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How the Rich Avoid Paying Millions in Taxes: Wealth Secrets You NEED to Know w/ Karlton Dennis · Earn Your Leisure

• 0:00
  Speaker 1: I got a letter in the mail from the IRS
• 0:01
  Speaker 1: telling me that I owe them more money than I
• 0:03
  Speaker 1: had at that point in time, I had to humble myself.
• 0:05
  Speaker 1: Finally picked up the phone called my mom. My mom
• 0:07
  Speaker 1: had owned a tax and accounting firm, and I asked
• 0:09
  Speaker 1: her what I did wrong? And she told me, you
• 0:10
  Speaker 1: could have done this, this, this, and that.
• 0:12
  Speaker 2: What's the network for the average client?
• 0:14
  Speaker 1: Tax planning makes sense? Right over three hundred K. That's
• 0:17
  Speaker 1: when you have enough liquidity to be able to invest
• 0:19
  Speaker 1: in tax reduction strategies.
• 0:21
  Speaker 2: What do you see that people get audited to most for.
• 0:24
  Speaker 1: I have seen some of the craziest things on some
• 0:26
  Speaker 1: of these other expense items massages for my team.
• 0:29
  Speaker 3: People see corporations pay zero percent tax, and they're like, how.
• 0:34
  Speaker 1: You're shifting income from one entity to another entity that's
• 0:37
  Speaker 1: filing tax returns on a completely different fiscal year.
• 0:39
  Speaker 2: In we'll benefits the most from the tax code and why.
• 0:42
  Speaker 1: The government has created a bunch of incentives inside of
• 0:44
  Speaker 1: the tax code because they know that they can't afford
• 0:46
  Speaker 1: to provide affordable housing for everybody. They know that they
• 0:49
  Speaker 1: can't get everyone a job in stimulus checks, so they're
• 0:52
  Speaker 1: partnering with business owners. You can be an earner in
• 0:54
  Speaker 1: this government, but they're going to penalize you for just
• 0:57
  Speaker 1: being an earner. Debt is a good thing. It's a tool.
• 0:59
  Speaker 1: It's something that I can used to my advantage. I
• 1:01
  Speaker 1: understand that there are certain wealth teachers that teach you
• 1:03
  Speaker 1: to be one hundred percent debt free. However, the tax
• 1:05
  Speaker 1: cod's not written like that. IRC one any one allows
• 1:07
  Speaker 1: for you to write off the cost of the production
• 1:10
  Speaker 1: of a movie film. These taxpayers have to spend one
• 1:12
  Speaker 1: hundred hours watching other movie films in order to qualify
• 1:14
  Speaker 1: as an active participant in the movie space.
• 1:18
  Speaker 2: All right, guys, welcome back Eyl. We are here with
• 1:21
  Speaker 2: a special guest, Carlton Dennis. Yeah, came from California and
• 1:27
  Speaker 2: specializes in tax strategies for high end wealthy clients.
• 1:33
  Speaker 1: Yeah, is that correct, Yes, that's great.
• 1:35
  Speaker 2: Okay. So this is a conversation that we can never
• 1:38
  Speaker 2: have enough of, especially around this time. It's tax time,
• 1:43
  Speaker 2: and I feel like, no matter how much we talk
• 1:46
  Speaker 2: about the tax code, most people don't have any idea
• 1:51
  Speaker 2: about it, and people still make mistakes. We just talked
• 1:53
  Speaker 2: about some entertainers that made some big mistakes when it
• 1:56
  Speaker 2: comes to taxes. So learning about the tax code, learning
• 2:00
  Speaker 2: about best ways to you know, really shelter really maximize deductions, really,
• 2:07
  Speaker 2: you know, make the most out of the code because
• 2:10
  Speaker 2: it's very complex. I think it's something that is always
• 2:13
  Speaker 2: educational to teach people on. So you know, this episode,
• 2:16
  Speaker 2: we're gonna go over that, we're gonna go over your
• 2:18
  Speaker 2: journey and you just get a lot of gym. But
• 2:20
  Speaker 2: first and foremoll, thank you for joining us.
• 2:21
  Speaker 1: Yeah. Absolutely, I appreciate you guys having me on. Excited
• 2:24
  Speaker 1: to talk taxts today. I want to be able to
• 2:25
  Speaker 1: help a lot of people kind of crack the code today,
• 2:28
  Speaker 1: if you will.
• 2:28
  Speaker 3: Yeah, I think it's going to be an interesting conversation,
• 2:31
  Speaker 3: one that obviously the audience is going to learn from,
• 2:33
  Speaker 3: but we're gonna learn from too, because one thing about
• 2:35
  Speaker 3: the tax code, especially when new administration's come in, it
• 2:38
  Speaker 3: always changes. Yes, right, things are take it now, things
• 2:41
  Speaker 3: get added, some things get put back.
• 2:43
  Speaker 1: So I got I got a bunch of stuff.
• 2:45
  Speaker 3: Yeah, yeah, because you know, we're trying to make sure
• 2:47
  Speaker 3: that that we can keep as much as possible out.
• 2:50
  Speaker 1: Of doubt, without of doubt. I love that. I love that.
• 2:52
  Speaker 2: So let's get into it. How did you even get
• 2:55
  Speaker 2: to this point, Let's let's start there. How did you
• 2:57
  Speaker 2: get into the world of taxes? How did you start
• 3:01
  Speaker 2: working with clients? Like, explain your whole background from start
• 3:04
  Speaker 2: to where you are now.
• 3:05
  Speaker 1: Yeah, so I actually don't have the traditional background that
• 3:08
  Speaker 1: most CPAs or a tax professionals have. I didn't go
• 3:10
  Speaker 1: to school for accounting. I went to school for kinesiology.
• 3:14
  Speaker 1: I thought I was going to go to the NFL.
• 3:15
  Speaker 1: That whole story didn't end up happening. And right when
• 3:17
  Speaker 1: I graduated college, I got a W two job working
• 3:20
  Speaker 1: for this company called Galo Wine Company, where I was
• 3:22
  Speaker 1: selling like wine and liquor, and I also started my
• 3:25
  Speaker 1: personal training business. I did not realize that when you
• 3:28
  Speaker 1: are a ten ninety nine contractor that you have to
• 3:31
  Speaker 1: report all your ten ninety nine income and if you don't,
• 3:35
  Speaker 1: dirs will report it for you. And so I got
• 3:37
  Speaker 1: a letter in the mail from the IRS telling me
• 3:39
  Speaker 1: that I owed them more money than I had, And
• 3:42
  Speaker 1: at that point in time, I had to humble myself.
• 3:44
  Speaker 1: Finally picked up the phone called my mom. My mom
• 3:46
  Speaker 1: had owned a taxi and accounting firm for over thirty years.
• 3:48
  Speaker 1: She was literally called America's tax lady, and I asked
• 3:51
  Speaker 1: her what I did wrong, and she told me you
• 3:52
  Speaker 1: could have done this and that to have prevented it.
• 3:56
  Speaker 1: I moved out of Hollywood, California, moved back home with
• 3:58
  Speaker 1: the parents, joined the family business, and within six months
• 4:01
  Speaker 1: I realized making personal training programs was never going to
• 4:04
  Speaker 1: do equate to the revenue she was receiving on selling
• 4:07
  Speaker 1: tax plans and helping people save money. And I decided
• 4:11
  Speaker 1: to go all in on tax and got my enrolled
• 4:13
  Speaker 1: agent's license and got on YouTube during COVID and to
• 4:17
  Speaker 1: twenty twenty and started sharing tax information with the world.
• 4:20
  Speaker 2: So your family you have a far Yeah.
• 4:23
  Speaker 1: My family has a firm, that's correct. Yeah, you still
• 4:26
  Speaker 1: work with them now? Oh yeah, absolutely, Yeah. My mom
• 4:28
  Speaker 1: has her firm, and then I have my firm too.
• 4:29
  Speaker 1: That's great.
• 4:30
  Speaker 3: You know, most times we hear stories and people try
• 4:33
  Speaker 3: not to stay in the family business. Yeah, what you
• 4:36
  Speaker 3: said you had to humble yourself, yes, right, Like growing
• 4:38
  Speaker 3: up obviously knowing that your parents did that line of work.
• 4:42
  Speaker 1: Were you like saying like, I'm going to do something
• 4:44
  Speaker 1: completely different. I don't want to do that. That was
• 4:46
  Speaker 1: it was just being stubborn about it. Yeah, one hundred percent.
• 4:48
  Speaker 1: I was super stubborn. I wanted to be the football guy,
• 4:52
  Speaker 1: the limelight guy. Athletics was always the thing that came
• 4:55
  Speaker 1: easy to me. And when I saw the writing on
• 4:57
  Speaker 1: the wall that I wasn't going to go to the NFL,
• 4:59
  Speaker 1: I needed to pivot into something else. So I immediately
• 5:02
  Speaker 1: went to career fair found the first job that liked me,
• 5:05
  Speaker 1: which was you know, Gallo Wine company. Fell into that.
• 5:08
  Speaker 1: But then I picked up personal training right at the
• 5:09
  Speaker 1: exact same time, and I called myself a celebrity fitness trainer,
• 5:12
  Speaker 1: moved to Hollywood, California, and started getting clients just by
• 5:15
  Speaker 1: posting on Instagram and social media. At that time, not
• 5:18
  Speaker 1: too many people were really using Instagram like that for
• 5:21
  Speaker 1: videos yet, and so I was like putting out a
• 5:23
  Speaker 1: bunch of videos to get people attracted to my business.
• 5:27
  Speaker 2: So at what point do you like, hit your stride
• 5:30
  Speaker 2: and say I'm all in on the taxis thing. I'm
• 5:33
  Speaker 2: done with, you know, trying to be a personal trainer. Yeah,
• 5:37
  Speaker 2: this is my so my chosen path.
• 5:40
  Speaker 1: Yeah, it happened actually within the first month working in
• 5:42
  Speaker 1: my mother's firm. So I convinced my mom I'm going
• 5:44
  Speaker 1: to go one hundred percent commission base, so I don't
• 5:46
  Speaker 1: want a salary. I'll just come in on sales and
• 5:48
  Speaker 1: I'll be one hundred percent commission based. Well, the first
• 5:50
  Speaker 1: four weeks I didn't make any money because I didn't
• 5:52
  Speaker 1: understand anything about taxes. I was just calling people and
• 5:54
  Speaker 1: didn't know what to say. She came into my office
• 5:56
  Speaker 1: one day and said, Hey, if you can't sell a
• 5:58
  Speaker 1: tax plan within the next four weeks, I am going
• 6:00
  Speaker 1: to fire you. Do you have plenty of You have
• 6:02
  Speaker 1: plenty of information here, so get to work. So what
• 6:05
  Speaker 1: I did that day is I went to Target and
• 6:06
  Speaker 1: I bought a recorder and I slid this black recorder
• 6:09
  Speaker 1: was eighteen dollars underneath her desk, and for eight hours
• 6:12
  Speaker 1: it recorded everything. I took that recording, sent it off
• 6:15
  Speaker 1: to REV dot com. Rev dot com sent me back
• 6:17
  Speaker 1: a transcript within forty eight hours. Now I had a
• 6:20
  Speaker 1: transcript of how my mother communicated tax Does she notice
• 6:24
  Speaker 1: she knew this? Okay? Now, when I got the transcript,
• 6:28
  Speaker 1: the first couple of calls that she has was just
• 6:30
  Speaker 1: regular taxpayers that are looking for tax returns, very simple conversations.
• 6:33
  Speaker 1: A thousand dollars return here, A thousand dollars return there.
• 6:36
  Speaker 1: But then in the middle of the calls is when
• 6:38
  Speaker 1: she got to the tax planning. She had a husband
• 6:40
  Speaker 1: and wife come in. They're a real estate agent and
• 6:43
  Speaker 1: a firefighter, and instead of looking for tax preparation services,
• 6:47
  Speaker 1: they were looking for ways to reduce their tax They
• 6:49
  Speaker 1: were making about half a million dollars a year, and
• 6:50
  Speaker 1: my mom elaborately explained in the writing how a tax
• 6:55
  Speaker 1: plan works, how you can leverage the tax go to
• 6:57
  Speaker 1: the fullest extent versus just filing a tax return. By
• 7:00
  Speaker 1: the way, the fee is twenty five thousand dollars and
• 7:02
  Speaker 1: on the spot they signed. The conversation was only twenty
• 7:05
  Speaker 1: five minutes. I had been writing workout programs for two
• 7:07
  Speaker 1: hundred and fifty dollars for a month, trying to get
• 7:09
  Speaker 1: up to one hundred clients. She made twenty five thousand
• 7:12
  Speaker 1: dollars in thirty minutes. That showed me everything that I
• 7:15
  Speaker 1: needed to know when it came to providing value to people.
• 7:17
  Speaker 2: So the twenty five thousand dollars was when you say,
• 7:20
  Speaker 2: a tax plan just for the audience, Yeah, this is
• 7:22
  Speaker 2: not just like a regular like you do somebody taxes
• 7:25
  Speaker 2: like you're putting together a strategic plan for wealthy people
• 7:28
  Speaker 2: to kind of guide them on the dues and dolls
• 7:31
  Speaker 2: what they should do, like explain what the tax plan
• 7:33
  Speaker 2: actually is.
• 7:34
  Speaker 1: Yeah, so the tax plan works like this. Someone is
• 7:37
  Speaker 1: going to take your income for the year, project out
• 7:39
  Speaker 1: your income for the full twelve months, and figure out
• 7:41
  Speaker 1: what your expenses are so they know what your net
• 7:43
  Speaker 1: profit is. That is going to allow for us to
• 7:45
  Speaker 1: be able to know how much taxes are you going
• 7:47
  Speaker 1: to pay federally on the state side, even Social Security
• 7:50
  Speaker 1: and Medicare. But that's going to be the number we
• 7:52
  Speaker 1: want to change. The next thing to do is to
• 7:53
  Speaker 1: figure out what your goals are. Maybe you want to
• 7:55
  Speaker 1: become a real estate investor, maybe you want to own assets,
• 7:57
  Speaker 1: maybe you want to focus on retirement. So you spend
• 8:00
  Speaker 1: time with the customer to kind of understand what their
• 8:02
  Speaker 1: goals are, and then you match it up with the
• 8:04
  Speaker 1: strategies that exist in the tax code. This is where
• 8:07
  Speaker 1: the fun starts to happen, because some people are going
• 8:10
  Speaker 1: into investments for the first time. Some people are setting
• 8:12
  Speaker 1: up entities or shifting income to children for the very
• 8:16
  Speaker 1: first time, and now they're able to reduce their tax
• 8:19
  Speaker 1: bill before the end of the year, giving them far
• 8:22
  Speaker 1: less stressed when they go to file their tax returns
• 8:23
  Speaker 1: with their CPA come April of the following year.
• 8:26
  Speaker 2: And what's like, what's the network for the average client?
• 8:29
  Speaker 1: I would say tax planning makes sense right over three
• 8:32
  Speaker 1: hundred k, because that's when you're at the point where
• 8:34
  Speaker 1: you have enough liquidity. You're three hundred K year in income,
• 8:39
  Speaker 1: that's when you have enough liquidity to be able to
• 8:41
  Speaker 1: invest in tax reduction strategies. Most strategies that are actually
• 8:45
  Speaker 1: going to save you a lot of money do require
• 8:47
  Speaker 1: you to invest money. And that's the secret that the
• 8:49
  Speaker 1: wealthy have been utilizing for years when it comes to
• 8:52
  Speaker 1: the tax code.
• 8:52
  Speaker 3: And in terms of pricing, because I know somebody's going
• 8:54
  Speaker 3: to hit it and say, oh my gosh, twenty five thousand,
• 8:57
  Speaker 3: that's based on obviously thirty years of work. But is
• 9:00
  Speaker 3: that also a strategy, right, because that could that be
• 9:03
  Speaker 3: written off in terms of tax expenses, like actually having
• 9:07
  Speaker 3: having somebody that builds a plan, like sometimes if you
• 9:09
  Speaker 3: hire an instructor like that could be a part of
• 9:11
  Speaker 3: your plan. Is that the pricing is it incorporated into
• 9:14
  Speaker 3: the strategy as well?
• 9:15
  Speaker 1: Yeah, it is. Because legal and professional services are one
• 9:18
  Speaker 1: hundred percent tax deductibles. So hiring a tax professional is
• 9:21
  Speaker 1: a tax write off for you. So before they've even
• 9:23
  Speaker 1: done anything at a thirty seven percent marginal tax bracking,
• 9:25
  Speaker 1: you might have already saved five thousand dollars for example number.
• 9:29
  Speaker 1: Once I heard the price, I'm like, oh no, they
• 9:30
  Speaker 1: wrote that off, yeah, one hundred percent. You're going to
• 9:32
  Speaker 1: place that underneath the business as a tax deduction. Yeah, absolutely, So.
• 9:36
  Speaker 2: Let's get into this. Let's get into taxes. So all right,
• 9:38
  Speaker 2: so the world of taxes. I always say, like, you know,
• 9:42
  Speaker 2: the tax code wasn't meant for employees, it was meant
• 9:45
  Speaker 2: for investors and entrepreneurs, correct, right, because that's the people
• 9:49
  Speaker 2: that benefit the most. Yes, se right, So kind of
• 9:53
  Speaker 2: explain it from your vantage point. Who benefits the most
• 9:57
  Speaker 2: from the tax code and why?
• 9:59
  Speaker 1: Yeahusiness owners and investors benefit from the tax code most
• 10:02
  Speaker 1: because they're doing what the government can't do the most.
• 10:06
  Speaker 1: The government has created a bunch of incentives inside of
• 10:08
  Speaker 1: the tax code because they know that they can't afford
• 10:11
  Speaker 1: to provide affordable housing for everybody. They know that they
• 10:14
  Speaker 1: can't get everyone a job in stimulus checks, so they're
• 10:17
  Speaker 1: partnering with business owners and allowing business owners to take
• 10:20
  Speaker 1: ordinary necessary expenses because they know business owners are going
• 10:24
  Speaker 1: to grow and eventually hire employees and be able to
• 10:27
  Speaker 1: get jobs. And that's what we want in this society.
• 10:29
  Speaker 1: We want people to have jobs. We also want energy
• 10:32
  Speaker 1: as well, and investors invest in energy, oil and gas, solar,
• 10:36
  Speaker 1: and most importantly, affordable housing. If you're a rental real
• 10:40
  Speaker 1: estate investor, you're probably taking on the loan, but instead
• 10:43
  Speaker 1: of you paying that loan, you've arbitraged the debt and
• 10:45
  Speaker 1: you had someone else paid down the loan aka your tenant.
• 10:49
  Speaker 1: So you're partnering with the banks in order to buy
• 10:51
  Speaker 1: an asset to provide affordable housing. That is why the
• 10:55
  Speaker 1: tax code is incentivized for real estate investors and business owners.
• 11:00
  Speaker 3: Perfectly put, we talked to a lot of people that
• 11:03
  Speaker 3: invest for the first time. A lot of people have
• 11:05
  Speaker 3: made money and decide to stock mark over the past
• 11:07
  Speaker 3: three years. One of the things that they don't realize
• 11:09
  Speaker 3: is there's a capital gains tax. Yes, can you break
• 11:11
  Speaker 3: down capital gains to the average investor at the beginning
• 11:15
  Speaker 3: to investor so they can understand it and prepare themselves. Right,
• 11:17
  Speaker 3: A lot of people like hey, I made a lot
• 11:18
  Speaker 3: of money, yes, and of the year comes like, hey, yeah, yeah,
• 11:22
  Speaker 3: you forgot about that part.
• 11:24
  Speaker 1: Yeah. Capital gains is tax treatment on investment income. If
• 11:26
  Speaker 1: you held an asset for more than three hundred and
• 11:29
  Speaker 1: sixty five days, you get favorable tax treatment zero, fifteen
• 11:32
  Speaker 1: or twenty percent. And really, if you're single, you would
• 11:35
  Speaker 1: have to make over four hundred and fifty thousand to
• 11:37
  Speaker 1: even get into the twenty percent bracket, So you're really
• 11:39
  Speaker 1: at zero and fifteen percent for most of the time.
• 11:42
  Speaker 1: When you have capital gains that are long term capital gains.
• 11:45
  Speaker 1: If you sell an asset like a stock Apple stock
• 11:47
  Speaker 1: or Google stock, or an asset less than three hundred
• 11:50
  Speaker 1: and sixty five days, this is when you have short
• 11:52
  Speaker 1: term capital gains. Short term capital gains are ordinary tax rates.
• 11:56
  Speaker 1: They start off at zero percent, they go all the
• 11:58
  Speaker 1: way up to thirty seven percent. See a lot of
• 12:00
  Speaker 1: day traders subject to ordinary tax rates, whereas sometimes long
• 12:04
  Speaker 1: term investors are subject to more of the favorable capital
• 12:06
  Speaker 1: gains tax rates. Here's the follow up to it.
• 12:08
  Speaker 3: Because sometimes you can have a great year, yes, and
• 12:11
  Speaker 3: then you might have a down year, right, twenty twenty two.
• 12:13
  Speaker 1: Is one of those years.
• 12:14
  Speaker 3: Yes, people don't talk about the capital loss that you
• 12:17
  Speaker 3: can actually contribute to those gains.
• 12:20
  Speaker 1: That's right.
• 12:20
  Speaker 3: How does that work and can that be spread out
• 12:23
  Speaker 3: over the course of years or do you have to
• 12:25
  Speaker 3: execute that right away?
• 12:26
  Speaker 1: Yeah, So one of the things that many investors will
• 12:28
  Speaker 1: do is tax loss harvesting, because if they have a loss,
• 12:31
  Speaker 1: they'll go ahead and capture those losses to be able
• 12:34
  Speaker 1: to offset gains they might have experienced earlier in the year.
• 12:36
  Speaker 1: Let's just say that you have an excess loss, You're
• 12:39
  Speaker 1: able to absorb three thousand dollars of that loss against
• 12:41
  Speaker 1: other forms of income W two to ninety nine income.
• 12:44
  Speaker 1: Anything that's an excess will roll over into the following
• 12:46
  Speaker 1: year to offset new forms of income. So those losses
• 12:49
  Speaker 1: will always travel with you.
• 12:51
  Speaker 2: So as far as like for entrepreneurs, right, it's made
• 12:54
  Speaker 2: for entrepreneurs. As far as the tax code the benefit entrepreneurs, Yes,
• 12:57
  Speaker 2: some what are some ways w like you're seeing and
• 13:00
  Speaker 2: even your clients like high and how they taken advantage
• 13:03
  Speaker 2: of it, like through retirement ployanes or like through different deductions.
• 13:07
  Speaker 2: Like what's some of the strategies that you're advising your
• 13:09
  Speaker 2: clients to take advantage of the tax code? So they
• 13:11
  Speaker 2: could pay less money in taxes.
• 13:12
  Speaker 1: Yeah, the first thing is making sure you understand how
• 13:14
  Speaker 1: to receive the income. Most business owners starting out are
• 13:16
  Speaker 1: going to have an LLC. You graduate from the LLC
• 13:19
  Speaker 1: right when you hit about sixty thousand dollars in business profit.
• 13:21
  Speaker 1: That's when we introduce the S corporation. The reason why
• 13:23
  Speaker 1: is because now we're separating your income into two different buckets,
• 13:26
  Speaker 1: distributions and salary. When you're an LLC owner, you just
• 13:30
  Speaker 1: take distributions and all of that business profit is subject
• 13:33
  Speaker 1: to fifteen point three percent self employment tax which is
• 13:36
  Speaker 1: sold security and Medicare. I don't want to pay fifteen
• 13:38
  Speaker 1: point three percent on all my business's profits, so instead
• 13:41
  Speaker 1: I transition over to an S corporation. I give myself
• 13:43
  Speaker 1: a W two salary, only paying that fifteen point three
• 13:46
  Speaker 1: percent self employment taxes on that salary, and the rest
• 13:49
  Speaker 1: of my business profit is only subject to federal or
• 13:51
  Speaker 1: state taxes if I'm going to state that taxes. So
• 13:54
  Speaker 1: making sure you have the right setup first is always important.
• 13:57
  Speaker 2: Wells with the state if woman.
• 14:01
  Speaker 1: LLC.
• 14:01
  Speaker 2: That's why everybody knows the LLC right, Yes, in the
• 14:04
  Speaker 2: S corp and the C corp. But there is. It's
• 14:07
  Speaker 2: more complicating, right, Like you have to pay yourself a
• 14:09
  Speaker 2: set salary. That's correct, right, Yes, So explain that too,
• 14:13
  Speaker 2: because that's something that I don't think most people are
• 14:17
  Speaker 2: aware of as far as like the benefits. But then
• 14:19
  Speaker 2: there's actually things that are required that are a little
• 14:23
  Speaker 2: bit more complicated than just the LLC.
• 14:24
  Speaker 1: You're absolutely right. When you transition from an LLC to
• 14:26
  Speaker 1: anes corporation, your tax compliance gets a little bit trickier,
• 14:30
  Speaker 1: but not too much trickier. When you're an LLC, everything
• 14:33
  Speaker 1: goes into your business bank account. You can transfer money
• 14:36
  Speaker 1: from your business bank account to your personal account. Things
• 14:38
  Speaker 1: are just so easy. When you go to file your
• 14:40
  Speaker 1: tax returns, everything flows over into your individual tax return.
• 14:43
  Speaker 1: You file things just one time. But when you're an
• 14:45
  Speaker 1: S corporation owner, you have a pretty awesome business that's
• 14:49
  Speaker 1: saving you money on taxes. That comes with more complexities.
• 14:52
  Speaker 1: What are those more complexities? Now? You're going to have
• 14:55
  Speaker 1: to give yourself a W two salary sometime throughout the
• 14:58
  Speaker 1: year and cut yourself a payroll. Could choose to give
• 15:00
  Speaker 1: yourself a bi weekly payroll, or you can choose to
• 15:02
  Speaker 1: give yourself just one payroll for the entire year. But
• 15:06
  Speaker 1: you have to give yourself a salary based off of
• 15:09
  Speaker 1: what your net profit is going to be and what
• 15:11
  Speaker 1: someone else is expected to earn in the same job
• 15:15
  Speaker 1: or profession that you are in. So this is where
• 15:17
  Speaker 1: it gets a little bit tricky, because business owners need
• 15:19
  Speaker 1: to manage their business profits in order to determine how
• 15:22
  Speaker 1: much of a salary they need to give themselves. But
• 15:25
  Speaker 1: the beautiful part about giving yourself that salary too is
• 15:28
  Speaker 1: that you're still only paying fifteen point three percent self
• 15:31
  Speaker 1: employment tax on whatever that amount is. So if my
• 15:34
  Speaker 1: business profits one hundred K for the year and I
• 15:36
  Speaker 1: only give myself a salary of thirty thousand dollars, I'm
• 15:38
  Speaker 1: only paying fifteen point three percent on that thirty thousand
• 15:41
  Speaker 1: and the other seventy thousand dollars in business profit, which
• 15:44
  Speaker 1: I could transfer to myself whenever I want to, is
• 15:46
  Speaker 1: only subject to federal taxes and state taxes in a
• 15:49
  Speaker 1: state that taxes me. So I mean, that's a lot
• 15:52
  Speaker 1: of game. That's a lot of game.
• 15:53
  Speaker 3: They should know that you talked about well, which I
• 15:55
  Speaker 3: brought up retirement accounts. Yeah, high earners, how should they
• 15:59
  Speaker 3: maximize as we're talking, But I just wanted to just
• 16:02
  Speaker 3: follow up. Oh, yeah, cause this is something that's important.
• 16:06
  Speaker 2: I don't want to skip over this C corp es core. Yes,
• 16:10
  Speaker 2: what's the difference between a C corp? What's differ between
• 16:12
  Speaker 2: the escorp?
• 16:13
  Speaker 1: Yeah, the S corporation is a flow through entity? What
• 16:15
  Speaker 1: does that mean? A flow through entity means that all
• 16:18
  Speaker 1: of the income flows over to the individual tax return
• 16:22
  Speaker 1: of the shareholder. The S corporation has no taxes that
• 16:25
  Speaker 1: it pays when it files its return on March fifteenth.
• 16:28
  Speaker 1: It's just an information return. It spits out a K
• 16:31
  Speaker 1: one at March fifteenth that goes into your individual tax return,
• 16:35
  Speaker 1: and that is what you pay taxes on your business
• 16:38
  Speaker 1: profit inside of your individual tax returns as high as
• 16:41
  Speaker 1: thirty seven percent. By the way, when you decide to
• 16:43
  Speaker 1: set up a C corporation, there is no flow through
• 16:46
  Speaker 1: anymore of that K one. The C corp has its
• 16:49
  Speaker 1: own tax rate and it's a flat twenty one percent,
• 16:53
  Speaker 1: which means the only way that you're going to ever
• 16:55
  Speaker 1: see that on your individual return is if you decide
• 16:57
  Speaker 1: to give yourself a salary from the C corporate. And
• 17:00
  Speaker 1: this is when we have what's called double taxation. My
• 17:03
  Speaker 1: sea COREP paid twenty one percent on business profit. But
• 17:05
  Speaker 1: then I decided to give myself a salary of one
• 17:07
  Speaker 1: hundred or two hundred k, and now I'm paying taxes
• 17:10
  Speaker 1: over here personally. Where Also, sometimes sea corporation owners can
• 17:14
  Speaker 1: get into a little bit more tax is if they
• 17:16
  Speaker 1: transferred money to themselves throughout the year. You see, when
• 17:19
  Speaker 1: you're a sea corporation, anytime you transfer money to yourself
• 17:23
  Speaker 1: that's considered a dividend, you're going to be tax at
• 17:25
  Speaker 1: flat twenty percent on that. But if you choose to
• 17:27
  Speaker 1: give yourself a salary out of your sea corporation, that
• 17:30
  Speaker 1: becomes a deduction for the sea corporation. Because salaries are
• 17:34
  Speaker 1: deductions for the business.
• 17:35
  Speaker 2: So which one is better, It.
• 17:37
  Speaker 1: Just depends on your circumstances. In some situations, sea corporation
• 17:40
  Speaker 1: shareholders will take a loan because a loan is non taxable, right,
• 17:44
  Speaker 1: So maybe you want to take a loan from your
• 17:45
  Speaker 1: business profits and you're going to repay it back and
• 17:47
  Speaker 1: you don't want to take a huge salary. So there's
• 17:50
  Speaker 1: different ways in which we can play this as well.
• 17:52
  Speaker 1: Maybe we want to give you a huge salary because
• 17:54
  Speaker 1: you're qualifying for a loan and you know that you're
• 17:56
  Speaker 1: getting ready to buy a house, so we decide to
• 17:57
  Speaker 1: give you a salary. But maybe you're in a year
• 17:59
  Speaker 1: where you don't really have a need to have a
• 18:02
  Speaker 1: big salary, but you transferred money to yourself because you
• 18:04
  Speaker 1: wanted to continue your investments. So you took a dividend
• 18:07
  Speaker 1: out of your sea corporation to keep your business profits high,
• 18:09
  Speaker 1: so you have a strong EBITA in the event that
• 18:11
  Speaker 1: you want to exit. There's different ways in which we
• 18:13
  Speaker 1: can leverage this.
• 18:14
  Speaker 3: I'm going to keep it in that thing because you
• 18:16
  Speaker 3: said an important date, marshifteenth. A lot of times people
• 18:19
  Speaker 3: don't understand the dates, the quarterly dates that you should know. Yes,
• 18:23
  Speaker 3: so I'll tie that into I guess the retirement plan again,
• 18:26
  Speaker 3: because this is something that like, if you're a high
• 18:28
  Speaker 3: earner you want to have a deduction, Which are the
• 18:31
  Speaker 3: retirement plan strategy should we use? What are the dates
• 18:34
  Speaker 3: that we should definitely know if we're planning taxes? You said,
• 18:36
  Speaker 3: marsh fifteenth, I think everybody knows April fifteenth, Yeah, sure, absolutely.
• 18:40
  Speaker 3: What are there other dates that we should know to
• 18:42
  Speaker 3: make sure that we highlight circle put on our calendar?
• 18:44
  Speaker 1: Is a year in advance so we hey, we can't
• 18:47
  Speaker 1: miss this day. Yeah. If you are on extension for
• 18:49
  Speaker 1: your S corporation, you have until September fifteenth to file
• 18:51
  Speaker 1: the S corporation and then if you're on extension as well,
• 18:54
  Speaker 1: that means you have until October fifteenth to file your
• 18:57
  Speaker 1: individual tax returns. A lot of taxpayers are self and
• 18:59
  Speaker 1: place lloyd that have investments will typically go on extension
• 19:02
  Speaker 1: because they're waiting for their k ones to come in
• 19:04
  Speaker 1: so that those k ones can be verified and then
• 19:06
  Speaker 1: filed inside of the tax returns with their proper CPA.
• 19:08
  Speaker 1: When it comes to retirement planning, I always recommend getting
• 19:11
  Speaker 1: a retirement planning done by December thirty. First, there are
• 19:13
  Speaker 1: certain circumstances when you're self employed where you can do
• 19:15
  Speaker 1: a catch up on your self directed four oh one
• 19:19
  Speaker 1: K or your step IRA, and that allows for you
• 19:21
  Speaker 1: to put up to about twenty three thousand, five hundred
• 19:23
  Speaker 1: almost twenty four thousand dollars away or sometimes up to
• 19:25
  Speaker 1: sixty nine thousand. If you are self employed with a
• 19:28
  Speaker 1: step IRA, that is a way for you to reduce
• 19:30
  Speaker 1: your taxble income. That money can't be touched until you're
• 19:32
  Speaker 1: fifty nine and a half, but it can grow and
• 19:34
  Speaker 1: continue to be invested for you. Another retirement account that
• 19:38
  Speaker 1: most self employed individuals are unaware of is called the
• 19:40
  Speaker 1: cash balance plan. The cash balance plan is even bigger
• 19:44
  Speaker 1: than the four oh one K allows for you to
• 19:45
  Speaker 1: make a larger contribution by determining how much money you
• 19:49
  Speaker 1: wish to retire off of today, allowing for you to
• 19:52
  Speaker 1: evaluate your age, the size of your business, how many
• 19:55
  Speaker 1: employees you have, and make a lumpso contribution into a
• 19:59
  Speaker 1: retirement account. We had a client that was fifty nine
• 20:01
  Speaker 1: years old that contributed two hundred and forty nine thousand
• 20:03
  Speaker 1: dollars last year into his retirement account because he decided
• 20:06
  Speaker 1: to create a cash balance plan and that reduces tax
• 20:09
  Speaker 1: bills significantly.
• 20:10
  Speaker 3: Dam I'm glad you brought up the cash balance to
• 20:11
  Speaker 3: something that we are familiar with. Yes, and we've taken
• 20:14
  Speaker 3: advantage of. Uh So, the first two years of the
• 20:16
  Speaker 3: cash balance has to be consistent, Yes, it does.
• 20:19
  Speaker 1: Right, So it's not exact same amount.
• 20:21
  Speaker 3: If it's one hundred thousand year one, it has to
• 20:23
  Speaker 3: be one hundred thousand year two.
• 20:24
  Speaker 1: What happens here three? Though year three you can you
• 20:26
  Speaker 1: can change the amount substantially. However, you still have to
• 20:30
  Speaker 1: make a contribution every single year. Okay, okay, yeah, perfect,
• 20:33
  Speaker 1: good enough.
• 20:34
  Speaker 2: And that's the define benefit polant.
• 20:38
  Speaker 1: Yes, defined benefit plan very similar to the cash balance plan.
• 20:41
  Speaker 1: They almost work the exact same way.
• 20:43
  Speaker 2: So when you're looking at a client, like you tell
• 20:47
  Speaker 2: them like, okay, four one k, that's one way to
• 20:50
  Speaker 2: save money. Yes, right, they're definamiliar with that, solo fur
• 20:53
  Speaker 2: one k, I ray stuff like that. But if you
• 20:55
  Speaker 2: really want to get the maximum amount, then you look
• 20:59
  Speaker 2: at the cash Yes, and that allows you to save,
• 21:03
  Speaker 2: like you said, two hundred thousand alls dependent on how
• 21:06
  Speaker 2: much money you.
• 21:06
  Speaker 1: Make, your age and stuff like that.
• 21:07
  Speaker 2: That is correct and that and that goes directly against
• 21:10
  Speaker 2: the money that you make. So if you make a
• 21:12
  Speaker 2: million dollars, you put two hundred thousand, now you rate
• 21:14
  Speaker 2: eight hundred thousand.
• 21:15
  Speaker 1: You reduce your tax bill income by two hundred k
• 21:17
  Speaker 1: relative to your company.
• 21:17
  Speaker 2: Dollar dollar for a dollar.
• 21:19
  Speaker 1: It's not a dollar for dollar credit, it's a dollar
• 21:21
  Speaker 1: for dollar deduction deduction. Yes, yes, absolutely. Is there is
• 21:24
  Speaker 1: there a cap on the cash balance. There is a
• 21:26
  Speaker 1: cap based off of your age. Yes, it is. And
• 21:28
  Speaker 1: it's based off of your age, the health of your business,
• 21:32
  Speaker 1: the type of revenue you have in your business, but
• 21:34
  Speaker 1: there is a cap and the older and older you get,
• 21:36
  Speaker 1: the bigger and bigger the amount you're able to contribute.
• 21:39
  Speaker 2: So for people to have a business, well, what's what
• 21:42
  Speaker 2: what would you recommend as far as like a retirement plan,
• 21:45
  Speaker 2: like just what's the what's the go to a retirement plan?
• 21:48
  Speaker 1: I always recommend a WROTH four oh one k first
• 21:51
  Speaker 1: or a ROTH set. So most of the taxpayers that
• 21:54
  Speaker 1: I work.
• 21:54
  Speaker 2: Why do you recommend the role and explain it difference
• 21:56
  Speaker 2: between the rowth and the.
• 21:57
  Speaker 1: Traditional The reason why I recommend a WROTH is because
• 22:00
  Speaker 1: because when you put money into the ROTH, you're going
• 22:01
  Speaker 1: to pay taxes. Today. We know what the tax rates
• 22:04
  Speaker 1: are today, and we know that these are the lowest
• 22:06
  Speaker 1: tax rates that we have had in the last fifty years.
• 22:09
  Speaker 1: So why not take the beating on the chest today
• 22:14
  Speaker 1: and allow for that money to grow tax free for
• 22:16
  Speaker 1: the rest of your life. I want tax free accounts
• 22:19
  Speaker 1: in my retirement. I don't want to have to manage
• 22:21
  Speaker 1: taxes in my retirement. So if I can make the
• 22:24
  Speaker 1: sacrifice right now and grow tax free wealth right now,
• 22:27
  Speaker 1: I know in twenty thirty forty five years I'm going
• 22:29
  Speaker 1: to be very happy about the decisions that I made.
• 22:31
  Speaker 1: I also recommend that to a lot of parents that
• 22:33
  Speaker 1: have children that work inside of their businesses. One of
• 22:36
  Speaker 1: the strategies that we recommend to a lot of parents
• 22:38
  Speaker 1: is setting up a management company for their real estate
• 22:41
  Speaker 1: and hiring the children through the real estate management company.
• 22:43
  Speaker 1: Because we can pay children up to sixteen one hundred
• 22:46
  Speaker 1: dollars without the child needing to file a tax return,
• 22:48
  Speaker 1: we turn around and set up a roth ira for
• 22:51
  Speaker 1: that child and contribute about seven thousand dollars into that
• 22:53
  Speaker 1: row on money that neither me nor the taxpayer had
• 22:57
  Speaker 1: to pay taxes on, and now that money can grow
• 22:59
  Speaker 1: tax free. You start that at the age of five
• 23:01
  Speaker 1: by the child that by the time the child's sixty,
• 23:03
  Speaker 1: there should be close to about a million a million
• 23:06
  Speaker 1: one inside of that wroth account. These are simple habits
• 23:08
  Speaker 1: that we can develop for our children right now that
• 23:11
  Speaker 1: can you know, pay dividends and create generational wealth. What
• 23:14
  Speaker 1: about an HSA is that a tax deductible?
• 23:17
  Speaker 3: A lot of times as entrepreneurs, you know, health a
• 23:19
  Speaker 3: service or something we we got to figure out on
• 23:21
  Speaker 3: our own, or how do you approach clients when it
• 23:24
  Speaker 3: comes to that.
• 23:25
  Speaker 1: Yeah, The HSA is absolutely amazing. I think everybody should
• 23:28
  Speaker 1: have an HSA. You can contribute up to eighty three
• 23:30
  Speaker 1: thousand or eight thousand, three hundred for a family. It's
• 23:33
  Speaker 1: awesome because it's set up to provide for health related costs.
• 23:37
  Speaker 1: So it's a tripled tax account. When you put money
• 23:40
  Speaker 1: inside of the HSA, you get a tax deduction for it.
• 23:43
  Speaker 1: It grows like a roth ira, so you don't pay
• 23:45
  Speaker 1: any or you don't have to be subject to any
• 23:48
  Speaker 1: taxes on the growth of the account. And then when
• 23:50
  Speaker 1: you go to take money out of the account, you
• 23:52
  Speaker 1: don't pay any taxes on it as long as it's
• 23:54
  Speaker 1: for qualified health related reasons. So we have taxpayers that
• 23:57
  Speaker 1: have put one hundred percent of their HSA into IDIO
• 24:00
  Speaker 1: stock and they may have contributed only six or seven
• 24:03
  Speaker 1: thousand dollars where they're sitting on fifty or sixty thousand
• 24:05
  Speaker 1: because they started their HSA back in twenty twenty three,
• 24:09
  Speaker 1: when in video is a lot lower.
• 24:10
  Speaker 2: If you don't use it and turn into like a
• 24:12
  Speaker 2: retirement plan at sixty.
• 24:13
  Speaker 1: Five, that's correct. Absolutely, it can convert into a retirement plan.
• 24:16
  Speaker 1: You can take distributions from it.
• 24:20
  Speaker 2: Okay, let's talk about this car situation, something that wow,
• 24:23
  Speaker 2: let's do it. Talked about Section one seventy nine.
• 24:26
  Speaker 1: Yeah, Section one seventy nine in Code Section one sixty
• 24:28
  Speaker 1: AK allow for business owners to buy a qualified vehicle
• 24:32
  Speaker 1: or piece of equipment that's over six thousand pounds and
• 24:34
  Speaker 1: write it off all in one year. The issue that
• 24:37
  Speaker 1: I'm seeing with most business owners is they're taking one
• 24:39
  Speaker 1: hundred percent depreciation on a vehicle. They're not using one
• 24:42
  Speaker 1: hundred percent for business. In the event of an audit
• 24:45
  Speaker 1: from what I've seen, if you don't have a log
• 24:47
  Speaker 1: booklet that is determining the amount of time that's being
• 24:51
  Speaker 1: spent in business with documentation and substantiation, the IRS can
• 24:55
  Speaker 1: disallow your one hundred percent and relegate it down and
• 24:58
  Speaker 1: that disqualifies you from being able to use that bonus
• 25:00
  Speaker 1: depreciation that you're able to capture on that tax return
• 25:02
  Speaker 1: that year.
• 25:03
  Speaker 3: So this is this is something that's changed, right and
• 25:06
  Speaker 3: during the pandemic it was at one hundred and I
• 25:08
  Speaker 3: think the last previous administration. Every year it had dwindled
• 25:11
  Speaker 3: down the yeas eighty percent, sixty percent, and I think
• 25:15
  Speaker 3: it was expired and then.
• 25:19
  Speaker 1: It was going to go to forty percent. Next year,
• 25:21
  Speaker 1: we got the one Big Beautiful Bill July fifth. We
• 25:23
  Speaker 1: don't call it that, but yeah, yeah WBBA, and that
• 25:27
  Speaker 1: bill essentially gave us one hundred percent bonus depreciation restored.
• 25:31
  Speaker 1: So now business owners are able to deduct one hundred
• 25:33
  Speaker 1: percent bonus depreciation on qualified equipment or vehicles. And that
• 25:36
  Speaker 1: even rolls over into the real estate space too. With
• 25:38
  Speaker 1: the cost irrogation study, we like to accelerate depreciation on
• 25:41
  Speaker 1: rental properties, just like we like to accelerate depreciation on vehicles.
• 25:44
  Speaker 2: Cost segregation. Yeah, talk about that, explaining that.
• 25:47
  Speaker 1: Yeah, So a cost irrogation study is a really awesome
• 25:49
  Speaker 1: strategy that we use for real estate investors to accelerate
• 25:52
  Speaker 1: depreciation on the asset to force a paper loss. This
• 25:57
  Speaker 1: paper loss is normally passive, so in order for us
• 26:00
  Speaker 1: to be able to use it against active forms of
• 26:01
  Speaker 1: income like W two or self employed income from anes
• 26:04
  Speaker 1: corporation or an LLC, most times we have to qualify
• 26:07
  Speaker 1: the taxpayer or the spouse as a real estate professional.
• 26:10
  Speaker 1: A real estate professional someone who can show the IRS
• 26:12
  Speaker 1: that they spend seven hundred and fifty hours in their
• 26:14
  Speaker 1: real property trader business or managing their own investment property.
• 26:17
  Speaker 1: But The second part of the test is you have
• 26:19
  Speaker 1: to show the irs that you're spending more time in
• 26:21
  Speaker 1: real estate than any other job you have. And for
• 26:23
  Speaker 1: most W two taxpayers who are working forty hours a week,
• 26:25
  Speaker 1: there's no way they're going to be able to prove
• 26:27
  Speaker 1: that their real estate professionals because they would have to
• 26:28
  Speaker 1: spend more time in real estate. It works if you
• 26:30
  Speaker 1: have a spouse that's maybe a stay at home spouse
• 26:33
  Speaker 1: that can be the real estate manager, but for most
• 26:35
  Speaker 1: taxpayers that have both working spouses, it doesn't work. This
• 26:39
  Speaker 1: is where the short term mental strategy comes into play.
• 26:42
  Speaker 1: You see, Airbnb and VRBO came out in what twenty
• 26:45
  Speaker 1: eleven maybe twenty thirteen. However, the passive activity loss rules
• 26:48
  Speaker 1: were written in nineteen eighty six, and back then Airbnb
• 26:53
  Speaker 1: and vrbos weren't around, but they did have hotels and motels.
• 26:56
  Speaker 1: And if you had a hotel or motel business that
• 26:59
  Speaker 1: was being rented out for seven days or less, you
• 27:02
  Speaker 1: had an active real estate operation, which means you can
• 27:05
  Speaker 1: take active depreciation against your active forms of W two
• 27:09
  Speaker 1: or ten ninety nine income, Which means if taxpayers today
• 27:12
  Speaker 1: run airbnb businesses, they're no different than hotel and motel
• 27:16
  Speaker 1: like businesses, and they have their customers stay in the
• 27:19
  Speaker 1: Airbnb or vrbo seven days or less. You have an
• 27:22
  Speaker 1: active real estate business. Under Code section four sixty nine.
• 27:26
  Speaker 1: This allows for taxpayers now to do the cost segregation
• 27:28
  Speaker 1: study to accelerate depreciation, and now they can take a
• 27:32
  Speaker 1: loss against their W two or ten ninety nine income
• 27:34
  Speaker 1: on an average investment property. You're taking it around thirty
• 27:37
  Speaker 1: percent of the building's purchase price as a year one loss.
• 27:41
  Speaker 1: So if you have a million dollar property, for example,
• 27:43
  Speaker 1: you're putting down two hundred thousand dollars down twenty percent
• 27:46
  Speaker 1: down payment, but then the government's turning around and giving
• 27:48
  Speaker 1: you a three hundred thousand dollars loss right off on
• 27:51
  Speaker 1: your tax returns. And if you're running it as the
• 27:53
  Speaker 1: Airbnb strategy that we just talked about, you're offsetting your
• 27:56
  Speaker 1: W two income or your ten ninety nine income. If
• 27:58
  Speaker 1: you have three hundred k and W two inc. You're
• 28:00
  Speaker 1: tax free. Now specifically for investment property. That's a specifically
• 28:04
  Speaker 1: for investment real estate only. You cannot depreciate personal property.
• 28:08
  Speaker 1: It has to be investment property hold for investment purpose.
• 28:11
  Speaker 3: So here's the tricky part, right because what if it's
• 28:15
  Speaker 3: new build, right, like you have primary residents, but you
• 28:19
  Speaker 3: have a new building, obviously you have to apply for
• 28:21
  Speaker 3: it as specifically primary go investment correct, But is there
• 28:25
  Speaker 3: any fine line in between that that you can use
• 28:29
  Speaker 3: tax code or it's pretty finat like this is your
• 28:33
  Speaker 3: primary residence, you can't do it.
• 28:34
  Speaker 1: I mean you can have a portion of your primary
• 28:36
  Speaker 1: residence being rented on Airbnb or set up as an
• 28:40
  Speaker 1: investment asset. We have clients all the time that will
• 28:42
  Speaker 1: set up ADUs in particular states like California and Texas,
• 28:45
  Speaker 1: and so the front unit is their home and then
• 28:47
  Speaker 1: the back unit is being rented out for real estate purposes.
• 28:50
  Speaker 1: We take the square footage of that back unit and
• 28:53
  Speaker 1: perform a cost irrogation study based off of the square
• 28:55
  Speaker 1: footage of that back unit. Are able to accelerate depreciation
• 28:58
  Speaker 1: in that light, Maybe you have a vacation home. Instead
• 29:01
  Speaker 1: of you putting twenty percent down, you put ten percent
• 29:02
  Speaker 1: down because it's a vacation home. Because it's a vacation home,
• 29:05
  Speaker 1: you're not there all the time. I might be able
• 29:07
  Speaker 1: to use that property as a short term mental for you.
• 29:09
  Speaker 1: Perform a cost irgrogation study and now accelerate depreciation, forcing
• 29:13
  Speaker 1: some losses on your tax return that can offset flow
• 29:15
  Speaker 1: through from your s corporate W two income. Yeah. One
• 29:18
  Speaker 1: of the things we did was the Augusta Rule. Oh,
• 29:20
  Speaker 1: I love it, august rule. Yeah.
• 29:21
  Speaker 3: Obviously, you know we tape in different locations. Yes, when
• 29:25
  Speaker 3: we tape in Atlanta, we use that studio. Obviously, is
• 29:27
  Speaker 3: it still up to fourteen times?
• 29:29
  Speaker 1: That's correct. Explain to the audience and how they can
• 29:31
  Speaker 1: take advantage of. Yeah. The Augusta rule started by really
• 29:34
  Speaker 1: it was popular because of the Master's tournament that was
• 29:36
  Speaker 1: happening in Augusta, Georgia. There weren't enough hotels to house
• 29:40
  Speaker 1: all of the different tourists that were coming out for
• 29:42
  Speaker 1: that tournament. So homeowners were opening up their houses for
• 29:44
  Speaker 1: those two weeks and we're providing housing at very high rates.
• 29:49
  Speaker 1: The city of Augusta said, you know what, our homeowners
• 29:51
  Speaker 1: shouldn't have to pay taxes on this, so they disallowed it.
• 29:53
  Speaker 1: If you're in the state, if you're in the state
• 29:55
  Speaker 1: of Georgia, will disallow for you having to pay taxes
• 29:58
  Speaker 1: on the rental income that you're receiving during this Master's
• 30:00
  Speaker 1: golf tournament. Well, the IRS loved that rule and made
• 30:03
  Speaker 1: it a law the following year. We call it the
• 30:05
  Speaker 1: August rule or the fourteen day rule. As tax professionals,
• 30:09
  Speaker 1: many business owners have taken advantage of that law as well.
• 30:11
  Speaker 1: What they'll do is they'll set up a contract between
• 30:14
  Speaker 1: their s corporation and themselves, and all they're doing is
• 30:16
  Speaker 1: renting their house to their business for fourteen days to
• 30:19
  Speaker 1: conduct business activities. These could be business meetings, business conferences,
• 30:23
  Speaker 1: business events, as long as those business events are ordinary, necessary,
• 30:27
  Speaker 1: and reasonable to the business in the pursuit of income
• 30:29
  Speaker 1: you are now conducting in behalf of the AUGUSTA rule.
• 30:32
  Speaker 1: I love this strategy because it directly puts money back
• 30:34
  Speaker 1: in people's pocket without them having to go spend more
• 30:37
  Speaker 1: money to save.
• 30:38
  Speaker 2: Yeah, with some of the mistakes, Like what do you
• 30:41
  Speaker 2: see that people get audited the most for?
• 30:44
  Speaker 1: Yeah, Like what's the mistakes that they make? As far
• 30:46
  Speaker 1: as us concern, Yeah, most audits happen because people make omissions.
• 30:51
  Speaker 1: Omissions means you left something off of your tax return.
• 30:55
  Speaker 1: Most taxpayers who get audited are scheduled see business owners riderships,
• 31:00
  Speaker 1: single member LLCs. Why because they receive a lot of
• 31:03
  Speaker 1: ten ninety nine They sometimes forget to report all their
• 31:05
  Speaker 1: ten ninety nines. And guess what if you forgot to
• 31:08
  Speaker 1: report that ten ninety nine, it got submitted. The IRS
• 31:10
  Speaker 1: knows you receive that ten ninety nine, and they match
• 31:13
  Speaker 1: it up to your tax return and flag your tax
• 31:15
  Speaker 1: return immediately. That is one of the biggest ways that
• 31:17
  Speaker 1: people get into audits. The second is using categories on
• 31:20
  Speaker 1: your tax returns that are essentially red flags of the IRS.
• 31:24
  Speaker 1: For most single member LLC owners, the two categories that
• 31:26
  Speaker 1: they like to use is other expenses and miscellaneous. To
• 31:30
  Speaker 1: this day, I do not know what a miscellaneous expense is,
• 31:33
  Speaker 1: but I know that many taxpayers who like to file
• 31:35
  Speaker 1: their own tax return love to use that category and
• 31:37
  Speaker 1: other expenses. When you have other expenses as a category,
• 31:41
  Speaker 1: that means you don't know how to really categorize the expense,
• 31:43
  Speaker 1: so you're putting it in the category that the IRS
• 31:45
  Speaker 1: set up for you called other expenses, and now you
• 31:47
  Speaker 1: have to list out each line item of what those
• 31:50
  Speaker 1: other expenses were. I have seen some of the craziest
• 31:53
  Speaker 1: things guys on some of these other expense items. Massages
• 31:56
  Speaker 1: for my team baseball, memorabile cards. What are these? Are
• 32:02
  Speaker 1: not ordinary? Necessary? Expenses to your business whatsoever. So why
• 32:05
  Speaker 1: are they landing here? That gets you flagged and that
• 32:08
  Speaker 1: gets you audited, and yes, schedule. See, businesses are highly
• 32:11
  Speaker 1: more likely to get audited, actually thirty three percent more
• 32:14
  Speaker 1: likely to get audited than as corporations or partnerships.
• 32:17
  Speaker 3: Man, that was triggering because every month I get that
• 32:19
  Speaker 3: itemized sheet and it's a breakdown and I'm like, all right,
• 32:22
  Speaker 3: I got to think about what that was. I to
• 32:24
  Speaker 3: think about, like, Yo, that's not my card. Let me
• 32:27
  Speaker 3: figure then, Like I'm pretty good with it. My memory
• 32:29
  Speaker 3: is pretty good. Yeah, but yeah, yeah, one hundred percent
• 32:32
  Speaker 3: spot on. I want to talk about started because I'm like,
• 32:36
  Speaker 3: I got to ask them about.
• 32:37
  Speaker 1: The salt deduction.
• 32:38
  Speaker 3: Yeah, because I don't think people are familiar with it.
• 32:41
  Speaker 3: You know that the rules have change. As a homeowner,
• 32:43
  Speaker 3: this is something that people can take advantage of. So
• 32:45
  Speaker 3: break down what the salt deduction is, how it's increased,
• 32:48
  Speaker 3: and how we can benefit from it.
• 32:49
  Speaker 1: Yeah. Absolutely, So salt stands for state and local tax.
• 32:53
  Speaker 1: If you are in a state that taxes you, or
• 32:55
  Speaker 1: you are in a local municipality that taxes you, the
• 32:59
  Speaker 1: government allows for you to deduct that off of your
• 33:01
  Speaker 1: tax return. So let's just say that I'm here in
• 33:03
  Speaker 1: the state of New York and I live in Manhattan.
• 33:05
  Speaker 1: Manhattan has its own city tax, and then the state
• 33:08
  Speaker 1: has its own state tax. I can deduct that off
• 33:11
  Speaker 1: of my tax returns. But here's the issue. I'm limited
• 33:13
  Speaker 1: to only ten thousand dollars between state and local tax. Well,
• 33:18
  Speaker 1: if I own a property here too, I may have
• 33:20
  Speaker 1: fifty thousand dollars in property taxes. This year, I might
• 33:23
  Speaker 1: have paid sixty thousand dollars in state taxes, and then
• 33:26
  Speaker 1: the city of Manhattan charged me another twelve hundred dollars.
• 33:30
  Speaker 1: I'm only able to deduct ten thousand. Well, with the OBBA,
• 33:33
  Speaker 1: we got an update. Appreciate you for that. We got
• 33:36
  Speaker 1: an update, and now it has increased to forty thousand.
• 33:40
  Speaker 1: There's a cap. If you're making over four hundred thousand dollars.
• 33:42
  Speaker 1: A justice grows income, you don't receive that forty k.
• 33:44
  Speaker 1: It drops right back down to ten thousand. But it
• 33:46
  Speaker 1: still helps out a significant amount of taxpayers because most
• 33:49
  Speaker 1: taxpayers make under four hundred thousand. So if you're in
• 33:52
  Speaker 1: a high tax state like Callo four in Hawaii, New York,
• 33:55
  Speaker 1: this helps you significantly you're now able to write up
• 33:58
  Speaker 1: up to forty thousand dollars of your or state taxes
• 34:01
  Speaker 1: on your tax returns, property taxes, or local taxes, helping
• 34:04
  Speaker 1: out many people.
• 34:05
  Speaker 3: So high earners not going to really help the average person.
• 34:09
  Speaker 3: Definitely helps.
• 34:10
  Speaker 1: Yes, does not help high earners at all. You will
• 34:13
  Speaker 1: not qualify for it.
• 34:15
  Speaker 2: Enough when you look at like the child tax credit,
• 34:20
  Speaker 2: right like, that's something that a lot of people are
• 34:23
  Speaker 2: not familiar with and don't even take advantage of. Line,
• 34:26
  Speaker 2: what should ever be parent, No, as far as ask concern.
• 34:29
  Speaker 1: Yeah, the child tax credit is something that you should
• 34:31
  Speaker 1: take advantage of. As your child is underneath the age
• 34:33
  Speaker 1: of eighteen and they are someone that you support, You're
• 34:37
  Speaker 1: able to get two thousand dollars per child, and that's
• 34:39
  Speaker 1: a credit, it's not a deduction. Part of the reason
• 34:41
  Speaker 1: why the child tax credit is so powerful is because
• 34:44
  Speaker 1: many low income households will have multiple children, and when
• 34:47
  Speaker 1: they go to file their tax returns and report their income,
• 34:50
  Speaker 1: they're getting back a sizeable refund because the child tax
• 34:54
  Speaker 1: Credit is a refundable credit, which means if I only
• 34:57
  Speaker 1: paid eight thousand dollars in taxes, but I have sixteen
• 35:00
  Speaker 1: thousand dollars in a tax credit. I'm getting back eight
• 35:03
  Speaker 1: thousand dollars in a refund from the government. Eight thousand
• 35:05
  Speaker 1: dollars when you're only making forty thousand dollars a year,
• 35:08
  Speaker 1: is a significant amount of money that could support you
• 35:10
  Speaker 1: and your family possibly for another month or two without
• 35:12
  Speaker 1: you having to receive money from your current job. So
• 35:15
  Speaker 1: for many low income households, the child tax credit is
• 35:18
  Speaker 1: one of the most beneficial things that they apply for.
• 35:21
  Speaker 1: Let's talk.
• 35:21
  Speaker 3: Let's keep it with the kids, because I believe first
• 35:24
  Speaker 3: of this year, Trump accounts going to effect.
• 35:27
  Speaker 1: Yes they do.
• 35:28
  Speaker 3: Yeah, Scott's good at marketing, so talk to us about that.
• 35:34
  Speaker 3: The benefits as employers, how you can use this to
• 35:37
  Speaker 3: your advantage. It's for every kid that is born in
• 35:40
  Speaker 3: twenty twenty six, or is it every kid under the
• 35:42
  Speaker 3: age of ten as of twenty twenty six.
• 35:45
  Speaker 1: I believe it's for every kid that's born from born
• 35:48
  Speaker 1: in twenty twenty six moving forward, and for children who
• 35:50
  Speaker 1: are currently under the age of ten can apply for
• 35:53
  Speaker 1: a Trump account and get a one thousand dollars funded
• 35:56
  Speaker 1: by the government, and that money can continue to grow
• 35:59
  Speaker 1: in a tax advance. Honestly, it's great I still favor
• 36:03
  Speaker 1: the roth IRA for your children. You can set up
• 36:05
  Speaker 1: a custodial roth. I think it's way more beneficial to
• 36:08
  Speaker 1: have the custodial wroth. But why not just set up
• 36:11
  Speaker 1: the Trump account for your child? That's money that's just
• 36:13
  Speaker 1: going to grow. I mean, the analysts are already doing
• 36:15
  Speaker 1: numbers on it. If you just let that account grow
• 36:18
  Speaker 1: from the day your child is born to the time
• 36:20
  Speaker 1: that they're believe sixty two years old, there should be
• 36:22
  Speaker 1: close to about eight hundred thousand dollars in that account.
• 36:25
  Speaker 1: That is generational wealth. So I think the Trump account's
• 36:27
  Speaker 1: absolutely amazing. It's one of the many things that Trump
• 36:30
  Speaker 1: kind of slid in there as a part of all
• 36:32
  Speaker 1: the other updates to be able to bolster his candidate
• 36:35
  Speaker 1: presidential candidacy.
• 36:36
  Speaker 3: Is it Do employers have the ability to match it?
• 36:40
  Speaker 3: Or is there still some clarity that needs to be
• 36:43
  Speaker 3: provided to us on that.
• 36:44
  Speaker 1: Based off of what I know, I don't believe the
• 36:46
  Speaker 1: employers allowed to actually, you know what, I believe there
• 36:49
  Speaker 1: is a way in which the employer can match it
• 36:52
  Speaker 1: for their own child, but I don't know about for
• 36:54
  Speaker 1: the children of their employees. I would have to look
• 36:56
  Speaker 1: into that. I would have to look into that.
• 36:58
  Speaker 2: Yeah, so, like a high income earner can still be
• 37:02
  Speaker 2: fragile if they don't transfer over to ownership. Yes, just
• 37:06
  Speaker 2: because you make a lot of money doesn't mean that
• 37:08
  Speaker 2: you're like, you know, in a stable position when it
• 37:10
  Speaker 2: comes to finances, when it comes to the tax code,
• 37:12
  Speaker 2: and just in general, so correct explain that.
• 37:16
  Speaker 1: Yeah, so there's a lot of taxpayers that make a
• 37:19
  Speaker 1: lot of money, But just because they make a lot
• 37:20
  Speaker 1: of money on paper doesn't mean they're taking home a
• 37:22
  Speaker 1: lot of money. And a big reason why is because
• 37:24
  Speaker 1: they're earners, they're not owners. You can be an earner
• 37:27
  Speaker 1: in this in this you know government, but guess what
• 37:31
  Speaker 1: they're going to penalize you for just being an earner.
• 37:33
  Speaker 1: Or you can choose to be an owner by assets
• 37:36
  Speaker 1: like rental, real estate, oil and gas, solar, and now
• 37:39
  Speaker 1: you have incentives that were written into the tax code
• 37:42
  Speaker 1: flowing onto your tax returns that you own. This turns
• 37:45
  Speaker 1: around provides deductions for you. The biggest one, of course,
• 37:49
  Speaker 1: is going to be depreciation with real estate, but solar
• 37:52
  Speaker 1: is also a powerful tax credit for many taxpayers. You
• 37:55
  Speaker 1: could choose to put solar on your own house, or
• 37:57
  Speaker 1: you could choose to start a solar business and work
• 37:59
  Speaker 1: with the third party company and install solar on others
• 38:03
  Speaker 1: people's houses. You still own the assets, so you get
• 38:06
  Speaker 1: to depreciate them, and you get to take the tax
• 38:08
  Speaker 1: credit relative to thirty percent of the purchase price. So
• 38:11
  Speaker 1: that ends up being a significant, significant tax savings that
• 38:14
  Speaker 1: people can receive when they're going into energy. It's a
• 38:18
  Speaker 1: good one.
• 38:18
  Speaker 3: So there's this idea. Obviously, financial education and u side thing.
• 38:23
  Speaker 3: I feel like financial structure is your thing. Can break
• 38:28
  Speaker 3: those two things down because I feel like people the
• 38:31
  Speaker 3: first step is understanding.
• 38:32
  Speaker 1: Yeah right.
• 38:33
  Speaker 3: The next step for me is being able to be
• 38:37
  Speaker 3: fluent about the understanding and explaining it. And there's this
• 38:40
  Speaker 3: piece I think that is vidently important, which you do
• 38:42
  Speaker 3: the financial structure.
• 38:43
  Speaker 1: Yeah, talk about that. Why that's so important? I believe
• 38:47
  Speaker 1: it's important because a lot of people, over time, as
• 38:50
  Speaker 1: they build wealth, they're building wealth based off of their
• 38:54
  Speaker 1: own understanding. Maybe you'll choose to go read a book someday,
• 38:57
  Speaker 1: but that book is not going to give you all
• 38:58
  Speaker 1: of the different tidbits to how the tax system is
• 39:01
  Speaker 1: structured to be able to serve you and your financial growth.
• 39:04
  Speaker 1: What I've chosen to do is I've chosen to structure
• 39:07
  Speaker 1: my finances in a way with the tax code so
• 39:09
  Speaker 1: that I'm doing things that the government wants me to do,
• 39:12
  Speaker 1: so I can turn around and make more money at
• 39:13
  Speaker 1: the exact same time. And in order to do that correctly,
• 39:17
  Speaker 1: I have to understand that debt is a good thing.
• 39:19
  Speaker 1: It's a tool, it's something that I can use to
• 39:20
  Speaker 1: my advantage. I understand that there's certain wealth teachers that
• 39:23
  Speaker 1: teach you to be one hundred percent debt free. However,
• 39:25
  Speaker 1: the tax cod's not written like that, and we all
• 39:28
  Speaker 1: operate underneath that tax code, and so getting the correct
• 39:31
  Speaker 1: financial structure can be the big difference between you getting
• 39:33
  Speaker 1: to one hundred rental houses or only having ten, just
• 39:36
  Speaker 1: based off of the way you think right. Another thing
• 39:39
  Speaker 1: too to take into consideration when it comes to financial
• 39:41
  Speaker 1: structure is entities. Many taxpayers may have a few LLCs,
• 39:46
  Speaker 1: but maybe those LLCs are all just floating out there
• 39:48
  Speaker 1: without one centralized parent company. I love using parent companies,
• 39:53
  Speaker 1: and I typically gravitate towards states like Wyoming and Delaware
• 39:56
  Speaker 1: because the state of Wyoming has a quarter chancery that's
• 39:59
  Speaker 1: been set up to handle disputes for business owners and landlords.
• 40:02
  Speaker 1: But more importantly, they don't require your name and information
• 40:06
  Speaker 1: to be at the county assessor's office or on public record,
• 40:09
  Speaker 1: So I can fly under the radar owning all these
• 40:11
  Speaker 1: different entities. When people go look up my entity, they
• 40:14
  Speaker 1: don't know who owns those entities. So I'm in a
• 40:17
  Speaker 1: different financial structure for growth, whereas someone who doesn't even
• 40:21
  Speaker 1: understand about these different things might be completely exposed gets
• 40:24
  Speaker 1: a lawsuit. While I'm running at one thousand miles per hour,
• 40:26
  Speaker 1: They're only running at fifty miles per hour. There's the
• 40:29
  Speaker 1: difference in speed to wealth, and it all comes down
• 40:32
  Speaker 1: to structure.
• 40:34
  Speaker 2: So talk about like what's the difference between Delaware and Wyoming.
• 40:38
  Speaker 2: And if somebody starting, should they incorporate their business in Delaware?
• 40:41
  Speaker 1: Yeah?
• 40:42
  Speaker 2: Should they move it later on once it's profitable? Like
• 40:44
  Speaker 2: what should they do?
• 40:45
  Speaker 1: Yeah? Delaware is the golden state for most corporations. You'll
• 40:48
  Speaker 1: see all publicly traded companies have their companies set up
• 40:51
  Speaker 1: in Delaware. And then real estate is probably the best state,
• 40:54
  Speaker 1: or Wyoming is probably the best state for rental real estate.
• 40:57
  Speaker 1: You'll see a lot of landlords set up their llcas
• 40:59
  Speaker 1: and Wyoming Wyoming's a perfect place to have your parent company,
• 41:03
  Speaker 1: the entity that's going to own every other entity underneath it.
• 41:07
  Speaker 1: Why because that state doesn't require your name and information
• 41:11
  Speaker 1: to be public record. If you go to set up
• 41:13
  Speaker 1: in an LLC in Wyoming, you'll set up a registered agent,
• 41:16
  Speaker 1: you'll create the LLC underneath the name, but it's not
• 41:19
  Speaker 1: going to post your individual name, you being the managing member,
• 41:23
  Speaker 1: on the public records. So then that parent company can
• 41:25
  Speaker 1: own in LLC maybe in Texas that has rental properties
• 41:28
  Speaker 1: in Texas. It could also own an LLC in Arizona
• 41:31
  Speaker 1: that has rental properties in Arizona. And at the same time,
• 41:34
  Speaker 1: if something were to happen in Arizona, you're abiding by
• 41:37
  Speaker 1: Wyoming laws in the event that you get into a
• 41:40
  Speaker 1: dispute with your tenants or there's a circumstance that comes
• 41:43
  Speaker 1: up that shields you because Wyoming has specific laws that
• 41:46
  Speaker 1: are favorable for landlords. Delaware has specific laws that are
• 41:50
  Speaker 1: favorable for corporations. Large corporations go to Delaware to incorporate
• 41:55
  Speaker 1: there because there is a Court of Chaucery in Delaware
• 41:57
  Speaker 1: that deals with corporate issues effically for business owners, a
• 42:01
  Speaker 1: lot of business owners feel like the laws and legislation
• 42:05
  Speaker 1: that was written in Delaware supports the growth of a
• 42:07
  Speaker 1: business owner more than any other state. That's why most
• 42:11
  Speaker 1: business owners who are publicly traded companies are looking to
• 42:14
  Speaker 1: exit will set up their entities in the state of Delaware.
• 42:18
  Speaker 1: I'm glad you said that.
• 42:21
  Speaker 3: There's another thing that's happened in the great state of California.
• 42:24
  Speaker 3: We're starting to see a lot of you know, those
• 42:28
  Speaker 3: the billionaire exodus. We recently we saw Elon and then
• 42:34
  Speaker 3: we now have seen Mark Zuckerberg pick up his things
• 42:36
  Speaker 3: and buy one hundred and seventy million dollar mansion in
• 42:39
  Speaker 3: Miami happening.
• 42:40
  Speaker 1: Yeah, talk about that.
• 42:42
  Speaker 3: I mean, on the surface, it feels like your wealthiest
• 42:46
  Speaker 3: residents are not going to be incentivized to stay there,
• 42:50
  Speaker 3: and so they leave, and then you know that continues
• 42:53
  Speaker 3: at a higher rate.
• 42:55
  Speaker 1: What's your thoughts about this? Criminal? Absolutely criminal, to be
• 42:58
  Speaker 1: completely honest with you, How are you going to put
• 43:01
  Speaker 1: a billionaire's tax on the wealthiest billionaires in California based
• 43:05
  Speaker 1: off of the amount of assets that they have. That's insane.
• 43:08
  Speaker 1: You're essentially saying, sell your assets in order to pay
• 43:11
  Speaker 1: a tax. Because we said so, we're the ones that
• 43:14
  Speaker 1: got ourselves into this debt, but you're going to be
• 43:15
  Speaker 1: the ones that have to get us out of it.
• 43:18
  Speaker 1: Billionaires are like, no, thanks, I'm out of here. Why
• 43:20
  Speaker 1: Because billionaires have choice, and they want to go to
• 43:23
  Speaker 1: places where they're respected. They want to go to places
• 43:26
  Speaker 1: where they feel like they're wanted and they're appreciated. That's
• 43:30
  Speaker 1: why they're gravitating towards states like Texas and Florida, primarily Florida.
• 43:33
  Speaker 1: Why because you have people like Ron DeSantis that are
• 43:35
  Speaker 1: on the news every single week speaking up for his
• 43:39
  Speaker 1: own state, pushing for no property taxes, supporting entrepreneurship, and
• 43:43
  Speaker 1: then you have people like Gavin Newsom, you know, bashing
• 43:47
  Speaker 1: billionaires misappropriating California funds. We have no idea what's happened
• 43:53
  Speaker 1: with all the taxpayer dollars, and there's a whole investigation
• 43:56
  Speaker 1: going on right now into that. I'm sure when you
• 43:58
  Speaker 1: talk about that for a later time, but we're dealing
• 44:00
  Speaker 1: with a situation where people are losing trust in California,
• 44:03
  Speaker 1: and then you slap us with this billionaire's tax. That's
• 44:06
  Speaker 1: the last straw from many people.
• 44:09
  Speaker 2: I mean, you own real estate, should you always have
• 44:11
  Speaker 2: it in the LLC.
• 44:13
  Speaker 1: If you believe in long term wealth creation, you will
• 44:15
  Speaker 1: always have your rental properties inside of an LLC. No
• 44:18
  Speaker 1: matter the fact that it may cost you eight hundred
• 44:20
  Speaker 1: dollars to set up an LLC and you have to
• 44:21
  Speaker 1: file a tax return. That's a small drop in the
• 44:24
  Speaker 1: bucket for a big problem that can happen later. We've
• 44:27
  Speaker 1: seen taxpayers that have had customers slip and fall in
• 44:30
  Speaker 1: their airbnbs, storm drains, have fallen down during rains and
• 44:33
  Speaker 1: have hitten people in the head. Next thing you know,
• 44:35
  Speaker 1: one hundred thousand dollars is going out and a check.
• 44:38
  Speaker 1: Two hundred thousand dollars is going out in a check
• 44:40
  Speaker 1: because we never set up the right proper liability of
• 44:43
  Speaker 1: protection that is so so important.
• 44:46
  Speaker 2: So it's really for protection purposes. It make any different
• 44:49
  Speaker 2: for taxes or no.
• 44:50
  Speaker 1: Absolutely, not setting up an LLC does not save you
• 44:52
  Speaker 1: money on taxes. This is a big misconception that many
• 44:54
  Speaker 1: people have. I need to save money on taxes, I
• 44:57
  Speaker 1: should just go set up an LLC. And LLC is
• 44:59
  Speaker 1: just a tax structure. Is saying I want limited liability protection. Really,
• 45:03
  Speaker 1: how you choose to utilize that LLC will determine if
• 45:06
  Speaker 1: you can save money on taxes. What expenses are you
• 45:09
  Speaker 1: putting inside of that LLC that are going to draw
• 45:10
  Speaker 1: down your taxbile income. So it's a big misnomer in
• 45:13
  Speaker 1: the tax place that setting up anet LOLLC automatically saves
• 45:16
  Speaker 1: money on taxes. It doesn't.
• 45:17
  Speaker 3: It made me think of the idea of having your
• 45:19
  Speaker 3: Brokens account inside of ther LLC. Yeah, more for protection
• 45:22
  Speaker 3: than it is for tax. Capital gains is capital gains.
• 45:25
  Speaker 1: Yeah, short term and long term, that's correct.
• 45:27
  Speaker 3: Yeah, I wanted because we talked about capital gains short
• 45:30
  Speaker 3: term and long term, but there was this idea, this
• 45:33
  Speaker 3: premise of maybe we tax unrealized gains. I want your
• 45:37
  Speaker 3: thoughts on that because I'd have mine, but I want
• 45:39
  Speaker 3: to hear from the professional.
• 45:40
  Speaker 1: Yeah, I mean taxing unrealized gains is pretty tough because
• 45:44
  Speaker 1: you're essentially penalizing me for holding onto an asset that
• 45:47
  Speaker 1: I believe in. And then let's just say we get
• 45:50
  Speaker 1: to the end of the year and I have all
• 45:52
  Speaker 1: these gains, but then the stock market takes a huge hit. Well,
• 45:55
  Speaker 1: now I just lost everything and I paid taxes for
• 45:58
  Speaker 1: on money I don't technically have anymore. I don't see
• 46:02
  Speaker 1: how that's fair in any world. And I don't see
• 46:05
  Speaker 1: I don't see that being passed. I don't see that
• 46:07
  Speaker 1: coming to fruition. But we get all these different proposals
• 46:10
  Speaker 1: because you know, these different agencies, what they like to
• 46:13
  Speaker 1: do is they like to shoot for the stars and
• 46:15
  Speaker 1: land on the trees. They like to swing for the
• 46:17
  Speaker 1: highest things that they can possibly achieve and land on
• 46:20
  Speaker 1: something a little bit softer and right now. You know,
• 46:23
  Speaker 1: we originally had Trump shooting to you know, get rid
• 46:27
  Speaker 1: of some taxes, but we landed on only forty percent
• 46:31
  Speaker 1: salt tax. These are the types of things that happen
• 46:34
  Speaker 1: when Congress is talking. They're shooting these big, big ideas
• 46:37
  Speaker 1: out and then we kind of vote and land on
• 46:39
  Speaker 1: these smaller ideas.
• 46:41
  Speaker 2: So talk about social media because that played a part
• 46:43
  Speaker 2: in your branding, your marketing. Yeah, what gave you the
• 46:48
  Speaker 2: vision for that? And how has that shaped your career path?
• 46:52
  Speaker 1: Yeah? So I picked up a camera when I was
• 46:54
  Speaker 1: fourteen years old, and part of the reason why is
• 46:57
  Speaker 1: because I really loved the TV show Jackass and all
• 47:00
  Speaker 1: the little different skits that they were doing. And when
• 47:05
  Speaker 1: I got into fitness right when I graduated college, it
• 47:08
  Speaker 1: was important to have videos out teaching people how to
• 47:12
  Speaker 1: work out correctly. I had spent years perfecting my fitness,
• 47:15
  Speaker 1: you know, in college with football, so that's kind of
• 47:17
  Speaker 1: when I started picking up the camera. It didn't happen
• 47:20
  Speaker 1: really the blow up until twenty twenty when I decided
• 47:24
  Speaker 1: to get on YouTube and I researched how do you
• 47:27
  Speaker 1: pay yourself as an LLC? And I realized there was
• 47:29
  Speaker 1: no YouTube video for So what I did is I
• 47:32
  Speaker 1: decided to create a long formatted video on how to
• 47:35
  Speaker 1: pay yourself as an LLC, posted it on YouTube. Didn't
• 47:39
  Speaker 1: think anything was going to happen. Thirty days later, I
• 47:42
  Speaker 1: got emails that I that were unresponded from Google Ads
• 47:46
  Speaker 1: and saying they needed me to open up a bank
• 47:48
  Speaker 1: account and connect it to my Google ADs' account because
• 47:50
  Speaker 1: they're trying to send me a check. And I went
• 47:52
  Speaker 1: back to my YouTube account. Within thirty days, I had
• 47:55
  Speaker 1: thirty thousand subscribers on my YouTube account on video how
• 48:00
  Speaker 1: to pay yourself as an LLC. That video is now
• 48:03
  Speaker 1: well over five six seven million views and has allowed
• 48:07
  Speaker 1: for me to create more videos. And what I focused
• 48:10
  Speaker 1: on early on was not creating videos for myself. I
• 48:13
  Speaker 1: created videos based off of what was missing on the internet.
• 48:16
  Speaker 1: I just started typing in on the internet, how to
• 48:18
  Speaker 1: pay yourself as an escort, how to pay yourself as
• 48:21
  Speaker 1: a LLC, tax as an es corporation. There was just
• 48:24
  Speaker 1: none of these videos. Then I found out about Google trends,
• 48:27
  Speaker 1: and I realized that people google search things and you
• 48:29
  Speaker 1: could just find out what is the trending Google searches.
• 48:32
  Speaker 1: So I typed in tax and found out all the
• 48:34
  Speaker 1: things that people were Google searching right during the pandemic.
• 48:37
  Speaker 1: How to receive a stimulus check, how to receive the
• 48:40
  Speaker 1: EIDL loan, how to receive the PPP loan, how to
• 48:43
  Speaker 1: place my children on payroll? Should I set up an LLC?
• 48:45
  Speaker 1: Should I What are the top five write offs for
• 48:47
  Speaker 1: an LLC? I covered the entire landscape, and I viewed
• 48:51
  Speaker 1: YouTube as real estate. I wanted to take up all
• 48:54
  Speaker 1: of the real estate on the internet for anything related
• 48:57
  Speaker 1: to tax. And that's when I put my head down
• 49:00
  Speaker 1: into work and fast forward. We're at I think like
• 49:03
  Speaker 1: over a million subscribers now, so I've been doing well grass.
• 49:05
  Speaker 3: So I mean you said it, I'm thinking I used
• 49:09
  Speaker 3: to have this idea of, you know, what people can
• 49:12
  Speaker 3: write off when they're entrepreneurs right as a WT employee
• 49:15
  Speaker 3: for like fourteen years. Yeah, and I'm like, man, that
• 49:17
  Speaker 3: would be great if I could write off you know,
• 49:19
  Speaker 3: my uniform, the equipment. What are the top five things
• 49:23
  Speaker 3: that LLC should be looking at to write off?
• 49:25
  Speaker 1: Yeah, I mean, for starters, most LLC owners are living
• 49:29
  Speaker 1: under a house, so they should definitely be taking a
• 49:31
  Speaker 1: home office deduction. If they're working for the convenience of
• 49:33
  Speaker 1: their home. They're most likely using a computer to conduct
• 49:36
  Speaker 1: a business, so those are automatically ordinary necessary expenses. They're
• 49:39
  Speaker 1: going to have a cell phone, so these are just
• 49:40
  Speaker 1: the basic things that say they should be deducting. If
• 49:42
  Speaker 1: they have a vehicle, they need to determine if they're
• 49:44
  Speaker 1: going to take the knowledge expense or the actual expense.
• 49:46
  Speaker 1: Knowledge means that you can take, I believe. I think man,
• 49:49
  Speaker 1: it might be up to seventy five per cents now
• 49:51
  Speaker 1: this year per every single mile that you drive, or
• 49:53
  Speaker 1: you can choose to take the actual expenses associated with
• 49:55
  Speaker 1: your car, your car payment, the gas, the utilities associated
• 49:59
  Speaker 1: with running your car. And then last but not least,
• 50:02
  Speaker 1: if you ask me, advertising, I mean, most businesses can't
• 50:05
  Speaker 1: grow unless people know who you are, and so if
• 50:08
  Speaker 1: you get on the internet and you pay for subscriptions,
• 50:10
  Speaker 1: you're paying for YouTube videos SEO. All of those expenses
• 50:14
  Speaker 1: are ordinary necessary to the pursuit of income. Those are
• 50:16
  Speaker 1: the basic things that every single LLC owner should be
• 50:20
  Speaker 1: taking on their tax returns.
• 50:21
  Speaker 2: What's the biggest secret of the wealthy or like, what's
• 50:26
  Speaker 2: the biggest thing that you think most the common person
• 50:29
  Speaker 2: doesn't know that wealthy educated people are doing to take
• 50:33
  Speaker 2: advantage of tax system.
• 50:34
  Speaker 1: Wealthy educated people are taking advantage of charitable structures. They're
• 50:38
  Speaker 1: setting up five oh one c threes and using them
• 50:40
  Speaker 1: completely different than the average public. When you set up
• 50:43
  Speaker 1: a private family foundation, you can roll over thirty percent
• 50:45
  Speaker 1: of your adjusted gross income into your own foundation. It's yours.
• 50:49
  Speaker 1: It could be a non performing foundation, meaning you don't
• 50:51
  Speaker 1: even have to let the public know what you're even doing.
• 50:53
  Speaker 1: You can just have a foundation and it doesn't even
• 50:55
  Speaker 1: do anything. Yet thirty percent of your adjusted gross income
• 50:58
  Speaker 1: can go into it. Only five percent of the charitable
• 51:00
  Speaker 1: assets have to be contributed to another five h one
• 51:02
  Speaker 1: CE or qualifying charity of your choice every single year.
• 51:07
  Speaker 1: There's no capital gains tax. Inside of a foundation. You
• 51:09
  Speaker 1: can have that money invested inside of stocks or assets
• 51:12
  Speaker 1: that can continue to grow in a tax advantage manner.
• 51:15
  Speaker 1: Not to mention, many of these wealthy families will hire
• 51:17
  Speaker 1: their children or family members to run their foundations and
• 51:20
  Speaker 1: carry out the philanthropic work. And that's another way to
• 51:24
  Speaker 1: shift income to a taxpayer that you were trying to
• 51:27
  Speaker 1: get income to without creating another tax for them.
• 51:30
  Speaker 2: So explain, or say, you have ten million dollars, right,
• 51:34
  Speaker 2: mm hmm, you said, do you put thirty percent?
• 51:36
  Speaker 1: You can shift thirty percent of your just a gross income,
• 51:38
  Speaker 1: so three million.
• 51:39
  Speaker 2: So three three million dollars into a charity that you
• 51:43
  Speaker 2: set up yep.
• 51:45
  Speaker 1: Five oh one c three called a private family foundation.
• 51:47
  Speaker 2: Private family foundation. Correct, three million dollars goes into the
• 51:50
  Speaker 2: private family foundation. Then what happens at that point?
• 51:54
  Speaker 1: Only five percent of those assets have to be contributed
• 51:56
  Speaker 1: to another qualifying five oh one c three by the
• 51:58
  Speaker 1: following year. Percent of the three million.
• 52:02
  Speaker 3: Three million, that's correct, it has the fifteen thousand, one
• 52:06
  Speaker 3: fifty thousand.
• 52:06
  Speaker 2: Yes, so one hundred and fifty thousand has to go
• 52:08
  Speaker 2: into a charity.
• 52:10
  Speaker 1: Correct.
• 52:12
  Speaker 2: The remaining two million, eight hundred and fifty thousand dollars
• 52:16
  Speaker 2: stays in the foundation. And what happens with.
• 52:19
  Speaker 1: That, Well, hopefully you're going to grow it. Right, it's invested.
• 52:23
  Speaker 1: We want it invested. What we don't want to just
• 52:24
  Speaker 1: sit in stale cash, Absolutely not, that'd be a horrible idea.
• 52:27
  Speaker 1: We want it invested in conservative assets. And then what funds,
• 52:31
  Speaker 1: so mutual funds. So if you can do that in
• 52:33
  Speaker 1: on behalf of the nonprofit correct?
• 52:35
  Speaker 2: All right, So it's so that two million, eight hundred
• 52:40
  Speaker 2: and fifty thousand dollars stays in your family nonprofit correct,
• 52:45
  Speaker 2: is invested in the market, it's growing.
• 52:48
  Speaker 1: Correct, Then what you're going to have to make another
• 52:51
  Speaker 1: donation in the following year. But before you make that donation,
• 52:54
  Speaker 1: what if you use the foundation to carry out philanthropic work.
• 52:57
  Speaker 1: Then the assets inside of the foundation are assets that
• 53:00
  Speaker 1: are used on behalf of the shareholders of the foundation.
• 53:03
  Speaker 1: So if I need to go fly to Africa for sake,
• 53:06
  Speaker 1: for example, one of our clients did this last year.
• 53:07
  Speaker 1: She flew to Africa and she built wells out in
• 53:10
  Speaker 1: Africa with her and her family. She paid for her
• 53:12
  Speaker 1: and her family to go out there. She paid for
• 53:14
  Speaker 1: a lot of the stuff that she did. She had
• 53:16
  Speaker 1: a film crew out there with her, She paid for
• 53:18
  Speaker 1: their experience, she stayed in a great hotel. All of
• 53:20
  Speaker 1: those were expenses, so it dropped down the asset value
• 53:24
  Speaker 1: of the foundation. There's a calculation too to where legal
• 53:28
  Speaker 1: fees go into that five percent as well, So her
• 53:31
  Speaker 1: legal fees get calculated, a part of the payroll gets
• 53:34
  Speaker 1: calculated into that five percent, so she's paying out salaries
• 53:37
  Speaker 1: as well. It's actually math that gets involved in that
• 53:39
  Speaker 1: five percent versus just saying five percent of whatever's left
• 53:43
  Speaker 1: over just has to be written off. There's a calculation
• 53:45
  Speaker 1: that's involved with that.
• 53:46
  Speaker 2: And so the travel, all of that is deducted from
• 53:50
  Speaker 2: the two point eight million.
• 53:51
  Speaker 1: Bract reducing the charitable.
• 53:52
  Speaker 2: Assets, and that's tax free.
• 53:55
  Speaker 1: That's sax ray.
• 53:56
  Speaker 2: Yes, and the money that grows is tax free.
• 53:58
  Speaker 1: Yes, it grows tax free.
• 54:00
  Speaker 2: And if you hire somebody, you can pay them from
• 54:01
  Speaker 2: the two point eight million.
• 54:02
  Speaker 1: Dollars, Yes, you can, and they'll earn a salary that's taxable.
• 54:07
  Speaker 1: To know that's taxable to them. Correct, Yeah, it's a lot. Yeah.
• 54:16
  Speaker 1: So one of the strategies that our clients utilize that
• 54:19
  Speaker 1: are making over two million in net profit with anes
• 54:21
  Speaker 1: corporation that spend a lot of money on ads is
• 54:24
  Speaker 1: they set up an advertising company as a C corporation,
• 54:27
  Speaker 1: But instead of setting up the SEA corporation to exist
• 54:30
  Speaker 1: on the same fiscal year end as THEES corp, we
• 54:32
  Speaker 1: set up the fiscal year end to be three hundred
• 54:35
  Speaker 1: and sixty five days later than the S corporation. Let
• 54:37
  Speaker 1: me give you an example. Let's just say we're in
• 54:39
  Speaker 1: the month of November and you have two million dollars
• 54:42
  Speaker 1: in net profit sitting inside of your business. But I
• 54:44
  Speaker 1: know that you spend money on ads. You rip one
• 54:46
  Speaker 1: hundred two hundred k in ADS every single month to
• 54:48
  Speaker 1: grow your businesses. Well, you know what your AD budget
• 54:51
  Speaker 1: is going to look like for twenty twenty six. We're
• 54:52
  Speaker 1: in twenty twenty five, still in the month of November
• 54:54
  Speaker 1: and December. So I set you up a C corporation
• 54:58
  Speaker 1: advertising company in the month of November that has a
• 55:01
  Speaker 1: fiscal year end of September thirtieth, twenty twenty six. That
• 55:07
  Speaker 1: means that if you make a contribution or a management
• 55:10
  Speaker 1: fee over to that SEA corporation, your S corporation gets
• 55:14
  Speaker 1: a tax deduction. You will file tax returns for your
• 55:17
  Speaker 1: S corp March fifteenth. If you go on extension all
• 55:19
  Speaker 1: the way until October fifteenth, But your sea corp now
• 55:22
  Speaker 1: has money inside of it, and its year doesn't end
• 55:25
  Speaker 1: until September thirtieth, When it's year ends four months and
• 55:29
  Speaker 1: fifteen days later is when it files its tax return.
• 55:32
  Speaker 1: So if September thirtieth is the fiscal year end October, November, December,
• 55:37
  Speaker 1: January fifteenth of twenty twenty seven is when we filed
• 55:40
  Speaker 1: a tax return for that sea corp. So that means
• 55:42
  Speaker 1: that if you had two million dollars sitting inside your
• 55:44
  Speaker 1: es corp, and we write a check for half a
• 55:46
  Speaker 1: million dollars over to that sea corporation, you just got
• 55:48
  Speaker 1: a half a million dollar deduction. Congratulations. You said about
• 55:50
  Speaker 1: one hundred and fifteen thousand dollars on your taxes. Five
• 55:53
  Speaker 1: hundred k is sitting inside of your sea court. Now
• 55:55
  Speaker 1: you're going to have to spend that money down or
• 55:56
  Speaker 1: you're gonna be subject to twenty one percent tax rate.
• 55:58
  Speaker 1: But I bought you nine I bought you from January
• 56:01
  Speaker 1: all the way up until September thirtieth for the ads.
• 56:04
  Speaker 1: For the ads. Whatever you don't spend is subject to
• 56:06
  Speaker 1: twenty one percent tax rep. So this is a way
• 56:09
  Speaker 1: for taxpayers who you know want to be able to
• 56:11
  Speaker 1: still stay in business, to be able to use entity
• 56:14
  Speaker 1: structures successfully to reduce their tax liability, and to also
• 56:20
  Speaker 1: be able to grow their business at the exact same time.
• 56:22
  Speaker 3: This is the conversation I feel like that's had when
• 56:25
  Speaker 3: people see corporations pay zero percent tax and they're like,
• 56:31
  Speaker 3: how it's like these type of these strategy.
• 56:34
  Speaker 1: That's an income shifting strategy. You're shifting income from one
• 56:37
  Speaker 1: entity to another entity that's filing tax returns on a
• 56:39
  Speaker 1: completely different fiscal year end. Absolutely incredible. You set your
• 56:44
  Speaker 1: fiscal year end, you set your fiscal year in with
• 56:46
  Speaker 1: a se corp. Pretty awesome. Yeah, makesense. Yeah.
• 56:51
  Speaker 2: So the marketing that you do social media and stuff
• 56:53
  Speaker 2: like that, Yeah, has that helped your business or has
• 56:56
  Speaker 2: that taken away from you actually practice seeing the business
• 57:00
  Speaker 2: and focusing more on like the branding, Yeah, aspect of
• 57:05
  Speaker 2: a business.
• 57:05
  Speaker 1: Yeah. So early on it was just creating content, as
• 57:09
  Speaker 1: Carlton Dennis, the YouTube guy putting out education. The education
• 57:12
  Speaker 1: led me to creating my own firm, and me creating
• 57:14
  Speaker 1: my own firm led me to bottlenecking myself to then
• 57:17
  Speaker 1: needing to hire a bunch of tax professionals and CPAs
• 57:19
  Speaker 1: underneath me to then being able to focus back on
• 57:22
  Speaker 1: the personality. Ninety six percent of tax Alchemy's revenue, it
• 57:26
  Speaker 1: comes from social media, primarily from YouTube and from Instagram.
• 57:30
  Speaker 1: I would say seventy percent of that is from YouTube
• 57:33
  Speaker 1: and the other thirty percent clients clients.
• 57:35
  Speaker 2: So that's still your main business, Yes, is clients clients?
• 57:38
  Speaker 1: Yep, tax planning high income clients. Yeah, so half a
• 57:41
  Speaker 1: million up to one hundred.
• 57:43
  Speaker 2: Million, you only take a half a million out.
• 57:45
  Speaker 1: Only half a million and up. Yeah, there needs to
• 57:48
  Speaker 1: be enough liquidity that the taxpayer has in order to
• 57:50
  Speaker 1: invest in tax advantage strategies, because we use a lot
• 57:53
  Speaker 1: of tax advantaged strategies that require investments. But if you're
• 57:59
  Speaker 1: underneath that amount, you could still do tax planning. You're
• 58:02
  Speaker 1: just not going to save the amount of money that
• 58:03
  Speaker 1: you might hope to save because real savings comes from
• 58:06
  Speaker 1: paying real tax and if you're not paying a lot
• 58:09
  Speaker 1: in taxes yet, you're not going to feel like you're
• 58:11
  Speaker 1: saving a whole lot. Yeah, you know what I mean.
• 58:13
  Speaker 1: If you're only paying twenty thousand dollars in taxes and
• 58:15
  Speaker 1: you save four grand, is that life changing money? Life
• 58:18
  Speaker 1: changing money is being able to come back to somebody
• 58:20
  Speaker 1: to say, hey, you were about to write a check
• 58:22
  Speaker 1: for one hundred and fifty thousand. You don't have to
• 58:23
  Speaker 1: do that anymore.
• 58:24
  Speaker 2: So what's that process if somebody wants to work with you,
• 58:26
  Speaker 2: walk us through the process of your firm, like what's
• 58:29
  Speaker 2: the yeah, the intake and what's the step yeah.
• 58:33
  Speaker 1: So for our process, as most of our clients will
• 58:36
  Speaker 1: come to our website, we have a VSL so they
• 58:38
  Speaker 1: watch a video sales letter for about fifteen twenty minutes
• 58:40
  Speaker 1: just educates them on the process of tax planning. They
• 58:43
  Speaker 1: get on a call with one of my tax specialists.
• 58:45
  Speaker 1: What we're doing is we're qualifying you. We're looking at
• 58:47
  Speaker 1: your income. We're trying to figure out what's the pain level.
• 58:49
  Speaker 1: Are you are are you are you tired of paying taxes?
• 58:51
  Speaker 1: Like this, Ninety percent of our clients that come over
• 58:53
  Speaker 1: to us already have a CPA. They're already working with
• 58:55
  Speaker 1: somebody that's filing their tax returns that they trust. We
• 58:58
  Speaker 1: understand that you have a CPA, but you don't have
• 59:00
  Speaker 1: a tax strategist, somebody who's sole job is to figure
• 59:03
  Speaker 1: out how to reduce your tax bill in real time.
• 59:05
  Speaker 1: So for many of them, they're understanding what a tax
• 59:07
  Speaker 1: strategist is for the very first time.
• 59:09
  Speaker 2: So you don't do taxes.
• 59:10
  Speaker 1: Oh, we do, absolutely, but we earn that business after
• 59:12
  Speaker 1: we've done a tax plan. We never offer tax prep initially.
• 59:15
  Speaker 1: We only offer advisory initially, and then we pick up
• 59:18
  Speaker 1: tax prep on the back end. A tax and accounting
• 59:20
  Speaker 1: firm will offer you whatever. You can call them up
• 59:23
  Speaker 1: and say, hey, I need my tax return. Sure here
• 59:24
  Speaker 1: it is to do a tax return, but an advisory
• 59:27
  Speaker 1: firm only offers advisory first. Then we pick up the
• 59:31
  Speaker 1: tax and accounting business on the back end, which means
• 59:33
  Speaker 1: that we're only working with the right type of clientele
• 59:35
  Speaker 1: that we choose to work with. If I'm doing tax returns,
• 59:38
  Speaker 1: I could work with someone who's making only sixty or
• 59:40
  Speaker 1: seventy thousand dollars a year and then go serve someone
• 59:42
  Speaker 1: who's also making one point two million dollars a year.
• 59:44
  Speaker 1: That's not my business model. My business model is to
• 59:47
  Speaker 1: work with high income earners because I know exactly the
• 59:50
  Speaker 1: type of involvement that I have to spend with them
• 59:52
  Speaker 1: in order to get them to save real money and
• 59:55
  Speaker 1: to get them to walk through doors they've never walked
• 59:57
  Speaker 1: through before. And that requires spend a lot of time
• 59:59
  Speaker 1: educating them. And if you're not at a point yet
• 1:00:01
  Speaker 1: where you're paying a lot in taxes, what's the point
• 1:00:03
  Speaker 1: in educating you about things that you don't really get
• 1:00:05
  Speaker 1: an opportunity to use yet. So we have a really
• 1:00:08
  Speaker 1: structured system. There.
• 1:00:10
  Speaker 3: Are you training the employees that you bring under the
• 1:00:13
  Speaker 3: firm and what's that process like? If somebody's looking like, Hey,
• 1:00:17
  Speaker 3: that sounds like a firm I definitely want to be
• 1:00:19
  Speaker 3: a part of or try to apply to be.
• 1:00:21
  Speaker 1: A part of.
• 1:00:22
  Speaker 2: Yeah.
• 1:00:22
  Speaker 1: We train CPAs on how to do tax planning, and
• 1:00:25
  Speaker 1: we train enrolled agents on how to use tax planning.
• 1:00:28
  Speaker 1: They use our software, they learn how to create our
• 1:00:30
  Speaker 1: tax projections the way that we do it, factoring in
• 1:00:34
  Speaker 1: state jurisdictions, using our court case law that we have
• 1:00:38
  Speaker 1: garnered over years of experience of collecting irs court cases
• 1:00:42
  Speaker 1: and shaping our understanding around tax law. And we build
• 1:00:46
  Speaker 1: a system around how to train them, just like how
• 1:00:49
  Speaker 1: many course creators will create you a course on how
• 1:00:51
  Speaker 1: to do X, how to do Y. I have an
• 1:00:53
  Speaker 1: internal course inside of my company on how to do
• 1:00:56
  Speaker 1: tax planning and deliver high level advisory services and communicate
• 1:00:59
  Speaker 1: it in a way that can get a desired result
• 1:01:01
  Speaker 1: for a customer.
• 1:01:05
  Speaker 2: There's a lot good information, for sure. So what's the
• 1:01:09
  Speaker 2: social what's the website? What's the YouTube like? How can
• 1:01:11
  Speaker 2: people actually follow?
• 1:01:13
  Speaker 1: Yeah? Absolutely?
• 1:01:14
  Speaker 2: And what do you put on you on a consistent basis?
• 1:01:16
  Speaker 1: My goal is to continue to put out the best
• 1:01:18
  Speaker 1: tax knowledge that I possibly can on my YouTube account
• 1:01:21
  Speaker 1: and on my social There is a gap in the
• 1:01:23
  Speaker 1: tax and accounting space and an absence of tax professionals
• 1:01:26
  Speaker 1: that want to teach people the tax code. My duty
• 1:01:29
  Speaker 1: and my obligation is to simplify something that is very
• 1:01:31
  Speaker 1: complex and to make something that is boring seems sexy.
• 1:01:35
  Speaker 1: And I think I'm doing a pretty good job of that,
• 1:01:36
  Speaker 1: and I need to continue to do a even better
• 1:01:38
  Speaker 1: job at that. People can reach out to me on
• 1:01:40
  Speaker 1: social media, but they also follow us on our website
• 1:01:43
  Speaker 1: at ww dot tax alchemy dot com, look for us
• 1:01:46
  Speaker 1: on our YouTube account Carlton Dennis, and you can also
• 1:01:49
  Speaker 1: reach out on our LinkedIn account as well. We get
• 1:01:54
  Speaker 1: a lot of tax professionals that are interested in applying
• 1:01:56
  Speaker 1: to work with us through our LinkedIn page as well.
• 1:01:59
  Speaker 1: How is mom looking at you? You know? Mom is Mom?
• 1:02:01
  Speaker 1: Is proud Mom is absolutely proud. Mom has done so
• 1:02:04
  Speaker 1: much in the taxan accounting space. I mean, she is
• 1:02:07
  Speaker 1: a humble a humble woman already as it is, but
• 1:02:10
  Speaker 1: she blew up off of TV and radio shows and
• 1:02:13
  Speaker 1: I blew up off of YouTube and Instagram. So we
• 1:02:16
  Speaker 1: have two different paths, but we are literally the same person.
• 1:02:19
  Speaker 1: And it's really beautiful now being able to see her
• 1:02:21
  Speaker 1: step back from her firm, allowing my two younger brothers
• 1:02:24
  Speaker 1: to run her firm, and me being able to take
• 1:02:27
  Speaker 1: some of the things that she taught me and the
• 1:02:29
  Speaker 1: processes around tax planning and how to handle an IRS
• 1:02:31
  Speaker 1: audit and build an advisory firm that serves the clients
• 1:02:35
  Speaker 1: that I like to work with. And so we have
• 1:02:36
  Speaker 1: a beautiful family that works really well collaborative to lead together.
• 1:02:39
  Speaker 1: And we both have our own separate firms because my
• 1:02:42
  Speaker 1: clients are completely different than the types of clients that
• 1:02:44
  Speaker 1: she serves. But there's an ecosystem that allows for us
• 1:02:47
  Speaker 1: to be able to serve one in another, and that's
• 1:02:48
  Speaker 1: what's beautiful about our relationship. One of the strategies I
• 1:02:51
  Speaker 1: have to leave you guys with is I RC one
• 1:02:53
  Speaker 1: eighty one IRC one eighty one allows for you to
• 1:02:56
  Speaker 1: write off the cost of the production of a movie film. Now,
• 1:02:59
  Speaker 1: movie film producttion companies, they spend tons of money on
• 1:03:02
  Speaker 1: these movie projects. But what they do is they seller
• 1:03:04
  Speaker 1: finance the production rights to investors. And so what my
• 1:03:08
  Speaker 1: clients do is they invest money into movie films and
• 1:03:10
  Speaker 1: become partial owners of the movie films. But in order
• 1:03:13
  Speaker 1: to do so, they take out a loan from the
• 1:03:15
  Speaker 1: production company through seller financing. It's a leveraged four to
• 1:03:19
  Speaker 1: one strategy. For every dollar that they put in, they're
• 1:03:22
  Speaker 1: taking on three dollars of recourse debt the loan, but
• 1:03:25
  Speaker 1: then their whole for a total four dollars. So if
• 1:03:27
  Speaker 1: you put in one hundred thousand dollars, you're getting a
• 1:03:29
  Speaker 1: four hundred thousand dollars deduction by investing money into a
• 1:03:33
  Speaker 1: movie film. Last year, we had clients invest money into
• 1:03:35
  Speaker 1: Mark Wahlberg movies, Jackie Chan movies. They are owners of
• 1:03:39
  Speaker 1: those movies. They're going to earn cash flow from those movies,
• 1:03:42
  Speaker 1: and they're receiving an active deduction on their tax returns.
• 1:03:45
  Speaker 1: When they ask how is this active in the movie space.
• 1:03:49
  Speaker 1: You have to materially participate in material participations one hundred
• 1:03:53
  Speaker 1: hours spent in your real property trader business. These taxpayers
• 1:03:56
  Speaker 1: have to spend one hundred hours watching other movie films
• 1:03:59
  Speaker 1: in order to call as an active participant in the
• 1:04:02
  Speaker 1: movie space. That is one of my favorite strategies we
• 1:04:04
  Speaker 1: like to utilize. Yeah, I feel like we all do
• 1:04:06
  Speaker 1: that exactly. Who wouldn't do that? Right? We put over
• 1:04:11
  Speaker 1: seven figures into movie films last year.
• 1:04:14
  Speaker 3: Me and my wife to talk about the timing of
• 1:04:16
  Speaker 3: acquiring assets as a tax strategy.
• 1:04:18
  Speaker 1: Acquiring assets is extremely important. For example, when it comes
• 1:04:21
  Speaker 1: to the short term rental strategy like we were talking about,
• 1:04:23
  Speaker 1: you don't have to run a short termamenttal all year long.
• 1:04:25
  Speaker 1: Direst states that you only have to spend one hundred
• 1:04:27
  Speaker 1: hours managing your short tournamental and your tenants have to
• 1:04:30
  Speaker 1: stay in the property seven days or less. So we
• 1:04:31
  Speaker 1: have clients that acquire short tourmental in the month of October,
• 1:04:34
  Speaker 1: they run it as an str for November and December,
• 1:04:37
  Speaker 1: and then they converted into a long term mental managed
• 1:04:39
  Speaker 1: by a paid property manager in January. They literally only
• 1:04:42
  Speaker 1: ran the property as a short tournamental for twelve weeks
• 1:04:45
  Speaker 1: out of the year. Yet we're able to perform a
• 1:04:47
  Speaker 1: cost irrogation, study, and accelerate depreciation. That's just one of
• 1:04:50
  Speaker 1: the many ways when timing strategies makes so much sense.
• 1:04:54
  Speaker 1: Oh a lot of game there you have it. Whole
• 1:04:59
  Speaker 1: lot of there you have it.