Give your children a purpose, not money. Toby Mathis and Jeff Webb of Anderson Advisors answer tax questions related to passive versus active income reported on payroll for people of all ages to flipping properties and real estate investments. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
- If I have a small business, do I need to make it an LLC to hire my children, or can I just be an independent contractor and hire them? LLC is not required for small businesses, but it is recommended for liability protection; your children’s wages should be run through payroll, even if they don’t have social security numbers
- I just bought a house, paid 30k in cash, and spent about $15k in rehab. What expenses of this deal can I write off, besides the rehab cost? Depends on whether you are flipping the property or using it as an investment property; capitalize all of it because you can’t write off the expenses as repairs
- If I am a real estate professional in 2020, can I offset previous years’ passive losses in this year? No, only for 2020 and only for years you were a real estate professional
- Can you put a primary residence into a land trust and/or LLC to maintain anonymity, if you have a commercial bank loan? If not, are there other options available? LLC or land trust is possible, but it’s not the best idea because it could impact homestead
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Full Episode Transcript:
Toby: Hey, guys. This is Toby Mathis.... Read Full Transcript
Jeff: And Jeff Webb.
Toby: You’re listening to Tax Tuesday. Apologies for the tardiness. We were doing our best to break our system, but we were not successful, so here we are. We really do have to get hammering right away today because today is the tax deadline. Jeff and his staff have been going crazy because CCH has done its dangdest to break today, right?
Jeff: Yeah, make it difficult. It’s a challenge.
Toby: Yeah, they like to make it interesting. Us and thousands of other accounting companies across the country have been having a lot of fun with our software today. The joy of it.
Hey, if you listen to Tax Tuesday and you like what you’re hearing, or you like just being a student of information, by all means, go on and sign up to some of our other social media platforms including the YouTube channel, Facebook, and LinkedIn. We’re always putting new content out. We do like to do that.
Tax Tuesday rules. You could ask questions. We’re going to try to do our best to be done in an hour today. I don’t think we’ve ever done an hour, at least not when I’ve been around. They do when I’m not here. They’ll keep on time, but today we’re definitely going to do an hour just because Jeff’s got a few hundred more returns to make sure they get in. We’re pretty good right now, right?
Jeff: We’re not terrible.
Toby: We’re not terrible, typical CPA. If you have questions, you can send them in on TaxTuesday@AndersonAdvisors.com. We go through these, and this is where we kick them in. This is where we pick them to go over, and today, let’s go over our opening questions.
Let’s start with number 1. “I have a small business. Do I need to make it an LLC to hire my children, or can I just be an independent contractor and hire them? Is the limit that I can write off $12,000 per child?”
“Just bought a house cash for $30,000 and spent about $15,000 in rehab. What expenses of this deal can I write off, besides the rehab cost?”
“I have a real estate business in Texas and was thinking of establishing a series LLC for my properties. How does this affect my ability to sell or do a 1031 exchange? Do I need to have a separate holding and management/operations LLC? Where does having a land trust come into play?”
“If I am a real estate professional in 2020, can I offset previous years’ passive losses this year? If I have a whole bunch of passive losses, does becoming a real estate professional affect those?”
“We are looking to purchase a used RV from a private party in California for $100,000. If we register a vehicle with our Wyoming Holding Company, can we avoid paying California tax—the sales tax?” I’ll answer that.
“Suppose one purchased a home in an opportunity zone, and the funds for the renovation came from the sale of some stock options and earnings from an Employee Stock Option Program. If the person’s accountant filed the taxes with no form 8996—that is for the opportunity zone—filed and the taxes were paid on the capital gain instead of deferring. What can the person do?” The only reason that the stock was sold was to fund the renovation and to improve the neighborhood. It sounds like we have a botched opportunity zone.
“Can you put a primary residence into a land trust and/or LLC to maintain anonymity if you have a commercial bank loan? If not, are there other options available?”
“I have a question with regards to taking some money from 401(k) without penalty due to Cares Act. Is it possible to use it to invest in real estate property, or are there restrictions on where you can use the money?”
“What are other ways to avoid capital gains aside from the 1031 exchange? Can a house be put in a non-profit and then sold so no taxes are owed?”
And the last question today, “I have a lot of passive loss carried forward from the 2019 tax year to 2020. If I elect to be a real-estate professional in 2020 for the first time, can I use this passive loss from the previous years as a deduction against ordinary income earned in 2020? Does it change the nature of the previous losses?”
Good questions, lots of them. Somebody says suggestions. I’m looking at some of your guys’ questions. “What’s the time frame to receive a tax refund due to COVID?” It says it’s been about four weeks. You should’ve gotten it by now if you put your bank information.
Jeff: Yeah, if you did a direct deposit and e-filed your return, it should be pretty quick. I’d say less than two weeks. If you paper-filed your return and you’re getting a paper check, it could be 8-12 weeks.
Toby: Yeah, so you should have received it.
By the way, we do have people on this. I know we have Patty. Let’s see who I have as a staff. We usually have a few folks answering your questions. We have Patty, Piao, and […]. I don’t think we have Eliot today. We got a lot of our accountants getting a little jammed. We can look at that.
Hey, there are some good questions coming up. I’m going to hold off, and I’m going to just jump right in and start answering the questions that were submitted.
“If I have a small business, do I need to make it an LLC to hire my children, or can I just be an independent contractor and hire them? Is the limit that I can write off $12,000 per child?”
Jeff: You don’t have to have an LLC. If you got a small business, I will suggest an LLC just for your liability protection. But if you have a business, the only requirement to pay your children would be you would need to run it through payroll.
Toby: If you are an independent contractor, you are not required to do all the payroll stuff if you hire your kids. You don’t have to do the withholdings or the security.
Jeff: How would record the wages, the income to them?
Toby: You may have to run through payroll and you may not have the Social Security Number.
Jeff: Right, you don’t have to have Social Security.
Toby: That’s how I’d be recording it. You would have a federal tax withholding […], income tax withholding.
Jeff: Any business, as long as you run a payroll form, you can run it through. And the reason we say $12,000 per child is because that’s the standard deduction. That’s the most you can pay them without them reporting taxes or paying taxes.
Toby: Yeah. They’re going to have a standard deduction, whether the $12,200 or $12,400 this year. But $12,000 is a good number, then you don’t have to worry about them. If they contribute to an IRA, you could toss on another $6000. If you paid them $18,000, then you could find an IRA, and you still have zero tax.
If you have 401(k), potentially that could put $19,500 in the firm. Now you can pay them almost $30,000 without worrying about $1 of tax yet. By the way, the independent contractors are an exception to the rule for all the withholding. I usually have clients as S-Corps because you avoid so much of the old age, death and survivors, and Medicare. I think that’s the same with yours, Jeff.
Toby: Then you just run general payroll, and most of our clients again are going to defer a chunk of it directly into a retirement plan. Because if you get that money in for a kid.
Jeff: Some people will—rather than running payroll—try to do 1099 their children instead. That doesn’t quite work as well because it’s not a deduction to your business for their payroll taxes, but they will have to pay self-employment taxes on every dollar over $400 that you pay them.
Toby: Even with the standard deductions.
Jeff: Even with standard deductions. Even if their taxable income is $0 they’re still going to have self-employment income.
Toby: Yeah. They’re still going to have a little bit. But what if they write it up with business expenses? What if the kids have some?
Jeff: Here we’re talking about older children.
Toby: Yeah, we’re talking about older kids.
Jeff: Yeah, so for 1099 they could do that. But for W-2, they wouldn’t be able to write off business expenses. They’d have to be reimbursed by the employer.
Toby: Makes sense. More questions that say, “I am starting an LLC with four partners. I’m retired with a disability. What is the best way to incorporate?” You would use the LLC with all four partners if that’s what you’re all doing and you make it a partnership. Depending on what you’re doing. If it’s an active business, you’re more than likely going to make that into a corporation. If you are a […] depending on whether you have to take the salaries out if it’s a passive business. You’re buying passive assets like real estate, you’re more than likely going to be a partnership.
We have a lot of questions but it looks like some are already getting on there. A question on the 1031. “My wife owns it in her name only—a California single-family residence. We are selling it at the end of this month and we plan to 1031 exchange.” This must be an investment property. “We have an irrevocable domestic asset protection trust with our own tax ID, which is the sole number of our holding company in Wyoming. How do we make sure that we can be anonymous for the new […] multi-family residence if the […] is only on my wife’s name—personally her tax ID? Trying to figure to make sure this happens.”
This is what you have to do. To make it simple, when you 1031, you’re going to have to go name to name.
Jeff: I agree with you on that.
Toby: The wife has to acquire the new property from the intermediary. The wife can immediately put that into LLC. It could be an anonymous LLC. Your wife can put it immediately into a land trust with a separate trustee. You could actually have an LLC be the trustee of the land trust and make it an anonymous LLC, so nobody will see.
The only thing that potentially could happen is somebody looks back in the title and sees that your wife’s name was on there somewhere. But that does not denote current ownership. Maybe a savvy person knows enough to figure out that you guys have that property as an investment property and looks up that property and pulls up its history. Otherwise, you’re not gonna see that in a typical asset search. That would be the way to do it. I think it would screw up your 1031 exchange. If they’re willing to take it, put it, and close it on the trust, I just know the IRS is pretty staunch about name to name.
The other way you could potentially do it is to put it in an anonymous trust before doing the 1031 exchange. But then you are at risk of the IRS saying, hey, you didn’t do a proper exchange. You transferred it right before. You didn’t hold it as an investment for the requisite period of time. It gets kind of interesting. Let’s keep jumping on. I’m going to go all day, and I know that they are already zipping away.
“Just bought a house cash for $30,000 and spent about $15,000 in rehab. What expenses of this deal can I write off beside the rehab cost?”
Jeff: Here’s my opinion, Toby. If you bought a house for $30,000 and the rehab was half of that, I’d say it’s highly likely that you’re going to have to capitalize all of that. I see a lot of people buying distressed houses and then will get large loans to totally gut the joint. You can’t write-off those expenses as repairs, typically. What expenses can you write-off? That depends on one or two things. Are you flipping a property, or is it going to be a common investment property?
Toby: Yeah, the first thing I ask myself when I’m looking at this is, hey, what kind of house? Is this your house, your personal property, an investment property, or are you intending to sell this? All three of those things are treated differently. If you bought it as your house, the $15,000 gets capitalized in this personal property, there’s no depreciation.
If it’s an investment property, you have $30,000. Part of that is land, which you don’t depreciate. Let’s say that $5000 of that is land, $25,000 is the improvement on the property, and I would just toss another $15,000. Most of that is probably going to be an improvement. I’m with Jeff. You’re going to add that to your basis, that’s a depreciable basis. You’re going to have $25,000 plus $15,000, so $40,000 of depreciable basis. What can you write-off? It really depends.
What we can do is to do cost segregation. Break those pieces down into 5-, 7-, 15-year property and 27 ½-year property, assuming this is a house where people reside. You could write-off probably about 30% of that, so probably around $12,000 in year one (if you do that).
Jeff: Versus $15,000 if you just make an all 27-year property.
Toby: Yeah. I mean we would look at some of the $15,000 and see which part of it is repair versus an improvement. And then the other issue is what if it’s a flip? In which case, all of it is just basis. You don’t get a deduction for anything. Technically, it’s the basis. It’s not a deduction, so it’s inventory. You’re basically running a car lot with houses.
Somebody’s asking a question about the banking structure. I see that. Here’s how it works. Let’s say that I have a holding entity that owns other LLCs. Those LLCs bring in money and they pay it up. It’s what’s called a non-dispositive issue. It won’t kill you if you don’t have bank accounts in all the sub-LLCs. But it is a factor that the courts can consider to determine whether they’re going to honor those LLCs. The money, normally you’d say, hey. If you have a property manager, you don’t really need bank accounts on each of the individual LLCs. It’s not changing anything. You would just have the property manager issue those monies to the holding entities. Straight up to the holding entity.
What’s your risk? Your risk is when somebody says that you didn’t honor the separateness. You’re going to say, hey, I honored the separateness. I kept separate books on everything, I know each property, and that’s all I’m required to do. You’re going to be fine. I’ve never seen anybody get in trouble with it.
But if you are self-managing and you’re receiving the rents, then you need to have something in that estate or you’re really going to have trouble. I would either have a property manager in that estate as a bank account, or I would have each LLC have its bank account. It depends on your banker, where you’re banking, and how easy they are to work with. I’ve had good ones and bad ones.
I tend to go with the side of having a bank account, but if it’s really a pain, then it’s not going to blow you up. It’ll be a factor. Just make sure you have good books. And if that’s the case, you could have 10 LLCs in your home estate with all rental properties, and you could have one bank account—your holding entity in one bank account. You’re getting that. I hope that makes you feel a little better. You’re not going to have bank accounts galore.
One other question then we’ll jump to the others. “First I want to thank you for the information. You guys are the best. Love watching the videos. My question is below. In escrow to purchase 70 houses and 70 lots in a particular estate. Based on all your videos, my strategy is to form a California LLC owned by Wyoming LLC taxes and S-Corp.” Given that there would be investors—it sounds that you’re going to develop. It sounds like, okay, we plan to rehab and then build all 70 lots. “Clint says, sell the lots after a year to avoid ordinary income. He says you’re taxed as a dealer no matter what. A little bit confused”
Here’s what’s going to happen. You’re going to get taxed as a dealer when you’re developing properties, and the dealer is just going to be an ordinary income to you. There’s no way around it. What you want to do is once you’ve developed that—and if you’re going to hold it for a longer period of time and sell it to somebody else, or you’re going to make it into a rental property, build on it, or whatever—you sell that on the installment sale to another entity. That entity is the investor who’s buying for the long-term hold.
If you are flipping the house—some people are, asking what does that mean? If I buy something with the purpose to sell it, it is inventory. It is no longer a depreciable asset. It’s just like buying Cheerios and putting them on a store shelf. Is that a good way to put it?
Jeff: Sounds good to me.
Toby: Yeah. It’s taxed as ordinary income at your rate, and it is subject to old age, death and survivor, and Medicare also known as self-employment, also known as social security.
Jeff: Question for you. Since the sale of undeveloped land has many favorable terms than the sale of improved properties, would you separate those into two different entities?
Toby: I might.
Jeff: Because you’re more likely to get capital gain treatment and installment gain treatment on the land.
Toby: It depends on how many lots you’re developing. If you’re doing 70, you’re toast. You could do more than six (I want to say). There’s a number threshold.
Jeff: When you start developing them they become inventory again.
Toby: Yeah. If you just buy the land, subdivide, and sell, then I think it’s six a year before you’re a dealer. If I buy them, fix them up, and develop them—you know what you’re doing. I’m adding the value by getting the engineering and by putting in the infrastructure.
Jeff: As soon as you run roads, lines, and stuff.
Toby: That’s all a dealer. And when I do that, that’s ordinary income. What we want to do is get that off of you as quickly as possible. Let’s say I’m developing a property. I’d buy it for $200,000, now it’s $300,000. I sell it on an installment sale. Now I say I’m going to pay you for years, and I’ve just capped my ordinary income at that $100,000. And then as that property goes up in value, let’s say I sell it in two years and it’s worth $500,000. I’m going to have long-term capital gains on a portion of it that I can 1031 exchange. I cannot 1031 exchange dealer property.
“I have a real estate business in Texas and I was thinking of establishing a series LLC for my properties. How does this affect my ability to sell or do a 1031 exchange?” First off, it doesn’t. It’s per-name. If you’re in a series, you’re going to have to take the title in a series. So if I’m series one, series a, series b whatever of such and such series LLC, then I just have to make sure I take the title in that exact name.
“Do I need to have a separate holding and management entity?” Usually, you want to, but you’re not required to. The operation is if you’re managing your own properties. If you have a property manager, by all means, you could use a third-party. I like having a management company because there are lots of other expenses to write afterward.
“Where does having a land trust come into play in a series LLC? It’s like any other LLC.” What you’re doing is you’re using the land trust to hold title and then the individual series are the beneficiary. You’re just trying to make sure that if there’s a loan, they won’t call the loan due if you’re putting it in a trust. And technically, there’s a law called the Garn-St. Germain Act that says they cannot if it’s irrevocable trust that is used as a primary residence or as a residence. But what it means is most banks look at trust and say, oh we don’t call those due.
If you put it directly in the series, everybody knows where it is. If you’re worried about anonymity at all, that could be an issue. But also you’d get the due-on-sale. And I’ve only seen it twice in 22 years.
Jeff: Yeah, I’ve never seen it.
Toby: I had it and that was just somebody took it out or put it in. And then the bank was like, no, we don’t you put that in there. I think we actually put it in trust and they were happy. I just don’t want you guys to run into this.
“Once I sell a flipped house, how long should I keep the LLC I created for that flip active i.e. when can I dissolve it? After the statute limitation is run?” No, you could dissolve it right away. You don’t have to keep it. There are some people that as soon as it closes, they’re going to go down…
Jeff: Cash the check and dissolve that property.
Toby: Cash it, drain it, and dissolve it. That’s the standard operating procedure. Most people aren’t doing it the day after. They are saying, hey, that’s next month. I’m going to dissolve it, or when it comes due.
Jeff: If you wait for statute limitation, you’re just leaving assets and they’re just looking for—
Toby: The thing is there really are no statute limitations. It could be upon discovery.
Jeff: I was thinking of the tax statute, but yeah, you’re right.
Toby: Yeah, you still got seven years. Isn’t that stinky? If there is a substantial underpayment, then it’s forever 25% or more?
Jeff: I think if they can prove fraud, then they can go back six years instead of the normal three.
Toby: There’s a bigger one. Isn’t there one that’s forever? Fraud is forever, I think.
Jeff: No, I don’t think so.
Toby: That is something for us to look up. I always like the stuff that I can’t remember that I can go do.
“Can’t you rename an LLC in lieu of dissolving?” No, because it’s still the same entity. What you’re trying to do is cut the liability. You dissolve the LLC because it’s liable for all the activity. If you just change the name—you may be in the middle of a flip and somebody files a claim. They could encumber your title because it would be with the state.
Jeff: A lot of the Secretary of State’s sites follow that change of name changes and such.
Toby: Somebody says 1031 Exchange. Somebody’s talking about Biden eliminating the 1031 exchange. Biden can’t eliminate the 1031 exchange. You still need Congress. Could he push it? It’s the same thing. Trump was going to eliminate Obamacare, right? He ran into some problems with that. He did a lot of workarounds. He’s going to build a wall. He’s going to do all these things, but you got to deal with Congress. Everybody makes promises during the presidential elections. I don’t think the 1031 exchange is going away. The real estate lobby would probably have a little something to say about that.
“I am a real estate professional in 2020. Can I offset previous years’ passive losses in this year?”
Jeff: No. Unfortunately, that real estate professional would be for 2020, not for any year since you were not a real estate professional.
Toby: I am going to draw this up Jeff because I always find it helpful—when you are thinking of all the different types of losses and income—to visualize it. I have trouble otherwise. Let’s say we have 2017, 2018, 2019, and 2020. All right. We have passive, which would be real estate or businesses in which you do not maturely participate. We have passive income. Let’s say we made $100,000 passive. In 2018, we made $50,000 passive, but we lost $100,000. Then in 2019, we made $50,000, but we became real estate professionals. We managed to generate a $200,000 loss. And then in 2020, we broke even and we don’t have any loss.
We start looking at these and just go by the rule. Passive losses can offset passive income only. If you do not have enough passive income, you carry it forward. Active real estate professional income is an ordinary loss, and it can offset anything. Here we have this plus, so we don’t worry about 2017. Here in 2018, we have $50,000. The net is $50,000 passive loss, which we carry forward in 2019.
Here we have $50,000 of passive income. We have a pile that would take that out, right? So we’d offset these two. Now you have an active $200,000 loss. This where it gets fun. We can go back with that right? We could actually carry this back. This guy right here, we could carry this all way back to 2014 unless (let’s assume that) we didn’t have anything to offset. We’ll eventually knock this out, and we’ll still have an extra $100,000. You will use this against that.
Just to give you guys an idea. That’s why I wish it was cleaner than that, but it makes a difference what you are the year that you make it. Those losses are etched in that particular year. If you have a passive loss, all you’re ever looking for is, am I going to sell the item—the asset? Because then I could take that loss against the gain. Now you’re yes, I’ll just take the loss. Or do I have the passive income that I can offset with it? If I have an ordinary loss, I’m looking for anything—any income. And I can carry that loss forward too, both of them. Hope that makes sense, guys. If you understood that, by the way, you got a star. Somebody said, nevermind. I got it. I love it.
We’re going to jump into another. Somebody says, right. But it’s also the corporate rate that could increase. What they are talking about with Biden—just so you guys know, Biden’s pledge to increase the capital gains stocks back to 28%. And to move the corporate taxes back.
Jeff: Back to 35.
Toby: I think it’s back the way they were. Julie says, “What about the rest of that $100,000? I’ll go back.” That $100,000 you carry forward.
Jeff: It could be carried forward to that 2019.
Toby: Yeah. So you’d have an active loss of $100,000, and you keep carrying that forward until you use it up.
Somebody says, “Please explain passive income versus passive.” Passive income is income from businesses in which you do not materially participate. If I put money in Jeff’s accounting practice but I don’t do accounting, and I am just sitting there as the passive investor even if it’s in an S-corp, I’m passive. I never pay self-employment tax.
If I have real estate, it’s presumed to be passive always unless I’m a dealer. Then you look at your losses. If you have losses, then its passive loss can only offset passive income. And you can carry forward passive losses. You don’t carry them back, right?
Active losses and net operating loss can offset any income. Your W-2, we don’t care. In order for it to be a net operating loss with real estate, you have to qualify as a real estate professional. Real estate professional is found in code provision 469(c)(7).
I’m just going to write that for you because you’re going to tell your accountant to familiarize themselves with that because if you hit that, your losses automatically become ordinary and this is a gold mine. Because I could pay for losses on a property I bought. I could buy property for $1 million. I could put $50,000 down, finance the hell out of it, or have other people put the cash in. I don’t even put dollars in. And I can cost seg it and take a 30% loss in year one. That would give me basically a $200,000 to $300,000 loss to use against my ordinary income, so I can knock my W-2 down.
You guys that are high-income earners, real estate professional is your friend. Only one spouse really has to qualify. If you’re married filing jointly, one spouse. You can be a gal who’s a surgeon, makes a ton of money. Her husband manages their property. We’re picking up properties every year just looking at which ones to seg. You use the cost seg to eliminate some of the tax on—I actually have a couple of these that the wife’s the surgeon and the husband is doing the real estate. And you are using the paper loss from the real estate to offset her W-2 or her professional practice money. Anyway, we keep jumping on. Fun stuff.
“We are looking to purchase a used RV from a private party in California for $100,000 for business use.” Sure, its business use. By the way, I don’t just say that. The IRS likes to say that too. “If we register the vehicle with our Wyoming Holding Company, can we avoid paying California 8.75% sales tax?” What say you, Jeff?
Jeff: Quick story. We actually had somebody who tried to do this. Bought the RV for business use and drove it across the country because they had a directors’ meeting across the country. Well, he didn’t mention that it was at their son’s house for Thanksgiving.
Toby: How did that go over?
Jeff: Not well. You’re going to have to register this RV wherever it’s being garaged. It doesn’t matter that it’s being held by the Wyoming Company or whatever company. If this RV is spending all its time in California, the state is going to hunt you down and make you register in the State of California. You may have a different opinion on this.
Toby: No. Somebody just says, look, which is why it’s so annoying that Mar-a-Lago gets benefits. No, Mar-a-Lago is a conservation easement. I’ll explain that one. It is genius. If you guys know what they do, it’s literally a joke.
Jeff: I have a client who did that in his country club.
Toby: I’ll explain how that goes in a second. Just for cocktail parties, you can tell people. I’ll show you how it’s done. All right. Where we buy it is going to dictate where their sales tax is. You buy it in California, they’re going to hit you with the sales tax. Now you say, but we’re not going to use it in California. We’re going to use it exclusively outside the state. California will tell you, well, if it’s going to be out of the state, and it’s not here, then you don’t have to pay our sales tax. You would pay wherever it’s going to be registered and where it’s going to be parked. If it’s driving all over Timbuktu, Egypt, then it’s not really parked anywhere. As long as it’s not in California, they don’t care.
The problem you have is, let’s say we put in Wyoming. Wyoming has a sales tax of 4% plus all states have something they call a use tax. And the use tax is when you put an asset there that you don’t pay sales tax on, they say great, pay sales tax here. For example, if you’re in California, you buy the RV in Wyoming, and you say, I’m going to ship it over to California. Don’t charge me any sales tax. California is going to get you on the use tax.
There are a couple of things here. First off, you’re buying it for business use. Business use means 50% or more use for business. Any portion that you use for your recreation is taxable too. I tend to tell people, hey, don’t make it hard. Just buy the RV. It’s yours. Reimburse yourself the mileage. Your mileage is $0.58 a mile, and go drive around for business.
If you have rental properties in different states, go visit them. If you’re looking at investing in certain states, go take the RV. I have a buddy of mine, he’s a lawyer. He calls it the war wagon. Whenever he goes to trial and he tries cases all over the country, he takes his war wagon. All those miles are deductible, and because it’s an RV, you can do 280A with this. You can get somewhere in the neighborhood of $750 a day for 14 days. About $10,000 a year you’ll be able to get tax-free out of your company.
You screw that up if it’s a business asset. Plus if it’s a business asset, you’ll find that the insurance is going to be a little more expensive. Anything you want to add on that one?
Jeff: People who usually do this are aware of that $100,000 write off, or whatever the RV costs. That’s very lucrative, but it does come with its risks. It is something that the IRS looks very hard to see how you’re actually using that recreational vehicle.
Toby: Yeah, lots of people by the RV and the boat and call it a business asset. They’ll say, I used it 80% for business. They’re like, okay, prove it. Where’s your log? A bunch of questions, and already got caught. Lots of people get caught. But they were doing some funky stuff.
“Can I lease my RV to my business?” Yes, but then you have sales tax going back to you, and you have income going back to you. I want the money that comes from the business to me tax-free, not recorded anywhere. That works. I moved $4000 out of my active C-Corp to cover Lasik surgery. This would be a health cost.
Jeff: Right. Medical deduction.
Toby: That’s fine. It’s deductible as another—how do you guys label that?
Jeff: Out of pocket.
Toby: But on the corporation?
Jeff: On the corporation, it’s a medical reimbursement.
Toby: Yeah, you just call it medical reimbursement. You’d get that tax-free. That’s why we do it.
Mar-a-Lago. If you understand how conservation easements work, here’s how it works. If I give to a true conservation company—Ducks Unlimited is a big one—and I give them a permanent right, a gift that reduces the fair market value of my real estate. Think of here’s a big bunch of real estate in a really expensive area.
Somebody says, “What’s 280A?” It’s 280A. Section 280A is disallowance for certain business deductions of the home, but in the end, it’s 280A(g)(2). There’s a little price there for you—if you’re willing to go to the end of it—where it says you can rent your house out less than 15 days and not record the income. You have to have a third party that you rent to and a corporation that qualifies.
Mar-a-Lago. You can rent an RV, a boat, or anything that has sleeping quarters and a head in it. Yeah, you can. You can have multiple houses too. If I have two residences, we just tell taxpayers—husband and wife, or single—14 days. Don’t go above that. We know that we’re good, we have been for decades. That’s been going on since the ‘80s. I don’t think it’s new. I don’t think we’re original.
Jeff: If you don’t know a conservation easement is, it’s an easement on your property saying, I will not change this property.
Toby: Or I could give them mineral rights. If Jeff has land with oil under it, he could give away the oil rights to a conservation company knowing full well he could go after that oil. Or if it’s granite and he’s got valuable minerals underneath his land and you give it to a third party nonprofit, Jeff gets a deduction. The fair market value he would get is a charitable deduction. Limited to 50% of his adjusted gross income. Any excess, he can carry forward for five years.
Now, what Trump did, is he gave away the development rights to break that golf course into single lots. Don’t quote me on this. I think it was six big parcels, and he did it to three of them. He also did it to the clubhouse. What he did with the clubhouse is he says, we’re going to maintain the original antiques that are inside the clubhouse. Every year they have a gala where people can come in. That’s what they’re doing. He got about a $5 million deduction that year for that. It didn’t come out of pocket or anything. He just said, hey, here, I’ll give the development rights to this entity. They get to hold it. What we know is that Mar-a-Lago is always going to be there. It’s going to be really tough. It’s always going to be open space and a French antique. Probably.
If you like that type of stuff, by the way, here’s a good segue for a shameless pitch. We just came out with the Tax Toolbox, $595. What we do is we have an electronic version only for $495. You can go in there and log in. There you go. I’ll just go over it real quick. It has 22 different lessons and a 278-page workbook. What I do with the workbook is I just gave you all the different documents to take advantage of the deductions we go over in there. Because 280A, for example, you have to get a couple of quotes. Here’s the agreement between it.
If you’re a realtor and your broker won’t pay you, they say, I had to give it to Jeff individually, but Jeff has an S-Corp because it’s going to save you $10,000 a year. You can give me some documents. There are two documents under a Fleischer decision that says, hey, as long as I let the broker know and I have an employment agreement with my S-Corp, then I can treat it that way. Sometimes you guys take it 100% on the Schedule C and then put it on the S too, right?
Jeff: Yeah. I’ll send the 1099 to them personally. We will nominate it over to the S Corporation.
Toby: There you go. We’ll figure a way. There’s always a way. We just have to dot our I’s and cross our T’s. Speaking of that, come to the Tax-Wise Workshop. That’ll also be included in the Tax Toolbox. We’re going to do an online version this year, but usually, they’re two days. Sometimes we go for three days. Probably move them to three days again. If you guys know me, we never end early. That’s just because we love to answer your questions. We love to make sure you get a lot of value out of it. And we’re so much fun to hang out with, especially Jeff because he’s such a Chatty-Cathy.
Jeff: I know.
Toby: Here we go. All right. You can go to a link if you want to. It’s aba.link/ttb920. Here’s all the stuff that’s included—22 lessons, 30 exhibits, plus you get the Tax-Wise, and it’s $595. If you want to digital-only, it’s $495. All right. Pattie can get you those links if you need them. That’s the last you’re going to hear of that.
“Suppose one purchased a home in an opportunity zone, and the funds for the renovation came from the sale of some stock options and earnings from the employee stock option program. If the person’s accountant of the taxes with no form 8996 filed, and the taxes were paid on the capital gains.” You didn’t report it. The only reason the stock was sold was to fund their renovations. Let’s just call this what it is. You bought something in an opportunity zone. Your accountants somehow screwed up and didn’t report it, maybe you didn’t tell him. They took the information you gave and did it. What do you do, Jeff?
Jeff: I had a bunch of questions from this one.
Toby: Rightly so.
Jeff: I’m assuming by ESOP that you mean just a regular company stock option plan because a lot of these are retirement plans, which would not qualify for opportunity zones.
Toby: For the ESOP?
Toby: It could be.
Jeff: Well, because you don’t get capital gains from a retirement plan.
Toby: The chances are these guys sold their business to the ESOP, and the ESOP is paying them out in trenches to spread out the capital gains on the sale of their business. It sounds like maybe he’s a participant.
Jeff: Yeah, it sounds like he cashed out the stock options to invest in this opportunity zone, but it looks almost like he purchased the property in his own name rather than in an entity.
Toby: Nail on the head. An opportunity zone is these areas where the government has decided, each state submitted it, and said, if you buy properties or set up businesses in these particular zip codes and you keep them there for 10 years and sell them, you don’t have to pay any tax. You have to fund them with capital gains if you want the tax benefits. You have to defer capital gains. You’re going to pay tax on the capital gains, but you’re going to get a step-up of 10%. You’re going to pay tax in six years now—it’s 2026.
You’re going to have to pay tax on it. It’s just you don’t have to pay it for six years. You’re only going to pay 90% on 90% of the income. To do this, you actually have to have an opportunity zone fund—a QOF, Qualified Opportunity Fund—and that has to be a partnership or C-Corp. It has to be an entity, and it has to receive your funds. You can’t just go invest in it unless you invested in somebody else’s partnership. But it can’t be you, and it can’t be just you.
Jeff: You can’t donate property to the fund either, correct? I mean, you can’t go buy a house and then put that house in the fund.
Toby: No, you actually have to acquire it.
Jeff: Okay. The fund has to acquire.
Toby: I believe there may be an exception to that if you had something and you’re exchanging it. Somebody says, what about a bank account for the zone fund? It has to receive the fund.
Jeff: Yeah, it’s going to have to have a bank account.
Toby: Yeah, and just keep in mind, this could be a dairy queen too, or you could open up your computer business there. As long as you have 50% of the employees in the opportunity zone, the business qualifies. They have a 50% income tax. If you do buy real estate, you have to improve that real estate. It’s up to 50% of its value. It gets pretty interesting. Let’s see, there’s a whole bunch of questions. I won’t dive into this, because, as Jeff said, definitely we’d be sitting down with this client. It sounds like they’re not going to qualify. They probably didn’t have somebody telling them what they needed to do.
They could go back and get relief if it was just an error, but it’s like anything. You have to show excusable neglect, and you have to show that is not prejudicial to the United States government. I would say that you’d have to show that your accountant has the information and screwed it up. If they screwed it up, fantastic. They fall on the sword. They say it’s my fault. 99% of the time, they’re going to agree to that. Is that fair?
Toby: Somebody asking about Tax-Wise. Tax-Wise is on 12/1, I believe. We had to move it a little bit just because we have so much cool stuff. I don’t know if you guys are paying attention to what’s going on in the market. But inventory is drying up. I showed some folks this weekend the St Louis Fed, so it’s FRED—Federal Reserve Economic Data. The inventory in the states where we buy, which is North Carolina, Texas, we’re buying in Indiana, and we buy in Missouri. We were talking about the inventory dropping 37% in Charlotte, in some places—30%, 40%. We’re watching it just go down.
Everybody says, well, all the evictions are being held off. I don’t know anybody that’s getting hammered other than the retail folks. Everybody that I know that has a multifamily or single family there in the 93%, 94% collection. We haven’t seen it yet. It doesn’t mean it won’t happen. It just means that, man, we need houses. Everybody needs houses. It’s crazy. It’s like a nut on your fruitcake. Even if it’s owner financed properties, somebody’s asking. Primary residences are things that can be deducted on taxes, some mortgage interest. Even if it’s owner financed, yes, you still get that.
Somebody says, “What about the installment sale and the benefits from that?” Okay. Jeff, let’s pretend that you’re going to sell me something.
Toby: What are you going to sell me, like a business, house, or something else?
Jeff: I’ll sell you a house.
Toby: All right. So Jeff’s going to sell me a house. What did you pay for that house?
Toby: What is it worth now?
Toby: You have $50,000 of gain. Jeff says, man, I am getting killed on my taxes this year. If I have that capital gain—let’s say Jeff’s in California. Your capital gains rate would be 20% plus 13%. Let’s say on the top bracket plus you’re going to have a net investment income tax. Jeff is looking at arguably a 36% tax rate on that $50,000. What if we say, Jeff, I’ll pay you over 10 years? Now, Jeff is going to get three types of income. He’s going to the return of his basis, which is zero.
Jeff: Yeah, zero tax.
Toby: Zero tax. He’s going to have some depreciation recapture (I should say) on his $100,000 if he’d appreciate any of it. He’s going to have capital gains, which is going to get spread out over 10 years, and he’s going to have a limit of interest that he’s going to receive because I’m going to have to pay interest if it’s more than $10,000. We just spread out Jeff’s tax hit, and that’s why people use installment sales. Isn’t that cool? I learn something new every day. And sometimes what we do is we take really highly appreciated.
Jeff says $150,000, let’s just put a few zeros on that. Let’s say you had something you paid $1 million for and you have $15 million and you want to spread it out over your lifetime. We may take a look at your life expectancy into an installment sale over the rest of your life. And sell that asset maybe to your kids or put it in trust. Sell it to the trust with your kids is the beneficiary so that we can lock in its value for state taxes and we can spread out the tax hit.
Plus, if we step up the basis, you could actually sell that business or that asset at a future date, and not recognize all the taxable gain in that year. Let’s just say you’re paying mom and dad out over 25 years. You’re spreading out that tax hit over 25 years. It really does work like magic, if you know what you’re doing.
All right. “Can you put a primary residence into a land trust and/or LLC to maintain anonymity if you have a commercial bank loan? If not, are there other options available?” What do you say?
Jeff: You can, I’m not sure that it’s the best idea.
Toby: Reach out to an accountant.
Jeff: We talked about this before, though, about putting an LLC, or a primary residence to an LLC, and what that does to your 121 exclusion.
Toby: It doesn’t hurt anymore. It doesn’t kill your 121. The bigger issue with the LLC is the homestead. You can screw up your homestead, potentially, because the homestead’s individual. If you have an unlimited homestead like in Texas or Florida, you’re not going to want to use an LLC. You’re more than likely going to use a trust because you already have an unlimited homestead.
Jeff: Meaning if you come in and sue me, I no longer have that same protection.
Toby: Correct, I don’t want to eliminate that. But if you’re in California where the homestead is less than $100,000 and you have a $1.5 million house, you probably do want to have an LLC around it. But it sounds weird that a commercial bank loan. Maybe it’s a commercial bank? I don’t know any other types of banks. It’s not my bank. It’s a primary residence, so it’s a bank loan.
If you don’t want them to squawk, use the land trust. I think we talked a little bit about that earlier. We have a bunch of questions, but we’re already at 4:00 PM. I don’t want to drill your time off, Jeff. I promised Jeff that we’ll be done in an hour because he’s so swamped.
“I have a question with regards to taking some money from a 401(k) without penalty due to the CARES Act. Is it possible to use that to invest for a real estate property or other restrictions on where you can use the money?”
Jeff: There absolutely are restrictions. These withdrawals up to $100,000 from 401(k) or IRA is intended to be used for financial assistance in relation to COVID.
Toby: Yup. You make a certification that it’s COVID related. Now that said, if you’re spending the $100,000 that you have and you need this $100,000 extra because of the $100,000 you’re being forced to pay, then you could say, well, the $100,000 I’m using is from the plan. They don’t really look. The only place that they do look is when you’re doing the EIDL loans.
They will require that you use them for the damages done from the national disaster. If you’re using an economic injury disaster loan from the SBA, you have to use it for specific purposes. The PPP loan, you could use that for whatever you want. It’s just not forgivable unless you use it for particular things.
Jeff: Is it a problem that when I go to get a loan for a property I’m buying and they say, well, where’s this $100,000 of cash coming from because they always ask.
Toby: And you say I withdrew it from my 401(k). That’s fine. When you say without penalty, that’s telling me that it’s an early withdrawal. Don’t forget that you can borrow $100,000 from your 401(k)—403(b), 457(b)—your qualified retirement plan. Not in IRA, but you can borrow $100,000 from your 401(k). You can use that money for anything. You have a deferral of payback for the rest of 2020, and then you have to pay it back over five years quarterly. Lots of questions on this one.
Jeff: I was going to say, if you’re taking distributions to purchase real estate and all, you need to remember that money has to be put back in tax-free within three years.
Toby: By the end of the third tax year, which would be 2022. It’s not really three years. They say three years, it says three years but I think it’s three. They have to give us some definition. Somebody says, “Can I present a tax question?” Yes, you can. Though there are about 100 sitting in front of you. I just saw that.
It said, “I want to see if there’s anything right here for CARES. What can be done with the Roth IRA?” You can always take your money out of a Roth that you put into it. You can take out the growth in it after five years without penalty. And if you’re in the penalty, then you can do the early withdrawal. But I don’t see that really. You’re going to be able to get the money. There’s not going to be an issue.
“Are the $150,000 EIDL loans being forgiven?” No. They give you up to a $10,000 advance. You don’t have to pay that back, but the actual loan itself is a 30-year loan at 3.75%.
Jeff: The only free money that I’m aware of from all the CARES and all the COVID related is the up to $10,000 EIDL grant and the PPP loans are going to be forgiven. Other than that, everything has to be paid back somewhere.
Toby: Yeah. “Is the owner finance interest and property tax deductions refundable, or does it go directly on your tax bill?” You’d claim it on your Schedule A. You’re going to have to exceed your standard deduction, which is always an issue.
Jeff: If only jointly it’s $24,000.
Toby: Yeah. It’s such a high amount unless you’re in California, we know.
Somebody says, “What’s out there to help adult children?” You can always employ them. You can put them on your board. There’s a misnomer out there that you have to pay everybody a wage. No, you can give them fringe benefits—even if they’re tax-free—if they’re helping you. You can have them on your board and you can do a medical reimbursement plan. You could pay them and dump it straight into their 401(k). There are lots of things you could do.
Somebody says, “Can you use EIDL loans for paying W-2 for yourself out of an S-Corp?” Yes, you can, but you’re supposed to use PPP to do that if you have a PPP loan.
Somebody says, “Don’t you have to use the PPP loan for at least 60% of wages?” No, that’s to make it forgiven. If you’re in a crisis and you have to choose between I don’t want to have to pay this money back versus I need to survive, fire everybody, and lay everybody off—guess what I’m doing. Sorry, I love my people, but the business has to survive or nobody has a job. The guaranteed way to make sure that nobody has a job including you is to have your business go under. Your first task is to keep that business going when all hell is breaking loose, and I’m not going to be worried.
By the way, those PPP loans, you don’t have a personal guarantee. Your business goes away. You walk away from it. I just want to make sure that you understand that. I’m going to have to jump in this. I’ve gotten long for Jeff, so we’re going to knock these last ones out.
“What are the other ways to avoid capital gains aside from a 1031 exchange? Can a house be put into nonprofit and then sold so no taxes are owed.” What say you, Jeff?
Jeff: Can a house be put in a nonprofit and sold so no tax is owed? Absolutely.
Toby: Yeah. Now you’re thinking like us. What other ways can we avoid capital gains?
Jeff: We talk about the Qualified Opportunity Fund.
Toby: It’s going to defer it for a while.
Jeff: Yeah. Another way is to harvest other capital losses while you can.
Toby: Yup. Maybe we do a cost seg on a property so that we don’t pay any tax because capital gains aren’t bad. If you’re married filing jointly, you have long-term capital gains and you don’t have other income or you managed to push your income down low. You got $80,000 of capital gains that you pay zero tax on.
Jeff: I’ve never seen taxes exceed the proceeds from the sale of a property.
Toby: Yeah. This is where it gets fun. You could also do an installment sale. If you’re retired, you’re going to be in a low tax bracket. I just said the magic word, long-term capital gains are taxed at zero if you’re below $80,000. You have a required minimum distribution. You still have your standard deduction. Now you have this money coming in. Even though it’s capital gains, who cares? Zero—aborts 15%. I’ll take that action all day long. My aggregate tax bracket is going to be in single digits.
Jeff: One thing I’m going to bring up—let’s see what you have to say, Toby—is putting the house in a nonprofit and selling it there. Once you put it in the nonprofit, you’re getting a deduction for a charitable deduction for it. Those proceeds are now the charity’s money. It’s not your money anymore.
Toby: A lot of our people are really good people. They’re going to give it away anyway. Also, your family can work for it. You’re talking about your adult children. Give them a purpose. Don’t give them money. Give them a purpose.
“Are PPP funds more closely regulated than EIDL loans?” I would say the EIDL is much more staunch on what it could be used for. All the people that go to jail are doing the PPP loans because they’re the ones that were getting the millions of dollars and buying Bentley’s with it.
Let’s see, “Regarding the CARES Act 401(k) withdrawal and loan, would it not be more likely to take advantage of both? No. There are almost no audits on the exempt entities, guys. I’ll just tell you this. Everybody’s always talking about 401(k). They’re going to come in and they’re going to look at my 401(k). No, they’re not.
There was a great case in New York where they asked them to terminate their 401(k) plan because they hadn’t been using it. They had done a bunch of violations and they were like, oh, shoot. We have to give so much to our employees. Please call it dead. They wouldn’t do it. They said, hey, how about we just give you a little penalty instead and they go, no, really. We want to kill it. How about we reduce the penalty? The Department of Labor has to get in when you kill a 401(k) and they don’t want to be involved. You’re going to see active resistance.
Where you get problems with the IRA is when you buy real estate in it and then go live in that real estate or use it as your vacation property. Then they can say hey, all that money that was in that IRA is all taxable. You could have spent $10,000 on something and the whole fund is toast because they get to take the whole thing and say, yup, IRA violation. The whole thing is taxable.
Somebody says, “Is SBA reopening the PPP and EIDL loan application period?” The EIDLs are still out there, I believe. The PPP is done. Are they going to reopen it? Not without congress giving them some more money. If we could get congress to actually do their jobs, that would be great. Or maybe we should be thankful that they’re not doing their jobs? I don’t know. It’s always a double-edged sword because every time they make it, it seems like our deficit goes nuts. Maybe we should just tell them to stay home.
By the way, while we’re talking about people staying at home, that’s what I tell all the writers. I say I’m working at home. You should work from home too. If you feel like writing, burn your own house. Burn your stuff, trash your yard, don’t go into my backyard, and trash all my stuff. That’s just me being mean.
This is our last question, and it’s a lot like the earlier one. Our audience will now know the answer to this. “I have a lot of passive losses carried forward from the 2019 tax year to 2020. If I elect to be a real estate professional in 2020 for the first time ever, can I use this passive loss from the previous years as a deduction against ordinary income earned in 2020?” We have—I’ll draw this up—2019 and 2020. We have lots. Let’s just call this $500,000. I have a ton of what’s called passive activity loss.
Jeff: That’s a big loss.
Toby: Yeah. It comes up to 2020. Does it change its nature? No. It’s still a […]. I have active income. Can passive losses be used against active income? No, not unless I have losses while I’m a real estate professional. When did this loss get created? Is this an ordinary loss or a passive loss? This is a passive loss. Even though I am now a real estate professional, it does not change the nature of this loss. No, I cannot use it as a deduction against ordinary income. There we go. Isn’t that fun.
Jeff: One thing I wanted to mention on this is when you become a real estate professional, if you have more than one property, you typically have to aggregate your properties together. Combine them all into one activity. Normally, if you’re not a real estate professional, you sell a property and release all the losses on that property. If this all came from one property and you sold it tomorrow, you’d release all of it.
Toby: Yes. You don’t want to contaminate all your properties.
Jeff: Correct. If you aggregate a bunch of different properties together…
Toby: We have to be careful if you have losses that are being carried for.
Jeff: Yeah, because if you sell one of those properties, you’re still not going to be able to release those losses […] sell substantially all of your properties.
Toby: Somebody says, “What about unearned income like SSDI?” That’s ordinary. No passive activity loss. A passive activity is businesses in which you do not materially participate in or real estate. That’s it. Everybody always says, oh, it’s royalties, interest, and dividends? No, it’s not. That’s portfolio income and a lot of people pretend that doesn’t exist. They call it all earned or unearned. What it really is now we have ordinary income, passive income, and you do have portfolio income, which is some of it is ordinary, some of it is taxed as long-term capital gains. It all depends. It’s fun. You guys are all brainiacs now.
Somebody says, “What about the infinite banking system? Is it good for a business?” Can be. We’re big believers in the infinite banking concept because we believe that you should be insuring for known issues. I believe that you should make sure that you have a certain amount of life insurance and disability coverage so that if anything happens to you, you’re not putting a burden on other folks. You’re able to access that policy if you need to. We see that over and over and over and over and over again. We like the idea of growing the cash value, not being subject to the loss of the S&P. It all works out great.
One of our partners here has left and that’s all he does. He is Greg Boots. He wrote a book called The Private Vault, which we have one of that we could always send out to folks. Great information. Once you get sophisticated with the business, there are ways to create certain types of deductions. Usually using a nonprofit and lending in a payroll deferral program where we can get write-offs now. But you will be paying that back out of the cash value in the future. There are lots of cool things. There’s also financing a policy. There’s a group down in Texas that that’s all they do is they do financing. There are some great things.
Somebody is asking about infinite banking. I think it’s good. We call it the private vault. We use it a little bit differently, but it’s pretty.
Somebody says, “I know you don’t sell products, but do you know any affordable disability insurance? I found that it is expensive.” We have fiduciaries that we could send you to that are really good at finding the cheapest stuff. They have to put your interest before their own and they don’t rip you off because they’re trying to get the highest commission.
Andersonadvisors.com/podcast, you go in there. You get some of the replays in the Platinum Portal. Some of you guys have been in there before. You guys know where we’re sitting. Jeff, thank you so much for taking the time. If you want to blow off, finish this thing up.
Jeff: All right. We’ll see you all next time. I’ll see you all next time.
Toby: Jeff is a rock star and he’s been working his tush off with our folks. But if you like this stuff, we just love educating. Jeff and I have been doing this for quite a bit of time. We have thousands of people that register for these events, and we have thousands of people that watch them every week. We like that. It’s not millions because we know it’s tax stuff, and this doesn’t float everybody’s boat.
The people that take this stuff to heart, they end up saving a lot and they end up keeping a lot more. I believe that if you keep it, you’re going to do better than our government with it. I’d rather you guys keep the money and do stuff with your own.
More information if you go to our social media and register. It’s all the same thing. Aba.link/(whatever the service is). You could figure that out. If you have questions, by all means, send them on firstname.lastname@example.org. We’re not going to charge you to answer your question. If it gets too specific, we may hop in and say, hey, you need to be a client for us to get into this type of stuff. If it’s tax prep or if it’s very fact centric. For those of you guys who are platinum, you can already ask unlimited tax questions there.
Platinum, if you want to learn about that, just reach out to Patty and she’ll have somebody contact you. Platinum is $35 a month. There’s a signup fee. We waive it on certain types of packages that we offer, but it’s $35 a month. You could talk to all the attorneys—including tax attorneys—all you want and have an unlimited consult. Ask questions, have documents reviewed.
If you want to ask tax questions, you ask them through the portal. We do them in writing just because we want to make sure that we’re giving you the right cite and the exact right information. You can refer back to it and share it with your accountant if somebody else is doing your tax prep.
All of that for $35 a month, I know. But we’ve been doing it for years. We have thousands and thousands of people there, so we don’t have to raise the price, and it works really, really well. We’re not pigs around here. We live just fine. We don’t need to have six branches.
That’s it for today. Thank you guys for showing up. Just reach out to us. If you want to, hop on to our website and you can request a consultation. Patty, I think she’s out there. She’s going to reach out to you guys. We’ll make sure that she gets you and how to get your questions answered.
Thanks, guys again, and good luck to you guys all. Stay safe. Some of you guys are figuring out, maybe I need to have my taxes reviewed. That’s part of Platinum too. We do that as a courtesy. It’s called to keep more solutions. Reach out. We love to be able to save you some money and put it in your pocket. Thanks, guys.
As always, take advantage of our free educational content and every other Tuesday we have Toby’s Tax Tuesday, another great educational series. Our Structure Implementation Series answers your questions about how to structure your business entities to protect you and your assets. One of my favorites as well is our Infinity Investing Workshop.