Hawaii Group Leans Forward!A One Stop Shop for SMB’s.
What a Team!!Matt Delaney and Sean Knox make a great team offering professional staffing and executive search to Hawaii’s SMB’s (Small and Mid-Sized Businesses). Watch how these two individuals combine their talents to make the Hawaii Group a “one stop shop” for all back-office functions for Hawaii’s SMB market place.
When you include the recently announced merger on June 30 of HiAccounting with WR Financial (a wealth management, tax and accounting service company) the opportunities for increased efficiencies and cost savings for SMB’s increase significantly.
Editor’s Note: It’s with great pleasure that I announce the inaugural flight of AirAsia X to Honolulu. I know this carrier well and flew it during my last trip to Asia where we did a series of three road trip adventures in Malaysia (including the Kinabatangan River inBorneo) and a visit to Singapore. I’ve had a love affair with Malaysia for over 25 years. People are incredibly friendly, the food is fantastic and the country is brimming with exotic flora and fauna. (I liked KL so much the first time I visited, I came very close to moving there).
When I heard that AirAsia X was going to connect to Honolulu I was nothing short of ecstatic. This carrier and its affiliate airlines cover Asia like a glove. Kuala Lumpur, the system’s hub, is a perfect platform from which to visit Vietnam, Thailand, Indonesia and the rest of Southeast Asia.
I wish the airline the best of luck. I hope local residents here in Hawaii will come to realize what a great asset this carrier will be.
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Flight D7 001 from long-haul low-cost carrier AirAsia X landed at Daniel K. Inouye International Airport today with a remarkable load factor of over 90%, marking the airline’s first foray into the US.
The four times weekly route departed from Kuala Lumpur, Malaysia for Honolulu, Hawaii via Osaka, Japan.
The successful inaugural flight was followed by a celebration and press conference event at the Royal Hawaiian Hotel today, graced by State of Hawaii Chief of Staff Mike McCartney; Malaysian Ambassador to the US HE Tan Sri Dr Zulhasnan Rafique; Hawaii Tourism Authority President and CEO George D. Szigeti; AirAsia X Chairperson Tan Sri Rafidah Aziz and AirAsia X CEO Benyamin Ismail.
AirAsia X Chairperson Tan Sri Rafidah Azizsaid, “We are here to democratise air travel for everyone so flying long haul would no longer be a luxury only a few could enjoy. This landmark route to Hawaii is a bold new chapter in that quest to help more people travel farther for less. But this is just the beginning, and soon our guests will be able to enjoy flights to even more destinations in the US as we continue to grow our international footprint.”
Last week, AirAsia was named the World’s Best Low Cost Airline for the ninth straight yearswhile AirAsia X won the World’s Best Low Cost Airline Premium Cabin and Premium Seat awards for the fifth consecutive year at the Skytrax World Airline Awards held at the Paris Air Show.
“We are deeply honored AirAsia X has chosen Honolulu as its initial destination to expand service in the United States and appreciate how this route strengthens our ties with the people and culture of Malaysia,” said George D. Szigeti, President and CEO of the Hawaii Tourism Authority. “AirAsia X customers in Kuala Lumpur and Osaka will enjoy the convenience of this direct service and how it connects them with the welcoming aloha spirit of the Hawaiian culture, the spectacular natural beauty of our islands, and the diversity of Asia Pacific influences that enriches the experience of being in Hawaii.”
AirAsia X is beginning its maiden U.S. service with introductory one-way fares starting at $99 from Honolulu to Osaka and $149 for continuing service to Kuala Lumpur.
The return leg from Osaka to Honolulu is an introductory $162.36 while flying from Kuala Lumper to Honolulu, with a layover in Osaka, is $198.02 one way.
Round trips would be as low as $261.36 and $347.02.
Guests transiting in Osaka do not require a Japanese visa during the two-hour stopover, and can return to their seats on the flight after clearing security with any carry-on luggage or belongings.
Guests can also make use of AirAsia’s Fly-Thru service to connect seamlessly to Honolulu from other cities within AirAsia and AirAsia X’s extensive flight network with just one additional stop.
The introductory fares are available for travel from June 28 to Feb. 6.
Flights depart Mondays, Wednesdays, Fridays and Saturdays.
The carrier will use 377-seat Airbus A330-300 aircraft on the Malaysia-Osaka-Honolulu route.
AirAsia X serves 22 cities in Asia, Australia, New Zealand, Africa and the Middle East with a fleet of 30 A330s.
By Tom Yamachika – In early May, on the day our Legislature adjourned, one of the newspapers summarized our Legislature’s work on the Honolulu transit surcharge extension as “Epic Fail on Rail.” With the Federal Highway Administration poised to pull out its $1.5 billion commitment if no funding solution is firmed up, our legislators need to get their collective act together if they want to help the project get back on track.
How did we get to be in this spot? This week, we’ll retrace Senate Bill 1183 and its tortuous history through our legislative labyrinth.
SB 1183, like its companion House Bill 1442, was a 6-page bill to extend permanently the current rail surcharge on general excise tax (GET). The bill also proposed to give an unspecified percentage of the surcharge proceeds to the state DOT (Department of Transportation). The other counties were given the option to adopt their own GET surcharge beginning in 2018.
The first committees to work on the bill, the Senate Committees on Transportation and Energy and Public Safety, Intergovernmental, and Military Affairs, came up with a 78-page monster containing two parts, one that would extend the surcharge permanently and another that would extend it to the year 2032. (Yes, these conflict with each other.) Other sections of the bill would establish a tax credit for low-income taxpayers; raise the base GET rate to 4.5% for everyone (the surcharge would be on top of that); and contained a pages-long laundry list of mandates to the City. At the time, the Senate Transportation Chair explained that she wanted to keep all options open.
The Senate Ways & Means Committee took a very different tack. Its 10-page version basically said, “We’ll take away the State’s 10% skim off the surcharge, but no extension; you’re on your own.” That draft unanimously passed the full Senate and went over to the House.
There, the House Transportation Committee kept the bill alive by putting blanks in it – its draft extended the tax to an unspecified date, reinstated the skim but replaced the percentage with a blank percent to recover the State’s costs and a blank percent that would go the DOT for State highway projects.
The House Finance Committee then filled in the blanks, extending the tax for two years, and dropping the skim to 1%, none of which would be earmarked for the DOT.
This version went to the Conference Committee, and then surprising things started happening. First, the Senate proposed a new draft, radically different from the version that passed the Senate, which extended the surcharge for ten years and raised the skim to 20%. The House came back with a draft that left the GET surcharge untouched, dropped the skim to 1%, and raised the hotel room tax from 9.25% to a hefty 12%. The latter proposal, though innovative, caught the hotel industry unaware, prompting vigorous objections. Then-Senate money chair Tokuda agreed to that version with tweaks a few hours later, thereby making the Final Decking deadline.
After frantic meetings through the weekend, the money chairs, apparently with some members of the hotel industry, reached a compromise involving a shorter GET extension and a lower TAT hike. Amendments were introduced on the chamber floors to implement the “agreement,” although another version with only a GET extension and no TAT increase, which Mayor Caldwell supported, was circulating in the Senate. The House passed one version and jettisoned its Speaker, while the Senate adopted the other version and deposed Chair Tokuda. With no agreement between the chambers, neither version can be enacted. That is where we are now.
We now seem to have a bunch of rudderless ships in the harbor banging into each other. Could the Governor have brought both sides together? Was Senate President Kouchi capable of herding the 25 senators? And how about former Speaker Souki, new Speaker Saiki, or House money chair Luke? To what or whom should we be looking for leadership to get us out of this mess?
I talked with a very impressive young man this week: Kendrick Chang. Perfect example of how you can be successful regardless of your age. From Kaiser High School to George Washington University to anywhere he wants to go. Not all university students are as confused as they appear on TV; rioting, damaging property and whining. Some, like Kendrick, are committed to making a difference through handwork, discipline and maturity beyond their years.
Editor’s Note: This is part of a series on “crossover” wear, clothing that can be worn in the wilderness, at home, at work and on social occasions. Crossover wear is better tailored, more durable and hence more expensive than run of the mill “tactical” clothing. Triple Aught Design(aka TAD), has become popular with everyone from hikers to secret service personnel. In this piece we’ll look at their Recon AC Pant, Gemini Shirt and Equilibrium Jacket. (The jacket is featured above).
Triple Aught Design logo–the company is based in San Francisco
Triple Aught Design describes their products as “purpose-built goods for the ‘capable’ consumer”. Tucked away in a 100+ year old former cannery in San Francisco’s funky Dogpatch neighborhood, the company has created a line of elegantly functional and durable clothing. In short, TAD has successfully melded rugged functionality with a refined, urbane aesthetic.
Triple Aught’s products span both urban and wilderness settings.
They appeal to a demographic that groks “EDC”, better known as “Every Day Carry” gear. Management understands that their customers are at home in any number of environments whether it’s the C-suite, the rifle range or a lava field on the Big Island of Hawaii.
Company spokesman, Scott McGuire says, “One of the dominant characteristics of our customers is capability. Some may ‘carry’, whether it’s firearms, or simply being prepared with a first aid kit. In any case,” says McGuire, “each customer has a proclivity for being skilled and responsive in nearly any situation”.
The Gemini Shirt derives its moniker from NASA’s Gemini program.
Notwithstanding TAD’s urban headquarters, McGuire told me his company’s employees often spend their free time “in the dirt, often far off the grid”. They move between city and country with ease – in the same manner as Triple Aught customers.
For this article I made a point of taking TAD’s products far off the grid, ranging from the Ko’olau mountains in Hawaii to the Continental Divide Trail in northern New Mexico.
Non-Corporate Culture
TAD’s culture has everything to do with the product and vice versa.
McGuire said that the employees share a real intimacy in the creation of their products. “The office staff”, he said, “sit next to the sewing machines used to prototype our goods. We are makers of goods.” This contrasts with other manufacturers who contract their work to third party, overseas factories.
Even though TAD manufactures made-in-the-USA products, they keep their prices down by marketing and distributing their goods directly to the consumer. It’s a strategy that’s viable only because of the Internet. Boutique fashion companies have always existed but it’s easier and far more lucrative to sell and promote your products if you can eliminate the dreaded middleman. Thus they can sell high end apparel at a reasonable price that would not have been possible 20 years ago.
The Recon AC Pant is light and tough.
Recon AC Pant
Of all the crossover pants that TAD makes, these are the most in sync with “action and mission”. The company has designed them for the “speed, mobility, and comfort” one would need during long-term covert operations. Whereas most of us won’t be slinking into North Korea or Eastern Ukraine anytime soon, the message is that this piece of clothing will help get you anywhere you want with the greatest of ease and comfort.
While the marketing message maybe a tad dramatic, the pants live up to their hype.
Pockets galore for stashing your stuff
What strikes you first is that they are made 100% of a kind of parachute-like nylon that is both very strong and very light. They are not flashy—they are all business.
The mobility they afford was remarkable. You can practically do yoga in these pants—the movement is so unrestricted. They are particularly good for hiking—bounding up and down boulders is a breeze.
The pants are water repellent but not waterproof. Water or moisture tend to bead up and roll off the fabric. After a wash you don’t need to put them in the dryer. Just hang them on a clothesline or drape them over a rail on the balcony. They will dry in 10 minutes or less in the sun.
The pants can also be rolled up and squeezed into any crevice of your suitcase. You don’t have to worry about wrinkling them.
In line with its “covert” DNA, the Recon AC Pant also has a number of storage options. There are no less than nine pockets on the Recon AC so that you can carry everything you need–mobile phone, passport, knife, map, coins, etc.
The front hand pockets are a potential treasure chest. To begin with, they have flat lace loops to clip key chains, USB drives, tiny pocket knives or what have you. There’s a reinforced flap that allows you to clip a folding knife and a small coin pocket. Behind both front hand pockets are nifty little welt pockets where you could tuck a small smartphone or another item for easy access.
With nine pockets Recon AC is great for travel.
There are also two main cargo pockets on the thigh. They are secure and zippered with YKK zippers. Both thigh pockets have loops in the upper corners. These large pockets are appropriate for maps or similar items that lay flat. Probably not so good for weightier stuff such as cell phones which can flop around on your thigh.
There are also two generous rear welt pockets to pop in a wallet or an AR 15 magazine.
You would also want these pants for travel. Not only are they easy to pack, there are a plethora of pockets to stash your goods.
They are incredibly comfortable. I like the way they hang from my waist. Even though they are loose-fitting, by necessity, they are tailored to accentuate your physique. They are stylish enough to wear anywhere, except perhaps to the Opera Ball.
My pants were gunmetal but you can get them in khaki and other colors. The price ranges from $88 to $110.
The Gemini Shirt has a really clean, lean look. (Even on a non professional model).
The Gemini Shirt
The Gemini Shirt derives its moniker from NASA’s Gemini program. According to TAD it embodies the spirit of NASA “where exploration and adventure are the defining creed”. Again, a little dramatic but the idea is that this shirt, which is made from a of 21st century blend of cotton and polyester, can handle “multiple environments”.
Comfortable, chic and fits like a glove.
This shirt is handsome and masculine. There’s a sort of retro-cowboy/western look about it that I really like. I call it the space cowboy look in deference to the San Francisco musician Steve “Space Cowboy” Miller, who used to reside in an old ferry boat on the Embarcadero, not ten minutes from TAD headquarters.
What I really dig about this shirt is that you can wear it anywhere. It’s stylish, comfy and there’s (of course) a hidden envelope pocket to stash important items.
It’s also incredibly practical. The high-tech fabric resists wrinkles which makes it a desirable traveling companion. You don’t have to worry about ironing this shirt and it’s dressy enough to wear, yes, anywhere.
I got mine is a deep “siege” blue and it fits me like a glove. They are also available in other hues. Price ranges from $80-90.
You can wear this in town or at 9000 feet. Works great as a shell in the mountains.
Equilibrium Jacket
This item came in extremely handy as a lightweight traveling jacket good for just about any environment and stylish to boot. It travels well because it compresses easily and has sufficient insulation to keep you snug, even at 9000 feet in the Rockies. Normally I’d travel with a leather jacket but for high altitude the Equilibrium is much more practical.
If the situation dictates, it’s designed to be loose enough so that you can also use it as a shell. Coming from Hawaii to the Rockies, I needed my Patagonia parka too and with the Equilibrium on top I was perfectly layered without looking like a polar bear.
The secret insulation is a third party product (known as “Alpha”) from a company called Polartech.
The Equilibrium is compressible, and easily packed. A rear pocket serves as a stuff sack. To engage, simply turn pocket inside out and stuff the jacket into the reversed pocket.
A rear, single entry hunter’s pocket serves as a stuff sack.
Alpha was originally developed for the U.S. Special Forces when they required a more advanced insulating material in their combat uniforms. This fabric is a new technology with active insulation that regulates core body temperatures during both dynamic and static activities. This latest advancement in adaptable breathability helps eliminate the need of shedding or adding layers while on the move.
A stable core of lofted knit fibers prevents fiber migration to keep a uniform consistency, even after heavy wear and repeated laundering. By keeping moisture vapor moving freely through the fabric it increases overall air exchange and drastically speeds up dry times. This reduces discomfort from saturation and prevents it from turning into a sponge.
It looks great (mine was black), perfect for urban missions. It’s also breathable and lightweight. Retail price range from $160 to $200.
Conclusion
All the items we tested from TAD are first rate. The company uses high end materials, designs them to work and, to be fashionable anywhere. That’s what crossover is all about and they do it as well as anyone in the industry.
Robert F. Kay is a columnist for the Honolulu Star Advertiser, a health nut, a sharpshooter, the author of two Lonely Planet guidebooks and creator of Fijiguide.com.He likes crossover wear and 1911s.
Author’s Note: Every weekend was an adventure. Swimming and diving on the reef in the lagoon, hiking and camping in the cool, dense jungles of the island’s interior, eating bat stew on the rim of an ancient volcano, becoming lost in a blanketing mist while swimming in a cold, bottomless crater lake, outrigger canoe trips to uninhabited islands, numerous adventures by trail bike, romance in the setting sun, and night-dipping under the shooting stars. Too many social commitments, too much fun, too damn many women and not enough sleep.
A fisherman coming in from the reef
Once a month, I joined a group of ‘expats’ for adventure trips off the beaten track, including overnights on uninhabited islands and treks into the interior of the two main islands to hidden crater lakes, ancient lava flows, or for special birding excursions. I loved exploring the wild and mysterious jungle, as well as the boundless, clear sparkling sea.
One of the more challenging expeditions took us deep into the interior of Upolu island, following razor-sharp ridge lines and past spectacular panoramas across the island’s backbone and down to the sea – bush-whacking through the nearly impenetrable interior. At viewpoints along the way, we could see across to the other main island of Savai’i, with tiny Manono and Apolima islands in between – white crescents of surf breaking on the barrier reefs far in the distance.
We were climbing Mount Fito, the tallest mountain on Upolu (3,600 ft.) and extremely hard going through dense, ever-changing, tangled undergrowth and rugged terrain. I mopped up the rear, hanging back, listening to the distant singing of bush knives ahead as smoky rays of sunlight slanted through moss-laden trees, cicadas happily buzzing high in the forest canopy.
Jim and Dave at Lanoto’o Crater
Reaching the rim of the volcano, the late afternoon sun lit up the huge forested crater. Pairs of elegant Tropic Birds – long white tail feathers flowing – rode the air currents inside the massive crater. As dusk fell, the trees came alive with huge bats or ‘flying fox’ (pe’a). In the waning light we hung our sleeping tarps while our guides blasted a couple of bats out of the sky and made bat stew for dinner – tiny drumsticks of tender meat – not bad at all!
Accessible from the main cross-island road in the misty highlands, the trail to Lanoto’o Crater was a faint, rarely used track shrouded by heavy clouds – dark, cool and damp. Scaling the steep, densely forested volcano, we slid barefoot down the precipitous inner crater wall to the perfectly round, emerald green lake below. Incredibly beautiful as it was mysterious, and after a hard sweaty climb and a muddy slide down to the silent misty shoreline, the cool water beckoned.
Once while swimming across the lake a heavy cloud cover descended, totally obliterating everything in sight. All was white except for the ripples of dark, smooth water directly in front me as I swam. After momentary panic, I noticed my friends’ voices coming from somewhere on shore, and they guided me to safety. On the way home, we flagged down a bus-load of well-padded women returning from a picnic who pulled me up to dance with them in the aisle – squashing me with their huge bodies as the weaving, top-heavy wooden bus lumbered around tight mountain curves. I was lucky to survive that one!
An entire roast pig filling the back of the jeep
The endless summer continued in full swing with my brother Dave’s visit – closing down raucous night clubs in Apia, trekking, swimming, diving, and visiting YMCA rural clubs (kalapus) in remote villages throughout the country.
We enjoyed tons of incredible food served by village girls seated before us fanning the flies away as we ate, followed by Samoan cocoa or the ceremonial beverage kava – a relaxing psychotropic concoction made from the root of a plant in the pepper family. Wonderful stuff that tastes like dirty dish water, but soon numbs the mouth, face and then the whole body. We endured the seemingly endless ceremonies, speeches, and tortuous hours sitting cross-legged on the floor, and returned home with Dave sharing the back seat with a huge roast pig – one of the many generous gifts from the villagers.
At the time, there were no commercial dive operations anywhere in the country. But one of my friends had tanks and the fire station had a compressor to fill them. Driving along the coast to places where the surf was not so strong, we would hop over the reef for some ‘virgin diving’ in amazingly clear and wild waters teeming with sea life large and small.
Diving at the Apia town waterfront with Mount Vaea in the background (1985)
Particularly memorable was the time I took a paraplegic friend for his first scuba dive. Jerry was from New Zealand and was in Samoa conducting research on services for the disabled in the Pacific. We suited up, wrapped Jerry’s weight belt around his ankles to secure his legs and he held tight to my stabilizer backpack while we descended together for an awesome dive. Jerry wrote about the experience later as part of his published study, describing how much the scuba diving had meant to him, including the wonderful liberating feeling of weightlessness underwater.
You can read more about Jim’s backstory, hereandhere.
Asked another way, what is the amount of screen light compared to natural light, you take in over your day? Year?
I cut off watching TV years ago. Why?
Because, one day while hiking through floating flourishing flowers flowing across the mountainside, I had an epiphany.
Suddenly, I was aware of the enormous power of our human attention. The influence of the TV/mobile screen through the syncopating of human moods and desires. I realized the agenda of the owners of the information on the screen; it’s access to my moods, my thoughts and the rhythm of daily human life.
I returned home from the week long hike and just turned it off.
It was one of the best decisions I made, then. And, I flourished and was more joyful.
In the between time, I’ve also personally experienced the effects, in today’s dysfunctional over-capitalized system, of financial fraud and corruption. I’ve lost millions. However, from the depths of depression has slowly arisen through meditation—through choosing positive situations and places, through immersing myself in joy, in Nature—an emerging wave of gratitude for every breath, each molecule of life giving Hawaii that passes in my nostrils.
I’ve learned the power of choice, to focus on grateful thoughts. To be mobile, flexible, and thoughtful. Kind, empathetic and collaborative. Having a dog companion has lifted me further into the realm of chosen joyful states of mind.
I’m a pauper of stuff and scene, yet, I’m a wealthy in things unseen.
In short, what I’ve learned:
Laugh in the middle of someone hurling the injured way they feel about themselves at you.
Laugh when a colleague interrupts your amazing idea to say something narcissistic about themselves.
Laugh when your boss sticks his/her head into your office and barks a command at you.
Laugh at it all and see your sustainable choices clearly.
On June 3, 2017 as I watched the referee raise Max “blessed” Holloway’s arm in victory which earned him the UFC featherweight crown I knew right there, just like every other person along the Leeward Coast, he and fellow Waianae resident and UFC Welterweight Champion Yancy “The Kid” Medieros would be welcomed back home from Brazil with a parade. And what a parade it was. The streets were lined with cheering fans, well-wishers, and admiring keiki of all ages.
The amazing stories of Max and Yancy surely bring hope and inspiration to many West Oahu residents as their hard work, focus, and dedication proves that when you have purpose, vision, and goals in your life you can achieve your dreams. Mixed martial arts just happens to be the vehicle these two young men from Waianae used in their quest to better their lives, but the consistency and focus they employed during their journey can be the same focus, intention, and discipline that anyone from Waianae, Nanakuli, Ewa Beach, or anywhere in Hawai’i can incorporate in order to make their dreams manifest.
From my experience meeting people from all walks of life who’ve had all sorts of experiences, I can say with certainty that everyone has the inner strength to achieve their dreams. There are those who will use their circumstances in life as an excuse to never attempt any effort to make it better. I think it’s because there is a fear of stepping out of ones’ comfort zone. Let’s not kid ourselves to think that success is an easy road to travel. But once you take those first steps, you’ll see the journey is very exciting and rewarding.
Are you Waianae strong like Max and Yancy? If anyone knows Waianae, they know it can be a challenging place to grow up. And Max Holloway certainly knows how tough it is which is why he’s not only driven to excel, he also hasn’t forgotten his roots or his people. “Waianae…I wouldn’t change it one bit. That’s what made me. Some people fall into the stereotype. Others fight to break it. I fight to break it. Hopefully as kids are growing up they say, ‘If Max can do it, so can I’,” Holloway said.
When they’re not training for their next matches, Max Holloway spends as much time as he can coaching and counseling youth while Yancy Medieros is either volunteering his time with sick children at the hospital or training “the spunky Waianae kids” at his gym for free—just as long as they maintain their grades in school. Holloway says he wants the kids he works with to ignore everything other than the fire that resides inside them. And you too can achieve your dreams by focusing on your inner passion.
By Tom Yamachika – One of the bills our legislature sent up to Gov. Ige to be signed, which is almost certain to become law because the Department of Taxation sponsored it, is one to close an estate tax “loophole.” The issue isn’t as simple as it might seem, however.
First, some background. An estate tax is imposed when a person dies. The Federal Government imposes it when a decedent owned more than $5.45 million at death. The federal tax rate brackets start from 18% and go to 40%. Only fifteen U.S. states have an estate tax, and Hawaii is one of them. Our law generally conforms to federal law, but our tax rates go from 10% to 15.7%. (Six states impose an inheritance tax, which is similar except that the tax falls upon the heirs; of these, two states also have an estate tax.)
For a person’s estate to have an estate tax liability, the estate is usually substantial, and may include assets in more than one place. For a person who doesn’t reside here, we tax assets that are located, or “sitused,” in Hawaii. For a person who does reside here, we tax all property in the federal taxable estate, but give credit for estate or inheritance taxes paid to other states.
What happens if there is an entity, like a corporation or a LLC, that owns property? Because an entity doesn’t die, the estate tax isn’t imposed on the entity. But entities have owners. Corporations have stockholders, for example. So, the estate tax reaches the value of those ownership interests, such as corporate stock. So far, so good; an individual can’t beat the estate tax by throwing property into an entity. But an individual can use an entity to “situs shift.” Suppose the individual lives in Ohio and the entity owns valuable real property in Hawaii. The entity is not subject to Hawaii estate tax, and neither is the individual, because the shares of stock are generally sitused to the individual’s place of residence. Lo and behold, Ohio doesn’t have an estate tax, so this estate will not be taxed in any state! This is the loophole the bill addresses.
The bill says that if the entity is a single member LLC that has not elected to be taxed as a corporation, then the estate owning the LLC will need to pay estate tax in Hawaii the same as if the decedent owned the Hawaii property directly.
But wait. The bill doesn’t plug the loophole completely. In the situation just described, Hawaii estate tax can be avoided regardless of the type of entity, while the fix only works if the entity owning the Hawaii assets is a single member LLC disregarded for income tax purposes. Thus, if the entity is a partnership, a LLC with more than one owner, or a LLC that has opted to be taxed as a corporation (perhaps a S corporation), the fix doesn’t apply and the loophole remains.
Furthermore, how does the Department think it would be able to implement and enforce this law if it is enacted? The Department might be able to find out about a nonresident decedent who owned Hawaii property if there is a Hawaii ancillary probate, which would be needed to distribute Hawaii realty and other Hawaii assets, but how would it even find out about an LLC that owns Hawaii property and has a recently deceased owner? Even if the Department can keep an eye on all the Hawaii properties owned by LLCs, how could it watch their owners? In theory, LLCs that do business in Hawaii, wherever organized, need to register with the Department of Commerce and Consumer Affairs, but the registration form does not require the LLC to state who the owners are, just that a list of the owners will be kept on file at the company’s principal office.
In all, this bill seems like a knee-jerk reaction to a perceived problem. If this situs-shifting anomaly is a loophole that needs closing, it’s very doubtful whether this bill will accomplish it. Well, we can see what happens.
