Welcome to another episode of the Tax Tuesday show. Host Toby Mathis, Esq., joins our regular guest Eliot Thomas, Esq., Manager of Tax Advisors at Anderson Business Advisors, to help answer your questions. We send a big thank you to all our people online answering your questions today – Troy, Tanya, Sergey, Ross, Kurt, Kenny, Jared, Dutch, Dana, Patty, and Matthew are all on.
On today’s episode, Toby and Eliot answer listener questions including a very detailed question on inheriting rental properties, a question on crypto-currency and taxes, one on hiring and paying your children, and we answer the title question on structuring small businesses using an S-Corp.
If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors.
- “What is an installment sale on real estate? How do you utilize it within the tax code?” – An installment sale simply means that you’re getting payment over more than one year. It could be for two years, it could be for 20.
- “What happens to accumulated depreciation on rental property when the owner passes away? Does the person inheriting the property need to account for depreciation recapture from the deceased owner when you later decide to sell that property? If the person inheriting the property gets a step-up in basis, does that new basis now become the basis to calculate depreciation on if you keep the property? Can the person inheriting the rental property also have a new cost segregation done? And would that be affected by any cost segregation done previously? Any other tax considerations to be aware of when inheriting rental property?” — It goes away. Don’t gift it to your kids before you die! Your new value “step up in basis” is what you calculate from. New cost-seg, yes, nothing relates to the old cost seg.
- “I received a 1099 INT from a bankrupt crypto company I invested with called Celsius.” The money on the 1099 never touched my bank account as it is currently locked in a crypto wallet on their website for the last eight months. It was interest from USDC coins I staked, but I left it all in the wallet to reinvest. Am I supposed to pay taxes on this money that I never received, or can I leave it be and ignore it until the bankruptcy is resolved?” – you need to report it and you need to pay tax on it.
- “How does the tax law treat the hiring of children by an LLC? At what age can they be hired? Which circulars discuss this?” – when they’re under 18, no Social Security, no Medicare taxes on those, but they must be paid by an LLC that’s owned by mom and dad if it’s a disregarded LLC or a partnership, and they have to be paid as W-2 employees.
- “I’m using the home office and depreciating part of the house. How will it look on the taxes that the year I sell it?” – I like using the administrative office in the home and having an S-corp, a C-corp, or an LLC taxed as an S-corp or a C-corp, reimbursing me for the value of my space because then I don’t have depreciation recapture.
- “Are there any tax deductions for real estate held in a self-directed IRA?” When you see SDIRA, that just stands for self-directed IRA. – you’re going to lose out on those big things like depreciation, et cetera, so no tax benefit.
- “I was hit hard with UBIT inside my Roth, where I owed $200,000 on a $400,000 gain. The company is no longer in business, trying to scratch back any part of the UBIT. Is it possible that it happened?”– It was leveraged. Valerie, this is unrelated debt financed income. Yes, there is something you can do.
- “Can you explain S-corp taxes with shared distribution? When it’s time to file taxes, do we pay taxes on all shared distributions?” Do you have to pay taxes on everything you receive or just the profits, et cetera? – An S-corp has two primary ways of getting paid as an owner, shareholder. One would be W-2 wages and the other is all the other income.
- “I started in LLC, C-corp with Anderson advisors on October 22 for real estate. I have paid $20,000-plus in networks, education, probably getting training. I did not do any deals and 2022 for my new real estate business. Can I still write all that off for the business? I have used my personal credit card to make purchases for the new REI business, real estate business. Since I do not have a business credit card, did I break the corporate veil?” – Yes, you can deduct those expenses. They are going to go on your C-corporation. If they were incurred prior to the date of incorporation, there’ll be what we call startup costs.
- What org structure for small business is audited the least and provides the lowest tax liability?” – That’s going to be your S-corporation, typically. It’s going to give you a lot of deductions and reimbursements that you can take advantage of.
- “How do I best utilize my C-corp status for tax savings and investing in real estate? We have my 1099 paycheck going to our C-corp bank account and then pay out about half of it to our personal bank account as a paycheck. How do I utilize the other half that’s sitting in the C-corp accounts, such as to buy new short-term rental or long-term rental investment property?” – the C-corporation, before you do the loan, you can take a lot of reimbursements—accountable plan reimbursements, corporate meetings for 280A, medical reimbursements. That all gets some money out to you tax-free deduction to your C-corporation. Get these first, then take a loan.
- Rapid-fire chat questions answered at the end of the show
Full Episode Transcript:
Toby: Welcome to Tax Tuesday, everybody. My name is Toby Mathis.... Read Full Transcript
Eliot: Hi. I’m Eliot Thomas, manager of the tax advisors here at Anderson.
Toby: We are doing our best to bring tax knowledge to the masses. We’ll wait for everybody to fill up. Let’s go over the rules. You guys always love hearing about the rules, right? You can ask live questions via the Q&A feature. If I’m going to look up, we could see them over here. In your settings, you’re going to go down below and it’s going to say Q&A. That’s where you leave a question that is a lengthy question, where you’re actually asking our professionals a question for clarity. If it’s more than a few sentences, that’s where it’s going to be.
On the chat, you can do something like ask for clarification of something we just said, leave a comment, or even better yet, tell me where you’re sitting right now today. I don’t mean in your kitchen, I mean what city, what state you’re in, or what country you’re in, just so we get an idea. Somebody says can you please speak on the bank runs and thoughts? We’ll do that.
Baltimore, Wisconsin, Colorado, Florida, Chico, California, North Hills, California. Los Angeles in the house. There goes Seattle, there goes Washington, DC, Miami, Florida. A couple of Miamis, Loganville, Fort Worth, Vegas. Hey, you’re right here with us. Austin, Missouri, Clinton, Maryland, Reno, Oklahoma City.
Do I have to mute myself? No, you don’t have to mute yourself. Don’t worry. Hawaii, hospital outside of San Francisco, Fort Lauderdale. Hopefully you’re working in the hospital. New York City, we get them from all over the place. They’re pouring through. They’re even going into the Q&A too.
Anyway, we’re here to answer your questions. We got a whole bunch of set questions that you guys email in. Speaking of emailing in, you can always email in questions at firstname.lastname@example.org. We get them throughout the week. When we’re not broadcasting, then we put them up, so you’ll see some here.
If you need detailed responses to your specific question, you need to be a client. If you’re getting into advising and not just asking a question about a tax rule, then you’re going to need to be platinum or a tax client, which if you want to know how to do either those things, just say hey, I’m interested in learning how to become a client or I want to be platinum. Platinum is $35 a month. It’s not a break-the-bank and you can ask tax questions in writing. This is supposed to be fast, fun, and educational. Do you have fun doing these?
Eliot: It’s fun and educational.
Toby: Somebody says, oh, my God, I got my first aristocrat today. Thank you, Markay. That’s a dividend aristocrat. There are dividend kings and aristocrats. It sounds like you bought yourself a really good billion-dollar-plus company that has been increasing its dividends for at least 25 years. Yes, they’re out there. That’s awesome. Keep doing it.
Even in this market, you never stop buying. I have a little chart that says, when to be buying in the market. Buy, buy, buy, buy, buy, buy, buy, buy. You just don’t go crazy at any time. You’re not timing the market, you’re just consistently investing. Study after study after study has shown that it is the best way to be investing, not trying to time things.
Speaking of timing things, this whole bank run, it’s not the end of the world. It just seems like it sometimes if your money’s in a bank that gets tied up in one of these receiverships. Anything over $250,000 is exposed to loss, but you’ve seen Biden and the administration coming in and saying, hey, we’re not going to allow those losses to occur. We’re going to find strategies to allow the banks to continue to operate.
What’s really happening in my opinion is you have banks that are limited in what they can invest in, and they’re investing in bonds. These bonds, let’s just say it was a mortgage-backed bond. It was basically mortgage-backed securities. We were getting loans on mortgages, 3%. The coupon rate might be 2%. You invest in one of these things and you’re getting paid in the years coming forth at 2%. Who wants that right now? You can go get a CD for 4½ percent, so there’s no market for the bond.
The bond market just got crushed. You still have a guaranteed return of 2%. The bank is still going to have its money, but it doesn’t have any market for it. In my personal view, if I was the Feds, I would be saying, hey, let’s do a buyback on those. Maybe you don’t even pay the interest, and it works that way. But personally, I just look at the Fed raising interest rates the way they have. They knew they were going to keep raising interest rates until something broke, and we just heard a snap.
Hopefully, we’re through some of this. Some of you guys went through it in 2008. We had folks here, I think it was Silver State. Was that the one that went under here locally? There were businesses because everybody thinks it’s always rich people that have the bigger accounts. They had their payroll in there for about $3 million.
They went and talked to the bank, and they said, we’re worried about your liquidity. We’ve read some stuff and the bank assured them everything’s copacetic, don’t worry, we’re fine, and then the Feds came in, shut them down, and they lost their $3 million dollars. You end up dealing with the FDIC, trying to get the $250,000 back. That’s a process in and of itself.
Best advice to you guys is spread your risk out amongst multiple institutions if you have large balances. If you’re below $250,000, you really don’t have too much to worry about. What you’re going to see is everybody’s going to run to Chase, Bank of America, Wells Fargo, who was another big one?
Eliot: US Bank?
Toby: JP Morgan and Chase.
Eliot: This was number 16, I think, ranks of banks. They’re up there.
Toby: They were large.
Eliot: Hit the VC, the venture capitalists or whatever.
Toby: They’re going to get bailed out. Apparently, they’re going to be okay, right?
Toby: Then you had the signature top all over, too. We might not be done with it. But if you remember in 2008, 2009, 2010, when these banks were closed, it does cause an issue. The issue in my opinion is because the Fed just started raising interest rates and devalued all the bonds. If you’re a nerd, correct me if I’m wrong, but I don’t think there’s ever been a year where we saw the stock market and the bond market declined. I don’t remember a time in anything that I’ve seen, where you saw 20%-plus losses in the market, plus you saw bonds just get crushed, too.
Anyway, that’s not why you guys are here. You guys are here about taxes. You can ladder your CDs. If you’re sitting on a few million dollars and you’re just so worried, what you do is you buy CDs with a bunch of different banks, they’re all insured. That way, you don’t have to worry, or you go to Schwab where they have extra insurance. I think it’s up to $150 million. It’s a huge amount.
Anyway, let’s go to these. “What is an installment sale on real estate? How do you utilize it within the tax code?” That’s question number one, we’ll get to it, and we will answer it.
“What happens to accumulated depreciation on rental property when the owner passes away? Does the person inheriting the property need to account for depreciation recapture from the deceased owner when you later decide to sell that property? If the person inheriting the property gets a step-up in basis, does that new basis now become the basis to calculate depreciation on if you keep the property? Can the person inheriting the rental property also have a new cost segregation done? And would that be affected by any cost segregation done previously? Any other tax considerations to be aware of when inheriting rental property?”
That is about the most comprehensive question I’ve ever seen on inherited property. We’ll get to that. We get hundreds. I used to just grab 10. I’d be like, here, just grab a row. It’s always fun when you grab a long one.
“I received a 1099 INT from a bankrupt crypto company I invested with called Celsius.” This is again relevant to some of the stuff that’s going on. “The money on the 1099 never touched my bank account as it is currently locked in a crypto wallet on their website for the last eight months. It was interest from USDC coins I staked, but I left it all in the wallet to reinvest. Am I supposed to pay taxes on this money that I never received, or can I leave it be and ignore it until the bankruptcy is resolved?” Good question and tough answer.
“How does the tax law treat the hiring of children by an LLC? At what age can they be hired? Which circulars discuss this?”
“I’m using the home office and depreciating part of the house. How will it look on the taxes that the year I sell it?” Good questions.
“Are there any tax deductions for real estate held in a self-directed IRA?” When you see SDIRA, that just stands for self-directed IRA.
“Can you explain S-corp taxes with shared distribution? When it’s time to file taxes, do we pay taxes on all shared distributions?” I’m not quite following that, but I think we’ll break it down. I think I see what they say. Do you have to pay taxes on everything you receive or just the profits, et cetera? We’ll get into that.
“I started in LLC, C-corp with Anderson advisors on October 22 for real estate. I have paid $20,000-plus in networks, education, probably getting training. I did not do any deals and 2022 for my new real estate business. Can I still write all that off for the business? I have used my personal credit card to make purchases for the new REI business, real estate business. Since I do not have a business credit card, did I break the corporate veil?” We’ll have some comments on this for sure, but we’ll get to that.
What org structure for small business is audited the least and provides the lowest tax liability?” There are stats on this one, guys.
“How do I best utilize my C-corp status for tax savings and investing in real estate? We have my 1099 paycheck going to our C-corp bank account and then pay out about half of it to our personal bank account as a paycheck. How do I utilize the other half that’s sitting in the C-corp accounts, such as to buy new short-term rental or long-term rental investment property?” We’ll dive into all those.
If you guys are seeing that there’s a wide variety of questions, you’re probably already thinking to yourself, hey, I have some answers to that. Fantastic. If you like this stuff, go to my YouTube channel. You can subscribe for free. Put notifications on by clicking on that bell because then you know when a new video comes out. More importantly, if you like Tax Tuesdays, that’s where we put the recordings. You just pop in there. If you want to know how to get to YouTube, just go to aba.link/youtube.
All right. Eliot, “What is an installment sale on real estate? How do you utilize it within the tax code?”
Eliot: An installment sale simply means that you’re getting payment over more than one year. It could be for two years, it could be for 20. You’re just getting chunks of money, typically, the same amount each year or prorated amount for the first year, perhaps a down payment first year, where the payments are generally the same amount, it doesn’t have to be.
When we talk specifically about real estate, I thought this was interesting because we have to watch out for that. If you’re just buying an investment property, then the recipient only has to pay tax on a certain portion of what they receive each year. In other words, you don’t have to pay all the tax up front.
If you sell it for a profit of maybe $2 million, it doesn’t mean you have to pay all that profit right away because you just do it as your chunks of payment come in. That’s based on what we call the gross percentage. We just take that, times the amount of payment. There’s going to be a game component, there is going to be an interest component, and then there’s going to be the principal itself. You’d record each of that each year on your sale on real estate.
Toby: If you’re a code fanatic, it’s 26 USC 453. When you do an installment sale, which means you’re taking the payment over a longer period of time than just in one year, so it can be two years, it could be 20 years. You’re spreading the tax obligations out over that period of time, unless you opt out.
Eliot: That’s right. You don’t have to.
Toby: If you’re selling your personal residence on an installment note. Hey, I have $300,000 of gain, I’m married, I don’t have to pay tax on it. You may say, I’m going to opt out of the installment sale, even though you’re carrying back a note. It’s basically having a mortgage on the property and you’re the bank, and they’re paying you over time.
You’re going to get the gain back, you’re going to get a return of basis which is zero, you’re going to get depreciation recapture, and you’re going to get interest. Guys like Eliot break it all out and figure out what it’s going to look like.
Eliot: One thing I just want to also add is that don’t mix up this sale on real estate with flipping, because now we have a whole different tax code provision for that. Flipping is considered inventory, and you cannot use an installment sale with inventory. That’s an important note.
We often get new investors, and we have to warn them about that. If you’re flipping a property, make sure you know that you’re not taking in the payments on installment, otherwise you’re going to get hit with all the gain in the first year. Also, you cannot have installment between related parties.
Toby: Somebody says, can I get a recording of this? Yes, we’ll put it on the YouTube channel. Are you saying the inventory is the home? Yes, Faith, when you buy real estate to sell it. You’re a dealer. Pretend that you’re a car dealership and you’re having cars on your lot. You have real estate on your lot. The IRS says it’s no longer investment real estate, it’s inventory, which is not depreciated.
Under 453—that’s the installment sale code provision—it specifically says that when you are a dealer in real estate, then you cannot use the installment sale. This is relevant to somebody who buys, fixes up, flips, and carries back the note. You might be surprised that you’re required to pay the taxes in the year that you sold, even though you’re getting the money over 5, 10, or 20 years.
It’s almost better to not do that if you’re a flipper. That’s why you don’t see too many people that are in the flipping world carrying back notes because I could flip a house, I could have $100,000 of profit I have to pay tax on, but I haven’t received my 100,000. I’m going to be receiving it over the next 10 years, but I got to pay the tax this year, which can be a nasty situation.
“Oh, my God, I’m so new to real estate investing that what they just said about flipping makes absolutely no sense to me. Can they break it down for a five-year-old?” Yup. Claire, when you buy a piece of real estate, let’s say I buy a house, in my intent, when I buy it is to sell it. My intent is not to rent it and hold it for the long term. My intent is to put new paint on it, new carpeting, and turn it around and sell it for $30,000 more than what I paid for. I am a business, I am not an investor. I am considered a dealer, and I am taxed.
This is no different than if I had a pizza shop and I was selling pizzas. I am just a business. That’s where people make mistakes. Then you’ll have gurus out there go out there and say, no, you just hold it for a year and now it’s magically an investment. No, the court cases on it go far back. There’s one that where it’s 10-year hold that they treated the guy like a dealer.
The reason they want to is because you don’t have long-term capital gains. It’s going to be an active ordinary income if you’re materially participating. If you’re doing the flips and you’re working in it, then you’re going to have not only your ordinary tax bracket up to 37%, but you’re going to get hit with the old age, disability, and survivors’ Medicare, the Social Security taxes. That’s 15.3%.
Somebody says, I’m still working on my diet, easy on the pizza talk. Pizza is diet food, just bad diet food.
“What happens to accumulated depreciation on a rental property when the owner passes away?
Eliot: It goes away.
Toby: You have a step-up in basis. All of your accumulated depreciation, all you have to do to never pay it back, is die. That’s all you have to do. If somebody tells you to gift your property to your kids right before you die, ignore them. Don’t do it. Nine times out of 10, you just completely hosed yourself. I see people do it, still.
Eliot: Or at least the kids.
Toby: Don’t do it. All right. “Does the person inheriting the property need to account for depreciation recapture from the deceased owner when you later decide to sell the property?” It’s just a flat out no because it steps-up in basis. The depreciation is gone. You don’t have to worry about it. You get to re-depreciate it, and that’s going to be the next couple of questions.
That’s the fair market value. Mom and dad bought a property for $30,000, it’s now worth $300,000. They depreciated a big part of that 30, and they die and you inherit it. You now have a property at $300,000. You depreciate it at what amount?
Toby: Yup, you got to start doing it again. “If the person inheriting the property gets a step-up in basis, does that new basis now become the basis to calculate depreciation on if you keep the property?” Yes, absolutely. “Can the person inheriting the rental property also have a cost seg done, and would that be affected by any cost segregations done previously?”
Eliot: New cost seg. To my knowledge, the previous cost seg doesn’t have any effect. Stepped-up basis.
Toby: Yup. All you did is you accelerated your depreciation. Parents got more deduction earlier. It’s not like they got more deduction, they’re just accelerating that deduction. Instead of taking it over 27½ years, you might have taken about a third of that in one year, sometimes it’s stretching. Cost seg is breaking down the years from 27½.
Let’s say I had a property that’s a single family residence, same thing, and we’re renting it. Normally, you’re depreciating everything over 27½ years, so pretend the carpet in that house. It’s going to be depreciated over 27½ years. It doesn’t really happen, right?
The IRS allows us to do what’s called a cost seg and break the components down because that carpet is actually five-year property. You’re supposed to be writing it off over five years. It’s not like you increase the amount of your depreciation that you would get in 27½ years, you’re just front loading it. You’re getting a lot more deduction in the first few years than you would normally.
No, it doesn’t affect it. You can absolutely get your step-up in basis. No, it won’t impact you. You’ll get to write it off all over again, which is again, that’s why real estate is obviously one of the best investments because unlike if I bought shares in Microsoft, I can’t write off my shares in Microsoft. I can’t depreciate my shares in Microsoft. If I buy a piece of real estate, I get to write it off. Then when my kids inherit it, they get to write it off again at its new value.
If Microsoft shares go up in value and they step-up in basis, so what? I’m not going to depreciate it. I’m not taking a deduction for my ownership. In real estate, you are. It’s giving us a pretty big benefit.
“Are there any other tax considerations to be aware of when inheriting a rental property?”
Eliot: I don’t know about the inheriting, but often the question is, do I gift? As Toby pointed out, don’t gift because you don’t get that stepped-up basis. Wait until the beneficiaries can inherit. That is after someone dies.
Toby: Yup. I’ve seen it. I actually have a really bad story. It was when the estate tax went away completely, which is a tax they impose on your state if it’s over a certain dollar amount. Back in the day, when I first started practicing, it was $600,000, now it’s $13 million. It’s just some really high number. I think it’s 13. Is it 12?
Eliot: 12-plus, about 13 now.
Toby: Yeah, it’s about $13 million per spouse, so $26 million. You go above that. You’re going to pay this estate tax, which is going to be about 40%. There was a time when we were worried that we were going to go back down to $1 million.
There were clients who inherited property, and it was in the year that it would have been zero estate tax, and the dad gifted just prior, a building that he had had for almost 40 years, to the kids, and he gifted it. They got his basis. Now they have to pay tax and all that gain, they lose the ability to depreciate it, and they didn’t get any tax benefit at all. Zero, zilch, none. All they did is cause themselves millions of dollars of extra taxes. I hope they sent their accountant a Christmas dress. It was like, what were they thinking? They thought that it was going to be taxable, blah-blah-blah.
Eliot: To that, Toby, we often talk about the upcoming changes potentially in the tax code. Don’t just run out on all the talk you’ll hear in the press and all that. We really want to wait until it’s signed, sealed, and delivered before we’re starting making decisions on your tax planning.
Toby: Yes, don’t react to something that hasn’t occurred yet. “I received a 1099 INT from a bankrupt crypto company I invested with called Celsius. The money on the 1099 never touched my bank account. It is currently locked in a crypto wallet on their website for the last eight months. It was interest from USDC coins I staked, but I left it in the wallet to reinvest. Am I supposed to pay tax on this money that I never received, or can I leave it be and ignore it until the bankruptcy is resolved?” What do you say?
Eliot: They’re going to tell you, you need to report it and you need to pay tax on it. Right now, that’s where the IRS position is on this. There could be some unique situations, perhaps, Toby, depending on what happened with that. What got us to this point where Celsius is there?
Toby: We’ve dealt with this over the years with Ponzi schemes, bankruptcies, and stuff. You have two things that occurred. You made money on your staking, it’s held on an institution that’s become insolvent, and the question is, are you going to get it back? In the meantime, they’re sending you the 1099 saying, here’s the interest you made. You’re saying I don’t have access to it, therefore I should not be paying tax on it, and that’s not the rule. The rule was, you could have taken that money, you just continued to store it in Celsius, and they ended up going insolvent.
The question is whether your money was stolen or whether there was fraud. Your receiver may have opinions on that and they may be seeking direction. The receiver is an extension of the court. Undoubtedly, if there’s bankruptcy, there’s either a trustee, receiver, or both, and you’re probably going to want to get direction from them as to whether they believe that you’re able to take a theft loss or whether it was actually stolen, or whether there was fraud. I know that I’ve seen these before, I can’t remember Celsius specifically.
Eliot: I don’t know, but you do get a letter. I’ve seen many of those letters where they say, it’s from a government institution of some sort of the courts saying that this was part of a fraud scheme, we believe. What kicks it off for your tax preparer to say, okay, well, maybe we can take a loss here. There are specific rules to that as well, which we won’t go into here. Aside from that, if there isn’t any fraud, then one is required to report that interest income and has to pay tax on them, even though you don’t currently have access.
Toby: Yeah, and then if you have a loss, you’re typically going to have a capital loss. If you’re going to lose your cash, there’ll be some corresponding loss. The question is, in 2022, did you make money? They say, yes, and then you might have a loss in 2023, depending on what happens in bankruptcy. Of course, you may just get all your money.
That’s the thing. They’re going to say, hey, you need to pay the tax on the properly issued 1099. Your accountant could take the position that it was fraud and that you’re never going to get the money back, file your return and put a notation, and see if the IRS catches it.
For the most part, you were issued a 1099 INT. It said you made this money, and now that money is in jeopardy. You still pay tax on the money that you made, even though you may not get it back when we know for certain. It’s like anytime you’ve ever had a loan out to somebody, you don’t get to write it off when they don’t pay it back. You actually have to show that you went through and exhausted all measures of recovery before you can actually take a loss.
Eliot: And you want to be documenting.
Toby: All right. “How does the tax law treat the hiring of children by an LLC? At what age can they be hired? Which circular discusses this?”
Eliot: The big thing people are looking for here, usually, is how do I pay my child, maybe in a manner that I don’t have to pay employment taxes on? That’s when they’re under 18, no Social Security, no Medicare taxes on those, but they must be paid by an LLC that’s owned by mom and dad if it’s a disregarded LLC or a partnership, and they have to be paid as W-2 employees. It’s really critical to hit this. That’s up till 18, then up to 21—
Toby: That means they have to do something.
Eliot: Yes, they have to be working.
Toby: There are cases of kids, nine years old, getting paid Screen Actors Guild’s wages for being a talent for images and things like that, being a model, for the marketing materials. You have kids that push brooms and do cleaning, you have kids that do tech, that do data entry. You just have to show what they’re doing, and it has to be a reasonable amount that you’re paying them. If it’s a sole proprietor, which could be a disregarded LLC or a partnership, then you have no withholding if they’re under 18, right?
Eliot: You have to pay their W-2 employees, that’s correct. You can’t 1099 them. As far as the ages go, the federal government relies on that specific state. Each state has its own different rules. Most of them, the kids are not going to sue their parents. Not too many people look into that, but it is determined by the state rules.
Toby: I don’t think there’s any state where if it’s family members. Somebody say, do the grandkids count? I know it’s with children, for sure. I’m not sure.
Eliot: I don’t know about grandkids.
Toby: Here’s the thing. If they’re making less than I think it’s $13,850 in 2023, they don’t pay tax on federal income taxes. They may still have some employment taxes if you run it through payroll, but what we’re talking about is avoiding all taxes. If you pay somebody who’s 18 or under, or is it under 18?
Toby: It’s under 18. When you hit the age of majority, now we have to worry about the employment taxes, period. But the federal income tax is going to be next to nothing if you’re paying these kids. Let’s say you’re $10,000 a year, then normally you have to pay their tuition and you have to pay their tuition, and you’re in the aggregate tax bracket of your 32%. You’re going to have to make over $15,000 just for federal income tax purposes to be able to pay their tuition at $10,000.
If you just pay that kid the money, even if they’re over 18. We’re not worried about the employment taxes here. I’m just saying, if you just pay them even through payroll, it could be a C-corp, S-corp, whatever, pay them and let them pay for their tuition with the money that they earn, they may not be paying any federal income taxes, then the employment taxes don’t seem so bad. Your aggregate amount of employment taxes between an employer and employee after deductions is about 14.1%. You’re paying a total of 14% on money, where you would be paying, in some cases, 37-plus because you have employment taxes too, so 40%-plus.
What you’re doing is you’re saying, hey, I’m just going to be able to get much better tax treatment here if I let the kids pay for their college and things like that than me doing it. Somebody says, if flipping is like selling pizza—somebody’s going back to that 37 and 15—does that mean my aggregate tax amount is about 52%? It can be pretty high. It’s not going to be quite there, but it’s going to be pretty darn close.
If you’re 37%, you’ve actually phased out of the old age, disability, and survivors portion of Social Security, which is right around $147,000. If you’re 37%, it means you’re making a lot more money than that, then you’re looking at 3.8% 2.9%-plus, there’s an extra 0.8, so about 3.8%. You’re really looking at just over 40%.
Eliot: It could be state, too.
Toby: It could be state. Claire, that’s why you use an S-corp or a C-corp when you’re flipping because we want to be able to minimize that and get some of that money into a 401(k) or get it into another business.
Eliot: As far as a circular, I didn’t know what it was off the top of my head. But I do know, if you just type in the IRS hiring family, it’ll take you right there too. They have a really nice website that goes over that.
Toby: I’ll probably do another video on that, actually. I might dive in there. We’ve done it before, I’ll do another deep dive.
All right. “I am using the home office and depreciating part of the house. How will it look on the taxes at the year I sell it?”
Eliot: It’s going to look like you’re paying. That’s what’s going to look like. It’s a tax liability.
Toby: I don’t like the home office. I like using the administrative office in the home and having an S-corp, a C-corp, or an LLC taxed as an S-corp or a C-corp, reimbursing me for the value of my space because then I don’t have depreciation recapture. If you’re a sole proprietor, and you are taking a home office deduction and you have depreciation, or if you’re house hacking and you’re renting out part of your house, you’re going to have depreciation recapture when you sell the house.
Section 121 of the code allows you to avoid capital gains only, capital gains, specifically up to $250,000 if you’re single, up to 500,000 if you’re married filing jointly, but does not cover depreciation recapture. If you have a house and you have half the house that you’re renting out, or you’ve been doing a home office for years, you can do a 121 with a 1031 exchange. You can treat the part of the house that was depreciated. When you sell it, you can actually 1031 it into something else if the numbers justify it.
For the most part, that’s why we say don’t do the home office. Don’t be a sole proprietor. There are reasons not to be a sole proprietor, partially because they do get poor tax treatment, and they pay self-employment tax in all their dollars, which is the Social Security taxes. It’s not good. And they get audited a lot. There’s a whole bunch of reasons not to be a sole proprietor, but 70% of the businesses still persist in being sole proprietors. Anything else on that one?
Eliot: No, I think that’s pretty much it.
Toby: The answer to your question is make sure you’re talking to a tax professional when you go to sell the house. You may have some recapture, but it’s not the end of the world. At your tax rate, up to 25%. If there is some recapture, it might be annoying, but I don’t think it’s going to be a devastating tax, especially if you can control your income for that year.
Speaking of controlling income and learning about all these different tax nuances and how it works with real estate, my partner and I, Clint, we do real estate tax and asset protection every several to a couple times a month. We have one coming up, it looks like on March 25th, and then another one on April 8th. Feel free to register. It’s an all-day event. We go from about 9:00–4:00 Pacific Standard Time.
These are not recorded events. We don’t make the recordings available. There’s always something that’s an incentive for those who show up. If you want to learn about LLCs, land trusts, living trusts, corporations, S-corp, C-corp, dealer status, cost segregation, accelerated depreciation, 168(k) 1031, 121, all the different fun code provisions, then you want to come to this event. It’s actually really fun, and it’s always good. Absolutely, feel free. I think Patty already posted the link. Join us. We’ve been doing them for a number of years and they’re always fun.
“Are there any tax deductions for real estate held in a self-directed IRA?”
Eliot: No. When you have something in your retirement plan like that, there isn’t the concept of deductions. There’s cash flow going out paying for bills, and then there’s cash flow coming in your rent or if you sold it. We don’t have any tax consequences, so you’re going to lose out on those big things like depreciation, et cetera, so no tax benefit.
Toby: There is one exception, just to be annoying, and that is if you have a loan on your real estate in your self-directed IRA, then you have something called unrelated debt financed income. In that one, you can use your depreciation to offset. But otherwise, you’re putting it in a self-directed IRA, it’s exempt. You’re not paying any tax.
You got your tax benefit either doing a traditional IRA, a 401(k), rolling it into the self-directed IRA. Realistically, if you’re doing real estate and you’re going to be investing with a self-directed IRA, and if you need debt at all, if you need any loans to buy that property, roll it into a 401(k) because it does not have the same rule. You do not have to pay unrelated debt financed income in a 401(k).
If you’re going to be buying real estate and you’re going to be levering it at all in a retirement plan, make sure it’s a 401(k) because it is not taxable. A self-directed IRA is taxable when you have unrelated debt financed income. Excitement?
Eliot: Yup, good stuff.
Toby: Yup, good questions. “Can you explain S-corp taxes with shared distributions? When it’s time to file taxes, do we pay taxes on all share distributions?”
Eliot: An S-corp has two primary ways of getting paid as an owner, shareholder. One would be W-2 wages and the other is all the other income. It comes down on a K-1, we call it. Often we’ll use the term distribution, but really distribution means that you took the money out. That doesn’t have to be the case. You can leave it there and still be taxed, or you will be taxed. Your distribution share, not your W-2 income, is just taxed at your ordinary rates.
Toby: Yes, this is a big distinction. Regardless of whether you distribute the money in an S-corp, it flows down proportionately to the shareholders. Distributions have to be proportionate. I cannot distribute.
Let’s say Eliot and I are 50/50. He can’t take money and I don’t. They have to be equal distributions on an annual basis. There’s always this little game you play, especially if you have a doctor’s practice with 10 doctors in it, and there are all these different dollars going on. You have to make sure it matches up because they have to be equal distributions.
Regardless of whether you take distributions, you have to pay tax on your proportionate share of the profit, or you recognize a proportionate share of the loss. You cannot do non-pro rata distributions or loss sharing in an S-corp. This goes for an LLC taxed as an S-corp as well. If you have an S-corp, it really doesn’t matter whether you take the money out. It just matters whether there was profit.
Saying that, I’m going to give you guys one rule that for whatever reason, nobody knows, or the accountants know and they’re like, ah. If you have an S-corp and you did not take distributions, you are technically not required to take a salary. That one throws people off all the time because they say you’re required to take a salary out of an S-corp. You’re required to take a salary out of an S-corp if you take distributions. If you don’t take distributions, if you’re just growing it, then technically, you don’t actually have to take a salary.
Somebody says, “I was hit hard with UBIT inside my Roth, where I owed $200,000 on a $400,000 gain. The company is no longer in business, trying to scratch back any part of the UBIT. Is it possible that it happened?” I don’t know. Let me see. That was 2020.
Valerie, I’m going to see if I can find anything else. If you got hit with unrelated business income tax, was it unrelated debt financed income, or did you get hit with UBIT where you were running an active business in it? It was a business? Ouch. It shouldn’t have been gained, it was passive. I wonder what they got hit with UBIT for.
Eliot: I don’t want to speak for Valerie here, but I have a feeling that they can surpass you in that you didn’t do anything, but what you invested in was an operating business and that’s active with what they hit it with.
Toby: It was leveraged. Valerie, this is unrelated debt financed income. Yes, there is something you can do. The only time you actually run these scenarios in an IRA—it was a Roth, so it’s just a typical IRA—is when you have unrelated debt financed income and you can take the depreciation to lower the income. They had a big chunk of the gain. They sold it and it was levered. I don’t know a way around that one.
That’s probably what happened, Valerie. You had leverage and they said, you owed a bunch of tax on the gain. That’s a horrible situation because it sounds like you were taxed at. It sounds like it was less than a year. How long did they own the apartment building, or how long were you in it? Because it sounds like it was treated as a short-term.
Ten years of capital gains? That doesn’t make any sense. I would love to see that one. California […] says they treat it as ordinary income. They must have treated it as a flip. They must have bought the apartment complex, fixed it up, and sold it. Is that what’s happening? It wasn’t a flip? Then it’s not 37%.
Unless they treated it as levered, then they would. They taxed at the highest amount, 10-year hold, and they taxed you on the unrelated debt financed income is what they did. It’s at the highest rates. You got hit with that penalty because they levered it.
I hate the fact that that happened, Valerie, for you. Realistically, the promoters should be a little more careful. If you did that through a self-directed IRA, then they should have caught it, too. We see that over and over again. It’s the difference between an IRA and a 401(k).
A 401(k) would not have been subject to that same rule, I think even a Roth 401(k), although it’s almost impossible to get a Roth IRA into a Roth 401(k). In fact, it is impossible. You can’t roll it. I’m so sorry you got hit with that. It just stinks, but at least you made money. You got killed with taxes, but at least it was a profitable endeavor.
We always see something interesting, guys. I can see the chat. We disabled chat for everybody else just because people solicit each other. There’s always a Nigerian prince or an MLMer in there that’s trying to look for customers. I’m reading the chat as we go along. I apologize that you guys can’t see that.
All right, let’s go back. “I started an LLC, C-corp with Anderson Advisors in October of 2022 for real estate investing. I paid $20,000-plus in networks, education, et cetera.” It sounds like you went through one of the bigger education companies. “I did not do any deals in 2022 for my real estate business. Can I still write all that off for the business? I have used my personal credit card to make purchases for my new business. Since I do not have a business credit card, did I break the corporate veil?”
Eliot: Yes, you can deduct those expenses. They are going to go on your C-corporation. If they were incurred prior to the date of incorporation, there’ll be what we call startup costs. You will be able to deduct up to $5000. Anything over the startup costs will be amortized over 15 years. I was going to say depreciated, but it’s almost the same concept, but it’s amortized.
Anything after the date of incorporation, you’ll be able to deduct dollar for dollar deductions. Any loss you have in the C-corporation will just carry forward. The fact that you didn’t have any business, don’t worry about that. That’s perfectly fine. Your loss will just carry forward to next year when you do.
Toby: Here’s the thing. I don’t think that there’s a loss in the corporation yet because it’s a personal credit card. I think that the corporation will need to reimburse you first before that loss is in there.
Eliot: Yes. As far as the personal card, to that aspect of it, you need to turn it in. For reimbursement, typically, we get it on there. These would be the expenses that occurred after it was incorporated, generally. We call it loans from shareholders.
Toby: You’re going to get to write this off, period. Would you actually grab this as a deduction called a loan from shareholders? Is that what you’ll do?
Eliot: Yes, we will call it loss from shareholders. We would expense the expenses. We do have to have that payback. That’s right.
Toby: You’re either doing one of two things. You’re either saying, hey, I loaned you the money from the credit card to do the purchases, or you’re going to loan $20,000 to the corporation to reimburse you for your expenses at which time, then it becomes deductible to the corporation, or you wait until the corporation makes $20,000, and it’s just paying you back for the expenses that you incurred on its behalf. It’s no different than if your employer did that.
If I said to Eliot, hey, Eliot, go get pizzas for the office, and Elliot goes out and buys $1000 worth of pizza, it’s not deductible to me yet. He brings the pizzas in, everybody in the business eats the pizzas, and he’s still owed $1000. What it really is is I owe Eliot $1000, I get to write it off the day that I write him a check for $1000. There are actually three or four ways to treat this just to make it really confusing.
Eliot: But we didn’t break the corporate veil.
Toby: You did not break the corporate veil, and yes, you’ll be able to write it off. Since you’re a cash basis taxpayer, which means the corporation gets to write it off when it pays you for the expense. The only question is, did it pay you for the expense because you said, I’m going to loan you my credit card, I’m going to incur the expenses, you’re going to pay me back, and it gets to write it off right now? Or did I incur that expense and it’s just an IOU, in which case, then the corporation will pay me back once it makes money? Or do I loan it money that it can then pay me back and write it off? Isn’t that fun? Any other scenarios you can think of?
Eliot: I think that’s about it.
Toby: That’s what you guys show up.
Eliot: Just to that, where you run into the corporate veil scenario is if you have the corporation paying directly for your personal expenses. This is the other way around. You personally paid on behalf of the corporation, that’s okay. You can do that all day long. Just don’t want the corporation paying directly for your personal expenses, that’s where you have that corporate veil problem.
Toby: Yours is going to suck. The fact of the matter is these rules are not something that implodes when you don’t do something the perfect way. You get to look back quite often. You can fix things, you just document it. You can work with a tax professional, and they usually keep you on the straight and narrow.
Generally, you always have the opportunity to fix things. It’s not like all of a sudden, it blows up and you have a piercing. No. It’d be years later before piercing would even be relevant.
Somebody says, do you have any fun jokes that start something like two CPAs and a lawyer just walked into a bar? No, because that would be the most boring bar in the town when two CPAs and a lawyer walked in.
Eliot: From law school, after my student that was taught by my same tax professor. He was in a bar, a guy walks in and starts spouting off about how he was getting around tax provisions here, there, and all that. It turned out that this alumni of my school actually worked for the IRS as an attorney. He just sat there, had a beer with the guy, found out more information, and sent the audit out the next week. That’s actually a true story. It’s not a joke.
Toby: A lawyer and a CPA walk into a bar and only agree on the drinks. That’s about right.
All right, “What org structure for small business is audited the least and provides the lowest tax liability?”
Eliot: That’s going to be your S-corporation, typically. It’s going to give you a lot of deductions and reimbursements that you can take advantage of. I don’t know of any. I look at a lot of tax sources all over the web from all over the world, especially, of course here in the US. I don’t know anybody who has hit this more often than this guy right here as far as the statistics, tax wise, these programs and everything else, and his books and all that. I’m going to turn it over to you.
Toby: They used to have a specific table in publication 55. In this publication, they give out all the stats every year of who got audited and what happened during those audits. The big thing for me is, I don’t care if I get audited if I never lose. If you knew you got audited and you have a one in a hundred chance of losing, you probably wouldn’t be scared of an audit. The issue is, if I get an audit and I automatically lose 90%-plus of the time, so remember that.
When you look at these old tables, they’ve discontinued the last two years. We’re trying to piece together the data, but we have years and years and years of historical data. Sole proprietors get audited about 800% more than an S-corp when you actually make money. Let’s just say $100,000 a year. It’s about 1.4%, it’s 1.6% the last year that they came out with stats on $100,000, and an S-corp was 0.2 %. It’s about 800% more often, so that’s not good.
The worst part is the sole proprietors lose those audits between 94% and 95% of the time. The S-corps lose about 69%-71% of the time, but then again, it’s like 1/8 of the audits. And if you’re a sole proprietor, you pay self-employment tax, which is old age, disability and survivors, and Medicare, which is that extra 15.3%. There’s a phase out of it, but you pay that on 100% of your net profit.
If you make $100,000, you’re paying the actual dollar amount is about $14,100 in employment taxes. That S-corp would probably pay somewhere in their neighborhood of $5000 or $6000. You’re going to save $8000 or $9000 pretty easily just being an S-corp if you’re making $100,000 a year. When I look at those, it’s not even close.
The actual lowest audit rate, though, of all entities is actually the partnerships, but you wouldn’t run an active business out of it. It’s much better if you’re going to be doing real estate out of the S-corp, but they’re almost never audited. We do over 10,000 returns a year in our firm and less than a dozen audits last year. They’re so rare when you do things correctly.
Usually, there’s a way people are getting audited. They’re either putting in the wrong numbers. If it’s an S-corp, they’re not taking a salary and they’re taking distributions. In the case of a small business, they’re taking crazy deductions, which make no sense, the numbers don’t add up, or the 1099s don’t add up.
Usually, the majority thing about 70% of the audits are just correspondence audits where they send you a letter. It’s just very, very, very seldom. Some people are still giving us bad jokes. An accountant was having difficulty getting to sleep at night, so she went to see her doctor. Have you tried counting sheep and inquired with the doctor? Yeah, that’s the problem beyond the accountant. When I make a mistake, I spend six hours trying to find it.
Eliot: That’s true.
Toby: That’s all right. All right, enough of this nonsense. Let’s get in.
“How do I best utilize my C-corp status for tax savings and investing in real estate? We have my 1099 paycheck going into our C-corp bank account and then pay out about half to our personal bank account as paycheck. How do I utilize the other half that’s sitting in the C-corp account, such as to buy a new short-term rental or long-term rental investment?”
Eliot: One of the great things we can do here is you could take a loan out to yourself, but you’d have to pay a reasonable amount of interest back. You can take that loan, it gets out of corporation. There’s no tax consideration there other than the interest being earned by the C-corporation that’s going to do your investing.
Alternatively, the C-corporation, before you do the loan, you can take a lot of reimbursements—accountable plan reimbursements, corporate meetings for 280A, medical reimbursements. That all gets some money out to you tax-free deduction to your C-corporation. More than likely, depending on the dollar amount, you’re going to use a combination of those two to get the reimbursements first, then the loan.
Toby: Here’s the one thing. They say, hey, I take my 1099 paycheck. There’s no such thing. There’s a paycheck, which is W-2 and there’s 1099, which leaves you as an independent contractor. Whenever I see those two words used together, just think I’m an independent contractor and my company, the C-corp, is actually the one doing the service. You have to make sure that it’s being paid to the C-corp, not to you.
If it is going to you, there’s a workaround, but you got to make sure that if they’re issuing a check, it’s to the C-corp, then you take out a W-2 paycheck, and then you have the rest of the money sitting in there. If you just leave it sitting in the corp and you don’t do anything, we are taxed at 21%. If you wanted to pay that out to yourself, it’s going to be long-term capital gains too, depending on how much money you make. If you’re married filing jointly and you make less than $88,000 a year, it’s zero.
Usually, in this scenario, when we see this type, I’m probably putting a 401(k) or something in place, and you’re going to put money into a retirement plan. If you have half the money that you’re living on and the other half, let’s get more into your 401(k). We can contribute 25% of your paycheck. I forgot the amount this year. It’s $22,500 I think is the amount that I could defer directly in.
Let’s say you’re taking $50,000 in payroll, I could defer immediately $22,500, actually $30,000 if you’re over 50. You could put a big chunk in there, plus your company can contribute 25% of what you got paid. If it’s $50,000, then they could pay another $12,500. Now you just managed to put a whole bunch of money tax free over $40,000. That number to me adds up to $42,500 right into your retirement plan out of the $100,000, so you’re going to pay zero tax on it. That’s how you do it.
If you’re making money through your business, if you don’t have other employees, then it can be really beneficial. Somebody says, while that gets complex, its numbers, it’s just sitting there giving yourself the options, ABC. Eliot here and all the tax analysts, that’s what they’re doing. They’re always going through saying, here are your choices, you could do A, B, C, D, and which one’s going to get you the best result for the amount that you’re working?
It’s not that big of a deal. Once you get through one year of doing a 401(k), they’re not really that complicated. They’re actually pretty straightforward. There’s not a lot of paperwork. Why would you want a 401(k)? Because you don’t have to pay tax when you put the money into it. If you did long-term rentals in that or short term rentals in that, you wouldn’t be paying any tax on it.
You could also borrow from a 401(k), and then you can use that 401(k) money to buy other investments. Correct, yup. You don’t have to worry about tax on those investments. If you do stocks, you could do covered calls. You could do the wheel strategy we teach in Infinity Investing, and you could just be making money constantly. It’s not taxed until you take it out.
There’s so much stuff we could do. Again, it is somewhat complicated, but that’s why you work with somebody who can give you the scenarios. For us, it’s, hey, A, B, C, D. Hey, look, C’s obvious or B’s obvious. You could always play around with it.
Patty’s pointing out, you could always go to my YouTube channel. Hey, there it is. There are a ton of different strategies sitting on there. Faith, it’s a process. I always tell people, it’s about a year-and-a-half of getting used to the vernacular and talking tax, and all of a sudden, it just starts to go click, click, click. Once you do it for yourself and you see tax savings, it becomes relevant, and then it becomes more interesting.
If it’s something you just want to hand off to somebody else, you can certainly do that, but you really should know some of the basics. We do a tax-wise workshop. These guys do it about every two weeks, where they’re going through the strategies and break it into bite-sized pieces. We have tons of content, where we will teach you how to do this stuff. Once you do it a few times, it just becomes second nature, and you think it’s not really that. It’s like compound education, there you go.
What I care about is just the benefit. Once I start seeing benefits, then it becomes important and relevant to me. Think of it like this. If somebody walked up to you and said, I’ll pay you $1000 an hour to learn something, that’s about the return that tax education is. What they don’t tell you is it’ll end up being $1000 an hour every year for year after year after year, and it really starts to add up when it comes to retirement. It’s the difference between having $10,000 in your account and having a million dollars in your account over a long enough time horizon. That’s all it is.
There’s YouTube, it’s free. You go in there. I always have fun stuff that I’m posting. We have a really good group. I see a ton of questions they’ve answered, by the way. I got to just shout out to my team. Let me just tell you guys how many folks are answering your questions right now. We’ve answered over 200 complicated questions.
Troy, Tanya, Sergey, Ross, Kurt, Kenny, Jared, Dutch, Dana, Patty, and Matthew are all on. It’s not like we’re paying them. Okay, we’re paying them, but it’s not like you guys are having to pay them. They’re answering your questions and trying to do the best that they can to give you some clarity.
We know it’s complicated out there. They passed, how many tax acts in the last three or four years? They keep changing. They keep moving the goalposts. They change stuff on a continuous basis. It’s nonstop because they’re always doing regs, always giving additional guidance, they contradict themselves, and a court case comes out that poops right on everything.
You’re always trying to do the best you can, and we’re just trying to make sure that people are going in with their eyes open so that they’re able to take things into account when they’re deciding what to do, so that they can do things in the way that’s best for you, as opposed to just giving it over to the government.
We happen to believe that money is better off spent at home in your hands than it is giving it to the government. As much as we love the government, we think that you’re a better steward of your money than any governing agency or any governing body. The tax code is written for your benefit, so we may as well utilize it. They just make it a little bit complicated.
I’m just telling you, we got a lot of folks out there to help you. Even right now, they’re all just churning away trying to answer all your questions. What we’re going to do now is say, thank you for joining us. Send in your questions at email@example.com. You may see it posted here. We may be answering it live. If nothing else, we’ll make sure that we get a response to you. Anything you want to add?
Eliot: Thank you so much for joining. I look forward to seeing you again.
Toby: All right. What I’ll do is you’re going to see us go mute. But for those of you who have unanswered questions in the Q&A, hang on. They will answer them all before we are done.
Thank you, guys. Make sure that you come to the tax and asset protection events that we hold. Clint is an amazing speaker. They’ll get there. As far as tax wise, I think it’s in the tax toolbox. Go to the tax and AP event, learn about the business essentials package, or ask your rep about the tax toolbox. You guys may have access to it, you may not even realize it. It’ll be sitting in there and you’ll be able to continue to do all sorts of fun stuff. We’ll make sure that we’re helping you out.
By all means, join us for those workshops. Just plug in. You don’t have to become a client till you’re good, set, and ready, but you can absolutely learn together with us. We’ll always be giving you relevant information that hopefully puts more money in your pockets. We will see you next time, in two weeks.