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CMM Spotlight: The Sexy Salad

Posted: May 8th, 2018

It would be fitting for John Robertson, owner of an eatery featuring delights such as the Earth Angel Salad and the Basket of Sexy Egg Sandwiches, to add an eye-catching title to his business card. “Millennial Keeper” and “Outsourced Chief Culture Officer” are both fitting descriptions of a business owner who entices prospective corporate catering customers of this unique spot – the Sexy Salad in Hauppauge – with an offer that’s hard to resist: “Let me use my art to help your business.”

A long-time member of HIA-LI, Robertson recently welcomed CMM Managing Partner and HIA-LI Board Chairman Joe Campolo to the Sexy Salad’s newly expanded space on Adams Avenue in the heart of the Hauppauge Industrial Park (HIP) for a tour and discussion about the ways forward-thinking companies use catering to attract and retain top talent.

In the nearly 15 years since Robertson first opened his doors, the Sexy Salad has morphed from a hip lunch spot (which it remains today) to part of the solution for local businesses seeking to appeal to talent in the face of changing employee preferences and expectations. Reflecting on the common narrative that Long Island is hemorrhaging its young people who leave for the city or elsewhere, Robertson said that instead of fueling this “hysteria” over millennials, employers need to become part of the solution to keep our ambitious young people here. How? A critical step is to become an employer of choice by taking care of employees with food.

Robertson’s focus has therefore shifted from how to get hungry office workers in the door for lunch (though they are still welcomed with delicious food and terrific service) to expanding his catering services as a tool for Long Island businesses to keep their best and brightest workers happy and productive. Robertson knows this idea works because it’s how he’s grown his own business over the years with very little turnover. Each employee enjoys free lunch every day, despite ever-increasing costs. He hosts a summer barbecue for staff with a grab bag of gifts employees actually want. He sends new employees home with dinner for their families on Day 1. “Food is such an effective way to convey your appreciation,” Robertson said. “It’s a great way to take care of employees who work hard.”

Fellow business owner Campolo, who is in the trenches with Long Island’s business community every day and is working to modernize the HIP – the second largest industrial park in the nation after Silicon Valley – pointed to the gourmet cafeterias now commonplace in West Coast offices. When there’s high quality food in the office for the taking, employees not only feel valued, but they also save time – which means more productivity for employers. Robertson agreed that these non-monetary benefits are now critical to employee retention: “Food can be viewed as an expense, but forward-thinking companies use it as a tool, a benefit, an incentive.”

Robertson has always been an entrepreneur, selling lemonade to motorists waiting on line in his neighborhood during the 1970s gas crisis. He explained that he “worked a lot for a little in hopes of eventually working a little for a lot,” toiling away in hotels, NYC executive dining rooms, and food service companies before opening the Sexy Salad in 2003. Last year, he took advantage of the opportunity to double his footprint when the neighboring space opened up, creating Build a Burger adjoining his well-known eatery. His current involvement with the prestigious Goldman Sachs 10,000 Small Businesses program has encouraged him to think even bigger, giving him the opportunity to get “re-motivated” to keep growing.

The Sexy Salad has already grown into a critical role helping successful Long Island businesses attract and retain employees in the most delicious way possible. Think about that the next time you sample a Sexy Salad Platter.

John Robertson, owner of the Sexy Salad on Adams Avenue in Hauppauge, recently welcomed CMM Managing Partner Joe Campolo for a tour and discussion about the ways forward-thinking companies utilize catering to attract and retain top talent. Next photo: Robertson takes great pride in the quality ingredients and exceptional service that are hallmarks of the Sexy Salad experience.

After the lunch rush! Next photo: Salad not your thing? There’s still plenty to choose from at the Sexy Salad.

No regular omelets here (“sexy” omelets are offered for breakfast). Next photo: Food for thought. How does your company boost employee morale?

The unique Sexy Salad logo adorns everything at the eatery from the cups to this wall clock. Next photo: Robertson opened the Sexy Salad in the heart of the Hauppauge Industrial Park in 2003. Last year, he seized on the opportunity to expand when the neighboring space became available, opening an adjoining Build a Burger and doubling his space.

A look at the seating area in the Build a Burger section. Next photo: Campolo and Robertson both credit HIA-LI with being a major driver of business.

Robertson is a longtime supporter of HIA-LI.

CMM Closes M&A Deal for Major Events Management Company

Posted: May 3rd, 2018

On behalf of client Wave Capital Consulting, Inc., Campolo, Middleton & McCormick successfully closed a deal involving the purchase of substantially all the assets of a major events management company. The transaction, which closed in April 2018, included the acquisition of rights to business networking and sales events and domain names including NY XPO, LI Business Expo, and NY Market Expo, some of the most recognizable names in trade shows and facilitated networking. CMM’s Vincent Costa brought the deal to a swift close along with Donald Rassiger.

“CMM provided great service from start to finish and handled the deal very efficiently,” said Peter Spoleti of Wave Capital. “They kept me informed every step of the way.”

CMM has helped clients close billions of dollars’ worth of deals over the past 10 years. As the cornerstone of our corporate work, our Mergers & Acquisitions practice is focused on working efficiently and creatively to keep deals moving toward closing. The firm also has access to a critical network of relationships with M&A advisors, bankers, accountants, IDA loan advisors, and other professionals to assist in getting deals done.

CMM Spotlight: The Argyle Theatre

Posted: May 3rd, 2018

There’s no shortage of lofty reasons to eagerly await opening night at the state-of-the art Argyle Theatre in Babylon Village, namely: the positive impact of arts and culture on a region’s vitality. Millennials want to live and work in places where they can also play and find entertainment. The arts and culture sector often outranks other sectors in U.S. spending. Entire communities are planned around cultural spaces and the arts.

Not to mention, live theater is just SO GOOD!

The Argyle Theatre opens this month with a full schedule of Broadway-caliber shows, from Guys and Dolls to The Producers, featuring professional equity actors, at the newly renovated 1920s movie house that most recently housed Bow Tie Cinemas until closing in 2014. Joe Campolo, CMM Managing Partner and a lifelong patron and supporter of the arts on Long Island, was thrilled to receive a behind-the-scenes tour of the Argyle Theatre in April as construction crews completed the last phase of renovations.

The Argyle Theatre’s grand opening this month is the culmination of a lifelong dream for father and son co-owners Mark and Dylan Perlman, who purchased the building in 2017. The Argyle is set to become a regional destination: it is the second year-round professional equity theatre on Long Island and offers a convenient, right-in-my-backyard alternative to NYC for Long Islanders seeking a night out featuring live entertainment with the quality and style of Broadway. Only a five-minute walk from the Babylon LIRR station and surrounded by the vibrant Babylon Village downtown restaurant and shopping scene, the venue is sure to attract theatergoers beyond Long Island as well. A shuttle to and from the train is planned, and a bike rack is going up outside the building. (For those coming by car, the Argyle’s website will list nearby lots where parking is permitted during showtime.)

“We’re looking to make people think and feel,” said co-owner Mark Perlman of bringing professional, live theater to Long Island’s South Shore. “We’re incredibly excited to bring the Argyle Theatre to the public after a very long process.” The beautifully renovated single-theatre space features 250 seats at orchestra level and an additional 250 at mezzanine level, as well as top-of-the-line lighting, sound, and rigging systems.

Season tickets are available as well as single-show tickets for an inaugural season that also includes Hairspray, Peter and the Star Catcher, The Hunchback of Notre Dame, and Spring Awakening. Marty Rubin, the Argyle’s Director of Sales, has also put together corporate event packages for businesses looking beyond the boardroom for a unique venue that transports visitors to different time periods and places. Classes, summer programs, and children’s programs are also planned.

CMM is excited to welcome the innovative Argyle Theatre to Long Island and support its role in keeping our island a vibrant cultural destination. Check out these photos of our private tour in the weeks before the Argyle’s grand opening, then head over to https://argyletheatre.com/ or call 844-631-LIVE for tickets.

 

Pictured: Argyle Theatre co-owner Dylan Perlman, sales director Marty Rubin, and co-owner Mark Perlman invited CMM Managing Partner Joe Campolo to the 1920s-era former movie house on Main Street in Babylon Village during the last phase of construction in April. The Argyle Theatre’s inaugural season begins this month. Next photo: The iconic “Babylon” fluorescent sign will shine once again in Babylon Village.

The space has been completely renovated from its most recent past life as Bow Tie Cinemas. This state-of-the-art facility will now offer year-round professional equity theatre. Next photo: The 500-seat Argyle Theatre now seats 250 at orchestra level and 250 at mezzanine level.

The new single-theatre space features an orchestra pit, balcony, and top-of-the-line lighting, sound, and rigging systems. Next photo: Inside view of the front doors during construction. These posters advertise the last movies screened at the former movie theater before closing in 2014.

 

Marty Rubin and Joe Campolo check out the balcony. Next photo: Center and right, owning and operating the Argyle Theatre is a dream come true for father and son team Mark and Dylan Perlman. On the left is sales director Marty Rubin, who has reconnected with Mark, his former baseball teammate at Queens College.

Enter stage left: the view from the stage. This stage will feature productions of Guys and Dolls, Hairspray, Peter and the Star Catcher, The Hunchback of Notre Dame, Spring Awakening, and The Producers in its grand opening season. Next photo: The Perlmans paid careful attention to every detail during the restoration. Here, a view outside from upstairs.

The Perlmans honored the theatre’s past, as well as their own journey to making their dream a reality, by including period furniture with a personal twist. This couch belonged to Mark Perlman’s parents. Next photo: Just one of the many dressing rooms backstage being readied for opening night.

State-of-the-art lighting awaits installation backstage. Next photo: This box office is now open! Single show and season ticket packages are on sale now – call 844-631-LIVE.

May 31 – Campolo Discusses Long Island Development at HIA-LI Trade Show Executive Luncheon

Posted: May 1st, 2018

Event Date: May 31st, 2018

HIA-LI 30th Annual Trade Show: Long Island’s Largest B2B Trade Show & Conference

Suffolk Community College Sports & Exhibition Center, Brentwood

May 31, 2018 from 9 a.m. – 3 p.m.

Join us for the Executive Luncheon: 11:30 a.m. – 1:30 p.m.

Long Island Development: Growth for Business, Our Kids & the Economy

Moderator: Mitch Pally, CEO, LIBI

Panelists: Joe Campolo, Campolo, Middleton & McCormick

Russ Albanese, Albanese Organization

Jim Coughlan, TRITEC Real Estate

Paul Pontieri, Village of Patchogue

David Wolkoff, Heartland Business Center

Register here or call 631-543-5355 to reserve your spot (members $50; non-members $65)

 

Campolo and CMM Advance Quality of Life on Long Island with Leadership Role in The Energeia Partnership

Posted: May 1st, 2018

Campolo, Middleton & McCormick, LLP has pledged $50,000 to financially support the mission, work, and programs of The Energeia Partnership and its efforts on behalf of Long Island. Joe Campolo, CMM Managing Partner, recognized business leader, and a member of the Energeia Class of 2016, has also been elected to Energeia’s prestigious Board of Advisors.

Energeia, which derives its name from a Greek word used to describe the demonstration of inner character in deeds, brings together a diverse group of ethical leaders from Long Island’s public, private, and nonprofit sectors to help address the region’s most complex issues including education, poverty, land use, energy, transportation, and healthcare. Energeia’s mission fits seamlessly into CMM and Campolo’s efforts to improve the quality of life for all Long Islanders and bolster the economy.

“We are very grateful to Campolo Middleton & McCormick’s Joe Campolo for believing in our mission to serve as stewards of positive change here on Long Island,” said Executive Director Paul J. Tonna. “Support from generous donors like CMM is essential to achieving our goal of promoting and enhancing life on Long Island, and ensuring the long-term sustainability of The Energeia Partnership.”

Campolo has spearheaded some of the most important initiatives in recent years to grow the Long Island economy. In addition to CMM’s support of The Energeia Partnership, Campolo is the driving force behind projects that attract public and private dollars to support economic engines on Long Island, including the Hauppauge Industrial Park, and has facilitated partnerships among the region’s power players to boost the economy and promote innovation. The firm also provides philanthropic and pro bono support to many national and local nonprofit organizations.

Campolo explained that his personal experience with Energeia was eye-opening, vastly improving his perspective on key issues. “Energeia is a terrific path to help Long Island leaders become more thoughtful about different perspectives before making decisions that impact people and society at large,” he said.  “I am proud to support Energeia’s incredibly important work.”

CMM Spotlight: Tesla Science Center at Wardenclyffe

Posted: April 26th, 2018

The Tesla Science Center at Wardenclyffe may not yet be open to the public, but innovation is already on full display on these hallowed grounds in Shoreham where famed inventor Nikola Tesla conducted research.

Known for his groundbreaking contributions to alternating current (A/C) electricity, fluorescent lighting, radio, and the technology behind the x-ray, wi-fi, and more, the Serbian-American inventor and engineer has been enjoying a posthumous resurgence in popularity after dying impoverished in 1943. (The 187-foot-tall broadcast tower Tesla built at the Shoreham site was torn down in 1917 for scrap to help pay Tesla’s bills at the Waldorf Astoria.)  But now, decades after Tesla’s death, Elon Musk’s celebrated electric car bears Tesla’s name in recognition of the inventor’s creation of the induction motor and A/C transmission, and Tesla is finally achieving the recognition his scientific contributions deserve.

CMM’s Marc Alessi serves as Executive Director of the Tesla Science Center, which is being developed on the Shoreham site as a technology center housing a business incubator for fledgling companies engaged in scientific research, as well as a museum dedicated to educating the public about Long Island’s rich scientific opportunities past, present, and future. The Center’s vision is to educate visitors about the magnitude of Tesla’s accomplishments right here on Long Island and their impact on modern-day life, as well as foster curiosity, experimentation, and lifelong learning.

“This isn’t just another science museum. The fact that Tesla conducted his research on these grounds sets it apart,” said Joe Campolo, CMM Managing Partner and National Advisory Board Chairman for the Tesla Science Center, who recently had the opportunity to venture behind the locked gates for a tour. Once the restoration of the complex is complete, Campolo said, “this Long Island site will be a destination for innovators and science enthusiasts around the world.”

Campolo recently worked to secure an unprecedented donation of one million dollars from CMM client Softheon, Inc. to the Tesla Science Center to help solidify Long Island’s spot in scientific history, and Peter Klein of Klein Wealth Management – HighTower Advisors is exploring partnerships with entrepreneurs and science advocacy groups to bring in additional funding. Programs planned for the site include presentations, lectures, and visiting experts; science teacher association conferences; student field trips; and science competition workshops, mentoring, and awards, as well as a permanent Tesla exhibit and a host of other rotating science exhibits.

Learn more about the story of the Tesla Science Center in these photos, and visit teslasciencecenter.org to contribute to this one-of-a-kind effort.

 

Marc Alessi, Joe Campolo, and Peter Klein in front of Nikola Tesla’s lab during a recent visit. The lab was designed by noted architect Stanford White.

A look at the lab from another angle. Peerless Photo also operated at this site. Next photo: Alessi, Campolo, and Klein have all taken leadership roles to make the Tesla Science Center a reality and promote Long Island’s rich scientific history.

A statue of Nikola Tesla from the Government of the Republic of Serbia peers out over the site.

 

A famous multiple-exposure photograph of Tesla in his Colorado Springs lab in 1899 with a “magnifying transmitter” high voltage generator. Credit: Wellcome Collection https://wellcomecollection.org/works/zncts6ch. Next photo: The broadcast tower, 1904 (photographer: unknown). The tower is long gone, but the lab still stands today.

 

Marc Alessi, Peter Klein, and Joe Campolo examine site plans.

Tesla is now a household name. Next photo: Planning is well underway for the restoration of the site.

Commemorative bricks surround the Tesla statue at the Shoreham site. “TO THE GREATEST MAN WHO EVER LIVED. THIS IS OUR LEGACY.”  “Master of Electricity, Man Out of Time.” “In the Space Between Intellect & Insanity Lies Genius.” Next photo: “ENCOURAGE LEARNING AND INNOVATION AT ALL AGES.”

“Tesla: Better Than the Other Guy.” Next photo: “Tesla, still getting walked on after all these years.”

  

CMM’s Marc Alessi has been instrumental in developing the Tesla Science Center since his service in the New York State Assembly. Next photo: “Here’s to humble scientists.”

 

“Never forget the underdog.” “For the love of science.” Next photo: “Tesla lives on in the hearts & minds of inventors!”

The future site of classrooms and exhibits at the Center. Next photo: This house will be reconfigured for office space.

    

Tesla was born in the Austro-Hungarian Empire and had both Serbian and Croatian ancestry. He emigrated to the U.S. in 1884 and ultimately became a U.S. citizen. Next photo: A closeup of part of the former site of the Wardenclyffe Tower.

 

Tax Cuts and Jobs Act – How Are You Going to React? Part 2 – International Provisions

Posted: April 20th, 2018

Tags: ,

Alan R. Sasserath, CPA, MS
Partner, Sasserath & Zoraian, LLP

As discussed in a previous article, the Tax Cuts and Jobs Act (“TCJA”) is here to stay and our challenge is to understand how to react to it to minimize our taxes.  This article will focus on the international provisions of the TCJA and how US companies with foreign operations and foreign companies with US operations should react.  It’s a worthwhile read if you own all or part of a foreign company or are thinking about expanding your business beyond the US.

Below is a discussion of some of the international provisions that affect controlled foreign corporations (“CFCs”).  CFCs are generally foreign entities owned more than 50% by a US “person” (individual, partnership, corporation, etc.) or persons.  Of course, we will also discuss what the US owners of CFCs should think about to minimize the effect of such provisions.  (Please keep in mind that this is a high-level discussion of the Federal tax provisions and you should consult your tax advisor regarding such planning.)

1. Transition Rules to the Modified Territorial System: The new international tax system under the TCJA is known as the Modified Territorial System (“MTS”).  The TCJA was signed into law on December 22, 2017 and went into effect on January 1, 2018.  At the time the law was signed, there were large amounts of previously untaxed income that were retained in foreign countries under the pre-TCJA international tax system.  Accordingly, there wasn’t a lot of time to plan for this provision of the TCJA for calendar year entities.  Under the transitional rules, such previously untaxed income will be taxed to the U.S. owners at either 15.5% or 8%.  This provision applies to US C corporations that own more than 10% of a foreign entity and other US owners, other than S corporations, of a CFC.  S corporations are permitted continued deferral.  Again, calendar year taxpayers had nine days to plan to try to do what they could to get to the 8% tax rate or avoid the tax in its entirety.

However, fiscal year taxpayers do have time to plan since the tax relates to the last fiscal year beginning before January 1, 2018.  Accordingly, if your fiscal year end is September 30 and you have $250 billion in previously untaxed, overseas profits (think Apple), then you have until September 30, 2018 to plan a way to decrease the tax rate from 15.5% to 8%.   The main driver of the difference in tax rates is whether the untaxed overseas profits are sitting in cash and similarly viewed assets (15.5%) or harder assets like inventory or fixed assets (8%).  Again, if you have a fiscal year, whether you have $250 billion or $1 million in overseas profits, you should be doing whatever you can to reduce the tax rate from 15.5% to 8%.  One last item to note is that this tax can be paid over eight years with a timely election.

2. Global Intangible Low Taxed Income (“GILTI”): If you ever wondered what our elected officials thought of U.S. companies with foreign operations, please see this acronym: GILTI (pronounced “guilty”), and you will learn everything you need to know.  GILTI relates to the global minimum tax that the US now charges on US CFCs.  It is possible that majority owned foreign entities/minority owned US entities get dragged into these rules as ell.  Under the pre-TCJA rules, if a CFC owned an active foreign entity, then that foreign entity’s earnings were not taxed in the US until such funds were repatriated to the US.  Now, under TCJA, practically speaking, if a US person owns an active CFC, then they are required to calculate the amount of tax on such foreign income (known as GILTI) after certain adjustments are made to the foreign income.

The calculations of the tax on GILTI for a US C corporation and an individual, either directly or via a pass-through entity, are very different.  For a C corporation, the effective tax rate is 10.5% of GILTI before foreign tax credit.  Also, if the foreign corporation paid 13.125% or more of tax to the foreign country, then the tax on GILTI  would be zero for that year due to the allowance of the foreign tax credit.  For an individual, the effective tax rate is 37% of GILTI.  That’s right: there is a 26.5% difference in tax rate and potentially 37% difference with the inclusion of the foreign tax credit in tax rate between owning a CFC via a C corporation and an individual since individuals are not permitted to utilize the corporate foreign tax as a credit against US individual tax in this situation.  However, there is an election that an individual can make to be treated as a C corporation for the purpose of this tax effectively lowering their rate to that of a C corporation.  Since the election has been in the law for many years and GILTI is a new concept, we don’t know if an individual will be entitled to all the benefits afforded to a C corporation.  We are waiting for further guidance on this.

If you own a foreign entity that will be subject to GILTI either directly or through a pass-through entity, then you may want to contribute such ownership into an LLC ASAP.  With an LLC, you are permitted to make an election to be treated as an S corporation, C corporation, partnership or disregarded entity.  While such election is generally required to be made within 75 days of formation, that period can be extended if there is reasonable cause.  I would hope that the IRS would accept “ambiguity of the tax law” as reasonable cause to file a late election.

3. Foreign Derived Intangible Income (“FDII”): FDII generally relates to property sold or services provided by a US C corporation to a non-US person. The tax calculations are similar to the GILTI tax calculations; however, the effective tax rate on this income is 13.125% as opposed to the 10.5% tax rate on GILTI.  One of the strategies to get the benefit of the 13.125% FDII tax rate would be for a company that is a pass-through entity to drop their non-US sales into a separate C corporation to take advantage of the low tax rates on such income.  However, this planning strategy would more likely apply to entities that were not eligible for the pass-through entity 20% deduction under the TCJA.  Also, foreign corporations that set up a US C corporation would be eligible for this benefit as well for sales via the US C corporation.  Could the US become a tax haven for foreign companies in high tax jurisdictions?  Finally, DISCs are still available as well to be used in conjunction with this planning opportunity.

In addition to the provisions above, there are many others.  Also, there is a fair amount of confusion surrounding several provisions, some of which were mentioned above.  In addition to the suggestions above, here are a few others, in general, as they relate to the international provisions under the TCJA:

  • Revisit any “check the box” elections that you made or decided not to make in the past. Based on the changes resulting from the TCJA, you may come up with a different answer.
  • As you can see with GILTI and FDII, C corporations are favored under the TCJA. As mentioned above, there is an election available to individuals to, potentially, get the same benefits as a C corporation with regards to GILTI.  Don’t be so quick to convert your pass-through entities to C corporations.  Once you convert to a C corporation, there is a five-year waiting period to be able to elect S corporation status again without IRS consent.  Also, once S status is elected again, there is an additional five-year waiting period to get all of the benefits of S corporation ownership back.  That five-year waiting period is measured from the time you decide to revert to an S corporation.  It is not unheard of that the TCJA will be “reversed” depending on the results of future elections, but such a reversal would be unlikely, especially in the near term.
  • If you plan and are successful to avoid the CFC rules, then you must be wary of the Passive Foreign Investment Company (“PFIC”) rules. As onerous as the CFC rules above are, the PFIC rules can be even worse.
  • If you are going to go the C corporation route, try to restructure to get a potential future benefit in the way of section 1202 stock. The benefit of section 1202 stock is that shareholders can avoid all Federal and potentially State income tax on up to $10 million of gain in the event of a future stock sale.
  • The discussion above relates to Federal income tax changes. Please note that state taxes will apply as well and can be equally or more complicated.
  • Some of the provisions discussed above sunset at pre-determined dates. For example, the effective tax rate related to FDII increases from 13.125% to 16.41% for tax years beginning after December 31, 2025.

The bottom line: if you own a foreign entity, then you should consult with your tax advisor immediately if you have not already done so.  Once the technical corrections to the TCJA are deployed as we hope/expect later in 2018, we should have more clarity on the provisions that are unclear at the moment.  At that point, you should re-confirm that you are maximizing your opportunities from the tax perspective.

This article does not necessarily reflect the views of CMM and does not constitute legal or tax advice. Please consult with your accountant about your particular tax situation.

 

How to Negotiate with North Korea

Posted: April 20th, 2018

By: Joe Campolo, Esq. email

Tags:

When handling an important negotiation, the parties must take it seriously and be prepared. This approach is a must whether you’re negotiating a small business deal or about to engage in diplomatic negotiations. As I’ve previously discussed on LI News Radio 103.9 with Jay Oliver, the United States needs to carefully handle its sit-down with North Korea’s Kim Jong Un and determine a roadmap for the negotiation beforehand. Here’s a great preparation checklist from the Wall Street Journal.

10 Tips for Negotiating with Kim Jong Un
By Robert B. Zoellick
The Wall Street Journal, March 28, 2018
https://www.wsj.com/articles/10-tips-for-negotiating-with-kim-jong-un-1522189919

The news that President Trump plans to sit down with Kim Jong Un offers a perfect example of his style: Mr. Trump surprised his world-wide audience, put himself at the center of attention, and took a big risk, probably impulsively. Now the drama has shifted to whether Mr. Trump and Mr. Kim will actually meet. And if so, when and where?

Haphazard diplomacy with North Korea presents a real danger, so someone around Mr. Trump had better be preparing for a complex negotiation. Here are 10 steps to get started:

  1. Identify the outcome Mr. Trump wants to achieve.That may seem simple, but consider the range of possibilities. The U.S. could seek progress toward the peaceful unification of a free Korea. Or it could accept the North Korean regime’s existence if Pyongyang gives up nuclear and other weapons of mass destruction, plus long-range missiles, while promising not to sell its technology. Mr. Trump could focus on North Korea’s threats or behavior—whether toward the U.S., South Korea, the region or the North Korean people. The U.S. could demand that North Korea return people it has abducted from other countries, especially Japan. The bargaining will take sharp twists and turns. Mr. Trump needs to know how he will frame America’s initial demands and what he wants to achieve over different time frames.
  1. Assess, coldly and rationally, America’s actual leverage.What pressures and inducements can be brought to bear by the U.S., its allies, China and Russia? Mr. Trump will have to coordinate this leverage, which means the White House must be prepared for varying scenarios. Given the experience of past talks with North Korea, expect extraordinary demands, breakdowns, walkouts and reversals of positions. Getting China and Russia to go along will require Mr. Trump to consider trade-offs.
  1. Bolster U.S. relations with South Korea and Japan.These two allies can help the White House achieve a successful negotiation—or deal with failure. (They are also the cornerstone of future U.S. policy toward China.) That means America must win and hold public support in both countries. Threatening to withdraw U.S. troops from South Korea and diminish American trade can hardly help.
  1. Decide on the negotiating process.The U.S. could negotiate directly with North Korea. Or it could add South Korea, which would give America’s ally standing and reduce the risk of a split in the alliance. Or the U.S. could revive the six-party talks—including Japan, China and Russia—from previous negotiations. Mr. Trump must decide whether his secretary of state should lead or whether he wants to rely principally on officials a step below. The White House should know whether it wants to use a step-by-step process to turn paper negotiations into realities on the ground. The U.S. should look for ways to make North Korean reversals impossible, or at least difficult and costly.
  1. Engage Congress.At a minimum, Mr. Trump needs lawmakers’ support as he embarks on this negotiation. He may even need their votes to approve a treaty or allocate funding.
  1. Consider what Mr. Kim may want. The North Korean ruler will get an early bonus just by meeting as an equal with Mr. Trump, which legitimates Mr. Kim’s rule. North Korea will claim it is negotiating in good faith and therefore the U.S. and its allies should ease sanctions, offer piecemeal concessions, and hold off stronger measures. It will present itself as standing for Korean nationalism and South Korea’s leaders as Yankee lackeys. Mr. Kim could reach for unification on Pyongyang’s terms. He could demand a peace treaty to conclude the Korean War and an end to America’s alliance with Seoul. The U.S. should expect, at a minimum, that Mr. Kim will want to keep his nuclear weapons and missiles to deter any threat to his regime.
  1. Decide what the U.S. is—and isn’t—willing to trade.Demands are just the start. Pyongyang may press Mr. Trump to concede security guarantees, economic openings, or even assistance from Seoul or others. On the other hand, the U.S. needs to decide whether its alliance with South Korea and the U.S. forces stationed there are nonnegotiable.
  1. Decide the minimum the U.S. will be willing to accept from North Korea. Trump attacks the Iran deal for failing to roll back Tehran’s nuclear program, ignoring its missiles, lifting limits over time, and turning a blind eye toward its other aggressive behavior in the region. If he wants to avoid making a similar deal, the U.S. and its allies should agree on what will prompt them to walk away from North Korea.
  1. Be prepared for no agreement.The U.S., South Korea and Japan should have a plan in case the talks fail. Should South Korea maintain its outreach to the North as a way to build confidence and ease tensions? Mr. Trump may prefer to isolate Pyongyang. The U.S. could press for tighter sanctions to choke North Korea or even threaten military action if Mr. Kim crosses “red lines.” If Mr. Kim can divide the U.S. from its partners, he will have achieved a great success.
  1. Get Mr. Trump to agree that he won’t wing it. Attending a summit and making news are not the same as getting results. The president’s advisers need to run through this preparatory list—or a better one—with him.

Mr. Zoellick is a former World Bank president, U.S. trade representative and deputy secretary of state.