadily increased regardless of which party controls the White House or Congress.

It's great that accounting has been accorded some respect and that accounting education may soon be eligible for Federal support. There is an acute shortage of accountants relative to open positions.

Respect the green eyeshade!

The Dismal Classroom

Although my chosen profession of finance and accounting provided me with a good living and decent retirement, Ben Stein's economics teacher in Ferris Bueller's Day Off always punctures any pretentiousness that I may have had about my line of work:



It's pathetic that I (still) know the answers to Ben Stein's questions.

Philosophical Underpinnings

(Examiner image)

Out of curiosity more than necessity your humble retired accountant has been sampling online Continuing Professional Education courses that CPA's take to maintain their active status.

It's a hard slog, with tax modules grinding through Internal Revenue Code sections and accounting training covering the recently recompiled accounting bible, the Accounting Standards Codification. Right, I could barely keep my eyes open writing the previous sentence.

If you can handle the tedium, you can find nuggets of substance, such as:

An entity should aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have substantially different characteristics.

Don't overwhelm the reader with "insignificant detail", yet don't combine dissimilar information if it will mask meaning. Holding to these principles requires deep understanding of the material by the writer and an ethical obligation both to present and not to omit significant information.

Long ago I seriously considered a career in journalism, and I thought its aspiration to report the truth without fear or favor was similar to accountancy.

Both professions fall short of that ideal, of course, but IMHO most journalists no longer view truth as their ideal anyway; rather, they seek to weave a narrative to influence readers toward a particular point of view.

Accountancy harks back to an Enlightenment perspective: present all information that will be important to rational, intelligent readers of financial statements (e.g., lenders, investors, employees, customers, etc.) in making their decisions. Despite the mockery they must endure, accountants can take pride in the philosophical underpinnings of their profession.

Now, back to the dusty ledgers and green eyeshades....

A Sarbanes-Oxley Act for Elections

SOX: how many governments would pass?

Those who had some connection to the accounting function of a public company---from the lowliest billing clerk to the CFO and CEO--during the early 2000's, found it to be a very tough slog.

The scandals of Enron and WorldCom defrauded investors of $billions, and the Sarbanes-Oxley Act was enacted in 2002 to prevent a repeat of these occurrences.

SOX required companies to diagram in great detail their entire accounting system (e.g., billing and collections, payroll and personnel, accounts payable, inventory, etc. etc.), identify weak points, and list management's means of correcting mistakes and preventing fraud at hundreds of these weak points.

The accounting function, which was understaffed because it was often regarded as a necessary evil--certainly less important than sales, marketing, production, and engineering--was highly stressed because of the Sarbanes-Oxley work on top of its regular responsibilities.

But the benefits of doing that work were substantial: many weaknesses were discovered--often the concentration of tasks in one person--and controls, supervision, and money were added to beef up areas that could significantly harm the organization. Also, with the benefit of experience, some of the burdensome requirements that did little to reduce risk have been lifted .

The private sector still has financial scandals, of course, and we can't know how many of these scandals SOX has prevented. But now that the price to put in SOX has been paid, trust in financial reporting has largely been restored.

The same can't be said for the public's trust in election results. After the Presidential election of 2000, there was universal shock at the abysmal state of the country's election apparatus. What was clearly needed was a Sarbanes-Oxley Act for government systems, especially for elections.

But because no such requirement was imposed in the intervening years, the weaknesses of election systems--and their lack of controls--have not been corrected; in fact they have been exacerbated by the increasing ways that false or changed ballots can be added to the count. The deficiences are glaringly obvious to reasonable people, regardless of whether their side won or lost.

Repairing our elections so that fraud will be prevented, or if discovered can be quickly corrected, won't be easy given the principle and fact of local government autonomy.

We could start by publishing recommended-but-not-mandated "best practices" for elections and form a Federal election-systems audit team that would examine State and local voting systems and make recommendations to officials. These examinations will be resented, of course, as were SOX auditors (I didn't like them either), because they will always find weaknesses in the way things are done.

There will be technical obstacles unique to elections---for example the dual priority of identifying legal voters and keeping the ballot secret--but are solvable using blockchain and similar technologies.

We sometimes forget that one of the foundational principles of democracy is that the losers accept the result because they trust the process. That trust is near tatters, but it can be restored by demonstrating to everyone, clearly and transparently, that cheating can't turn an election.

Accountants Don't Want to Stand Up and Be Counted

In 2008 I contrasted my profession of accounting with that of journalism:

CPA’s can’t get too close. Accountants’ principal duty is to the shareholders, lenders, and anyone else who reads the financial statements. There may come a time when auditors must disclose information that will damage the stock price. They have to make a choice between their client and their responsibility to the public. There is no question what they are expected to do.

Keeping their distance and independence is a must for CPA’s if they are to maintain trust and a reputation for integrity. Some accountants violated that trust during the go-go tech boom and Enron / Worldcom scandals. In order to save the profession, accountants had to reassert the guiding principles of independence and integrity. You don’t see auditors standing up and cheering at shareholders meetings.

...Today the profession of news journalism has lost its way. Opinion has leaked beyond the editorial pages to the rest of the newspaper. “Newsmen” publish unconfirmed rumors that support their stances and ignore inconvenient facts that don’t. Outside the office, they openly display their political preferences; there’s no attempt to maintain even the appearance of objectivity.

Yet when Obama emerged from a curtain on stage, the audience of more than 2,000 [minority journalists] bolted to its feet, cheered and whistled. His remarks drew repeated applause throughout the 30-minute broadcast, which CNN and Time Inc. sponsored.

12 years later accountancy by and large has held steady to the principles of independence, objectivity, and the appearance of objectivity, while journalism has only gone downhill.

But back to accountants: I wonder if there's any connection between their ethics and political preferences?

Headline: Accountants favor Trump in election by large margin

In a survey of over 400 accountants from across the country conducted by Arizent, the publisher of Accounting Today, 55 percent of respondents said that they plan to vote for the incumbent president, against 38 percent who plan to vote for his rival, Democrat Joe Biden....

"If we end up with a Democratic presidency and Democratic control of both houses, then the 2017 tax act will probably be vitiated and as much as the market increased due to the lower corporate rates, it will fall," predicted one respondent. "Ironically, raising the corporate rate will almost certainly cause less government revenue due to multinational business fleeing our shores, and less capital gains income tax income."

...Respondents were roughly evenly divided about the potential impact of lots of mail-in ballots, with 44 percent saying they would be not very or not at all confident in the results of such an election, and 39 percent saying they would be very or extremely confident in them.

...When asked if they thought social media platforms and the media business were doing enough to stop the spread of misinformation and to help protect the integrity of the election, the vast majority of responding accountants said they weren't — but their direct responses suggest that they don't want media to do more, so much as to do it very, very differently.

"It is not the job of social media companies to regulate political speech," said one accountant. "It is, however, the job of our news outlets to report news without political bias and without opinion. Our country is being fed distorted news every day!"

"Social media should stay out of deciding on reliability of information," added another. "The mainstream media is so biased, their reporting is largely ignored."

Bucking the stereotype, accountants are white-collar and college-educated, yet prefer Republican policies. I suspect the reasons are:

1) In college and later at work accountants are in an environment where there is "objective truth" to be discovered. There are different opinions about what the numbers can mean, but Generally Accepted Accounting Principles and Generally Accepted Auditing Standards keep the differences to a defined range. There is little room for "your truth," "my truth", and diverse perspectives when it comes to preparing financial statements and tax returns;

2) Accountancy is not glamorous, and most practitioners do not seek publicity or influence. Consequently it has escaped the left's notice as an institution to be captured, that is, to be made "woke".

Flying under the radar is how accountants like it; let them do their jobs and don't discuss matters that have nothing to do with work. It's no surprise that the political party that is more likely to leave them alone gets accountants' vote.

© 2020 Stephen Yuen

Accountant, Go Home, Organize Thyself

West end of Ala Wai Canal from the McCully bridge.

I used to be able to grind away all night on spreadsheets and documents, but 12 continuous hours now seems to be my limit.

As the sun sets on my Hawaiian "vacation," I didn't accomplish everything that I hoped, but I did enough so that I wouldn't have to return in March or April (though I might just for fun). I scanned or copied the papers that I will need to do Mom's tax return and sketch out her financial picture for 2020.

As usual, I'm much further along with clients and family members than I am with my own stuff...

My Hawaiian Vacation

Time honored: separate papers into piles on the floor.

Throughout his life Dad was disciplined and organized. It took four of us kids to take over his various responsibilities, i.e., running his business, managing his personal finances, and making sure Mom has her needs met.

The information is scattered across different households, and I have to put it all together to do the tax return. There's a problem, however.

Obsessive long-dormant accounting predilections have reared their head. If I were just focused on the task, I'd extract the needed information--e.g., medical expenses from a personal checkbook--and leave everything as is.

But the accounts haven't been reconciled! The invoices haven't been categorized!

If I shoved all the papers into a box, no one would notice. But I would know.

This "vacation" isn't turning out the way I had hoped.

Give It a Rest

I peruse Accounting Today's Tax Fraud Blotter to keep up with the goings-on in accounting and tax. (I study these schemes to spot them, not to use them, of course---besides, the crooks got caught!)

The first item caught my eye for non-tax reasons:

Media failed to disclose that he's a Starbucks
customer, too (Providence Journal photo)

Pawtucket, Rhode Island: Former state senator and businessman James E. Doyle II, 47, has been sentenced to two years in prison for engaging in a $74 million dollar check-kiting scheme in which he wrote tens of thousands of worthless checks and failed to report more than $1 million dollars in income.

He admitted that as owner of Doyle Respiratory and Doyle Sleep Solutions he engaged in a fraud during which $74 million in worthless bank transactions were executed in check-kiting schemes through his accounts. He also admitted that for tax years 2013 through 2016, he and his wife failed to report to the IRS more than $1 million dollars in income and failed to pay $305,426 in federal taxes. Doyle executed the scheme daily, at times in excess of 50 transactions per day, including using ATMs to lengthen the time it took for checks to be presented for clearing.

He was also sentenced to three years of supervised release upon completion of his prison term, and ordered to pay $426,707.25 in restitution.

Was Mr. Doyle II another example of perfidy by a Republican businessman and ex-state senator? (Providence Journal: "Doyle, a Democrat representing Pawtucket".) The fact that his political party was never stated in the tax article or in AP/U.S. News is a clue. It's another example of "name that party".

every time a Democrat is caught in misconduct, the media will either “accidentally” forget to mention his party affiliation or will bury it at the tail of the article were [sic] fewer people will see it...On the other hand, when a Republican is caught in a crime his party affiliation either leads the piece or even appears in the very headline of the report.

Some media outlets have begun mentioning the party affiliation of every crooked politician, but just once I'd like to see such an omission for a Republican miscreant.

But back to the original article: "Doyle executed the scheme daily, at times in excess of 50 transactions per day." He seemed to be in panic mode, with checks flying between his accounts. Two years of rest in prison, away from the busy-ness of his world, may actually do him some good.

And the Company's Name is Great, Too

Naomi Granger, founder of Dope CFO, on how she found her niche:

Naomi Granger (WSJ photo)

I picked professional athletes at first, and would go on LinkedIn trying to connect with players. The ones who were actively playing seemed to be bombarded by different financial advisers.

Then I decided to try real estate because I already knew a few agents, but realized most didn’t make enough money to hire an accountant.

That’s when I stumbled upon cannabis. It’s such an underserved industry, facing these huge problems because of the changing laws and massive growth. Most banks won’t serve cannabis companies, and large accounting firms and accounting software providers don’t want to serve the industry either because it’s still an illegal business, federally speaking.

The debits and credits of cannabis accounting don't cover new ground. However, the ethics issues are difficult to navigate, since CPA's are not supposed to be associated with businesses that knowingly break the law (marijuana is still illegal under Federal statutes).

Good luck to Ms. Granger, an entrepreneurial millennial accountant to keep your eye on.

Tax Day, 2019: One's Own Experience

H&R Block:  overall tax liability is down 24.9%.
Just goes to show that one shouldn't generalize
from one's own experience.

After three consecutive years of simplifying our financial life--and being able to file our tax returns by April 15th--we had to go on extension last year because we received a late Form K-1 from a pass-through entity. This year we received the K-1 in March and didn't have an excuse for tardiness.

However, the changes from the Tax Cuts and Jobs Act affected us more than we originally estimated; the State and Local Tax limitation (SALT) hurt, while the Qualified Business Income (QBI) deduction helped. What also "hurt" was a large capital gain from a long-time mutual fund investment; sure it's nice that the gain was there in the first place, but the funds have always been reinvested automatically and the increased basis will benefit us only when the fund is sold. Thus occurred one of the banes of the tax world: a transaction that produces taxable income but not the cash to pay the taxes.

Deciding to take a couple of extra months to pore over the records, we completed the extension forms (Federal 4868 and California 3519), wrote two checks that left a mark, and dropped the envelopes in the mail. We'll mail the final returns in June.

I would fire my accountant, but when I gaze in the mirror he looks so pitiful that I can't bring myself to do it.

Better If We Don't Have To

It was a successful Hawaii trip in that a number of financial and personal projects were completed. However, the final item, my parents' 2018 tax returns, was ready to be sent in but couldn't, alas, be crossed off the list.

The problem was not the detail (I reconciled the accounts of their small business), nor tax law changes (they met the test for the Section 199A, aka QBI deduction), but the bane of the accounting profession, missing documents.

The exact amounts of Mom's retirement income and withheld taxes were known, but we couldn't find the Form 1099-R. TurboTax doesn't require this document for electronic filing, but the electronic transmission was rejected by the IRS because of a data mismatch. (TurboTax advised that it was probably one of the birthdates, but correcting the government database wasn't going to happen quickly.)

So we are going to do this old school. The returns have been printed and signed and are sitting on the table. Once they receive a duplicate 1099-R, it will be stapled to the returns and mailed in. And if the duplicate doesn't come in, we'll file Form 4852. But it's better if we don't have to.

Accountants: No Respect

From "Mingle All the Way"

Her daughter wants to be an entrepreneur, but the Lindsay Wagner mother character wants her to choose a steady, reliable career.

Hey, Lindsay, you didn't play it safe when you were young.

Even the Hallmark Channel says accountants are boring. Ouch.