mcbreck

Reading for pleasure is something I've always struggled with getting into doing. In 2021 I decided I'd start by reading 20 pages per day. That comes out to about 20 books per year. I usually switch back and forth non-fiction and fiction. I'm keeping a list of the books I've read which is fun to look back at.

Growing up, we used to do that a lot on my grandfather's farm. My brother-in-law enjoys it and they have a place near their home where it's an option. I greatly enjoy going to their house as they have 2 horses (Red and Dollar), a mini-donkey (Ted), about 5-6 cows, 2 cats (Ginger and Chevy), dog (Comanche) and chickens. Love visiting. I'm not as big into hobbies as my brother in law.

I plan on doing that from about the age of 60-65 to pay for health insurance and vacation.

For those of you retired or partially retired - what do you do all day? Over this past long weekend my wife and I didn't do a lot because it was hot and we'd seen our families pretty recently (did have lunch with my dad). By Tuesday afternoon we were both pretty bored and wondering what people do all day during retirement. After work each day I hit golf balls, read and go for a long walk with my wife and I could do each of those before lunch in retirement. Wondering what else I could do. I'm thinking I'll likely join a golf club which allows me to play about 10 different courses as much as I want for a reasonable amount. But I can't play every day....

Sales commissions are not a COGS, they are an operating expense and included on line 10. Now if they paid a percentage of revenue to a clearing firm, I consider that a COGS. For example if I'm an investment advisor clearing through Charles Schwab and Schwab takes 10% of my revenue and pays me the 90%, that's a COGS. Reality is that most probably don't include the 10% in their income or expenses because they never see it. They book the money coming in and ignore the expense in their accounting.

Rocket Mortgage is back to offering mortgages with just 1% downpayment and they'll double that amount so that you have 3% equity. Several banks are back to offering 0% down to special groups. I love that they wanted to you write a letter admitting you broke the law by submitting a tax return you knew was fraudulent.

What claim would there be? I'm not responsible for their penalty and I certainly wouldn't make a claim for $350.

Mind boggling. (my credit accounts have been frozen since the equifax hack)

I find listening to a hardcore accent to be VERY enjoyable whether it's Brooklyn or Alabama. My in-laws are Southern Missouri and about half have a VERY strong southern accent and the other half have nothing. My niece just recently became a nurse practitioner and has had to start catching her language because people were shocked when she popped out a Y'All in meetings and patients were laughing at some of her southern idioms. In St Louis the differences in slang are so pronounced within racial groups because of self imposed segregation which is just wild. You can get a white guy from South St Louis with a massive southern drawl and a black guy from North St Louis with a completely different southern drawl and they don't sound alike at all.

Financial planning projections are silly but they are even more silly if you don't understand the assumptions and how they impact the final numbers. In 1999 our planning software used expected market returns for the next 10 years to be 15% per year and was told regulators prohibited me from lowering that number. nasra.org is all public pension funds and they give what their expected portfolio rate of return is going forward - the average now is the lowest I've seen it and it's just 6.92%. They slowly (very slowly) dropped their returns during 0% interest rates so I'm guessing we are near a low.

I called the PPL 4x last week and the longest wait was 19 minutes and they called me back in a very timely manner. The other three times I had immediate access. All 4 calls were exceptionally pleasant.

My financial planning software will almost always say to convert and will tell you that you've saved $x in taxes. I'm very reluctant because I don't know what the tax code will say in 15 years. How do I know they won't tax ROTH distributions over a certain level of income? At one time it was unthinkable that people would pay taxes on Social Security benefits and most people do today. My teacher friends and clients have been told their entire careers that they'll never pay state taxes on their public pensions and most of them do.

I mentioned it a long time ago that one of my best friends is going to prison for Medicare Fraud. He's plead guilty finally and is scheduled to be sentenced in a few weeks. We are having lunch tomorrow and I'm interested to hear what he has to say. Our previous luncheons have been interesting. Per the sentencing guidelines I think he'll get 4 years (out in 2) and then 3 years of house arrest. The key will be how much money he has left and whether they'll be able to keep the house when it's over. One thing I've learned, when you withdraw money from your retirement account to pay a court order of restitution, that's taxable and he'll owe a penalty for early withdrawal. I'm wondering if his previous accountant isn't going to do a whistleblower case on him to get the IRS to come after his expenses claimed on an illegal kickback scheme. Not that he'll have any money most likely.

Seems to me this client needs to be released into the wild. I'm very close to informing mine that they need to go elsewhere. I'm certainly not paying a penalty which will likely lead them away - hopefully. The wife is very nice, the husband thinks he's a VERY big deal. Previous years he made 2.5x more than she does and this year she's expecting to make about 50% more than him. I'm interested to see how that dynamic unfolds in our conversations.

Client makes a ton of money ($400k) and does a Roth conversion which generates an additional tax bill. Sweet. They are in a high tax bracket and couldn't explain why they would do a Roth conversion except the Ed Jones rep suggested it so it's his fault. I give them the extension and which includes an estimated penalty for underpayment and they decide to not pay it and just pay the tax bill - deducting the penalty amount. Now the IRS sends a letter requesting the penalty and the client thinks I should have to pay it because somehow it's my fault and they pay too much in taxes.

My brother is a workaholic. He works 365 days per week and when he was CEO was monitoring activity on Xmas morning. We always joke that if he "retired" and took a 40 hour per week job it would be part time work.

My brother was a CPA and went to work for a company he audited. He was treasurer and moved up to being CEO. Now he's the CFO of a large company. He refused to be a partner of his CPA firm because of the Arthur Andersen meltdown and financial meltdown it caused the partners. He also didn't want the stress of having to bring in clients.

I should mention, 40 hours per week is enforced at my nephew's firm. The CEO is often in the lobby of the headquarters as people come in as they want people IN THE OFFICE. At the same time management wants them OUT by 5pm and no meetings can be set after 4:30 / 2:30 on Friday. My wife works for a company that says you must work 40 hours but you can show up anywhere from 7am to 9am (thus leaving floats but many leave at 3:30pm). Then consultants set meetings at 5pm on Friday and everyone throws a fit but management quietly ignores it as long as they aren't included in the meeting. My wife's boss tells her to automatically respond with OUT OF OFFICE at that time but she misses a lot of meetings.

From what I've been told it's a three fold problem: it's the extra hours of college that are required. 150 hours versus 120 means you need a 5th year or you are getting your masters. My nephew considered it but that extra year was a deal breaker so he chose the Finance degree. Now he negotiates contracts. The other issue is the extra hours of work a CPA is required to do. His job is 40 hours per week except for 2 weeks at the end of the year when companies get desperate to finalize deals. His CPA friends are working 50-60 hours per week for the same money year round. When you are 20 years old, who wants to commit to that for the next 40 years? The public auditing requirement is perceived as overly burdensome and boring. The perception is that nobody wants to do the job and that's why it's required as a condition. They get low cost labor nobody wants to do.

Listened to a podcast on AI while on vacation last week - it's fun to laugh at it now but be prepared for the revolution.

Same sort of auditing is in place for SEC and FINRA. 30 years ago we had an SEC auditor in our offices and he tells us our books are clean, he can see it in 20 minutes because they are simple but still had 2 people auditing them for 2 weeks. His example was Prudential Financial but he said something like "we have auditors in their offices year round, we spend weeks figuring out where money was coming / going and by the time we figure it out they change their methods and we have to start over." Personally the FED audit is the one that should matter and the Fed knew Silicon Valley was about to blow up a year before it did and they did nothing about it. We had a former New York Fed Chairman who under Congressional testimony declared he'd never been a bank regulator. The New York Fed IS the primary bank regulator. We had a FINRA audit with 2 guys - one decided a client's kids were stealing from their mother's account and I was liable ($10k per month was being wired to her nursing home). After 6 hours the other auditor looked at it for 5 minutes and pointed to the line where they deposited more money than they withdrew. He declares "why would the daughters deposit an additional $500k into an account where they are stealing $10k per month?" Our last SEC (20 years ago) audit we had two auditors for Monday and Tuesday and one flies home. On Wednesday morning the remaining auditor looks at a money market account and wants proof we'd sent a prospectus to every client of the firm for that account. I told her we didn't and BLOW UP. All day Wednesday she's in conference calls to the home office. Thursday same thing and on Thursday afternoon she schedules us a conference call with management for the next day. On Thursday our secretary tells me something huge is up and we are in trouble. Friday morning I'm sitting in the conference room waiting on people to dial in and she tells me we were required to send out a prospectus. When I mention there is no client money in the account and it's all ours - you could almost see the blood drain from her face. We showed it as an asset of the firm on all our financial statements for years which they thought was also fraud. woops. She flies out 2 hours later having done absolutely nothing of substance.

Warren Buffett says that if you offered him all the Bitcoin in the world for a total price of $25 he would pass. Cathie Wood says Bitcoin is going to be priced at $1m per in 7 years. Crypto is not an investment as it offers no ability to perform a discounted cash flow analysis. It is a speculative instrument like gold or Beanie Babies.

On Monday I visited with a 100 year old client for about 30 minutes as I dropped off his taxes. What a joy that was. He has a lot of health issues but what a terrific outlook on life. He was telling me stories (with names) from his college fraternity years before WW2 and after his service years. That was a fun part of the day.

What a wonderful feeling. Congrats.

I'm usually done with taxes except 2-3 pickups on the final day. I've got 18 people who are coming in tomorrow. I've had 5-6 in the past week who've had rejected efiles because of their exchange healthcare when they've never had it before (adds a twist). I'm also at significantly higher extensions. People just can't get their act together to get me basic information.