Real Estate

Out-of-State Investing Guide for Commercial Real Estate Investors in Los Angeles, California

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Isn’t real estate supposedly one of the best investment class categories in the world? People always need a place to live, right? So why does it seem almost impossible to invest in real estate in California, which is known alongside New York and Florida, as one of the best places in the world to invest in real estate, unless you have a few million dollars? It is because they are densely populated and in the case of Los Angeles they have already increased dramatically not only in the last six years by 40% but have quadrupled, 400%, in the last 30 years. (S&P Index LA) Those are great returns for an asset that is considered safe and moderately growing. So what should a person do today if he lives and grew up in Los Angeles and wants to invest in real estate but doesn’t have a million dollars to invest? The solution is simple, invest out of state!

Many people think that it is difficult to invest in a state like Texas. You have to manage the property, collect the rent, and make the right long-term investment decisions in a state you’re only somewhat familiar with at the moment, right? Well let me explain why it is good for someone to think otherwise, and how a great agent can acquire a property for you in another state in a deal where the tenants, those who use the property’s space, manage the property. for you. And even paying property taxes! Not only that, but they are institutional companies that guarantee the money they promise you for periods of up to 10-15 + years, by contract. This is just the beginning of my explanation of how investing outside your comfort zone with the right advice can benefit you and your family.

How about the security of these investments? I don’t want to lose my hard-earned dollars. You neither. So why would you invest in something outside of Los Angeles or the California region? A region that has proven its worth for decades and shows promising signs of growth in certain areas. These are definitely valid points in the eyes of an avid investor, but maybe it’s time to reconsider. I already mentioned that property prices in Los Angeles are expensive, which is one of the main reasons to invest elsewhere.

Haven’t you noticed that many people who have been living in California are moving to surrounding states where it is much cheaper to live and to places where new and old commercial industries are beginning to flourish? I personally know some people who have moved. Texas alone has added more than 5 million people to its population in the past thirteen years according to the Texas Department of State Health Services, and it is still growing. With that in mind, doesn’t it seem like a great deal to acquire commercial property in a state where you can buy commercial real estate for around $ 150,000- $ 300,000 down payment? You couldn’t dream of that in Los Angeles unless you wanted to buy an old dilapidated building.

Are you beginning to understand how easy it can be to invest outside of your state and why it is more lucrative? If you do that’s great, if not, here’s another way to understand it in a situational scenario with numerical figures.

My friend Jack has $ 500,000 right now that he wants to invest.

Here’s what would happen if Jack invested in a Los Angeles commercial property between 2015 and 2020.

Suppose Jack does not apply for a loan and buys a flat fee commercial property.

$ 500,000 x 4% annual interest = $ 20,000 of income / year (before taxes) x 5 years = $ 100,000

During this time period, the property’s value amounts to $ 600,000 for 2020, and Jack sells his property to Jenner. That generates a profit of $ 200,000 before capital gains and income taxes.

Now let’s say Jack stepped out of his comfort zone and decided to buy property in Texas.

$ 500,000 x 8% = 40,000 income / year (before taxes) x 5 years = $ 200,000

During this time period, the property’s value goes up to $ 750,000 and Jack is now showing Jenner how easy it was to invest out of state due to the structure of this deal. He told Jenner that since Starbucks managed his property and paid him on time without question every month, this made it easy for him as an investment. Now, Jenner wants to buy this investment from Jack, because she sees the benefit and Starbucks wants to sign again for 10 more years with a rent increase.

Jack just won another $ 250,000 from the increased property value.

In total, Jack has accumulated $ 450,000 before taxes during the last 5 years investing in Texas. Get it ?! Do you understand the benefits and financial rewards? It’s not to say you can’t have these structured deals in Los Angeles, but remember that they offer half the interest in a market that’s already up 40% in the last six years.

Jack has made $ 450,000 investing in Texas vs. $ 200,000 investing in California with the same amount of money. That’s an additional 125% increase in earnings, giving you an even staggeringly greater amount of money on your next big investment!

Shopping Product Reviews

Popcorn machine: invention and development

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Is the popcorn machine the most important invention to date? Well, consider this statistic: Americans are said to consume more than 17 billion liters of popcorn each year, that’s more than 50 liters per person, and that’s enough popcorn to fill the Empire State Building 18 times. .

And where do you eat a large percentage of this popcorn? Right, when watching a movie. In fact, many of the theaters make more money selling you popcorn than selling you a ticket, especially after they put enough salt in it for you to buy a soda to drink as well. So there is a case for the movie industry to think that this is the most important invention.

Then there is Nebraska. This state produces about a quarter of the annual popcorn production in the US, which is close to 250 million pounds. They certainly know the tremendous importance of this invention.

Or what about microwave oven manufacturers? There’s a joke that popcorn invented the microwave. This makes sense considering that popcorn is actually one of the number one reasons a microwave is used. I guess that makes a microwave a popcorn machine.

Well, you could say that this is not as important as Facebook or the iPhone, but an astonishing amount of popcorn is produced and eaten. And probably a lot while updating your status or texting, so what’s really more important 🙂

Invention and development of the popcorn machine

Charles Cretors is credited with inventing the popcorn machine in 1885. His original machine was an addition to a peanut roaster that he redesigned to use a small steam engine. By 1893, and at the Columbian Exposition in Chicago, Creators had created a steam unit that operated as an automated process and included a popcorn wagon displaying the popcorn. Most significant about his latest design was that the popcorn can was popped in its own seasonings and oil with even and consistent results.

Cretors continued to develop his invention with the first horse-drawn popcorn cart and the first electric motor popcorn machine. These became very popular as movie attendance increased in the 1920s, and popcorn even grew in popularity during the depression as a result of its low cost.

Development came to a halt during WWII, as manufacturing efforts went into war-related things. After the war ended, and to continually respond to theater and stand owners, the new popcorn machines took advantage of advances in technology and made it possible to make popcorn even more consistent, faster, and in greater quantity. . C. Cretors & Company is still in business today and continues to be one of the leaders in the modern concession industry.

So how important is this invention? In 1988, the United States Postal Service issued a new set of stamps commemorating transportation. And as part of this series was a 16.7 cent postage stamp that was illustrated with the Cretor model from 1902. This was done as a tribute to what has become one of the most consumed and popular snacks ever. All as a result of the invention and development of the popcorn machine.

Sports

Monday Night Soccer Trivia – Part 1

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Monday Night Football, now on ESPN, is an American institution. Many of the best games in history have been featured over the years on Monday Night Football. Monday Night Football games have been popular with fans and gamers alike. Fans love it because it usually features teams that were successful during the previous season, and players like it because of the national television exposure during prime time. Here are some great Monday Night Football trivia articles.

  • Monday Night Football was the second longest-running primetime show on the network, behind 60 Minutes.
  • The number of Monday Night Football games shown on ABC during its 36-year run: 555.
  • The announcer with the longest tenure on Monday Night Football was Frank Gifford, who led a third of the broadcast team from 1971 to 1998, a total of 28 years.
  • The first MNF game was won by the Cleveland Browns over the New York Jets on September 21, 1970.
  • Only once in the history of Monday Night Football did the game end in a draw. In 1984, the St. Louis Cardinals and New York Giants tied 20-20 in overtime.
  • The New York Jets have the distinction of losing the first Monday Night Football game broadcast on ABC (to the Cleveland Browns), as well as the last MNF game broadcast on ABC (to the New England Patriots).
  • 1989 was the first year that Hank Williams Jr. sang All My Rowdy Friends Are Here On Monday Night as part of the Monday Night Football performance.
  • The Indianapolis Colts have the distinction of scoring the most points in a Monday Night Football game with 55 points on October 31, 1988. Two other teams have also scored 50 or more points in an MNF game: December 23 In 1991, the San Francisco 49ers scored 52 points and on December 20, 1982 the San Diego Chargers scored a nice 50-point round.
  • On November 26, 2007, due to poor field conditions in Pittsburgh, the Steelers vs. The Dolphins game totaled the fewest points in MNF history with a final score of Steelers 3, Dolphins 0.
  • The most one-sided game in MNF history occurred on December 19, 2005 when the Baltimore Ravens defeated the Green Bay Packers by a score of 48-3 (a 45-point difference).
  • The record for the most shutouts in Monday Night Football history is held by the Seattle Seahawks, who have eliminated their opponents five times.
  • During the 2007 season, the four ESPN Deportes Spanish-language announcers who covered Monday Night Football games announced the games from ESPN’s headquarters in Bristol, Connecticut, and never traveled to the actual games.

Monday Night Football on ABC was an American tradition in which many people scheduled their weekends. Many say it was ABC’s treatment of MNF as more than a game, but as an event in itself, that elevated the NFL above the Major Leagues as the America Game. ABC’s sister cable sports station ESPN now airs Monday Night Football, and while the channel is different, the game is still the highlight of the week in soccer.

Tours Travel

Grenada Spice Island

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First discovered by Christopher Columbus in 1498 during his third visit to the New World, Granada has become known as the “Island of Spices” of the Caribbean. One of the world’s leading producers of nutmeg, cloves, cinnamon, and cocoa, the fragrant aroma of spices seems to envelop the island’s emerald slopes, beaches, and rainforests.

The first permanent settlement in Granada was established in 1650 by the French. During the 18th century the island was held alternately between the French and the English. After the Treaty of Versailles, the island was ceded to the British.

In 1974, the three island nations made up of Grenada, Carriacou, and Petite Martinique achieved independence, thus becoming one of the smallest independent nations in the Western Hemisphere.

Its progress came to a halt in the late 1970s when a left-wing government took control and ended free speech and many other freedoms. After the intervention of the United States and several Caribbean counties in 1983, order was restored and near the end of the year a new prime minister was elected in his first free election since the riots.

Grenadians are extremely grateful to the United States for coming to their aid in 1983 and defeating leftist renegades and thus restoring order. Their appreciation is not only expressed by the people, but a lot of graffiti can also be seen thanking the United States and its military.

Grenada is now the ideal vacation spot, St. George’s exemplifies a perfect setting in an idyllic Caribbean paradise. Most motels are family-owned and no building can be taller than a coconut palm.

As the largest spice-producing island in the Western Hemisphere, you shouldn’t visit without touring the island and its many attractions. At the top of the list would be a spice plantation, where cocoa, nutmeg, cinnamon, and other spices are grown and harvested. See how cocoa beans were dried and processed, look at cinnamon, nutmeg, bananas, and a wide variety of jungle vegetation.

It is quite entertaining to drive through the narrow mountain roads, trying to navigate the potholes while observing all the vegetation of the rainforest and the beautiful landscapes. Another beautiful observation point is Grand Etang Lake, where you can enjoy a local drink, a sandwich, and mountain views.

Because Grenadians observe many natural healing practices using their herbs and spices, as well as a diet of many of the natural foods found on the island, they have one of the longest lives in the Western Hemisphere, only a few years ago the longest. ancient. person in the world lived in Granada reaching the old age of 127 years.

Located 90 miles north of Trinidad, the island is only 21 miles long and 12 miles wide, and with a population of 107,000, 27,000 of whom live in St. George’s, its capital, this island is one that should be on the list of anyone who travels to this part of the world.

Arts Entertainments

Kobe Bryant does these workouts to jump higher, do you?

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Have you ever wondered how professional NBA players jump so high and dunk so well? The NBA stars are in very strict jumping training that they do every day. The training is very simple and can be done by a basketball player of any level, be it a high school player who needs a few more inches to shoot or a college star who wants to win a dunk contest. These are the key elements of NBA jumping training.

1. Jump squats! Stand with your feet shoulder-width apart and your hands behind your head. Bend your knees and squat down so your legs are parallel to the floor. Now jump as high as you can, keeping your back straight and your hands behind your head. Instantly, when your feet hit the ground, repeat the whole process. Do about 20 jumps, 3 times or until you can’t do more.

2. Stairs! This is easy and effective. Start by simply running down the stairs and back down. Then go up the stairs by jumping a ladder with each step. Then jump up the stairs with both feet. Ten Jump 1 foot down the stairs. All of these exercises work your calves tremendously, which is an important part of jumping height. Do these workouts every day.

3. Sprints! Sprints are much more effective in improving jump height than long-distance running. Sprints force your muscles to become much more explosive. Do at least 5 100-meter long sprints every day. You’ll see your speed start to skyrocket and you’ll start jumping higher in no time.

Technology

Is working from home likely to increase or decrease your risks?

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Many people say that working from home brings benefits for both the employer and the employee, as well as many people who are self-employed, but it is also important to consider the negative aspects, including the risks that it can cause, or at least increase. . Can they be offset by reductions in other risks? Can we find reasonable control measures that allow us to maximize benefits and minimize risks?

Who benefits?

From the employer’s point of view, the main benefit is probably the savings in the amount of office space required. This is also a benefit for the self-employed.

From an employee’s point of view, the elimination of commuting is probably a big draw, but for some, the ability to work in an environment of their own choosing and the absence of distractions like unnecessary supervision and office politics are the Main benefits. allowing them to really focus on work and work with the timescales and paces that suit them and allow them to work at their optimal pace.

Some would counter this by saying that there can be as many distractions at home as at the office, especially during school holidays. Obviously this is going to be more important to some than others and you need to find what is best for your situation.

Will they take you for a ride?

Some employers are cautious about allowing work from home due to the risk of employees taking advantage and doing too little work. Some companies try to mitigate this by requiring staff to complete worksheets to account for their time. Some even require a certain number of keystrokes on the computer. Unfortunately, these control measures are often ineffective, ineffective and counterproductive. I would advise measuring results rather than inputs. If a person can do the job to a satisfactory level, then it shouldn’t matter whether the time taken was longer or shorter than the norm. And obviously the opposite is equally true. However, it must be recognized that some jobs lend themselves more to production measurement than others.

What about health and safety?

Some people worry that homeworkers risk damaging their health by using poorly designed workstations and not taking adequate breaks from repetitive tasks. Some even suggest that employers should conduct health and safety checks on employee facilities. That might be justified if there was a lot of physical labor involved and the premises in question amounted to a workshop, but it’s probably too intrusive if someone is simply using your home as an office. A sensible compromise might be for the employer to insist that all employees receive adequate training in safe and healthy ways of working.

Cyber ​​risk.

This is one of the most serious risks and one that is often overlooked. If an employee is using their own computer or even a device linked to a computer, it is essential that they maintain all cyber security standards that would apply if they were working in the office on the company computer. This means setting a company-wide policy for things like passwords, backups, encryption, malware protection, and firewalls, as well as rules for using the internet and social media. A similar approach to data protection and business confidentiality risks offline is also necessary, to ensure that other people living in the home, or even visitors, do not have access to company documents.

The other side of the question.

However, it would be a mistake to overemphasize risks. In some way, home work can reduce risks. My home is less likely to be attacked than most offices by people looking for valuable information. There is also a reduction in certain risks, if people do not concentrate in one place. In the case of a physical accident in an office, there could be multiple victims, while this is much less likely with people who work from home. Similarly, damage from a fire, flood, or storm in an office could cause the company to close, at least temporarily, whereas such a total closure would be highly unlikely if workers were at their various locations. homes.

Balance!

My advice is to weigh the risks in your particular situation, along with other costs and benefits, and see what steps you should take to control them, rather than making general assumptions that home work is good or bad.

And the environment?

Finally, remember that from a societal point of view, reducing passenger traffic is something to be appreciated.

Home Kitchen

The benefits of kitchen cabinet siding

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Kitchen cabinet siding has many benefits. It’s certainly a lot less expensive than starting from scratch, but it also recycles old cabinets, making it the most environmentally friendly option. Of course, the deciding factor is the fact that the job can be completed in much less time with far fewer interruptions.

The main benefit, as with most things, comes down to cost. Cost is a defining factor for most things, so with kitchen cabinet siding, savings of up to thirty percent less than full replacement are great motivators that lead people to choose this as a option.

Another eco-friendly benefit is reusing old cabinets instead of ripping them out. It makes perfect sense when considering how sturdy older cabinets tend to be. Modern cabinets are mass produced in factories, with a design optimized to be light for transport and easy to assemble. Rather, things produced in the past were built to last. Breaking down such great cabinets seems like a waste, and replacing them with something inferior seems like a terrible shame

The key benefit of kitchen cabinet siding is the sheer choice and ability of the siding to look stunning, as if it has been completely replaced. Finishing is a key part of achieving this, and there are three options in regular use, from solid-color or wood-effect plastic laminates to the more realistic effects of rigid thermo films. For the ultimate in looks, the genuine wood finish of the wood veneer outperforms the other two.

While saving is a huge benefit, there are unfortunately situations where kitchen owners must be careful to go for the cheapest option. Many kitchens do not have an optimal layout and, therefore, involve extra work for the people who use them. It’s a shame that those who are cooking or working in the kitchen are forced to trip over other people and weave around misplaced cabinets. The ideal solution in this case is to simply gut it and start from scratch. Some cabinet siding companies offer some cabinet replacements so that if only a few needs are done, customers can get the best of both worlds. Most will also fit in new cabinets.

Most beneficial is the cabinet liner’s ability to be done faster and with fewer interruptions. Unfortunately, there will be times when a full replacement is the best value, in which case a few days of disruption are unavoidable. Sometimes a fresh start for your kitchen may be the best option. The time of renovation work is the perfect time to change a few other things, such as drawers and accessories, such as replacing granite kitchen countertops.

Kitchen cabinet siding not only saves costs, but its greatest benefit is its simplicity and ease, allowing you to get the kitchen you’ve always dreamed of at a reduced cost and less fuss.

Auto

Tesla rises 1,081%: the big bet to make now

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“Are you crazy.”

My friend Sasha scoffed as we drank latte for our Sunday morning ritual. Across the table, Brian shrugged, confident in his statement. “You’ll see. Soon even your parents will want one. Top gear he is lying “.

I watched the exchange between my two friends, already familiar with this discussion.

Look, this was in 2011, and we were discussing electric cars. More specifically, the Tesla (Nasdaq: TSLA) Roadster – the first series of road-legal electric cars you can buy from a company. By then the car had been on the market for about three years, and we had seen the Top gear episode that implied that the shiny new vehicle was defective (the reason Tesla sued Top gear).

We were fascinated by what this technology meant for our future, so I ended up routinely discussing it with my friends in their twenties over coffee.

After all, it was pretty much something out of a sci-fi novel: a lively sports car that ran solely on lithium batteries. It was like an exciting science experiment that you could try for yourself if you had $ 101,500 to spare.

Sasha was convinced that the entire industry would collapse and burn; I didn’t think people wanted to spend more than $ 100,000 to own an unreliable device because they had to charge “like an iPod.”

And he was right, at least about the Tesla Roadster’s short lifespan.

It was on the market for about four years and less than 2,500 were sold. It was a failure for the most part. Even Tesla CEO Elon Musk said so.

But, as is often the case, failure helped pave the way for a success story of epic proportions.

See, the Roadster launched Tesla on a trajectory that has boosted its stock 1,081% in the last five years. The Tesla brand now routinely makes headlines on major news sites. And Tesla’s success is just beginning, despite the bumpy road – it’s the shortest stock on Wall Street right now because of the fears that have always surrounded groundbreaking technology in its infancy.

That success is just one indicator of how this technology will completely revolutionize the automotive market, despite what my pessimistic friend Sasha predicted.

Look, electric cars are already capturing the imaginations of people around the world.

In fact, UBS bank forecasts that electric vehicles will account for 14% of global car sales by 2025, up from 1% today. Countries are wisely preparing for this change in the car market: Australia is already preparing to build the world’s longest “electric highway”, spanning 1,250 miles and 18 sports stations. Better yet, France and the UK recently announced that they will ban gasoline cars by 2040.

And brands and governments are increasingly working together to bring this piece of green energy into the mainstream by offering incentives: For example, BMW and Nissan just started offering discounts to San Diego residents that, when combined with a Federal tax credit of up to $ 7,500 and a state discount of $ 2,500: Reduces $ 20,000 from the cost of a new electric car.

To top it off, Volvo stated that from 2019 it will only make electric or hybrid cars.

Meanwhile, technology continues to develop by leaps and bounds: Top gear He recently drove the highly anticipated Tesla Model S around 670 miles on a single charge, though I admit it was in unrealistic condition considering it was driven in the summer with the air conditioning turned off. It’s not something you could do in South Florida without dying of heat stroke.

But this powerful machinery is the reason why many experts have reserved one of these bad boys for themselves. For the sake of comparison, the standard Tesla Model S 100D lasts about 300 miles. And that was already impressive.

As countries continue to lessen the burden of owning an electric car, technology continues to evolve and institutions focus on making it more affordable miles; many of the obstacles to this innovative lithium technology are falling by the wayside.

All of this shows just how shortsighted the detractors of electric cars (and Tesla) are.

So as an investor, if you haven’t entered this market, now is absolutely the time to start researching the technology-based opportunities that are sure to benefit. You don’t want to be left behind as the next great automotive revolution looms.

Digital Marketing

Knuckle tattoos!

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A great idea for tattoo placement is the knuckles. This makes a strong and permanent statement and serves as a constant reminder of the symbolism or phrasing you have chosen for inking. Here are some important points for getting your knuckles tattooed:

1. Make sure you are sure of the placement of the tattoo on the knuckles.

Obviously, this is an area where cover-up is not a great option in everyday life. Your knuckle ink will become part of your character, much more than a shoulder or back tattoo. It will become one of the main characteristics that you will identify with in society, so make sure you are okay with that.

2. Make sure you are sure of your design choice.

Letters should always be thought long and hard, and since letters are a common knuckle tattoo, the display will be front and center and you need to make sure the words last in meaning and meaning. Four-letter words may have seemed great when you were an eighteen-year-old maverick, but will they sound corny to you at thirty? The same goes for the names of boyfriends, groups, gangs, clubs or philosophical sayings.

3. Research the detailed design options.

This refers to the specific form of font or letters you choose. You can make a great knuckle tattoo idea look amazing with the right font or choice of letters. Definitely go for different fonts as your options are not limited to standard letters. An easy and convenient way to search for fonts is to browse tattoo galleries online to make sure you find the right lettering design to suit your knuckle tattoos.

Business

Bluesky Assignment – Goodwill in a car dealership sale

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The IRS defines goodwill as “the value of a trade or business based on the customer’s expected continued patronage due to name, reputation, or any other factor.” IRS Publication 535: Business Expenses, Chapter 9, Cat. No. 15065Z.

The American Society of Appraisers defines goodwill as: “that intangible asset that arises as a result of name, reputation, customer loyalty, location, products, and similar factors that are not separately identified.” And as “that intangible asset that arises as a result of elements such as name, reputation, customer loyalty, location, products and related factors not identified and quantified separately.”

However, goodwill can be divided into personal and business (business) goodwill. Unlike corporate goodwill, personal goodwill is the intrinsic value of the services of a specific and identifiable person to a business.

The distinction between personal and business goodwill is important insofar as: (a) tax savings on the sale of businesses; and (b) divide the assets in a marriage.

In divorces, the business goodwill is considered marital property and can be divided, while the personal goodwill is the sole property of the individual. See: May v. May, 589 SE2d 536 (W. Va. 2003) and Ledwith v. Ledwith, 2004 Va. App. LEXIS 488 (October 12, 2004).

When a C corporation is sold, the company’s goodwill is taxed at the corporate rate (which could go up to 35%), and then again as a dividend (another 5-15%) when distributed. Not including state taxes that may be owed, a profit of $ 3,000,000 could result in only $ 1,500,000 after taxes for one shareholder.

With a few exceptions, sales involving S corporations, partnerships, sole proprietorships, or other pass-through entities, Blue Sky is taxed only once as a capital asset. Note: C Corp. taxed with an S Corp can also be incurred, if the S Corp. is not at least ten years old and does not have, for example, adequate built-in earnings. (Visit your accountant for details.)

In this article we are interested in auto dealership sales and are considering allocating a portion of the proceeds from the sale to personal goodwill because, as CPA Carl Woodward notes in the Spring 2006 issue of “Headlights “From the AutoCPA Group:” For some dealers, much of the total value of the blue sky is due to this personal goodwill. “

The concept of separating goodwill with personal and business distinctions first appeared in the 1986 Nebraska case of Taylor v. Taylor 386 NW2d 851 and later spread to other states. See: Beasley v. Beasley, 518 A.2d 545 (Pa. Super. Ct. 1986); Hanson v. Hanson, 738 SW2d 429, 434 (Mo. 1987); Prahinski v. Prahinski, 75 Md App 113, 540 A2d 833 (1988); In Re Marriage of Talty 166 Ill 2d 232, 652 NE2d 330 (1995) and Martin Ice Cream Co v. Commissioner (110 TC 189 1998).

In 1998, Norwalk v. Commissioner TC’s memorandum 1998-279 held that personal goodwill comes from an intangible asset that is owned by the individual, not the corporation, and that personal goodwill could be paid to owners because individuals’ employment contracts they expired when the corporation was sold.

(Some courts suggest that a seller enter into a non-compete agreement to protect the value of personal goodwill; however, if the personal goodwill portion of a purchase price were paid by a non-compete agreement, it would generate revenue in place of capital gains.

Also, while Norwalk maintained personal goodwill it is not transferable without a non-compete covenant, in most states and the Reexamination of Contracts, non-compete agreements are controlled by, among other things, “reasonableness” standards. . And, in some states, the applicability is questionable.

Personal goodwill allocations have ranged from 10% to 90% of the total purchase price. In the Tresco Dealerships, Inc. sale, approximately 40% of the capital gain was allocated to the dealer principal as “personal capital gain,” resulting in a tax savings of approximately 27 cents on the dollar.

In the event that a medical practice had a total appraised value of approximately $ 600,000, with tangible assets of $ 165,000. The appraiser then allocated $ 165,000 to the equipment and supplies, $ 35,000 to the corporate goodwill, and $ 400,000 to the physician’s personal goodwill.

When structuring the asset sales of “C” companies, buyers often agree to such allocations because they do not have adverse tax consequences.

The IRS evaluates personal goodwill in the context of the facts related to each sale and the contracts, articles, minutes, and so forth of the selling corporation. Did the shareholder, for example, have a non-compete agreement with the corporation? Was there an employment contract that gave the corporation the benefit of the shareholder’s personal goodwill? Did the buyer think they were buying personal goodwill? Did the seller think he was selling it? (See: Resolution of private letter 9621002).

This article is limited to discussing “personal goodwill” and is not intended to cover all of the tax saving methods available at a dealership sale. Talk to your accountant and tax attorney about other options, like installment sales and more.