Latest / Weekly Docket / Insider Trading, Contractor Disputes, Tax Tips, and Snapchat's Dark Side

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Insider Trading, Contractor Disputes, Tax Tips, and Snapchat's Dark Side · Weekly Docket

• 0:04
  Track 1: Welcome to Silverman Law Firm's Weekly Docket, where we talk legal news and practical law.
• 0:10
  Track 1: Today is February 29th, 2024.
• 0:14
  Track 1: My name is Phil Silverman.
• 0:16
  Track 1: I'm your host, and I'm here with my co-host, Austin Black.
• 0:19
  Track 1: How are you doing today, Austin?
• 0:20
  austin_1_02-29-2024_132733: just leaping right into it.
• 0:22
  Track 1: Ha ha.
• 0:22
  Track 1: I love a good leap year joke.
• 0:24
  Track 1: happy leap year.
• 0:25
  Track 1: what do we have on the docket today?
• 0:26
  Track 1: Austin?
• 0:27
  austin_1_02-29-2024_132733: we're gonna be going over our legal news the dangers of insider trading from home, when you work from home with your spouse or partner.
• 0:36
  austin_1_02-29-2024_132733: And then also some conservative states are suing social media companies specifically meta to stop content moderation against conservatives.
• 0:44
  austin_1_02-29-2024_132733: then we're going to jump into a guest interview with a tax attorney Brandon Reza.
• 0:51
  austin_1_02-29-2024_132733: And we think he's gonna hopefully keep people out of prison for the IRS coming after them.
• 0:57
  austin_1_02-29-2024_132733: And then going to go over a few legal questions on Having contractors perform work on your house?
• 1:03
  austin_1_02-29-2024_132733: then we're gonna go over our ranting and raving section.
• 1:07
  austin_1_02-29-2024_132733: And this week we get to talk about something both you and I hate which is Snapchat, right?
• 1:11
  austin_1_02-29-2024_132733: bad application bad platform has led to a lot of issues just both related to school and, and outside of school for youth.
• 1:21
  Track 1: Well, I'm most excited about having Brandon friends on the show as a tax attorney because it's tax season and we've got March 15th coming up, which is a deadline for a lot of S Corporation returns, and we also have the April 15th deadline coming up for the personal returns.
• 1:37
  Track 1: So excited for that.
• 1:39
  Track 1: let's get into our legal news section.
• 1:42
  Track 1: First thing we're talking about.
• 1:44
  Track 1: is what they call pillow talk, insider trading.
• 1:47
  Track 1: It was actually here in Houston.
• 1:49
  Track 1: I'm based in Houston.
• 1:50
  Track 1: Austin's based out of our Dallas office, but a husband and wife are living in Houston.
• 1:56
  Track 1: Wife works for bp, British Petroleum, some type of.
• 2:00
  Track 1: Executive job, I would suspect.
• 2:02
  Track 1: She's working from home.
• 2:03
  Track 1: The husband's working from home.
• 2:05
  Track 1: The wife is privy to An acquisition that BP is gonna do, BP is gonna acquire travel Centers of America.
• 2:13
  Track 1: And if you don't know what that is, I think they've got the TA signs and they're like truck stops or convenience stores all around the country.
• 2:22
  Track 1: So publicly traded company.
• 2:24
  Track 1: The husband's sitting somewhere in the house, over here's the meeting or the conference.
• 2:29
  Track 1: BP's gonna acquire them.
• 2:31
  Track 1: He's like, aha, I've got a bright idea.
• 2:34
  Track 1: I'm gonna buy the Stock Travel Centers of America He makes like$1.76 million.
• 2:41
  Track 1: He gets caught and he goes to the wife and the wife is like, you know, how would you say WTF or, or whatever.
• 2:50
  Track 1: And, he goes, I did this because I loved you so much and I, I didn't want you to have to work so hard and I wanted you to be retired How do you think that went over Austin?
• 2:59
  austin_1_02-29-2024_132733: Probably quite well.
• 3:01
  austin_1_02-29-2024_132733: I mean, significant other, whenever I tell her that I've committed insider trading based on information from her job, she's always quite happy with it.
• 3:09
  Track 1: BP declined to comment and the wife, I think immediately moved out, later divorced him.
• 3:16
  Track 1: There's no evidence that the wife intentionally leaked any of this information.
• 3:20
  Track 1: I don't think she is being prosecuted, but BP did place her on leave, I believe BP later fired her, so it did not end well for wife.
• 3:33
  austin_1_02-29-2024_132733: Just be careful where you're working and, and sure that you are on the same page with your partner, but what's confidential, what's not
• 3:40
  Track 1: So the husband, is not disputing the charges.
• 3:42
  Track 1: I think he's trying to do a deal probably punishable by some prison time up to five years and up to$250,000 in fines.
• 3:52
  Track 1: He probably also has to give the money back.
• 3:55
  Track 1: moving along, let's get into transitioning rather awkwardly from insider trading to first Amendment rights, we have our home state of Texas, very conservative state, and the state of Florida they're suing Meta and Google.
• 4:11
  Track 1: Texas and the state of Florida is saying you guys are different than a regular website.
• 4:16
  Track 1: and because you are the town square, you are the modern day public forum.
• 4:21
  Track 1: You should have different standards so you don't get to moderate content.
• 4:26
  Track 1: And I think what the conservatives are mad about is Big Tech is generally left-leaning.
• 4:32
  Track 1: They're generally Democrat, favorable to Democrats.
• 4:35
  Track 1: the accusations from the Conservative party is if they're posting things on social media, their content is being removed by big tech who doesn't like conservatives, but they're framing this in the context of Big tech, is their website's not a regular website, they're a public forum.
• 4:54
  Track 1: they should not be entitled to the same free speech as an editorial newspaper.
• 4:59
  Track 1: And the argument by Big Tech is, we're not a public square
• 5:03
  austin_1_02-29-2024_132733: newspaper.
• 5:04
  Track 1: Right.
• 5:05
  Track 1: And they're entitled to the same First Amendment, free speech rights as a newspaper.
• 5:12
  Track 1: Now, the state of Texas and the state of Florida, their argument is, well, you are more like a telephone company.
• 5:19
  Track 1: You are like Verizon Wireless.
• 5:22
  Track 1: And your job is to provide telephone service or cell service and text messaging service.
• 5:29
  Track 1: And anybody who texts, or anybody who talks over your network, you're not allowed to regulate it.
• 5:34
  Track 1: Just like Verizon, Wireless doesn't regulate texts between private citizens.
• 5:39
  Track 1: So they had four hours of oral arguments and we don't have a decision yet.
• 5:44
  Track 1: the court was very, very skeptical.
• 5:46
  Track 1: Justice Samuel Alito said, well, I don't think you're like either one.
• 5:51
  Track 1: I don't think you're like a editorial newspaper, and I don't think you're like a telephone company.
• 5:55
  Track 1: How does the court decide?
• 5:57
  Track 1: I don't know.
• 5:58
  Track 1: Do you have any thoughts on the matter?
• 5:59
  austin_1_02-29-2024_132733: if I had to guess, they're probably gonna come up with some weird factor tests for this in-between situation, right.
• 6:06
  austin_1_02-29-2024_132733: For free speech involving this
• 6:07
  Track 1: Hmm.
• 6:08
  austin_1_02-29-2024_132733: and content regulation there.
• 6:09
  Track 1: and there's, there's been much ado in oral arguments about the difference between services on the platforms.
• 6:17
  Track 1: So we post things on social media all the time, but there's also different services.
• 6:22
  Track 1: There's dm direct messaging, there's, there's communications between private citizens that are outside of the public posting and the court is wrestling.
• 6:32
  Track 1: Well, how do we, how do we write a rule that maybe applies to both of those services?
• 6:38
  Track 1: So we'll see how that one comes out.
• 6:41
  Track 1: We'll keep you updated on that case, Alright, We've got Brandon Frenza coming on the show, so let's talk to him about taxes, how to avoid fines, and how to stay out of prison this time of year.
• 6:53
  Track 1: Thanks for coming on the show, Brandon.
• 6:55
  Track 1: How are you doing today?
• 6:56
  squadcaster-fff3_2_02-29-2024_120900: Wonderful.
• 6:57
  Track 1: It's always great to have a tax attorney.
• 6:59
  Track 1: We are in tax season.
• 7:01
  Track 1: You guys are incredibly busy.
• 7:03
  Track 1: Hard to get.
• 7:04
  Track 1: So I appreciate you coming on.
• 7:06
  Track 1: tell us about your practice and what you do and a little bit about yourself and how you got into tax.
• 7:12
  squadcaster-fff3_2_02-29-2024_120900: I've been in tax for a little over 11 years.
• 7:15
  squadcaster-fff3_2_02-29-2024_120900: And after taking a few tax courses in law school, I found that I actually enjoyed the work.
• 7:21
  squadcaster-fff3_2_02-29-2024_120900: I focus a lot on businesses and estates helping people form their entities, and there's always a tax issue.
• 7:29
  squadcaster-fff3_2_02-29-2024_120900: So for the last 10 years, I've spent about half my time doing the transactional side of business and estate formation.
• 7:35
  squadcaster-fff3_2_02-29-2024_120900: And then helping clients that get themselves into trouble with taxes.
• 7:39
  squadcaster-fff3_2_02-29-2024_120900: Or fight with the IRS on audits or compliance matters.
• 7:42
  Track 1: there's that old saying, the only thing that's certain is death and taxes.
• 7:46
  Track 1: and nobody likes taxes, but you have to do'em.
• 7:51
  Track 1: You've been doing them for a, a long time now.
• 7:53
  Track 1: I understand that you may have interned with the Internal Revenue Service.
• 7:57
  Track 1: Is that right.
• 7:58
  squadcaster-fff3_2_02-29-2024_120900: Yeah.
• 7:58
  squadcaster-fff3_2_02-29-2024_120900: I spent some time over at the IRS building, working directly with the attorneys there not too long back, the director made a statement about ways the IRS could approach a tax issue.
• 8:11
  squadcaster-fff3_2_02-29-2024_120900: And she, she listed it as either a hunter mode or a helper mode.
• 8:17
  squadcaster-fff3_2_02-29-2024_120900: And the IRS has kind of done this sort of back and forth.
• 8:20
  squadcaster-fff3_2_02-29-2024_120900: Some years they're more.
• 8:22
  squadcaster-fff3_2_02-29-2024_120900: on helping the taxpayer understand and resolve the issue.
• 8:26
  squadcaster-fff3_2_02-29-2024_120900: And other times they're more aggressive like, we're coming after you
• 8:30
  Track 1: I think if you're going through an IRS audit, you probably do feel persecuted or hunted a, bit.
• 8:35
  squadcaster-fff3_2_02-29-2024_120900: Yeah.
• 8:36
  squadcaster-fff3_2_02-29-2024_120900: When I'm dealing with the IRS, usually the client is already in kind of a pinch I've never had one go, you know?
• 8:42
  squadcaster-fff3_2_02-29-2024_120900: I'm really excited to work with these guys they're either scared,
• 8:47
  Track 1: Yeah.
• 8:47
  squadcaster-fff3_2_02-29-2024_120900: just terrified that everything's gonna come crashing down or they're furious and they're ready to go to war and.
• 8:54
  squadcaster-fff3_2_02-29-2024_120900: Half of my job is just stepping in between and sort of calming the tension down a little bit.
• 9:01
  Track 1: so you were on the dark side and then now you've transitioned to helping the people and taxpayers and, businesses.
• 9:08
  Track 1: we've got some questions that people want to know, that always come up This time of year.
• 9:13
  Track 1: Let's talk about.
• 9:15
  Track 1: Cash income.
• 9:16
  Track 1: there's been this idea, if it's a cash business, I can hide that.
• 9:21
  Track 1: I can put the cash in my pocket and then I can go, you know, buy, lunch or buy some, some other personal expense.
• 9:28
  Track 1: And then the IRS is never the wiser.
• 9:31
  Track 1: what do you say to people like that and, what's your advice to them?
• 9:36
  squadcaster-fff3_2_02-29-2024_120900: Oh, that is probably the first thing I hear from a client.
• 9:40
  squadcaster-fff3_2_02-29-2024_120900: So the government has a lot of ways to verify.
• 9:43
  squadcaster-fff3_2_02-29-2024_120900: You receive income through a 10 99 or you put money in the bank.
• 9:48
  squadcaster-fff3_2_02-29-2024_120900: is possible for them to look at those records a lot more easily than cash under the mattress.
• 9:53
  squadcaster-fff3_2_02-29-2024_120900: the general
• 9:55
  Track 1: principle in the law is
• 9:57
  squadcaster-fff3_2_02-29-2024_120900: that any financial gain is considered income and income is taxable.
• 10:04
  squadcaster-fff3_2_02-29-2024_120900: So the question is, I sell stuff Through the garage sale or Etsy online, or I just have people pay me in cash.
• 10:10
  squadcaster-fff3_2_02-29-2024_120900: Do I have to report that?
• 10:11
  squadcaster-fff3_2_02-29-2024_120900: the legal answer is yes, you have to report all income.
• 10:16
  squadcaster-fff3_2_02-29-2024_120900: Keep in mind, if you get audited.
• 10:19
  squadcaster-fff3_2_02-29-2024_120900: The IRS will do a thorough job of looking into your finances and your resources and if your.
• 10:27
  squadcaster-fff3_2_02-29-2024_120900: Spending a
• 10:29
  Track 1: a lot
• 10:29
  squadcaster-fff3_2_02-29-2024_120900: than you have coming into the bank account.
• 10:31
  squadcaster-fff3_2_02-29-2024_120900: That's a big flag to an auditor if you've got a bunch of cash.
• 10:36
  squadcaster-fff3_2_02-29-2024_120900: and then the IS says, explain this, that's a big flag.
• 10:40
  squadcaster-fff3_2_02-29-2024_120900: If you are in a business that naturally would have cash receipts, IRS will use just business standards to sort of aggregate the amount of cash they think you ought to have brought in.
• 10:52
  Track 1: let's say you've got a client come to you and they own a restaurant.
• 10:55
  Track 1: restaurants are often cash businesses.
• 10:57
  Track 1: And let's say it's a Mexican restaurant.
• 10:59
  Track 1: the guy sells tacos.
• 11:00
  Track 1: he's selling all these tacos, taking all this cash.
• 11:02
  Track 1: But let's say he's only reporting sort of half of it and the other half of it, he's, not reporting.
• 11:09
  Track 1: How might the IRS.
• 11:11
  Track 1: Catch him.
• 11:12
  Track 1: what kind of power do they have to come into his restaurant, for example, and start, going behind his kitchen and, and counting his tortillas and counting his ground beef, do they do that?
• 11:24
  squadcaster-fff3_2_02-29-2024_120900: Yeah, that's a field audit.
• 11:26
  Track 1: Hmm.
• 11:27
  squadcaster-fff3_2_02-29-2024_120900: auditors will come and do field audits.
• 11:29
  squadcaster-fff3_2_02-29-2024_120900: they come in and they
• 11:30
  Track 1: Yeah.
• 11:31
  squadcaster-fff3_2_02-29-2024_120900: and they try to come up with a reasonable, number, They can come in and they will do, just like you're talking about, they'll take a look at the business, the activity.
• 11:39
  squadcaster-fff3_2_02-29-2024_120900: have statistics that they rely on for general types of business.
• 11:44
  squadcaster-fff3_2_02-29-2024_120900: So a food business, they know that there's a certain percentage that's coming in cash.
• 11:48
  squadcaster-fff3_2_02-29-2024_120900: They look at the bank account and they're not seeing cash deposits that make, that.
• 11:53
  squadcaster-fff3_2_02-29-2024_120900: They're gonna start questioning and they're gonna go down that route questioning to try to figure out.
• 11:58
  squadcaster-fff3_2_02-29-2024_120900: Why is it that we don't see that?
• 12:01
  Track 1: you mentioned a little bit about expenses.
• 12:02
  Track 1: Talk to me a little bit about expense substantiation.
• 12:06
  Track 1: I used to hear stories that in the old days, the auditor would come out.
• 12:11
  Track 1: And the auditor would say, you've got some expenses listed here.
• 12:14
  Track 1: You know, back to the restaurant example, maybe the Mexican restaurant owner says, Hey, I've got this big.
• 12:19
  Track 1: Random assortment of, paper receipts And you just hand the auditor a box of receipts.
• 12:25
  squadcaster-fff3_2_02-29-2024_120900: The shoebox.
• 12:26
  Track 1: Right?
• 12:26
  Track 1: do they take that?
• 12:27
  Track 1: What's the auditor's gonna hand'em right back to you?
• 12:29
  Track 1: What do they do?
• 12:30
  squadcaster-fff3_2_02-29-2024_120900: as the years have gone by, I've seen the attitude towards a box of receipts get less accommodating.
• 12:36
  squadcaster-fff3_2_02-29-2024_120900: An auditor will take that and go, I'm not gonna go through that box.
• 12:40
  squadcaster-fff3_2_02-29-2024_120900: So you need to come up with a summary and show me these numbers actually are.
• 12:47
  Track 1: Yeah.
• 12:48
  squadcaster-fff3_2_02-29-2024_120900: so you have a requirement to keep, reasonable, accurate records.
• 12:53
  squadcaster-fff3_2_02-29-2024_120900: Individual expenses need to have some kind of substantiation that, you mentioned.
• 12:58
  squadcaster-fff3_2_02-29-2024_120900: Substantiation means that there is enough document evidence to show somebody.
• 13:03
  squadcaster-fff3_2_02-29-2024_120900: it needs to be enough to, to reasonably show that that expense occurred, that it was ordinary and necessary to operate the business.
• 13:11
  Track 1: there's a guy in kind of in the area where I live, he lives on a very major street and he's got like two or three supercars parked in the driveway.
• 13:21
  Track 1: And he puts the little magnet of his business, right?
• 13:24
  Track 1: Let's just say it's X, y, z business of this magnet that he sticks on, the supercar and, and his argument, I can already see, I think of you by the way, when I drive by.
• 13:34
  Track 1: His argument is, okay, I've got three supercars.
• 13:36
  Track 1: Everybody on this busy street like me is stopping and looking at the supercars, and it's actually great branding because I'm like, wow, there's three supercars over there, and I see the magnet of his, of his business on the side of the car.
• 13:50
  Track 1: He goes through the audit.
• 13:51
  Track 1: The auditor says that's not reasonable and necessary.
• 13:54
  Track 1: That's not a valid advertising expense.
• 13:57
  Track 1: How do you see that coming out?
• 13:59
  squadcaster-fff3_2_02-29-2024_120900: Yeah.
• 13:59
  squadcaster-fff3_2_02-29-2024_120900: So I've been through that scenario a lot of times I've.
• 14:04
  squadcaster-fff3_2_02-29-2024_120900: a few arguments.
• 14:05
  squadcaster-fff3_2_02-29-2024_120900: I've lost a few of those.
• 14:07
  squadcaster-fff3_2_02-29-2024_120900: It's a mixed bag.
• 14:08
  squadcaster-fff3_2_02-29-2024_120900: the examiner they're not the person who determines what's reasonable and unreasonable.
• 14:14
  squadcaster-fff3_2_02-29-2024_120900: They're in a position to make a determination on behalf of the government, and you have a right to fight that determination
• 14:21
  Track 1: which is an expensive burden by the way.
• 14:23
  Track 1: I own a lot of businesses and it's nearly impossible.
• 14:28
  Track 1: to fight the IRS, my strategy, You get audited, you let'em find a little bit, then you just kinda roll with it Make'em feel like they did something.
• 14:38
  Track 1: Pay'em if you disagree with it.
• 14:41
  Track 1: Screw it because by the time you take him to tax court, they know that you can't go up against the all powerful, mighty Federal government.
• 14:49
  Track 1: So just lick your wounds and go on.
• 14:52
  squadcaster-fff3_2_02-29-2024_120900: Yeah.
• 14:52
  squadcaster-fff3_2_02-29-2024_120900: So this is the part of the show when the IRS is not listening to this conversation yeah.
• 14:57
  squadcaster-fff3_2_02-29-2024_120900: That's an option.
• 14:58
  squadcaster-fff3_2_02-29-2024_120900: Yeah.
• 14:58
  Track 1: Let's hit you with a couple more questions E-filing verse paper filing.
• 15:02
  Track 1: This time of year, you hear all the time one verse the other.
• 15:06
  Track 1: Oh.
• 15:06
  Track 1: If you, if you e-file, you're more likely to get audited.
• 15:09
  Track 1: Oh, no, no.
• 15:09
  Track 1: If you paper file, you're more likely to get audited.
• 15:12
  Track 1: Do you see any truth in that?
• 15:14
  squadcaster-fff3_2_02-29-2024_120900: I would just for a simple answer, I think paper filing probably puts you in more of an audit risk than e-filing, The IRS is moving to a more computer based system.
• 15:26
  squadcaster-fff3_2_02-29-2024_120900: a smarter system.
• 15:27
  Track 1: Yeah,
• 15:28
  squadcaster-fff3_2_02-29-2024_120900: the paper file side it's gotta go through and be processed and either entered into a computer system or reviewed by someone.
• 15:35
  squadcaster-fff3_2_02-29-2024_120900: but it puts the return in front of someone.
• 15:38
  squadcaster-fff3_2_02-29-2024_120900: So the
• 15:39
  Track 1: likelihood of someone
• 15:40
  squadcaster-fff3_2_02-29-2024_120900: a problem with it, I
• 15:42
  Track 1: I
• 15:42
  squadcaster-fff3_2_02-29-2024_120900: go up.
• 15:43
  squadcaster-fff3_2_02-29-2024_120900: That's, that's why I
• 15:44
  Track 1: that, that makes a lot of sense.
• 15:45
  squadcaster-fff3_2_02-29-2024_120900: they're really trying to push everything digital.
• 15:49
  Track 1: Okay, good information.
• 15:51
  Track 1: What about extensions versus no extensions?
• 15:53
  Track 1: So you'll hear CPAs say, I don't ever wanna file on time because that increases your risk of an audit.
• 16:01
  Track 1: you gotta file the extension and move on.
• 16:03
  Track 1: He's shaking his head no, but I, I think CPAs say that because they, they just never wanna file anything on time.
• 16:08
  squadcaster-fff3_2_02-29-2024_120900: Yeah, extension is perfectly fine.
• 16:10
  squadcaster-fff3_2_02-29-2024_120900: It's reasonable.
• 16:11
  squadcaster-fff3_2_02-29-2024_120900: You have every right.
• 16:12
  squadcaster-fff3_2_02-29-2024_120900: it's law.
• 16:13
  squadcaster-fff3_2_02-29-2024_120900: The IRS's system is set up to expect an extension.
• 16:17
  squadcaster-fff3_2_02-29-2024_120900: if you're not ready to file the return file that extension.
• 16:21
  squadcaster-fff3_2_02-29-2024_120900: To avoid some penalties.
• 16:23
  squadcaster-fff3_2_02-29-2024_120900: The extension, however, will not stop your requirement to make a payment on time.
• 16:29
  squadcaster-fff3_2_02-29-2024_120900: Your payment is probably due when the original filing date is due or before that.
• 16:36
  Track 1: There you go.
• 16:37
  Track 1: Let's talk about home office expenses real quick is a big one we get,
• 16:41
  squadcaster-fff3_2_02-29-2024_120900: Yeah,
• 16:42
  Track 1: I mean, everyone's working from home.
• 16:45
  Track 1: They're all looking how to maximize deductions.
• 16:47
  Track 1: if you're self-employed what's the rules on taking a home office expense?
• 16:51
  squadcaster-fff3_2_02-29-2024_120900: so let's say you have a room in your home, you would take the square foot square footage of that space that is your home office.
• 17:00
  squadcaster-fff3_2_02-29-2024_120900: And then the entire square footage of the home, and you figure out what percentage that office represents of the house, and then you can take the actual expenses that you're putting into the office or the expenses that are part of the home that might go towards that office, and you would get that percentage.
• 17:16
  squadcaster-fff3_2_02-29-2024_120900: That's the actual receipts methods.
• 17:19
  Track 1: if you're self-employed and you have an office dedicated somewhere else, is.
• 17:23
  Track 1: it still okay to take the home office expense?
• 17:26
  squadcaster-fff3_2_02-29-2024_120900: if you have a dedicated office, The IRS's view is that your home office isn't necessary.
• 17:33
  Track 1: Really.
• 17:34
  Track 1: Okay.
• 17:35
  squadcaster-fff3_2_02-29-2024_120900: it on the return and it'll compute.
• 17:37
  squadcaster-fff3_2_02-29-2024_120900: And, and the, the thing to consider there though is the home office expense can be phased out very quickly
• 17:44
  Track 1: Okay.
• 17:45
  squadcaster-fff3_2_02-29-2024_120900: on your income.
• 17:46
  Track 1: Last topic we're gonna talk about these big SUV deductions.
• 17:51
  Track 1: The game
• 17:52
  squadcaster-fff3_2_02-29-2024_120900: Uhhuh.
• 17:52
  Track 1: is you can go out and you can buy some huge S-U-S-U-V.
• 17:58
  Track 1: Chevrolet Tahoe, probably a Lincoln Navigator But these big SUVs, and you would take this accelerated depreciation in the first year.
• 18:09
  Track 1: Explain that to our listeners.
• 18:11
  Track 1: Is that still going on?
• 18:12
  squadcaster-fff3_2_02-29-2024_120900: Yes it is.
• 18:13
  squadcaster-fff3_2_02-29-2024_120900: Okay, we're talking about depreciation of a business asset.
• 18:17
  Track 1: mm-Hmm.
• 18:18
  squadcaster-fff3_2_02-29-2024_120900: A cars, or typically a five year depreciation schedule.
• 18:21
  squadcaster-fff3_2_02-29-2024_120900: for a long time.
• 18:24
  squadcaster-fff3_2_02-29-2024_120900: the vehicle was over that 6,000 pounds, which is where you get your light trucks and your SUVs You could deduct in the first year.
• 18:33
  squadcaster-fff3_2_02-29-2024_120900: For a long time, it was up to$25,000 on the bonus depreciation, or 50% of the value on the special depreciation.
• 18:40
  squadcaster-fff3_2_02-29-2024_120900: After 2017
• 18:43
  Track 1: Mm-Hmm.
• 18:43
  squadcaster-fff3_2_02-29-2024_120900: up through 2022, they upped that value to a hundred percent.
• 18:48
  Track 1: Wow.
• 18:49
  squadcaster-fff3_2_02-29-2024_120900: The Tax Cuts and Jobs Act allowed it to be a hundred percent in the
• 18:52
  Track 1: Wow.
• 18:52
  squadcaster-fff3_2_02-29-2024_120900: year.
• 18:53
  squadcaster-fff3_2_02-29-2024_120900: So you buy your
• 18:54
  Track 1: your car
• 18:54
  squadcaster-fff3_2_02-29-2024_120900: you could depreciate it.
• 18:56
  Track 1: why didn't you call me and tell me that immediately?
• 18:58
  Track 1: would've bought like a Tahoe for me and a Lexus for you, for as a thank you.
• 19:02
  Track 1: So a hundred grand in the first year.
• 19:04
  Track 1: Bonus depreciation that ended in 2022.
• 19:07
  squadcaster-fff3_2_02-29-2024_120900: It did.
• 19:07
  squadcaster-fff3_2_02-29-2024_120900: And then they sort of brought it back, but on a decline on a phase out.
• 19:12
  squadcaster-fff3_2_02-29-2024_120900: And so in 23 this last year, so your returns now for any vehicles placed into service in 2023, that special depreciation was 80%.
• 19:24
  squadcaster-fff3_2_02-29-2024_120900: And it will continue to go down until 2026 when I believe it's gonna be phased out.
• 19:30
  Track 1: 80% of the cost of the vehicle,
• 19:32
  squadcaster-fff3_2_02-29-2024_120900: Right.
• 19:33
  squadcaster-fff3_2_02-29-2024_120900: So there's another caveat though.
• 19:36
  squadcaster-fff3_2_02-29-2024_120900: And this fits most people, especially in a small business or self-employed
• 19:40
  Track 1: Yeah.
• 19:40
  squadcaster-fff3_2_02-29-2024_120900: scenario, your business use, if it is not a hundred percent owned by the business and only used by the business, then your business versus personal use is gonna come into effect.
• 19:53
  squadcaster-fff3_2_02-29-2024_120900: And if you don't use that for more than 50% of business.
• 19:57
  Track 1: Hmm.
• 19:58
  squadcaster-fff3_2_02-29-2024_120900: you're not gonna be able to take that special deduction.
• 20:01
  Track 1: I see.
• 20:01
  squadcaster-fff3_2_02-29-2024_120900: do, the percentage that you use it is the percentage of that dollar amount that you can take.
• 20:08
  squadcaster-fff3_2_02-29-2024_120900: So you can see 80% of the value, but if you only used it for 60%, you get 60% of the 80%.
• 20:17
  Track 1: so when you get audited, this is like the first place the auditor goes, right?
• 20:20
  squadcaster-fff3_2_02-29-2024_120900: These are what we call low hanging fruit, the use of vehicles home office deductions.
• 20:25
  squadcaster-fff3_2_02-29-2024_120900: meals and entertainment, And the reason they're low hanging fruit is because you, the taxpayer, have a requirement to make sure you have proved.
• 20:34
  squadcaster-fff3_2_02-29-2024_120900: All that we talked about before, the ordinary and necessary, you gotta keep your mileage logs on the vehicles, you gotta keep the business purpose.
• 20:40
  Track 1: and is it true The auditors they're gonna say, show me your mileage logs on every date throughout the year, or whatever.
• 20:46
  Track 1: And they're gonna want you to substantiate that
• 20:48
  squadcaster-fff3_2_02-29-2024_120900: Yeah, and the term is contemporaneous.
• 20:50
  squadcaster-fff3_2_02-29-2024_120900: They want you to do it in real time, However, let's say you say, well, I produced all this information.
• 20:56
  squadcaster-fff3_2_02-29-2024_120900: I didn't do it at the time, but I was able to go back and look through my calendar and my GPS and I was able to come up with my mileage log, auditor should accept that.
• 21:06
  Track 1: And same thing for meals in entertainment, if you're going to lunch or dinner with the client where they expect you to get the receipt right on the back of the receipt, which you talked about.
• 21:16
  Track 1: Is that really the standard?
• 21:17
  squadcaster-fff3_2_02-29-2024_120900: Well, a business purpose, you don't necessarily have to put down exactly what you're talking about, but it's a good idea to have a note on there about.
• 21:27
  squadcaster-fff3_2_02-29-2024_120900: I mean, if you're, if you're gonna be taking your client to Chick-fil-A and you're gonna write that off.
• 21:32
  squadcaster-fff3_2_02-29-2024_120900: And I hope it's something better than Chick-fil-A, you know, more expensive, at least if it's
• 21:36
  Track 1: I've got four, Brandon.
• 21:37
  Track 1: I've got four kids.
• 21:38
  Track 1: There's nothing better than Chick-fil-A.
• 21:40
  squadcaster-fff3_2_02-29-2024_120900: Yeah, right, right.
• 21:41
  squadcaster-fff3_2_02-29-2024_120900: The auditor's gonna be like, well, how, how do I know that's not just regular lunch, which you cannot deduct your everyday going to Chick-fil-A for lunch.
• 21:51
  squadcaster-fff3_2_02-29-2024_120900: but if you can show, something that will help you and the auditor identify that it was a business purpose.
• 21:58
  Track 1: Okay, well there you have it.
• 22:00
  Track 1: This, most of the last part of that conversation about auditors and substantiation of mileage I'm getting really angry about auditors, so that's not on you.
• 22:09
  squadcaster-fff3_2_02-29-2024_120900: No.
• 22:09
  squadcaster-fff3_2_02-29-2024_120900: That's why I prefer to be on this side of it
• 22:13
  Track 1: So thanks for coming on the show.
• 22:15
  Track 1: That's all, the topics we have for today.
• 22:19
  Track 1: It's tax time tell the listeners out there if they have questions about tax, if they want to get ahold of you.
• 22:25
  Track 1: Your Brandon Frenza.
• 22:26
  squadcaster-fff3_2_02-29-2024_120900: Yeah I make it real easy.
• 22:28
  squadcaster-fff3_2_02-29-2024_120900: You can go to friends of law.com to find me.
• 22:31
  squadcaster-fff3_2_02-29-2024_120900: My email is brandon@friendsoflaw.com,
• 22:36
  Track 1: and friends spelled just like it sounds.
• 22:39
  Track 1: F-R-E-N-Z like zebra a.
• 22:42
  squadcaster-fff3_2_02-29-2024_120900: Correct.
• 22:43
  Track 1: Thanks for coming on the show, Brandon.
• 22:46
  squadcaster-fff3_2_02-29-2024_120900: Glad to be here.
• 22:46
  Track 1: let's go and answer some legal questions.
• 22:49
  Track 1: this is our contractor section, You own a home.
• 22:52
  Track 1: Own a homestead.
• 22:54
  Track 1: You hire someone to come out and do some renovation or remodel work, and these are the most of the questions we get.
• 23:01
  Track 1: First of all, do you have to be licensed to be a general contractor in Texas?
• 23:06
  Track 1: What do you think?
• 23:07
  Track 1: Austin?
• 23:07
  austin_1_02-29-2024_132733: to be a general
• 23:08
  Track 1: I,
• 23:09
  austin_1_02-29-2024_132733: no,
• 23:10
  Track 1: we get a lot of calls from people that have moved here from California and they're in Texas and they're like, well, we're happy to be here.
• 23:17
  Track 1: We're in the land of the free now.
• 23:20
  Track 1: And they go out and they bought a house and they're renovated and their contractor does a terrible job.
• 23:25
  Track 1: And they call us to see the contractor and they want to know, I'm gonna report this to the licensing authorities.
• 23:31
  Track 1: And we have to tell them, well, Texas is a little bit like the Wild West.
• 23:35
  Track 1: We don't require our contractors to be licensed, but if you have a trade come out like an HVAC man, or an electrician or a plumber, those guys are required to be licensed and they're typically licensed by the Texas Department of Licensing and Regulation.
• 23:54
  Track 1: So let's talk about liens and homestead properties.
• 23:56
  Track 1: So the contractor goes out there, works on your homestead, does a terrible job, and then he alleges that you still owe the money and their go-to is always, I'm filing a lien unless you pay me.
• 24:05
  Track 1: what do you say to that, Austin?
• 24:07
  austin_1_02-29-2024_132733: I say good luck because I've never seen a situation where that works.
• 24:10
  Track 1: It is almost impossible to get a lien against a homestead in Texas.
• 24:16
  Track 1: We have some of the strongest homestead protections in Texas.
• 24:19
  Track 1: Article 16, section 50 of the Texas Constitution says you basically have to have a written contract signed by both spouses and notarized.
• 24:29
  Track 1: Before you can get Alina on homestead, So, the ball is in the homeowner's court, very much so on this.
• 24:34
  Track 1: Alright, next question.
• 24:36
  Track 1: Do you have to pull permits when you do work on residential property?
• 24:41
  austin_1_02-29-2024_132733: Almost always, yes, And if you don't, you could be liable.
• 24:46
  Track 1: Generally, if you're in a municipality, a city, they're gonna be in charge of the permitting process and allowing you to work in kind of inspecting and overseeing that.
• 24:56
  Track 1: typically if you are doing structural modifications, you have to pull a permit.
• 25:02
  Track 1: If you're just doing cosmetic, non-structural modifications, then you typically don't need a permit.
• 25:08
  Track 1: here's the big problem though.
• 25:09
  Track 1: Nobody wants to pull permits.
• 25:11
  Track 1: The problem is when you go to sell that house, you're gonna have to fill out a seller's disclosure, and it's going to ask you, have you ever done any work that required a permit where you did not pull a permit?
• 25:23
  Track 1: I.
• 25:23
  Track 1: And you can either lie which is gonna open yourself up to all kinds of liability, or you can be truthful and say yes and explain it, in which case you're gonna have a difficult time selling the house because now the buyer knows and there's no Affordable way to get this back because if you've done all this substantial work and you didn't pull a permit, you can go retroactively, pull a permit, and they're gonna charge you probably some additional fees for pulling a permit after the work has started.
• 25:50
  Track 1: But the real cost is going to be the inspector has to come out and look at everything.
• 25:55
  Track 1: So the inspector doesn't have x-ray vision to look through your sheet rock and everything you did.
• 25:59
  Track 1: So all that's gonna basically have to be redone.
• 26:01
  Track 1: So you get into big problems if you don't pull a permit, Let's talk about damages models for contractors and I'll set the stage on this one.
• 26:09
  Track 1: Homeowner hires a contractor, Takes forever to do the work or, doesn't do a good job.
• 26:14
  Track 1: And it's obviously just ridiculously bad work, or the contractor skips out on the job, takes a little bit of money, starts work, never really finishes it.
• 26:24
  Track 1: and then lo and behold, because it always happens, the contractor will then either claim he's owed more money, threaten to file a lien.
• 26:33
  Track 1: The homeowner and the contractor get into a dispute.
• 26:36
  Track 1: What do the damages look like?
• 26:38
  Track 1: And, and here's usually what it is, but said simply, the contractor is generally entitled to any value that he's added.
• 26:47
  Track 1: So if it was a hundred thousand dollars project and.
• 26:51
  Track 1: He got paid 50 grand and he did 50 grand of work.
• 26:55
  Track 1: Then you're even, So on the damages side, thing I wanna stress is the owner does get offsets, and this goes back to the permitting process.
• 27:03
  Track 1: For example, if you have a contractor that goes out there, doesn't pull permits, the homeowner finds out about it before making the final payment and says, Hey, I've gotta have someone come.
• 27:13
  Track 1: I've gotta go hire another contractor, have to redo all this work.
• 27:17
  Track 1: And pay that contractor.
• 27:20
  Track 1: Well, that's, that's coming out as an offset.
• 27:22
  Track 1: So if that contractor tries to sue the homeowner for breach of contract, the homeowner is gonna raise an offset defense and say, no, I had to do all this.
• 27:30
  Track 1: That's not really your measure of damages.
• 27:33
  Track 1: So that's a quick little scenario on how damages work in the contractor setting and.
• 27:40
  Track 1: The contractor often is gonna try to file a lien as a point of leverage.
• 27:44
  Track 1: We already established that those almost never attach, and if our law firm is hired.
• 27:49
  Track 1: We're gonna jump pretty quickly to a summary lien removal process for failure to comply with the lien filing requirements for Homestead, or we're gonna get that done at some point in a summary judgment, Now we're gonna get into the rant and rave section of our show.
• 28:07
  Track 1: And this one really burns me up.
• 28:10
  Track 1: Are you familiar with a company social media service out there called Snapchat Austin?
• 28:15
  austin_1_02-29-2024_132733: Yes.
• 28:16
  Track 1: And are you an avid snapper?
• 28:17
  austin_1_02-29-2024_132733: don't think I've used Snapshot in seven or eight years,
• 28:21
  Track 1: this is a company that is simply put a hundred percent evil and needs to die.
• 28:28
  Track 1: And they are enabling our youth to do.
• 28:32
  Track 1: terrible things.
• 28:34
  Track 1: The average user on on Snapchat is incredibly young.
• 28:38
  Track 1: kids want to start getting on this platform at about 11 or 12 years old.
• 28:44
  Track 1: Technically they have to be 13 to sign up for it, but Snapchat, never verifies.
• 28:50
  austin_1_02-29-2024_132733: Yeah.
• 28:52
  Track 1: here's the premise of the whole thing.
• 28:53
  Track 1: the snaps, which is basically like a message which is often like a photo or sometimes it's some text.
• 28:59
  Track 1: the messages are essentially deleted after a certain period of time.
• 29:04
  Track 1: So this company is in the business of providing children and people that want to prey upon children like pedophiles and drug dealers, an anonymous communication medium to do elicit terrible, awful things.
• 29:22
  Track 1: I made the mistake of giving one of my kids Snapchat, and when I got on there to kind of audit what was going on, I, couldn't see anything.
• 29:28
  Track 1: It said, you know, message delivered and it, it was gone.
• 29:31
  Track 1: I couldn't see what the conversation was about.
• 29:34
  Track 1: why do we want to give our children and give people a platform to do a illegal things?
• 29:41
  austin_1_02-29-2024_132733: I think that there should be age verification for 16 or 18.
• 29:44
  Track 1: Well do you know why it's 13?
• 29:46
  Track 1: I just learned this, that the reason when a child goes on to sign up for Snapchat, he's given all of these legal consent terms, and I'm thinking, in the state of Texas, you have to be 18 to contract.
• 29:58
  Track 1: Why is it not 18?
• 30:00
  Track 1: And it turns out that in 1998 there was this act, the Children Online Protection Act, which is just incredibly an ironic name.
• 30:11
  Track 1: Bear, in mind, the internet went public in 1993, so we're five years after It went public.
• 30:18
  Track 1: And the legislature, they probably had good intent, decided that children could contract for things at 13.
• 30:25
  Track 1: So Snapchat, you know, all the social media companies, including Snapchat, they don't care about our kids.
• 30:32
  Track 1: If they could have made it 10 or 11 or if they could have eight year olds contract, they would, they just pick 13 because that's the federal law that preempts the state law of Texas to be able to contract at 18.
• 30:46
  Track 1: So they're having our children contract for things at 13 years old
• 30:49
  austin_1_02-29-2024_132733: not even really at 13.
• 30:51
  austin_1_02-29-2024_132733: Right?
• 30:51
  austin_1_02-29-2024_132733: there's no verification.
• 30:52
  austin_1_02-29-2024_132733: So yeah.
• 30:53
  Track 1: Let's talk about streaks.
• 30:54
  Track 1: lemme tell you how this works.
• 30:56
  Track 1: you have Snapchat and the software encourages you to communicate with people and it attempts to qualify and quantify your level of friendship based on the streaks.
• 31:08
  Track 1: I guess that's the consecutive number of communications or that you've done, and I didn't know what this stuff was
• 31:15
  austin_1_02-29-2024_132733: isn't our streak like 230 days right now?
• 31:17
  austin_1_02-29-2024_132733: Aren't we?
• 31:18
  austin_1_02-29-2024_132733: Aren't we at.
• 31:19
  Track 1: Yeah, our producer Aaron, by the way, said that he has a streak of something like six years with a friend of his, so, we know that from psychology, and I'm, I'm reading a lot of this stuff that the child's frontal lobe at the age of 12, 13, all the way up to 18, some people are even saying as high as 22 years old.
• 31:41
  Track 1: Whatever that number is, they're saying the frontal lobe is still developing and one of the strategies to hook our children.
• 31:48
  Track 1: on this app is to convince them that these streaks are somehow rewards
• 31:55
  austin_1_02-29-2024_132733: it's I.
• 31:55
  austin_1_02-29-2024_132733: same psychology behind like a lot of online games with microtransactions where they have like rewards for logging in each day.
• 32:06
  Track 1: So Snapchat, you know, acknowledged that there's some public discord.
• 32:11
  Track 1: So they decided they're gonna allow some features where parents can.
• 32:16
  Track 1: Monitor the users that their children are chatting with, but the parents can't actually see the content of the messages or the snaps.
• 32:27
  Track 1: And I look at that and I'm like, what, you mean to tell me that you have the audacity as a company to tell me as a parent that I shouldn't be able to see what my children are messaging.
• 32:42
  Track 1: I mean, that is atrocious and I'm gonna tell you why they did it.
• 32:46
  Track 1: their whole business model and the whole premise of their existence and their app is for children to be able to do illegal and elicit and bad things in secret and confidentiality.
• 33:00
  Track 1: And if they let that out of the bag, if they let that loose, then their whole business goes away.
• 33:06
  Track 1: there was a couple out there They had a 16-year-old who died from an overdose because the drug dealers are going on Snapchat and they're using it as a platform to sell drugs to kids.
• 33:19
  Track 1: The kid buys a Xanax on Snapchat.
• 33:22
  Track 1: and the Xanax gets delivered in the middle of the night, and of course it's laced with fentanyl and the kid dies And Snapchat is enabling it.
• 33:32
  Track 1: And, they're doing nothing about it.
• 33:35
  Track 1: And we are absolutely in a war for our youth.
• 33:39
  austin_1_02-29-2024_132733: Agreed.
• 33:40
  austin_1_02-29-2024_132733: And on a positive note, at least this is something that it seems both the right and the left can agree, needs to be looked at
• 33:47
  Track 1: This company Snapchat is by far the worst one, and now that I'm all worked up, that brings our show to a close.
• 33:55
  Track 1: So.
• 33:55
  Track 1: Like us, subscribe to us, follow us wherever you get your podcast.
• 33:59
  Track 1: We Appreciate you listening.
• 34:01
  Track 1: If you have legal questions out there and you want us to answer them on the podcast, email us at info@sillawfirm.com.
• 34:09
  Track 1: I nfo at sil, SILB as in boy law firm.com.
• 34:14
  Track 1: Feel free to write the questions in Feel free to record them in audio when you email us, tell us that you want it to be on the podcast.
• 34:22
  Track 1: Otherwise we might think it's just a request to the regular firm.
• 34:25
  Track 1: Now, I'm Phil Silverman with the Silverman Law Firm.
• 34:29
  Track 1: I've been your host, and Austin Black has been my co-host.
• 34:32
  Track 1: So we're signing off.
• 34:33
  Track 1: Thank you for listening, and thank you Austin.