My $3.3M mistake
2009-05-27
Ever since I was a teenager, my dad would occasionally send me things to sign. Things for the family business, where I was part owner. I didn't understand the complexities of it, and didn't need to, so I'd just sign without question.
In 1994, as I was recording my first album, I needed to borrow $20,000 to buy studio equipment. He said, “Instead of lending you money, start a corporation. Then the family business can buy shares in your corporation.”
So I did. Because my band was called Hit Me, I called the company Hit Media Inc.
My dad's company bought some shares, and that helped me finish my album, and continued to run my record studio at a profit.
Four years later, I was living in Woodstock New York, and started this little hobby called CD Baby.
The first time I got a check addressed to “CD Baby”, I brought it down to the bank and told the bank teller, “I need to set this up as a new business, so let's open a new business account.”
She said, “Oh you don't need to do that. You can just make it a DBA on your Hit Media account.” (At that time, Hit Media was a recording studio and booking agency.)
Seemed a little strange since CD Baby was definitely a new business, but it saved 10 minutes and $100, so I said OK.
Four years later, CD Baby is doing really well. A few million dollars in sales. Probably half a million dollars in net profits. I paid my dad back the $20,000 I borrowed.
I call up my accountant in January to say, “OK. I got all the Quicken books balanced. Should we file early this year?”
He said, “Oh, you don't need to file. CD Baby is just a lineitem on your dad's company's tax return.”
I said, “Uh... what?”
“You didn't know that your dad's company owns 90% of CD Baby?”
“Uh... what?”
“You should talk to your dad.”
Yes, it turns out that one of those pieces of paper I signed without question had sold 90% of the shares of Hit Media Inc to his company.
That would have been fine, except the bank teller advised me to make CD Baby a DBA of Hit Media, so now that meant my dad's company owned 90% of CD Baby.
FFFFffff.... SSSSssss.... RRRRrrrr.... Oh, what a sinking feeling.
I couldn't be mad at my dad. He was doing me a favor in 1994, and thought I knew the deal. Nobody thought my little hobby was going to turn into a multi-million-dollar company.
It was my fault for not reading what I signed. My fault for letting a bank teller's quick advice make that major decision for my business structure.
What made it even worse is that I couldn't just buy it back for the original $20,000. The IRS won't allow that. The only way was to pay full market value, as determined by an outside valuation company.
In the end, I had to pay $3.3 million dollars to buy back that 90%.
Lessons learned:
- Really understand something before you sign it.
- Ask all questions, dumb questions, hypothetical questions, extreme-scenario questions, “what if” questions, until you're sure you really fully understand it as well as anyone on earth.
- It's also very worth paying for an hour meeting with your accountant, and asking 100 questions there, too.
- Each separate business venture should usually have its own LLC. It's very cheap through companies like LegalZoom, and well worth it.
- This was definitely all my fault. No one else to blame.
- ... plus whatever other lessons you're going to teach me in the comments, below. :-)
Ouch.
That's all I can muster up this early in the morning.
Just, ouch.
at least it was your dad! thanx for the quick lesson.
Man, what a lesson to learn the hard way! Kudos to you for keeping your word, of course.
I have an ongoing relationship with two investors in my first production music library - a deal done 13 years ago via handshake. Not advised at all! It's worked out splendidly for everyone, but in some ways the decision to get an investor instead of a loan from a bank has "cost" me hundreds of thousands of dollars (it was a relatively small initial investment in hindsight). Now, when possible, I'd say partner with a bank.
Shit, negro, I woulda punched my dad in the NUTS if he tried that shizzle on me!
Oprah once said that her biggest mistake was not signing her own checks! It cost her dearly. Thanks for that lesson, its a good one.
Wow. Thanks for that post. Very informative. But the deal of buying back the 90% should be done just between you and your dad. Leave the IRS out of it.
Haha, I know, I wish it was that simple, huh?
I second John, at least it was your Dad. And at least he decided to sell you the shares! imagine if he just decided to say, "nah, I'll keep these."
I thinkyour dad may the only guy to ever make a killing from an investment in a recording studio. 3.3 million, I can't even imagine how tough it was to swallow that.
I'm loving these daily posts btw, thank you for continual inspiration!
Yup, when it comes to banking business advice ask your accountant or your bank agent. Never take the advice of the tellers. I learned that lesson long ago.
In other words, don't forget to look under ALL the chickens first.
Like Daniel said, über-kudos to you for keeping your word and doing the right thing. That's quite a lesson to learn, for sure. I can only imagine. I feel confident that you've already put all the following together, but I still think they bear mentioning:
- you're obviously successful enough financially that this has proven to be an expensive lesson learned and not a whole lot more. That's something I can only imagine you're grateful for.
- Your quote, "This was definitely all my fault. No one else to blame." Owning up to any mistake, big, little or otherwise, isn't always the easiest thing to do and, in my experience, never extremely pleasant. So kudos to you again for not finding somewhere else to pass the blame.
- None of us would even be considering any of this if CD Baby hadn't been as successful as it has been so, again, while an expensive lesson has certainly been learned on your part, I'm sure, another way to look at it all is that you're experiencing great successes which, without them, these "mistakes" would never have come to light.
It's all in how you look at it and, from what I can tell, you and yours are taking it all in in the most positive light you're able and, in my (albeit, limited) experience, the traits of making mistakes, owning up to them and taking the appropriate steps to fairly and ethically resolve them, and then stepping back from and learning from them and then sharing what you've learned with the community at large....well, let's just say I'd wish you continued success, but I really don't need to. You're doing all the right things. Making mistakes, fixing them, learning from them, and sharing what you've learned with others.
While I don't "need" to say "good luck" to you and yours, I will anyway as it's always refreshing to come upon someone/an organization that's "doing things the 'right' way" and experiencing the corresponding amounts of success. Again - kudos to you and yours! I wish you all the best in your continued and future endeavors.
that sounds like something I would do... Don't listen to too quick advice, others don't know your whole story as well as you do
You just funded your parents retirement. Congratulations!
And explain it to your wife when she's got PMS. If you can cover all the bases then and there you're definitely in the clear!
Wow. $3.3mil for $20K. Does not compute! I'm sure that was a hard lesson to learn, Derek. But, we've all gotta learn 'em sometime. Thank you for sharing, it really drives home the point of making sure one knows what's going on COMPLETELY before signing or agreeing to something.
Thank you very much for sharing so much important experience with us ! I almost could feel like you, this little big business mistakes aways happen with business men. I wont forget, never. No matter what, it´s better being a stupid for one day than losing a million of dollars in life !
Good info.
Thanks to bloggers like you with your various horror stories about ownership, shares, etc., I've managed to avoid unintentionally, or stupidly, diluting ownership of my firms SmartFlix.com and HeavyInk.com.
On the other hand, I've absolutely made a huge number of NEW mistakes on my own.
I ruefully look forward to writing my own entrepreneurial blog posts some day with subject lines like "don't hire friends just because they are friends", "don't sign for more office space than you need", "don't linearly extrapolate your revenue", and more.
Travis J I Corcoran, President
SmartFlix
--
http://SmartFlix.com/
web's biggest how-to DVD rental store
I am not sure I understand why you lost $3.3M? You paid them to your dad to get 90% back. Didn't your dad give those $3.3M back to you?
Can you explain why the IRS would not allow you to pay your dad back the $20K?
I'm sort of curious about what, if any effect this has had on your relationship with your dad/how he reacted to the whole situation.
Thanks for sharing this - its also good to track the capitalization going through and always have a clear picture of who owns what, especially in a private company.
Wow, lesson learned indeed. Signing contracts are always nerve wrecking!
I would add (from my own experience).
Read & understand the contract ...check
Consult with your lawyer ... check
Negotiate without your lawyer - Not always possible, but we got screwed once, because we negotiated a deal with another party. Then handed to our lawyers who changed it, to his advantage. Our lawyer couldn't get any concession from their lawyer. Then I learned at the signing that the other party had left the negotiations to his lawyer (who was GOOD) and didn't even know about the changes.
It's simple, if it was your dad and you still had a good relationship with him.
1.) Bought the 20k company for 3.3M
2.) Your Dad could have gaven you the 3.3M back for you being the CEO Salary (As investors can choose salary)
It is a valuable lesson, but it sounds like you've made a tremendous success with your life, if you were able to buy the business back for $3.3 million. But thanks for sharing the tip!
Holy cow Derek... that is unbelievable and thanks for sharing that story.
What about "sole proprietorships" where no one can buy any stock and changing the business structure as it grows?
I've learned that if you can't afford to pay cash for something, your business is growing too fast anyway.
Kind regards.
*Jared
OMG! thx for sharing this lesson of life and living. although it was yr father, like u'v explained, u had to buy it back by the full value!
it means, checking checking checking, better to invest also in a lawer, before signing too fast.
all the best for the future, and thx so much for sharing yr knowledge.
Thank godicus it was your dadicus!
Hell of a story. Tough way to learn. Glad you shared. There is too much to know about business structures and legalities, but it is essential to at least have cursory knowledge. You need to know the right questions to ask before you sign anything.
At least it was dear old Dad.
Seriously. Ouch. Well, if you're going to take a hit like that, might as well keep it in the family!
Best finance lesson I ever learned was never to borrow cash without a sure-fire way to pay it back- and that working double shifts at your day job doesn't count.
Wish it hadn't taken me the best part of 20 years to learn, but hey.
WOW! That's something indeed to remember. I sometimes get lazy reading the fine print but indeed it is a well heeded advise to do. Read everything before signing at all no matter how small the print on paper can be.
Thanks for the reminder! Learned a lot from you. 
It's really really hard to think that far in advance.
Seems like every time I've started a business and thought through all the potential details, that business didn't work out.
The few that were successful weren't setup cleanly and were disorganized.
Why did it take four years to figure this out? Wouldn't you know after the first year of trying to file?
WHF this would be really important if the owner wasn't your dad .. BUT THIS IS YOUR DAD MAN!! YOUR DAD!!!
My dad can have 100% of everything I posess.. If only that would make him alive again...
you are very mature in your acceptance of fault and responsibility. However, why did your dad accept re-payment of the $20,000 if that was for the purchase of the stock? Did you also sign a promisorry note as part of the original loan? If so the family company's acquisition of the 90% shares was illusory as there was really no consideration for the purchase of the shares. the consideration would have been the $20k. but if you owed that as a loan in addition to the stock the family company got, there was no real consideration for the shares.
It appears your dad accepted re-payment of the $20k. why?
Finally, "your" company, Hit Media Inc., was a small closley held corporation. If your gross income was a couple million, why did you pay $3.3 million. who valued your company? did you see legal tax counsel for simply accept what your accountant told you?
Wow Derek,
I have to hand it to you for sharing this with your readers. It was a HUGE lesson! I myself have made some HUGE mistakes with my business, but I'm not so sure that I would be as bold to put them out there like this! I think mine are too fresh, and I haven't worked through all that yet, and hope one day, I will share my mistakes with as much transparency as you have here. Thank you!
For that price you should own the bank, too.
I am sorry for your million dollar loss. (I'm kidding) But anyway, I hope it helps you recoup if I continue to link to CD Baby where there are listings of some notable Caribbean Jazz artists, artists whom we cater to at Woodshed Entertaiment Collective.
Wow, that's quite an expensive lesson Derek ! Of course, I WISH I had a problem like that ! ! LOL ...
Hey there Derek,
It's been a while, and glad you keep me up to date. This borrow money story is tops.
I'm in a hurry, but I just had to drop you this note. By this tiny mistake you would have almost jumped of the deep end, if you weren't as smart as you are. Unfortunately, sometimes we have to learn it the very hard way, in order to pay attention in the smallest way, and learn it fast.
What a trip! I have laughed so much, and forgive me for that. It's how you tell the story. All I can say is you've topped it all. We always want to give people the benefit of the doubt as trusting a bit too much perhaps?
No, I have nothing to teach you. I Congratulate you! Thank you for sharing this story with the world. Great learning tools for anyone. It's a must today, since everyone wants to make fast money, and become a star whatever that means. You'r only a star in the present moment!
Enjoy in what you do in the moment, and that is being successful.
Bro- family is family and business is business, but good golly. You built it up for your dad and he kept the business?
I would expect my dad to do what is right, and not hide under the guise of "it's business". Does he happen to own a car lot?
Gerald: if he could have just given it back to me, he would have, but the IRS doesn't allow that. This was a deal between his company and my company, and the IRS watches in-family transactions very closely. That's why we had to have an outside valuator assess fair market value. -- Derek
Wow I am speakless!!! I remembered getting my first offer to have a manager in the 80s. The guy even said get an attorney to look at the contract. I followed his advice, because I did not know nothing about the music business in the 80s. The attorney told me do not have the checks go to your manager. The guy was mad as heck about that portion of the contract scratch out. I did not get a manager until the 90s. That was a mistake, because she did nothing for my career. I've done more for myself by reading and learning.
Sorry to hear of your mistake, but hopefully you made out well enough. Thanks for sharing the lesson learned.
And by the way, be glad it was your Dad who taught you that lesson ; )
Things definitely could have been worse. Take care brother!
Great advice, but I think subconcisously you are angry at that bank teller. You say.. "This was definitely all my fault. No one else to blame."
Yet at least three times in the ancedote you direct (or misdirect) blame to the teller.
1. The part of the story where you indicate just saying "OK" as if the teller duped you into the easy way out by her suggestion of doing a DBA.
2. A very direct blame of "That would have been fine, except the bank teller advised me to."
3. The I accept full responsibility, but I still have to mention it was the teller's fault. "My fault for letting a bank teller’s quick advice make that major decision for my business structure."
Interesting read none the less.
I used to blame the teller, then realized it was my fault for letting anyone's quick opinion guide a major decision like that. That's why in the telling of the story I both blame her, then accept it's all my fault. Definitely not angry at anyone but myself. -- Derek
couldn't you have done a stock for stock merger and avoided any taxes?
What a great story, man. Of course, it's all water under the bridge now, right? I mean you did eventually sell the company to Disc Makers, and I always assumed you sold it for a profit. Personally, I think financing your parents retirement is a really cool thing to be able to do, even if it was by accident.
Just can't understand! Don't you and your dad talk? Sounds like he scammed you. If you guys just so don't get on, then I would have scammed him back. No $3.3m checks to reward him for doing the dirty on you.
Lesson: "You can't even trust your dad! Who are you going to trust? NOBODY!"
CyberFonic: read again. He assumed I had read the thing I signed, and knew the deal. Everone (even my accountant) thought I knew about the 90% ownership. It was my fault for not understanding what I had signed, not his. -- Derek
not only did you have to buy back your company for $3.3 m but I imagine your dad had to pay capital gains taxes on that $3.3 M so Uncle Sam got a gift of somewhere around $600,000 out of the money you paid your dad.
The big question should be: why did you need those 90% back?
And was it really worth paying the IRS and your dad such a figure.
Wouldn't it be cheaper to invest into your dad's company and for example get 51% of the shares?
Or just start a new business and start moving things to that new business over a longer period of time?
Stuart: My accountant said the same thing at the time, but to me it was symbolic. I wanted to own my company 100%. Even if it was impractical, it was psychological. I'm glad I did. -- Derek
Unbelievable that your own father would do that to you! I wonder if you are even on speaking terms with him. Parents are supposed to shepherd their children and care for them with their children's best interests at heart - not take advantage of them or abuse them in the way that your father did! Absolutely, despicable behavior on your father's part!
Not at all. Read again. He was doing me a favor in loaning me the money. He thought I had read everything and knew the terms. He wasn't taking advantage of me. When I said I wanted to buy the 90% back, we had to do it by IRS rules. To do some kind of insider deal would have been against tax-law. -- Derek
You're awesome dude, thanks for posting this.
I apologize for probably sounding stupid but I have many questions:
1. If your father's company bought "some" shares in HitMedia, why do you refer to the $20,000 as "borrowed" money? In addition, why did you have to pay it back to your father? Did your father lend you $20,000 AND made his company buy shares in HitMedia?
2. Did any other members of your family invest in HitMedia?
3. Is your father's company owned by him only or with your family as well?
4. Is CD Baby a business or a hobby like you mentioned? If it's a business (or a hobby that turned into a business), was it started/operated by HitMedia or by yourself?
5. Even if your father assumed you knew what you were doing when accepting a 10% share in the company, why didn't he try to discuss it with you and at least convince you that this might not be in your best interest?
6. I could be mistaken but I think there are much easier ways of obtaining the majority of HitMedia's shares than to directly buy them.
I have a very similar relationship with my father as you have with yours. However, during my 12 years of setting up companies and operating them (with large losses a couple of times), my father gets on my case for EVERY tiny decision I made/make. Although it can get very annoying, I realized that that is my safest route to financial success. Of course, he does this to make sure I'm doing the right thing and not to just annoy me (well, maybe just a little!).
Nakib: Sorry, but this is all long-past and I've said all I want to say about it. 1:no, 2:no, 3:family, 4:business, 5:it used to be worthless, 6:oh well -- Derek
As someone who hates paperwork, I know I have a tendency not to read the small print and what I sign. This is another story to remind me to be careful!
It must have been as difficult for your Dad (when he found out you hadn't understood the deal) as for you, I hope this hasn't tinted your relationship.
Mind the language, but anyway here goes, the most important thing my dad has taught me (and from a relatively young age) is: "Watch where you stick your penis and your signature"
What is the problem here? If my father owns a company thats not different for me, from owning it myself. In family you might even do that for strategical reasons. And if I earn money for the company of my dad, he pays me as salary if he can't give the money to me as part of the winnings. But the basic lecture is very very true!
Lesson you should have learned: Do not really on a bank teller to give you legal advice.
Lesson #2: Do not use LegalZoom, ever. You will regret it in the future.
Lesson #3: If it's important, shell out for a lawyer. If the shit hits the fan b/c the lawyer fucked up, you get to sue them for malpractice for all of your losses.
waww, it's a good lesson, though it costs you $3.3 million.
compare to the cost, you get more valuable lesson from the mistake.
thanks for sharing the info
Cheers
it's indeed a costly mistake...another perspective to look at this would be discovering this mistake few years down the line...maybe the hit would be in billions and not millions...Thanks for the early redemption...All the very best
Is cdbaby your only sucessful venture? If so, it's hard to imagine how it could have earn you so much so that you were able to buy 90% of it. Especially if I assume that it's value has been monothonically increasing.
What I can easier imagine is that it didn't really cost you all the 3.3M, given that it was a deal inside your family, only some taxes: your father had to pay some of the 3.3M as income tax and then he gave it back to you which might be again taxable (as it is here in Hungary). So all in all, your real loss must have been a few hundred thousand, which is still a lot to pay for a mistake, of course.
Thank him for the investment, you should be proud that you made it at the end of the day, i guess every body is smilling. if the money was not on loan you may not have been this made.
The bottom line is this read to understand anything agreement before you append ur signature.
Thanks for the write up.
That is a truly exceptional and fabulous mistake! Glorious, splendid, well done
BRAVO!
Derek
All I can say is
WOW
Thanks for sharing!
I had to post one of ur quotes on this blog on my facebook status.
"Ask all questions, dumb questions, hypothetical questions, extreme-scenario questions, “what if” questions, until you're sure you really fully understand it as well as anyone on earth." -derek sivers-
Thanks again!
Cool! Thanks Jerico! Glad you like it. -- Derek
Boy that is just horrible, very weird how this world structures its own destruction. It should have ended better really. - John
To be honest, I would never, ever do something like that to my son. EVER.
Amen to all of it. I've lost thousands making little stupid mistakes. Penney wise, pound foolish!
I might get out of the music business, we are being bootleged so much all over the world but it's not just Cd's, it's also movies, there losing billions on theft!
A timely tale of good advice! As I begin to restructure my old-fashioned websites, perhaps I need to refine and restructure my business(es), before I make that "great fortune" over the next 10 to 12 years? ;-)
Stories of our great mistakes, not just our great successes, benefit the commonweal.
(I love being verbally archaic!)
I love that you have the balls to share this story and admit your mistake. That's why you rock!
Thank you!!! You've just saved me and a whole bunch of others from being pawned for sure. It's easy to overlook the details.
Filing as an LLC is important, because you shield yourself from potential liabilities, in essence protecting yourself and your household from lawsuits.
ouch. Ouch. OUch. OUCh. OUCH
Independent producers praise you for having that hobby and sharing the vision
Wouah Derek, Thank you so much for sharing.
I feel pretty dumb those days about having bought a car on lease when I learned a long time ago as a young bank employee to never get anything on lease. Right now I am having trouble with the car and with the company that sold the car. And I should have ask more questions and especially not signed when I felt like not.
Oh well, your story make everything looks easier ;-)
Wish you a great day.
Thank you for those blogs.
Loved the story! I'm still in awe of how you built the company to be of that value.
unfortuantely, there are many business relationships that move on with a informal or lack of true understanding in the true underlying legal relationship. onen should take care whenever one "partners" in any effort (writer, label, busines, etc). often, without it stated otherwise, the legal reality follows the monetary investment and does not take "efforts" into consideration - thus your situation...
Amidst all the pretty little things that they were promising, this is why I didn't sign a deal with one of the Big 5.
Things are set up so that they can benefit no matter what. Do I regret my decision? I'm not sure, but feeling trapped is not something I enjoy.
Sorry for that Derek.
Sweet deal for your Dad!
I bet he never sends you one of those "how much it cost me to raise you" invoices now!!
Hey Derek, can I be your daddy next time you start a business?
This could have been anyone and not necessarily Steve's Dad! There are valuable every day lessons to be learnt here, for me apart from wisening up, its being able to take responsibility for our own actions in a society where pointing the finger is the way to go.
That is amazing. That's actually very scary to me, even though I don't own shit! lol. But, I plan to in the future, and reading things like this keep me in the frame of mind to be careful about the complexities of business.
Amazingly in business there are fine points of which wording and trust often are most important. Wording can be verified but trust of someone else looking after OUR best interest is hard to find. When you find it treasure it like love because it'll be eternal.
I thank you for sharing the wisdom of your experiences as it's a great path for all to walk beside anyone who has been there and done that & then shares it so honestly!
Did you have take a loan out to buy the shares back?
Did your father's company then have to pay a tax on the gains?
Yes and yes. -- Derek
It always pays to know what you're doing and take care.
Derek,
You could have blamed others as so many do. You took responsibility for your situation. A very valuable lesson learned, and you are able to pass it on to others.
Wow. It's funny that everybody (well me, anyway), when they screw up, think that they are the only ones who have ever done something stupid. You are brave for sharing.
Ur dad KNEW and instead doing the right thing he didn't. either way business is not business - business is cat and mouse for everybody except bill gates, danny branson, warren buffett etc. how much more did your dad need? we seem learn our hardest lessons from our "bloodline" - my dad NEVR supported me - EVER. He's old and bitter and me? i'm happy and in the top of my game.
never do business with family - EVER EVER EVER. They always fall apart at our expense.
It's great that you take responsibility for your own actions.
It's sad that the IRS can prohibit your father or his company from giving you whatever he wants to give you.
Who would've been hurt by this "inside" trade?
Those laws are part of a web of rules that give power to our government at the expense of sanity.
If there's fraud, there's fraud, and it could be prosecuted without an entangling web of rules.
Beyond that, we needn't be strapped into all of their straight jackets. They may like the power and may have convinced many of us that it's good for us, but that's politics, not justice.
I like this part: "Ask all questions, dumb questions, hypothetical questions, extreme-scenario questions, “what if” questions, until you're sure you really fully understand it as well as anyone on earth." I do that all the time, and People HATE me for that. But, thank you for reassuring me that I'm doing the right thing! I still make mistakes, though, sometimes... somehow....
Man, that's a tough one, Derek. That is extremely unfortunate on your part. I guess I owe CD Baby an apology although frankly I'm not impressed with them, Derek. What a damned hard lesson to learn my friend. Sincerely, Clay Wilson P.S. I hope you earn back that money in spades in your future endeavors.
I can tell from that one mistake things are going to end badly, your wife will leave, you will end up selling for not much. Pretty much game over.
Get a job as long distance trucker you are not cut out for the real world here.
Lesson learned, perhaps. But how well? I appreciate what you doing with the post (now ancient history). But if in the end the suggestion is to tell readers to go to LegalZoom, rather than first speak with a qualified business attorney and (not "or") CPA, then in my honest view it is a lesson not fully learned. If only I could share with you the numbers of times I have seen people, being penny wise but dollar foolish, shoot themselves in their feet by not seeking qualified professional advice, even if their ultimate intention is to form a business online. I can only assume that such people think that their above average intelligence (and no doubt equally good looks) are enough for them to always make the best choices in even garden variety legal and tax matters, when none will even know what a fraction of the issues are (with all due respect, see the dozens of misinformed comments above). I am not saying business formation and tax election are necessary "rocket surgery" (to mix metaphors). But costs associated with "fixing" peoples' self-created disasters are generally so much more expensive then "helping" them avoid them in the first place, that is it difficult to accept that going to LegalZoom is the best lesson to draw from your unfortunate experience. Sure, your point was perhaps more narrow. But the consequences of referring people to LegalZoom (a.k.a. to their own devices) rather than to a bank teller could be equally disastrous. "Common sense," it is said, "tells us that the Earth is flat." I find this particularly true when people attempt to apply that same common sense to legal and tax matters. (BTW, this also means that it is not good enough to consult with the attorney who represented you in your auto wreck.) Thanks for sharing the unhappy issue and creating a forum for others to learn from.
Mylaclypse the Elder
P.S. With that amount of coin at issue, I could also think of 3.3 million good reasons not to recommend LegalZoom for wills.
buying the shares back off your dad would have been a buzz though and he probably wanted to reimburse you later yes?can you tell me how things stand in such a situation ie biz/family ties how does that work? is it true that there are no friends in biz and that one should not do biz with family?
Nah. Wrong lesson to take from this. It could have been anyone. Real lesson to learn: make sure you understand what you're signing, and don't let one person's word (in this case: the bank teller) make you make a big decision without knowing the facts. -- Derek
My question is:How come IRS allow it only in one way but not the other?
How can your dad have 90% (I guess almost for free?) but you can't buy it back for $20K??
You have to act as unrelated parties. If I buy Google stock for $1 and it goes to $100, they can't buy it back for $1. -- Derek
Derek,thanks for sharing this. I will read before I sign from this day forward. I lost everything I held dear back in 1996. I'm rebuilding now at:
http://www.directmatches.com/atteon
Charlie Kirkpatrick
CD Baby/Stage Name
Charley Waco
Ouch,
It is good you can be so sanguine about the whole thing and realised that it wasn't your dads fault. A very grown up way of dealing with it. I know I would have done the same as you and picked the easier cheaper path. I hope I would deal with it like you
Hi Derek,
This is a good lesson, although thankfully the stakes are often less. Signing without looking is so easy to do and mistakes like this can't usually be recovered. I should pay more attention too. I've been through tough times as well, but I have to point out something somewhat humourous...if your Dad had kept 90% shares (and assuming the relationship with him is still good), would your Ex-Wife had taken less? More would have ended up helping the current Trust...I dunno, things work in strange ways. Then again maybe there's more I don't know and I'm just rambling junk.
You are my new hero, and I applaud you! I don't have to explain the 'why' in regards to this article, you know.
You are a gifted, intuitive, positive, Lightworker, ascended past the negativity, anger, and blame-energy that consumes so many within the minutia of their lives.
Your positive energy attracts the same and that's why you are at peace and can help others in such significant ways.
I see you.
Don't be afraid to take a leap. Just take a good look before your feet leave the ground. Thanks for sharing. Bill