At Strothman and Company we help entrepreneurial businesses grow. At every stage.  Every day. That's why we keep you up to date on relevant issues.
New Middletown Office and Strothman Wealth Care Launch

On Wednesday, March 21st, Strothman and Company is formally welcoming two exciting new ventures to our firm. Please join us at our New Middletown Office from 4-8pm as we welcome our new Middletown Team (formerly Ecken & Smith P.S.C.,  Louisville Business First Article) and introduce you to Strothman Wealth Care, our new Wealth Management Division.

Learn more about Strothman Wealth Care today at our Brand New Website.

Ryan Antepenko AIF Financial Advisor Joyce Smith CPA, Partner

We are Finalists for One Southern Indiana's Business of the Year!

We are thrilled to announce that Strothman and Company has been named a finalist by the One Southern Indiana ONE Awards for Business of the Year! Please take a moment to visit the link below and vote for Strothman and Company. The voting closes at noon on Tuesday, March 27th.

One Southern Indiana - ONE Awards Finalist - Strothman and Company

One Southern Indiana - ONE Awards Finalist Strothman and Company

Protect Yourself from Tax Refund Scammers

Red Flags and What To Do
√ A refund check via direct deposit that you were not expecting.
Check with your tax professional to verify that the deposit is unexpected.
Contact your bank to discuss either changing your security information or closing that particular account.
√ A check arrives in the mail for a refund you did not expect.
Contact your tax professional.
Return the check promptly to the regional center that sent it. Write "VOID" on the check and include a copy of IRS Form 14039 and attach a note to let the receiver know you have been a victim of a refund scam.
√ Any type of phone call that is intimidating or threatening, or requires financial recompense from anyone claiming to represent the IRS. The IRS does not make phone calls like this to taxpayers.
Unsure? Call the IRS on its toll-free numbers (800-829-1040 for individuals or 800-829-4933 for businesses) to verify before you take any action.
√ A suspiciously fast refund check. It normally takes at least 10 days for a refund check to arrive by direct deposit (the fastest mode of refund). The IRS noted that fraudulent refunds were showing up in bank accounts just days after the Jan. 29 start of tax season.
Send the check to the IRS, and tell them you believe this refund resulted from hijacked data and that you are a victim of a refund scam.

Although the IRS has no explanation for how the thieves were able to get into the system within hours of the start of the filing season on Jan. 29, speculation has run rife. Some have wondered if the cybercrooks had inside help. The IRS emphatically denies that the problem originated within IRS systems or data. The hacking seems to have targeted businesses specifically created to prepare and file tax returns. Additionally, some think the recent major data breach at Equifax has placed millions of people at potentially greater risk of having their personal information stolen.
The IRS expects victims of refund scams to be proactive and return refunds promptly that were issued in response to a fraudulent claim. To add insult to injury, it may take up to four months before victims are able to get the legitimate refunds that are due to them.
Forewarned is forearmed. There are some things you can do to protect yourself. First, discuss this issue with your professional tax advisor. Plan to file as promptly as you are able to do so. Scammers count on being able to get their fraudulent filing to the IRS before the legitimate tax returns arrive.
Estate Planning Essentials You Need to Revisit Due to the New Tax Law

Estate planning is never done. Just like a piece of real estate, it needs periodic maintenance and care to make sure it's in good shape when you need it most. Provisions in the newly passed GOP tax plan mean it's time to revisit a handful of key areas of your estate plan. Below we discuss the five areas you should check-in on.

Will the new tax law impact my estate taxes?

The new tax law exempts a portion of an estate's value from what is commonly termed the "death tax," just like to prior law did - but the thresholds have changed. The previous exemption limit was $5.6 million; this was bumped up to $11.2 million. This increase in the death tax exemption means that many wealthy families will see relief and a need to simplify their estate tax plans. Under the new threshold, experts estimate around only 5,000 estates per year will be subject to taxation above these limits. In other words, it's a great time to be rich - but not too rich.

I'm married, so what happens to my surviving spouse?

You're probably confused thinking about this because usually one spouse dies before the other. The exemption limit for married couples relates to portability, which is the term for how a surviving spouse avoids estate taxes on what they inherit from the deceased spouse. Portability as a rule was instituted back in 2012, and the new law preserves it.
An estate plan can invoke portability rules by using specific language, without which a spousal estate may have to create a bypass trust that will cost a lot of time, money and likely reduce the inherited amount.

How will my state estate tax be impacted?

Right now, 15 states have some type of estate tax. Out of these 15 states, a portion link to the federal exemption limits - so these will automatically increase. Others are completely independent, so unless these state legislatures act, nothing changes here. With some states having exemption limits as low as $1 million, there is a good chance of being exempt from federal estate taxes and subject to state estate taxes - so you still need to proactively estate plan.

Will my estate plan fulfill my wishes and avoid unintended consequences?

Boilerplate documents can cause outcomes that don't align with your exact intentions and wishes. If you have particular needs or desires, you need to work with an estate planning attorney and accountant to set up or revise your estate plan. On the financial side, one example is the overly vague and general Power of Attorney (POA).
Without specific provisions that otherwise limit or prevent specific actions, a POA has the potential to allow the managing agent to engage in a variety of undesirable behaviors. For example, he might be able to legally make gifts to whomever he wants (including himself); change beneficiaries on financial accounts such as life insurance or 401ks; or discontinue financial support to a disabled relative, just to name a few. Ultimately, the only protection against someone exercising unwanted power over your estate when the time comes is to be specific and lay it all out ahead of time.

How often/soon should I review my estate plan?

A general industry rule of thumb is approximately every three years, assuming no significant life changes. Otherwise, anytime you experience a major life adjustment such as a divorce, birth of children or grandchildren, the sale of a business, retirement or a major change in health status, you need to revisit your estate plan and adapt it.


Changes in circumstances drive the need to modify estate plans - and the new tax law is one of those types of changes. The expansion of exemption limits may mean you have more money to go around, changing your wishes; or it could mean that previous plans are no longer necessary. Whatever the case may be, now is definitely the time to revisit your estate plan.

Technology: Blockchain Technology - Beyond Bitcoin

To many people, Bitcoin and blockchain technology are the same thing. Bitcoin might be the best-known example of a successful application of blockchain technology, but as soon as business leaders understood the power and advantages of the Bitcoin model, various industries, institutions and humanitarian organizations leapt on the technology as a solution to a variety of issues and challenges.

Most of us have some idea of how Bitcoin works. The concept was unveiled via a whitepaper in 2008 by a Japanese businessman whose real identity still is not known. "Bitcoin: A Peer to Peer Electronic Cash System" showed how a crypto-currency system could provide its users with a decentralized, time-stamped bookkeeping platform, or ledger, that was incorruptible, transparent and public, yet impervious to corruption or interference. It has also been described as an encrypted database of agreements - which means when the parties involved have made a deal, neither can go back and revise the terms. Smart Contracts is a blockchain-based contract system that requires all parties to fulfill their contractual obligations before the terms of the contract can be completed.

Hailed as a major innovation, blockchain technology - in the form of Bitcoin - made its entrance into the financial sector in January, 2009. Some nine years later, the technology is being used in many different ways - from aiding humanitarian relief efforts to improving the efficiency of government departments through the authentication, confidentiality and improved management of medical and benefits records. To help consumers understand how it works, some commentators have said that blockchain is to Bitcoin what the internet is to email. In other words, it is an electronic system. Application designers build programs to tap into its international reach. Bitcoin - a crypto-currency - is just one type of application.

Here are some of the other ways that blockchain applications are being used to address global issues here and in some of the poorest areas of the world:
  • Voter fraud and cybersecurity are hot issues worldwide. In the past decade, voter legitimacy has surfaced as a serious issue in major U.S. elections. Blockchain technology offers governments a way to provide its citizens with secure (unhackable) electronic vote-counting systems. Blockchain technology can provide a permanent and public ledger for voter registration; handle voter identification; and track voting to ensure there is no tampering at a later date.
  • In 2017, the United Nations faced "the biggest humanitarian emergency of our era" in Syria. One of the most successful efforts to assist those most affected involved a blockchain platform developed by the crypto-currency Ether, Datarella and Parity Technologies. This partnership bypassed the bureaucracy, inefficiency and corruption that frequently hobble international aid efforts by giving refugees direct access to financial donations to buy food and essential supplies.
  • Blockchain technology can work like a bank for impoverished people who do not have bank accounts. Unlike traditional financial institutions, blockchain crypto-currencies don't levy hefty fees to transfer money across international borders. These traditional bank charges can inhibit business transactions in developing nations and impose financial burdens on individuals sending money to support their families overseas. BitPesa is a blockchain platform that can send and collect crypto-payments between Sub-Saharan Africa and the rest of the world. Africa is one of the costliest regions in terms of financial transfers. BitPesa users need only have access to a smartphone to use the crypto-currency platform. The BitPesa success story has made money transfer fast, affordable and reliable for migrants, immigrants and refugees - people hit hardest by poverty and displacement.
This Year's Fuel for Economic Growth
There are several factors expected to help fuel the economy through 2018. The first is government intervention through fiscal policy.
Congress passed the Tax Cuts and Jobs Act (TCJA) at the end of 2017. This legislation offers a plethora of tax breaks for corporate and individual filers alike. With it, Congress is looking for two results: an increase in wages and business expansion to create more jobs; and an increase in consumer spending.
Another factor is monetary policy, which is set by the Federal Open Market Committee (FOMC) of the Federal Reserve Board. This committee adjusts U.S. monetary policy based on the direction of two economic factors: inflation and unemployment. If the prescribed fiscal policy works, inflation is expected to rise further and unemployment sink lower. These actions will provide the impetus for the FOMC to increase interest rates which will, in turn, put a damper on growth.
This just goes to show you the precarious nature of government tools and the importance of using them in concert to help keep the economy at an even keel.
However, the private sector of the economy also provides fuel for growth. Several money managers have offered their insights into some of the most influential components for 2018. For example, wealth manager Merrill Lynch sees the following trends as contributors to growth this year:
  • Artificial intelligence - robotics
  • Genomics - "gene editing"
  • Geopolitics - China, Russia
  • Global trade - Europe, Japan
  • Hurricane-related rebuilding
Another growth theme with diverse implications is that of demographics. For example, in recent years the millennial generation has surpassed baby boomers as the largest generation and is poised to make its mark in several unique ways.
First of all, this demographic is expected to drive the residential real estate market for the foreseeable future. While it got off to a late start during the recession years, Morgan Stanley projects that millennials will largely account for the 1.3 million households expected to be established each year over the next five years. This statistic is 30 percent higher than the long-term average increase.
Also note that the tail end of the millennial generation is currently still in high school. The recent controversy over school shootings and the uprising of teens as activists for gun control laws could have long-term repercussions on gun manufacturing, sales and legislation, not to mention a greater focus on the needs of the education community.
Baby boomers, however, are not yet done influencing economic growth. Now entering retirement and their later years, this demographic is expected to drive healthcare in general and the pharmaceutical industry specifically. Spending on prescription drugs is projected to increase by at least 4 percent to 7 percent a year through 2021. Investment opportunities abound not just for drug manufacturing companies but also for distribution channels such as pharmacies, supermarkets and major retailers.
Boomers also are driving much of the infrastructure boom in many major metropolitan centers. As they sell off their homes to family-oriented millennials and move out of the suburbs, many cities are investing to revitalize urban neighborhoods from roads and sewer lines to data centers and storage facilities to support e-commerce. These efforts will help accommodate a more affordable and manageable lifestyle for retirees.
According to Prudential Financial, there is currently a migration trend comprised of 60 million to 70 million people a year moving to cities worldwide - a pace of urbanization that is unprecedented in history.
Stock Market: Volatility Returns - Finally

After months of warnings from Wall Street that the markets' extraordinarily long bull run could not last forever, the inevitable happened. Volatility returned to U.S. markets in a major way in February. The precipitous falls that happened on Feb. 2 and 5 were all the more shocking to investors because the market trend for many months had been almost consistently upward.

Investors got over their initial shock, and the decline became much less scary when investors calculated that the staggering 1,175 drop in the Dow Joes Industrial Average (DJIA) on Feb. 5 - although the biggest drop ever in absolute terms - had only taken share prices back to their starting point at the beginning of 2018. The incredible upswing since Jan. 1 had taken the DJIA so high in such a short amount of time, that this seeming correction in February in fact represented a decline in value of only 4.6 percent. This all being said, the return of volatility in the U.S. markets had a sobering effect on stocks worldwide during the first week of February. In London, the Financial Times Stock Exchange (FTSE) 100 fell 8.2 percent from its record high in January, and the MSCI Emerging Markets Index dropped by 7.5 percent. An element of calm was restored to international markets when the Dow rebounded quickly following its alarming decline, but major U.S. stock indices continued to gyrate throughout the month, logging gains only to give them up a day or so later.

What is Fueling the Turbulence?

Many analysts have suggested that uncertainty over interest rates is a major factor. Both the Federal Reserve Bank in the United States and the Bank of England have begun to increase interest rates and curtail their respective "quantitative easing" policies. Monetary policy going forward is less certain. In the United States, the Fed has undergone a change of leadership as Janet Yellen has departed and Trump appointee Jerome Powell assumes the role of chairman. Nervous speculation regarding monetary policy was fueled when the minutes from the January 2018 Federal Open Market Committee meeting were released in late February. Many who reviewed those minutes felt they indicated a more hawkish approach to monetary policy. Some economists also have voiced concern over possible increases in inflation rates in response to global economic growth. These concerns seem to be as yet unfounded, with core inflation in the United States (excluding food and energy) at 1.5 percent.
Positive News

Many Wall Street analysts remain optimistic and see February's market turbulence as a temporary hiccup. Leading economic indicators suggest that economic growth in the United States will be strong in the first half of 2018. They note that fourth quarter earnings for 2017 have been good, with the Standard & Poor (S&P) 500 Index showing profits up by 13 percent and sales up 8 percent over last year. They believe the corporate tax cuts also will help boost profits, and that shareholders will benefit from cash-rich corporations buying back shares.
It remains to be seen whether they are right and that the recent market turbulence was a short-term reaction to monetary policy concerns, or if February's gyrations were a precursor of more volatility to come.

The observations above are general commentary and are not intended to replace the advice of your professional investment and tax advisors.
How to Give Effective Feedback for Better Performance

When it comes to making the most of an organization, providing feedback to employees is imperative to ensure worker productivity is high and turnover is lowered. According to The Conference Board, nine out of 10 executive level officers are aware that employee engagement is key to an organization's function, but only half understand how to work toward higher levels.

While employee engagement is a complex matter, one facet often includes giving employees feedback to tell them where they are doing well and where they need to improve. Since employees don't fit into a single personality type, there needs to be a varied approach when it comes to giving feedback.

Understanding Why Feedback is Often Disregarded

Even the best performing employee with the greatest potential for advancement can still be resistant to coaching. Identifying resistance to coaching is the first step in making feedback more effective. Examples of being resistant to feedback include changing feedback meetings to a later date or feigning interest in the feedback itself, but never actually changing behavior based on the advice.

Other reasons employees may not listen to and apply feedback is that they've had a bad experience receiving it from past supervisors. This can occur when feedback was directed at employees by bosses who didn't provide actionable tasks they can take to improve performance, or bosses who didn't ask the employee to explain what they were struggling with in the course of their duties. Similarly, by not explaining how the feedback can help increase the chances of meeting a project's goal or earning a promotion in the future, the lack of communication makes the feedback impersonal and less effective.

How to Deliver Feedback More Effectively

There are many strategies to help managers provide feedback that help develop a higher level of employee trust, increasing the chance of the employee receiving and applying the feedback. An initial way to develop a working relationship is for a manager to highlight what a worker does well and how and why it's important to the company's mission, even if they aren't a top performer.

Another way to build trust with employees is to keep feedback and performance confidential. If the worker discovers his performance is being discussed beyond necessary supervisors or with other employees involved in related projects, it could damage whatever trust may already be established.

Allowing an employee the latitude to make errors, within reason, can give a subordinate the confidence needed to take the feedback to heart and incorporate it into areas where he may be struggling. Following up with a commitment to weekly mentoring sessions is another way to keep the level of trust high.

There are real world examples of how these approaches can work. For instance, while a newly hired candidate's performance was rated as exceeding expectations at her first annual review, she had not been focused on building work relationships with her direct boss and colleagues. In an organization that values relationship building among supervisors, co-workers and subordinates, her boss should give her this feedback to help her become a more well-rounded employee.

Instead of diving in to the negative portion of the employee's conduct (where she failed to reach out to her boss for advice and other colleagues in the same department to gain different perspectives to keep learning on the job), the employee's supervisor focused on building a relationship with the new employee by highlighting her top-notch performance. By having the employee understand the supervisor's empathy, the likelihood of the employee improving on relationship building was higher due to the supervisor's empathetic feedback.  

While giving feedback varies with each employee, taking different approaches can and does have positive impacts when building organizational efficiency.

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