Chapter 99: Prof Plans for Me to Become a Quadmillionaire

Friday, April 22, 2005 (Continued)

It was easier for me to check the kitchen for Prof than check his study, because the stairs arrive at the ground floor near the kitchen. Plus I should greet Vanessa anyway. The fact that I was overdue for a snack had not escaped my notice either. Also, I like kitchens. So I had lots of good reasons. I stuck my head in, and somewhat to my surprise, Prof was in there.

As part of the mutual greetings Vanessa asked, "How's your day been, Mark?"

"Very interesting so far."

Vanessa said, "Good. You can tell us about it over dinner."

"Umm, maybe not. It probably wouldn't be suitable dinner conversation in front of The Boys' girls." The two interesting things I'd been thinking of were the Gia and Dakota incidents. Probably best not to mention those, or all the girls who'd tried to pick me up today, and ESPECIALLY NOT the guys who'd tried to pick me up either (shudder). Which pretty much left me with nothing to talk about. Apparently it'd been a slow day, other than all the sex.

Soon Prof said, "I've got a piece of interesting news about your business idea. Can you spare five or ten minutes from the girl you have upstairs?"

"Easily, Julia just fired her from being a Liaison. Your daughter is merciless! I don't mean that as a criticism, because I understand why and agree, but she's still scary. I'm VERY glad she's on my side, that's for sure."

Vanessa said, "You are her side. Did you learn a good lesson from the girl, or did she just not work out?"

"I learned a lesson. The girl, Dakota, wanted a second date quickly and tried to manipulate me into it by crying. Largely put on, I suspect now. I totally fell for it, but when Julia came into the room, Julia saw through it in no time at all. Dakota did know I was busy so she was being selfish, and we'd caught her in another little lie too, so Julia fired her. If she doesn't leave under her own steam, Julia's threatened her with having The Boys carry her outside naked and dropping her on your front lawn. I imagine the fear of that will have her moving shortly."

Vanessa chuckled, adding, "So you won't fall for the crying trick again?"

"Umm, perhaps. Let's say I'll be more doubtful in the future. Dakota's crying seemed genuine, which worries me. The only reason I suspect it was fake was because it stopped so quickly when Julia started talking. Julia saw through her because of the facts of the situation, not because of her crying seeming false."

Vanessa said, "You won't be able to tell fake crying from real crying because they'll nearly always be real. Females can make the emotion at the base of their upset real, even if it's a pretend emotion. It's a consequence of our ability to empathize with other people. In her case, Dakota was empathizing with a version of herself that deserved another date with you and was being hurt by your not giving her one. Think of it as acting, where the actor intellectually knows she's acting, but truly does feel the emotion. For future reference, if a girl is crying at you because she wants you to do something that's better for her than you're prepared to do, then you should assume that she's probably manipulating you. That'll be true more often than not. I don't blame you for being fooled this time, but you should have seen through the facts if Julia could do so quickly. Were you very uncomfortable when she was crying?"

"I'll say! I HATED it."

"Yes. That's one of the reasons it works so well, guys stop thinking when a female cries. The 'Protective Instinct' kicks in. Guys feel an instinctual compulsion to make everything better."

"EXACTLY! That's exactly how I felt."

"That's how every guy feels, and every woman knows that. It's one of our best weapons. Dakota was foolish to use it around Julia though."

"Julia was in our study originally and only came into the bedroom after Dakota had been crying for a while. Maybe Dakota had forgotten about Julia, or maybe Dakota thought she'd be able to manipulate me before Julia got back, which would've been silly because I'd have to tell Julia I had another date with Dakota, which would've opened it all up. I don't think Dakota was very smart."

"Just as well she's fired then."

I was more comfortable with the Williamses now, so I confessed, "Yes and no. She had REALLY nice breasts."

I was a bit embarrassed saying it, but the two of them laughed away happily. Prof chipped in with, "Maybe I should hang around in case The Boys need any help carrying her out, haha."

Vanessa playfully slapped his shoulder, "Down boy! Why don't you take Mark to our study for your conversation. I should go upstairs and check on Dakota."

I spoke up, "Umm, can I grab a snack of something please. I'm quite hungry. Also, why do you need to check on Dakota? I didn't think she mattered anymore? Certainly Julia wasn't worried about cheering Dakota up. Julia was merciless."

Vanessa said, "There's plenty of snack makings in the fridge, or cookies. You don't need to ask, help yourself anytime. I'm not worried about Dakota because I'm sure Julia is doing whatever's appropriate. Julia got a good sense of values." I wasn't as sure of that, as Julia's brutality seemed excessive to me. In fact, it seemed excessive even compared to what I thought would have been excessive, if that makes sense. Vanessa continued, "I just want to make sure we don't have an angry, vengeful teenager running amok upstairs, wrecking the place."

Oh dear! I'd never thought of that. I felt bad bringing that risk into the Williams' house. And I thought of something else too, "I'd better come up with you. Julia did say she was going to have a shower, so Dakota will be alone."

"Don't worry about it, Mark. I doubt Julia left her alone, and the sight of you would probably make matters worse. I'm sure I can handle a single teenager. I get enough practice with roomfuls of them at work. She's not a 200lb weightlifter, is she?"

"Haha. No. I don't think you need worry about that. Are you sure? I don't feel comfortable leaving you alone with her."

"I feel comfortable. Make yourself a snack and go chat with Prof. I know you're in the kitchen for the next few minutes, so I'll call out if I have any problem. There's some lemon cake in that can over there." That was a dirty trick, as I really like lemon cake. Lemon anything actually. Vanessa headed upstairs. I let her go alone, as it was her call and I didn't expect Dakota to be violent. Plus there was lemon cake down here.

Prof said, "I'll get you a piece of cake; you check the fridge."

It was a good division of labor, after I'd said, "Make it a big piece please."

He talked while we made my snack, "About the business. We can talk generalities out here, but we'll save the details for when we get into my study. In general, I had an idea a few days ago about how to get a significant proportion of the money into your name. We want it in your name for a variety of reasons, mainly because that'd be fairer and so you'll learn all the lessons that result from being rich. Ideally all the money would be in your name, but because of where we earn it, it has to go into my name initially. I don't know whether you're aware or not, but if all the money is put in my name, and then I give it to you, then we have to pay Gift Tax on it, so it'd be taxed twice: when we first earn it, then when I give it to you. That's true even if I give it to you one second after I get it. The IRS takes about a third each time, so for every $100 gross, I have to send them $33, keeping $67. Then when I give that $67 to you, I have to send the IRS another third, call it $22, leaving you with $45. We'd end up with 45% of what we started with. In America, all gifts worth more than a few thousand are taxable. Great system, isn't it?"

"I don't understand tax, but to me that sounds unfair and wrong."

"Let's not worry about the morality; it's the law. As you get older, you'll see that laws can be immoral. They're written by humans, with all the vested interests, greed, biases, errors, lack of imagination, etc., that entails. Anyway, the problem that I'd been thinking about was how to get as much of the money as possible into your hands without the double taxation. I had an idea that I checked with my accountant. He confirmed that it's perfectly workable."

I had a plate nicely loaded now, so we walked toward Prof's study. I'd been listening carefully, in case Vanessa needed help, but had heard nothing. Just as we were leaving the kitchen I heard footsteps on the stairs, so I ducked back to look. Vanessa was coming down alone, saw me and said, "Everything's fine."

That's all I needed to know, so Prof and I resumed our little journey. In his study he continued. "I didn't give my accountant the details, but he said he didn't need them. It is perfectly fine for us to establish a business and create a foundation document that determines its profit split. We'd have no trouble with the IRS saying that even 75% of the profit goes to the inventor of the business's core idea, which is you. We're going to make your intellectual property - which is a fancy name for "idea" - worth 60% of the profit, for a reason I'll come to soon."

The reason didn't matter to me. I remembered that Prof said we'd try to win enough so that after taxes we'd have $5 million. 60% of $5 million was a number that I was EXTREMELY happy to have in my bank account.

Prof continued. "The remaining 40% will be split 20% in each of two categories: financing and labor. The financial contributors will share in 20% of the profits in proportion to their investment. The workers - that's mainly you and me - will share in the last 20% in proportion to our time input, which we'll call equal."

I said, "I'm not sure I followed that. Do you mean I get EVEN more than 60%?"

"Yes, because I haven't explained everything yet. I'll do that shortly. Be aware that this is all an accounting fiction. We're doing this only to keep the IRS, banks and other officialdom happy. Let me finish explaining using our example, and you'll understand better at the end. Okay?"

"Please."

"For every $100 of profit, you get allocated $60 for the value of what I'll call, 'The Idea'. We don't need to tell the IRS what the idea is, merely that there is one. In reality it's because you've got your TK ability, but we won't be telling the IRS about that! Then there's $20 of profit to allocate according to labor input. Let's assume you and I are going 50/50 on that, as we're both going to Vegas, so you get another $10, as do Vanessa and I collectively. Lastly there is another $20 to allocate to the financiers. If Vanessa and I put up all the money, as we originally discussed, then we'd get all $20, so the final split would be 70 to you, 30 to us. However, it appears that Vanessa and I aren't going to be putting up all the money, as your mother says you'll be settling with your school early next week. Felicity says the amount will be $45,000."

"Wow. That's wonderful! Carrying that cast around was a pain, but nowhere near a $45,000 pain. Awesome!"

"Your Mom won't accept the deal until she's talked to you about it, but she says she knows you'll approve."

"I'll say. More than approve!"

"That'll release the school for all liability over all the past assaults on you and the incident of the teacher threatening your grades. The slate is wiped clean. The $45,000 will be paid directly to you, not to your parents, so it'll be in your name. I talked to Felicity about what I'm talking to you about now, and she's making the payment being in your name part of the deal with the school. They don't care who they pay, just so long as they get lots of signatures on the release. What we're going to do is Vanessa and I are going to put in $50,000, you'll put in $45,000 and your parents another $5,000, making $100,000 in total. So you get the $60 per $100 credit for your 'idea', $10 for your half of the labor, plus 45% of the financiers $20, which is another $9. The final totals are $79 per $100 of profit for you, 5% of 20% for your parents, which is $1, and the balance of $20 for Vanessa and me. To put real number on that, if we win $7.5 million at roulette, lose a third in tax, we net $5 million. You get 79% of that, which is a fraction under $4 million; your parents get 1%, which is $50,000; Vanessa and I get 20%, which is $1 million."

"Wow. Those are amazing numbers!"

"Especially yours. You'll be a 'quadmillionaire'. But, as I mentioned earlier, it's mostly an accounting fiction. Let me explain the rest. Our goal is to have two $1 million dollar emergency funds. A million may sound like a fortune to you," He was right about that! "but it's really not that much. If some emergency comes up and you have to flee the country and keep a low profile for several years, you'd be surprised how fast that could be used up. We'll have two $1 million funds, one for each of our families, except that you'll be able to access both of them. That way if an emergency happens it's likely that you and anyone you're with will be able to fend for yourselves. Those will be spread across two or three overseas banks who can wire the funds to you wherever you are. We'll also make sure we stash some cash in a few locations too, enough to keep you going for a few days or to get you overseas, until you can tap one of the emergency accounts.

^-- "The reason we made your idea worth 60% was to leave Vanessa and me with 20%, and therefore a $1 million share. That's our emergency fund. Your parents are tipping in their $5,000 just to even up the financing. They feel better about their family carrying the same risk of losing as Vanessa and me. Legally, because you're a minor, all your winnings are controllable by your parents anyway, so they can set up their $1 million emergency fund using what is theoretically your money. That'll leave $3 million of winnings, mostly for the mansion, its renovations and furnishings, which will be in your name. That'll probably end up costing something like $2 million, but that's only a very rough guess. I'm sure there will be a spending spree as well. There's bound to be, with so many women involved, haha. Hopefully we'll be able to hold back a $100,000 or so for the emergency cash stashes, some at home, some in safety deposit boxes in two or three places. Maybe some even buried in the woods somewhere, just in case something really crazy happens and you can't go anywhere near any people. So the almost $4 million that you'll theoretically have in your name will be spread around: $1 million overseas, roughly $2 million spent on the house including all the renovations and furnishings, some cash stashes and some spending. I know Julia intends for you to get a new car, for example.

^-- "That's a slightly simplified breakdown, as I think we should give The Boys, Julia and Carol a very small credit for their labor. Again it's really an accounting fiction, but when the money comes in we only want to pay tax on it once. This is especially important for Carol and Julia, as neither of them is your legal wife so they don't have legal, tax-free access to your money. If you give them much more than $10,000 per year, you'll have to pay gift tax on it. If we record in the business's documentation that Carol and Julia did some work for the business, then they can get a share of the profit.

^-- "I said earlier that you and I will not quite be 50/50 on time. My share needs to stay at 50% else we can't afford our overseas fund, so we have to reduce your share of the time. Every 1% of the time allocation is worth 1% of 20% of $5 million, or $10,000, so if you wanted to put $100,000 in each of Julia and Carol's names, for example, then you'd have to give them 10% of the labor each, so the time share would be 50/30/10/10. I don't imagine you'd want to give Donna more than $10,000 per year, so there'd be no need to involve her in this, but Vanessa and I would like The Boys to get something in their names. They've spent time helping you, but their time isn't so valuable as to be worth more than a few hundred dollars, but we'd like something more substantial than that. That's all up to you, of course.

^-- "That's the structure described. There are a few side issues I'll mention. One consequence is that neither family needs to sell their existing houses. Vanessa and I would probably keep this house, and either rent it out or let Andrew and/or Robert live here if they want to stay in the area, if they get jobs here. I think we'd be wise to keep this house just in case there's a personality clash among the two families. With so many people under one roof, even if it's a very big roof, that could happen. Vanessa and I are both unusually focused people, and our style may clash with that of your parents. No faults on either side, just different ways of doing things. Another issue which may have occurred to you, is why go to all this bother to minimize taxes, when we can just win more money?"

I agreed, "That HAD occurred to me. This is a LOT more complicated than I thought."