Day 87 - Business Ethics

          A local recruiter called today about the same juice packing company I discussed with the Colorado recruiter on Friday. When I told her I had already been submitted to the company, she said that I had not. She knew this because she had checked, and my name was not on their list of candidates.

I thought this was more than a little curious. The Colorado guy had seemed quite purposeful and competent. I couldn’t imagine him not doing what he claimed to have done. The local recruiter seemed quite purposeful and competent as well. She also claimed to have a close relationship with the company and to have placed many candidates there in the past. I told her to submit me as well, but to alert the company that I might be submitted twice, and that, should that occur they should deal with the Colorado recruiter who had contacted me first.

I hope I have covered all the bases here. Stuff like this makes me nervous. It’s tough enough trying to attract a potential employer without being undermined by the idiots in the recruiting business. Getting submitted twice for the same job seems to say that I am doing a poor job of managing my own search. Any prospective employer would have to wonder how, failing at that seemingly simple task, I could ever hope to manage their accounting department.

*****



Deep6News announces JP Morgan's pending merger with Hell.

Interestingly, Henry also came to Albatross a couple of years after Ivan. Like Ivan there was something he wanted from us. Henry wanted to be an Albatross dealer again. Enough of the old regime had transitioned out of the company that Albatross was willing to entertain this idea. I’m sure that Henry thought that my presence there would make the pitch easier for him. I guess that it did because I didn’t have a problem getting on his side in this overture. I thought it would be a good idea. I thought Henry could move some of our boats. He certainly had a lot of credibility amongst our customer base because of his past success as an Albatross dealer.

You have to appreciate that Albatross prides itself on being a moral company. It was founded more than 80 years ago now by a family patriarch and passed down through three generations before being sold off to outside investors. After two such sales, Albatross still retained much of the flavor and character of the original family company. It is the only place I have ever worked that had a chaplain on the payroll and scheduled weekly prayer services for the workforce. This had been the environment in which Henry first became a dealer.

In the beginning he had been wildly successful, and because of this the Albatross management was able to turn a blind eye to some of his less righteous predilections. When he made the newspapers for income tax evasion amid allegations of laundering drug money however, Albatross was suddenly embarrassed by their association and promptly jerked Henry’s ticket. They had refused after that to have anything to do with him, and had even questioned my moral fitness to work there because of my past association with him. Now Henry wanted to be admitted back into the fold, and everyone seemed to think that would be a good idea, especially if Henry could manage to jump start our stalled sales.

Some wag once told me that everyone in the boat business is a whore. They meant by that that there is no genuine loyalty in the business, and they meant to extend that general ethical lack all across the board: from manufacturers to dealers and from sales staff to customer base.

That assessment has certainly been born out by my experience. Customers regularly work two or three deals at the same time with different sales people at different dealers in the hopes of getting a better deal. Sales people regularly change employers, and will happily transfer the lies they used to tell about the boats they now sell to the boats they used to sell and vice versa. Dealers will do the same on a grander scale.

Everyone it seems is on the make—all the time. In this environment you have to be careful what you say because the likelihood is that before long you will want to get into bed with the person or persons or organization that you said it about. Henry’s new association with Albatross was a case in point.

We signed him up, and Albatross looked to me to manage our relationship with him. Once again it seemed I was back in the business of trying to keep Henry honest. Oh well.

Day 72 - Idea of a Lifetime...or Not

          There was nothing worth getting excited about on the job boards today—a recurring theme. I didn’t even try applying. I’m excited about the martini article. I posted a link to in on my FaceBook account and got 17 hits. Seems people are way more interested in drinking than they are in poetry, even silly poetry. Again, it’s a way different world than it used to be. People used to indulge in a little culture of an evening, and baser pursuits were pursued later and behind locked doors. Now it’s slam down a bunch of cocktails, mate, then play video games into the night. Oh well, maybe my martini recipes will add a little refinement back into the mix. Or maybe I should consider an article or a series of articles on how to date strippers. I wouldn’t know anything about it of course, but I’ll bet a hell of a lot of recruiters with ADHD would manage to focus long enough to read them. This is beginning to sound like a breakthrough idea as I write it down. I’m going to have to think on this some more.

*****

          I had a breakthrough idea once when I was still working in public accounting. I thought I was going to be rich. There was a moment of complete clarity when all the parts came together. I realized that I had the resources to  pull it off, that it would work, and that, most importantly, people were going to send me money.

          This happened in the mid eighties. The IRS had just issued a new regulation that required everyone who was taking a deduction for business use of an automobile to keep a contemporaneous log of that use. That meant that taxpayers were supposed to accumulate the business mileage and expenses on their automobiles as they were incurred, that is daily, rather than making some kind of estimate at the end of the year. Like most IRS regulations, this one was in response to perceived abuses.

In addition to the log, taxpayers were also required to attest, in writing, that they had complied with the regulation, and to provide this written and signed attestation to their professional tax preparers. That meant that every CPA and every H&R Block office and every other tax preparer was going to have to get a log book and a signed statement from every one of their clients who wanted to take a deduction for business use of an automobile. The clerical burden of just this one provision of the tax regulations was going to be astronomical. Whole forests were going to be laid waste to create the paper.  

          I knew several things for certain as soon as I read the new rule:

• Almost no one was going to comply with the letter of the rule—at least not at first
• Almost all of the written attestations were going to be bald-faced lies
• In order to get taxpayers to comply at all, the contemporaneous log was going to have to be extremely easy to use and keep track of
• Somewhere in the midst of this burdensome regulation was an opportunity to make some serious money

My idea then was this. Some smart cookie—me—should print easy to use log books that accumulated mileage and auto expenses by day, week, month and year. The log books should include the attestation statement with a signature line at the end of the book. A plain English explanation of the regulation should appear at the beginning of the book. And the idea that tied all these things together into a marketable flash of brilliance: the log books needed to be sold to individual CPA firms whose names and addresses would be emblazoned on the covers. The CPA firms would distribute the books to their clients as promotional gifts. Regulation met, signed, sealed and delivered, and the cost of compliance turned into a marketing tool for my fellow professionals.

Several interesting things happened on the way to realizing my dream. The execution of the idea actually went pretty smoothly. I designed my own log book. I did the layout in a spreadsheet. I wrote the appropriate verbiage. I bought a list of Florida CPA firms, having decided to start with Florida and expand from there. I found a printer willing and able to take on the job in small lots. I set up a company, rented a mailbox, mailed out a flyer, and waited for the money to come pouring in.

It didn’t pour right away. It trickled at first, but it did come in and it was encouraging as hell to a fledgling entrepreneur. Every day I went to the mail box and there were checks in it. It was exciting. Then two things showed up in the mail box that took some of the joy out of the enterprise. The first was from a lawyer representing someone in Michigan claiming that I had infringed on their copyright. This was not really a big deal because they were only claiming that I had used their name on my log book and that their rights predated mine. I had taken every step I knew to prevent this from happening, but I guess you can’t cover every base. I had paid to register my copyright, and sent a sample book along with the fee. I had done a name search to determine that no one else was using that particular name and nothing had come up. But there it was in the letter. I didn’t have the wherewithal to fight it, so I changed the name. The only real problem was that I had a lot of flyers out with the infringing name, but I decided not to worry about that. I’d just fly right from that point forward and hope for the best.

The other disturbing thing that showed up in my mail box was my flyer with someone else’s name on it. I mean they had taken my flyer, word-for-word, and by extension my idea, put their name and address on it and sent it to all the CPA firms in Florida. The word-for-word part is what upset me the most. I fully expected someone else to try to capitalize on my idea. I knew it was a great idea, and there was really nothing about it to keep people from copying it. What I hoped was that I would get out there first with a product so good that it would be difficult for anyone else to catch up. Well this guy, whoever he was, didn’t bring one new idea to the table. He didn’t even try to change up the advertising. Word-for-word! Talk about a lazy thief. I mean really. The only thing that kept me from going ballistic and hunting this guy down was that he had decided for some reason to charge twice as much as I was for the books. He wasn’t just lazy. He was stupid. So I quit worrying about him as well.

The orders started to pick up, the bank balance started to grow. I was feeling pretty smug about this time, and then the bottom fell out. I don’t know if you can anticipate this kind of thing or not. You’d have to be pretty pessimistic to count on something like this happening. There are all kinds of contingencies and all kinds of things that can go wrong, but for your whole business plan, the very premise of the model you design, tweak, stroke and stoke to evaporate overnight just doesn’t seem fair or plausible. Yet that’s exactly what happened. The IRS got so many complaints about how difficult their new regulation was that they decided to rescind it. That’s right. You heard me. The agency everyone loves to hate, the rat bastards who stay awake at night thinking up ways to make your life more miserable, decided to act nice and cancel a burdensome rule.

Maybe they had figured out as I had that the regulation was not going to raise the level of compliance with the code governing automobile deductions. It was only going to raise the level of detail contained in the documents supporting the deductions. The level of fraud was going to stay the same. The number of trees killed to substantiate that level of fraud was the only thing likely to change.

My budding business died in a matter of days. The orders stopped. The mail box was empty. The bank balance went to pay for some books we had printed on spec. I didn’t lose money thankfully, but I didn’t make any either, and I never got over the feeling that I had been cheated out of a really promising future.

Day 36 - Trading Catatonia with the IRS

          I had lots of discomfort and lots of blood in my urine today. Thank God for the spanking new bottle of hydrocodone. Kelly Ripa was looking spectacular this morning, but not so good that I didn’t get up and go take a nap in the middle of the show. It takes a little medication for me to get interested in Kelly, but just a little too much and I’m right off her again. There’s a delicate balance involved.

In my wooly youth there was an underground comic I used to enjoy about a bunch of inveterate stoners called “The Fabulous Furry Freak Brothers.” At some point they developed a kind of life maxim that was repeated frequently in the comic and eventually became a cult mantra for the times: “Dope gets you through times of no money better than money gets you through times of no dope.” Leaving aside the relative truth or fallacy of that particular statement, there is often a relationship between dissimilar objects like dope and money or hydrocodone and Kelly Ripa or drudgery and leisure that needs to be maintained within a narrow range of ratios in order to work at an acceptable level of satisfaction. Now that I’m out of work and having to take medication to moderate my various pains, I’m finding a lot of my ratios are getting out of whack. Hopefully something will happen soon to reestablish some semblance of order and balance.

*****

I owe the IRS a million three?? I guess it could be worse.

I lost ten times that much in my trading account in the last 20 minutes.

          My reveries today went back to Henry and all the abuse and injustice associated with working for him. In spite of his affronts to good manners and decency he was always interesting, especially when considered next to the anal bozos I have worked for since. Henry was a megalomaniacal sociopath, but he was always direct and unapologetic about it. For this reason he was almost entirely predictable. For instance when he stiffed my wife on the $30,000 real estate commission I knew he was going to do it and warned my wife to get a written contract before she set out to sell his house.

“He promised,” she said, and so he did. In the end though, when he betrayed her trust, broke his promise, and cheated her out of her livelihood, it was just ‘bidness.’ It was entirely within the norm of Henry behavior not only to stiff her on the commission, but to be surprised and a little hurt when she got angry about it.

          When Henry said he loved me the day I almost killed him, I have no doubt that he believed it. Henry had no idea what love is, but, to the extent that he was capable of experiencing emotions and affixing labels to them, however bizarre to the rest of us mortals, what he felt for me and my wife was genuine affection. Now that we are not associated with him on a daily basis, he will not ever think of us again unless there is some immediate benefit available to him in the reaching out. When such a situation presents itself to him however, we will be the first people he thinks of. That’s about as much as one can hope for from Henry.

           Henry used to delight in telling people I was the only person on the planet that he trusted enough to grant power of attorney over all his affairs. That he had not actually done so did not trouble him very much, or me either for that matter. He had given me power of attorney over his income tax issues, and probably that was close enough to ‘all his affairs’ for Henry as tax matters occupied a large percentage of his psychic energy. Henry was one of those people who would rather lose a thousand dollars of real money to real crooks than give up a hundred dollars to the IRS. Fortunately for him I was able to pull his fat out of the fire several times when it came to his taxes.

Henry never really appreciated what I actually did for him, but he did appreciate what he thought I did for him, which was keep him from having to pay any taxes. I didn’t really have much to do with that happy state of affairs. The real reason Henry didn’t have to pay any taxes was that he never made any money. He was an appallingly bad businessman—completely clueless in the intricacies of managing his assets to generate profits and positive cash flow. He was however a master of leverage, and what he managed to do was build a huge and precariously balanced house of cards on credit. He was always one deal away from disaster, and he took us all to live with him on the bloody edge of the precipice.

          What I actually did for Henry was not nearly so exciting, but was, at times at least, immensely satisfying. One such occasion had to do with an IRS audit. No one likes to get audited—especially Henry. He was so completely and naturally larcenous at heart that he couldn’t imagine getting through an audit unscathed. In addition to that, he did not trust the IRS or any of the agents in its employ to deal fairly with him—not since he had admitted to a female agent (long before I met him) that he was knocking down cash, and she had the brass to bring him up on charges.

          The real irony in that particular incident was that Henry had admitted to the impropriety, not out of contrition or even because he thought that he was about to be found out, but rather because he believed that the female agent would be so impressed with his resourcefulness and temerity that she would consent to sleep with him. He did it to get laid, but instead he got screwed. That at least was Henry’s take on it. I would love to talk to the agent and hear what she has to say about it. I imagine that it is, for her, a tale that grows larger and sweeter with each telling.

          So when Henry got the notice that he was going to be audited again he rushed down to my office, threw the envelope on my desk, and told me to handle it. Henry did not want to confront or be confronted by anyone from IRS. He just wanted me to make the whole thing go away.

          The auditor turned out to be another woman. I’d dealt with a number of auditors in various capacities at that point in my career. I thought that I was batting a thousand with them. That is most of the audits I’d been involved in had resulted in a ‘no change’ finding, meaning no additional tax due, and those that had not, amounted to not more that a few dollars each—essentially the same result. My opinion of the process and of the agents involved was this: an audit is meant to be fair, and the auditors who conduct them are just regular people trying to do a difficult and tedious job in which they are usually regarded with fear and loathing. Always I had treated the agents and auditors with whom I dealt with consideration and respect. They had done the same with me.

          This new auditor however seemed to be cut from different cloth. She was as unattractive and disagreeable a person as I had ever had to deal with. She was not just unfriendly. She was imperious. She was beyond the reach of such charm as I had managed to develop to that point in my life. She would not be led. She would not be cajoled. She would not be persuaded by reason, logic, or even by beautiful reports. She was a plodder, so I let her plod.

          It took forever. She examined every aspect of our business for the previous three years. She looked at payroll records, bank records, financial statements, invoices, receipts, notices and minutes of the board of directors. If it was on a piece of paper she looked at it. She said not one word about any of it—not to me at any rate. I assumed that she had found nothing to discuss. I knew that our returns were true and complete and supported by the underlying books and records. I knew we were clean as a whistle because it was my job to make sure that we were. That was the only way I was going to keep Henry out of jail, and keeping him out of jail, if you will remember, had been his sole mandate to me.

          Still the agent plodded on, and I began to suspect that she was hiding out with us. She either didn’t want to go back to the office or she didn’t want to start the audit they had scheduled next for her, so she was going to drag our audit out until they reassigned her next job. I couldn’t imagine why else she was taking so long to conduct what should have been a routine examination.

          It took six weeks to get my answer. After an absence of several days the auditor called to tell me she had finished a draft of the final audit report, and wanted to review it with me. We made an appointment for the following day. She showed up in her usual grumpy mood and started off our meeting by telling me that her final additional assessment of tax was going to be $1.3 million. I pretended not to be alarmed, which was actually pretty easy because all of my synapses and all of my vital organs had shut down the second she mentioned $1.3 million. It is an easy matter not to register surprise when you are catatonic.

          She gave me a copy of her report. My immediate plan was to hide in a closet until after closing time, and then to get into my car and drive to Argentina. I didn’t know if the U.S. had an extradition treaty with Argentina or not. It was not a fully developed plan. I looked at the paper she had handed me. It was an IRS form, a fill in the blanks form with spaces for the essential findings, the applicable code sections, the amount of the related assessment, and so forth. I needed to get Henry to sign it to finalize the outcome. The entries on the form were made by hand in a tightly crabbed block print so tiny I needed a magnifying glass to read most of it. I looked at the assessment. $1.3 million is a huge number—maybe not to the investment bankers and Wall Street traders who are largely responsible for our current financial crisis, but then, to Henry and me at any rate, it was an astronomical sum. Henry was going to have a stroke.

I looked at the reason for the assessment. The auditor had asserted that Henry had taken deductions for losses in excess of his basis. I stopped and read that part again. I knew that was wrong. I sat down and waited for my vital organs to reboot. It took several minutes.

          I had set Henry’s company up as what is known as an S Corporation. An S Corporation is a special kind of corporation that is taxed as if it were a partnership. That means that instead of the corporation paying any income tax, the corporation’s income and losses are passed through to the stockholders and reported on their individual tax returns. Henry’s corporation had only spun losses, so Henry, the sole stockholder, had deducted the company’s loss each year from his other income to arrive at the adjusted gross income on his Form 1040. When I say that Henry deducted the losses, I mean of course that I did it for him when I prepared his annual returns.

Now there is a limit to the amount of losses that a stockholder in an S Corporation may take, and that limit is the amount of money the stockholder has actually invested in the company. This is called his basis. The basis is adjusted upwards for any profits passed through to the stockholder and downwards for any distributions of cash or property taken out of the company by the stockholder. The loss deductions taken by the stockholder in total may not exceed the stockholder’s adjusted basis. This sounds complicated but it is actually very simple. It is also something that I took a great deal of care to calculate correctly each year. I knew that the auditor was wrong.

          I went down to the office she was using, and asked to see her calculation of the adjusted basis. As soon as she showed it to me I knew what she had done. She had started with the adjusted basis at the end of the period under audit—a number from which the distributions Henry had taken had already been deducted. Then she deducted the total of all the distributions that Henry had taken. She had in effect reduced his basis twice by his distributions. Her math was wrong. I tried to put on a considered and avuncular air. This is hard to do when your ego is turning cartwheels as if you had just checkmated Bobby Fischer or stripped a basketball from LeBron James. Still, as gently as possible under the circumstances, I pointed out the error in calculation to the auditor.

She didn’t register any surprise or alarm. I suspect that this was because all her vital organs had just shut down. I knew just how she felt. She’d walked in there with a $1.3 million assessment under her belt. She thought she was going to be a big hero back at the office. She thought that she was taking down a big player who’d already copped to a felony evasion charge. Her career was made one minute, and then, thanks to me, in the next minute—not so much.

She sat looking at the offending calculation for about 30 seconds, after which she uttered a single word: “Oh.” Then she packed all her work papers and schedules into her valise and left. I got a ‘no change’ notice the following week. Henry thought that was just as it should be, and he was right.