Kutchins Robbins & Diamond: CPA and CFP, Chicago, IL- Newsletter

Albert Friedman, president of Friedman Properties, is a recognized pioneer in revitalizing the now‑booming River North area in Chicago and is referred to as the unofficial ,mayor' of River North. He is one of the Developers most responsible for the revival of the once‑seedy area directly north of the Chicago river known as 'skid row.'

"Skid Row, which was once a very dangerous area, has become an exciting, safe, attractively landscaped and much‑sought‑after place to live, work and play, says Robert Lopatin, Chief Operating Officer and Director of Development.

Friedman Properties Ltd. has been engaged in real estate development and the restoration of urban neighborhoods since the early 1970s. "These aging buildings are not just made of bricks and mortar, they have a soul," Mr. Friedman has said. "I feel it is my responsibility to bring out the character that was put into them."

Preserving the Past‑ Building the Future

The company's main focus in the River North neighborhood has been the Court House District. Friedman Properties currently owns and operates approximately three million square feet of office and commercial space in this area, and their tenants include 20 of the most exceptional restaurants in Chicago including Spago, Ben Pao, Brasseri Jo, Frontera Grill, Maggiano's, Ruth's Chris Steak House and Shaw's Crab House. The Court House District, consisting of 42 buildings over 12 square blocks, has become the heart and soul of River North.

One of Friedman Properties' first restoration projects in 1985 was The Old Cook County Criminal Courthouse at 54 W. Hubbard Street. The firm painstakingly restored the building that once was the site of the Haymarket Anarchists Trial and the stage for the historic defense of the infamous Leopold and Loeb murder trial. The six‑story, 100‑year‑old structure now serves as a private office building known as Courthouse Place. With the restoration, Friedman Properties became a recognized leader in the field of preserving historic buildings.

In 1999, the city of Chicago awarded Friedman Properties Ltd. the right to redevelop 320 North Clark Street, also known as the Traffic Courts Building. This massive 400,000‑square‑foot structure fronting the Chicago River between LaSalle & Clark Streets was built as a food processing plant for Reid Murdoch & Co., whose name remains part of the riverfront facade. The redevelopment project consists of a major retailer. office spaces and restaurants. Once completed, there will also be a river's edge veranda and dock area to receive a Mercury Cruise Lines executive cruise boat and water taxis. Finally. the exterior of the building will be restored to its pre‑ 1928 splendor, and the clock tower with its illuminated faces once again will grace the Chicago River. Comments Mr. Lopatin: "The Reid Murdoch Center is a very significant restoration project for the City of Chicago and River North."

Another of the firm's projects is the completely new mixed‑use River North Center, which will encompass two square blocks and be the future hub of office, retail and residential activity in the heart of River North. This is a joint venture development of Friedman Properties, the Habitat Company and Standard Parking.

For his dedicated commitment to the revitalization of Chicago's historic River North neighborhood, Albert Friedman received the Silver Plaque Brotherhood Award for Education in 1998. The award recognizes business leaders who have distinguished themselves in exemplifying the principles of The National Conference of Christians and Jews.

Friedman Properties has also extended its standard of excellence and beauty into Chicago's newly revitalized Theatre District. A two‑theatre complex for the Goodman Theatre has recently debuted at the northwest comer of Dearborn and Randolph. Working hand in hand with the Goodman Theatre, the company has developed approximately 50,000 square feet of rentable space as the retail and office component of this vital downtown project. Two restaurants and a banquet facility comprise the retail component.

Whether it's real estate or accounting, having a historical perspective is important. Michael Abrams, controller at Friedman Properties, has worked with Bruce Robbins of KRD since 1994, although Bruce has been the accountant of record for the company since 1979. "When I took over as controller of Friedman Properties in 1994, Bruce was a valuable resource. Because he has the intimate knowledge and historical perspective of our company, he was able to bring me up to speed rather quickly. Without his assistance, the transition would have been a lot more difficult. Bruce again stepped in last year when Albert Friedman's executive assistant left the company. Having had a relationship with us for years and years, Bruce can offer advice and comment on matters because he has the benefit of knowing how the company has evolved. He meets with us quarterly and reviews all our intemally prepared financial statements and tax filings. He and the firm also provide tax planning and business consulting and assist us with structuring and strategizing for new acquisitions. First and foremost, we are still a familyoriented business, and I personally view Bruce as a part of our family. Knowing he and the firm are on our team gives us one less thing to worry about.

A Handy Employee Discipline Checklist for Managers

Discharging or disciplining employees presents the potential of employee and union claims, which can quickly ripen into costly lawsuits. Therefore, a legal and practical checklist for employee terminations should be at the side of every manager. Here are seven basic guidelines that can go a long way toward keeping you out of trouble:

Forewarn employees of their deficiencies and the disciplinary consequences of their continued failure to remedy those deficiencies. And, do it in writing. Without such "proof," the employer is at risk when the employee claims: "They never told me they had a problem with my work‑I was just fired."
Confirm that the rule was violated or the management direction that was insubordinately ignored was reasonably related to the operation of the business; and, the performance requested was that which an employer might properly expect from an employee.
Before administering discipline, the employer should make an effort to determine whether the employee in fact violated or disobeyed the employer's rule or order. The employee should be told the nature of the charge and should be given an opportunity to defend.
There should be an investigation conducted fairly, impartially and without discrimination to determine if the employee's guilt was as charged. Basic due process considerations can be persuasive and can help to buttress employer defenses to litigious employees.
There should be objective and substantial evidence of guilt. Suspicions, unsupported polygraph or drug tests and generalities will not withstand challenge.
Rules should be applied uniformly, fairly and without discrimination. If other rule violators have been tolerated, or present employees have even worse records than the offender, the employer's discipline will be subject to attack.
The degree of discipline should be reasonably related to the seriousness of the offense and the employee's past record. Discharge is the ultimate workplace penalty. If the punishment exceeds the crime, the employer's action may fall as excessive.

M&E Expenses that are 100% Deductible

In general, a company can deduct only 50% of business M&E (meal and entertainment) expenses. The June issue of the Journal of Accountancy points out, however, that careful tax planning let,, companies take advantage of certain exceptions to this rule and increase the tax deductibility of some M&E expenses to 100%. These exceptions must be separately identified, accumulated and reported. According to the Journal, certain types of M&E expenses a taxpayer incurs which are not subject to the 50% limit include:

‑Costs of recreational, social or similar activities that are mainly for the benefit of employees who are not highly compensated.

‑Expenses directly related to the business meetings of employees, stockholders or directors.

‑Expenditures included in an employee's moving expenses that are paid or reimbursed by the employer and includable in the employees' gross income.

‑Cost of meals that are excludable from an employee's gross income as a de minimus fringe benefit.

House Upholds Marriage Penalty Veto

Voting 270‑158, the House has sustained President Clinton's veto of the "marriage penalty" bill. The vote was 16 fewer than the two‑thirds necessary to override the veto. The Marriage Tax Penalty Relief Act of 2000 would have raised the standard deduction for married couples filing joint from S7,350 to S8,800 (twice the standard deduction for single filers), and gradually expanded the lowest income tax bracket (15%) to twice the corresponding bracket for single filers. House Majority Leader Dick Armey said, "We'll have to put the bill up on the floor next year and hope the president will sign it."

In light of a rapidly growing population, longer life expectancies, and serious concern over Social Security, more people are evaluating the need for long term care (LTC) insurance. To determine whether LTC insurance makes sense for you, consider these important issues:

Aside from assessing the need for LTC insurance, there are also many issues to consider when evaluating and comparing policies, including definitions, triggering events. benefit amounts and terms, waiting periods and facility coverage. As with any insurance, read the policy and any riders carefully. 9

The United States Postal Service has published an informative, free guide titled, Consumer & Business Guide to Preventing Mail Fraud. Mail fraud is defined as: "A scheme to get money or something of value from you by offering a product, service or investment opportunity that does not live up to its claim." The guide includes some of the more common mail fraud schemes and other common consumer problems. Of particular interest to business owners are the sections on Solicitations Disguised as Invoices and

Bogus Invoices. Don't be victimized by con artists who try to get you to order goods or services by mailing solicitations that look like invoices. Watch out for "Yellow Pages" advertising invoices designed to look like they're from your local telephone directory publisher. You can almost always be sssured that these bills are bogus. Charges for genuine Yellow Pages advertising will appear on your local telephone bill.

Investment Fraud. Fraudulent investment promoters try to get people to invest money by promising either a large increase in the value of the investment, higher‑than‑market interest on

capital, or both. Investment schemers market by mail and by telephone and use high‑pressure and sophisticated selling techniques. You may be dealing with an investment schemer if you can answer "yes" to the following questions:

* Are you promised an unusually high rate of return or interest payment on your capital?

*Are you pressured to make a decision because new investment units "are selling fast"?

When you plan your charitable contributions at the end of tile car, keep in mind that giving a noncash gift can often benefit a charity at least as much as cash, while potentially giving you added tax savings. If you donate cash, say S 10,000, to a charitable organization and you are in the 36% tax bracket. you could expect to save S3,600 when you deduct the donation on your tax return, provided you meet IRS guidelines. On the other hand, if you donate S 10,000 in highly appreciated assets such as stocks or mutual fund shares, you may not pay capital gains tax on the gain.

If you sold $ 10,000 in stock held more than a year, then donated the proceeds to a charity, you would generally save S3.600 in federal income taxes, if you pay taxes at 36%. Unfortunately, you would also be liable for capital gains taxes. If that stock had appreciated $4,000, you would owe $800 in federal capital gains taxes. Donating the stock outright generally saves you on both your federal income tax return and on capital gains tax, and a qualified charity doesn't pay tax when it sells the donated stock.

If you would like to donate to a charity, life insurance may be the appropriate gift for you. Depending on your age, a few hundred dollars annually can buy a life insurance policy worth tens of thousands of dollars in death benefits that the beneficiary, your charity, would reap. Donating some or all of your retirement plan assets, including 401 (k) plans and IRAs., is another way to benefit a charity. Finally, if you'd like to make a substantial gift to charity but want to retain an income from the property, consider creating a charitable remainder trust. You receive a current income‑tax deduction for a gift that will actually be made in the future. A charitable remainder trust may also result in estate tax benefits.

Remember, any qualified gift to charity‑either cash or noncash‑reduces the amount of financial assets in your estate, potentially lowering estate taxes due at your death. Talk to your financial professional if you're looking for ways to benefit charity while cutting your tax bill.