Monthly Archives: August 2015

LGBT: The next battle…

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Though pockets of resistance remain, the battle for gay marriage was won. But, the war isn’t over, especially for individuals who identify as Transgender. Their struggle is just beginning to coalesce into a meaningful discussion, thanks in part to Caitlyn Jenner’s coming out. Though Jenner is the current ‘poster child’ for transgenderism, she is by no means the first. Sex reassignment surgery for those who desired a full transition dates back to the 1920s by doctors in Germany. Christine Jorgensen, a self-proclaimed transgender woman, was first known to Americans with the headline: “Ex-GI Becomes Blonde Bombshell” in the early 1950s. Chaz Bono came out in 2009. At the very least, Jenner’s step onto the stage identifies the shadow group of people who live and suffer in the day-to-day world. The ultimate benefit of this comes with the crystallization of the understanding for just how complex humans are. Any attempt to gauge the diversity between simple male and female classification is like trying to comprehend the infinite dimensions beyond the 3-D world we live in.

However, transgenderism isn’t all about gender-confirming surgery; it’s about identification, and more specifically about self-identification. It begins with the recognition that who you are on the inside doesn’t necessarily have anything to do with what you look like on the outside. In a world were almost everyone tries to label or categorize into a known – and comfortable – set of classifications, being transgender invites a multitude of problems, not the least of which is outright danger.

Of course I knew the story of Christine Jorgensen, and I saw the reports on Chaz Bono, but my knowledge of this sketchy existence was limited until about two years ago. I first met a woman as a member of my class in a Master’s Degree program for writing. We struck a friendship from our first day, and gradually a sense of trust in each other. A year later, in a conversation with her and a small group of my other classmates, she made it known that the memoir she was writing as her Master’s thesis was based on her life as a transgender woman. The courage of the revelation was astounding. I now have the privilege of doing some editing work on that very same book, and her words are electrifying.

Transgenderism is fast becoming mainstream news. There are even reality shows and television dramas featuring people who identify as such, though one complaint is that the scripted series tend to have cisgender actors in the roles rather than actual transgenders. Transparent, starring Jeffrey Tambor as a trans-dad, looks at humanity despite issues of gender and has won dozens of awards. I Am Jazz, another TV series explores the difficulties of being a transgender in school. The soap opera The Bold and the Beautiful has a plot line that featured the marriage of a transgender woman. In September, the movie About Ray will premiere starring Elle Fanning as a girl trying to make the transition as a boy and the family issues that it provokes.

Despite this new-found awareness, problems facing transgenders are overwhelming. Even basic healthcare becomes a headache.

I had a lengthy conversation with Amelia Gapin, a transgender woman and the co-founder of My Trans Health. Their mission is to connect transgender people to physicians who will provide knowledgeable and quality healthcare. Amelia stresses about “just finding a doctor, of having to go through having to have that conversation with them, and then not knowing how they’re going to react.” She had one doctor go so far as to ask if she needed a pap smear during a physical. Her friends and fellow transgender women have had doctors wonder how it was possible they had breasts. It’s clear that the medical community, despite years of study and training, isn’t automatically adept at dealing with them. One patient saw the contents of her medical file in which the doctor wrote that he was masculine looking and dressed like a woman. The doctor was “ignorant of the fact that she was a transgender woman” and used male pronouns. Other complications might arise, especially in the case of a transgender man who probably still has a cervix, a uterus, and ovaries. Doctors need to be aware that they’re treating a man with the possibility for the development of certain cancers.

So far, the hardest challenge facing My Trans Health has been reaching out to the medical community and finding those willing take the time to educate themselves to the complications or those who have had some experience already. Initially they are focusing on New York, Miami, and San Francisco. Amelia’s guess is that there are perhaps 750,000 transgender people in the United States alone, but that number could be on the very low side. Ultimately, My Trans Health would love to be proactive in the development of special medical education that will cover transgender issues.

Medical insurance can be a nightmare. Most policies do not have transgender-inclusive riders and therefore generally fail to cover the costs of gender-affirming surgery which can run anywhere from $20,000 to over $100,000 and be performed by only a small handful of surgeons. The best that most transgenders can generally hope for is the coverage of hormone therapy.

The most horrifying aspect of the transgender world is the violence they face. There has been no lack of recent news on how many murders have been committed. The recent reporting of a Marine in the Philippines, a man who should have been serving with honor, strangled a transgender woman to death when he found out. In this country alone, there have been 19 murders so far this year as of four days ago. Most have been transgender women of color. These reports are only the ones we hear about; I can’t begin to imagine how many of the total number of murders in this country might have had some aspect of transgenderism associated with it. So many find they must relocate often and disassociate with their loved ones in order to live in relative safety. The opportunity to find happiness and live a normal life is elusive and mostly unattainable.

Governor Christie, of New Jersey, recently underscored issues of documentation by vetoing a statute that would have allowed transgenders to change the sex on their driving licenses. His excuse was that “Birth certificates unlock access to many of our nation and state’s critical and protected benefits such as passports, driver’s licenses, and social services, as well as other important security-dependent allowances.” It seems to me that if a married woman can effectively change her name to reflect her husband’s (that’s another subject entirely) and have new documents issued, it shouldn’t be that difficult to figure a way to make it easier for transgenders to do the same.

These few issues are just the opening salvo of the new battle for LGBT rights and acceptance. There are many more, from legal protection and discrimination to the minutiae of how school districts administer who is entitled to use the bathrooms and locker rooms.

It took forty-six years from the time Leo Laurence called for the Homosexual Revolution in San Francisco to achieve legislated same-sex marriage. One can only hope that the wisdom gained from the emergence of these rights will carry over to the battle for transgender support, recognition, and acceptance.

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IRS and the 1%: A report from the front lines…

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From: Onepercenttakers.com

Been there, done that – have the scars. Being a controller and sometimes a chief financial officer for over three decades, I’ve had plenty of exposure to both the IRS (personally and professionally) and several members of the 1%.

In fact, I suffer under the scrutiny of the IRS BECAUSE of one such member of the 1%.

Not that long ago, after the collapse of the company I was working for (think sub-prime mortgage crisis) I managed to side step into another position. I was grateful for only having been out of work for about a month. Sadly, sometimes a cure can nearly kill you. I went to work for a man who was just finalizing an overseas contract that put well over 8 figures into his foreign bank accounts. He hired me for his New York office as his Chief Financial Officer. This turned out to be the consolidation of five other people (the current CFO, Controller, Bookkeeper, HR Director, and IT Director) at a rate that was tens of thousands of dollars less than I was making in the company that was forced out of business. The contracts that my new companies had in the United States were either failing, stalled, or taken away thanks to the ensuing recession.

I’m a normal human being – I had credit card debt, child and maternal support payments, rent, insurance, a car loan, etc. My new salary was short of what I needed, so I was honest with him, told him my break-even salary, and reminded him that he was now saving over $400,000 a year in other salaries by replacing them all with me. All I wanted was to skirt by until the market improved and then we could re-evaluate the situation. We agreed – it was October. Comes the first of January – he slashes my salary by nearly 50% of what I had been earning just five months earlier. The cut was so deep that even if I stopped paying child support, I still wouldn’t have had enough to pay rent, my car loan, or buy food. On top of this, despite the fact that he had over $30M in his banks, he decided he didn’t feel like continuing his stateside business and let about 40 people go. My debt began to soar.

Now any good business man – you’ll find your pick of the litter amongst the 1% – would have congratulated him for making the right “business decision.” Okay, let’s go with that for the moment.

Prior to this, he had pulled $8M into the country as a loan from his foreign entity. His tax accountants advised him that the IRS would look upon this as a repatriation of foreign earned income and he’d have to pay tax on that. Well, let’s face it, no 1%er every feels it’s incumbent upon them to pay income tax. Thanks to the fact that we used Quickbooks software (an extremely forgiving accounting software with no audit trail) he changed it from being a loan from his foreign entity, had the contracts rewritten overseas, and now re-titled them as “Marketing Fee’s Payable” suggesting that the money was to be returned to the people who had hired him, if at some point the money wasn’t earned. Suddenly, no taxable event; he uses half the money to pay company bills and promptly pockets $4M. He later converts the ownership of the company to a single member LLC, which means that that company no longer files a tax return. For the IRS: out of sight, out of mind. Flash forward, the contracts were fulfilled, the money never went back to client, and no tax was every paid on the money he pocketed.

I wish I could say that was the end of his villainy, but it was just the beginning. At that point he was semi-retired with no business and only three employees (me, a sales agent, and a personal assistant). Oh, and $30,000,000 in a foreign bank. He’s still stuck with the problem of bringing that money here; when he does, it becomes taxable. What to do, what to do? The man likes art, so he goes on a buying binge over the next two years and purchases about $20,000,000 worth in paintings, jewelry, and sculptures. The solution? Have a transport agent package his purchases into containers and ship them back to the United States to his various homes and apartments and the rest into warehouses in the New York metropolitan area. There was no trace of money being transferred from an overseas account to a domestic one and it seems customs doesn’t bother to inform the IRS that art is being imported into the country. No income tax paid.

Now we’re up to about $28,000,000 in taxable income for which not one penny in tax has been paid. Just imagine a member of the 99% messing up their tax return and maybe putting the wrong amount from their W-2 or 1099 on a 1040; the IRS would be all over it within weeks. Why? Because we’re the sheep who faithfully TELL the IRS what we owe them; all they have to do is stick out their hand to collect.

I did try, by the way, to have an attorney prepare a case for the IRS with the facts and backup paperwork to what I’ve mentioned here, but they felt the IRS would shy away from the work it would take to bring this guy to justice. Let’s face it; it’s easier to go after the little people, like us. Actually, the IRS makes it easier for these types to pocket billions with no tax. How you might ask? There is a tax loophole brought to you by the Reagan Administration called ‘non-recourse debt’. Non-recourse debt is a debt that you don’t personally have to pay if there is a default on the loan. Here’s an example of how this works.

First, you have to understand a company owner’s basis in that company. A person starts a company and puts $1,000 in for the expenses of setting up the company. As it starts to make money, that person can withdraw that $1,000 without paying any tax on it – obviously. It’s just like the company paid back a loan. But, if the person takes out $2,000, the second one thousand is taxable because it was more than his basis. Now, let’s up the scale, and this especially goes for real estate developers – people like Donald Trump and the late Leona Helmsley.

Here’s some numbers: The business owner has put $1M into the company as capital. He bought a building for $800,000 with a mortgage of $600,000 that he personally guarantees. Over the next couple of years, the building doubles in value (very common in NYC), it’s now worth $1,600,000. He refinances the building for $1,120,000 (70% of the building’s value) with a mortgage that only the company guarantees because it has a good record of accomplishment – the new loan is now non-recourse debt. The owner is no longer personally libel to the bank if the company defaults on the payments. He pays off the original mortgage of $600,000, which leaves him with $520,000, which he distributes to himself as return of capital – he’s left with $480,000 in basis in his original capital account – no tax due. That’s cool. Another three years go by. The building is now worth $3,000,000. The owner refinances it again with a mortgage of $2,100,000. He pays off the current mortgage of $1,120,000, which leaves him with $980,000 in the bank. He pays himself back the remaining $480,000 in his capital account plus an extra $500,000. Now normally that extra $500K would be taxable, but under the current IRS regulations, since the mortgage is ‘non-recourse’, the IRS considers this as additional basis for the owner in the company, and he takes that $500K without incurring a dime in tax – it is deferred tax. He can buy a fancy car or apartment; he can take a two-month vacation in Europe in the finest hotels, all without losing any sleep over how he’s going to pay Uncle Sam.

Nice, huh? The catch, you might say is that when he ultimately sells the building and pays off that ‘non-recourse’ loan, the deferred tax – because he now has negative basis in the company – would become taxable then. It would, but building owners get fancier, they do 1031 Exchanges for bigger buildings, and wind up deferring the tax forever. Meanwhile the middle and lower classes are footing the majority of the tax burden for the Country.

From Liberty Unyielding

From: Liberty Unyielding

The IRS still has it out for many of us. I make just enough money that the government takes an extra little slice by way of something called the Alternative Minimum Tax – it’s an add-on tax  because it limits the benefits of certain deductions (this was enacted in 1982 and, thankfully, President Obama attempted to lessen the burden some in 2012). I can’t deduct educational costs or the interest on student debt, because I make too much money the government says. For me, the pièce de résistance, are the rules surrounding child support. I am divorced, and I had no issue paying support for my children. The inequity of the situation is that I had to earn far more than I had to pay, because child support is paid with after-tax dollars, so for every dollar I paid out, I had to earn about $1.43. That doesn’t sound like much, but over a decade and $220,000 in support payments meant, I had to earn in excess of $300,000. I’m still okay with that. Here is what I’m NOT okay with: the IRS does NOT allow the payer to deduct a dime. The custodial parent does NOT have to declare a dime. That money goes into the receiver’s bank account tax-free. The payer bears the full burden of the support PLUS the tax on it.

We all know the rich are getting richer and the middle class and poor are getting poorer. There is no question that the Internal Revenue Tax code and the opportunities, which aid the wealthy, are egregious. They must be addressed, reorganized, and curbed. I would love responses to this post describing personal experiences with either the IRS and the 1%, or both.