Finaloop

The upcoming elections may be the closest ever, with both candidates polling pretty much evenly, and all differences are within the margin of error. It looks like it will be down to the wire. Trump’s colorful past, which seems baked into the polls, includes his conviction on 34 counts of falsifying business records, which happens to be right up my alley (not the falsifying part...). The claim pretty much is that payments made to his attorney, Michael Cohen, were classified in the books as a legal retainer, masking the fact that they were in fact, a grossed up reimbursement for hush payments that Cohen made to adult-film star Stormy Daniels, on behalf of Trump, in order to prevent sordid details of Trump’s alleged affair with Daniels from becoming public. These payments, per the verdict, were in fact, in violation of campaign finance laws, and the misclassification covered up that point. Add statute of limitations questions to the mix, and we are left with a total mess (the sentencing was pushed off until after the elections). Without expressing an opinion on the verdict, one main takeaway here is that accurate bookkeeping isn’t just about avoiding penalties—it's sometimes also about protecting your reputation and staying out of the headlines. Keep your books in order, and go out and vote!

Shohei Ohtani might be baseball's brightest star. His 50 home run, 50 stolen bases season was as unprecedented as his ability to simultaneously be a top notch hitter and pitcher, drawing comparisons to Babe Ruth. His Dodgers just beat the Mets and my bet is that the Ohtani-led Dodgers will beat the Yankees in this year's October classic. A little less than a year ago, Ohtani signed a 10-year, $700M contract, reportedly structured by a tax firm, in which $68M of the revenue per year is deferred for ten years and only $2M is paid out on an annual basis, allowing him to defer significant taxes, and possibly change tax residency by the payout time (let's say, move from California to Florida, which can save him approximately $90M in taxes.) While the contract size was heralded as the largest signed in sport's history, and in retrospect, the investment seems sound, a couple of thoughts come to mind here. First, make sure that your tax planner understands finance and basic concepts like time=money. Without nerding out too much, the present value of $68M in ten years is not $68M today, and is probably lower than the $45M-$46M range floated by the MLB. Main takeaway here, make sure that your tax accountant really understands finance, and isn't just looking to reduce your current tax bill. At the end of the day, the net amount in your account is what really matters. Lots of tax accountants that have zero understanding in finance, and vice versa. Second, watch out for California. Their personal income tax rate (13.3% plus surtax) is the highest in the country. If you want to do business in California, you have to put up with an awful sales tax regime, crazy franchise tax payments and more. Third, Ohtani is a marvel. Even tax accountants and financiers agree on that. Period.

Growing up in Cleveland is not too bad. Nice people, midwest atmosphere, terrible weather (can’t have everything in life). The one downer of Cleveland is the sports teams, specifically the Browns. No matter how hard the Browns try, they always seem to get it wrong. Look at Baker Mayfield (or heck, Joe Flacco) today, vs. Deshaun Watson, who, per a trending X post, has more settled lawsuits (23) than touchdown passes (19) since joining the Browns (the guy is on a 5-year, $230M contract). One of my other favorite pastimes, in addition to being a Cleveland sports fan, is accounting and finance. Now, while accounting for your inventory, you may occasionally have what’s called inventory write-downs, or even dead inventory. Think of a D2C brand that gets stuck with last year’s swimsuits- they’ll be lucky if they can sell them at half price this year, and may actually need to just get rid of them. When writing off inventory, it is important to do this real-time, otherwise you could end up recording a huge expense year end.  Folks, we are just in week six of the season. Never too early to cut your losses and write off your inventory. Who knows, maybe another Joe Flacco is waiting around the corner.