Can someone expand on why Joe Louis shouldn't have been made to pay taxes...

I still hate the tax guys, but, that was a good reply.

Part of the problem here (South Africa) is that the government is SO inept and SO corrupt that they have literally no money left. That's why they are being giant schlongs about stuff. It just burns me up to see my tax money practically flushed down the toilet, and then being told all the problems are my fault. But, whatever. Let me not get started.

 

Cause he was a 190 pound man with 213 pounds of ripped lean artifical muscular 37 year old fat.

I dont know about the rest of you, but the day i turned 37, all my body weight was no longer real, and I developed the ability to levate, its fun.

 

In Joe's autobiography he states that when first told by an accountant that he owed a certain amount in taxes, he told the accountant to pay it. The accountant resisted, telling him to let the amount build up so that they could settle with the IRS for an amount lower than the original. In the book Louis said "I wish I never listened to him."

I know firsthand how easy it can be for anyone to end up owing the IRS a lot of money. I had always done my own taxes. With my mathematical background and interest in tax laws, I actually enjoyed the challenge of figuring taxes different ways so as to maximize the refund (or minimize the amount due.) Then one year a situation came up where it was unclear what the law was on this situation. On several occasions I called the IRS for assistance and got conflicting advice. Looking at the different scenarios, in the worst-case one I would owe the IRS more than I could pay and would have to work out a payment schedule with them. At that point I went with a reputable tax accountant and kept using the firm ever since.

It is pretty well established that Joe Louis was not good at handling money and he may well have ended up broke even without the tax situation. But having nothing is better than owing millions. I would have expected that his accountants and advisors should have better known the tax consequences of the purse donations and planned accordingly. Then maybe that whole fiasco might never have happened. As I noted, it is easy enough to misunderstand or misinterpret tax law, but that is the reason we have accountants.

 

The point is you can’t spend what dosnt belong to you. Managers own 33% of the boxer. If his managers were not spending what didn’t belong to them and they were not getting into this trouble then Joe has to have went against better advice. Joe couldn’t have realised or cared enough about the consequences.

The decision to hand over profits from two fights -apart from expenses- to the army and Navy when over 80% of everything was already going to the government cannot have been a decision that was made lightly, without serious consideration. Joes management was not a tinpot organisation. They had legal representation and accountants.

The amount of publicity the decision to donate all proceeds of those fights had gotten should have enforced that all the right information had been made available in advance. Surely the Government itself would have advised them too?

But once it was done it really was a sticky situation with no real hope of ever getting out of that mess.

Some people cannot see sense and when they come to their senses it’s far too late. I think it was terrible. If it was self inflicted it was with the best of intentions. A real shame.

 

"No good deed goes unpunished"

 

It’s clear Joe was trying to do a good thing.

 

Joe's purse for the second Conn fight was $577,000. By 1946 the top tax rate was 89 percent. Which means Joe owed more than $500,000 in taxes on that purse too. There was simply no way of him ever paying back the money he owed with the tax rates at.the time being so high.

There was never enough left over to pay the outstanding taxes that were growing every year because of the penalties being tacked on.

 

Ya to tell your client not to pay your taxes so you can pay less later seems really fishy to me.. I wonder if there was a hand in his cookie jar type of thing going on? Wesley Snipes got that same advice and went to prison for it

 

No it's not correct. As an accountant l can tell you those who know the rules pay less taxes than those who don't. The fact that he fought, donated the money and then had to pay taxes on the money was just poor planning. He should have only fought on the condition that these donated funds wouldn't be taxable. Either that or he could have received all the money, paid taxes on it and then donated the residual. Very poor planning by his advisors who should have known better.

 

I don't know the details but unless he received payment for these fights this shouldn't have been taxable income. Essentially he was volunteering his services like millions upon millions of people do annually. This isn't taxable. So he must have been paid and then perhaps donated these funds. And even though there are credits for charitable donations, they certainly wouldn't eliminate the tax on this income. It's stunning to think his advisors wouldn't tell him this and structure this arrangement differently.

 

The publicity his donation got pretty much proves to me things had been outlined to him correctly beforehand and Louis still went ahead and chose to do the wrong thing. This doesn’t mean Joe knew it would go as wrong as it did. He must have had faith in his other investments and not worried enough about the consequences.

I think once he was wealthy he could not think past the fact the fact he still had the championship so he thought Money would always be there. I think he had property and a nightclub. In his mind he was rich so it didn’t matter what people were warning him. Mounting debts did not concern him whilst he was champion.

The thing that does not add up though was why did he retire as champion after the Walcott fight whilst he still had these crippling debts? At that point he’d came back from the war to this huge debt but just after four fights he then retired!

I’m starting to think he didn’t retire. He had 80 exhibitions and promoted fights until a new champion was found - then he fought that champion.

 

Hard to say. My hunch is that he would know next to nothing about investing and tax planning. Even today few do. So if he has someone investing his money and someone preparing his tax returns and someone negotiating his pursues it would hard to imagine him going rogue. If l had to pick him not getting proper advice verses him ignoring proper advice l would certainly lean towards the former. I find it hard to believe that if his tax liability was presented to him prior to this he would choose to essentially bankrupt himself rather than consider other options.

After reading a bit more it turns out his accountant screwed up his tax returns for a number of years. Not sure what remedies were available back then but today one would likely sue your accountant and depending how egregious things were his liability insurance policy would have at least paid for the penalties and interest, and perhaps he might be awarded more in which case the accountant or his firm would have been liable.

 

yes this sounds good. Most likely he was already in a financial mess before the donations because he knew nothing of investing and tax planning. And he didn’t take any of it seriously enough. The advice he got had to be bad. When the money was coming in everything must have seemed like a good idea. That accountant was an idiot. But joe really should have listened more and questioned more successful people and followed the kinds of things they did. His managers apparently had no such problems. They can’t have been so interested in guiding him financially. Clearly he was not best equipped to be sensible and prudent on these matters. It must have seemed impossible for him back them to ever lose money when so much was coming in. It must have been hard to keep track. Especially when he borrowed and gambled too.

 

My advice to boxers, athletes or most people who get wealthy quickly is to invest in an annuity as they are exempt from creditors and of course you can't spend what you can't get a hold of. An annuity is essentially the same as a pension.

 

Joe did a lot for the country, and they came back and screwed him over. Real sad, to be truthful.