How Dividends Are Taxed and How to Reduce Your Tax Bill

Jeff: I’m Jeff Webb.

Toby: We’re going to be going over a whole bunch of fun stuff today, lots of tax. A lot is going on in the world right now, obviously, but there are some tax issues coming up. I had somebody ask me what about this corporate minimum tax? It’s only for corporations that are booking income of over a billion dollars. When I mean booking, it’s kind of like an AMT, which means it doesn’t matter what your deductions are, we’re going to tax you on it. If you make a billion dollars, you have to worry about it.

All right, what do we got? You could ask your questions. Some people are already doing it. You can go to the chat. You can say, hey. Hey, Sherry. I see you there, and folks from Raleigh. Let me know where you’re from. We’ll call out your city and state if I can see it fast enough. Sometimes they fly through.

Cancun. Oh, my gosh. I’ll be in Claremont, San Diego, Corona, California, Mooresville, North Carolina, Indio, California, Los Angeles, Northern Virginia, and Greensboro. Oh, my God, now they’re going too fast. Miami, Montana, Morgan Hill, New Jersey, Rio Verde, Pennsylvania, Florida, Tulsa, Oklahoma. At this point, they’re just going through too fast.

There’s El Paso, Huntington beach, Dallas, California, Tampa, Lakeland, Arizona, Santa Clara, Lawrenceville, Georgia, Boca Raton, Dublin, California. We got people from all over the place. We would have Hawaii in the house. Aloha. Chicago. The pro surf is going on there right now. Where? Must be…

Patty: Huntington beach.

Toby: Huntington beach, nice. Medford, Oregon.

That was Patty, of course. We have a whole bunch of people on to serve you, including Patty, Troy, Matthew, Dutch, Eliot, and probably more. Ian, Piao, Christos, Eliot, Dutch. Oh, my gosh. We have a lot of people to help you.

If you have questions, you can go into the Q&A and you can post a question. If you have comments, put them in the chat. A comment is, oh, my god, what was that? Or if I ask a question and say, hey guys, what do you think of this? What do you think the answer is? Then go into chat. Otherwise, use the Q&A if you have questions for the accountants and the attorneys. They’ll do their very best to get through.

If you have really specific things to you, we will invite you to become a platinum client. It’s a whopping $35 a month and you can ask your questions away. People say why do you do that? You should be charging $400 an hour like everybody else. Sure. That stinks. We don’t want to do that to you. I didn’t like it when people did it to me so we’re not going to do it to you. There we go. You use the golden rule.

What else do we got? You can always ask questions during the week. You go to taxtuesday@andersonadvisors.com. We get about 500 a week. It is pretty insane and you can go through there. Then we pick the questions to go over out of those questions. My picking process is here’s ten of them, slap them up. Just make sure there’s nothing in there too crazy. All right, here we go.

By the way, I’m going to read through the questions first, then we will go through them. Jeff just wants to answer them all. I’ll be like, Jeff, wait. We’ll go through and tell you what we’re going to answer and then we’ll go through an answer. If you have comments on it, by all means, you can do it. All right.

“What are the tax implications of selling stock and using the proceeds to invest in real estate?” We’ll answer that. Good question.

“I formed a business in Wyoming for anonymity. I look forward to flipping houses after I save enough from wholesaling. I have yet to get an EIN because I’m not sure how I should be taxed. Please advise for a beginner university student. Thank you and I am grateful for all your videos.” We’ll go through that.

“We are partnering with a friend to run an Airbnb business. We will buy the property and our friend will manage the Airbnb business. Does this qualify us as professional investors?” Professional something, we’ll get to it.

“What’s the best way to avoid taxes when getting income from Forex trading? Can I get a hard money loan with no collateral?”

“I bought a real estate course in April of 2022 and then I started my LLC in May of 2022. Can I write off the cost of the course as a business expense on my taxes?” I’ll go into that one, too. The answers you will see are never quite as straightforward as you wish. That’s another great example so we’ll get into it.

“My investment style is to strictly invest in dividend-yielding stocks with the exception of a few growth stocks.” Good for you. That’s actually a smart move. I bet you’re laughing at everybody right now. “I always roll the dividends back into the generating stock. I never sell anything.” In other words, they’re doing a dividend reinvestment plan or they’re just buying more shares directly out of it. “My question is this. Must I pay taxes on the dividends?” Jeff will have to answer that one. That’s the question of the day. Must I pay taxes? Maybe.

“A syndication investment was sold in December because the Schedule K-1 wasn’t March final. Some capital was held back. My CPA says passive losses can’t be used to offset the capital gains. Is he correct?” We’ll answer that one.

“I have heard you speak about revocable trust. Can you tell us the difference between revocable trust and an irrevocable complex trust? I know you have said that with an irrevocable you don’t own anything, but wouldn’t you want that so you can’t get sued?” Yeah, we’ll go over to that, too.

“I have a non-profit mentoring business that I often fund with my personal finances. Is there any way that I can write this money off on my taxes?” Yeah, we’ll go through all these really good questions today. Jeff, what do you think so far?

Jeff: I think they’re good questions.

Toby: Yeah, I think we’re going to have some fun today. Are you ready? We’re going to dive in. Before we do, please go to our YouTube channel and subscribe. In fact, do more than just subscribe, go and subscribe and click the little bell. That way when we put out videos, you can see it. Don’t just go to mine, go to my partner, Clint. He’s really smart and he does more of the asset protection side. I tend to stick around the tax and even some finances.

If you go there, we’ll love you and you’ll see, by the way, if you watch some of the videos. Nowadays, I’m going to give you guys a new one. You’ll see pictures of my cats. I’m going to start giving away pictures of Peaches and Clint. All right, there’s the YouTube channel.

You can also live stream this event. Every other week we do Tax Tuesday on the YouTube site as well as a live stream. We go in there and spend some time—about two or three videos a week—and you’ll see we even have some short ones, most of them in the 20–30 minutes range. Some will get a little longer, like the Tax Tuesdays, but the regular videos are usually 30 minutes or less, and they’re pretty jampacked. You’re ready?

Jeff: Let’s go.

Toby: “What are the tax implications of selling stock and using the proceeds to invest in real estate?” Jeff?

Jeff: That depends. If I sell some stock and then go out and buy some real estate, one actually has nothing to do with the other, except in one circumstance that I can think of is if you buy real estate in a qualified opportunity zone. If I sell my stock and I have a gain on it, take those proceeds and buy real estate in a qualified opportunity zone, I can defer my gains for a time.

Toby: You’re looking at the sale of stock being a capital asset, investing into another capital asset. We don’t really care whether you’re selling stock and buying more stock, selling stock and buying real estate, or selling stock and buying crypto. Those are all taxed as capital assets. Crypto, we don’t know what the heck it is. We’ll call that a currency, but it’s taxed as a capital asset.

If you sell your stock, it’s either going to be short-term or long-term gain because it’s capital and you pay your tax consequences. Jeff is 100% correct. The only way to defer capital gains right now is if it’s real estate, you could do a 1031 exchange. If it’s stocks, you can do a qualified opportunity zone. And it’s only going to be deferred for a couple of years.

I think it’s going to be recognized in 12-31-2025 so it will be recognized in 2026 and that’s yay, you could hold off some of it, but then you have to jump through the qualified opportunities zone hoops. Maybe it’s a good deal. Maybe you have some qualified opportunity zone. Opportunities, you sell your stock.

Could we offset some of the selling of the stock? Let’s say the stock was at a loss and you have some real estate that’s a gain. Could you sell the real estate and use the loss?

Jeff: Yeah, you could sell the real estate or actually any other kind of asset that you could get a capital gain from to offset that loss, and vice versa. If you were selling the stock at a gain and you have some lost leaders out there as some of us do from the market, you could sell that. I don’t think you’re going to want to sell real estate at a loss right now, but there may be other losses that you can—

Toby: And […] real estate, hang on to your stocks. Frankly, you shouldn’t be selling anything at this point. Nobody times the market. Keep buying beyond that. If you have some crypto at a loss, you could sell it and buy it back and offset the sale of your stock. This is weird.

If I sell a stock, you have something called the wash-sale loss rule that restricts us from being able to buy it back within 30 days of the sell before or after so it’s like a 60-day stretch. Regardless, I can’t buy it back. I can’t create a loss. That does not exist with real estate or with crypto. If I sell stock and I want to invest it into real estate and I’m sitting on some bitcoin that’s gone down a little bit, it might be wise to say, you know what? I’m going to offset that.

Jeff: I bought bitcoin at $69,000. It’s now trading at $23,000, maybe a third of what I bought it for, but I know it’s going to come back, Toby.

Toby: I could sell it, take that loss, offset my selling of stocks and buy the crypto right back.

Jeff: And be right back in the position I was already in.

Toby: You got it. You have your transaction costs depending on where you did. You could avoid it or you could do it.

“When do you do the 1031 exchange in order to avoid taxes against real estate capital gains?” Anytime you sell, Cici. As long as it’s an investment property, even if you held it for six months. As long as you follow the rules of the 1031, you could exchange real estate and buy more real estate.

I could sell a piece of property and buy ten pieces of property. I could buy one piece of property. I could buy land. I could buy a mobile home park. I could buy a condo. I could buy a single family. As long as it’s real estate, I can swap it as long as it’s of equal or greater value.

“Do I do it prior to selling the property?” No, you have to have a 1031 exchange qualified intermediary when you sell to make sure that you do not receive the funds or you do a reverse exchange where you do the same thing. You buy a property with a qualified intermediary, then you sell the previous property. That’s called a reverse exchange. You could do that, too.

If you have questions on that, Cici, either reach out to us or grab a 1031 exchange facilitator, because you can avoid millions and millions of dollars in taxes by doing the 1031 exchange. Hopefully, we beat these tax implications, selling stock, and using the proceeds to invest in real estate to death.

I’m going to do one more, which is, “Hey, I buy real estate and depreciate the heck out of it. Can I use that to offset my stock sale?”

Jeff: Yes, you can, because losses of other types of income can offset capital gains. It’s just that capital losses can offset a lot of different things.

Toby: Real estate losses?

Jeff: Well, that’s assuming that you do qualify to take those deductions. It’s cost segregations and depreciation.

Toby: If I cost seg real estate and it’s passive, I cannot use it against my capital gain, unless I’m an active participant, or real estate professional, or that real estate doesn’t qualify as rental real estate.

It’s an Airbnb or VRBO, in which case then it’s just an ordinary loss. As long as I materially participate, then I could actually use it to offset my capital gains. But I never would because capital gains, depending on if it’s long-term, I would never want to use ordinary losses against it just because it’s taxed at a maximum of 20% anyway, the long term capital gains. But if it’s short-term, I would use it for sure.

Anyway, you see how there are like some little pieces to this? I wish it was just straightforward, but actually, I don’t know if I do. I don’t think we would be sitting here if it was straightforward. I think I’d probably be digging ditches somewhere. I don’t know what I’d be doing. Buying more real estate.

All right. “I formed a business in Wyoming for anonymity. I look forward to flipping houses after I save enough from wholesaling. I have yet to get an EIN because I’m not sure how I should be taxed. Please advise for a beginner university student. Thank you and I’m grateful for all your videos.” Jeff?

Jeff: Corporation, that’s all I got.

Toby: Yeah. If you are flipping or doing any activity, what type of corporation would you recommend for a young person?

Jeff: What type of corporation are you talking about, LLC versus Inc?

Toby: S versus C.

Jeff: Definitely C. If I’m doing wholesaling and possibly flipping, I’m going to do a C corporation.

Toby: For those of you guys who don’t know what flipping is or what wholesaling is, flipping is I buy a house to sell it and it’s not going to be considered a capital asset. It’s going to be considered inventory. It’s no different than if I had a grocery store and I bought Cheerios and stocked the shelf, or if I had a car lot and I had lots of Corvettes and I sold Corvettes. I don’t get to write it off until I sell it and it’s a cost to good sold. But it’s ordinary income and it’s subject to self-employment tax.

Wholesaling is when I put properties under contract and I sign them, or I sell them to somebody else, or I buy a house really quickly and immediately sell it, which means I’m like a dealer again, or I’m like a flipper. In any of those, it’s no different than making pizzas. It’s an active ordinary income.

Now, Jeff is going to a C Corp more than likely because we know we can zero it out. We’ll have lots of expenses all over here, this little cell phone here, 100%. I have a corporation. I don’t have to figure out what portion is personal versus business. If the business gets a benefit from it, it writes it off 100%. This computer writes it off 100%.

You’re a college student, I’m sure you have lots of things that you’re having to incur that you can reimburse. If it starts making too much money, now we might want to consider making an S selection if you’re going to use that cash and you’re going to live off of it, but otherwise, you still get a benefit.

Some people don’t realize this. You can get a benefit even with the C Corp if you’re paying it out all on salary. There are still some benefits there because of the way the employment taxes work versus a sole proprietor.

A sole proprietor, in my book, is the wrong entity to be. The wrong thing to be just because your audit rate is, as of today, about 400%–1600% higher than its corporation counterpart. And you lose those audits on average 95% of the time if you’re a sole proprietor.

I don’t want to invite that into my tent. I would prefer to just not be molested and I can write off so much stuff with my C Corp, then I’m not too worried about it. Even if you make a bunch of money in a C Corp, here’s a hint. If I don’t want to pay it to myself, I might start loaning it on projects so when you do your first flip, you could actually do it through that C Corp.

I might set up a separate LLC just for that particular flip, depending on the value of it, but from a tax standpoint, that C Corp is now your friend, and it’s going to be protecting you liability and giving you a lot of tax benefits.

Jeff: I agree with you about setting up an LLC for each flip. What about wholesaling?

Toby: Wholesaling, I’m not too worried about it. I would probably do that through the parents. If I’m doing a lot of wholesaling and I’m concerned if I’m actually taking title and I’m going to do a double close, I might use a separate entity for that if I’m worried about getting sued ten years from now for something I’m doing, then I might do it.

I’ve only seen that happen once and it was a change of title up in Seattle, of all places, where they were about the 10th owner back and they got sued. Again, as long as you have good insurance, you’ll be able to take that out. By good insurance, I mean for your wholesaling you’re probably not carrying much, but make sure you have personal insurance and make sure that you have an umbrella policy to cover you in the event that you don’t have your regular homeowners or renters policy that doesn’t cover you.

I’m not too worried. You don’t have anything to take away honestly. When you’re getting started, I’m not too worried about lawsuits. A lawsuit nowadays, four years, $250,000 probably to take it to trial, and you can make them suffer. Most people don’t. Usually, with a lawsuit, it’s more than nuisance value and the emotional toll and taking time out of your day to have to deal with it.

As long as we’re isolating our target, their win, just so you know, let’s say that it’s somebody like you’re wholesaling, you’re doing your thing, you’re even flipping like Toby, but there’s a whole bunch of value in this thing. That thing gets lightning sued, it’s not overnight.

You’re going to keep operating your business. You’re going to pay yourself a salary and guess what you’re going to quit doing? You’re going to quit buying any more deals in that particular entity and it’s going to be drained of cash on its own, and there’s going to be nothing for them to take. All we’re trying to do is keep it off of you so they can’t follow you around the rest of your life.

All right, a fun one. Here’s an interesting one. “We are partnering with a friend,” I should say current friend, “to run an Airbnb business. Now, we will buy the property and our friend will manage the Airbnb business. Does this qualify us as professional investors?” Jeff?

Jeff: Actually, it does the opposite from my point of view. If you’re not managing that Airbnb business yourself, your partner is actually going to have more material participation than you do. The only way to defeat that is if you both have more than 500 hours of time. I don’t know how you do that if you’re not managing that Airbnb business.

Toby: You’re buying the property and they’re going to manage it. You’re the owner. This is where I always get confused. Why would you give somebody a piece of your property if you’re the one buying it? Let’s just say, all right, I set it up. We throw everything into an LLC. We’re partners. I have a lot more basis. I have this real estate and I’m going to depreciate it. You would be what’s called a passive investor in that enterprise.

It’s no different than if Jeff works at the pizza shop. I just put the money in. I bought the oven. I’m passive. He’s active. I still can’t take that deduction against my ordinary W-2 income or things like that. It’s not going to help me. No, it does not qualify you as a professional investor.

Professional real estate status is on rental properties only. If it’s a typical Airbnb property, it’s four days or less on average. About three days as their average right now. That is not a rental activity according to the IRS. That is a regular business, just like I’m running a pizza shop.

Your friends, if they’re managing it, would be the material participant. They would get the deduction that would flow through under their return and offset their W-2, you would not.

Let’s do another one. If you were able to qualify as a real estate professional because of all your other rental activities, and it’s hard to qualify, but let’s say one spouse did nothing but real estate or was in construction, or as a real estate agent, or did flips or whatever, wholesale, and they qualified for 750 hours. It’s what they did the most of their time. Then you both combined materially participated in your real estate, what I would be doing is taking that property, putting in its own LLC. You own it 100% and then I might lease it to the Airbnb that you own with your friend.

That’s more than likely what I’d be doing under these circumstances. I may even do that regardless. Say even if somehow you are going to qualify as a material participant able to take the write-off, I would probably side with let’s keep the real estate separate from this. There’s no reason to do it. You guys can split up the income all you want, but I want to make sure that that house always remains your house.

Jeff: I want to go back to the whole partnering with a friend thing. I kind of feel like when we say partnering, we’re not talking about a partnership. Either I own the business and I’m either hiring him as an employee or 1099 contractor, or we set him up in his own property management business and have him be the third party and not actually own a piece of that.

Toby: Yeah, that’s what I was just thinking. I would have the real estate separate. I might lease it. I might set up a corporation if I wanted to do it together. When I say do it together, meaning the Airbnb business, not the rental. I own the rental. I’ll put it in here and I could even agree.

Let’s say that I owned a property, I set up a business, and I lease this to that business. I say, Jeff, only pay the lease if it’s capped at 50% of what we met. We could do something like that and then I could pay for it. Then I could agree to Jeff getting a guaranteed payment or if it’s an S Corp, you get the salary because you’re the only one working.

Everything else comes to me as a lease payment and I can offset it with depreciation. How much tax would I be paying on that? Zero. Anyway, I could do it that way and in that way also, Jeff isn’t eating up my depreciation. I’d be very mad at that.

Somebody says, “Can I use my personal residence as an Airbnb? What qualifies as a short-term rental and its benefits to offset my W-2 earnings?” You can and let me just give you a couple of rules unless you want to go over them.

Jeff: No, go ahead.

Toby: If it’s 14 days or less, you don’t have to recognize the income. I wouldn’t even depreciate it under those circumstances. If it’s over 14 days, then I’m going to take that portion of the home and I’m going to depreciate that portion. If it’s the house and it’s 25% of the square footage, then 25% of the improvement value would be depreciated. I could accelerate it.

If I am the one managing that rental, yes, I could offset my W-2 with that depreciation. I don’t know how much it would be. It depends on your situation, but yeah, people house hack is what we call that and they do it all the time. Some people just do it for 14 days because they don’t have to pay tax on it and then they don’t depreciate, and they don’t have to worry about any issues when they sell the property.

You might have some recapture when you sell it under those circumstances if you’re depreciating it, but you could actually 1031 exchange that. You could actually 1031 exchange just that portion of the home. You can still use your 121 exclusion. Weird stuff. All right. I think we beat that one to death, too, unless you have anything else.

Jeff: No, the horse is dead.

Toby: Poor horse. “What’s the best way to avoid taxes when getting income from Forex trading?”

Jeff: The IRS is actually very hard on Forex traders. I don’t know why they’ve become such a focal point. There is one tool called 988 election. When you do Forex trading, it’s subject to the 1256 rules, which basically says that no matter when I bought and sold it, 60% get treated as long term and 40% as short term. I got this right?

Toby: Yup. Okay.

Jeff: The 988 election allows you to change those capital gains into ordinary gains. Why would I want to do that? It doesn’t really make sense. Well, it makes sense if you’re not very good at this Forex trading and you’re losing money.

Toby: Usually, you don’t see deductions against Forex. You can create it. The way that you create it typically is to have a structure for the forex trading managed and partially owned by another corporation so you might have a partnership owning the Forex account, 80% and 20% to a corp.

The 20% goes to the corp automatically and the corp would use that money to fund all the expenses. Jeff is absolutely right. You’d have 1256, the 60/40 split on anything that’s futures looking. I think, that is what it’s going to boil down to. I don’t think it’s at all and I think it defaults. I thought the default was the 988 on Forex. Futures contracts are default 1256. right?

Jeff: Yes. I wasn’t sure about which way it defaulted. I do know you can revoke that election, but you got to do a private letter ruling.

Toby: I think you can do it per transaction. I think you can actually state unless you’re going to treat it all as one. I think that it’s, don’t quote me on it, but I believe that it’s 988. You said it was the exception of the rule. I think it’s the rule and the exception is 1256 if you’re designating a future as something that could happen in the future, then I could treat it as 1256. Otherwise, currency trading is going to be ordinary income. I think it’s always ordinary income. The only one that’s not is futures, for sure, and usually that’s commodities.

Then if you’re doing future-looking Forex contracts, then you can elect to treat it as 1256, I think, but it gets muddy no matter what. Here’s the rule. If you’re doing Forex trading, make sure you have an accountant looking at it, and then by all means, if you’re not profitable at it, which is about 80% of Forex traders. Is that fair?

Jeff: It’s hard to beat the computers.

Toby: It is really hard to beat the computers. It’s tough. Anybody that’s actively short-term trading, I know those of you guys who make money at it, but I’m just saying that in our experience and the studies have shown this, too, you have about a 4% success rate. It’s hard to time the markets.

I’m going to get some hate mail. A bunch of people are probably going to leave. You just told me I’ll never make money. No, I’m just saying that you better be really good at it. You better have really good mentors. You better have people that are watching you while you’re doing it. Trade as a group and be smart about it. If you’re gambling, you’ll lose eventually and it’s always big.

“Can I get a hard money loan with no collateral?”

Jeff: Maybe.

Toby: We get them all the time, actually.

Jeff: This is going to depend solely upon the lender. A hard money loan is money from a private lender, not from a bank. If they want collateral, they’re going to ask for collateral.

Toby: This is where it gets really funny. Whenever you have lending, remember the three Cs—cash, collateral, or credibility. If you have cash, you can always take a loan out against the cash. I think I may have talked about this last time where anytime I opened up a business, I’d buy a CD at that institution. I’d use it as collateral to get a line of credit.

Then eventually they wouldn’t need the CD as collateral, and now I just have a business that has an open line of credit and then over the years it would expand. Even now we have businesses that have large lines of credit. We just don’t use it that often. That’s the cash.

Collateral is like if I’m doing a car loan, house loan, something where there’s something that they could take. The home loan is the obvious one. I’ll loan you money, but I’m going to take a mortgage out against your property.

Then you have credibility where it’s just your credit score. We’ve all been young people, and young people have no credibility so even when they do a collateral loan, like on a car, they may still say we want somebody else to co-sign.

When you’re doing a hard money loan with no collateral, what you’re really doing is doing a personal loan. Yes, there are lots of people that will give you a personal loan. There are credit cards that will give you cash advances. There are people that give you a line of credit just off your signature, that’s all it is.

Hard money usually says non-traditional lender may be non-bank, but you can get a loan without collateral. Speaking of collateral, you can also get loans with collateral. I was just emailing back and forth with somebody at Morgan Stanley and they still have loans below 2% on their securities-backed lines of credit.

Again, the collateral is the stock. They will loan you now because what do you think that’s going to happen in the stock market? They’re looking at it going, this is the worst start of the S&P since 1970. There’s one direction it’s probably going to go. Inflation is going nuts, which is a driver of growth.

Even if we went into a recession, they’re probably saying, hey, you know what? You’re probably going to be pretty good. They’ll give you a securities-backed line of credit, usually up to 70% at really low amounts of money, even though mortgages are up. Everybody goes, mortgages are 5.5%. Yeah, there are still 2% and 3% loans out there.

Jeff: But the Fed just raised their rates by 3.25%. Since then, mortgage rates have dropped.

Toby: Because they’re not tied to each other.

Jeff: I know they’re not, but it just still doesn’t make sense.

Toby: Here’s a question: what are the mortgage rates tied to? What do they follow? Does anybody out there know on chat? What are the mortgage rates tied to? Is it the Fed or is it something else?

Let’s see. Bonds. Somebody says bond. It’s the 10-year Treasury and we inverted. In other words, they’ll give you more money for the bond for a shorter period of time than they’ll give you for the long period, which tells you […], so you have a 10-year Treasury. What’s going on is the 10-year Treasury is going down. The short-term treasury has been going up. It’s called inversion, which they always call recession.

So the 10 and 2. The 10-year Treasury has gone below the 2-year Treasury. The 10-year Treasury is slightly below the 3-month Treasury. It’s like within a few. I forget what it is, but it’s really close, like a fraction of a percent. Then they’ll start screaming we’re in a recession again. Actually, they’re already screaming right now, recession. I just tried not to listen to them.

The 10-year Treasury has been down, which is, again, why has the mortgage interest rate been shooting up? The 10-year Treasury has been doing it in the garbage all year. This is the first year (I think) where we had the first six months where bonds were down and stocks were down. Usually, it’s one or the other. But it’s a funky time, if you like those types of things.

If you have an economist, you just walk up to him and go, did it invert? And then they’ll be like, yes, and you go, oh, the 10 and 3 inverted? And then they’ll go no, no, no, no, the 10 and 2, the 10 and 2.

All right. “I bought a real estate course in April of 2022, and then started my LLC in May of 2022. Can I write off the cost of the course as a business expense on my taxes?”

Jeff: That depends. It’s going to depend primarily on how your LLC is being taxed. If it’s being taxed as a corporation, a C corporation, you can use those real estate costs, have your C Corporation reimburse you for them, and they will be startup costs to your C corporations.

Toby: Is there a cap on that?

Jeff: There is not a cap exactly. It’s kind of capped on how much you can deduct in the first year. So if I paid $5000 for my course, I’m going to be able to deduct all that in the first year.

Toby: So that’s a startup expense.

Jeff: Yeah.

Toby: That’s option number one. What’s option number two?

Jeff: You could deduct it as the real estate course is being used. That is if I paid for it in April 2022 but I’m actually not doing it anyway.

Toby: What if you’re already a real estate investor?

Jeff: Oh, if you’re already a real estate investor—I assume not in this case. Or a real estate agent even.

Toby: Anything. I could write it off.

Jeff: If this meets your need for your current occupation, then yeah, you could write it off immediately.

Toby: I would think you could still write it off even if I’m an investor, because we had the Woodward case that was actually a guy that went to one of our events. He didn’t bother to listen to us, listen to his accountant and got tased. It being a tax case—not that we took glee in that—it was weird because we had our notes on it. Always cover your katush. It was kind of funny. The guy had not purchased any properties yet. Took a course and his accountant told him you could write it off. You’re not in business yet.

The reason that Jeff is saying use the corp is because by setting up a corp if it’s in business, there’s only one reason you’re setting up a for-profit corporation. Whereas you and I, they look at us, what are you doing? Do you have rent or do you have real estate? Yes. So if you’re a flipper, you could definitely write it off if you’re already engaged in it in your individual name or in an LLC.

If you’re an investor, you might have a little harder road to hoe because it may not be considered an ordinary necessary expense that you can use. If it’s a C or an S corp, then we don’t have to worry, or an LLC taxed as a C or an S, then we can definitely write it off. Worst case scenario—we’re writing it off over time. Best case scenario—you already have revenue coming in there. It’s literally just reimbursing you for that education.

Jeff: One thing I don’t like about putting on Schedule C—and it may be a legitimate expense; I’ve been flipping for a couple of years—if I have this giant education expense that I’m putting on my schedule C, it may be legitimate, but it may be waving a flag to IRS to come look at me.

Toby: Did I mention that sole proprietors lose their audits 95% of the time?

Jeff: I’ve heard that.

Toby: Yeah, they get absolutely ripped. You don’t want to be a sole proprietor especially if you’re on the audit. They just don’t do well. Your stats are not in your favor.

Speaking of being in your favor, if you want to put some stats in your favor, come to a tax and asset protection event. They’re absolutely free. We do them about twice a month and are always a little bit different. We have one coming up on August 13. You can certainly register again there. It’s well worth your time.

Has anybody been to the tax and asset protection event? What would you tell somebody who is thinking of it? Let’s see. Somebody says, “They figure sole proprietors are less sophisticated and won’t fight back.” Yeah, a little bit. You know who they love to audit? They love to audit the people making or taking the earned income tax credit.

Benny says, “I’ve been a couple of times. I highly recommend it.” Agnes says, “Yes, I went several times. Go to the tax and asset protection.” Now somebody’s just really like, do it, go. “You always learn enough to get a headache. That’s a great tax event. It’s incredible, so informative.” Thank you. Thank you. Sign up for the next session. So I won’t keep reading that.

Jeff: You need to go more than once because of that headache gets less and less the more often you go.

Toby: This is good. A lot of people down there are going crazy. “I highly recommend the workshops.” “Time well spent.” “I’ve been a couple of times and I suggest reading Clint’s book.” It’s one day Saturday. All right, let’s keep going. You guys can always come to events. We do a ton. You go to YouTube and come here. There’s never a bad time to get some education.

Someone says, “What do you think about buying tax liens?” They’re great. Absolutely great. You’ll probably end up with a lot of properties depending on where you go.

Jeff: I was going to say do you want to end up with the properties?

Toby: Yeah, some people buy them just because they want the interest. But to me, it’s like you don’t really lose. It just depends on where you’re at.

Somebody says, “Any plans to do an in-person event?” We’re talking about doing one in December, talking about it. Every time I see big in-person events, I’m always thinking it’s a super spreader event.

No matter what someone’s going to walk away and say that they got sick from something, but we’ll probably start doing them again. It’s fun to talk behind the camera, but it’s more fun to see people and see what’s up. Plus, you can goof off together. All right.

Jeff: You skipped one.

Toby: Oh, did I skip one? All right. Yeah. All right. “My investment style is just strictly to invest in dividend yielding stocks, with the exception of a few growth stocks.” I’m good with that, by the way. I would not be investing in growth stocks. Never been a big fan of it, but now I’m less of a fan of it because that is gambling.

“I like companies that have good, free cash flow and pay it to their shareholders. But I’m going to invest in something I want to get paid. I don’t want to give companies an interest free loan. I always roll the dividends back into generating stock. I never sell anything. So my question is this. Must I pay taxes on the dividends?” Jeff?

Jeff: My investment strategy is to throw lots of money at growth stocks that have never turned a profit. I’m just kidding.

Toby: I hope that someday it will be worth something. Then when it goes up, you’re like, yes, I made money and then they take a big chunk of it.

Jeff: Let’s put it this way. The dividends that you receive during the year that you’re reinvesting through the DRIP dividend reinvestment plan, are taxable income to you. So I have $100 stock, I receive a $1 dividend. I have to report that $1 of dividend, but that gives me $1 basis in that dividend. Whether or not you’re actually going to have to pay taxes on those dividends is going to depend on whether you fall in the income brackets.

Toby: Dividends are taxed as?

Jeff: Corporate dividends are taxed as a long-term capital gain.

Toby: Yup. In case you didn’t get that, they’re going to be taxed at 0%, 15%, or 20%, depending on how much money you make. If I’m a typical person, let’s say that I’m an average individual, according to the census bureau I’m a couple and I make $92,000 a year, how much would I pay on my dividends?

Jeff: You’d pay 10%. I think they’re cut off at $80,000 something.

Toby: $80,000 something, but I have a standard deduction. That was a trick question. I love it. I just sucker punch Jeff all the time.

Jeff: He is correct.

Toby: Yeah, so I take my standard deduction. I probably paid zero on it. But yeah, you’re right, it’s $88,000 married filing jointly. Anything below that is zero long term capital gains rate. So if you have dividends, you might be paying zero on it. You might be thinking you’re paying tax on it, but it depends on where you’re at. Otherwise, between $88,000–$527,000-ish, you’re paying 15%, which is yay, still great.

Or if you don’t want to pay tax on your dividends, guess what you do? You invest through your 401(k), your IRA, your Roth or some account where it’s tax-deferred or tax-free in the case of a Roth. Then you just let it […]. DRIP is actually even though you’re reinvesting it, they still make you pay tax on it. But it’s preferential tax treatment.

Jeff: Nice thing I like about the DRIP, too, is it’s a form of, what do they call that, where your average…

Toby: Oh, your dollar cost average.

Jeff: Dollar cost averaging at the same time.

Toby: Which by the way, there are a ton of studies on it. You’re better off investing through a bear market and continuing to consistently invest and trying to time the market over and over and over again. In fact, if they show you that if you had time the market perfect and invested, versus if you just continually invested through bears and going up, you’re actually better off just to continuously invest.

I know some of you guys are like, no that’s not the case. I heard from this guy who sold me option trading course that’s not the case. Yeah, it is. Probably the best investor on the planet is a guy named Warren Buffett. The whole thing about Warren Buffett is, he’s a really great investor, because you pretty much have 100%. If you’re in dividend stocks, you have about a 100% chance of having profit, having great success, and completely getting all your money back out in 20 years.

It’s like 100% versus everything else where you have a real chance of loss. So it’s one of those few things where I could say it with about 100% certainty, if you invest your… If you do this, I don’t care whether the market is going down 50% up. Historically, you are going to be making money—period—on your investment. Not just your money back, but you’re actually making returns. There’s nothing else that really gives us that.

Oh, it’s the Pelosi. You’re just mean. Lance is being mean. He’s picking on our Speaker of the House and her husband, who are excellent traders. But the truth is, Lance, if you look at Unusual Whales, a bunch of Republicans beat them. They just don’t talk about it, which is like, let’s just be honest, it’s just freakish that they let Congress invest.

In fact, up until what year was it? I think it was about 15 years ago that they stopped them from being able to insider trade. It used to be legal. When I got into this business, it was legal for Congress to insider trade.

Somebody says, “You are correct. I am an Unusual Whales member, too. They are doing great research over there.” See, you have to be a whale. You have to be an ape and you have to be a whale. If you don’t know what those are, don’t know what […]. All right. Let’s keep going on.

Oh, by the way. If you’re doing this—this is one thing—whoever it is that wrote this, you want to add some money to your collection? Start selling out of the money covered calls against those stocks and you’ll get an extra little bit.

“My wife holds all stocks and has about a $3000 paid dividend and $10,000 DRIP. I earned $200,000 but she does not. Should we file married but separate?” That’s interesting. I’m sorry, somebody asked that in the chat. “My wife holds all the stocks” and she made about $3000 and dividend and threw in $10,000 in DRIP. You would be at zero. But my guess is that you’re probably going to be better off filing jointly. But you should have your accountant calculate that.

Jeff: Yeah, married filing separately. No, I won’t say never.

Toby: Rarely. Rarely.

Jeff: Works out better. I sat there and said that to one person. The only reason I pause is because somebody says, I think I’m better off doing it one way. I was like, there’s no way and then I went calculating. I was like, yeah, you’re counting smart. I’m an idiot. So here’s the rule that you should never violate. It’s the three rules actually, of all things financial.

If you guys don’t know these, this is the one thing where you might want to write this down, is to calculate, calculate, calculate. Those are three rules. Rule number three is look at number one. Do your calculations and don’t listen to dorks like me when we pontificate. Get your pencil out. Let’s figure out what it is.

All right. “A syndication investment was sold in December. Because the Schedule 1 wasn’t marked final, some capital was held back. My CPA says passive losses can’t be used to offset capital gains. Is he correct?”

Jeff: I’m going to disagree with your CPA. Here’s why. Normally, when you get a well prepared K-1, it gives you a list of activities. This syndication could own a couple of properties. Each of those properties are an activity. The LLC, the syndication itself, is not the activity, even though it couldn’t be an activity because of its ordinary losses and stuff like that, but probably not. Once you sold your activity, which was that piece of real estate, that should have freed up all the losses for that piece of real estate.

Toby: 100% with one exception.

Jeff: Yeah, the exception.

Toby: What’s the exception?

Jeff: If you’re a real estate professional that has made an aggregation election, and you have other properties aggregated with this, it does not free up that loss.

Toby: But you took the loss already.

Jeff: Yeah, you’ve been taking the loss.

Toby: Unless you already had the loss and then made a real estate professional election, which is why we look at your loss carry forwards before we do that, but you’re absolutely right. Yeah, the final return means nothing. What they care about is they’re in a liquidating event and the liquidation event that the IRS will look at is did the syndication liquidate its assets?

If it has three properties, and it only sold one at a loss, and the other two are still holding, then that’s not substantially all of its assets. If it sells two, I think you’re closer to substantially all of its assets depending on the value, but if it sells three, it’s definitely done a liquidation event for itself and then whether or not it continues to operate is immaterial. The other option is you sell all your interest in the syndication, then you would be able to free up that loss.

Jeff: Now, here’s something else to think about. I’m holding this real estate activity in the syndication. I sold it at a gain. That capital gain from selling is passive income. That passive income, passive capital gain can offset any passive losses you have in that activity. So, there’s more than one way to skin a cat.

Toby: In other words, your CPA is wrong. Just going to have fun. No, there might be one of the exceptions as to why. We don’t know what they’re looking at. But my guess is if they’re thinking that that has to be a final return, there’s no such thing that I’ve ever seen.

Jeff: From what you’ve said, we believe your CPA may be incorrect.

Toby: Yeah, you’re so nice. Your CPA may be incorrect. We’re not perfect. I’m not a CPA. I’m just a lawyer. Your CPA, you’re perfect. But most CPAs are just human beings.

Somebody says, “What’s the second one?” Oh, the second one of the three rules is calculate, John. John, it’s calculate, calculate, calculate. We have to calculate. What’s the third one?

Jeff: To calculate?

Toby: Possibly. I can’t remember. I think the third one is looking at the first one. What was the first one?

Jeff: Oh yeah.

Toby: I forget. All right. “I know you said that with an irrevocable trust, you don’t own anything. But wouldn’t you want that so you can’t get sued.” All right. Jeff, what do you think? We’lll break this into two pieces.

Jeff: The revocable trust is your typical grantor trust, living trust. You can call it any number of things. It really doesn’t mean that much until you die. You can place assets in the revocable trust, but you can also take the assets out, so they’re never permanently there until you pass away.

Toby: They’re going to be taxed as a grantor trust.

Jeff: Yes.

Toby: So revocable trusts, there are actually rules. Even if it’s an irrevocable trust, that has the ability to change and swap out beneficiaries and things like that. They’re still going to say that’s a grantor trust, which means the trust doesn’t exist for tax purposes, it’s going to go to the grantor.

Jeff: Yeah, that’s a great point. So my million dollars of stock that I put in my living trust, that’s still being taxed to me.

Toby: Your living trust, your revocable trust, land trust, personal property trust, they’re all grantor trust. We could also set up a Nevada asset protection trust or Wyoming or South Dakota or Alaska or Delaware, whatever you want to call it. You could set it up. If you have the right to switch and change the beneficiary, it’s a grantor trust. It’s called an intentionally defective grantor trust. It’s still an irrevocable trust, but it is defective for tax purposes, meaning that it’s ignored.

We do that too a lot when we’re just using it for asset protection. The irrevocable nature of it—if we create an irrevocable—is what’s the asset protection tool. For tax purposes, there are other things we look at. Can you switch it? Can you swap things out? Can you take a loan against it that would destroy? Whether it’s a complex or there’s another term called simple trust, which we’ll get to a second.

The difference between a revocable trust and an irrevocable complex trust is this. A revocable trust is ignored for tax purposes and it can be changed. An irrevocable trust means you cannot make changes to it and it pays its own tax, and you could distribute principle. You’re not required to, but you can. A simple or irrevocable simple trust, pays its own tax. By the way, the trust tax rates are horrific. You’re at 37% when you make $13,000. Horrific.

Simple trust means you distribute all the income on an annual basis, but you can’t distribute the principle. So if I create an irrevocable simple trust, I’m putting money in it. I’m putting it into some assets, and it’s kicking off the income. I have all these tax cheats that get out there and they start saying, we’re going to set up a tax-free trust.

Here’s what we’re going to do. We’re going to take the dividends and we’re going to reinvest it and don’t have to pay tax on it. We’re going to take all that. What they’re doing is they’re looking at a tax code and they don’t understand the difference between a simple and a complex trust and they draft a complex trust that these rules do not apply to in a simple trust.

Let’s say you own stock and every year you’re paying out the dividend. But your trustee says, you know what? We’re getting a one-time distribution and an extraordinary dividend of a bunch of shares. Is kicking me out Warner shares. I don’t want to pay tax on that. I could apply that to the corpus in that particular case and not have to pay tax on it without distributing it.

I can’t play that game with a complex trust, which is what these bozos are always trying to do. Then I’m always like, bad news to people that know you can’t run your business through a trust and never pay tax on it. But he told me you can. Yeah, they’re completely wrong.

Here’s what it is. The difference between the revocable trust is it goes down to you from a tax standpoint. In an irrevocable complex trust, if there’s any income left that’s not distributed to you, it’s taxed at the corporate rate. If it’s distributed to you, it keeps its nature.

It could be long-term capital gains, short-term capital gain, interest income, ordinary income, and then an irrevocable. If it’s in a good jurisdiction, and it’s well drafted, it’ll be almost impenetrable from creditors of yours, because you don’t own it. If you’re in control of that puppy, now we broke it and more than likely, it’s going to be a grantor trust. Then you better have good statutes like Nevada to protect it.

Jeff: One other thing I wanted to bring up in a difference between a revocable trust and an irrevocable trust is, say my costs and my assets are about $100,000. Fair market value of half a million dollars, and I put that into my revocable trust. I die. My beneficiaries get the stepped up basis, they get the $500,000 basis, not the $100,000 basis. Whereas in the irrevocable trust, if I put that same $100,000 my cost, and it’s worth $500,000, their basis is $100,000 because it’s considered a gift to the trust.

Toby: The trust basis.

Jeff: The trust basis.

Toby: But that would only be if it’s not intentionally defective.

Jeff: Correct.

Toby: Absolutely 100%. That’s why you don’t play with these things. Personally, I can count on two hands how many complex trusts have been put together. More than likely it’s going to be intentionally defective because I want to have the ability to work with it. I do the complex. If it’s a living trust that’s going on, then that’s a different animal completely. At the time, it’s revocable. Then it becomes irrevocable after you pass and everything’s already stepped up.

Jeff: Complex trusts allows you to control what’s going out to the beneficiaries, or whoever is the trustee. Whereas the simple trust makes money, gets passed on to the beneficiaries, and they deal with the taxes.

Toby: Somebody said, “I did a trust because I thought it would take everything out of my name.” They can. They could actually be pretty effective, but it might flow onto your return. Then the only question is whether somebody could see that.

Somebody says, “CPA says you cannot use passive losses to offset capital gains. He did not clarify what type of capital gain. Wouldn’t passive losses offset only passive capital gains, but not portfolio capital gains and not capital gains from active business?”

Jeff: Well, if this was one we were talking about before, once the activity is sold, the losses are no longer passive.

Toby: I don’t know. I don’t really see passive capital gains. I know you mentioned it.

Jeff: It’s anytime you sold passive activity for capital gain, it can offset any other passive losses.

Toby: Any other passive losses that gain. So those passive losses would be used against that passive gain. I always think in my brain of it being extinguished. I always think of it. But I guess if you have gained from that, then the other passive losses could offset it.

Jeff: When you talk about passive capital gains, most people go, what?

Toby: Yeah, so it’s always whether you have a passive activity, and you have capital gain from the passive activity, and then you could offset it with other passive income. Again, you’re looking at the syndication. I’m a passive investor to passive activity. I get rid of that. If you have any other passive activities rolling around out there that can be used to offset it. Sounds like that’s what you’re saying.

I’m not 100% on it. I got to say, I want to dig into that. You probably looked at it before. So it’d be good for something that we’ll have some fun on. Because I keep thinking about somebody liquidating their syndication and having a big capital gain and then buying another piece of real estate, depreciating it to offset that capital gain. Could they do that?

Jeff: In the same year?

Toby: Yeah, I’m a doctor. I invest in a syndication. That syndication eventually liquidates and I have all these capital gains. Then I go, could I buy another piece of real estate or another syndication and use that depreciation? Let’s say they accelerated depreciation the same year. Could I use that depreciation because it’s passive to offset that capital gain from the previous indication?

Jeff: Yeah, if it’s all done in the same year.

Toby: If it’s all done in the same year, then you could. That’d be pretty powerful.

Jeff: You can check me on this.

Toby: I got to look at it. It’s not clicking a bell with me, but it doesn’t mean it’s not true. But if you’re looking at it, there are a lot of clients that would actually benefit from that when they’re looking at the exits of their investments. That’d be huge for them. Because I know that a lot of times we’re looking at other means to lower their income. A lot of times, it’s Airbnbs and things like that. So that might add another tool in the toolbox.

“I have a nonprofit mentoring business that I often fund with my personal finance. Is there a way that I can write off this money, or write this money off on my taxes?”

Jeff: Here’s how I would do it. I would let the nonprofit pay its own expenses. Let’s say they need to go out and buy a computer. I give them the cash, they buy the computer. Every time you give them cash, they should give you a receipt. I think we’re talking about like in-kind contributions where I’m doing something for you that will work. I’m just not really crazy about it because it’s harder to document. It’s harder to prove.

Toby: What I would say is, I think the easiest way to look at it is anytime you put money and you fund a nonprofit, it’s going to be a charitable donation, so long as you document it. So what I would be doing is documenting and then the organization is paying that expense. Now because you donated it, the question is whether you could write that off whether you exceed your standard deduction.

We’re going to look at everything from your medical expenses to your state and local taxes to mortgage interest, and then we look at your donation. So if you are above your standard deduction, then you would get to write it off. Otherwise, you wouldn’t. Again, depending on the type of business.

What I might suggest for you, if you’re in the ‘it wouldn’t’ case, is that you mark it as an expense that needs to be reimbursed as an employee, and reimburse yourself if ever the nonprofit mentoring business makes money. It sounds like it’s doing something and there’s revenue coming in, because it’s mentoring. If you’re just giving away that service, then you may not get that deduction, if it’s not in excess of your standard deduction.

You see, that was a lot of people, hey, I’m making $50,000 a year. I’m donating a lot of my time, and I’m giving money to my church, or I’m giving money to this organization. But I don’t get a benefit for it. I’m looking at it going, well, your standard deduction right now is $12,950 if you’re single, it’s close to double that pretty much when you’re married, which is like it’s, again, $25,000 plus.

Unless you’re giving away a lot of money, chances are you’re not going to get a benefit from it. About 80% of people file the standard deduction right now, so about 80% of the people are getting no benefit from charitable giving. Trust me the charities know this, because they took it in the chin in 2017 when they passed that law. It was much more beneficial for the charities when it was a lot smaller standard deduction.

Jeff: Once they kept that state and local tax deduction.

Toby: The SALT deduction.

Jeff: Yeah, it made it really hard to get to that married filing joint standard. Get above that standard deduction.

Toby: Yup. I remember I did a taxmageddon (I think) is what I call that. When they passed the Tax Cuts and Jobs Act of 2017, we did a taxmageddon. One of the first things we said is, instead of giving in one year, get used to giving in two or get used to giving in three years. In other words, put your money aside, save it, save it.

So instead of giving money to your church every week, just say, hey, I’m going to put the money aside, and maybe I’ll give nothing this calendar year. But on January 1, I give it a whole bunch. Then by the end of the year, I give a bunch more. What I’m doing is I’m shifting that donation into one year so that I could try to get some benefit out of it. Some people are up for that. Some people aren’t.

Or if you have capital assets, you might give a capital asset to the church and say, can you sell it? Maybe if it’s stock, you sell it that way. I don’t have to pay the capital gains on it, but I get to write off the fair market value. Maybe that’s something you’re doing instead of giving cash.

We went through all these different scenarios. Same thing with crypto. When it was going way up, people were like, hey, can I give it to my church? Yeah, you give it to church and your church can hold on to it till it’s worthless.

Jeff: I do love that whole strategy of giving either something large or giving a couple of years in advance. One thing I usually suggest, especially if it’s a church or something like that, is you let them know. Hey, I’m giving you my next three years worth of contributions. Don’t expect this every year.

Toby: Yup. “I’m on the board of a company and an investor. No compensation from the business would disqualify as active participation if we keep accurate minutes from record to meeting.”

Active participation is a real estate term. I think you mean material. It just depends on how much time. And if you’re a board member, chances are they’re going to treat you as if you’re at least doing, or more than likely you’d have to do over 500 hours.

I can’t imagine that there would be a material participant with as little as a hundred unless it’s really not an active business, but if it’s a traditional business to be a material participant, you really have to put in about 500 hours.

I think that’s it. So there’s the YouTube again, if you feel like subscribing and doing a deep dive on any of these things. I have a feeling I’m going to be doing a video at some point on exiting syndications, passive capital losses and things like that. It’ll be kind of fun. We don’t know everything. If that’s one thing that you’ll learn from these sessions is that we’re curious and we’ll dig into it. Nobody knows everything, but you can ask how it gets treated or how can I get it in a fashion that benefits me for my tax standpoint?

Somebody says, “I donated $6400 to start a nonprofit for my wife. Is that deductible?” Yeah, it would be treated as a charitable donation, John. Whether it’s deductible depends on your standard deduction (obviously) and whether it exceeds that amount. Sometimes, yes, sometimes no, but you’re doing it. You’re doing the right thing by donating anyway, no matter what.

All right. Go to YouTube. If you have questions and you want to get them answered, send them to us taxtuesday@andersonadvisors.com. And of course, visit us at Anderson Advisors. You go to our website and sign up for about five different classes that we teach. Some are a little more advanced, some of them are more basic. But in any event, tons of material. Anything, Jeff ?

Jeff: No, that’s all we got.

Toby: Then I’ll say this. Eliot, Troy, Matthew, Dutch, Piao is on, Ian, Christos, Patty, Matthew, all these guys are there in the background answering your questions. They do a great job. So thanks again, guys. It’s a team effort and we enjoy the fact that you’re spending time with us. Hopefully, you got something out of it. If nothing else, we will see you in two weeks.