[IMGCAP(1)]Entrepreneurs are the brightest, most focused and determined people I know. But it is also lonely for many of them.
There are few people they can trust, and sometimes they just need a sounding board of someone who won’t pass judgment but might point out inconsistencies or illogical conclusions. That is a role for CPAs, and sometimes great things come out of it.
I have been in many meetings where the client did not want an opinion but needed to hear him or herself speak out loud to someone. CPAs are there for that. We listen, consider, sometimes prod, don’t pass judgment and keep it confidential. We seem to know when clients want our advice—which is often—but we also know when to nod occasionally and be that sounding board. And sometimes, opportunities arise.
One Friday morning a client asked to see me. He owned a very large piece of land on a Caribbean island that his newly married fourth wife decided she wanted to develop. He wanted to see me so he could vent, rant and beg for a solution out of it.
In the course of his tirade I latched on to something he said and suggested a plan that might make a lot of sense. I told him that upscale houses could be built just inside the perimeter, while the entire inside of the property, which comprised over 75 percent of the area, could be donated to a wildlife preserve charity. The tax deduction would be enormous because it would be based on the value created by the property sales and not his cost, plus he could add an easement restriction that prohibited any development on the donated property. The houses he built would have extended gigantic beautiful “back yards,” increasing the selling price and allowing the client to get paid twice” for his property—and become a philanthropist as well. It was a short meeting, about a half hour.
When I got back to my office, the client’s secretary called me. In the short time it took me to walk back to my office, she arranged for me to fly to the island Monday morning, have a look around the property that afternoon, meet with an attorney, real estate agent and developer on Tuesday, have some follow-up and unrelated meetings Wednesday (that led to the client getting involved in more businesses on the island) and a return flight home early Thursday morning. That was the first of a number of visits to that island for the client.
The takeaway is that many times CPAs help clients make lemonade out of lemons. But we have to be trusted, knowledgeable listeners and creative thinkers.
Edward Mendlowitz, CPA, is a partner in WithumSmith+Brown, PC, CPAs. He has authored 20 books and has written hundreds of articles for business and professional journals and newsletters plus a Tax Loophole article for every issue of TaxHotline for 27 years. Ed also writes a blog twice a week that addresses issues his clients have at www.partners-network.com. He is the winner of the Lawler Award for the best article published during 2001 in the Journal of Accountancy. He has also taught in the MBA graduate program at Fairleigh Dickinson University, and is admitted to practice before the U.S. Tax Court. Ed welcomes practice management questions and he can be reached at WithumSmith+Brown, One Spring Street, New Brunswick, NJ 08901, (732) 964-9329, email@example.com.