The field of “Sports” has had a significant influence on Indianapolis, Indiana, during the eighty-plus years that I have lived in the Capital City. From the outset, over one hundred years ago, with the Indianapolis Motor Speedway and the famous “500 Mile Race” to the present day NFL Indianapolis Colts, NBA Indiana Pacers, Indianapolis Indians Baseball Team and The Fuel Hockey Team, all have contributed to the luster and glory that sports have brought to the “Circle City.” Once again, “sports” are making a major contribution to the future success of a major entity in Indiana’s Capital.
It was a personal pleasure this past Spring to have a preview visit to “The Riley Children’s Health Sports Legends Experience at The Children’s Museum.” If the title doesn’t take your breath away, the “experience” will.
The 7.5 acre, $38.5 million project is by far the most exciting and worthwhile addition to the local sports scene in decades. It encompasses both opportunities for sports participation and fitness while encouraging learning, fun and entertainment through sports memorabilia and challenges for all ages. The emphasis is on family participation.
The challenge is where to begin enjoying the various “Sports Legends Experiences.” There is so much to see and do that it is difficult to determine a starting point. I was initially shown some of the displays in the “Old National Bank Sports Legends Avenue of Champions.” Various sports “Legends” who have inspiring stories with strong Indiana connections are featured. The names are familiar to all who have ever resided within the boundaries of the Hoosier State: Oscar Robertson; Larry Bird; Tamika Catchings; DaMarcus Beasely and A.J. Foyt, to name just a few. Add to those illustrious individuals Wayne Gretzky; Bobby “Slick: Leonard; Reggie Miller; Wilma Rudolph; Reggie Wayne and Barbara Wynne. Hopefully, you are beginning to understand my challenge in trying to cover all there is to know about the many “legends” presented.
Moving along as quickly as my legs and mind would allow, displays covering the accomplishments of the before mentioned legends as well as the various collegiate and pro athletes and teams that have performed so admirably within our State were presented. Best of all, there was the opportunity to practice my sports technique, such as it is, against the legends while shooting hoops against a time clock; agility and balance through rowing; blocking and kicking football and soccer goals and even becoming a broadcaster announcing my personal great moments in sports.
All that was covered before I had the opportunity to see the greatest challenges of them all – outside The World’s Largest Children’s Museum. That’s right…as the saying goes, “You Ain’t Seen Nothing Yet!” Within easy walking or running distance, depending upon your agility, are a dozen experiences on paths made of soft, spongy material to prevent injury should you stumble or fall. You can test your various mental and physical skills against time clocks, hoops and goals. Your personal “bests” will come together to create your own legendary family moments.
Try a hand at shooting baskets geared toward various age and size requirements; kick field goals and participate in soccer games; play golf on special links designed by Pete and Alice Dye; race along on the Indianapolis Motor Speedway Pedal Car Racetrack; Church Brothers Collision Repair Drag Strip or the Barbara Wynne Tennis Challenge. Are you getting the picture? There is far too much to see and do in one trip to the Museum. The “Legends” will take more time and trips to accomplish all there is to do.
Before we go, however, you will want to experience the “Fantasy Tree House of Sports” which dominates one end of the sports field. This sixty-foot tree was inspired by Disney’s “Tree of Life” letting visitors climb among giant pieces of sports equipment and provides a platform overlooking all the outside sports venues. The view is breath-taking and can only begin to make you appreciate the many sports experiences in which you have participated.
The Museum located at 3000 North Illinois Street is open Sunday thru Wednesday from 10 a.m. to 5 p.m. Thursday thru Saturday from 10:00 a.m. to 8:00 p.m. The doors are closed on Easter, Thanksgiving, Christmas and Mondays. after Labor Day through February. For pricing of the “Legends” consult the Museum’s e-mail address: www.childrenmuseum.org/sport-experience.
Several months ago I was asked by the president of my organization to assume a new role on an interim basis. While I had worked with each of the groups I was being asked to supervise, the new responsibility would be totally outside of my day-to-day experience. Oh, and I had to make this decision in the next 2 1/2 hours.
When situations like this present themselves, what do you do?
The safe route is just that—safe. It’s easiest to decline and stay right where you are. You can think of reasons to justify that decision. You don’t know that part of the organization. Who will take your role if you’re not there? You’re not ready for it.
Each of those thoughts ran through my mind. But I also had other thoughts, competing for space in my head. These included: This is a way to grow, I will learn new things and meet new people, the president must think I can do this, my associate dean is ready to be the dean.
So when he asked me what I thought, I candidly replied, “This scares me to death. But I will paraphrase Richard Branson [CEO of Virgin] who said, ‘When someone asks you to do something amazing, say yes and then figure out how to do it.’ ”
So I said yes.
Saying yes is not necessarily the right decision for every person. But think about what you would do if a similar situation was presented to you.
I had been a business dean in three institutions for about 16 years. While each institution was quite different, the job was essentially the same. I chose to be a dean again and again for a variety of reasons, not the least of which was that it was easy for me, especially as a mom who wanted to be present for most of her kids’ activities. I knew how to do this job inside and out, and I was comfortable.
But about a year before I was asked to assume my new role, I told the president that I was getting into “maintenance mode,” which is a not a good thing for me. I am a builder, a change agent, a “make things better” person, and I was running out of ideas. The president remembered that conversation when he needed someone for the interim role.
He understood that I had not spent time in the part of the university he was asking me to lead. But his confidence in my abilities to lead, manage and communicate gave me the willingness to leap into the unknown.
I see folks stuck in lots of jobs. Maybe they never should have taken the job to begin with, as their skills and experiences are not a good fit with what they are doing. Or perhaps they once were quite happy but now are miserable. They might even think no one realizes how miserable they are. On the contrary, everyone does. Maybe, like me, they need to grow in a new direction and, for whatever reason, haven’t had the gumption to pursue anything new.
Please don’t stay stuck! If anything I’ve said resonates with you, look for new opportunities, either within your organization or outside it, so you can stretch yourself. Learning new things is quite exciting, but also intimidating. I haven’t been this stimulated in probably five years. Is it scary? Of course! But sometimes a little fear of failure can provide the impetus to work that much harder to ensure your success.
The goal is growing and helping the organization. So I’m glad I took the leap of faith and said yes when asked to do something different. While you may not be asked, you are in charge of your career and can certainly pursue new growth opportunities. Update that resume and get started today!
The study of aging is incredibly important. Although it’s a process we all go through, the amount of research on aging is sorely lacking. Considering that the number of people in the United States over the age of 65 outnumbers the entire population of Canada, it’s obvious that need for research into the aging process is dire. Understanding the biology of aging doesn’t require a lab coat, but it does require knowledge of the jargon around the science. For the convenience of America’s senior population, here’s a helpful breakdown of all the facts and figures on aging seniors need to know.
About Caloric Restriction
Caloric restriction is an eating practice seniors might want to consider. However, always remember it’s crucial to discuss any potential diet changes with your doctor before engaging in them. However, knowing the language around caloric restriction can help you ask the right questions. Scientifically speaking, caloric restriction is described as “undernutrition without malnutrition” and is essentially eating 30-40% fewer calories while still maintaining nutrients and vitamins to support a healthy lifestyle. Preliminary results from studies conducted on monkeys demonstrates success in extending lifespans through caloric restriction. This has not been tested in humans yet, but the results in other organisms are promising. Still, it’s important to keep in mind that a calorie restricted diet makes mammals more susceptible to hypothermia and increases healing time for wounds.
Protein p53 and Tumors
Protein p53 is a tumor suppressor—meaning that it acts to combat the cell mutation that causes cancer. It occurs naturally in the body but is disrupted by damage to your DNA. The question of whether aging causes DNA damage or DNA damage causes aging is one that scientists have been arguing for several years. However, regardless of their answer, what seniors need to know is that proper nutrition can help increase DNA repair, making it easier to support protein p53 and the important work it does in protecting our bodies from cancerous cells. Eating lemons, persimmons, strawberries, apples, broccoli, and celery has been shown to aid in DNA repair so keep these around the house and you’ll be taking active steps towards wellness.
ROS, or reactive oxygen species, are oxygen-containing molecules produced naturally when the body turns food into energy. This is a process that we see in many instances of nature; for example, the way an apple browns in the sun or rust occurring on iron. The more we age, the more likely oxidative damage is because our cell’s defenses against it is reduced. Oxidative damage can lead to Alzheimer’s, cancer, diabetes, heart disease, and age-related deafness. However, consuming antioxidants helps boost the body’s ability to protect itself. Examples of foods high in antioxidants are: grapes, blueberries, red berries, nuts, leafy greens, sweet potatoes and other orange vegetables like carrots, green tea, and whole grains.
No matter where you are in the aging process, eating right is one strategy you can employ to slow the cell damage and oxidation and help keep our brains and bodies strong even in old age. However, buying fresh vegetables, supplements, and vitamins can become costly especially considering a large portion of seniors rely on social security to make ends meet. Fortunately, there is a way you can increase financial liquidity after retirement. Did you know if you still maintain a life insurance policy, you can sell all or a portion of your policy for an amount greater than the cash surrender value? This is known as a life settlement and can provide the stability you crave. Contact Life Settlement Advisors to learn more.
Patricia’s two children are grown, married with their own children and live more than a seven-hour drive away. Patricia wanted to be closer to her grandchildren. Her oldest son convinced her to move closer to him. Patricia sold her life insurance policy and used the funds to ease the cost of moving and find a comfortable new living arrangement.
I know that it is sometimes easier to say than actually do. So many things are racing through our minds. This is especially true if you are near or at retirement. There are so many things to consider. We have family that we worry about. They can be kids or grandkids. Where will they go to school, how are they financially? Will they need our help? Or, how can we help?
Let’s not forget ourselves. Will I have enough retirement income to keep me in the lifestyle that I have become accustomed to? Will my money last? What about a downturn in the stock market? Do I have too much equity exposure? And, let’s not forget our health, long term care needs, and the money to take care of all these things. And, with all this in mind, how can you “go to bed happy and wake up happy?” The answer is to start emptying your “worry buckets.” And, the way to do that is with some planning. Let’s take a look:
There is an old saying that goes something like this. When young, the question is if I will die. When we get older, the question is... when will I die. If we all knew the answer to that, life would be simpler but I don’t think enjoyable as we approach that end date. So, how about some good soul searching questions. If you happen to be married, do it with your spouse. Let’s look:
If you happened to pass away now, would those that are dependent upon you be in decent shape? If the answer is no, take a look at your life insurance portfolio. Maybe you need some more. Maybe you want to sell all or a portion of your life insurance portfolio.
Want to look at long term care types of expenses? What happens of you can’t perform 2 of the 6 activities of daily living? Do you have a financial vehicle that would spring alive and provide you with cash now? They do exist, and it doesn’t have to be a long term care policy.
Have you pre-paid for your funeral and expenses around that event? It makes it much easier on your family if you have.
Are your beneficiary designations up to date on your policies and investments?
What about your will? Up to date or need a revision?
Have you made a distinction between your wants and needs? You know, separating your essential and discretionary income needs.
What about your doctor? Are you going in regularly for a checkup?
In closing, I did have an event happen that shook me around. My wife passed away with complications in surgery. Being in this business, I had a pretty good plan and felt comfortable. Now that my life has changed, I went back and revisited everything I mentioned above. I took the steps to make sure that everyone was protected... including myself.
So, I am not going to say that I have emptied all “worry buckets” but I have most of them. And it allows me to “go to bed happy and wake up happy.” Is there anything better than that? Maybe you need to sit down with a financial professional and take a look at your situation.
Are you having enough money withheld from your regular paychecks? The Tax Cuts and Jobs Act (TCJA) has made several significant changes to the tax rules for individuals for 2018 through 2025. As a result, many taxpayers who previously itemized deductions are expected to claim the standard deduction, starting in 2018.
3How is withholding affected by the TCJA? The amount you elected to have withheld on your Form W-4 under the previous tax law might need to be revised under the new law. If you withhold too much, you’re effectively giving the IRS an interest-free loan to use your money until it’s refunded after you file your 2018 return sometime next year. Conversely, if you withhold too little, you’ll face a stiffer tax bill when you file the return.
Unfortunately, it’s not easy to figure out the right withholding amount under the TCJA. A “paycheck checkup” can help you assess your situation.
Your 2018 tax return isn’t due until next April. But you generally can’t wait until you file your tax return to pay the full amount of tax you owe. Instead, employers are required to withhold taxes from the paychecks of employees. Likewise, self-employed individuals and retirees and others with investment income or retirement account withdrawals must make quarterly estimated payments.
You might need to do both — have tax withheld and pay quarterly installments — if you earn substantial income outside of your regular salary. If you fail to comply with the requirements, you could be liable for an estimated tax underpayment penalty, in addition to the tax liability.
The due dates for the quarterly estimated payments for a tax year are:
These dates are adjusted for weekends and holidays. So, the next quarterly installment for income earned in 2018 is due Monday, September 17, 2018.
You can avoid an estimated tax underpayment penalty using any one of these three safe harbor rules:
If you’ve been having “just the right amount” withheld for your circumstances in the past, the TCJA has altered the landscape. Examples of major changes that will affect individuals for 2018 through 2025 include the following:
The standard deduction is almost doubled to $12,000 for single filers, $24,000 for joint filers, and $18,000 for heads of households.
The itemized deduction for state and local taxes combined is limited to $10,000 per year. This applies to any combination of 1) state and local property tax and 2) state and local income tax (or state and local general sales taxes if you choose to deduct them instead of state and local income taxes). Previously, these amounts were fully deductible by most taxpayers who itemized deductions.
The itemized deduction for mortgage interest is potentially reduced under the new law. Specifically, the interest deduction for new acquisition debt is limited to interest paid on the first $750,000 of debt, down from $1 million. (Pre-TCJA home acquisition debts of up to $1 million are grandfathered under prior law.) In addition, the deduction for interest paid on up to $100,000 of home equity debt is generally repealed (unless the home equity debt is used to buy, build or substantially improve the home secured by the debt, in which case it can be treated as acquisition debt subject to the $750,000 limit).
Itemized deductions for most miscellaneous expenses — such as investment advisory fees and unreimbursed employee business expenses — are eliminated.
Personal and dependent exemptions are eliminated.
The child tax credit — which generally applies to dependent children under age 17 — has been increased from $1,000 to $2,000, and the income phaseout thresholds have been significantly increased (to $200,000 for singles and heads of households and $400,000 for married couples who file jointly). So, many more households will be eligible for the increased credit. In addition, a new $500 credit is available for other qualified dependents, including a qualifying 17- or 18-year-old, a full-time student under age 24, a disabled child of any age, and other qualifying (nonchild) relatives if all the requirements are met.
In light of these changes, many taxpayers who have itemized in the past may instead opt for the standard deduction starting in 2018. This could have a major impact on their withholding obligations.
Even if you expect to continue to itemize under the TCJA, you can benefit from a “paycheck check-up,” especially if you have older children who won’t qualify for the $2,000 child tax credit or you report income from more than one job. (See “3 Families Who Might Need to Adjust Their Withholding” at right.)
Of course, your withholding choices should also reflect your personal preferences. For instance, some taxpayers prefer to overpay taxes during the year so they can receive a big tax refund from Uncle Sam. Others like to just break even.
To adjust your withholding, request a new W-4 form from your employer, fill it out and then submit it. Any withholding change will show up in the next payroll calculation.
The IRS offers worksheets for estimating the “right” amount of withholding, as well as a new online withholding calculator to help you crunch the numbers. Unfortunately, the online calculator requires you to input a lot of financial information, which can be time consuming. And many people aren’t comfortable putting sensitive personal data into cyberspace.
To minimize the hassle and potential security risks, discuss your withholding with your tax advisor. He or she can help you sort through the provisions of the TCJA that will affect your tax situation and address other withholding objectives in the coming years.
If you are an active reader of this website, chances you are a savvy, informed investor. As we approach retirement age, smart investors have learned to reallocate their portfolio, moving away from more aggressive investments and into safer bets. Some of us have our homes paid off; some took advantage of recent years’ low mortgage rates and have refinanced to fund once-in-a-life-time vacations, pay off credit card debts, or to finally pursue that dream hobby – maybe a boat, an antique car – that could be a bit impractical, but what the heck, you’ve earned it.
Some of us are also refinancing to help our children. We tell them we all had it tougher when we were their age; but truth be told, in today’s economy, young people do have a lot of financial burdens. Average student loan debt has doubled in just twelve years. Starting salaries are in much better shape than a decade ago, but current level of wage growth cannot keep up with home price growth, which is now at 6.2% annual increase nationally and as high as 13% in markets such as Seattle. If you have adult children living in one of these expensive cities, a conversation about helping them buy a home may already be familiar to you.
To many, parents helping a child buy a home is a duty and a rite of passage. Nearly 1 in 4 (23%) of all home loans in the U.S. now has a non-spouse co-borrower listed for the mortgage. In most cases, it is a parent who is co-signing. In San Jose, that figure is 51%; in Miami, 45%; in Seattle, 39% of home loans now have a non-spouse co-borrower. So it is certainly common particularly in expensive housing markets for a parent to be a co-borrower of an adult child’s home loan.
Beyond that, parents are also helping to fund children’s down payment. According to ValueInsured’s latest quarterly Modern Homebuyer Survey, 34% of Millennial first-time homebuyers plan to rely on a parent’s help to fund their home down payment. In Denver where home prices are giving Seattle a run for its money, 41% of young people said they need to rely on their parents with their down payment. 46% of Baby Boomers nationally report they have helped or plan to help their children with a down payment, and again, that percentage is higher in hot housing markets.
No doubt many among us are refinancing our own home to help our children. Some might be able to draw funds from savings or other investments to help without a cash-out refinance. In either scenario, The assumption is that home prices will continue to go up, and eventually, hopefully, the adult child will be in a position to pay back the parent. Or if it is a gift, the down payment would give the child a leg up for a better financial future as home values rise. Sounds great, but all relies on a big “if”…
Any housing historian or economist would tell you home prices do tend to go up long term, but never in a straight ascending line. The housing market on average goes through 7-10 year value fluctuation cycles. As luck would have it, we are now right at the 10-year mark from the height – and the eventual spectacular collapse – of the last cycle that ended in 2008. As parents, we want to help our children and set them up for success, but we need to be careful that by helping, we are not moving them closer to the eye of the next financial storm.
After nearly a decade of downward trends, interest rates are now on an upward trajectory, with 30-year fixed now at a 4-year high. Home sales volume are on a decline, indicating that while some people are willing to pay the possibly overvalued prices, many more are staying on the sidelines to avoid buying high, and therefore bringing down total home sales volume.
The Federal Reserve is planning another three to four interest rate hikes this year. Median home prices are now 20 to 30 percent above pre-bubble peak of the last housing correction in many overheated markets. Housing bubble talks are getting more rampant, including by renowned money manager James Stack, who predicted the last one. Some say like the stock market, home prices could continue to go up. But we are witnessing more volatility after several years of uninterrupted gains on Wall Street. Now, even typically bullish Goldman Sachs is warning there is a "high probability" for a stock market correction in the coming months.
If you have or plan to refinance your own home to help your child buy a home, it is prudent to bear in mind that young people who buy now could be buying at top of the market. If the housing market corrects and your child needs to move for a job or other reasons during the downturn – as mobile young families often do – one home purchase by your child now could have regrettable effects later on two households. Nearly half of the country’s housing markets – including Chicago, Miami and Las Vegas – still have not recovered close to their pre-2008 crash peaks. In other words, a parent who refinanced their own home to help a child buy a home in Chicago in 2006 could still be under-water, in both households.
Unlike during the last housing peak, the current market run-up does come with new solutions: Down Payment Protection and Equity Protection. These innovative and consumer empowering products are insurance policies that can be purchased by homebuyers and refinance mortgage borrowers from their insurance agents to protect their down payment and appraised home equity value. Even if homebuyers are buying at peak of the market, if they sell later at a loss after a correction, their loss in the down payment they put into the home purchase is reimbursed back to them, in a simple, no-catch process that issues them a check of the loss value within 30 days. Refinance borrowers have a similar option, in equity protection. They can lock in the appraised value of their home at market high when they refinance; when they sell later at a loss after a downturn, their loss in equity can be reimbursed back to them, also simply and quickly within 30 days.
Caring parents want to help their adult children pursue the American Dream of homeownership and build their own nest. It’s an admirable thing to do. But there’s a smart way to do it without exposure to unpredictable market risks, while setting your children up for more secure leaps into their financial future. In the same way you may be reallocating your own investment to safer money places, there is now a safer way to buy a home, and certainly a safer, smarter way to be a generous parent.
People often think of different things. For many people the first thought when the word annuity is mentioned is that an annuity provides an income – a pension is a type of annuity. However, while every annuity could be used to provide an income, the ways in which the income is provided differs depending on the annuity.
A period certain income annuity provides income for a certain period. You provide the principal and the insurer will pay back the principal plus interest for 5 years, 7 years, 10 years, 20 years, whatever timeframe you select.
Why might you do something like this? Perhaps you are forced into early retirement at age 57 and you need an income to carry you through until you are old enough to collect Social Security. Perhaps you want to help a grandchild with their college expenses, without giving them a lump sum, a period certain annuity could help cover college costs for the years needed for them to get that bachelor’s degree. Perhaps you already own an annuity and you’d like to convert a part of that annuity value into a tax-free life insurance benefit; a period certain annuity could fund that conversion.
The use of a period certain annuity can also offer certain tax advantages because most of the income produced is not only free from federal and state income taxes, but it isn’t included in calculating whether you owe taxes on your Social Security benefit. It would take too much time to get into all of these different uses, so the main point you should take away from this is a period certain annuity pays out a steady income for a specified number of years.
Those Roman legionnaires were given a life income annuity that paid an income as long they lived. When they died, the income stopped. You can also get the same type of annuity today. It’s a great deal if you live a long time and a bad deal if you get hit by a bus next month.
Why would you buy this type of life income annuity? People buy them when they don’t plan to leave this particular money to children or charities and want to get the maximum income. A person typically would not put all of their assets into buying a life income annuity, but they might purchase one to ensure they have a guaranteed income to cover the essentials if something happens to their other assets.
A life annuity can be set up to last as long as one person lives or two. If your health and genes are good, a life annuity can provide a dependable monthly income for a long time, so it is often used in conjunction with other assets to provide for a tranquil retirement.
The rap on a life annuity is if you die the insurer keeps any money that is leftover, but that isn’t necessarily true. You can buy a type of life annuity that guarantees that if you die early the annuity will continue to pay out to your beneficiary until your original principal is returned – if you put in $100,000 the insurer will pay out at least $100,000.
There are a variety of other options. You can have the annuity pay out until you die or for 20 years, whichever is longer. You can arrange it so that your spouse would still get all or half of the original income amount if you die. You can even buy a life annuity that won’t start payments until 10 or 20 years from now. The different options offer different amounts of income. The first annuities were issued by the Roman Empire as a reward to legionnaires for their service. Two millennium later annuities are still being used to provide a dependable income.
A young person’s imagination can be a wondrous thing to behold. And, when adults play into the fantasies, it becomes even more wonderful. As a child of five years, my imagination knew few boundaries. If it existed in our backyard, I could imagine all sorts of marvelous adventures. Just give me a piece of rope and a wagon, and I was off to the never-never land of excitement. Add to this an occasional weekend trip to my Grandma Wilkens house, and the adventures took on a completely different dimension.
An over-night stay at Grandma’s would usually begin on a late Friday afternoon. I was delivered to the care and feeding of my grandparents by my mother who would drop me off usually after the evening meal. After a short play time with the local in-house toy chest, it was off to a big double-bed with snuggle-down blankets. I remember the bed because it was at least three-times larger than my bed at home.
The waking process was the beginning of the “Adventure” for the weekend and my growing imagination. My grandmother would awaken me with the sound of a buzzing bee. And, she would gently come beside me in the bed and pretend to “sting” me awake. The stings were more like tickles and proved the awaking process was effective.
Once washed, dressed and fed, it was only a matter of a short time before Grandma and I boarded a local streetcar for an exciting trip to downtown Indianapolis. These weekend adventures took on a basic format over the years. Usually, we would arrive in the center of the city in time to do a bit of adult shopping. My Grandma was aware of my lack of interest in this part of the weekend festivities, so, she would speed through her list of things to acquire.
Next would be a stop at Woolworth’s, a local “Five and Dime” Store, for a bite of lunch. We always sat at the counter, but I was usually too excited to eat more than a “bite.” Grandma would insist that I needed to finish my meal to keep up my energy for the rest of the adventures. It was what was about to take place, that was the best part of the day! We were off to one of the local movie houses for a show!
Downtown Indianapolis had at least a dozen movie theaters in those days, and, quite often, there was a stage show that accompanied the matinee. Keep in mind, this was years before television. Not only did we get the latest Hollywood comedy or drama, but live performances as well. It is difficult to imagine what all that glamor and excitement did to my childhood life. It added another dimension that a whole backyard couldn’t provide. The various acts of acrobatics, juggling, dancing and singing, opened my eyes and mind to a world of entertainment that had no boundaries. And, when you throw-in “Laurel and Hardy”, the “Bowery Boys” or a “shootum-up Western,” on the same bill, it just didn’t get better than that.
After leaving the theater, there was time for a quick ice cream treat, and picking up an inexpensive toy that would occupy the rest of the day at Grandma’s. My Dad would usually pick me up early on a Saturday evening and bring me back to the reality of home life minus the expanded adventure of the city.
These adventures at Grandma’s continued for several years until my sister, who was two and a half years younger than I, joined the experience. She didn’t have an iota of the interest in movies or stage shows that I enjoyed, so, it didn’t take too many downtown visits before we decided that we would discontinue the excursions.
Even though it has been over seventy-five years since those early days of “adventure”, they remain vivid reminders of times that were real…not imagined!
Once upon a time, taxpayers could generally deduct 50% of business-related meal and entertainment expenses. However, several exceptions allowed larger deductions in certain circumstances.
The Before and After of Exceptions
Under prior law, the following exceptions to the general 50% deductibility rule were available. (In some cases, as you'll see below, the exceptions have been retained under the TCJA).
An employer could deduct 100% of:
In addition to the above tax write-offs, business taxpayers could, under previous law, deduct 100% of the cost of:
Effective for amounts paid or incurred after December 31, 2017, the TCJA disallows deductions for most business-related entertainment expenses, including the cost of facilities used for most of these activities.
Specifically, nondeductible expenses now include:
Deductions Still Allowed
Apparently, you can still deduct 50% of the cost of business-related meals with business associates. If so, the time-honored rules for proving that meals are business-related still apply. Once again, this conclusion isn't completely clear at this time. We are awaiting IRS guidance.
It's clear that you can still deduct 50% of the cost of meals for you or an employee while away from home on business-related travel.
In addition, a business's costs for meals and food and beverages that fall under some of the exceptions listed above are still 100% deductible (for example, when the cost is reported as taxable compensation to recipients who are employees and non-employees). Meals provided to employees subject to the DOT hours-of-service limitations are still 80% deductible.
Key Point: If a hotel or other lodging establishment includes meals in its room charges or you give employees per-diem allowances that are intended to cover meals, you can use a reasonable method to determine the portion of expenditures allocable to meals and subject to the 50% deductibility rule. Ask your tax advisor about this.
Tax Planning Considerations
Taxpayers should assess their current expense allowance policies to determine if the unfavorable TCJA provisions warrant changes in policy — especially for entertainment expenses incurred by employees. Accounting system changes may be necessary to separately track employee entertainment expenses and employee business-related meal expenses, which may still be 50% deductible.
As you can see, the treatment of meal and entertainment expenses is complicated after the TCJA. Maybe more complicated than you thought! Also, understand that what you read here is based purely on our analysis of the applicable provisions in the Internal Revenue Code. Subsequent IRS guidance could differ.
Feeding Employees: Then and Now
De minimis meals. Under prior law, employers could deduct 100% of the cost of food and beverages supplied to employees, if the food and beverages were tax-free to employees because they qualified as a de minimis fringe benefit. Those benefits are defined as having a value and frequency of occurrence so small as to make accounting for them unreasonable or administratively impractical. Examples include:
Employer-Operated Eating Facilities: Under prior law, employers could deduct 100% of the cost of operating a qualified eating facility for employees, such as a company cafeteria. The facility had to meet certain requirements.
First, it had to be:
TCJA Change: For amounts paid or incurred from January 1, 2018 through December 31, 2025, the new law allows employers to deduct only 50% of the cost of operating a qualified eating facility for employees. After 2025, no deductions will be allowed.
Employers that operate eating facilities for employees should review the costs of running their facilities and determine if the temporary 50% deduction rule and the eventual complete disallowance rule dictate a change in policy.
Meals Provided for the Convenience of the Employer. Under prior law, the cost of meals furnished to an employee for the convenience of the employer could be fully deducted by the employer and treated as tax-free to the recipient. However, 100% deductibility for the employer only applied if a bevy of requirements were met. Otherwise the general 50% deductibility rule for meals applied.
TCJA Change: For 2018-2025, the TCJA allows employers to deduct only 50% of the cost of meals that are provided for their convenience. After 2025, no deductions will be allowed.
Then came the Tax Cuts and Jobs Act (TCJA), which dramatically shifts the playing field for expenses paid or incurred after December 31, 2017. The new law also creates some uncertainties, as this article will explain.
Your tax advisor can keep you up to speed on the issues and suggest strategies to get the biggest tax-saving bang for your business meal and entertainment bucks.
Liquidity means the ability to turn an asset into cash. Having liquidity gives you the feeling of control, but liquidity provides both real control and the illusion of control. The financial reason for wanting liquidity from what are intended to be dollars left untouched until some future date, is the ability to cope with or avoid potential risk. If you have an unexpected financial emergency, being able to sell or transform an asset quickly to get dollars in your hands is real control. This is generally what is thought of when one thinks about their asset being liquid, but liquidity isn’t that simple.
Does liquidity also mean getting the money without a cost? If so, then certificates of deposit within their penalty period could be viewed as illiquid. Indeed, even money market accounts could be viewed as illiquid since federal law limits free withdrawals to not more than six per month. Typically there is a commission or fee if you sell a stock or bond – does this mean stocks and bonds are illiquid?
What is the time limit on liquidity? We use words like immediate or instant liquidity, but unless the money is in our mattress or wall safe we can’t get it this very second. You typically can’t get the money for two days or more when you sell securities; is this liquid? A check is called a demand deposit, but the bank can stop access to those funds for a week by saying they have concerns over “doubtful collectability”. And if a week delay is viewed as liquid, why wouldn’t the two to four weeks it usually takes to get the check from cashing in an annuity also be liquid?
And then there is the illusion of liquidity. Typically a bank will let you cash in that CD or make that seventh withdrawal from the money market account this month, but they don’t have to. A bond sale settles in two days, unless you were trying to sell many of the mortgage-backed bonds in 2008 for which there were no buyers. And, an extreme case, there was zero investment liquidity in the days following 9 -11. Although that was extreme, governmental authorities in some countries believe that some exchange traded funds (ETFs) could become illiquid during a market panic. The financial markets, banks, and even governments all operate on the illusion of liquidity believing there will always be buyers, enough people paying their debts and a government that will be able to ultimately bailout any crisis, but this is only true if people still believe the illusion.
The illusion of control imagines that you will exercise that liquidity well. In the stock market the mirage is that the investor will sell out of the market just as it begins its fall – or will use the liquidity to keep moving from liquid choice to liquid choice to maximize returns. The reality is that doesn’t happen. Indeed, as Investment Company Institute data shows time after time, the liquidity is used to sell at the bottom of markets and often to leap out of rising markets.
The concept of liquidity is not as clear cut as it first appears. If liquidity is defined as not having a cost then many annuities would be excluded, but so would any ETF, stock or bond where a commission or transaction fee is involved in the sale. If liquidity is defined as having instant access to the funds then every investment is ruled out as well as many bank products. What this all means is you need to ask yourself how you define liquidity and what it means to you.