Heiress Huguette Clark, who was born in 1906 and died last May at 104, was America's last living link to the 1890s "Gilded Age." Her father, William A. Clark, was Montana's "Copper King" and, according to her New York Times obituary, "once bought himself a United States Senate seat as casually as another man might buy a pair of shoes." Huguette grew up in a 121-room mansion, at the corner of New York's Fifth Avenue and 77th Street, that cost three times as much as Yankee Stadium. But her life soon took an odd turn. She married, for just a year at age 22, then got a quickie Reno divorce. (Her husand claimed they never even consummated the marriage.) Then she and her mother withdrew almost completely from view. The last known photograph of her was taken in 1930, and she rarely appeared in public after her mother's death in 1963.

Clark may have been shy, but she was no miser. She spent most of her life in a 42-room coop at Fifth Avenue and 72nd Street, said to be the largest parkview apartment in the city, and worth an estimated $100 million. (She left in an ambulance in 1988 and never came back.) She owned a 21,666-square-foot mansion called "Bellosguardo," or "lovely view," on 23 acres overlooking the Pacific in Santa Barbara, CA. (She stopped visiting sometime in the 1950s, and reportedly turned down a $100 million offer to sell it to Beanie Baby founder Ty Warner.) And in 1952, she bought a 22-room mansion on 52 acres in New Canaan, CT. (She added a new wing to the house and hired caretakers to live on the grounds — but never spent a single night there herself.)

Huguette had so little contact with the world that some people wondered if she was actually still alive. It turns out she spent her last 22 years in a series of ordinary rooms at New York hospitals. She had few visitors during this time, and little contact with anyone outside these facilities. But her few contacts included her attorney, Wally Bock, and her accountant, Irving Kamsler. And that's where Clark's Gilded Age story begins to tarnish.

Clark was worth half a billion dollars at her death. She left the bulk of her fortune to charity, with smaller bequests to her longtime nurse ($30 million), her goddaughter ($12 million), and her attorney and accountant ($500,000 each). You would think she'd be able to pay her taxes, right? But property records show the IRS filed four liens for unpaid taxes — $1 million in 2006, $1.1 million and $41,000 in 2007, and $7,400 in 2008. Even worse, according to a Probate Court filing, the pair had let unpaid federal gift taxes and penalties accrue — to the tune of $90 million!

It turns out both the attorney Bock and accountant Kamsler have a history of questionable conduct. When Bock's former law parter Donald Wallace died, after revising his will six times in the last few years of his life, Bock and Kamsler wound up inheriting $100,000 in cash each — plus Wallace's Mercedes and his Upper East Side apartment. They even collected $368,000 in fees on the $4 million estate! And, just by the way, Kamsler is also a convicted felon and registered sex offender, who pled guilty in 2007 to attempting to disseminate indecent material to minors in an online "chat room."

As Huguette Clark's bizarre story reminds us, money really can't buy happiness. Our job, of course, is to help you pay the minimum tax allowed by law. But before you ask us what we can do to help you pay less, ask yourself how those savings will improve your life. Are you working to put your children through college? Build security for your retirement? Or are you looking for life's little "extras," like traveling in style? Those are the real benefits we work to give you — not just numbers on your annual IRS "scorecard"!

Ed Lloyd & Associates, PLLC • Charlotte NC CPA Firm

Tax Planing, Preparation and Accounting Services 

call 704-544-7600
Please visit ELCPA.com today!

November 10, 2011 - Tax Strategies for Kim Kardashian

When most women slide on a pair of jeans, the last thing they want is to make their butt look big. But socialite Kim Kardashian has parlayed her generous posterior into what passes for celebrity these days. She's appeared on Dancing With the Stars, penned an autobiography, launched her own fragrances, and starred in not one, not two, but three reality shows.

Kim married the latest love of her life, New Jersey Nets power forward Kris Humphries, on August 20. Just 72 days later — on Halloween, no less — she announced she was filing for divorce. And hearts across America sank. Why, if these two krazy kids can't make it, what hope do the rest of us have, right? Not surprisingly, skeptics have alleged that the wedding was just a hoax. (It's not clear that the groom, who has said "I love my wife and am devastated to learn she filed for divorce," was actually in on the joke.) We'll resist the temptation to heap more scorn on the situation, so we can focus on what people really want to know — specifically, how will the whole train wreck affect Kim's taxes?

For starters, how will the heartbroken Kim file, single or married? Filing status is determined as of the last day of the tax year. So if Kim rings in the New Year subject to a legal separation, she'll file at the higher single rate, even for income earned during the marriage. (Makes you wonder if anyone at the IRS has any romance in their soul.)

And what about the wedding payday? (Mock the Kardashians all you want, they still managed to turn a $10 million wedding into a profit center.) The star-krossed kouple reportedly earned $15 million from E! for broadcasting the ceremony, $2.5 million from People Magazine for photos, $300,000 more from People for their engagement announcement, and even $50,000 from Las Vegas nightclub Tao for hosting the bachelorette party. Those paydays are obviously taxable, of course. Kim will also owe tax on some of the freebies she got from publicity-hungry vendors. These include a $15,000 cake, $60,000 for three Vera Wang dresses, $400,000 in Perrier Jouet champagne, $150,000 (!) in hair and makeup, and even $10,000 in Lehr & Black wedding invitations. Dumping Humphries doesn't mean she gets to dump the taxes she owes on what she scored for marrying him!

As for Kim's ring, it's a stunner — at 20.5 carats, it's roughly the size of the asteroid that wiped out the dinosaurs. TMZ reports that Kim's pre-nup requires her to buy the ring from Kris if she wants to keep it in case of divorce — ironic, considering that under California law, the bride usually just has to say "I do" to take ownership outright. This means if Kim someday sells the ring (at auction, televised on E!, no doubt), she'll owe tax on any gain above that purchase amount.

What about the wedding gifts from the 500 guests who presumably also weren't in on the joke? Gifts are never taxable as income, so there's no problem there. But Kim has announced she'll be donating the value of the gifts to the nonprofit Dream Foundation, a charitable organization that grants wishes to terminally ill adults. So she gets a double win — tax-free gifts plus a fat deduction for the value of her donation.

Most Americans spend a lot more time planning their wedding than they do planning their taxes. That can be an expensive mistake. For some of us, a good tax plan can actually pay for a pretty nice wedding. But time is running out. If you want to save taxes for 2011, you have to plan for it in 2011. There are fewer than two months left in the year — with plenty of time out for holidays — and our calendar is filling up fast. So call now, so you have plenty of time to enjoy A Very Kardashian Khristmas!

Ed Lloyd & Associates, PLLC • Charlotte NC CPA Firm
Tax Planing, Preparation and Accounting Services call 704-544-7600
Please visit ELCPA.com today!