Business Record - Iowa Biz

There is no tax fairy

Image by Getty Images via @daylife

It's okay to dislike taxes.  In fact, it's normal and healthy. But that doesn't make them go away. It would sure be nice if a Tax Fairy could wave her wand and make them disappear. 

It's not going to happen.

People will have been seeking the Tax Fairy as long as there has been an income tax.  That's fine, until you think you have found her. 

- The founder of Buy.com sought the Tax Fairy in "OPIS," a tax shelter marketed by a national accounting firm designed to generate artificial losses.  The Tax Court ruled that there was no Tax Fairy, imposing $25.7 million in taxes and $10.7 million in penalties. 

- A defense industry consultant looked for the Tax Fairy in the "Millennium Plan," attempting to deduct contributions to a Section 419A(f)(6) welfare-benefit plan while earning tax-sheltered income and retaining access to the funds contributed.  The Tax Fairy never showed, and the Tax Court upheld $5.7 million in additional taxes and $870,000 in penalties.

- A group of medical professionals in North Platte, Nebraska, sought the Tax Fairy through a CPA from Bakersfield, California.  They attempted to hide their income and deduct personal expenses in "loan-out" corporations.  They were sentenced last week on federal tax charges, and the Tax Fairy never showed.

Tax professionals can do a lot.  They can make sure you pay no more than you need to; with the right facts they can delay your tax and sometimes get you nice refunds. They can guide you safely through the dangerous and byzantine byways of the tax law. 

But if you make a lot of money and you want to continue to control and use it, you will eventually have to pay taxes.  There is no special "de-tax" plan or double-secret pay-no-taxes-ever trust scheme that your preparer is just too lazy or ignorant to tell you about.

There is no Tax Fairy. 

- Joe Kristan

Image courtesy Wikipedia Commons.

Do you know how to innovate?

As our world moves quickly away from the Industrial Age into this Technology/Idea Age -- we're being called upon to build something very different than our parents or grandparents did.

Our generation is being asked to create ideas, technologies, new solutions to age old problems -- all of which require us to be innovative.

What does that actually mean?  It means coming up with something new, being creative, coming at problems in a fresh way.  In business it means finding better ways to be valuable to your customers' lives.

A lot of people believe that they're not creative or they can't do that sort of work.  I think that's rubbish.  Everyone has it in them to find new answers.  Or even to ask new questions that lead to new answers.

How do you do it?  I might suggest you read a book I just finished called Innovate Like Edison by Sarah Miller Caldicott. (click here to check out the book*)

In this book, Caldicott identified the five competencies of innovation and then tells stories of how Thomas Edison (said to be the world's greatest innovator) and many modern day thinkers/business leaders exemplified these skills.

They are:

1. Solution-Centered Mindset: Keeping an unwavering focus on finding solutions. 
2. Kaleidoscopic Thinking: Juggling multiple projects, generate many ideas and then make creative connections or discern patterns 
3. Full-Spectrum Engagement: Managing and balancing a massive workload with social life, family and other obligations.
4. Master Mind Collaboration: Multiplying individual brain power by bringing the right people together.
5. Super-Value Creation: Targeting all creations to an existing market and provide value to potential customers.

Before you poo poo this as something you don't have to worry about -- consider this recent quote from Seth Godin.

“For 80 years, you got a job, you did what you were told and you retired. People are raised on this idea that if they pay their taxes and do what they’re told, there’s some kind of safety net, or pension plan that’s waiting for them. But the days when people were able to get above average pay for average work are over.

If you’re the average person out there doing average work, there’s going to be someone else out there doing the exact same thing as you, but cheaper. Now that the industrial economy is over, you should forget about doing things just because it’s assigned to you, or “never mind the race to the top, you’ll be racing to the bottom.”

Whether you own the business, push a broom at the business or both -- the world has changed and is demanding that we keep pushing to the top or get out of their way -- because they're going to get there with or without us.

So... looks like it's our time to decide.  Innovate or Irrelevant.

- Drew McLellan

*Affiliate link

Building going geothermal

More and more new commercial buildings are going geothermal as a viable means to reduce energy costs.  The 40,000 square foot Central Iowa Shelter & Services building, currently under construction south of downtown Des Moines, features a geothermal system.  The mechanical engineer for the project, Alan Langley of Alvine Engineering, says “the trend in Iowa is more buildings are using geothermal systems, in fact about 80% of the schools we design use geothermal systems. Offices and healthcare are good candidates also.”

Alan also adds “the trend started in Iowa when the utility companies started to provide hefty rebates for energy conserving systems like geothermal”.  Basically, the utilities pay companies to lower their energy usage rather than bring on a new power plant costing millions of dollars.

A commercial system costs $16-$20 per square foot so the cost for a geothermal system for a 10,000 square foot building would be $160,000 to $200,000. The payback is typically 5 to 7 years and from day-one heating and cooling costs should be reduced by 35%-45%.

A geothermal system takes advantage of the earth’s constant temperature.  The diagram shows the earth’s temperature near the surface in Iowa to be about 52 degrees.  Therefore, the temperature of water when circulated through a closed system of vertical or horizontal loops nears a constant 52 degrees.  The loop is tapped into by mechanical equipment which either transfers heat to the loop during the summer or takes heat from the loop during the winter.

An amazing result of the loop is the potential transfer of energy within a building during the winter.  The interior zones of a large office building many times require year-round cooling while the perimeter usually requires heating.  Mechanical equipment removes heat from the interior zone and transfers the heat to the loop.  Mechanical equipment at the exterior zone reverses the process and removes the heat from the loop providing heat where it is needed. Now that is being Green!!!