Motley Fool Money - Disney's Big Cheese

Episode Date: March 24, 2017

Disney's CEO extends his stay. Sears gets slammed. Nike drops. And Twitter searches for premium revenue. Plus, Motley Fool Wealth Management financial planner Megan Brinsfield offers tax advice for investors. Thanks to Audible for supporting Motley Fool Money. Listen to Audible's new original series: Ponzi Supernova. Details at audible.com/ponzi. Audible and Amazon Prime members listen free.     Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's the Motley Full Money radio show. I'm Chris Ellen, joining me in studio this week from a million-dollar portfolio of Jason Jason Moser and Matt Argusinger. and from Hidden Jems, Seth Jason. Good to see you, as always, gentlemen. Hey! We've got the latest headlines from Wall Street. We've got tax tips for investors,

and as always, we'll give you an inside look at the stocks on our radar. But we begin this week with retail. In the 1980s, Sears was the biggest retailer in America. This week, the company said there is substantial doubt. It will survive for much longer. And the stock, which hit an all-time low last month, fell another 12% on Wednesday. And, Maddie, I know there is a lot of nostalgia for Sears.

I know that because I've read all these stories this week. But this is a business that's been in trouble basically this entire decade. It has. But the story was you had Eddie Lampert, brilliant banger from Goldman Sachs, ESL investments, a very successful hedge fund, had bought Kmart, and then had this merger with Sears. I think it was about 12 or 13 years ago. And the whole idea was, well, the real estate's valuable. We're going to sell it off or release it back.

We're going to sell the craftsman appliance brands. We're going to sell the craftman tools. We're going to be able to buy back a lot of stock or do all kinds of financial engineering. And I think a lot of investors glommed on to this and said, well, this is kind of like Warren Buffett taking over the textile company. This is Eddie Lamper taken over an admittedly struggling retail brand that he can sort of spin in a bunch of different ways, find other investments to make. And be a successful investment, if not a successful retail company. The problem is they just so underinvested in the store itself, in the core business, that Sears rapidly became irrelevant to the point where now, I think the liabilities on the company,

the debt, the pension obligations, it's just too big of a hole to dig out of. Yeah. And Seth, immediately after Sears comes out with that statement, and those are their words, substantial doubt. They come out with that statement, and then not surprisingly, right after that, a lot of their vendors come forward and say, oh, hey, are we going to get paid? Yeah. By the way, you're not getting any new stuff to sell in your stores until we see some green, Jack. This is, to me, this is one of those excellent lessons that you can get in hindsight,

which is that, you know, the lone Wall Street genius probably can't fix the broken business all that often. And the idea, I always look at some of these. I mean, this sometimes happens, but I try to look at some of these stories and say, are the people running this business really that stupid, you know, that nobody has thought of this stuff? And the answer is usually, no, they're not probably not that dumb. Some businesses just disappear because they lose mind sure. I mean, Sears, to me, it's like talking about like the Wells Fargo wagon coming to town. I mean, I can't, when I was a kid and we were wearing tough skins, we knew Sears sucked.

And this was 40 years ago. Yeah, but the Wish Book, when the Sears catalog Wish Book would come before Christmas, that was always great. Nobody was buying anything out of it. I mean, you have to applaud their self-awareness. I guess maybe they were the last ones to figure. this out. I mean, it's, they admit that they have serious doubt. I mean, that's like me telling my wife, honey, I have some serious doubt that I'm going to remember to actually put the toilet seat back down after I use the bathroom. And in a house full of girls, that can be

a big problem. So, I think, yeah, Seth hit it there. I mean, it's not like Sears has ever been all that compelling from the beginning. I mean, it certainly was a big retail presence a lifetime ago. I don't know that I went there of my own volition. My mom. took me there because tough skins were cheap and they lasted like an entire school year. There were some good brands, though. They better be because you were getting your ass kicked the whole time for wearing tells skins. They did have, or do have, at least there are some powerful brands there that I feel like

that's a great example of just not investing in the brand, nurturing the brand and giving that brand a chance to succeed, whether it's craftsman tools. Land End. Land's end. What is it? Kenmore. Compliances. I mean, you're seeing now instead, every house has a whirlpool or a kitchen aid.

So, I mean, there's certainly under investment on management's part there, and that's, I think, going to prove to be the death blow. Well, even when Lampert had the merger with Kmart and Sears, I think at that point in time, you could have said, well, Sears is already getting disrupted, but not by e-commerce as everything like retail is getting disrupted today. It was about Walmart. It was about Target. It was Costco and Coles and other businesses that were already eating Sears lunch back then.

And so this is not a surprise. But now, I think it just happened a lot faster. And of course, now you layer on e-commerce on top of that online retail. And it's just the death knell for the business. It's also just an example of how sort of competition and capitalism are supposed to work. I mean, we're all better off because there's stores similar to Sears selling pretty high-quality stuff cheaper. So if we lose Sears, who cares?

Nobody should. I agree. Yes. Let's move on then. Third quarter profits for FedEx came in lower than expected. Revenue was up 18 percent. Seth, not going to the bottom line, though. Yeah, I was surprised.

I haven't looked at FedEx's numbers for a while. It's several years with free cash full not looking great. And the problem, I think, is they're having to invest a lot of money, capital expenditures as well as operational expenses. And what analysts were worried about this quarter, apparently, was margins in the ground business weren't so great. Now, management says those are going to get a lot better really quickly move up from something like 11% to 14%.

But it turns out that all of those people out there, I'm looking at you, lazy mouse-clicking, internet ordering. Who was? Hilties charged. That everyone ordering stuff online actually makes it kind of hard to run a profitable delivery business because driving boxes to people's houses is actually pretty expensive. So what we all need to do is just have our packages delivered to work where a guy can just wheel in a hand truck. He makes one stop. And FedEx will be much more profitable.

Really? That's the move for FedEx. That's the move. Are they paying you for this analysis? Yeah, I want, yeah. Can I get on the board and start this? No, that really probably would help them. It's just not been as profitable.

So they've been trying to address with some efficiencies and some automation, making that segment a little more profitable. And they say it's going to happen soon. By the way, last weekend I had a little bit of a road trip. And for the first time, Jason, I saw an Amazon 18-wheeler delivery truck. Oh, wow. They had their own? Speaking of competition.

Drone? Was it driven by an robot? No, it was driven by an actual human being, as far as I could tell. Not for long. Well, I figured they have a jet, at least one. I mean, then trucks had to be out there somewhere. Well, and Amazon making a little bit of a headline this week, although they haven't confirmed it, but widely reported that they're moving into the Middle East by buying suk.com, which

is a pretty popular e-commerce site based in Dubai. Yeah. I mean, I think that's just what we more or less have come to expect with Amazon. Amazon. I mean, doubling, tripling, quadrupling down on really what they know how to do well, and that is e-commerce. I mean, they've laid the roots here domestically. We've seen how this plays out. We're watching it play out internationally in Europe. We're watching them make big investments in India, even looking at sort of cracking that China nut, so to speak. But I mean, investing in the Middle East, I think, is just a no-brainer opportunity. Having

lived in Cairo for three years and having been able to travel around that area, it is a busy place, a lot of consumer spending, and certainly convenience is going to play out very, very strongly there. So I think this is probably a wise move. And one of the nice things that Amazon does is when they buy these properties, they sort of let them run and continue. So you got Zappos being Zappos and stuff. And I think that makes a lot of sense. Don't try and make it all Amazon. Nike's third quarter profits rose 19 percent. And Wall Street did not appear to be remotely impressed. Shares of Nike falling a little bit this week. This is a good report, Jason.

It wasn't a bad report. I think retail in general is that a really tough go of it lately. And I'm sure that a lot of people probably felt like Under Armour's recent shortcomings were at least partly due to Nike's fortified position, sort of as the market leader in the space. But Chris, nobody's immune, right? And that, I think, is what this quarter told us, because the market, I think, is really concerned, actually less about the numbers they released and more about what they see coming down the pipe here with futures orders. And for a company that historically has lobbed up these really robust double-digit futures orders numbers, I mean, they're seeing futures orders now.

I think they were seeing down 1% on a currency-neutral basis, which is a big deal for a company like this. Now, there is plenty of good there. Gross margin, while it ticked down 140 basis points, they still did a very good job of bringing it down to the bottom line and growing earnings per share at 24%. And that's what they do really well, is they're able to operate in tough environments and good environments and still really realize value for shareholders, bringing that share account down. I'd love to see them raise the dividend. I feel like a 1.5% yield for a stock like this is just too low.

They're doing a really good job on the share buybacks. I'd love to see them raise the dividend a little bit. I'll just add that we've had Nike on our watch list in a million dollar portfolio for a little while now. We like seeing that sell-off. I'm just impressed, and the company is still growing double digits internationally emerging markets. I think once we get through this sort of North American retail malaise, we'll just, you know,

This is a company if you have a long enough time horizon, you can do really well with. If you listen to last week's show, you heard our guest, Julia Borson from CNBC, predict that in the next few months, the Walt Disney company would announce, Bob Eiger is extending his time as CEO. And on Thursday, the company did just that. Iger is on board as CEO through the middle of 2019. Julia Borsden for the win, Maddie. For that matter, probably Disney shareholders get the win too. Absolutely. This is great news. This is the guy you want. I think every Disney shareholder wouldn't mind a 10-year extension to his Iger. I mean, Bob's only 66. I mean, Buffett's 83.

You don't think he wants to kick back a little bit? I wouldn't. I don't think so. I wouldn't want him to. But, you know, with Iger, you're always going to think about the three big acquisitions he made, the Pixar, Marvel, and Lucasfilm acquisitions that have just exponentially grown Disney's intellectual property and the value of that property. But you've got to give him praise in some other areas as well. If you look at the parks and resort segment or the consumer product segment, pre-tax profits have tripled there since Iger took over. And then the Disney's overall operating margin was about 16% when Michael Eisner left. Today, it's over 25%. So this is a vastly more profitable

company. And returns on invested capital, average about 18% over the last 10 years. Just such an impressive tenure. And of course, the valuation of Disney, under 50 billion when Iger took over, today almost 180 billion. And oh, by the way, Beauty and the Beast grossed $460 million in just the first six days. Incredible. It all just started with steamboat, Willie. More headlines coming up, and we'll dip into the Fool Mailbag. That's next.

This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moiser, Matt Argusinger, and Seth Jason. Shares of Twitter up a couple of percent on Friday on reports that Twitter is exploring a subscription-based premium service for professionals. Jason, can they make this work? And do they need to make it? I think it works. I think you're allowed to laugh.

I mean, my first reaction to this is why I appreciate the fact they're considering something like this. I mean, I also can't help but wonder if they are even able to possibly execute on building a future like this one. They just haven't really fully been able to nail the free platform. Now, with that said, I mean, information is obviously very valuable stuff. And Twitter is a treasure trove of very timely information, a lot of it. they can figure out a way to come up with a robust way to organize that data for the customers

that they're surveying in regard to this, then they'd probably be stupid not to try something. Now, I mean, to be clear, this is something that it sounds like they're looking at building sort of a more robust version of tweet deck, which is a desktop sort of way to manage your Twitter account. And so I could see certainly how businesses, how professionals, journalists, whatnot would be able to see value in something like that. I mean, it eliminates the ad experience altogether. It probably, ideally, would reduce or eliminate completely trolls and sort of the negative negativity

that Twitter can exude at times. Again, I feel like probably this is putting the cart before the horse. They really kind of need to shore up a few things on the free platform before they can really, I think, convince any of us that this would have any real chance. Well, I think there's a use case for this. I mean, I think if they can capture 2, 3 percent of monthly active users, which I don't know, it doesn't sound like a huge hurdle to me. This could really turn their profit picture around.

And I agree with Jason. I just think as a journalist, media person, public relations person, there are a lot of potential tools in sort of the marketing world that you can use if you had new features. Yeah, and I will say, we took a visit to Marriott headquarters up here in Maryland just last year, 2016. And it was interesting to see. They have a very big glass-en-case room dedicated solely to managing their social media presence. And it was wall-to-wall screens with a few people in there managing Twitter, Facebook, Instagram, and everything that was going on. I can definitely see where businesses, professionals, journalists, and whatnot could find value in something like this.

I mean, as always, it really the key lies in execution. And that is a total wildcard. But it seems like the demand is at least out there. People indicate they would pay for something like that. It's not meant, I think, for users like us sitting here at the table. I mean, that doesn't really change our experience much. But if there's something where professionals could find some value in there, I mean, maybe it's worth taking a look at. However bad your week was, it probably wasn't as bad as shareholders of Bay Bay Bay stores, the women's apparel chain. Shares of Bay Bay Bay Area falling 40 percent this week after the company announced it is closing all of its physical stores and going completely.

completely online. According to their website, Seth, they've got more than a couple of hundred stores. This seems like a pretty dramatic move to go from, we've got a couple hundred stores to we want zero. Not if you've been reading the conference calls, which I haven't, by the way, I haven't covered them for years, but I did do a quick catch-up before the show. And they've been burning cash for five years. And, you know, revenue is just dwindling and not having really a wholesale account and selling what looks kind of like the same stuff. that they were selling back when I used to cover them when this was a sector I covered. There's just so much competition out there in this space.

And so the stores were killing them. The only place a lot of retailers, apparel retailers, are growing these days, is online. And a lot of them are shutting down stores and shoring up online. Guests is one of them. Guests luckily has international presence and wholesale accounts to balance things out. Baby has got nothing else, or is it B.B. How do we want to pronounce it here? I've been going Bibi.

But maybe it's B. I'm going to go with Beeb. Bebe. Yeah. You know, I turned and asked Abby Malin, who works next to me because I had checked in for, I was looking at the stuff online and things is where we have to work a little bit. I said, who wears this anymore? And she said, slutty New Jersey housewives.

Wow. And there, Garo, there goes our New Jersey listenership. But I think that just, I mean, that was saucy and I had to bring it in. But I think it points out that, you know, she is a youngish 20. something who just wouldn't even consider looking at their clothes. And when that happens, you end up closing all your stores and selling online. What surprises me about closing all of the stores is even when we've talked about other retailers like Barnes & Noble, we've acknowledged, you know what? Barnes & Noble has some locations that make money hand over fist. I'm just surprised that they

didn't look at their stores one by one and go, you know what? These 50 are making a lot of money. We'll keep these 50 open, but we're closing. Maybe they're 50. Yeah. I mean, they've been, they've been kind of rationalizing, as you would say in corporate speak, the store portfolio for a long time. And maybe the most rational decision in the end is we just have to close all of them. You can email the show. Radio at Fool.com is our email address. You can also join the Motley Fool podcast group on Facebook. We've got a question from Robert MacArthur in Detroit. I'm new to the investing game and was wondering if you could point me in the right direction

for good sources of investing knowledge for novice such as myself. Along with reading the book, The Intelligent Investor, I'm currently, doing research online and following a few YouTube channels to soak up as much as I can, but I'm open to any and all suggestions from a group of seasoned investors like you guys. Jason, we've got about a minute and a half. Let's just go around the tables. You got something for Robert? Yeah, I mean, the low-hanging fruit here, I think if you're an investor or want to learn more about it, you got to be on Twitter.

I mean, there are just so many great follows out there that can offer useful, timely information, very educational. Hit me up on Twitter and I'll even provide you some ideas there at TMFJMO. So, Seth? I would say go to Buffett's annual letters and read those. They're free. They're full of excellent wisdom. Think about what Charlie Munger would say, which would be, you know, you don't necessarily

have to read investing, but you better be curious and read a lot of history. Maddie? I see, Robert, we can name dozens of books, investing books for you read. But I would say explore things that might be of interest to you that might have some connections to investing. I recently read a book called Mint Condition, how baseball cards became an American obsession, just because I like the collectibles. market, but there were so many interesting investing lessons within that book, but it was also

a subject I liked. So just to say, expand your horizons, read things that you're interested in. And I'll add one bonus here. I don't know how old Robert is. If he has kids or when, if you ever have kids, pay attention to what your kids are doing. They are a great proxy as to what the future holds. A lot of great investing ideas out there. All right. Jason Moser, Seth Jason, Matt Argusinger. Guys, we'll see you a little bit later in the show. Up next, Megan Brinsfield, is going to get you ready for tax day. Stay right here. This is Motley Fool Money. All the best things in life are free. You can keep them for the buds and bees I want money. All right, before we get to

Megan Brinsfield, got to say thanks to Audible for supporting this episode of Motley Full Money. Audible channels has a new original series called Ponzi Supernova. This original audio documentary series tells the story that you think you know, Bernie Madoff, the legendary Fawdster who is sent to prison for orchestrating the largest Ponzi scheme in history, but that is definitely not the full story. It's drawn from hours of unheard conversations with Bernie Madoff behind bars. They've got interviews with the FBI, the SEC, victims of Madoff's scheme. Ponzi Supernova takes you on a fascinating journey into the dark interior of our financial system. It's a six-part, Audible Original series, and Ponzi Supernova is available on channels

And, you know, sometimes it's hard to remember, but this was a $65 billion scam that Bernie Madoff pulled off. The story is fascinating. I've started listening to it. It's really good stuff. And if you want to learn more about the series, just go to audible.com slash Ponzi. And listen. Audible and Amazon Prime members listen free. That's audible.com slash Ponzi.

Taxes, cow, taxes, goat, taxes, pants, taxes, coat. Taxes, tight, tax. is shirt, taxes, words, taxes, dirt. Welcome back to Motley Fool Money. I'm Chris Hill. Tax Day is right around the corner. Joining me in studio now is Megan Brinsfield certified financial planner, certified public accountant with Motley Fool wealth management. Thanks for being here. Thanks for having me. I appreciate it because I know this is an especially busy time of year for you. It is and it's exciting for me. That's one of those things that I like about you and find very interesting about you is that I don't know anyone who gets like truly joyful at the idea of

taxes, but you genuinely enjoy doing taxes. I do. And this time of year, people don't know whether to just leave me alone or that this is their favorite time to talk to me. This is my favorite time to talk to you. So let's start with the people out there who are scrambling because they haven't done their taxes. Are there any last minute tips that actually help people right now? Well, the first thing is that there are a few extra days this year. Normally, tax day is April 15th because that falls on a holiday, or sorry, April 15th falls on a weekend this year. The Monday after is a holiday in D.C. So you actually have until April 18th to file your tax returns. Oh, so I can totally kick back. Yeah, you've got an extra weekend in there. So you do have

a few more days to get everything together. In terms of, you know, beyond just sort of the tax Are there any sort of areas that people should look to, particularly investors, in terms of what should they be checking in terms of potential write downs? I think one big thing is that a lot of brokerages are just going totally online now. You've got to go online to get your documents, and some of those documents are separate from the 1099 themselves. So the 1099 has everything that's required to be reported to IRS, but other things like margin loan interest might be on a separate statement.

something like that. And you have to go digging for it a little bit more. This is something you and I were talking about during the break. When Donald Trump was elected back in November, and this happens anytime a new president or a new person is prepared to occupy the Oval Office, you get the conversation about, well, what type of legislation is this person going to hit the ground running with right out of the gate? And in the case of Donald Trump, certainly among the top two or three things, was tax reform. And, you know, and And for investors, the idea that corporate taxes would be cut, and that could translate to the bottom line, I think that probably factors into some of the enthusiasm we've seen in the

stock market over the last couple of months. But now, as Congress starts dealing with health care and all that sort of thing, I'm curious in the conversations that you have with people that you're working with at Motley Fool Wealth Management, how does all of that affect the timing? Because right now, it's no longer looking like a sure thing. that whether it's corporate tax reform or estate taxes, anything that might benefit investors, it's not necessarily given that's going to happen in this calendar year. That's true. I think we'll see a lot of legislative time dedicated to health care,

and that's something that does impact our taxes. If you recall the Obamacare or Affordable Care Act instituted taxes on net investment income. And so a lot of those health care reforms will come out on the bottom line in taxes. But when we're talking to clients right now, what we hear is a lot of uncertainty and seeking guidance on timing. So a lot of times people have tax planning ideas like Roth conversions or when they're looking at retirement, thinking about how much health care will cost. And those things are in question now. And so it makes it harder to plan for the near term. We can still look at someone's long-term financial viability, but some of those smaller items, tactical items are in question right now.

Aside from questions dealing with timing around taxes, what are some of the most common questions that you're getting these days, whether it's related to taxes or just sort of the rise that we've seen in the stock market over the last few years? Yeah, I think a lot of the questions around the stock market are tie into politics now more than they have in the past. But most of the time it's just people seeking certainty and wanting to know what direction things are going to go or what moves to make to protect themselves against potential downside. So people feel like the market's been going up for a long time and that makes people nervous.

Like when is the next downturn going to be? And of course we don't know that. But just having someone to talk it through can be helpful for folks. How much handholding is involved in your job? It seems to me that a lot of people, when we're thinking about investing, and we're looking at an individual company, we're trying to separate our emotion, particularly if it's a business that we interact with as a consumer. We're trying to separate, well, what's my emotional experience as a customer versus how is this business performing, that sort of thing? It would seem to me that in your line of work, you're dealing with

that, but you're also dealing with tax. You're dealing with people who maybe are coming at it from an emotional standpoint of fear because they don't want to make a mistake. They don't want to make a mistake in terms of selling a stock too quickly, and they certainly don't want to make a mistake on their taxes. Right. So much of investing success comes from temperament. And so in our field, we sort of joke that we're one-part financial advisor and one-part therapist. That we do get a lot of those anxiety-driven conversations, and a lot of it is just, whether you call it hand-holding or sort of talking people off the ledge a little bit with the anxiety emotions, really getting

them back to basics about how they think about investing. And a lot of times, even if they make an incorrect decision or one that you would look back in retrospect and say was incorrect, the fact that they have a financial advisor to blame it on can be somewhat helped. It helps them sleep at night, knowing that they're talking to you. Exactly. Because apparently you're not busy enough. You've also been doing some volunteer work with taxes, yes? I have been.

That is true. And I hesitate to admit that just because, like you said, it makes me sound weird. No, not weird. I would just think that, again, this time of year is so busy for people in your line of work. I think it's great that you're taking what you're. would otherwise be your downtime and spending it, volunteering, helping out people in the D.C. area who maybe don't have the financial means to hire their own accountant. But just because they're not making a lot of money doesn't mean they don't also have

complicated taxes too. Absolutely. And there are a couple of different programs that people can use to get their taxes done for free. One is through volunteer income tax assistance, VITA organizations. through the IRS. And the other one, which I volunteer with, is AARP. And the AARP tax sites actually don't have a threshold on how much earnings you have to have to get your taxes done there. So you could make a lot of money and still have AARP do your taxes, which is pretty cool.

Do you have to be a member of AARP for that to happen? You don't. In fact, most of the people that come are young, working people. I asked because I just got a little something in the mail. I had a birthday recently, I got a little something in the mail from the AARP saying, hey, we have a rough estimate as to how old you are. We think you might want to join us. We did this last time you were in the studio, and it was so much fun. I wanted to do it again. A little game that our producer, Matt Greer cooked up called deductible or not deductible.

I don't think we have any sort of sound effects to go with that. I really hope we do. You know what? Maybe that's a little something we can work on in post. All right, deductible or not deductible. I'll spot you up with an example. You tell me, is this deductible or not deductible? And let's go with landscaping repairs or utilities for a home.

Is that something I can deduct on my taxes? So normally the answer is no, that those are personal expenses. But if you use part of your home as a home office, you can allocate a portion of home expenses to the home office. So it's all based on the pro rata amount. If you have 100 square feet of office space out of a thousand foot home, square foot home, then you can deduct about 10% of your overall expenses. And that's on Form 8829. In case you're interested, you can see all the expenses that you can deduct.

And I think that some people have a misconception that you can just write off everything. Like even if you are having a massive renovation to your house, you renovate your kitchen, you can write that off. And when you're making capital improvements like that, you do have to consider that as part of your cost basis and potentially depreciate it over time. So it's not every single cost of your home, but it's things that are coming up as like a one-off sort of maintenance and repair type of. What if I invite clients to my home business to meet me in my kitchen? That seems like maybe a gray area. Well, the – or no. Maybe it's just black, like, don't try it.

I wouldn't try that because the rules for deducting expenses for your home office say that you have to use the space regularly and exclusively for your business. So your home kitchen, hopefully you use it for just cooking meals. All right. What about can I take a charitable deduction for letting the fire department burn down my house? This sounds like a crazy example, but it's actually something that people have tried multiple times in the past. And the most recent iteration of this case came down on no that you can't deduct that. And the people in this case were trying to argue that they had given the house to the fire department for training purposes. And what the tax law says is that any deduction or any charitable contribution that you make, the deductibility of that has to be offset by the value of services you receive.

So a place that you see this frequently is someone going to a gala or awards day. dinner. They might pay $500 for a ticket, but the value of the dinners and things that they receive are about $100, so their deductible amount is $400. Same thing with this home example. The court actually ruled that the demolition services that the client received were greater than the value of the home or the training value or benefit that the fire department got from it. But the IRS does have a second rule, which may have come into play. which says that when you donate something to charity, you have to give your entire interest, not just a partial interest.

And so unless you're donating the home and the land that it sits on, it's pretty difficult to make an argument for that deduction. Do you think there are people who work at the IRS who are just, like, if they get something like this crossing their desk, it just makes their month where someone's trying to deduct something and they just, like, bring in other people. Look what I got. I got someone who's trying to deduct something crazy. It's got to be, but it's got to start with just seeing a huge number on that Schedule A deduction line item and thinking, huh, something looks fishy here. And then when you get the response from the taxpayer being like, oh, no, we got to dig in here.

What about the costs of transportation for an organ donor? So that is deductible. And it's not just associated with organ donation, but a lot of people might have to travel to a different. hospital, for example, to get medical treatments or meet with a certain type of doctor. And those miles and transportation costs and hotel and things like that are deductible as medical expenses. And when you're traveling like that, you can actually take someone else with you. And that accompaniment can also be deducted. Just keep in mind that it does have to be reasonable. You can't stay at the writs every night and deduct that for medical expenses. All right.

Speaking of medical expenses, marijuana as a medical expense, deductible or not deductible? It's not. And you cannot use your flexible spending account or health savings account to pay for marijuana. Even though it's legal in 20 states, the federal law still says that it's an illegal substance, and so you can't use basically tax-benefited funds to purchase marijuana. All right. Last thing, and then I'll let you go. We obviously are close to tax day, but even closer, Major League Baseball's opening day.

Is it true that you went down to Florida, did a little scouting? It's true. I went to spring training for the Orioles and one game for the Nationals. So my scouting is really limited regionally right now. But I did talk to several people down there who will go down to Florida for like a month and just go to different spring training games and watch. It's great fun. If you want to check out more from Megan Brinsfield and the team at Motley Fool Wealth Management,

just go to foolwealth.com slash radio. That's Fool Wealth, all one word. Fullwealth.com slash radio. Thanks for being here. Thanks for letting me talk about my nerdy topics. Up next, we're going to give you an inside look at the stocks on our radar. You're listening to Motley Fool Money. Stay-Hare-income pack or get that brand new potty act.

There goes a shirt right off my back. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy yourself stocks and base solely on what you hear. Welcome back to Motley Full Money. Chris Hill, Hearing Studio with Jason Moser, Matt Arguson. singer and Seth Jason. You can check out past episodes of Motley Fool Money and all of our podcasts by going to Podcast.fool.com. And while you're there, you can test drive Rule Breakers,

which is David Gardner's growth stock service. The latest issue of Rule Breakers is just out. Two new stock recommendations from David and his team. Just check it out by going to podcast.fool.com and scroll down to the bottom of the page for more details. Before we bring in our man, Steve Broido, from the other side of the glass, to hit a with the stocks on our radar. Let's bring him in to ask him about Sears. Because, I mean, I think of Sears. One of the things I think of is the Sears Tower. Steve is a proud son of the city of Chicago. How much... Suburbs. I have to admit, suburbs. You know, it's all...

But that's where the Sears is... Chicago Land. How much time did you spend at the Sears Tower? Because that is an enormous landmark, and if you're afraid of heights, it should be avoided at all costs. Ben a few times. I don't think it's called the Sears Tower anymore. What is it? It's called something new. I think someone bought the naming rights to it, but everyone still just calls it the Sears Tower. That's what I will know it as. Yeah, it's like Maddie in Boston where the, you know, where the Celtics Played and the Bruins, it was the Boston Garden. And then they tore it down, built a new one and everyone still just calls it the garden. Even though it was called the Fleet Center at some point. Td Bank North, something. It's the garden. Steve, did you actually own a pair of tough skins when you were a kid like Seth and I did?

I don't know what tough skins are. The Sears brand jeans and corduroys. So, no, I did not. You didn't? Were you secretly, were you fashionable? I have a sneaking suspicion that you were a fashionable kid. I may have gone to Lus Chateau a few times. What is Lest Chateau?

Lus Chateau was this fancy pants place where they sold sort of European-style clothing in the mall. It was literally. I knew it. I totally knew that this was Broydo. Were you wearing parachute pants before everybody else? No. Maybe. No, I don't think so.

Is there a picture with an excellent mullet anywhere that you can, put on the radio for us? Definitely not. I just like that Le Chateau is literally a fancy pants place. I know. You go there to buy high-end pants. I can't believe that anyone ever could go shopping at Le Chateau and have gotten away with it in high school. Well, if you're fashion, well, like Steve back in the day. Wow. No problem. All right, let's get the stocks on our radar. Jason Moser, you're up first. What are you looking at this week? Yeah, I mentioned it earlier. Marriott, ticker M-A-R. You got to love big dogs and Marriott's acquisition of Starwood Hotels makes it the world's largest hotel operator with 1.1 million rooms and more

than 5,500 hotels and 100-plus countries, Chris, need I say more? Well, I will. This is a business that grows sort of any relatively slow rate, but they do a really good job of bringing value back to shareholders. The plan here up through 2019 now is to execute somewhere in the neighborhood of 7.5 billion in share repurchases, about 1.5 billion dollars in dividends. This is a stock we have up on our MDP high conviction list. We've identified a price point here. We think $85 is really attractive entry point. So we've got this one on the watch list. And we're ready to pull the trigger. We just need to see a little bit of a pullback. Steve? Question about Marriott? Is there a way to make a hotel like Marriott

totally distinguishable from another? Because I don't know Hyatt from Marriott from, you go to one. They all look the same. How do I make Marriott special? I think that's a very good point. I think the best thing they can do is through the membership rewards programs, because you're right. One of the most attractive parts about Marriott is that vast collection of hotel brands that it has. And they let a lot of the brands be the brands, and some of them have some personality. Seth, Jason, what are you looking at? Duluth Trading, which is D-L-T-H, and this is an interesting story. It's been in gems for a while.

They sell apparel, which is sort of designed to be sold to tradesmen and people who work sort of out in the garden and also the women who do that. But they sell stuff, for instance. They have a pair of jeans called ballroom jeans. They sell actually tight wicking underwear. They somehow managed to sell this to plumbers, long-tail T-shirts to unplummer your butt. And the stock was dwindling downwards in recent weeks because everyone expected them like every other apparel seller to be hammered.

And they actually did very well last quarter. The stock responded a little bit, but in the low 20s, it's still a pretty good deal. Steve, question about Duluth trading? What should I buy from them? What should you buy from them? I think you have to go with the underwear. They've got like 25,000 reviews on their underwear. Their buck naked underwear, it's called.

Maddie? A company I've gone with many times on the radio show is Mercado Libre, ticker M-E-L-I. We talked earlier in the show about Amazon BuyingSoup.com. Really, that purchase is all about the fulfillment centers out in the Middle East. Mercala Libre has such a big lead in Latin America. I see that as a potential next target for Amazon. Steve? Can I buy stuff here from them?

You absolutely can. Steve, you got a stock you want to add? to your watch list? I might go with the underpants company. You have to. All right. Seth Jason, Jason Moser, Matt Argusinger, guys. Thanks so much for being here.

Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.