H&R Block Gave Former McGladrey President C.E. Andrews a Lot of Reasons to Stop Coming to Work

Posted on by Caleb Newquist

The Kansas City Business Journal reports that former McGladrey President (and former Andersen Global Managing Partner) C.E. Andrews had his employment contract terminated by H&R Block yesterday. But don't worry, his landing will be nice and soft:

According to a separation agreement, Andrews will receive cash payments totaling $957,226, minus deductions. He also will receive $3 million for successfully managing the sale of RSM McGladrey. Kansas City-based H&R Block (NYSE: HRB) sold its accounting services subsidiary to Minneapolis-based auditing firm McGladrey & Pullen LLP  on Nov. 30 for $610 million. The sale had been announced in August, about a year and a half after the two companies were embroiled in an ugly legal dispute that involved McGladrey & Pullen trying to terminate its service agreement with RSM. In addition to the cash settlement and the payment for managing the RSM sale, Andrews will receive $1,000 a month for outplacement services for as long as 15 months. He agreed to a two-year noncompete and nonsolicitation provision. Andrews also is entitled to accelerated vesting of stock options to buy 20,292 shares of H&R Block common stock at $17.33 a share, 15,431 shares at $16.04 a share, and 11,019 shares at $12.59 a share.
I have to admit that I was initially a little confused by this, but after speaking to a McGladrey spokesperson, it all makes sense. When H&RB sold RSM McGladrey back to McGladrey & Pullen last year, Andrews was not part of the new management team (although he still has a bio on the McGladrey website). Since he didn't make the varsity team at the time of the sale, it was probably only a matter of time before The Block cut him loose.
 
But let's look to the future, shall we? Sinc he has a two-year noncompete and nonsolicitation provision, Jackson Hewitt is definitely out but does this preclude accounting firms? If not, there's definitely going to be an open spot at BDO soon. Of course, C.E. may have just been waiting for this moment so he can carry Natalie's bag full time. If you've got other career ideas for C.E., we'll entertain those now.
 

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Just So You’re Aware: The IRS Won’t Allow You to Deduct Your Pot as a Medical Expense

Apparently there’s been a bit of unnecessary confusion out there about the deductibility of marijuana for medical purposes. The Wall St. Journal article that we linked to this morning discusses the problems employers are encountering wie.g. can’t use HSA funds; they don’t care if you’ve got a card, if you test positive you’re fired).

But the question of deducting the cost of your White Widow et al. that you legally purchase in states like California and Colorado has been making the rounds. After a little discussion, it’s pretty clear that the IRS is not going allow you deduct your pot for tax purposes simply because it’s still illegal at the Federal level. Doctor’s note be damned.


The confusion arose due to the following letter that was sent to New York Senator Chuck Schumer, who had sent a letter to the IRS inquiring about a constituent using a “herb” to treat migraine headaches:

Pot

Talk about a vague response from the IRS. Tax Girl explains:

As with many facets of how to treat medical marijuana for tax and other purposes, it appears that those in charge are merely tiptoeing around the question. In the letter, the term “marijuana” is never used explicitly – the term used is “herb”. While it’s my understanding that the specifics of the case involved medical marijuana used for the treatment of migraines, that isn’t specifically stated in the sanitized version of the letter. No use of “marijuana”, just the term “herb.” That could be St. Johns Wort or milk thistle as far as the IRS is concerned.

Fortunately TaxProf Paul Caron clears up for us in a couple of updates from his latest post on this issue:

Update #2: Rev. Rul. 97-9, 1997-1 CB 77, specifically precludes a medical expense deduction for medical marijuana:

An amount paid to obtain a controlled substance (such as marijuana) for medical purposes, in violation of federal law, is not a deductible expense for medical care under § 213. This holding applies even if the state law requires a prescription of a physician to obtain and use the controlled substance and the taxpayer obtains a prescription.

So the IRS in Info. 2010-0080 either was (1) signalling a retreat from its position in Rev. Rul. 97-9 by not mentioning the federal legality of the substance; (2) implicitly referring only to legal herbs (and hence not covering marijuana).

Update #3: I am told by an enterprising reporter that the herb in question in Info. 2010-0080 is Petadolex, so it appears that interpretation #2 above controls and the conclusion in Rev. Rul. 97-9 denying a medical expense deduction for medicial marijuana still obtains.

So there you have it. Regardless if you have glaucoma, cancer, HIV, chronic pain, high anxiety or any ailment that marijuana can effectively alleviate, don’t bother trying to include it on Schedule A. We’d ask the IRS to implore a little common sense here but legally, as long as marijuana remains illegal at the federal level that’s not going to happen. And from a more practical standpoint, we’re still talking about the IRS.

Don’t Bogart That Deduction: Is Medical Marijuana a Medical Expense? [TaxProf Blog]
Just Say No: Pot Not Allowed as Medical Expense [Tax Girl]