Chapter 7

“Alicia, I called Sam about an additional advance to cover the cost of our wedding and other expenditures.”

“Good! What did he say?”

“He said yes, but ... he has to get approval from the Probate Judge. Sam thinks the judge will approve the additional distribution, but it could be a week or more before we get the money.”

“Oh!” I was hoping it would be sooner than that.”

“What’s the rush, Alicia?”

“I don’t know. Something keeps urging me to build up our finances. I know our two lottery tickets and granddad’s estate will give us far more money than we will ever need. But for some reason, I want it now, not two months from now.

“Ah, Jeb, what if we were to place a few bets on sporting events? We could easily win a couple of hundred thousand dollars. As you said about the Lottery, if we bet regularly through the same betting parlor, a few large wins should not stand out significantly.

“Jeb, do you think that you can write a program to predict a sporting event’s winner?”

“I don’t know, Alicia. There are many variables that go into who wins. In addition to the known variables, there are a lot of unknowns.”

“Well, wouldn’t that work in our favor? We could say, ‘We identified several previously unidentified variables that have a major impact on the results’. They may ask, but they wouldn’t expect us to reveal those variables.”

“True. However, something like that would need to be done over a long time to be believable. We want the cash now, not a year from now.”

“Well, what if we place a large winning bet, and then when we collect our winnings, we could talk about having developed a prediction program that seems to produce good results.

“Humm, it sounds like it might work, but let’s wait to hear from Sam. While we wait, we can give the idea more thought. I have a feeling we are rushing into something that can cause us major problems. Remember what your granddad said about the Time Scope being dangerous, if improperly used. If I recall, he also advised us to avoid placing bets with professional gamblers.”

“I know. However, he also said that if we decided to place bets with a professional gambler, the way to do it would be one bet that would win us a large amount of money and to then walk away.”

“I remember. My main concern is people might comment on our numerous wins in such a short period of time; you know both the lottery and sports. That type of notoriety will undoubtedly draw attention to us. The Lottery Commission and media may suspect something, but I doubt they would take any action other than a few questions. That may not be true of professional gamblers.”

“Oh! Okay. I’ll wait for Sam.”

“Good. What else were you thinking of us doing today, Alicia?”

“Last night I was thinking about us starting to look for a good area to live. I like the idea of a large place just outside the city limits. Since we will both be retired, something like a farm may be just the thing. I’ve always wanted a garden, but Mom wanted to keep our yard as grass, and then after Dad died we moved into an apartment.”

“I’ve never thought about gardening. It might be something I’d like. We could also plant some fruit trees. I’ve heard fresh homegrown vegetables and fruit is far better tasting than what we get in the stores.”

“I’ve heard that also, Jeb. In fact, a few of my preferred restaurants will only use freshly picked produce from our local farms.”

“What would you prefer to do, Alicia? Drive around the area looking for nice areas, or pick a real estate agent and have them advise us.”

“It seems stupid to drive around aimlessly looking for a good area when we don’t know if the area has a farm for sale. I vote for a real estate agent. One of my mom’s acquaintances sells real estate. Do you know anyone who is an agent?”

“No, but a couple of my married coworkers bought homes recently, and they may feel their agents did a good job. But ... I don’t have a high opinion of those coworkers as people, so any reference they may make would be questionable to me. I think we should go with your mom’s friend.”

“She isn’t what my mom calls a friend; she’s more of an acquaintance. However, Mom does have a good opinion of her as a person, so I’d be comfortable using her as our agent.

“Jeb, my referring to us as retired gave me a weird feeling. I don’t think it would be a good idea for us to just sit around doing nothing for the rest of our lives. I think we should start a business, and run it out of our home.”

“Yeah, that does sound like a good idea, sweetheart. In fact, I like it a lot.

“I’m unhappy with the Government taking forty percent of our winnings, Alicia. It just doesn’t seem right, especially since the State doesn’t tax our winnings. Your idea of going into business gives me an idea how we can recoup a small amount of that tax money and have a lot of fun in the process.”

“Oh, what do you have in mind?”

“Well, I’ve always wanted to tour the US and visit many of the well-known sights. Now ... if we went into business doing something like investing in real estate, we could take business trips to the areas we want to visit. While on a business trip, we could evaluate the advisability of buying the local real estate, and while touring the area to ensure it is a suitable area in which to invest, we could stop to visit the sights we want to see. All of our trip expenses would be a business write-off for tax purposes, which would save us money on our future taxes.”

“But, wouldn’t the IRS catch on when we don’t buy any real estate in those areas, Jeb?”

“Yes, they would, Alicia. However, before we leave on our trip, we will research potential investment properties and document our research. If one of those properties checks out when we visit the area, we can make an offer on the property. If it looks like a really good investment, we can make a reasonable offer. If it doesn’t look that good, but it wouldn’t be a total loss, then we make an extremely low offer that the owner will probably not accept. If the seller accepts the offer, then we will have bought a less than ideal property at a bargain basement price. If the seller counters, we can decline his counteroffer without countering their offer, or we can counteroffer with a price, still way below market value. If the seller counters again, we just walk away. If what looked like a good investment before we left turns out to be undesirable, we document why we didn’t make an offer. By doing all of that, we will be able to substantiate taking the trip for business purposes; if we are audited.

“Then the IRS will have a difficult time proving fraud. Especially with our documenting our upfront research, keeping good records of the business related costs we incur, and documenting the offers we make on properties to include the seller’s responses. But, I don’t think it would be a good idea to try and write off what are clearly tourist expenses.

“In fact, Alicia, buying a property on such a trip gives us several advantages. If it is a good investment, we will make money off of the property. We get to spend additional time in the area looking for a good property management company. We will have to make periodic trips back to that area to inspect the property, so we know our property is being properly taken care of by our property management company. Of course, we will combine those inspection trips with checking out further investment properties, which will extend our time in the area. That means more vacation time at a place that is of interest to us, and we get to deduct the majority of our vacation costs from our taxable income as business expenses, which in turn will reduce our tax burden.

“That’s devious, Jeb. I think it will work. Like you, I have a number of tourist attractions that I would like to visit. If we want to make it a touring business trip, we could buy ourselves one of those large, bus-like RVs and tow a car behind it. That way, we not only get to see the attractions, but we also get to see the country between here and there. If the IRS questions our driving, we can tell them we don’t like airports, the hassle and cramped quarters associated with flying, going through TSA checkpoints, rental cars, and hotel rooms. All of which is true.”

“I like that idea. Best of all, we can write off the RV, car, and cost of maintaining and driving them as business expenses.”

“Jeb, would we get in trouble with the IRS if we used the RV and car for an actual vacation?”

“I think so; if that was the only thing we did when we used it for a vacation. Now if we also evaluate the local areas we are in, then we could classify the trip as evaluating the investment potential of a popular vacation area. Who knows, we may actually find a few good investments.

“Wouldn’t it be great, Alicia, to make a lot of money, while getting even with the Government for taking almost half of our winnings?”

“I hadn’t thought of it before you mentioned it, Jeb. But, your idea for making money and using the trip costs of vacations as business write-offs to save us from paying so much income tax gives me a sense of satisfaction. Is there some way that we can use the Time Scope to improve the chances of our making good investments?”

“I hadn’t thought of that, sweetheart. I suppose we could look at what the general area and local property will be like in twenty years. We can also check to ensure the property we plan to buy doesn’t burn down in the near future or to ensure the area doesn’t become a slum.

“I like your idea of an RV, Alicia. It can be our rolling office and our home on the road. Since we will be spending a lot of time in it, I think we should have it configured for the ultimate in comfort and functionality.”

“I have an idea of what you mean by ultimate in comfort, Jeb, but what do you mean by ultimate in functionality?”

“I was thinking of two high-end desktop computer systems, one for each of us, to include a multifunction color printer/scanner/copier; a satellite communications link for Internet, phone, and TV; and a top-of-the-line GPS system.”

We both got a laugh out of Alicia speaking in her version of a highbrow southern lady when she said, “Why of course, Darling. I would expect nothing less.”

“Jeb, when we set up this investment business, do we want to limit ourselves to just real estate?”

“I was just using real estate as an example of what we might do, Alicia. But as we talked about it, it seemed like a very good idea that we should follow through on other investment possibilities. So no, I don’t think we should limit ourselves to just real estate. Did you have something else in mind?”

“Yes, I sort of liked granddad’s idea of investing in the stock market. It occurred to me that his main problem was he used the same stockbroker to buy and sell his stock. That left a traceable paper trail from the purchase through the sale of the stock. That allowed the people he dealt with to know how successful he was at picking the right stocks.

“Today, we have those companies that allow you to buy and sell stock on-line. You don’t deal with the same broker’s representative, so going through a company like E-Trade should give us a lower profile. We can have an even lower profile, if we deal with multiple, on-line brokerages.”

“That’s true, Alicia, and we can lower our profile even more by having the brokerages mail us the stock certificates. We can hold them or sell the stock at the proper time through a local stockbroker. By buying from one broker and selling through a second broker, no one in the brokerage business will know how much profit we make on our stock transactions. That should minimize the problem your granddad experienced.

“What about taxes, Jeb? If we are trying to not pay taxes on our income, how will that work?”

“Well, we will have to pay some taxes, Alicia. I recognize that the Government has operating costs, and our taxes pay those costs. However, a good tax attorney should be able to keep what we pay to a minimum.

“I know it is illogical, but I don’t mind paying taxes on my earnings, but paying taxes on gambling winnings doesn’t seem right. As an average taxpayer, I can’t deduct my gambling losses like a professional gambler can, but I have to pay taxes on my winnings.

“Death taxes are another tax I disagree with. A person pays income taxes on what they earn during their life. Their after-tax income accumulates and they use it to buy a home, car, and other assets. The person wants to pass on their assets to their family and after their death. Then when they die, the Government says his estate is income to whoever inherits it, so they take half of what he was worth before anything is bequeathed to their beneficiaries. That is just wrong!

“I know. They are going to do that to granddad’s estate. Aren’t they, Jeb?”

“Yeah, Sam told me the Federal Government will take forty percent off the top less the deduction. The State of Illinois will then take eighteen percent of the estate’s value as estate taxes, since the rate increased last year. However, Sam said that the state’s estate tax may be less, if he can get the estate taxed as an inheritance tax rather than an Estate tax. The inheritance taxes are complex to calculate, so all Sam said was by doing it that way the state’s overall tax rate would be somewhere between one and fifteen percent instead of eighteen percent.

“I tried to find out the difference between Inheritance and Estate Taxes for the Federal Government and the State of Illinois. I gave up after a while for the information seemed contradictory, and was definitely confusing. I’ll let Sam and the courts handle it. When the estate is ready for distribution, we will meet with Sam and he will explain how probate and all the taxes impacted the estate’s gross value. Sam said it would be a sizeable amount, but should be less than half of the estate’s total value. I took that to mean he was preparing me for a shock, and I would actually receive about fifty percent, or less, of the estate’s gross value.

“This is depressing, Jeb. I think I’ll call Mom’s acquaintance, Madge Fairbanks, and make an appointment for us to go house hunting after lunch; shopping always cheers me up. Now, what besides me would you like to have for lunch?”

“I would love to dine on you exclusively, Alicia, but unfortunately, I have an errand to run today in downtown Seattle. Give your mom’s friend a call and find out where her office is located. If we can get in this afternoon, we can grab a quick bite to eat downtown and then go to her office.”

We took care of my errand and finally arrived at Madge’s real estate company in Kenmore. I could see why Madge Fairbanks was one of Phyllis’s acquaintances, rather than a close friend. She was close to my age, perhaps a few years older, and quite attractive. According to Alicia, all of Phyllis’s close friends were around her age.

The only thing Alicia told me about Madge was, she met Madge at a Silent Auction that one of her mom’s charities had hosted. The auction was combined with a cheese and wine tasting, so after a good bit of wine, the participants kept upping the bids they wrote on their items’ bid cards. I hadn’t attended an event like that before, but Alicia said it was fun. Nibble on some cheese, sip some wine, checkout the items up for auction. If you are interested in something, write your name and bid on the item’s bid card below the prior bid. Once you examined all the items, you nibble on some cheese, sip some wine, and then check to see if someone has entered a higher bid than yours on the bid cards. If they have, you can enter a higher bid. It was a constant cycle until the bidding closed. Alicia said people often ended up bidding far more than an item is worth, just so they can win the bid.

Fairbanks’ Realty was a one-person operation. Small, but according to Alicia, Madge was selling a lot of real estate, which translated into a six figure income. When we entered her office, the ambience made me feel like we were coming home. As Madge greeted us, I could feel her personality enveloping us making us welcome. I could see why she sold a lot of property. Within five minutes, I knew I would never go to anyone else to buy property in the Seattle area.

As I took her extended hand in mine as I introduced myself, and a chill shot up my spine. Her voice was enchanting when she said, “Good afternoon, Mister Connor, it’s nice to meet you.

Looking to Alicia, she said, “It has been a while since we talked, Alicia.”

“It’s nice to meet you also, Miss Fairbanks. I’m not sure how much Alicia explained to you about what we are looking for. We’ve never bought a house before, so we are placing ourselves in your hands; and I go by Jeb.”

Madge had a professional smile on her face as we shook hands, but I had felt a tremor in her hand at the same time the chill went up my spine. In a friendly, teasing way, Madge said, “Ahh, Alicia. You’re lucky you have him wrapped up. He’s just what us girls are all looking for.”

With a laugh, Alicia said, “Down, girl! He’s perfect for me, and he’s mine.”

“I know, I can see it in his eyes and the way he looks at you. He’s fully committed to you.”

With a smile, Madge said, “Oh well, since I have no chance, let’s get down to finding the two of you a place to live.

“The first thing I need is for each of you to fill out a Buyer’s Questionnaire and a Credit Application.”

Alicia asked, “Madge, why do we need to fill out a Credit Application? I told you we would be paying cash for whatever we buy.”

“I know, Alicia, but I need documentation that shows the two of you are able to afford the homes I will be showing you. You would be surprised at the number of people who want to tour homes that are way out of their price range. Every time a prospective buyer views a high-end home, the seller’s agent has to go through the home and make sure the prospective customer didn’t leave a mess. If the property is messed up, the agent has to get a cleaning company to come in and clean up the mess. The Real Estate Board gets upset with those of us who take customers to homes they can’t afford or aren’t serious about buying.”

“Madge, I’m not sure how Alicia and I should enter our financial information. You see, right now the two of us together are worth about twenty thousand dollars. However, I just inherited my great Uncle’s estate, but probate won’t close for at least five more months. The lawyer told me the estate is worth several hundred million dollars before all the taxes and probate costs are paid. Then the other day, I got lucky with a Power Ball lottery ticket and won about eighty-seven million dollars. That is my estimate of the cash option payout after taxes. Unfortunately, I won’t be getting that payout for another five or six weeks.”