Baseball’s Replay System: Almost Perfect

Major League Baseball is using expanded instant replay for the first time this season. The new system allows managers to ask for a replay. The wikipedia entry on MLB instant replay explains it well:

(M)anagers will be allotted one challenge per game (two if the first challenge results in an overturned call) while the umpiring crew chief will be empowered to initiate a review in innings 7 and later. The umpires will also be allowed to review a home run call at any time, even during innings #1-6. Once a call is challenged an umpire requests a video review, fellow umpires in New York’s Replay Command Center will watch video of the play in question using the “indisputable video evidence” standard when deciding whether to overturn a call.

As with anything MLB does, the system has critics, but I like the replay system. It’s almost perfect.

The only thing I would change is the manager challenge part. That just seems hokey.

If the objective is to get the call right, then either team or any umpire should be able to ask for a replay on any play at any time, regardless of what inning it is or if a manager has “challenges” left. (I feel the same way about the use of replay in football, too.)

Baseball: When One Loss Equals Two Games

I am fascinated by seemingly random things when it comes to numbers. (Okay, I’m fascinated by a lot of random things, but numbers and statistics in particular.)

One of those things is an oddity of the baseball standings that looms large later in the season, when the number of games remaining grows smaller. And that oddity is that one loss can equal a two-game swing in the standings.


Team A has a record of 85-65. Team B has a record of 82-68. So Team B is 3 games behind. If Team B sweeps the series, it will move into a tie with Team A. But if Team B loses even 1 game in the series, it will be 2 games out at the end of the series. One loss equals a two-game swing in the standings.

I guess this isn’t so much an “oddity” as just something that sticks out to me. Normally in baseball, the goal is to “win the series.” So winning 2-of-3 is a good thing. But when you’re trailing in the standings, any losses to the team you’re chasing can create a huge setback.

Take the example above. Each team has played 150 games, which means 12 more games remain. A 3-game sweep by Team B results in a tie in the standings with 9 games left to play. But if Team B loses 1 game, Team A would still be 2 games ahead with just 9 games left. Not an impossible deficit, but a much bigger hill than being tied. All from losing 1 game.


Prior-Year Adoption Credits and Same-Sex Marriage

Scenario: Angie and Alice are in a same-sex marriage. In 2012, Alice went through the adoption process to become the parent of Angie’s child. Because of the Defense of Marriage Act, Alice properly filed her 2012 tax return as a single person … and claimed the adoption credit for adopting Angie’s child.


  1. After the repeal of DOMA, Angie and Alice’s marriage is recognized by the federal government back to the beginning of their marriage. So Alice’s adoption was a “second-parent” adoption. Second-parent adoptions are not eligible for the adoption credit. Will the IRS come after Angie and Alice on this?
  2. Alice’s 2012 tax return was such that she had an adoption credit carryforward. Can this carryforward be used on her 2013 joint return with Angie, considering that the adoption is now a second-parent adoption?
  3. What if Alice finds something that she needs to amend on her 2012 tax return? Will she need to change her 2012 filing status to “married” and pay back the adoption credit on that amended return, even if she’s amending for some other reason?

ONE: We know that the IRS will honor the filing status used on tax returns filed prior to September 61, 2013. See Revenue Ruling 2013-17. Angie properly filed her 2012 tax return as a single person, so there is no danger of the IRS challenging the adoption credit claim.

Additionally, let’s look at the wording of the Internal Revenue Code regarding the adoption credit. According to IRC Section 36C(d)(1)(C), qualified adoption expenses are expenses:

(W)hich are not expenses in connection with the adoption by an individual of a child who is the child of such individual’s spouse

The Defense of Marriage Act specifically said that the term “spouse” could only refer to couples in opposite-sex relationships. Angie properly filed her 2012 tax return based on the law of the land at the time. Angie and Alice were considered legal strangers at the time, so the adoption was not a second-parent adoption.

Which answers question two: I believe the carryforward can be used on Angie and Alice’s joint 2013 tax return.

Number three is worthy of a blog post of its own, which I’ll have on Wednesday.

A Heretic Speaks Out Against Value Billing

Value billing, as I understand it, is the concept that service providers should bill clients based on the client’s perceived value of the work completed. Across

Image courtesy of Stuart Miles /
Image courtesy of Stuart Miles /

the web, one will find plenty of articles about the wonders of value billing, sometimes even in the AICPA’s “Journal of Accountancy.”

Search “value billing” on Google and you’ll see nary a negative word about value billing. (Except in the archives of this law blog.) The few times a contrary word is written, defenders of value billing will rush in to strike down the heretic.

I’ve never been afraid of voicing my opinion on this blog, even if it’s contrary to what everyone else thinks. So here’s my opinion of value billing:

True value billing, where you bill a client based purely on the client’s “perceived value,” is BS.

Yep, I’m a value billing heretic in a world of true believers.

Areas of Agreement

I agree with proponents of value billing when they say that hourly billing is not the way to go (though I do bill by the hour sometimes).

I also agree with them that it’s important to be able to quote a firm price to the client up-front — something that’s hard to do when billing by the hour.

In my own practice, I use a “kinda-sorta” form of value billing, I guess. For tax work, I use a price menu where each form or attachment has a certain fixed price. For ongoing accounting work, I use flat-fee billing where the client pays a pre-determined, set amount each month for the services provided (but the flat fee is determined by an estimate of the ongoing time commitment.)

Determining prices is the hardest thing I do. It may be THE thing that I struggle with the most as a solo operator.

But I’m firm in my heretical conviction that true “value billing” is all wrong.

Example of Why I Think Value Billing is a Bunch of Hocus-Pocus

Let’s say I’ve got two tax clients, the Smiths and the Joneses. Both are married couples with kids. They both itemize deductions and have some daycare expenses. They come to me for tax preparation.

Value billing says I should bill each client based on how much the client “values” the work I’m doing. Meaning, the Smiths might pay $200 but the Joneses might pay $350 if I perceive that I’m providing that much more value to the Joneses.

Where does the extra $150 of value come from? How does one determine that? How did I decide it was $150 more instead of $100 more, or $50 more, or $10,000 more?

Image courtesy of iosphere /
Image courtesy of iosphere /

An article in the Journal of Accountancy says firms should appoint a “Chief Value Officer” and a “Pricing Council.”

The author opines that the “Pricing Council” should determine 3 price points: “Reservation” (where you turn a “normal profit”), “Hope For” (where you generate a “supernormal” profit”) and “Fist Pump” (where you “generate a windfall profit”).

Sure sounds to me like the service provider’s goal in “value billing” should be to jack up fees as much as possible, and hope that the client falls for the “Fist Pump” price.

Which leads me to this harsh conclusion — in order to value bill, a service provider should ask two questions:

  1. Is the client rich?
  2. Is the client naive about typical fees for the services they seek?

If the answer to these two questions is yes, then you’ve hit a home run and can jack up the fee while telling yourself that it’s okay because of the client’s “perceived value” — which is seemingly grabbed out of the sky.

So there you have it from this heretic on value pricing. I welcome commentary from any of the True Believers out there who want to save me from damnation for my failure to see the light of value billing.

From the Archives: Filing Separately on Your Iowa Return? Don’t Forget to Allocate Deductions

It’s a holiday week, so I’m hauling out popular posts from the past. This post from March 2012 reminds Iowans who are married and filing separate Iowa returns that they must allocate itemized deductions on the Iowa return based on income.

New blog posts will resume next Tuesday.


(Originally published March 7, 2012)

Married couples in Iowa who both have income will usually find that one of the “separate” filing statuses is the best to use on their Iowa taxes, rather than filing a joint 22691ziyqftheb8Iowa return. The reason is, Iowa has just one tax bracket regardless of filing status, so two people filing a joint return will be taxed on their combined incomes at a high point in Iowa’s highly progressive tax bracket. Filing separate returns allows each spouse to be taxed at a lower point in the tax bracket.

Iowa offers two “separate” filing statuses — married filing separately on a combined return, and married filing separately on separate returns. A more thorough discussion of the differences between the two statuses is for another blog post on another day. The main point I want to make today is: under either of the separate filing statuses, you must allocate itemized deductions based on income.

Allocating Deductions

When a married couple files separately on their Iowa returns — either on a combined return or on a completely separate return — the couple MUST share itemized deductions based on income. This is true even if one spouse made 100% of the payments from their own separate funds.


John and Jane are married in Iowa and file their Iowa taxes as married filing separately. John’s income is $50,000. Jane’s income is $25,000. On the Iowa return, John must claim 2/3 of the itemized deductions ($50,000 income/$75,000 total income of the couple) and Jane must claim 1/3 of the itemized deductions, regardless of who actually made the payments or whether the payments relate to separately held property.

This is a different concept from the married filing separately filing status on federal taxes. On a “separate” federal 1040, the itemized deductions generally go to whoever actually made the payment.

Image: renjith krishnan /