Archive for July, 2014|Monthly archive page

Do You Own Inches of Land in the Yukon?

Originally published in the Cedar Street Times

July 25, 2014

When I was growing up, I remember my Dad once telling me that he owned eight square inches of land in Canada.  He said he got the land as a promotion when buying cereal as a young boy.  At the time, I thought that was kind of cool, and just accepted it at face-value.

As I look back on that now from my perspective as an accountant, dealing with all kinds of financial related issues on a daily basis, a lot more questions come to mind.  For instance, where are the deeds to the property, and how would we find the right recorder’s office to get copies of the deeds if needed? Were the deeds ever even recorded?  Was it a fee simple interest?  Did he have mineral rights?  Eight square  inches may be just enough to drill a very small oil well!  Or maybe there is gold!

How would that impact his retirement planning? What about real estate taxes?  Typically land requires the annual or semi-annual payment of property taxes or the land is taken back or sold to settle the outstanding debt if unpaid.  Are there any laws regarding foreign ownership of land or any new requirements to look into regarding foreign asset holdings?

Could we lease the land, and what would the tax impacts be?  Should my Dad have included it in his estate planning so that loose ends would not pop up at some point which could result in title problems or perhaps probate?  Would there be any liability associated with this land, and should he have carried a general liability or perhaps an umbrella insurance policy in case his eight inches contained a stone on which someone could have tripped?!

What was his cost basis on these inches and how much profit would be recognized if we sold it?  All of these questions and more find their way to my door step for other client issues. As an accountant, we often end up as the independent advisor –  like the hub in a wheel with spokes running out to the financial planner, investment advisor, insurance agent, attorney, banker, etc.  Almost every profession leads back to taxes and tax planning in some way.

In my Dad’s case, I found we did not have any real concerns, but there is a fantastic story to go along with these inches of land which you can read all about at: http://www.yukoninfo.com/dawson-city-yukon/the-klondike-big-inch/.  The gist of the story is that this was a marketing plan in 1955 developed by Bruce Baker to get children to buy Quaker Oats Puffed Rice and Puffed Wheat cereals.

Baker decided to tie-in a popular radio and television show which Quaker Oats sponsored, “Sergeant Preston of the Ukon” by offering children the opportunity to own one square inch of land in the Yukon in Canada if they bought cereal.  The attorneys thought the idea was crazy, but Baker persisted and even flew to the Yukon and secured a 19.11 acre parcel to be divided up into 21 million one-square-inch parcels.  The company eventually agreed to the idea and thus began their most successful campaign ever.  Cereal boxes flew off the shelves as deeds were printed and inserted into each box, and every one inch parcel was given away.  They did a second campaign and Baker had four tons of Yukon riverbed sand sifted and packaged into tiny promotional pieces as well.

As the years rolled on, the inquiries about these hard-earned plots of land kept coming in by owners that wanted to know more about their plot of land, or its worth, and also by estate planning attorneys that were trying to figure out what to do with these deeds!  One child was said to have sent four toothpicks and a string and asked the Quaker Oats company to put a fence up around his property!  One person collected over 10,000 of these from people around the country and asked Quaker Oats to pick out a quiet place for him along a lake or river, if possible!

The reality of what happened is that the company that was created to handle all the deeds – The Klondike Big Inch Land Company, Inc. realized it would be way to expensive to record all the deeds in each child’s name, so with the opinion of a Canadian attorney they decided to send the deeds out and never have them officially registered.  The Klondike Big Inch Company, Inc. did not pay the $37.20 property tax bill in 1965, so the land reverted back to the Canadian government.  The company then shut its doors.

Still, to this day, however, nearly 60 years later, Canada and Quaker Oats receive hundreds of communications each year regarding the land!

Prior articles are republished on my website at www.tlongcpa.com/blog.

Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.

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Claire Elise Long

Originally published in the Cedar Street Times

July 11, 2014

At 7:50 am on July 3rd, I entered into my second contract of fatherhood! Fortunately it was not during tax season like my last contract when my son was born!  No, I was all smiles when my daughter, Claire Elise Long was born in our home with the help of our wonderful midwife, Maggie Bennett, weighing in at around six pounds 14 ounces and 19 inches long.

Whereas the vast majority of children born on the Monterey Peninsula have a Monterey birth certificate due to CHOMP’s location, I think it is quite fun that my son has a Pacific Grove birth certificate and my daughter will have a Pebble Beach birth certificate.  I told my wife, Joy, that we need to move and have children in Seaside, Sand City, Del Rey Oaks, Carmel, and Marina so we can collect all of the more rare birth certificates.  She did not find that as amusing as I did.

I think Claire Elise may be a Daddy’s girl as she followed through on my in-womb negotiations with her about the timing of her birth…unlike her brother, Elijah, who came during tax season despite express language in his birth contract stating otherwise. Claire Elise upheld the terms of not exceeding seven pounds eight ounces (a point bargained for by her mother) and she was given a right to exercise her birth option from June 29th to July 31 with a birthing bonus if born on July 4th.

When negotiating pressures intensified in the early hours of July 3rd, Joy caved and was very easy to persuade and saw no further need to hold out until the 4th.  I, however, needed more convincing.  Claire Elise deftly pointed out that being born exactly on the first day of the 10th fiscal quarter after her brother was born, would simplify things for quarterly reporting purposes…she knew how to push my buttons.

After holding the beautiful bundle of love, we immediately decided to approve her initial contract for child-rearing.  When my son was born we struck a deal with him to extend his initial contract through kindergarten with two renewable six-year options.

The second renewable option would include an opt-out for us after the middle school years.  There would be some additional language which could allow for a third six-year option to get through the college phase depending on certain performance benchmarks achieved in the prior option period.

Based on our experience with our son, we decided to offer similar terms but with some additional specific language regarding liquidated damages for things like unprovoked dumping of milk and juice and other gravitational experiments with glassware and plates, storing the remote control in a cup of chocolate milk, and breaking necklaces and expensive pairs of eyeglasses.

With business out of the way, we have been having the time of our lives…again!  The precious little noises and movements, the intoxicating cuteness, and her absolute and impartial trust make life a true blessing.  As I hold her in my arms, I know there is much good to come.  I can now look forward to not only experiencing the unique joys of having a son, but also the equally unique joys of having a daughter – and for this, I am very grateful.  I love you, Claire Elise; you make Daddy very proud!

Next step…convincing Momma that baby-modeling is a good idea so Claire Elise can generate earned income and open a Roth IRA!

Prior articles are republished on my website at www.tlongcpa.com/blog.

Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.