This column has been getting way too serious. Time to take a break from the weather or the economy. Let’s get back to basics.

Have you heard the one about ...?

An Irishman, a Mexican and a blonde guy were doing construction work on scaffolding on the 20th floor of a building. They were eating lunch and the Irishman said, “Corned beef and cabbage! If I get corned beef and cabbage one more time for lunch I'm going to jump off this building." The Mexican opened his lunch box and exclaimed, "Burritos again! If I get burritos one more time I'm going to jump off this building too." The blonde guy opened his lunch and said, "Bologna again. If I get a bologna sandwich one more time I'm jumping too."

The next day, the Irishman opens his lunch box, sees corned beef and cabbage and jumps to his death. The Mexican opens his lunch, sees a burrito and jumps too. The blonde guy opens his lunch, sees the bologna and jumps to his death also.

At the funeral the Irishman's wife is weeping. She says, "If I'd known how really tired he was of corned beef and cabbage I never would have given it to him again!” The Mexican's wife also weeps and says, "I could have given him tacos or enchiladas! I didn't realize he hated burritos so much."

Everyone turned and stared at the blonde guy's wife. "Hey, don't look at me" she said. "He made his own lunches!"

Anybody have someone like that working for you?

Even more to the point!

One morning a local highway department crew reached their job-site and realized they had forgotten all their shovels. The crew's foreman radioed the office and told his supervisor of the situation. The supervisor radioed back and said, "Don't worry, we'll send some shovels ... just lean on each other until they arrive."

Have a good month!
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If you are interested in either trip, but just have not made up your mind yet, we would encourage you to mark your calendar for Tuesday, September 23, when we will host a Winter Workshop Reception at the LCCA Office from 5:30 to 7:30 p.m. Not only will we provide FREE hors d’oeuvres and generous libations, we will explain the trips in detail and answer any questions you might have. For more information, just call Gary at the LCCA Office.
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For the last couple months, we have had a survey on the website asking for your opinion on the Summer Outing. Traditionally, the outing is held in June and over the past years we have been to Lake Geneva aboard the Lady of the Lake, Lincolnshire Dinner Theater, Miller Park for a ballgame and Arlington Park for horse racing.

When we asked what your preference would be between Arlington Park, Miller Park, Lake Geneva and a Cubs game at Wrigley, survey said:

• 32% wanted to go to Miller Park
• 21% opted for the boat ride on Lake Geneva
• 19% liked horse racing at Arlington, and
• 17% thought we should go to Wrigley.

A video was made of the “Selling Your Business” seminar held last May before the Membership Meeting. While not a cinematography success, it gets the important points across. This is our first effort at making LCCA seminars available to members who cannot attend. We expect to continue this in the future and hope our filming skills will improve over time.

The seminar covers the process for selling a family owned business and follows the sale of Benson Electric. The lessons learned and the process itself are well worth your time if you think that you might consider selling at some time.

The video is about one hour and forty minutes long and is available on VHS tape for just $25. To order a copy, just call Lisa at the LCCA Office – (847) 623-2345.
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The rains came – but only when golfers were NOT playing. At 5:30 a.m., thunder and lighting blanketed Countryside Golf Course. But by 7:30, the sun was out and the golf was hot. In the afternoon, a lightning alert postponed the start for 45 minutes. But when play began, the weather was perfect for the round. Rain got us again at dinner but by then everybody had the golf in and the tent for protection during dinner.

The winner for the day was Golf Chair Scott Nelson, H.H. Holmes Testing Laboratories, who decided to give golf umbrellas and golf bag umbrellas as the gift this year. How did he know?

This year the golf was as hot as the weather. A 59 bested the field in the annual Scramble Tournament winning the Low Gross Award by three strokes. Winners were:

1st Place – Payne & Dolan – 59

• Ray Sieracki, Payne & Dolan
• James Roper, Lake County Grading
• Scott Rieke, North Star Concrete
• Bill Martin, Top Deck Builders

• Wayne Machnich – Legat Architects
• Bill Steed, Legat Architects
• Larry Baskin, Glen Ellyn School District
• Ed Niskala, Vista Health

• Christian Damon – Patton Tractor & Equipment
• Matt Pehler – Patton Tractor & Equipment
• Tim Crum – Thelen Sand & Gravel
• Dan McMillan – Thelen Sand & Gravel

• Larry Matson, Waukegan Public Works
• Pete Sikich, Waukegan Public Works
• Rick Russell – Waukegan Public Works
• Buddy Johnson – Waukegan Public Works

• Todd Knop – Camosy
• Paul Geffert – Tec Corp.
• Ray Jorgensen – Condell Medical Center
• Mike Hackworthy

• Mike Sodaro, IBEW Local 150
• Mike Temple, Mechanical, Inc.
• Jack Orlov, John Keno & Company

Over 330 participated in this year’s event and we congratulate the winners and appreciate the patience of all the golfers. We would also like to thank Countryside Golf Course for their professional attention to details that helped make this year’s event a success. If you have comments on the outing, we would love to hear from you. Call Sheila at (847) 623-2345 or email us at sheila@lcca-il.org.
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A special thank you to Blue Boy Portable Toilets, Inc. for providing the outside beer recycling collectors. They did a brisk business!
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Gibson Electric Co., Inc. 2100 S. York Road – Suite #200 Oak Brook, IL 60523-1916 Phone: (630) 288-3800 FAX: (630) 572-6261 Contractor Mike McInerney, President Dan Neswold, Sr. Vice President Steve Becker, Director of Loss Control Electrical & Telecommunications Installation. SPONSOR: Fred Rodheim, Abbott Labs.

Haran & Associates, Ltd. 3201 Old Glenview Road – Suite #250 Wilmette, IL 60091 Phone: (847) 853-1234 FAX: (847) 853-1270 Associate James E. Haran, President Jim Udelle, Technology Consultant Gary Heinl, Audit Partner Mike Merker, Firm Manager Jim Hutchings, Technology Consultant Computer technology consulting, Accounting, Tax and Audit. SPONSOR: Pat Kirschhoffer, Kirschhoffer Truck Service

Sunbelt Rentals Pump & Power 2211 Oak Leaf Street Joliet, IL 60436 Phone: (815) 744-6484 FAX: (847) 744-6481 Supplier John Vedok, Manager Victor Bravo, Sales Engineer Construction and Industrial Equipment Rental SPONSOR: Aldridge Electric, Inc.

CORRECTION: Last month we incorrectly described the business for Monitor Surety Managers. The company provides surety (e.g. Contract Payment) bonds for prequalified contractor clients. We apologize for the error.
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The Department of Labor will now have the authority to require sworn statements from contractors confirming the accuracy of their records.

Senate Bill 1212 expands the law's coverage to all projects funded in whole or in part by public funds, including Illinois First projects.
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Contributors so far include: Jos. J. Henderson & Son Glenbrook Excavating & Concrete Air Con Refrigeration & Heating Berger Excavating William A. Randolph Greg Greenhill Construction American Acoustics Landscape Concepts Ragnar Benson C.D. Chidester Excavating Jack Frost Ironworks Manusos General Contracting T&R Tree Clearing Scott Pacatte Concrete Cutters Waukegan Roofing Electrical Contractors, Inc.

While it is too late to get into the drawing, it is never too late to help those who are dedicated to improving your market. We would still appreciate your contribution. Just send your check made out to Lake County Partners to the LCCA Office.
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In any Split-Dollar arrangement, the corporation and the employee retain certain rights. Typically, the corporation pays the premiums and owns the cash value and gets a portion of the death benefit. The employee gets to name the beneficiary of the remaining death benefit and reports taxable income equal to the value of the economic benefit he or she is receiving…commonly called PS-58 costs or it could be based on the term rates charged by the issuing insurance company if lower.

Specifically, the IRS is going after a form of Split-Dollar known as “Equity Split-Dollar.” The issue centers on how much of the cash value the corporation controls. If the corporation controls (owns) all of the cash value, then the new regs probably won’t have much impact on the employee. The PS-58 rates will change and will be given a new name. However, if the corporation only controls the cash value up to the amount of the premium it had paid AND there is cash value in excess of that, (called “equity”), this “equity” is going to be taxed to the employee under the new regs…not a happy result if it catches you or your employee by surprise.

There are some dates that you will need to pay attention to. First, nothing will take effect until January 1, 2004 at the earliest, for those plans in effect prior to 1/28/2002. That gives corporations an opportunity to “fix” those “Equity Split-Dollar” arrangements, which will be impacted.

How does one “fix” an “Equity Split-Dollar” arrangement? Simply stated (and believe me, this is far from simple), the corporation must terminate the Split-Dollar arrangement or convert it into a loan…the question becomes when would this have to be done? It will depend on several factors.

If the arrangement is terminated, the employee picks up taxable income equal to the corporation’s interest in the cash value. The employee then becomes responsible for paying the premium payments and any interest payments on outstanding loans on the policy. The corporation could "bonus" sufficient money to pay these premium payments. The employee would then pay the additional tax on the bonus. If the corporation were really feeling magnanimous, it could bonus out enough to cover the tax as well. Of course the corporation would get a deduction for this bonus, but it would have to pay it's portion of the Social Security (6.2% up to the cap of $87,000 for 2003, when combined with other compensation) and Medicare taxes (1.45% no cap) on it. The corporation also loses all rights in the policy, meaning it loses much of its effectiveness as an inducement as an employment incentive. The promise to bonus out future premium payments could be attractive, but how binding is it?

If the “Equity Split-Dollar” arrangement is to be converted to a loan, you will need to wait for the final regs to be sure this will be done correctly. The employee would owe the corporation a debt, equal to the corporation’s interest in the cash value, on which interest would have to be paid. How much interest and how frequently are questions which presumably will be answered by the final regs. Here again, the corporation could bonus the money for the interest payment out to the employee.

Needless to say, Split-Dollar arrangements have become more complicated, particularly for those corporations that utilize “Equity Split-Dollar” plans. It is still a viable strategy in certain situations, but it may have lost some of its appeal in others.

Just what should you do to be prepared for these new regs? A simple form is available from the LCCA Office by calling (847) 623-2345. Armed with this information, consult with your insurance and/or tax advisor. If you can’t find this information, contact your insurance advisor to help pull it together.

Clearly, this article is not a definitive “How to Kit” in dealing with various kinds of Split-Dollar arrangements. The final regs will be quite complex and well beyond the scope of this format. Each situation will need to be revisited on an individual basis. This article is designed as a “Heads Up;” there are changes coming down the road.

Paul E. Nick, ChFC is a registered representative of Lincoln Financial Advisors Corp. offering insurance through Lincoln affiliates and other fine companies. [8755 West Higgins Rd, Chicago, IL 60631 (773) 380-8512 phone, (773) 693-2531 fax]
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