Avoiding Capital Gains, Tax Strategies to Save you Thousands - LIVE Q&A | Mark J Kohler |

Here helping you out with your Main street business, tax legal strategies, trying to do the best I can with an amazing team behind me at the law firm of KQS lawyers, accounting firm K&E, CPAs and directed trust company. Now here for the next hour, we're going to break down topics, do live Q and A around the world here on Facebook and YouTube through entrepreneur and our own sites through our firms. Please, if you're participating, give me a second to explain the topic for today because it is a tricky one. But we've been. This has been by demand. In fact, my marketing director Jack said you're doing a show on this topic. I'm like, really? This is what everybody wants to talk about? He's like, yes. I'm like, all right, I'll break it down. Do the best I can. So we're going to let me explain the topic here, but please get involved down below. Give me some love. Give me a question, let us know how you're feeling. Once in a while we get some folks in the comment section that are just trying to promote their own stuff or be reckless and just be a headache. Please, we ask of you. This is an opportunity for all of us to work together and learn about small business. Let's keep it to the topic, be respectful of one another and have a great session here. Learn about how to make money and live the American dream. Alright? My mom would say I've got to take the gum out of my mouth here too. All right. Boom. We're gonna rock. I should be drinking a rock star right now. But there's none in the house. We gotta restock the fridge. Oh, the fridge is full. Ah, this is a good day. All right. Okay, now here's our topic. Today we are going to talk about. And I can't believe you guys have been requesting this. We are going to talk about capital gains. Woo. That's what you guys want to talk about. Now what this means is you bought a rental property, you sold it for more, you bought your home, you sold it for more, you bought some cryptocurrency, sold it for more, you bought some Tesla stock, some Lululemon stock and you sold it for more. You bought a piece of equipment, you bought a car truck, you bought, sold your business, you're gonna pay capital gains tax. That's what the topics about. Everybody keeps texting going, how do I get out of capital gains tax? What's the rate? How do I pay it? When do I pay it? Blah, blah, blah. So that's it, Jack, right? That's what we're doing. And a lot of people are making some money on crypto. Not this week. Not me. Took a hit this week, didn't we? That's right. Next week, Elon Musk will tweet something else out and we'll make money. Come on, Elon, give us some love. All right, now. Okay, here's the first thing I wanted to mention. There are two tax rate systems out there. There are ordinary rates, okay. And then there are capital gain rates. Now, my goal. Oh, well, they're cold, for crying out loud. Let's see what we got here. Anybody need a rock star? Huh? Huh? Yeah, this is big. I'm saying I'd give these away here on the show. I should. I should just sign when I'm sponsored from Rockstar, you know, Totally legit. We'll do it. Okay. Capital gains, ordinary rates now. Oh, boy. I've got a table here that I wanted to show you here. We can. This is going to be tricky. Basically, you've got 10 to 37% in ordinary rates. 10 to 37% based on your income. This. This is single or married. So we can kind of zoom in on this a little bit. Let's do that. So if you're single, I'm going to pay anywhere from 10% on my income to 37%. And capital gains is going to be zero to a max of 20% if I'm married, different income level, 10% to 37. Capital gains, zero to 20. So you have different brackets based on single or married. Okay, so that's. So when we start looking at these rates, we need to say, well, which one do I want? Do I want ordinary rates or do I want capital gain rates? Well, capital gains are better than ordinary rates. So sometimes right off the bat, people go, I don't want to pay capital gains. How do I get out of it? I'm like, I got people trying to get it. They want capital gains. So we have to remember on the continuum or. Well, no, no, on the comparison of just ordinarily capital gain, capital gain is better, lower rates. So if you make 100 grand in capital gain, let's do that. This is for fun. Let's say you're single. You made a. You made 100 grand. Okay, I'd be between 84 and 160. So I'd pay 22% the money between 84 and 100 grand. I pay 12% on the money between 9,739. No, no, I'm going to pay 10% on 97 to 39. Oh no, I want to get this right. Zero to 97 is 10%, 97 to 39 is 12% and then it's graduated. See what I mean? So if you say I made 100 grand, I've got to pay 22% in taxes. No, you're going to pay 10% on this chunk, 12% on that chunk, and everything above 84 up to 160, you're going to pay 22. So what they say is you're in the 22% bracket right here. Now, capital gain. If I had 100 grand of capital gain. So I have no W2, no W2 and I'm just living on an island and I sold my bitcoin and made 100 grand, I'm going to pay 15%, zero on the first 39. 15 right here. So that's kind of how it works. That's how capital gains works. All right, now questions are already flying in, but I want to do one more example. Then we're going to stick with questions. There's a continuum of the worst taxes. So I go left to right, I'm going to go left to right. So we're going to go. The worst taxes are over here and worst tax rates. Let's do that. The worst tax rates are over here. And how about no taxes? Sign me up. I want no taxes. All right, so over here the worst taxes on this continuum is going to be ordinary income plus self employment tax. Oh my gosh, the worst. And if you have a C corp, you might be paying double tax, corporate tax plus personal. So this is one of the worst equations. When I see someone getting killed with self employment tax or corporate tax, then let's say you don't have self employment tax but you have ordinary. And then you've got capital gain, capital gains right in here and, and then we get over here into. Boy, I'm just going to say Roths, no tax. Now what we're trying to do is get as many deductions as we can or tax credits to reduce our tax rate. And so let me. I think a lot of people don't realize this is a lot of times what I'm trying to do with my clients is in between this capital gain and ordinary, I'm really trying to reduce your amount of taxes based on deductions and write offs and tax credits. So deductions and credits is really what I want to be. And I want to look at how much money did I put in your pocket divided by how much did you make and or how much did you pay in taxes by how much we put in your pocket and we're going to find your effective tax rate and we want to get it as low as possible over here. I want to minimize self employment tax, I want to minimize corporate tax. I want to move you down this line as far as I can and get you to a no tax realm. I guess what I paused on and I'm going to just say it, but it opens up a whole can of worms is some people are like, well our Roths really here I'm going to erase this Roth IRAs or no tax inside a retirement account, which I love. It's really Puerto Rico, okay, We got Puerto Rico in here that you could be as low as 3% in taxes but you got to move to Puerto Rico to get it. Then we've got our Roth and tax free bucket and there we're talking IRAs and, and all these cool strategies, 401ks and all that. So my goal everybody is to get you over here paying us no tax called opportunity shifting. Now let me give you one example. Every take a breath then I'm going to go over here. Okay, everybody hang tight. Let me give you an example. We all know Chuck, sorry, Chip and Joanna that do fixer upper on one of the home networks. They build homes and resell them down in Waco, Texas. They are in the business of flipping homes. Now if I was meeting with Chip and Joanna and I meet with developers like that all the time. Had a phone call this morning, like it literally we talked about this very topic on the phone call and they go, mark, I want to quit paying so much in tax. And I go, do you have another deal you're looking at? Yep, we're going to go develop that house down the road or we're going to go develop that apartment building down the road. And I go okay, cool. You want to save taxes, don't do it. They're like mark, you're freaking idiot. I know what I'm doing. I know the market. I'm going to make money on this deal. What do you mean don't do it? I say don't you do it. Let your retirement account do it. Pay no taxes or very, very little. There's a lot of strategies involved here, but why deal with all this crap over here, even capital gains? Someone calls up and says mark, I'm going to buy dogecoin. I'm going to put down five grand on dogecoin and I know I could make a million dollars or 100 grand. It's going to come back. Hey, I own some dogecoin. Cool. I'd love to make 100 grand on my $5,000 investment in Deutsche coin, but I'm going to tell you right now, don't do it. Put the money in your Roth IRA and let your Roth do it. Zero tax. You still made the hundred grand, but you didn't pay tax on it. And you may say, well, Mark, I'm 25 years old and I don't want to wait till I'm 50 to have that million dollars or 100 grand. Hey, you want to pay the penalty in the tax to pull it out early, you can. You're not going to jail. But you know what, you got a long life ahead of you. And I meet with too many people that are broke at age 50 and they're freaking out. You don't want to be there. So let's start opportunity shifting and try to get into a better tax free scenario when possible. So the moral story is we're going to focus on capital gains today. I'll tell you what the rates are, how to get out of it, what to deal with, what's short term, what's long term. I've got some killer slides here that are going to blow your mind. And I'm gonna answer your questions, hopefully help you out. So see how it goes. Sound good? We're rocking it. Warm rock stars. Seriously? Warm rock. You know, it's like I come over for the super bowl and I have warm beer. You know, I come to do a show and I got warm rock stars. Ridiculous. Okay, all right. Okay. So, Corey, do you want me to read some of these questions that came in in advance? Oh, you did? Should I go with those? Okay. They're most current. Okay. All right, first, these are Instagram. We're going to go to Instagram first. If I made 300,000. This is Jerry69. If I made 300 grand with crypto, how can I avoid paying taxes? Also, if I'm from California, can you file my taxes? Jared, we'd love to help you out. And yes, I've got a full service accounting firm, over 50 employees. We're helping clients around the country. We would love to be of service, be patient. We just filed extensions for a lot of folks. We're going to be working on taxes till October. But Jerry, I've got some bad news. If you made 300 grand in crypto, You're going to be paying tax and California is going to kick your can too. So let's see how this works. Okay, everybody, so here's how this works. Take a breath. And you don't. I'm not going to get too geeky on you, but you've got to know this. This is what successful investors. And successful, sexy investors too, but successful business owners and investors know. Sorry, Freudian slipped there. Okay, when you go to cap, how do you tax or track capital gain? Okay, even my guys here in the studio, you're going to love this. Let's say Jerry went out and bought bitcoin. So here's his little bucket. And he bought bitcoin when it was just $5,000. That was only six months ago. Can you believe it? Okay, so he bought bitcoin for five grand. That is what we call. And I'm going to put it in red. You want to learn this? We call it basis. All right, so he's got his basis. That's what he bought his cryptocurrency for. Okay? Then we turn the corner into freaking February and March of 2021. Bitcoin is at 60 grand. It's out of control. And so we get this huge gain. So we have this gain on bitcoin. And now Jerry sells this Bitcoin for 300 grand. Sales price, sp. Sales price. So we've got purchase price. Five grand. Sales price, 200. No, 300. $5,000. Okay? So you take your sales price minus your basis and you have $300,000 gain. Now when you have this gain, we have to say, okay, I got a gain. Now my next question of Jerry is how long did you hold it? Okay, so now we've got our capital gain here. That's step one. We tracked it. Step one. I know that I've got a $300,000 gain. All right? Boom. Now we go, is it short term or is it long term? All right, this is what accountants do. I know you're gonna love it. You're like, man, Mark, you're turning me on. I go, I know when my wife is, like, feeling a little frisky, I just start talking about capital gain. Boom. She loves it. All right? Of course not. Okay? Everybody in here is like, I just vomited in my mouth. All right, okay, all right. Short term means you held it less than 12 months. Long term means I held it more than 12 months. Okay? So some people go, if you want to save money in crypto, hold it 12 months. Okay, all right, so we call it. I call up Jerry. Jerry, when did you buy your bitcoin? I bought it last year. Did you hold it 12 months? Nope. Okay. Crap. Alright. So we held it nine months. So his capital gain is now short term. Jerry, you're not going to like this show today. Maybe if it's short term, you pay ordinary rates. Ordinary equals short term capital gain. Accounts call it STCG Short term capital gain. Short term capital gain is subject to ordinary rates. Now, let's say Jerry gives us some great news. He's like, mark, I bought bitcoin last January, held it 12 months, sold it in March. Boom. Okay, we got long term capital gain. So now he pays long term capital gains rates on the 300 grand. Well, that's cool. All right. Okay, so we got to figure out step two in our little diagram here. Step two is we had to figure out, is it short term or long term? Okay, step one, how much is the capital gain? Step two, was it short term or long term? Now, if it's short term, it's pretty easy. Jerry's screwed. He's going to pay ordinary rates in California and federal. So let's go over and look at his rate. Now, I don't know if Jerry's married or single, but if he made 300 grand, we have to say also, how much was your W2? Did you make any other money? And he goes, well, Mark, I have a day job and I live in California. So I live in a shack and make 100 grand a year. No, I'm just joking. I live a place in California, too, and it's so expensive there, right? Let's say he makes 60 grand W2, just, you know, maybe a young guy buying bitcoin. So he's got $60,000 in his W2, plus he has 300 grand in his bitcoin sale. Short term capital gain, what is his adjusted gross income holding everything Constant? He made 360 grand. Now, let's say he just does a standard deduction. 12 grand. We're at 350. Now, I don't like Jerry's situation. I want Jerry to say, I got a small business on the side. I got some rental property. I'm putting money into a solo 401k, Mark, I'm going to bury that 300 grand in, like, five different places. Ooh, I got all sorts of things to do. But if Jerry says, I got a day job and I bought crypto, you're giving me nothing to work with Jerry. It's going to suck. So if that's the case, he's got 350 grand of income. So I have to take your short term or long term capital gain. And step three, I have to add it to all your other income. What other income did you make? All right, so now we got 350 of ordinary income. All right, let's go to the chart. Okay. 300 grand. Oh, 32%. I felt that in my gut. That's just fed, Jerry. That's just fed. Now it's graduated. You're going to pay 10% on the first 9,700, 12% on 9,700 to 40 grand, 22% on 40 grand to 84. 24% on 84 to 160 and 32% on everything over 160. That's just federal California. What do you guys think, darin? I mean, 9% at least. Probably 9. California. So, Jerry, I hate to be their bearer of bad news. Your effective rate at the very. I don't know what your effective rate will be because it's after all of this is meshed together, but for about 150 grand of your income, you're going to be at 32 plus 9%, 41% of about $150,000 of yours taxes. If you came to me with 350, I'd say you're going to be dropping at least 100 to 120k in taxes. So now last point. We're using Jerry as an example here. Let's say Jerry goes. No, no, no, Mark, it wasn't short term capital gain. Oh, step four, step four, calculate your rate. That was step four. You got to calculate your rate. Okay, now, well, Jerry comes back and says, no, Mark, I held it 12 months, so I only paid long term capital gain on the 300. Okay? Now guys, this is going to make you so mad. I'm sorry. I don't care. Don't hate the player, just hate the game. It's not my fault. I'm just telling you what the gov does. All right, Hate the man. Okay, all right. I'm trying to save you taxes, okay? Now this is really important. He had 300 grand. So now Jerry, we gotta say he had 300 grand in long term capital gain and he had 60 grand. Let's do that in black. He had 60 grand in W2, which is ordinary. And you're going to go, well, sweet, Mark, I pay a lower rate on the 300 and a higher rate on the 60. True, true. Okay, what's the rate on the 300? Well, you go, okay, he's single. 300 grand. I'm in the 15%. This is great. 15% range. I don't pay only 15%. Not this 32. Yep. Okay, so let's go back over here. 15% on that and 60 on the other is ordinary. Okay, now here's the problem. Jerry's gonna go, well, I take the 360 separately, right? No, now this is deep. So I've got 300 grand here. But your capital gain rate is based on your adjusted gross income, your overall income. So I've got to look at 360. Now, luckily, he doesn't get into the 20% range until 510 grand in a zero kicks in, disappears at 40. So we got this huge swath here. So his capital gain rate is going to be 15%. That doesn't change. But he says, well, my 60 grand, ordinary. Oh, my gosh, that's great. I'm right here in the 12% bracket. New, your ordinary rate is based on your adjusted gross income. So you're going to pay that's higher rate on your 60 grand, but you're going to pay the lower rate on your 15 on your capital gain. So it's, it's, it's complicated. That's why you use accounting software to kind of figure this all out. But it's tough. So it's, it's Jerry, you're gonna, you're, I can't get you out of it. What I wish Jerry would have done is bought all that bitcoin cryptocurrency in his retirement account and he'd be paying zero taxes right now. All right, I'm gonna go to the live viewers right now over on Facebook. Ashton says, what happens if the cryptocurrency crashes as it does ever so often? What happens then? All right, good question, Ashton. Okay, so I've got crypto and it crashes. Now, to me, everybody crashes means it went in the toilet and it's gone forever. I don't think that's going to happen. What Aaron might be saying is cryptocurrency is doing this, and right now we're here. Well, the first thing I'd say is option one, don't sell. You know, just wait it out. I, I had crypto go in the toilet this week for me. I'm, I'm just gonna wait it out. If some of you are living on crypto trading, you might want to get a day job. You're trading crypto. All right, other than trading crypto, I, I, I just don't like to see all my clients throw all their money into anything. I want to diversify. I want real estate, I want stocks, bonds, I want crypto. I want a small business. I'm going to be doing a variety of things. I probably have nine sources of income. So option one is. Wait. Now, what you can do is option two, you could sell, take the loss on paper, and then rebuy. A lot of people call this harvesting losses. So you will. You sell down here in this part, from here to here, you get to take that loss against other gains that you might have had earlier in the year. So you get to take this loss and wipe out real estate gains, wipe out other income possibly, and then rebuy it and wait for it to go back up. Now, some of you think that's. That's great, but let me go back to the slides. All right, so we got to start over on some of these slides. Got to get this down. There we go. Oh, how do I get out of the presentation mode? There we go. All right, here's how. For you accountants out there, I'm going to say this right now. All of this property we're talking about in the IRS code is called 1221, 1231, 1245, and 1250. If you take a CPA exam, you got to know all this crap. If you're preparing taxes, I don't want you guys to worry about it. Just start throwing that out. Okay, now this is important. 12:31 Property is real estate and equipment. Whenever you lose money on the sale of real estate, land, buildings, anything affixed to real estate, office furniture, equipment, machineries, trucks, cars, goodwill, you sell your business at a loss. Jerry could deduct that loss against his ordinary income as W2. That's great. That's not cryptocurrency. We got to go over here now. Okay, so now we go to 1221 property. 1221 property are capital assets such as stocks, bonds, mutual funds, and cryptocurrency. Okay, what happens if I gave a gain? I got to look at short term or long term and go through my steps. How much is my gain? Was it short term or long term? What's my calculate my rates. I got to go through all these steps. Losses. Oh, I can only deduct my crypto losses against other crypto gains or stocks, bonds, and mutual funds. So I can only deduct against other capital gains. Ouch. Okay, now, I can use these losses against gains over here. On 1231, I could use it over here. But if I don't have any other gains, and Jerry says all I have is a W2, these losses go into a bucket, and these buckets go away. So, I mean, sorry, these buckets stay there. They don't go away. And you have this bucket that just stays here and you can only dump it out when you have future capital gains. So if you go to harvest this loss and all it's doing is sitting there, what the freak? Doesn't do me any good. Might as well just sit and wait. See, some people are like, I better sell and harvest the loss. I'm like, oh, you got other capital gains? No. Who the hell cares? Set it out. Why stress? So this 1231, 1221 property is a little unique. And so this is why I go through in this presentation here. Okay, we'll go this way. Sorry. 12:21 Capital gains, short term or long term, deduct against other capital gains and not against rent. I can't deduct this against rent, but I can deduct it against the sale of real estate or the sale of other stock. Now we've looked at our chart of different taxable rates and then I get into 1240 and 1250. That's if we're going to talk about rental real estate. Whole other conversation. All right, so we go out of here, we go back. So Aaron. I'm sorry, Ashton, that's what I do. I'm sorry, I may have called you Aaron along the way there. Sorry, Ashton, but if your cryptocurrency crashes, just sit it out. Wait, it's a long term hold. Candice says what can be done for sale of property with 400 gain of property after sale. Single, not married, any way to reduce capital gains. Oh boy. No wonder people are asking these questions. These are hard ones, alright? They're not hard. I know the answer. It's just hard making it sense to the average person because those accountants and lawyers were geeks. Alright, let's draw it out. So Candace has a house. Let's put it in. Let's put it in black here. Alright, so Candace has a house. She has a $400,000 profit. Whoo. Now I'm going to assume it's not her primary residence. If it's her primary residence, I can exclude 250 grand if she's single, 500 grand if she's married, she says she's single. So if you sell a home, you buy it for 200 purchase price, you sell it for 600. What's your gain? 400,000 holding all things consonant. It's Candice's house. This is Candice's primary residence. Primary res. So she's got this $400,000 gain. If it's her primary residence, we can exclude 250 right off of the top, no tax. So that means she has, wow, 150 grand of additional capital gain. Because to get the sale of home exemption you've had to hold it at least two years. So I know it's going to be long term capital gain. So long term capital gain 150,000. Now if Candice says, Ashton, this is a good point. If Candace is selling her home, she has $150,000 gain and her cryptocurrency is right now in the toilet. I want her to sell, take the loss, harvest it and use her crypto loss against it. See, so I can use a crypto loss and reduce my taxes. That would be an idea to do before the end of year. And one example. So Candice, any way to reduce capital gains? Yes. Harvest any other capital losses. That's number one. Harvest any other losses. Oh boy. Candice, one option is if you've got a small business, I might try to create a loss over in your business or solo 401k, create a write off that we can offset. So number one is harvest losses. What I want to try to do is create offset with other write offs. Now for those of you that have a side hustle, I might be able to create write offs or even a retirement account in your side hustle, create a loss or a write off that we can use against the capital gain. That's an idea. The other thing, let's say this is not Candace's primary residence. Let's say this is her a rental property. So if this is a rental, your only other option at this point because you've already sold it, is an opportunity zone. So you could take the money and go reinvest it in an opportunity zone that can defer the tax and reduce the tax. Not entirely, but it can help. So you might want to look at opportunity zones. Number four is if Candice would have called me before she sold it, I would have done a 1031 exchange and exchanged it for another piece of real estate, maybe somewhere else. Pay zero tax and defer it down the road. Another option, if Candace is like, I just want a stream of income, I might have created a charitable remainder trust. Now if you type Kohler 1031 or Kohler Charitable Trust or CRT, I've got some awesome YouTube videos out there and you guys could study up on it. Candice, you'd have to do the 1031 and CRT before you sold, not now. The only thing you can do is look for offsetting write offs, harvest losses or do an opportunity zone. Those are the only three things that come to mind. Oh. Bird says looking buff. Keep going, brother. Look at this. I've been working out, but this is a new shirt. It's just more trim. You know, I think if I work out up here I get the V. So instead of working out this, I just work out up here. And this is still fat. I just. Anyway. Okay. Thanks, Bert. All right. Kristen says Christine Brooks. All right. She says how much time do you have to spend money from the sale of rental to rebuy another rental? Or can I use it for a rental I already bought? Whoo. Christine or Kristin? I think it's Christine. I'm going to go with Christine. All right. Christine asked about the 1031 exchange, so we're going to dive deep. Is that okay, Darren? Is that what I'm hearing? Okay for anybody out there? You ready? You bought a rental property. Let's go to the same example as Candices. I bought it for 200, now it's worth 600 and I've got a gain here in the middle. We'll put this in black. I've got a gain 400 grand. Alright, now Christine and everybody out there, if you've already sold the rental, there's nothing I can do. Except like I told Candice, harvest losses offset with other write offs or an opportunity zone. That's all I can do. Christine, you can't go buy a new rental if you've already sold the one. So we're toast. You have to get involved on the 1031 before you sell anybody out there. If you've got a property for sale and it's not your home, your primary residence as a rental property and you're going to have a gain. Holy crap. Let's start talking 1031 right away. Alright, so let's say you haven't sold yet. Here's the rule. Okay, so this is, this is tricky. You've got your selling property and you want to go buy a replacement property. That's what you want. Now what the IRS says if you. Christine, if you sell your property and buy another one of equal or greater value, you don't pay any tax. The gain slides to the next property. Well, I've got to go find a property that's of equal or greater value and exchange it. Yeah, no one's going to. The stars are never going to align. You're never going to find another property for 600 grand that you want and they want your property. I've never even heard of that. So what happens? Well, you sell your property in. The money goes into what's called a qi qualified intermediary. So you sell the property to a buyer. So here's the buyer that wants your property and so they give you cash or actually I'm going to put the money up here. The cash of 600 grand minus any debt you might have had goes in here and you give them the property. Let's clean this up a little bit. Okay? So I'm going to clean this up, make it look pretty here for you guys. All right? Okay. So the buyer comes over here and you give them the property. So the property goes from here. Property goes from here down to here to buyer. The buyer doesn't give you the money. You can't touch it. Now to answer Christine's questions, question, you've got 45 days to decide what you're going to buy and 135 days to close after the 45 days. So you have a total of 180 days to go buy what the freak you're going to buy. Now here's what's cool. You can sell one property and buy two. You can sell two, buy one. I once had a client that sold one property and bought 27 other properties. You just have to buy a property or properties of equal or greater value. So if she sold her property for 600 grand, she could go out and buy three properties of 200 grand each. I met my 600. I'm done. No tax. So now the money that's here in the qualified intermediary goes over to the replacement property seller. This is the seller. And then the property comes back to me. That's a 1031 exchange. And you've got 45 days to identify in writing what you're going to buy. Christine. And then 135 more days or a total of 180 from the day you sold. So 180 from here or 45 plus 135 from the day you get the money and you're qualified in marriage. Okay, that's a 1031 exchange. I hope this helps. Steve says, I'm just going to say I love you, man. That makes me feel so good. I appreciate that, Steve. Thanks so much. Candace from Canyon Lake, California. We got the sale of property of 400 grand. Already did that. Now over to YouTube. Long term holder, when are your CPA team going to start calling new clients? I'm on the list, just waiting for the call. Long term holder, thank you so much. If any of you are on kind of the waiting List to get cranking. I'm going to say this right now. Talk to Maxwell Rogers. He's going to hate I put his name out here today. He's going to be like, mark, my phone's ringing. But we're, we're doing the best we can to grow and hire new people and all that. But if you want to get a call over to there to the accounting firm, call Maxwell and just go, Max, how am I looking, bud? What are we doing? Keep me posted. So it's 435-865-5866. That's our accounting firm, K&E CPAs. So go check it out and Maxwell can hook you up at. Abdiel Palamo says when the Tesla trucks come out, how can we write it off for our business use? Oh, I love it. I already got my Tesla truck. Where is it at? Is it outside parked on the street? Oh, here it is. Okay, Abdiel, I already got my Tesla truck. Check this out. Loving it. Yeah, I signed up for my Tesla truck, but all I've got is a 3D model 1, 64th size of a real Tesla truck. But I'm on the list. Okay, now everybody, I love this. Okay, let's get down to some fun tax planning here. This is where the offsetting write offs come on. Because if you have got a capital gain over here on real estate or crypto and you need a write off, I want to go buy a Tesla truck and get a freaking write off. Huh? Okay, so we do our left side, right side. I've got operations over here, I've got assets over here. I've got my little side hustle. Okay, cool. I might have an LLC or a little sole proprietorship, but then I'm going to graduate to a full time small business and I'm going to ultimately get my S corp going. Now that could be an LLC taxed as an S corp and I may even have my day job over here, W2. So I got my W2 off to the side. Or I could be married and my spouse is working the W2. We got a side hustle. We're kind of working. And then I've got my full time small business there. I'm really cranking. This is where we do the S Corp. When you're making $50,000 or more net. So if you're netting $50,000 or more, that's when I. That looks ugly. Net. 50k. If you're netting 50k, I want to do the S corp. Got plenty of videos on YouTube on that. Now let's Say some of you are like, well, Mark, I'm buying rental property. I got a little LLC over here. I'm funding my 401k. I'm doing my IRA, I'm doing my Roth. And so this is kind of my tax free side. But over here I'm still buying Eric Reynolds and I love this. I buy rentals too. You might be doing long term rentals or Airbnb and you're just out cranking it all right down here it's all owned by your trust. Okay, now question was, where do I put my Tesla truck or your Ford F150 or my little Prius or any sort of car you have got, You've got different places. I could put the student red could put a car over here and write it off mileage or actual. I could do it out of my S Corp mileage or actual mra. I could do it over here and right off my car mileage or actual. So when I meet with the client or any of our tax attorneys, I've got Darren here in the house with us. We'll have Darren introduce himself in a minute. Some of you can do a consult with Darren within the next week and just say, I need some help. But he's also answering questions online for many of you. Type in his little heart away. He's getting blisters. I can see it. Break the record. He's trying to answer questions as fast as he can for you guys. Give him a shout out and tell him thanks if he's answering yours. But any of you that have a vehicle, I want to write it off in your side hustle, in your full time small business or in your rental property. If you're going to go out and get a Tesla truck. If it's more than 50% business use, I can do actual with depreciation, but I have to be greater than 50% business use. If it's under 50%, I'm just going to do the mileage and the mileage this year. Hang on, we got to get the calendar. I carry it around with me everywhere I go. Some of you may already have your calendar too. The Marcj Kohler 2021 calendar. Woo, sold out. We might do another print run. We'll see. At the very front of this, I've got my table of all the tax strategies and little tables of what to do in your various state to save money. And oh, you're gonna love it. Okay, so I go over here. The mileage write off is 56 cents a mile in 2021. So 2021 is 56 cents. All right, Chris says how much of the of this reducing tax strategy can you do after the year end versus have to do this before December 31st? Kris, that's a great question. Everybody take a breath. It's been a whirlwind, right? Go back to Instagram questions here in a moment too. Just hitting YouTube and Facebook, everybody. Kris just asked a great question. How much can I write off for 2020? Now that we're into May of 2021, there's not a lot of options except going back and trying to dig up everything you can with cash. Maybe on credit cards, your business debit card, anything you paid for that's business related at all. I want you to scour the bucket and try to find as many write offs as we can. That's the first good thing to do. Really work on your books. That's why extending is a good idea. I extend 60% of our clients. We don't even do their taxes until summer and fall. We're going to extend so we can really help you carve out as many write offs as you can. Really the only thing you can do that would be significant at this point is possibly a solo 401k or a SEP contribution. It depends on if you have employees in your small business. Everybody please sign up for my newsletter. Pay attention when I do webinars and my fall workshop because Kris do webinar and broadcast after broadcast in November and December saying here are the year end strategies. If you're going to write off health care, you got to do an hra. If you're going to pay your kids or your spouse, you got to do it now. If you're going to go buy a truck, you got to do it now. Now I'll give you guys a little tip here. This is a deep one. I haven't done this on the show. You guys might like this. Darren, okay, let's say you've got your small business in 2020. Now we're in 2021, but you started last year. And I don't care if it's an llc, an S corp or a sole prop. Now this is good. Some people may say well before the end of year at 1231, did you go out and buy a truck? No, I need to go buy a truck for my business. We're in 2021 now. Is it too late to go buy a truck? Well, under the new Tax Cuts and Jobs act that Donald Trump and the gop, if you hate him, that's fine. But this was a big bonus that we got, and it's called bonus depreciation. You can take a vehicle that you personally owned that had never been in your business before. This is, again, something that some of you might be able to do and contribute it to the business, backdate that contribution to the business back in 2020, and bonus depreciation, the whole darn thing off. Now, this assumes it's over 50% business use. If it's 100% business use, I write off the whole hundred percent of the truck, not what you paid for it, but it's fair market value on the day you contributed to the business. So instead of doing mileage, I'm going to go back to 2020, contribute my truck to the business, which I truly used for business. You can't just make this crap up. You got to say, yeah, I used my car, my truck, I used it in my business. I never bought it last year, but I used it for my business. And I never put it on the books of the business. I never wrote off mileage. See, this is. I'm just giving you an option for some of you. So if you've got a vehicle you've never used for mileage, never contributed to the business, you don't have to actually go out and buy a new vehicle. You can contribute it last year. This could be your spouse's truck or car, bonus depreciation, the crap out of it. We're talking refund. I don't know. Could be an option. Cool, right? Did you know that? See, I learned that a couple months ago. I'm going to give a shout out to Tom Bradford. Love him. And the Bradford Tax Institute learned it from him. Jamie says, I would. Would I pay capital gains tax even if I reinvest the proceeds? Now, Jamie, Corey, can you look at Jamie Acevedo's question and go up a little further? He may have asked, would I pay capital to gains tax even if I invested it? I don't know if he's talking about stock or real estate. Let's figure that out. Okay, I'm going to go over to Instagram while Corey looks up that. How do you avoid capital gains on a flipped property held only for three to five months? See, Elmore, Elmore, Elmore. Gage guy says, how do you avoid capital gains on a flipped property held only for three to five months? Elmore, it would be a blessing in your life if you got capital gain. Does that make sense? This is why I was telling Jack. I'm like, why are we talking about capital gain? People need capital gain. I want you to get capital gain. Unless you did it in your retirement account, capital gain is the best darn thing you can freaking get. Elmore Gage, guy on Instagram says, well, how do I get out of capital gains? Freak. Dude, you're paying ordinary income tax, possibly self employment tax. Capital gains would be a blessing and you ain't getting it. You are not getting long term capital gain. So if we go back to our continuum here and look at this, okay, Elmort guy says, well, I flipped a property in three to five months. If you're in the business of flipping property that's ordinary subject to self employment tax. Dude, you're all the way over here and you're saying, how do I avoid capital gain? I'm trying to get you over to capital gain because you're screwed. So capital gain is a good thing and I'm trying to get you long term capital gain. So if you only held it three to five months, not good. So we're so I hate to say this is why. Tax planning in advance. So some of you may be going, well, Mark, what's the solution? We plan in advance before you sell. That's when we got to talk. So many people start calling our law firm and accounting firm when they've already made the money. And I know it's hard because you're like, mark, I can't pay you guys because I didn't make the money yet. But then I make the money and I call you guys and it's too late. I know it can be frustrating, but just listen to the podcast, read the blog articles, come here on the live show. This didn't cost you anything. I do this every Thursday for an hour. We're almost done here. I'm going to do everything I can to try to wrap this, you know, a bubble around this. So if any of you. Did you find out what Acevedo, he didn't post anything before that. Okay, so go back to his question and I'll try to do the best I can. Jamie Acevedo says, would I pay capital gains tax even if I reinvested the proceeds? Well, if Jamie's talking about real estate and you reinvested in real estate in a 1031 exchange, you avoid capital gain, but you got to do a 1031 and plan for it in advance. Would I pay capital gains tax even if I reinvest the proceeds when I sell stock or crypto? Yeah, you're going to pay the capital gains tax and then go rebuy more stuff. But all of you, I would go look at opportunity zone strategies. There's some options there. I've done a podcast on opportunity zones, and I've got blog articles on it and YouTube videos. Check those out. Because you can take a capital gain from stock or crypto and go buy real estate and sometimes delay the tax, reduce it a little bit. So it's called an opportunity zone. I'm going to take my capital gain and put it in a zone. The government has said we need to rebuild this area. Okay, now, so here's the perfect model, everybody. I'm going to finish with this. You're going to love this. I'm going to do one of my master diagrams right here. This is going to blow your mind. Now, this is what people do with my tax attorneys when they call up, they go, mark, I just need an hour. We can do a lot of good things in one hour. So here's what this would look like. We want to build Water runs Downhill. And some of you have seen this before, but I might say something that really is powerful for you. Down Here is your 1040. Everything goes down to your 1040 tax return. I want it owned by your revocable living trust. We've got a special this month. Right now we're doing 20% off. We do it every year at Memorial Day. This is our 11th year in running. We do 20% off on estate plans to get your trust and will done. Check it out on our website. You're going to love it. Get in. The sooner you get in, the sooner we can get you out. Because a lot of people wait to do this during the year when we do our special. Okay. If I have a client that has children under age 18, we're going to use this little bubble in the middle. And also if I have clients that are married with a lot of medical expenses, we're going to come back to that over here. I have some clients that have a W2 or their spouse has a W2. They also one in three Americans have a side hustle, and it's just a little sole prop, and that's okay. I think that's great. You're just going to report on a schedule C. I have other people that have a side hustle with an LLC. So this is a side hustle LLC. Side hustle LLC. Now, what you're doing in these is you're getting 1099s for selling a product or a service drive, an Uber drive, doing landscaping, consulting. And so we've got these different little 1099s. I'm going to write that a little better so it looks pretty. We've got our 1099 income coming down here. Now for those of you that have a full time small business with employees or not, you might be a full time realtor, consultant, landscaper, attorney, accountant, engineer, whatever. You're going to get into an S corp and this S corp is going to give you a W2 and you're going to take draws. And we're doing this because we want to save on self employment tax. Okay? So we're going to save self employment tax, save SE tax. I do not recommend S Corp. I mean C Corps for small business owners. I want the S corp. All right, now all of this income, this is a schedule C. All of this income is going to flow down to your 1040. I want to take as many write offs as I can right here. This is a really important area. I want to write off auto, home office, cell phone, travel, dining, electronics, computers, microphones, chargers, headsets, glasses, cameras, tables, TVs, monitors. We want to write off everything we can in our small business to save taxes. We're going to take our profits and we're going to pull these profits over and we're going to fund our Roth IRA, solo 401k. Or regular IRAs. I also am going to take profit and pull this money out and I'm going to go buy my own home. I'm going to try to work, to work towards home ownership. Good thing. I want my own home and my trust is going to own it. I also want to take profit and drive it up here. Create LLCs to buy rental property and I'm going to buy rental property all over the country. And if I have multiple of rentals in multiple states, I might have multiple LLCs. And that's okay. I could have several LLC's going on. I might get a little bit of life insurance. I'm a term guy. I'm very careful with whole life, universal life and bank on yourself life insurance. Be careful with that. If you can't maintain those premiums indefinitely, you've got to be very careful with your income. So I may even invest some money in my own name like stock, bonds, mutual funds, CDs, whatever. Now here's where it gets interesting. If I'm going to pay kids under age 18, I'm going to pay him here in a little family management company, a company that's providing services, legitimate services for my businesses. So I might pay a management fee over here. I might even pay a management fee for my LLCs next. If we have a lot of medical expenses. We're going to set up what's called an hra, a health reimbursement arrangement. And I might hire my spouse if I'm married. If I'm not married, I might set up a little sister company with a C Corp and an HRA just for me. This is where I take my W2 and then I zero it out. I don't want to pay any corporate tax so I use a combination of the S Corp and the C Corp as a tandem structure. If I'm single with a lot of medical expenses now I'm still writing off my medical insurance up here. Now for those with a day job, which is a good thing, we got credit, we got a W2. We're building wealth, we're getting out of debt. I'm using this W2 and I'm using the matching program at work and I want to play in the match and then get the heck out matching out. And I'm going to take that extra money and run it through my own small business side hustle and fund my solo 401k. And this solo 401k is going to help me make really build a lot more wealth. And I can have two 401ks next. If I do have kids or a spouse, I'm going to be funding their Roth IRAs and we might even set up a health savings account. But we're going to be building all of these tools here. And you know me, I've got cows, rental properties, a crypto mining rig. Got all of these different investments inside my retirement accounts. See and look at this. I've got a W2. I may have a side Hustle sole prop. I may have a side Hustle llc. I may have an S Corp in maximizing my write offs and saving on self employment tax. I could be flipping properties up here. I could be doing consulting and 1099s. I could run multiple businesses through my S Corp. Me, Mark Kohler. I have one S Corp but my S Corp owns other LLCs and partnerships. I could be funding a solo k, a main 401k, an HSA, a Roth, an IRA. I can have a little family management company, pay my kids, pay my spouse. I'm going to build rental properties over here around the country, create cash flow. I'm going to be out of debt and and I'm going to be building my value in my own home. I don't do this very often but it's kind of exciting. I hope I answered some of your questions. I got a lot of people here viewing and a lot of questions and I want to say thank you. I love what I do. I love small business. I love investing. It's hard. I work sometimes 50 or 60 hours a week. I'm just like you out there trying to make it happen. Don't give up. Keep learning, keep trying. Network. Be really careful what you invest in. Do your due diligence and don't feel like it is a sprint or a race against someone else. It's your journey and your journey is going to look different than everybody else's. My journey looks very different than the people in this room and it's not a contest. Don't judge yourself. Use social media to gain information and knowledge and enjoy it. But don't compare yourself to others and take your time. There's no get rich quick scheme out there. I'll be here next Thursday answering questions trying to help you on your American Dream. I've got a ton of videos on my website, monthly webinars, books, videos, workshops coming up this fall. Please sign up. Get involved. My team is amazing. Lawyers, accountants and our self directed team helping you invest your retirement accounts where you want to invest them too. Thanks everybody. Have a great night.