Technical topics regarding tax preparation.
Are any of your clients billionaires?
Post a reply

9-Nov-2019 8:44pm

I was surprised to see the number of US billionaires in 2018 at under 800 and not closer to 10,000 Context was who would be affected by a wealth tax on billionaires. Probaly have to expand the reach of a wealth tax to the "over 200 million" wealth range.

https://www.ubs.com/global/en/wealth-ma ... llionaires

10-Nov-2019 9:23am

I've decided that all my clients, added together, don't make it to billionaire status. Nowhere near it. That would be a thousand millionaires, right?

10-Nov-2019 10:05am

As i think about it, I can imagine that the 700 estimate could be way understated because we don't have capital taxes here for individuals like some other countries. And a lot of assets are held in LLC's and S corps etc.

10-Nov-2019 10:55am

And a lot of assets are held in LLC's and S corps etc. Right, maybe even most, plus trusts. So what? A human individual owns them.

Definitions can make a big difference. Couple of decades ago, at an AICPA meeting on taxes, I heard a speech by a big-time politician regarding millionaires. Turned out that what he meant by the word was individuals having annual income of that amount or more, as opposed to having a net worth of that amount or more.

10-Nov-2019 12:51pm

(To see if we are billionaires) Are we supposed to record against our net worth a liability for the anticipated amount of the federal and state income taxes on the deferred gain in our share of the [deferred tax] assets held by our retirement plans?

10-Nov-2019 1:42pm

(To see if we are billionaires). Good thing you prefaced the question that way. Check the instructions, if any. Or see what Forbes does.

10-Nov-2019 1:49pm

Here are the names of the top 400, in case you aren't sure about one of your own clients. There are of course additional billionaires not on the top 400 list, and the rankings can change on a daily or weekly basis.

The Forbes 400: The Definitive Ranking Of The Wealthiest Americans

Here is the methodology. Obviously it's based on some guesswork by the reporters. And valuing all shares of publicly traded stock at FMV is obviously ridiculous -- it's not like Bezos or Gates could turn around tomorrow and sell all their shares and get cash equal to the FMV, as such a large sale would drive the price down dramatically. It would be like saying that if my hourly billing rate for tax prep is $200, my annual earnings potential is therefore $400,000, which is absurd.

https://www.forbes.com/sites/jenniferwa ... he-numbers

10-Nov-2019 1:55pm

There are of course additional billionaires not on the top 400 list....

Doing a little bit of snooping yields this: "At these heights [Forbes 400], a record 221 American billionaires ... fail to make the cut."

10-Nov-2019 4:09pm

Makbo, that's why you sb responding to one of those dozen letters I get a year work less net more cpa practice companies :)

I do know a now large regional firm that signed up for one of the early programs "How to build a million-dollar practice" and it actually worked for them. But it didn't have the cultish/MLM tones that some of the practice building programs have.

11-Nov-2019 4:53pm

The Walton Family basically has created their own CPA/Tax law firm. I’m guessing many of the billionaires do that.

11-Nov-2019 8:56pm

RB, the two billionaires I"m aware of, both use sole practitioner cpas' for their personal and trust returns.

But on a related topic, was it about 20 years ago that AMEX started buying up cpa firms? Whatever happened to that? A month ago a client with real estate loans at Union Bank say Union bank offers total tax and accounting and legal services to their clients.

12-Nov-2019 10:09am

lenraphael wrote:But on a related topic, was it about 20 years ago that AMEX started buying up cpa firms?

I have some vague recollection that the business might have been sold to H&R Block at some point, long ago?

12-Nov-2019 1:51pm

All of my billionaire clients support the 6% Annual Wealth Tax ! -LOL

13-Nov-2019 3:37pm

It pays ... to read the Forbes Billionaire list. Even if a few of my clients are on there, I may not know it from their tax returns. The wealthiest people can show little to no income. In fact, one of my not-yet-billionaire clients had so little income that they qualified for medicaid which is based on income, not assets.

13-Nov-2019 4:24pm

Andrew wrote: In fact, one of my not-yet-billionaire clients had so little income that they qualified for medicaid which is based on income, not assets.

Just for the record, there are multiple types of Medicaid with different eligibility rules. New under the Affordable Care Act, there are some MAGI-based tests for Medicaid health coverage, which is what I think you are referring to with your client. But "your assets come into play when it comes to Long-Term Services and Supports (LTSS), the part of Medicaid that pays for long-term care in a nursing home." https://www.verywellhealth.com/your-ass ... ty-4144975

13-Nov-2019 4:43pm

philly sez "All of my billionaire clients support the 6% Annual Wealth Tax!"
Wow! So do mine!!

13-Nov-2019 5:08pm

ALL my billionaire clients are cheapskates.
I mean, if you added up all the revenue I get from billionaire clients, it wouldn't even add up to $100.

That said, my complaint response from billionaire clients is 0%.

13-Nov-2019 7:40pm

Captcook, the billionaires are cheating you. Only $100 in income? I heard through the grapevine that some billionaires don't even want to show their tax returns. Maybe billionaires don't use tax accountants because they figured out a way to have no income? Just take out loans against assets and you'll have zero income. No returns required to be filed. Even easier with interest rates so low, that a billion in a savings account just generates an amount below the filing threshold. Do you think that's a coincidence?

13-Nov-2019 8:46pm

Andrew: I am 99% sure that in Ohio there is both an income AND an asset test to qualify for Medicaid health coverage and other "welfare" benefits. I believe your residence, a motor vehicle with a values that does not exceed a certain amount, and work tools are exempt. But then there are many programs and the eligibility criteria may differ.

13-Nov-2019 8:55pm

In my career the biggest abuse I ever saw was a trust fund "baby" that had a "small business" (really a hobby) that supposedly earned just enough to qualify for soc sec and medicare benefits. So that person gets a nice benefit and Medicare coverage for very little FICA tax payments paid in over the years. There is little way the IRS computers can find this kind of abuse.
Post a reply