3 Secrets You And Your CPA Should Know

Exciting. It's the end of year. This is what us accountants geek out. You're in tax planning. I've got three tips, three secrets, three strategies that are going to save you money before you're in. And my CPAs out there, my enrolled agents, my tax preparers, you're going to love these. These are legit. They're oftentimes overlooked. That's why I call them secrets. I'm not just playing with the name here to get your attention. I got three ways to to save taxes right now in your small business before your end. And we're going to explore them right here. I'm going to take questions, we're going to do the Q and A, we're going to have a good time. I'm a CPA attorney, bestselling author, radio show host, podcast or YouTuber and gosh darn it, I love freaking saving taxes and I love American dreams. So we're going to kill it today. Now I'm going to tell you the three because you want to know where are we going with this? Number one, we're going to talk about paying your family members before your end. Did you put your kids on payroll this year? Put your spouse on payroll? Did you even put yourself on payroll? But paying the family is really a cool strategy if you do it right, if you jack it up, it can backfire on you. So paying family and you've got to do it before your end. If you're gonna launder money, you gotta actually laundry. You can't just say I paid my kids. We gotta do it. Alright, number two, little shout out to better call Saulaire. Okay, number two, we're going to talk about the solo 401k. I know that sounds weird, but guys, a lot of small business owners can have a solo 401k. You can have a 401k at work, you might have employees, so we got some issues there. We'll talk about that. But you can pull the trigger on a 401k for yourself. Very affordably. Better than a Roth IRA. You can have a Roth 401k and you can have it in place before year end, but put the money in next year and get a write off this year. Pretty cool. Number three, we're going to talk about your board meeting, your corporate board meeting, your LLC board meeting. You may not even have an LLC or corporation. You can have a board meeting before year end and take a tax write off during the holidays. So I'm going to talk about that a lot again. A lot of accountants don't bring that up. So you CPAs out there, I think you're going to love it and want to share it with your followers. All right, so number one, paying family. So let's go to the whiteboard. All right, so on this, People, you need to know this. There are two freaking awesome reasons why you're going to pay your kids. And we got back up. I got to back up here. Millions. Here's your 1040. This is your 1040 tax return. This line right here is your adjusted gross income. See this line? Everybody calls this. This is the line. This is the line. Whenever they talk about above the line, below the line, that's the line. And if you get a write off above the line, it's freaking awesome. A write off below the line sucks. And what millions of Americans do in and CPAs don't talk about it enough is they say quit paying taxes and giving your kids money for soccer, for school clothes, for gas, for food at school, for anything. Your kids are going to prom. They got music lessons, they're sporting stuff. We pay taxes and give our kids money. Get your kids involved in the business and take a tax write off. Let them pay their own taxes. They may pay zero taxes and not even need to file a tax return this year. The standard deduction. Okay, I want to pull this right out of my calendar. I've got my calendar right here. I've got all the numbers for the states as well. But the federal standard deduction is $12,950. Your kids. No one, no one in America pays tax to the United States on the first $12,950. That's federal standard deduction. So if my kid goes and works at McDonald's, they don't pay tax on the first $12,950. Okay, so if I pay my kid 10,000, say I've got a teenager, they come by and help at the office. They clean the home office. They're helping out with social media, they're helping out with marketing. We're going to go through some of those rules. And how low, how young could a child be on your payroll? But they don't even file a tax return on the first $12,950. No even tax return. So I can take a tax write off, pay my kids, and they can pay for their own soccer, their own school clothes, and their own school lunch. That's normal. It's okay. What do you think the family farm does in Oklahoma or Idaho and the potato farm or the New York City deli? The Kid comes and works after school in the business, you pay them, you get a write off. They they don't have to file a tax return on the first $12,950. Now here's what's even more cool. You do not, and I'm going to repeat this, all of you CPAs out there, you do not have to issue them a W2 and you do not have to give them a 1099. I'm going to repeat that. When you have children under age 18 and I'm going to show you where you pay them, you do not have to issue a W2 or 1099. Now, technically, I'm just going to say this because some of you CPAs out there are freaking out. There's a penalty if you don't do a W2. Da da da. You. Yeah, it's a penalty based on the withholdings. There's no withholdings on a kid under age 18. There's no FICA. You don't have to withhold FICA on your kid. So the penalty is zero. The IRS doesn't care. I have former IRS agent as a tax partner. I've had IRS agents on my podcast and I've never had a client audited for paying their own kids. You do not have to issue a W2 because there's no penalty because there's no FICA withholding. And you do not give them a 1099 because now they got to file a schedule C. Do not give them a 1099. They're your kids. There's an exemption for this. The IRS knows it. It's been on the books for years. You don't learn this on the CPA exam. You don't learn this in school. You don't learn this on the enrolled agent exam. People. It's legit. I've written on it. I've talked about it. I've done it for years. It's okay. So here's how you do it. I'm going to put it in red and I could do the whole podcast on this. So I got to move quick. You pay your kids out of the LLC and you just call it outside labor and you do it before the end of the year. Outside labor. It comes right out of the. It's on the schedule C. Other expense. Outside labor, not payroll, not a subcontractor. No 1099, no W2. Over here. Your kids help with the rentals. Same thing. Outside labor. It's going to go on the schedule E and you're just going to Put it over there. For some of you that are not accountants, don't worry about the schedule. Just make sure you pay your kids out of this account. You're like, well, I paid them out of my personal account. No, no, no, no, you can't pay them out of your personal account. You got to pay them out of the business account before you're in. And you're like, well, I already paid him this year. Put money back into the business and pay them again. How would you launder money? But no, but it's legit. You got to pay your kid. You're like, oh, I already loaned the money personally. Now I'm going to put it in the business and actually pay them, and then your kid's going to pay you back. All the kids should have their own bank accounts anyway. I've got this in my book, the tax and legal playbook. And right now we're going to give some books away and I'm going to give three, four. I'm going to give away three or four books at the end of this podcast webinar live. This is not a podcast. Or when we're on Live on YouTube and Facebook. So I'm going to give away some books. If you're still here, we're going to give away a book here at the end of the broadcast. Got a whole chapter on this. Now, if you have an S corporation, you have to set up a little sole proprietorship support company. You pay a management fee to this little family management company or support company. You pay a management fee that's on the tax return, the 1120s. And don't worry about the forms. If you're not an accountant, you're going to tell your. You're just going to do a check from the S Corp to a sole prop, go down to Wells Fargo Chase B of A tomorrow, open up a little sole proprietorship, call it a cleaning business, a little support company. And this is where you pay the kids. I've done it for years. So here's the deal. Quick example. When my kids were all under age 18, I had Dylan, my twin girls, and Molly. I paid Dylan one year, six grand. I paid the twins each four grand and I paid Molly two grand. Dylan may have been 16 years old. The girls were 14 years old. And yeah, and then Molly would have been about nine years old. So I paid Molly $2,000 for the year, a couple hundred bucks a month. And she would help clean the office. She would help with the rental properties. The other kids were helping with the computer. They're Doing receipts, shredding paper filing, helping out at the office. My events get your kids involved in your business. If you drive Uber, your kids are cleaning the car, they're washing the car, get home office type stuff. And so instead of me, right here, this is $16,000, right? So I took a write off for 16,000 as a management fee and then I paid the kids 16 grand, zeroed it out. The kids didn't even file tax returns. They didn't even file tax returns. No tax, no withholding, no W2, no 1099. We do this every year. We've been doing this for 20 years in our firm and teaching our clients. You can do this. Okay, so this is how it works for paying kids under age 18. Now I'm going to do a different color here. This is easy for kids over age 18, 18 or older. You pay them a 1099, you give them a 1099, you give Them a 1099 easy schmeasy. So all you're doing is paying your kids throughout the year. Out of the business directly. When I, my kids now are older and this week I helped one of my kids with tuition. They're like, hey, can you send me. It was around $800 for another piece of tuition. And I said, okay. But I did not send them. I did not give them tuition money out of my personal account. I gave them, paid them out of the S Corp this week, $800. Because they're on my board. They're on my board of directors and board of advisors, which we're coming to in step three or option three today. So all the kids have a role in my business. They got it. And at Christmas they get a 1099. They love it. It's put it in their Christmas stocking. It's special. Okay? Now that's how you pay your kids 18 or under. I've got YouTube videos on this and I've got. It's in my book, the tax and legal playbook. You can get more of this any on my podcast. People subscribe. If you haven't subscribed to my YouTube, go subscribe, hit the bell icon. And every time I shoot a video, you get pinged. I'm saving you money with every YouTube video I shoot. Okay, that was strategy one, paying your kids before your end. I have a whole video on. Should you pay your spouse? Go to YouTube and watch it. Okay, now the second strategy is the Solo 401K. Now here's what's cool everybody here. Let's go back to our trifecta okay, so I maybe have a side hustle. Okay, maybe you have an S corp, Right, So we'll say an LLC side hustle. Now you cannot form and fund a 401k with a rental property business that doesn't work. Can't do it. Now some of you may have a day job. Now if you have a day job that's outside the box and they may be funding a 401k for you. Now this is where they do the match thing, right? Well, what I want you to do is do the match and out. You're going to put in just enough money to get the match from your company and get out that matching out. You doubled your money. The reason why I want you to get out is because their investment options will are minimal. They're going to have ETFs and mutual funds and the fees in these 401ks are off the frickin chart. Go read anything from Tony Robbins, Warren Buffett. It is terrible. The fees that are buried in 401ks. Put in just enough to match and get the hell out. Then you're going to set up your own 401k. Yeah, you can do that with your Uber business even. You can be driving for grubhub and Uber Eats or whatever. And you can be like take money from your small business and fund your own 401k. And guess what? You can match 100%. Well, it's 25% of your salary, but you can match. And there's no other employees, so you don't. There's no discrimination. You can. We have a special every November on 401ks. You can set up your own for around four or five hundred bucks. We have a paralegal that does it all for you. You're off to the races. You can fund it next year if you have an attorney console in the process, we knock off 100 bucks. I think it's $900. If you want to set up a solo 401k, you have to do it in the next six weeks. Our deadline is in the next three weeks. Because there's so much paperwork to file. The IRS system goes down around right after Christmas to do maintenance. You can't get any ein in that time period. So we got to get that 401k done in the next four weeks. But what's cool people is you can decide how much you're going to put into it in 2023, but you get the write off in 2022. But if you don't set it up now you can't do it. Now, we want to do this on top of your regular Roth. So you're. And here's what's cool, people. You can have a 401k at work and you can still have your own side solo 401k. You can do both. You can make $1 million a year and still have a Roth and a 401k. You can participate in two 401ks, two different jobs and still have your own solo. A lot of CPAs miss this. It's an option. It's out there. And so if you're a tax advisor, be looking at this as an option to talk to your clients. Now I'm going to throw this out to Everybody. Tomorrow at One O' Clock Mountain, I am doing 15 year end tax strategies. I'm only doing three today live. Tomorrow, 15 year end tax strategies, a free webinar. I do it every year for all of my followers and clients. We've already got hundreds of people registered for it. Go register the links down below. Tomorrow, 15 of them. Today we're just hitting three. You're going to love it. Okay, now that's the Solo 401K. If you want to set up a Solo 401K, just go to kkoslawyers.com now, people. Your 401K does not have to buy stock. It does not have to buy crypto. You can buy real estate. You can do notes. It's called self directing. Another secret that we teach on our podcast every week. So don't think that when you set up a 401k, you've got to put money into it. Now you can do that next year and get a write off for this year. And you can invest in what you love and know. It could be your sister's bakery business. That's where you can put your 401k. So it's whatever. Just it's. It's a structure. It's not an investment. A lot of people are like, oh, 401ks are terrible. No, the 401k is a structure. What you put in the 401k could be terrible. Let's think outside the box. Now I'm going to come to all these great questions. We're going to be hitting them here in a moment and I'm going to give away some freaking books. I need to see you folks subscribing and hitting the bell icon on YouTube, please. This is information that you can share with your friends and family and everyone in your life to help them better live Their American dream. One out of three Americans now have a side hustle. That's a small business. These strategies work. Which brings me to number three. The board meeting. I love the board meeting. Oh my gosh. So a board meeting, guys, you don't have to be Microsoft or Tesla or Apple or Walmart to have a board meeting. You can have your own board of advisors even if you have a side hustle. In fact, I highly encourage it. I want you to have it experience with your family during the holidays. Talking about money. How many of you didn't talk about money around the dinner table? Change the dialogue, change the vernacular. Get your family excited about your side hustle. Talk about it. So here's what it looks like in your trifecta. We're going to come over here and if you have a little side hustle, LLC or even a sole prop, guys, you don't have to file anything with the IRS or the state. What you do is you get around the table. After Thanksgiving dinner, you're not having Thanksgiving. You're having a dinner and a board meeting. Now your Thanksgiving dinner is a write off. This is the tax strategy. Travel to the board meeting is a write off. Travel and dining to get there is a write off. You're going to have a meal and talk about business. Two years ago, we did our board meeting in Puerto Rico. The year before that we did Jackson Hole. This year I'm doing a Park City. I'm going to have a meeting around Christmas with my family and talk about business. And it's a tax write off. And it's legit. Big companies do it and you can do it too. And again, a lot of CPAs miss this to say, hey, do you have your board meeting? Because your LLC should be doing minutes every year anyway. Some of you are like, I don't even. I have one sheet of paper for my llc. I set it up three years ago. You may need to get it cleaned up. And we have a cleanup service at our law firm to get it cleaned up. We give you a list of questions to hold in your board meeting. Now, your LLC is more solid. It's legit. Now if you have an. So a LLC is going to have a board of advisors. BoA, board of advisors. A corporation is going to have a board of directors and your LLC with your rental properties. That's a small business. I have a board of advisors with my kids over here. So you have a board of advisors, board of directors, board of directors. They can all have their meeting. And this inc. You need to be Doing your annual maintenance. You need to be doing your minutes every year. Are you. Do you have a corporate book? Do you have stock certificates? This is the asset protection that you thought you got, but if you don't maintain it, your company's going to get dissolved, too. If you haven't done any company maintenance, get over to the office and talk to Becky. Lloyd is my director of company maintenance. She has a team of paralegals doing minutes and registrations for clients around the country. We charge 150 bucks a year. That's it, 150 bucks a year. Now, if your books are a mess, she's going to transfer you over to Christie's department and do a cleanup. Krissy over here, Christy Rice, she's going to get that cleanup done. Might cost you three or four hundred bucks, but that was the money you should have paid to do it right in the first place. So get the cleanup done. Then Becky will get you your company maintenance program, will get you the minutes, the questions you need to ask, and then you're going to have your board meeting. That's a tax write off. I'll give an example. And everybody doesn't have to be there in person. Let's say you're going to go to Minneapolis and you're going to go see your grandma at Thanksgiving. Well, guess what? Your grandma's got a lot of advice in her. She's lived a life and could maybe share some things with you about making money and building wealth and how things could be different, maybe financially for you if you just talk about it. So you're going to fly to Minneapolis and you're going to go, grandma, I need you on my board of directors. I need your help. I just got a ting of emotion saying that you're gonna. You're gonna say to your grandma, will you be on my board? She's like, well, what do I do? I want to tell you about my business. Tell me what you do different. Just listen. Let her talk. Freaking A. Record it. You never know when grandma could be gone. And then you're gonna turn on your laptop, you're gonna put out a Zoom meeting, and you're gonna go, hey, kid. Hey, spouse. Hey, mom. Hey, dad. We're gonna have a board meeting. I'm here with Grandma, and we're gonna have our board meeting. You get a tax deduction for flying out to Minneapolis and get to take a tax write off for the dining while you're there to have that board meeting with mom and grandma and everybody on Zoom. Now, you didn't pay for anybody else's travel. So there's no write off there. But if you paid for anybody else's travel, let the company pay for it. You're having a company meeting at Christmas and Thanksgiving or somewhere in between. You're not just going for food, you're talking about your frickin American dream. That's a tax write off. Is that weird? Why are our CPAs not talking about this? It's so fun. This is a secret. In small business, you need to have a board meeting for good asset protection. And you need to have a board meeting to talk about life and money and business. Tara, take me off the whiteboard. Guys, I just want to look you in the eye and just talk about how powerful this really is. You're an entrepreneur, you're trying to make money. Talk about it with your family, have them help you. And if you're paying for anybody's hotel, Airbnb, airplane, airfare, food, you can't write off 10 days in Cayman Islands, but you can write off one day and the airfare to get there and you're going to talk about your business. That's the board meeting. Boom. Alright, can I go on center screen here? Okay, so everybody, I'm just excited to be here with you. I want to answer your questions now and let's see where this goes. Tomorrow is my fifth year end tax tips webinar. It's links down below. Sign up for it. My tax advisors out there, I'm launching my tax advise, my tax Advisor certified training January 1st. I've got 12 modules I've been working on for two years, 100 videos and white paper and everything. And I'm going to talk about it on tomorrow a little bit. And I've got a two day workshop in Phoenix on December 2nd and 3rd. People I'm throwing down, I'm training certified tax advisors around the country now and we're changing America. It's going to be freaking awesome. All right, some of these questions. Great evening from the Netherlands. Thanks Ivan. I love it. Dominique says, I heard that they have to be 13 years old. Wrong. Okay everybody, Dominique, this is good. Dominique says dump truck driver. Love it. Small business. He said they have to be 13. What you may be thinking about, Dominique, is that you've got to go open a bank account. And some of the banks don't want to open an account for a child under age 8, under age 13. So what you're going to do is go open a bank account under your name and make your kid a signer and give that account In a sense, to your child. My daughter Molly, all my kids had bank accounts by age 6. Now, banks change policies. Credit unions have different rules. Big banks have different rules. But the point is, as long as you have a joint account, which is what I want, I want to join account anyway. If you open up a bank account for your kid, you're a signer. If you open up account for yourself, make your kid the signer, and then rename it their account. Now your kid has a debit card, and now you can transfer money from the business into their account whenever you need to, because you're going to pay them for working in your business. So you can pay a kid 6 years old for shredding paper in the office and cleaning the office. Maybe $100 a month. Boom. And then as they get older, you can pay them more. I usually pay kids in their teens five or six thousand dollars a year or more because they're helping out more in the business. But anyway, everybody's business is different now. Grandkids, Kris, here's the trick with grandkids. Let's go to the whiteboard. The only person. Now, everybody pay attention. Accountants out there. This is important. The only person that can pay kid under age 18 and not withhold FICA is the parent of that child. So if you want to pay a grandchild, you're going to have to 1099 them or W2 them, which we don't want to do. Right? So what I do is if you have a side hustle, you have an S corp, you have an LLC with a rental property, you got your solo 401k in the middle, you got Roth IRAs for you and all the kids. Boom, boom, boom. Okay? What you do is you're going to 1099 your kid, and then they're going to have a small business supporting you, Schedule C. And they're going to pay the grandkid for the services that they rendered. Now, you might use them as a model or a part of your business marketing. And I'm not going to pay a kid five grand to be on stage with me. But I had my grandson Oliver come on stage with me at the Real Estate Tax Summit in Honest Austin. And I was like, here's Oliver, and this is a family business, and Oliver's a part of our family business. And you need to include your kids in your investing and education. I'm going to pay Oliver $500 for his guest appearance. Now, I'm going to 1099 my daughter Allison, and then she's going to Pay Oliver. Now, I got a write off for $500. She has income of $500. She has a write off for $500. She pays zero tax. I get a write off. Oliver now has $500 of earned income. What am I going to do with Oliver? Oliver is going to open a Roth IRA. Roth IRAs for everybody. Now Oliver has $500 sitting in a Roth. Oliver's Roth can be a partner in my next llc. To buy a rental. Blow your mind, people. We've been doing this for 20 years. It's legit, it's honest, it's normal. It's what people do. Your family, every one of your family members should have a Roth ira. And you should be paying all of your family members to help you in your business. And with the money you're paying them, you get a write off. And then the person gets to open a Roth IRA and invest with you. That's American dream. It works. Now we got to figure out how much you're going to pay them, what entity you're going to pay them out of. If you need a consult with a tax lawyer at my office, you're like, my accountant doesn't even know this. Or, I'm an accountant and I'm learning this. My certified tax program will teach you come January 1st. But in the meantime, you can call the law firm and say, hey, law firm, I need to consult with one of your tax lawyers for just an hour. People don't worry about paying a lawyer 500 bucks. I want to save you freaking 10 times that. When you call our law firm, if we're not saving you 10 times what you're paying us, we failed. Don't get hung up on what you're paying per hour. Think about how much you're saving per hour people make. Saving money is making money. I freaking love it. All right, so grandkids, you pay them through your kids. That's how it works. All right, if under 18 have neither a 1099, do they need to have any supporting documentation to contribute to a Roth IRA for earned income? So Vivian says, everybody, this is a good question. If I pay my kid. Okay, Mark, go back to the whiteboard. Maybe you pay one of your kids a 10 if they're under age 18 and you pay one of your kids outside labor and there's no W2 and there's no 1099. And Oliver, Oliver, my little grandson, no 1099, no W2. How in the world does he go to TD Ameritrade and open up a Roth IRA? Well, first of all, I don't want you going and open up a frickin Wall street mechanism Roth ira. I want you to open up a self directed freaking IRA where you can invest in what you know best and you're not buying playing the lottery with stock. But that's just me, sorry, financial advisors. There is a place for Wall street products and I do have Wall street accounts. But if you try to go open a TD Ameritrade Roth IRA for someone under age 18, I don't even know if they can let you open up a Roth on their online account system@directed Ira. All you have to do is self certify, yes, I paid my child earned income or on the account application as a guardian for your child. You're going to open up a Roth IRA and all you have to do is check the box. I have earned income. Trying to figure out how to say it. It's a self certification. There are broker dealers out there that will open up Roth IRAs for your kids and they go, do they have earned income? Great. If they're like, prove it. Give me a W2. You know what you say F you. I'm not going to prove it. I paid my kid. You don't trust me? I'm going somewhere else, people. This is your account, this is your kid's Roth account. If the bank's making it too hard to open a Roth, go somewhere else people. Quit listening to these big Wall street banks that tell you how to run your life. You run your own freaking life and find a bank that works with you. Go to a local bank. Bet here in this little Idaho town I'm at today, if I go down to the local bank and go to the manager and say, hey, I want to open up account for my 10 year old, he helped me on the farm this year, I paid him and I want to open up a Roth ira. You know what, Mark, we'd love to do that for you. Great. Do they need to see a W2? No. Do they need to say a 1099? No. Because when I paid my kid working on the farm, I didn't give them a W2 and 1099. But damn it, they had earned income and I took a write off and they have income. Own this people, you're in control. Your own freaking destiny. You find professionals that know what they're doing and quit listening to idiots out there. And I'm getting pissed here. Sorry. Okay, maximum amount I can pay a teenager not to be audited with no W2 or 1099. Meryl okay, people. Okay. I had a client pay their teenager 45 grand last year because their teenager is a licensed realtor, and their Realtor, they earned 45 grand working for their family's brokerage under age 18. Okay? It's. So now they're going to file a tax return at that point, and they're going to have $40,000 of income, and they're going to take the standard deduction, and they're going to pay tax, but that kid's going to be in a lot lower bracket than their parents. It's okay to pay your kids what they earn. Maybe it's 2 grand. Maybe it's 20 grand. Maybe it's 200 grand. Miley Cyrus was making. Oh, my gosh, she was making $100 million a year before she was even 18. It's insane. So, people, you can pay your kids what they earned. Meryl, don't worry about being audited. People get audited all the time. And you just prove it if you have to. I don't. You're not going to get. Gosh, I'm just flustered here because people are like, I don't want to get audited. I've never had a client in 22 years audited for paying their kids. I had a client get audited, and two years ago, plastic surgeon paying kids, paying nurses, paying family. The auditor came in and said, oh, these are the kids. Okay, fine, fine, fine. Oh, this nurse. They better be a W2, not a 1099. They got audited for not issuing a W2 to a nurse. They didn't care about paying the kids. They were like, oh, they're at college. 1099. Oh, this one's under age 18. That's fine, people. I don't want this to be a sham. You are paying your kids because they're working in the business, Meryl. And if you really paid your kids for working in the business, bring the freaking audit on. And when the IRS shows up, I want that spotlight on the kid and on you. And you're going to say, yeah, my kid worked in the business. Tell him, you win. That's it. It's okay. You're going to be all right. Okay. M. Ross says, Mark, my CPA says I cannot move out of my personal residence and turn it into a rental and then sell it to my LLC to get the fair market value on depreciation. You can't do it because of related party rules. No, you can do this as long as it's a fair market value. You're not cooking the books. We can put your property into an entity and, and we can get stepped up basis and then you can start to depreciate the home. You can do the sale of home exemption and sell it to an entity and take that write off. Now I'm going to make a, I'm going to say this. Some of you CPAs out there are like Mark, you can't do that related party transaction. I've done related party sales. As long as the price is properly supported and is not cooked up, you're not coming up with an inflated price. You're doing fair market value on that. You may even want to go through a formal closing with title insurance and everything and sell it to the LLC properly to give title rather than just a quick claim deed. That's not going to work. But I'm going to, I'm going to reserve the right to be wrong here. Whenever someone says my CPA said this, I'm like well that's not my understanding. But you don't know what you don't know. And I'm constantly learning and out there in my certified network. We have an open forum internally now and we're opening it up January 1st where US CPAs can collaborate and find the right answer and do the right thing for our clients around the country. So I get a second opinion on that. Call another CPA and talk about doing a bona fide sale at fair market value, not cooking the books to your entity. So you can take the sale of home exemption and get stepped up basis and start depreciating it. I don't have a problem. Let me answer a new question here. Meryl says can we. I'm just going to. I like your question. Can we decide declare our board meeting out of the country? Yes, you can hold a board meeting wherever you want. Puerto Rico's a not out of the country per se, but US territory. But yeah, you can go wherever you need to. Now you can't write off 10 days in Europe doing your board meeting. You get one day, so be careful with that. Here's another question. Can a minor child be paid. This is Nohan. Can a minor child be paid by a C Corp taxed by 1120 with a business check for cleaning the office daily or must it be paid through payroll? Thank you so much. My husband and I love your videos. Okay everybody, I'm going to repeat this. Can I pay a minor child out of a C Corp with a business check for cleaning the office or must it be paid through payroll? You can, but don't okay, let's go to our. Let's go to the whiteboard. What you can do and what you should do are two different things. So let's say you have a C corp. Now, that's a whole other issue. I don't know why you have a C corp. You better have a very targeted reason for that. But let's say you have a C corp or an S Corp. If you pay a kid under age 18 and you just give them a check out of a corporation, you are going to have to give them a 1099. Now, if they act and look like an employee, you've got to give them a W2. Now let me give an example. Last year, I had my daughter Allison working in my company. I gave her a W2. She looked, acted. Quacked like a duck. She was a. Let me get back here on this. She was an employee, so I had to give her a W2. So if they act like a employee, look like an employee, you treat them like an employee. You got to give them a W2. But if they're going to be a janitor in your office and you're going to pay a kid under age 18 or over age 18, you would have to give them a 1099. So that's why you don't pay them out of the corporation. I don't want you to pay them out of the corporation. So what you do is you set up a janitorial company. You set up a sole proprietorship. That's a janitorial sole prop. This sole prop is a schedule C. We're not broadcasting. We can't do it right now.

IPad is down.

IPad is down. Okay, can I give it to you, see if you figure it out? Okay. Sorry. My tech team's figuring out the iPad. Okay, now everybody listen. I don't. I set up a sole proprietorship as a janitorial business. That's a side business that my C Corp is going to pay for janitorial services. When you pay your kids out of a sole proprietorship, There is no 1099 and no W2. If you pay your kids out of the corporation, you've got to do a W2 or 1099. This is why accountants, some of you CPAs listening will say, well, Mark, if you pay a kid out of a corporation, you've got to do a 1099 or W2. Yes, but I'm not going to pay them out of the corporation. I'm going to 1099, a sole proprietorship. That's a support company for my Bigger business. And that support company is a schedule C. So I pay the schedule C. The schedule C pays the kids for cleaning the office. We've been doing this for years. It's honest, it's legit. It's not cooking the books. It's normal. And then the schedule C pays zero tax. My kid gets paid zero tax? No 1099, no W2. I got a write off on my corporation. There you go. Okay, let's see. Questions. If you are on YouTube or Facebook, you can just type your questions in the chat and I should be able to see your questions. Santos. So wherever you wrote, how do I send a question? That's where you write your question. Okay. My seller sold his house for 250 grand. How much capital gains tax are they going to pay? Well, Jim, bless your heart, this is great. Everybody. Jim says my seller sold his house for 250 grand. How much capital gains tax are they going to pay, Jim? It depends, right? Was this the sale of their primary residence? Probably no tax at all because you have the sale of home exemption. If it was a rental property, you've got to look at what did they buy it for? Did they have depreciation? What's their basis? What did they sell it for? What's the middle part there? That's the gain. Then you multiply the capital gains tax rate that applies to that amount. Now, everybody, if you see any comment about Mark Joe March A Kohler so excited about some stupid bitcoin scam, ignore it. Most of you are already smart enough to do that. So there's some bots out there putting crap on our chat. Just ignore it. If I get paid for my side gig on a 1099, can I pay my kid? Well, Ricken, you can, but I got to know the more facts. So everybody, let's have fun with this. So we're going to go to the whiteboard now. Thanks, tech team there. So Ritkin says, I got paid for my side gig on a 1099. Can I pay my kid? Well, let's look at some examples here. This is why you do a consult between now, People were busier now between now and the end of the year than any other time during the year. Because Rick can say, I gotta pay my kid and if I don't do it by December 31st, I'm screwed. So I gotta talk to someone. So you might call the law firm and get a call in and go, I need some advice. I'll have my CPA network launched in January where you can talk to any CPA around the country that's in my network and get these types of advice. Okay, Ricken, I don't know what your 1099 is, so let's just say you're an LLC or a sole proprietorship and you are getting a 1099. Let's give three examples. You're getting a 1099 for consulting, you're driving for Uber, or you've got a little side hustle doing landscaping, or you're a janitor for a company and they give you a 1099, or you're selling on ebay. I mean, there's a bunch of examples, right? So you could have a 1099 from any of these things. People, that is a side hustle. Ricken has a side hustle. He's getting a 1099. In this example, Ricken is going to file a schedule c on his 1040. Now, we have to say two things. What did his child do for the business? And how old is that child to justify this? So the way he's talking, we know this is a minor child. So if this kid is between 6 and 10 or 12 or 15 years old, it's very easy to say that child is going to be doing cleaning in the home office, shredding paper, helping go clean, helping landscaping by picking up garbage and loading up the truck. If you're doing Uber, ebay or consulting, it may be harder to say what is my kid really doing? To help in the business, you got to get creative. Maybe they're helping with some of the social media. Maybe they are a little bit of your advertising. Maybe it is just home office and shredding paper and cleaning. Maybe you can only justify paying your kid $1,000, $100 a month. I can usually justify $100 a month for any kid 5 years old or older because they're going to be working in the home office. Cleaning, dusting, shredding paper, vacuuming, helping with the home office. Everybody should have a home office. And if you've got a minor child, they're keeping the home office clean. Now this is not household chores. This is not doing dishes. This is a real home office with real duties for a kid. Now, if your child is one year old, I'm going to have to get really creative on what your 1 year old did to help your business, Riken. So figure it out. So I'm hoping that's helping. Bo says maybe we're going to give away some books here, people. And so I want names ready, I want four names ready.

And names are definitely here.

Names are ready to go. We're going to give away books here in a minute, but I'm going to take one more question. Question. This is from Bo. Bo says, should a holding company that is a single member to a couple LLCs owning real estate be set up as a single member or partnership with its own tax return? Okay, now Bo, let's go to the. Let's stay over here on our whiteboard. She's talking about assets. And Bo could be a male or female. So I'm just going to say this Bo here says I'm a holding company that is the single member LLC to a couple LLCs owning real estate. Okay, so this is good. So we have a parent LLC that owns a couple other LLCs. And so let's say this LLC is in Arizona and this LLC is in Florida. And we have two rentals here, and we've got an Airbnb here. Okay. And Bo says that that LLC owns 100% of these two other LLCs.

Bo is a dude. Just a heads up.

Oh, it's a dude. All right. Thanks, Beau. Thanks for your patience. So Bo says this people. So you know, that's called a single member LLC. It owns 100% of these two LLCs. So these are called single member LLCs. Now, Bo says we set this LLC up as a holding company. And you know why we do this. This is literally a chapter in my book. This is going to be a COPE entity. I'm hoping that's what Bo did. And we're doing this for asset protection. And so we want the second layer because it's going to give us more asset protection. And his trust is going to be the owner of this llc. So that's what Beau's talking about. The question is, do we want this entity to be a two member LLC or do we want it to be a single member llc? Well, to be honest, there's pros and cons that a two member LLC will have to file a tax return, a 1065. In a lot of states where you're getting COPE protection because you're doing this for asset protection, you're going to have to be a two member LLC to get that better asset protection. And also, filing a separate tax return reduces your chances of an audit by 1500%. 1065s are audited 15 times less than a Natalie. I'm coming to your question, by the way. That freaks me out. Okay, we're coming back to Natalie's question. Guys, I got to do one more. But a COPE entity in most states has to be a two member LLC and you reduce your chances of an audit by 15 times doing a 1065. So that's a good, that's a good thing. Wyoming allows you to be a single member LLC and get coat protection but then you would report this on a schedule E. If you're being really aggressive on write offs I might still tell you to go two member LLC because I want that extra audit protection. Whoever set up this cope bow should have walked through this with you. This is a big deal. You should not be doing this on your own. No offense, one of my tax lawyers. When we set up these copes they're going to answer this question for you and help you decide what's best in your situation. I don't know what state you live in, I don't know what state these rentals are in. I don't know what state your cope is in. I don't know how much your net worth is. Those are all going to play into this. You don't know what? You don't know. This is why it's very dangerous for me to go to freaking Home Depot and fix my garbage disposal on my sink because I'm going to freaking jack it up. I call a plumber and you're like well Mark, a plumber is going to run you a couple hundred bucks. Yeah, but I know it's done. Frickin right. So be careful out there. People playing lawyer on TV, going to LegalZoom and setting up your own damn LLC is hoping to get it right. Pay a lawyer once in a while. And I know that sounds very self serving and I'm not trying to do be that way. Once you have consults with my attorneys and you've gone through some education with our office and you understand the rules, yeah, you could pull the trigger on your own once in a while. But Bo, if you're asking this question, that question would be answered in your consult with the attorney. So guys, if you want just call KKOS lawyers, we'll hook you up. But you can see Bo some of the issues there. So KQS lawyers.com get in this two member versus single member LLC. That's really what we're trying to focus on is what are we trying to do there? And it's going to depend on a lot of issues. Okay Natalie, last question. I got to hit it. Natalie said freaking A. Her CPA says she can't have a home office with an S Corp. Wrong. Wrong. Oh my gosh. And yes, all of my books are available on Audible and just go to Amazon.com okay, so let's go to the whiteboard. You got your trifecta. You have an S corporation. What you're going to do is a home office deduction, as in a sense, reimbursement. You're reimbursing yourself for the use of your home office. Corporations do that all the time. Instead of paying you rent on to yourself for your home office, which might trigger a schedule E which we don't want, we put it as an other expense and this is where we put office expense because it's non taxable income to you. You're going to do the numbers. Your CPA is still going to do an analysis and figure out what would your home office deduction normally be and figure out that number, whatever it is, and then we're going to insert it here as an other expense on the 1120s as a home office reimbursement. Because you're an employee of your S corp and ask your CPA this, say, hey, Mr. Mrs. CPA. If I have an S corp and I'm going to reimburse my employee for the use of their home office, do I have to put that on their W2? No, because it's a reimbursement. It's like reimbursing them for mileage, going and picking up food at Costco for the office. So it's not included in their W2. You're not going to 1099 them. It's a home office reimbursement and you're going to take it as an office expense for reimbursing them for the use of their home office. Can't you do that for yourself? You're an employee of your own damn escort. Boom. People, we've been doing it for 20 plus years. It's normal. It's okay. I write articles on how to do the home office with an S corp. I'm going to be helping educate more and more CPAs around the country on some of these kind of street smart strategies. Because CPAs, I feel your pain. You don't learn this in school. You don't learn this at regular CE courses. I go to C E courses. I just taught a CE course for the Arizona Society of CPAs last week. People, I'm your tribe. I want good strategies that are legit. I, I don't want my clients to get audited. I don't want to be audited. But there's strategies out there that are okay. We can be aggressive people. You're a tax advisor. Your clients are starving. For good tax strategies. I'm trying to throw down everywhere I can. I love you guys. I love small business. All right, we'll go to the screen, straight on. We're going to give away some books. This is the tax and legal playbook. It's one of my favorites. This is second edition. 35 game changing strategies, 35 different chapters. I love this book. I've got other books, too. I don't know. Should we give away all these?

Yeah, let's give away all the books. I got four. I got five people here. I mean, you said you're going to give away four books.

Okay, well, I've got three books I love. This is what your CPA isn't telling you. And the Business owner's guide to financial Freedom. You know, let's do six people. Let's give away two books each. Okay, give me some names here.

All right, let's start off with Meryl.

Meryl.

Meryl Tirado.

Meryl Tirado. You are a winner.

Two of her questions.

Why not? Okay. And anybody that wins, you've got to email Diane. Let's put it up on the whiteboard. Dianearkjkohler.com you email Diane, give her your name and tell her you want a book. She's going to verify because we're writing down people's handles right here. Don't people try to cheat the system? And we're going to get that. Dianearkjkohler.com and won a book. And she will hook you up. She's my customer service manager. So Diane wins the tax and legal playbook. Who's the other person that wins this book?

Let's go with Sothanet sri so sanet

sry so sinet so thinet S o T H I n E T SRI S r Y people, what I'm going to ask you if you win a book, do me a solid. Please make sure that you're subscribed to YouTube with the bell icon. I am literally 300 people away from getting 300,000 YouTube subscribers. We will check no other CPA in the country. Tax lawyer for small business has 300,000 subscribers. Thank you, everybody. Subscribing. I appreciate you. I'm trying to spread the good word. Okay, two winners of the financial freedom book. Give me a name.

All right, let's go with Dominic the dump truck driver.

Dominique the dump truck driver. Man, you're going to love this book. The Business owner's guide to financial Freedom. Love it. Make sure you email diankjkohler.com all right,

we Got one more left, right?

Yep.

Okay, let's do Jared Janesek. I think it's Jenesek. It's J A N A C E K. Okay.

Can the people hear you online too?

Yes, sir.

Okay, everybody, I'm not going to repeat. That's James, my studio manager. Shout out to James and Patrick running the studio today. There's our second winner and then two more books. What your CPA isn't telling you. This is a story. I love this book. This is a gateway drug to tax planning. Who's going to be our winner here?

Let's do Rub dirt on it.

Rub dirt on it. I love it. Rub dirt on it. What your CPAs are telling you. All of you. Rub dirt. Says he has a lot of great books. You may already have this book. Great stocking stuffer people. Buy your family some CPA book. Buy your CPA a book for Christmas. But get your CPA hooked on my Kool Aid. So if you already have my books, you just want it, get it and re gift it, baby. All right. And one other winner of what you're

last winner for today is Santosh Timlishina.

Santosh Tumasina. That's Tim I L Timil Cena. Santosh Timolsina. Hey everybody. These books are great gifts. Let them know about the webinar and the webinar tomorrow, one o' clock mountain hour and a half, 15 year end tax strategies. The three we covered today will be in that 15, so you might have to hear it again. That's not a bad thing. I'm going to do some Q and A tomorrow. It's going to be an hour and a half, 15 year in tax strategies. You can get registered at my website markjkohler.com and down below is the link and you're going to freaking love it. I have an event in Phoenix December 2nd and 3rd. There's only 20 seats left. It'll sell out by tomorrow. Everybody in Phoenix is just figuring out that it's there. December 2nd and 3rd, but it will be a virtual broadcast. I think three or four hundred bucks. That's a tax write off. December 2nd and 3rdrd, you can register at my website, markjkohler.com Two full days of all my freaking awesome tax strategies. And I'm gonna be offering a discount at that event for my new certification program for CPAs and tax advisors. So that launches in January. So it's gonna be a great event. December 2nd and 3rd, you can watch online and I promise you you're going to save 20 times whatever the cost of that event is you're going to freaking love it. You're going to be the captain of your ship. You're going to keep living the American dream, and you're going to be owning it. You're going to own your freaking tax return. People, I love you. Thanks so much for being here today, and I'll see you next time.