Bezos, Spears, Musk, Thiel - What's Going On?

Foreign.

Welcome, everybody to this week's episode of Main Street Business podcast with yours truly, Mark Kohler and my amazing co host, Matt Sorenson. Welcome, Matt. Am I welcome?

Thank you, thank you. I thought you were coming with a pretty good radio voice there.

Yeah, you know, I've been practicing.

Yeah. Welcome everyone to the industry business.

Yeah. In the morning, before I eat breakfast or brush my teeth, I practice my radio voice, that deep radio voice. But anyway, then by noon I sound like a 12 year old boy in puberty, so I'm pretty much shot. So. Hey, everybody.

Welcome to. Hey. At least you still got the mornings. Still got the mornings.

Yeah, I got the mornings to sound manly. Welcome, everybody. This is exciting. Today's topic for our podcast is one, one might say a cornucopia, you know.

Yeah. Hunger Games throwback Thanksgiving feast. Thanksgiving feast of tax and legal news that's out there.

Yeah, we actually, all week long we're like, dude, we got to talk about this in the podcast. Oh, we got to talk about this. And all of a sudden on Friday we're like, there is so much going on that we need to comment on

because we got, yeah, we got, we got Jeff Bezos's taxes, you know, getting disclose. Peter Thiel with his self directed ira, of course, which we love. And then of course, who could leave out Britney. Yeah, I mean, Britney, the free Britney movement is on and we got Britney Spears and all the legal issues going on there. We'll throw out a couple tips there. This is, you know.

Yep. The IRS released their data book for 2020, which is their compilation of what the freak they've done the last year and data that they've been gathering over the last two to three years as returns are processed and examined and audits. And so it's kind of, you know, it's kind of a revelation. If you. There's a letter from the commissioner of the IRS at the front of the data book. Some of you may enjoy a little love note.

The only time I want to see a letter from the commissioner of the irs, it's not on a data book. Not coming to my house, please.

If you haven't got any love letters in the mail, you got one from the IRS yesterday. And the commissioner was just saying, hey, you know what? We're doing a good job, folks. We're here for you. You may think I don't, I don't feel like you're here for me, but they are. They're collecting money so we can pay. Keep the lights on in America.

Hey, they've been Sending people checks, you know? Yeah, some people, like the irs, the last couple years, they got some stimulus checks, you know. Oh, it wasn't all that bad.

Yep. Which is in the news, too. We're gonna talk about that. A fourth stimulus check. Is that really gonna happen, man? Lots of interesting things. The IRS does a survey with their date of book, too. You're gonna find out how many people think it's okay to cheat on their taxes. It may be you, you know. Yeah, we're gonna see.

Interesting. Was that a confidential survey? Yeah, like audit all these idiots that said it's okay.

It's like, you know, it's like that whenever the. The cops are looking for deadbeat dads, they. They do a. Send them a letter and go, you just won a hundred dollar gift certificate. And then they all show up, you're arrested. You know, this one, they're like, how many feel it's okay to cheat on your taxes? Thanks for filling out the survey. You're now being audited. So, yeah, it's.

What's your Social Security number?

All right, you're an idiot. So we're gonna.

Gotcha. That's the gotcha classic sting operation from the irs.

Yeah, well, I'm dying to talk about Brittany. I mean, I. I lit a candle yesterday. We had a little ladies first.

I mean, let's, you know, Ladies first. Let's start talking about Britney first.

Okay, I won't. I won't be offended by that in that I comment first. But we're talking about Britney, though. Brittany is the lady lady. Okay. Yes, of course. Yeah. I mean, I played Britney Spears in the house last night, at least four songs, had some people over, and Little Womanizer, a little toxic. We were just rocking out. Okay, so really did. If you have not been following the news, as in E News and Extra, then it did actually hit mainstream news yesterday. See, I follow the news, but mainstream news, you know, whatever.

The Wall Street Journal.

Yeah. I mean, this is big stuff. So for those that haven't followed the story, it has. It actually is very interesting and it is really tragic, as Justin Timberlake's. Timberlake said yesterday, too, on Twitter. Oh, yeah, jt, he piped in. Everybody was piping in yesterday, popping in, whatever. Okay, so here's the story. Britney Spears, about nine years ago, was struggling, had some very public situations, being reckless, maybe with her money, her body, her decision making was in question. She had a huge amount of wealth that her family, primarily her father, thought was going to be wasted. She was going to lose everything if someone didn't step in and get her into rehab and this and that. Now maybe she did need to go to rehab and she had some problems and gosh, what child star actor hasn't had problems? I've got a lot of sympathy for those folks. And I, and I am, I'm being sincere here. I think Lindsay Lohan has really had a very difficult life, some may think Difficult. What do you mean? Well, being a child actress or actor is not all it's cracked up to be. It messes with your head. So anyway, Brittany went through that too. And some that came through the Disney machine, like Justin Timberlake, made it out a little less unscathed. The guy's pretty darn sharp. The guy's awesome. And he's a scratch golfer. So talented. Do you know he's been on Saturday Night Live more than any other guy? Yeah. So good.

I mean he's, he's a renaissance man.

Yeah, he is awesome. So anyway, Britney kind of had a. Kind of fell off the wagon about nine years ago. So her father along went to court and filed for a conservatorship. Now, I'm not. Some of you may know the details far, far, far better than me. Don't not be mad. I'm generalizing. There's a co conservator involved. There was a lot of court action. There's been two documentaries released since then. I'm just giving you the general lowdown. So essentially this conservatorship and this is the legal news. I'm going to let Matt explain a little bit more about this too. I'm just going to. I'm the color commentary. I'm just giving you the background. Then Matt can give you some kind of. What can we learn from this? Comments. And I'll, I'm sure I'll chime in some more. I'm just in it for the, you know, the, the splashy news. But anyway, so when a conservatorship goes into place, her dad and a co conservator were put in charge of all of her money, all of her estate. Now conservatorships are granted across the country every day in courtrooms all over America.

I've set one up for a client. I've had. I've done one.

Yeah. So we'll talk about when those might happen. And anyway, what this essentially did is that Brittany had to ask for money from her conservator. The conservator controlled her revenue, her expenses, her credit card, her debit card, who she could ride in a car with, who she Couldn't. Who could she get married? They actually would not allow her to even have children. I mean, this is. Yeah, there was iud. Yeah, that is. I mean, that made. Right. Yeah, that is. They didn't sterilize her. I mean, seriously, that. But this to the level of that it was a doctor prescribed IUD where she couldn't even have a child and couldn't get married to her boyfriend and every. She couldn't go get a coffee at Starbucks without approval. It was bad. Now some may say, hey, she needed that early on. And maybe so, you know, she went into rehab, there was some help she needed. But to get out of a conservatorship, very, very difficult, especially in California, you have to go before a judge, either your attorney representing you or yourself, and prove to a judge, I'm back on top of things, I'm feeling good, I'm cognizant, I can handle my own financial affairs. Let me do my thing. Well, so courts across the country and judges hear these arguments every day as well. And if you've got mom or dad in Alzheimer's, they're not going back to court. If you've got someone that's become a drug addict, they're not going to pass that test in court. Right. But Brittany, she's tried to get her life back together. She's done a great job. She's been doing her Vegas show and all this, but the judge repeatedly has said, no way. And their court hearings have all been in private and all the court records, very few of them have been unsealed. And so everybody on, she said, I'm sick of this. And she said, I'm going to quit performing in Vegas because I can at least control my voice. And I'm not going to dance or sing or act or do anything until this is removed. And finally she was able to have her day in court yesterday in Los Angeles court and go in there and explain her situation. And she had a 20 plus minute dissertation that she had prepared and she went ballistic talking about her dad who has been controlling and abusive through this whole thing. And she was pleading, begging with the judge, let me handle my own affairs. So that was in the news yesterday. And it just really puts a spotlight on this whole conservatorship process. And there was a lot of her fans out front and the free Britney, you know, movement, which I'm the president of and no, I'm not. I'm just saying. So anyway, that's the story. So, Matt, I mean, take thoughts. Okay.

Yeah. I mean, I think the conservatorship is something that most of us won't face, like Brittany. But Mark gave a couple of scenarios where it can come up. Your aging parents, okay, your aging parents might not be able to take care of their affairs, financially or otherwise. Because also your personal things that you can have a conservatorship for, not just your finances. So you might have aging parents that you know, you'd have to take conservatorship of and as you care for them, and you would manage their finances according to the court's discretion and rules. One that I had, the case that I had was I did a conservatorship for someone whose parent died unexpectedly. Parent was like 30 years old and had a 7 year old child. Grandma became conservator for the child. Now those ones are different because once she hits her age, she doesn't need a conservatist because she was a minor. But I think the one to keep in mind is as we age is our parents age. And what one thing I just want to point out with that is part of an estate plan, of course in our estate plans is this is the legal tip on it is there's usually powers of attorney where if you become incapacitated or you're unable to make decisions for yourself financially, there is a financial power of attorney that springs into action and that the person you picked, maybe your spouse or one of your kids, has authority to now act on your behalf. And so they could then go in and use this. The person you picked on the financial power of attorney, not your dad that you didn't like, that came in and applied for a conservatorship in court. You can pick this person on these powers of attorney. And so it'd be the person, of course you would trust, you think would make the best decisions for you. You could have a power of attorney for your health care decisions if you're unable to make them for yourselves as you age as well. So these are just one of the little pieces of an estate plan that would, that could come into effect for you if you're unable to make decisions for yourself. These powers of attorney, which are part of all of our estate plans, would then spring into effect and the person you appointed would then be able to make those decisions and carry out those actions for you.

You know, and here's if I did watch the documentary on Brian Wilson, who sang for Beach Boys, and that was a very tragic situation where. Landy, I don't want to get into too much of it, but Dr. Eugene Landy was assigned to be the conservator for Brian Wilson in the Beach Boys case. And he really misdiagnosed Brian Wilson and the family for years. And his first wife tried to fight it and couldn't get it removed from. Finally, in 1990, they were able to get a new conservator appointed because he needed a conservator. But this guy was abusing him and the money and everything. And that was a case. I was just looking up a few others. Joni Mitchell had a conservator after suffering a brain aneurysm. You might have a family member that could be in a car accident, and they need to be a conservator setup to handle their money until they recover or come out of a coma or who knows what. And so they're quite common. But. But to get them removed again, the person that the conservatorship has been granted for needs to present themselves and prove to a judge or maybe some doctors that, I'm back 100%. And that's a very difficult bar to pass sometimes. So anyway, legally, we want to just bring this up because those of you that may have minor children or parents that are aging, this is where the revocable lust, revocable trust comes into play. Did I say revocable lust?

No, lust is irrevocable. That's for sure.

You could fall out of lust with someone, you know, you could revoke it. Say, I hereby revoke.

You can't change the lust you had yesterday, though. That lust was down there.

It was out there. Okay.

It was out there. You sent it into the world.

Okay, well, I might revoke my lust today, so.

Okay.

My lust for life. I don't know. Okay. So anyway, you have a revocable trust set up for you to handle your affairs if you're in a situation where you need conservatorship. So that way, a judge is not involved, someone that you may have not wanted appointed is involved, and the trust is the way to go. So.

And that's the powers of attorney that are part of the trust. Like, when we set this up, there's actually a separate document, but it's part of the trust package. Yeah, of course. That we do. And most lawyers would. That would. Could then spring into action where those people could act on your behalf. The people you picked.

Yeah. Now, in summary, I have to say I'm a little jaded and selfish here because I want this conservatorship, you know, removed from Britney Spears so that she can get back to performing Because Matt and I are planning a business retreat this fall and I need to go to the show.

I know we've been dying to see Brittany.

Yeah. So it's, it's tragic. Okay, now, next topic. Let's. Yeah, let's. You get to choose. Do you want to talk about.

Yeah, let's.

Jeff Bezos or Peter Thiel?

Let's talk about Bezos.

Okay. All right. Give you, you give the background. Okay, give everybody the story. Who is Jeff Bezos? Some people may not know.

Okay, we want to break down Jeff Bezos, owner of Amazon, richest man in America. Maybe he's always competing with Elon Musk of who's the richest in the world. Actually, not America. We just happen to always have the richest, but you know, in the world. And there's been a disclosure of tax returns of the wealthiest individuals and ProPublica reporting agency, News agency has somehow got these, which is, by the way, under investigation. How the heck they got these? But they've been exposing in some ways some of the tax reporting and strategies, scams, schemes, whatever you want to say, of the wealthy. And so we want to break some of those down and other people in here. Warren Buffett stuff's getting disclosed here. Peter Thiel, who we'll talk about in a minute with the self directed ira. Who else is in there? I mean, there's a lot of famous, not just Bloomberg, but Michael. Yeah, Musk was in there. Elon Musk. And, and I'm going to give some examples here of, of what we see. But the headlines which we've probably all heard is they pay a, you know, 1% of that. They only pay 1% in taxes.

Yeah.

Okay, well, there's some. The math that this news organization is using is a little deceiving. Yeah, we're going to explain.

Who was the politician that got accused of funky math or what was that? Was it Trump?

Fuzzy numbers. Fuzzy, fuzzy numbers.

Yeah, or something. We better not get political. Matt warned me before the show, no politics. So. Yeah, okay, so do you want me to teach a little math? What's called the numerator and denominator.

Can you explain? Oh, this is going to be great on a podcast.

Yeah, people are going to eat this up.

Okay, turn it up, folks.

Fifth grade math. Fifth grade math. Coming. Chew, chew. Okay, all right. Okay. Fifth grade math. Coming down the track. Okay, so let me teach you about what's called a percentage calculation. In this equation, there's a numerator and a denominator. The numerator's on top, the denominator is on the bottom. You take the numerator and divide it by the denominator, and that tells you a percentage. Now, in this ProPublica article, their main point was to get everybody fired up and say, these billionaires are not paying their fair share in taxes, and the percentage that they pay in tax is way too low. We're getting screwed, and they should be taxed more. We got to call a spade a spade. I mean, that can be really the biggest takeaway from this article. I hate to say it, but Matt said I can't talk about politics. No politics, Right.

Yeah. Well, you already lost me at numerator and denominator. This podcast is going nowhere f. If anyone's still listening.

Okay, so three people just careened off the side of the road and had an accident falling asleep. Okay. All right, Matt, give me a numerator. Let's do Bezos. What is the numerator?

Let's talk about Bezos. Okay, now this was from 14 to 18. They added these numbers together. Okay, so during that time period, he paid $1 billion in taxes.

Okay, so that goes on top. $1 billion. Billion.

One billion. Yeah.

Okay.

Yeah. Evil Industries has revenue of $1 billion a year.

Okay, all right, one billion in taxes. That's the numerator. Now, what's on the bottom?

Okay, on the bottom is the income. He had.4 billion. It was actually 4.2, but just so we can do the math here, 4

billion.3 billion.2 billion, so. Oh, whatever. Okay, so let's do the math. Corey, you got a calculator there? 1 billion divided by 4 billion. Drumroll. Yes, it is 25%, people. So he. Oh, I was joking. You really did it over there. Okay, whatever. Thank you, Corey. What was the result? Let's do a fact check. Yeah, 25. Corey. Verified.

Oh, okay.

Okay, we're good. Yeah.

Mark. Mark is a tax attorney and licensed cpa.

Folks, if I blew that one, you should not be listening to your have

to hand back your licenses.

Okay, all right, so, 25%. So his effective. Now, this is what accountants call it, his effective tax rate. So after the marginal rates on lower amounts and capital gain and losses, and you kind of look at. Okay, here's your AGI, your adjusted gross income divided, and that's the denominator. And then on top, once you find out how much tax you pay, you put that on top and you divide it. So his effective tax rate. Now, this is federal, and we're not talking state, but his federal tax rate was 25%.

That's not outrageous.

That's not.

Here's what ProPublica said is they call it the true tax rate of Bezos. 1%. Well, how did they come up with that? How does that make sense?

Now see, this is where the numerator and denominator come back.

Oh, now I get why you were born the heck out of me.

With numerator and denominator, what changed in ProPublica's equation? Where did they get 1%? Matt Sorensen. This.

This would be like a sixth grade story problem, you know, in math class. Okay, all right. At our fifth. I don't know what grade you get into this, but. Okay, okay, here's what the. Here's what they did. They said, well, we're not looking at his income, we're looking at how much his wealth increased because Amazon stock has been the best performing stock and highest growing company in the world. So surely we can make it look outrageous if we just look at how his wealth has soared because it's stock's gone up now. He hasn't sold it. Just like when your house goes up in value or the stock in your portfolio goes up in value, you don't pay tax on that. You pay it when you sell and realize the gain. Now, his wealth went up $100 billion during that period.

100 billion. Oh, my gosh.

All right, I'm eating my delicate, enumerating and denominating. I mean, that's.

Okay, so we got to go back to our numerator and denominator. Okay, so on the top, he still paid a billion in taxes. Didn't change. Now we go from 4 billion on the denominator to 100 billion. Holy crap. Okay, Corey, let's do the math. Let's stick with our in house strategic calculator operator. Okay, 1 billion divided by 100 billion. Corey, do you know the answer to that? Please? I'm not going to repeat what you just said. It is 1%. This is why he runs the camera and not the calculator. He said 10%. He missed a couple zeros there. But Corey, I love you. Okay, okay. All right.

Now this is what ProPublica reports. This is the headlines. You see 1% true tax rate. Okay, since when did America tax people on their wealth growing? We tax it on income. We have an income tax. Yeah, we don't have a wealth tax. And yet. Yet. Yeah, yeah, I know.

What is that crazy talk? What do you think was in the other rest of the article?

Yeah, here's so, but okay, so here's the tricky Part of it.

Why is it.

I mean, here's the thing.

Let's just.

There's a reason Bezos is the wealthiest or second wealthiest person in the world. Why is it? He's smart, he has more Amazon stock than anybody, and Amazon's been the best performing, highest gross company in a long time. So what's going to happen to the person that has that stock? It's going to go up a ton. Like, so this is like. This is like the classic case that you could make something sound ridiculous. Go take the person who has the. Who owns something that's appreciated the most but hasn't sold it, and then say how much tax they paid. And you're going to make them look like a total buffoon.

Yeah, yeah.

And that the. And that the tax system's rigged. It's not.

Yeah. And I mean, there's. We don't.

There's pros and cons, of course, but, you know, pay tax when stuff goes up. When your house goes up in value, do you pay tax?

I don't know. No way. And we don't need a numerator and a denominator to make someone look like a buffoon. We can do it right here on the show. Just give us a set of facts. We'll exploit it. Now it's true.

And finally, somebody agrees with something we said.

Yes. Now, in the second half of the article, what did they propose? Oh, here is a Biden administration proposal for a wealth tax. And doesn't that make sense, everybody? Because look at what, you know, Jeff Bezos, Elon Musk, and Warren Buffett, and all these rich people are doing. They are. They're just widening the tax gap and the wealth gap. And now is there a wealth gap? Sure. Is there a tax capture? But it's just sad to see the news manipulate the numerator and denominator. Yeah.

Respect. They need to have more respect for the numerator and denominator.

Yep, that's right. Here's.

I'll give you Musk, too, for a quick second here, just so you can see. Just because they did the same thing on Elon Musk.

Okay.

Say I'm like. We're like. He and I are bros. You know, Elon.

All right.

Okay. Okay. In this same period, 14 to 18, this is the years they have the returns. He paid 455 million in taxes. Let's just say 500 million so we can do the math.

500 million. Corey, get ready with your calculator on.

1.5 billion.

Said he's not Doing any more calculating. He said he's, he's not taking the beating, the verbal beating any longer.

For the best. Yeah, plenty of your strength, Corey. Okay, 500 million.

Don't quit your day job.

500 million.

Okay, 500 million, okay.

Paid 500 million in tax. That's the numerator on 1.5 billion in income.

Okay.

What is that? That's a third. Yeah.

33%. That's ridiculous. 1.5 billion. What a loser compared to pesos. Geez, Musk.

Come on, kick it in the gear since 18. That's when Elon really took off with Tesla and everything. Fine, okay, all right. Now here's what ProPublica reported though. That his true tax rate was 3.27%.

Oh my gosh.

Okay, now how did they do that? How did they get to 3.27 on 400, 500. It's basically 455 million, but 500 million of income and 1.5 million.

Let's ask Corey. Corey, how did it get there? He's now starting to throw things at me.

No, I think we better leave Corey out of this. Well, here's what they did. Of course we all know they screwed with the denominator. And instead of taking the income that he made as the denominator, as one would do. Yes, they took. How did his wealth grow? Okay, also one of the most successful coin companies. He owns a ton of Tesla stock. We all know that's gone up and he hasn't sold it. So his wealth went up $14 billion. Okay, so he has. We have 500 million. You divide it by like 14 million, it's about 3%. So now they say, ah, Musk only paid 3.2%. That's insane. No, he didn't. He paid about 33% in income tax on what he made.

Wow. Crazy.

Crazy.

Well, so folks, you can do the

same for Warren Buffett, by the way, who gives half of his wealth to charity. Like, I mean, you know, he's gotten huge charitable deductions.

So like what a good guy. Well, okay, so the moral of the story is don't believe anyone when they say the check is in the mail. So we don't or don't read everything you don't believe everything you read on the Internet. Don't read everything you believe.

Yeah, I think this, I think the nice thing that's interesting with the ProPublica is I hate seeing people's. I feel pretty. I wouldn't feel that great if I knew that my tax records got revealed, you know, not That I have anything to hide. But I could see, like, how Buffett and Musk and Bezos, how they're not too thrilled right now, this being reported. Obviously, someone unfairly got those records and committed a crime. There's a crime committed to get these. Yeah, sure, we're all interested in it. Obviously, we're talking about it. But there's been a big misrepresentation in the news about the reality of it. There's just. They have. Just, like, they knew what would get people interested and what would make this story carry. And it was all about the numerator and denominator and just messing with the numbers.

Fifth grade math. It all comes back to fifth grade.

Mm.

I mean, runs through it.

Are you smarter than a fifth grader? ProPublica isn't.

Apparently ProPublica is not. Okay, now, before we get to Peter Thiel, another billionaire, we're gonna talk about that issue. Totally different news story. And we've got. I'm really excited about the Peter Thiel story because we're gonna help equip you to be the coolest person at a dinner party or a barbecue this weekend. If you're going to a summer barbecue or family reunion, we're giving you a freaking arsenal of ammo here. This is gonna be good. All right, but first, yesterday, the IRS released its annual data book. Now, again, we talked about this a little bit at the beginning. This is a hot read. Probably gonna be a New York Times bestseller. Not. But if you want it, I'm just gonna give you a couple little tidbits out of this were interesting. First, again, there was over $1 billion of unclaimed refunds in 2017. Can you believe that? So you have three years from the date your tax return is due to claim a refund. If you miss that deadline, your refund's gone. One billion people never filed a return or filed a wrong return. That's crazy. Did I say 1 billion people? I said people for a total of $1 billion. Sorry. Left money on the table. Now, the survey on cheating with tax. Matt, I'm gonna ask you. Okay?

Yeah.

What's the percent of 100Americans surveyed?

Okay.

Survey says this is Family Feud. You're up at the little button.

Survey says.

All right. What was the percentage of Americans that said it's okay to cheat a little bit here and here? Here and there. Literally, the question was, do you feel it's okay to cheat on your taxes a little bit here and there? What do you think the percentage of Americans said? It's okay.

I'M hoping it's low because I'm not cool with that personally.

Okay.

There's plenty of great tax strategies to do it legit. Okay. Governments want to, you know, just want to start.

Yeah. This is like Deal or no Deal. You've got to explain your. Yeah, you do want to.

I prosecuted people for unfairly paying their taxes as a prosecutor before I did this job, you know, before Mark and I.

So before you answer, do you want to use a lifeline? Do you want to call anybody? Don't call Corey.

I phone a friend. Yeah.

Cory's like, you can call me now.

I'm not calling Corey on percentages.

Yeah. This is another percentage question.

I love you, Corey, but, yeah, we all have strengths and weaknesses. I'm going to go with. I'm going to go with 10%. Oh, I think I'm hoping only 10%. And maybe it's. Hopefully it's less, but I'm going to.

Pretty darn close. If you were throwing a grenade or playing shooting archery, you'd still shooting a shotgun. Playing horse. Horseshoe. Okay.

Horseshoes. Okay.

Horseshoes. Okay.

I didn't ring it. Maybe it's a leaner.

The answer is. The answer is 8%. 8% of Americans said it's okay to cheat a little bit here and there. 3% said.

Those 8% all got audited by the IRS. Like, thank you for responding to the survey. Yeah, you are now under audit.

Yeah, you're now under audit. 3% said it's okay to cheat as much as possible. Now, that was the dental community

who we joke about and seem to be the most aggressive people on tax.

That's right, because we both went to dental school, so we're now allowed to make dentist jokes. So.

Yeah, we're not anti dentites.

No, we're not anti dentites. Now, if you're a dentist, you know where we're coming from. So you just chuckled to yourself.

That was a Seinfeld quote. Do you know that one?

Well, that's what I said. We went to dental school so we could joke about Dennis. Remember?

Oh, was that line from that.

That was from the same show. Because he goes, only Dennis can joke. Make dental jokes.

Oh, that's right.

And Jerry's like, what? Why do they have to corner on all the Dennis jokes? For Dennis.

Yeah.

All right.

Okay.

Anyways, now, all right, 87% of people said it's not okay to cheat. So the other 1 or 2% were just idiots. Okay. Now, I will just say this in summary. Audits are down compared to 10 years ago, if you made less than 100 grand, you had a 1% chance of being fully audited. Ten years ago, it's now down to 0.25%. So it's one out of 400 people are going to get audited if you make less than 100 grand, if you make between 100,000 and a million. Ten years ago, you had a 3.5% chance of being audited. Now it's down to 1%. So again, about a 75% reduction. And if you make more than $1 million, your chance of an audit 10 years ago was 20%. See, the IRS is going where there's money. If there. If they smell blood in the water, they want to do an audit where they're gonna cash in. You know, auditing the little food vendor that makes ten grand a year. There's no money in that. That doesn't mean you can cheat on your taxes, people, all right? And then now that's down to 5%. So if you make more than a million dollars a year, you have a 5% chance. 5 out of 100 people will be audited anyway. But there's all sorts of facts and figures there. If you're bored tonight, you can go to the Web and type in IRS 2020 data book and just enjoy that letter from the commissioner. Little love letter telling you how things are going. The status of the irs.

I love that. That's interesting. I mean, there's no Britney Spears or billionaire involved in it, but some just good facts, some good info, just good core reporting.

That's honest reporting there, man.

Yeah. Just very fair and balanced.

Yeah. I did not mess with the denominator in one shape or form. Okay? Okay. All right.

Numerator and denominator, right?

Yeah. Irs, they know their math.

Yeah.

The reporters, I don't know, they just. They're bloggers. Glorified bloggers. Okay. All right, let's get over to Peter Thiel now. Do you want to explain the situation? And then. Now, Matt, I'm going to toot my partner's horn here. That didn't sound very appropriate, but I'm going to toot your horn anyway, okay? Because you're not going to toot your own horn. That didn't sound either good. Yeah, this is pg. Corey just said we just got a rated E again.

No.

Hey, I'm going to.

I'm just not gonna say anything. This is like.

I would recommend that one at the

bottom of the toilet bowl right now, okay?

So prepare to have your horn tooted. Matt Sorensen is America's literally, and I say this with all love and due respect, is America's number one expert on this topic. I'm gonna say it. Matt wouldn't say it because that would be, you know, jinx. But I can say it. So tooted his horn. He is the man. He's got the best selling book on the topic. And so who better yet to explain to us the Peter Thiel situation. Okay, Matt, the floor is yours.

Yeah, well, and I'll just say just because I can't toot my own horn, I guess I'm just going to try the GAO report that cited in that. So it's not sounding right. Why did you. What metaphor? That's the wrong metaphor. But this jail report that's mentioned in the article about Peter Till's Roth ira, I consulted with the GAO on that. They used my book, they bought my book and I consult them a couple times actually on that so they could understand IRA rules and how self directeds work and stuff and policy recommendations they were going to make with the irs.

I wouldn't call that tooting your horn because no one knows who the GAO is. They're like, you mean the glue?

The government anonymous organization, the Government Accountability Office that frankly audits the IRS and looks at tax policy. And they were tasked by the Senate Finance Committee to write a report on self directed IRAs and then on what they call mega IRAs with 5 million plus accounts.

So this is a real organization, this

is a real government agency. They exist.

They have an office D.C.

you know,

so in the basement of the Smithsonian you will find a door that says gao. And there's a guy in there eating Cheetos. He called Matt for a tip. Okay, all right, here's what, here's the

big thing I want to say about the Peter Till story though and the 5 billion Roth IRA. We're going to get into the detail on it, but the headlines and the pushes. This is not cool that someone can have a 5 billion Roth IRA because that money's going to come out totally tax free. I'm like, wait a minute. That is freaking cool. Yeah, we should be saying the headline like how we can all have a 5 billion Roth IRA that comes out tax free. Not like how do we stop this? We need to be talking about how Americans can have larger retirement accounts, how they can grow, how they get even greater control of their money and keep more of it in a Roth IRA than give it up to the government. Not like how we can stop someone from growing a retirement account and making great investments. That's backwards. Yeah.

You should be a reporter.

Do you want people to be like, no, I don't. I don't have enough money in my retirement. I need Social Security. In fact, can you give me more politicians? Can you, like, don't we want people to have success and have large retirement accounts?

Yeah. It's like saying, man, look at this guy, lost 50 pounds. What a jerk. Yeah, let's talk about. That's a good thing, you know, So,

I mean, yeah, I mean, I only lost five. I mean, well, okay, let's talk about how we can all get to do that. And so. But let's hit a couple points. You want to.

Yeah. Can I take a shot at. Yeah, okay, Here, here's the deal. These are called, in the eyes of the media and the IRS and the gao, Government Accounting Office. Apparently, some office in. Do you see that?

Called Accountability. Accountability.

Oh, Government Accounting Accountability Office.

Yes.

Okay. Not the Accounting office. There's no such thing. Okay. Us accountants would want one, but there probably is one.

Okay.

All right. So they are terming these as mega Roths, not to be confused with the mega Roth strategy, which we teach, but these are considered mega value Roths in America, and apparently they're being blackballed as a bad thing. Now, here's why I was saying, I think you could be the hit at your family reunion this week. This could be the chance. Fourth of July is right around the corner. You're going to be eating a hamburger, hot dog, and you're going to say, hey, there's this guy has a $5 billion Roth. And they're first going to say, how in the heck did he get a $5 billion Roth? And then the conversation is going to go, is that cool? And you're going to say, let me tell you, first of all, it is darn cool. And you can do it, too. And all of a sudden, everybody's going to crowd around you with their paper plates, chips, salsa, and they're going to be like, please pray tell, tell us how this is possible. And you're going to. Everybody's going to be like, man. And they're going to remember this for years to come. I remember that family reunion where John or Judy, they told me how to do this and they changed my life. They're not going to remember how good the potato salad was or the jello with the whipped cream. I love that, though. But they're going to remember you.

Marshmallow whip in it.

Yeah, the marshmallow whip. A little bit of a little fruit cocktail. That's on my mind. She'd take fruit cocktail, pour in the jello, let it sit all night in the fridge, then put whipped cream and then just stir it up. Oh, magic.

Okay, all right, back to the show.

Okay, sorry, back to the show.

Okay.

I was thinking of my barbecue coming up. Okay.

Yeah. Well, here, let me say. Let's say why it's cool. I just want to make sure everybody's on the same page on this. And also

you gotta explain why it's cool. Okay, go ahead. I mean, you had me at 5 billion in a Roth, but go ahead. If you didn't think that, nailed it.

Okay, okay. There's one thing about having $5 billion, there's another thing to have 5 billion in a Roth IRA.

Okay, okay, fair.

Which would you rather have? Would you rather $5 billion in the bank account? 5 billion in a Roth IRA?

I would want it in the Roth. Sorry, Corey, what would you want? Roth. Obviously he's been listening.

He consumes the podcast. He has to sit through this stuff.

Put down the calculator. You're scaring me.

Okay, why do we say that? Okay. In the money in your Roth ira, when you go make investments and grow it, like Peter Till, when you are the first investor in Facebook, when the shares are hardly worth anything and then turns out to be the biggest, one of the biggest successful companies in the world, that investment gain in your Roth ira, you pay no tax on it. Okay. And when it comes out later at retirement at 59 and a half, you pay no tax. Again, if I had 5 billion. If he used 5 billion of personal. Or, sorry, he used personal money to buy that Facebook stock, let's say, when it was really low, when it was no one else really owned it besides Mark Zuckerberg and Eduardo Saveron. Right. He's the first investor in this thing. If he bought that with personal funds, he would have paid a ton of taxes as he sold stock and invested in other things.

ProPublica would have said maybe 1%. Yeah, he should have them do his taxes.

Yeah. And then, you know he's gonna pay taxes. He grows the income. Well, in your Roth, as we all know with Roth accounts, there's no tax. When you're making good investments and the money's growing and there's no tax on the way out. When you hit retirement at 59 and a half. So it's this little tax free war chest that you have, or you get a grow, and it's this special account that's built for retirement. You don't get a touch till, you're 59 and a half. Now, Peter Till touched his early and he's paid some penalty and taxes to get it out. That's in the report. He's paid millions because he's touched some of the money early. He's not 59 and a half yet, but soon he's going to be able to pull this all out.

Yeah.

No tax.

And I will add one last addendum to Matt Sorensen's argument on why it is cool.

And can I just say, oh, there's a group of people that say that's not cool. Like ProPublica. They're saying, that's not cool. That's not fair.

Yeah. Oh, well, all the cool kids want 5 billion in a Roth. And that's. I'm just going to say that. Now, one thing to add to it is if he were to die before spending his 5 billion, because he was saying, I'm going to live till I'm 120 years. I'm going to spend it all. Okay, well, you go for it. Now, if he were to die before he spends it all, his family has 10 years to spend it tax free. And if they can't blow it all in 10 years, then they have to pay taxes on it. So that's what's called an inherited Roth ira. Okay, now how do you do it?

Let's say. Can we say what Peter Till is doing? Because obviously he wasn't just buying a mutual fund.

Well, that's where we're going next. How do you do this? Yeah.

Okay. I'm sorry. I mean, I didn't know where you were going, so I was making sure you were pivoting to the right direction.

Yeah, I pivoted. I pivot. Now, out here in Idaho country, do you know what a pivot is?

Yeah, it's that this. They're like sprinklers.

I'm water.

Right.

Okay. For this portion of the show, I am going to put on my official John Deere hat. Okay. For Those watching on YouTube, I've just donned a John Deere hat. Now, those that are farmers know these hats are hard to come by. Did you know it? You just can't go buy this hat.

I did not know that.

The only way you get a John Deere hat is if you buy a John Deere tractor. Oh, and my wife.

What's funny about that, this is pretty interesting. Okay. My daughters had a hat business in high. In high school, they sold thousands of hats. You know, I think they sold. It's thousands of hats. It Was a great little small business for my older two daughters. They made money on it. They learned small business. It was awesome. But they would get patches and they would put them on hats.

Okay.

And they would put them on their shops and on all over the place. They would market and sell them. And it was a great little biz which John. John Deere sent them a cease and desist letter because they were. They put. They made a hat. They put John Deere. A John Deere patch on a trucker hat, which is what they would do. They put unique patches on trucker hats and they'd sell them for like 20 bucks.

I never knew John Deere sent him

a cease and assist letter.

Did they? Really interesting. Yeah.

All right. Good thing your dad's a lawyer, because

he came into your bedroom and said, cease and desist. I advise you to cease it.

I said, don't worry about it. They're really not going to do anything. Let's look what's on the website. How many more of those do you have? We only have like two more patches.

All right.

We're okay. Don't worry.

We gave your children. We've talked about Brooke on the show. She's actually been on our podcast, I think it was a couple years ago. And we talked about her small business that really played a major role in her getting into graduate school and a great job in New York. And I love to tease her about her hat business. But anyway, my wife and I got my. Her father, my father in law, one of the smaller John Deere tractors that you can putter around on about an acre or two in your backyard and farm. I got him a John Deere. You know what father, you know, he. I just went to heaven in his book. So, you know.

Yeah.

Bought his love for life.

But you're like, I get the hat.

No, but they gave us two hats.

Oh, you get two.

We got two hats. So it was pretty cool when they delivered the John Deere. The guy came out and said, here's your hats. And my father in law knew. He was like, I want my hat. And so he got one and I got one. So anyway, I will just quickly say we are way off on tangent today. I hopefully many of you have enjoyed this show today. We've been having fun. It's just a good day. But anyway, a pivot. Yes. So those big sprinklers that go around in a circle on a farm, that's a pivot. Okay, So I.

You have all those sprinklers too, right there. You just.

I know What? I mean, yeah, whatever. Shut up.

I'm a bad influence on you. What would it be? Irrigation. What would be the right word?

Yeah, irrigation.

System.

System. Yeah. See, I bet. See, I'm not, I can't, I, I can't even do this hat justice. I'm embarrassed.

I don't know that you burned the hat yet.

I, I can't even describe a pivot. And so thus I do not deserve my John Deere hat. Okay, so let's pivot. Here's the reason. So when you're around the buffet line at the family reunion and you're going to say, let me tell you how cool this is. We already went through that. They're going to say, how do you do this? And the way Peter Thiel did it is he had the same contribution limits all of us have, but he invested in what he knew. And everybody's go, what do you mean? And say, well, what are you allowed to invest your IRA in? And they're going to go, I don't know. Stocks, mutual funds. If they're smart, they may even say ETFs, which are the new sexy mutual funds of the world, which is an exchange traded fund. But that's about all you're going to get in the buffet line. And they'll go, what did he buy? Well, he sat around the table and bought Facebook stock when it was just an idea. So if you have a Roth ira, you can buy cryptocurrency, you can buy real estate, you can buy precious metals. Buy into a business and this is the perfect opportunity to pitch your uncle on your business. So if you really want to do some damage at the family reunion, start pulling them into a corner and selling them your business idea. They will be blackballed for years. And this will get you out of future family reunions. Really? Yeah.

And maybe it's your nephew or niece that's going to create the next. The Facebook.

Yeah.

Or maybe the next Bumble app. And they need some little, they need some money. And you're like, well, dang it, I'm kind of annoyed with my mutual fund that my Roth IRA owns. I'd love to throw that into your company. And I'm going to get a pretty good piece of the stake here. And if that company becomes successful, you too will have a large Roth ira. And this is really what we do every day at our company. Directed IRA with clients. They're making self directed investments. They're investing what they know, whether it's real estate or a private company or a startup or a Fund or crypto, whatever. It's just taking control of your money and investing in what you know. Peter Thiel just happened to be really good at it. And he's a tech wizard. He's made some great picks and investments

and thousands, if not tens of thousands of people across the country have now created million dollar Roth IRAs. Very, very common. And you can do it too. I had a phone call today with the client that has a million dollar IRA in different types of cryptocurrency. I mean this was just a $200,000 IRA or 50. No. What was his base? Around 50 to $60,000 over the last five years in an IRA, it's now worth a million. So now we're not advocating high risk investments or cryptocurrency, but you know, that is a possibility. So now one last, one last joke and we'll call it a day is I love Matt's strategy when it comes to the family reunion business pitch. Because let's say your daughter is dating some guy you're not too thrilled with, you know, or he's got a business idea you're not too thrilled with. So when he comes to his future father in law and says, hey, I got a deal for you. Why don't you use your IRA and my small business, you'll say, well I wish I could, but it would be prohibited if you were to marry my daughter, so I can't invest with you. And that's your out?

Yeah, that's your out. Yeah. So there's these little rules called prohibited transactional, by the way. And so there's things that you, there's people you can't buy and sell with your IRA with. And we can never do it justice here. But we have a whole other podcast, the directed IRA podcast that goes over how you self direct your IRA. What are the rules? We're like 20 episodes deep in it. It's pretty freaking great. Just you can find that on whatever podcast channels you go to. Directed IRA podcast, Check it out.

Well, we actually seriously created a short list of these four topics today because there was a lot in the news. There's talk of a fourth stimulus check. The debate continues on any changes with a tax bill this year. There's always some juicy nugget in the news, so you are well equipped now as a tax and legal junkie. If you're listening to this podcast, I think you should call yourself a tax and legal junkie. And we therefore. What do you call it when they knight someone? They knight you. They. Yeah, we're we, we endorse you. We endorse you as a tax and legal junkie.

Okay.

You're welcome.

Well, what I was just gonna say, you know, maybe we did put a little spin on it today because, you know, we do have opinions. What can we say? But hopefully we just wanted to give you like what's going on out there. And it's like, you know, we report, you decide or what. However it goes, we want to correct some of the facts. I was just on the, on the Peter Till, you know, Roth. I was just kind of annoyed with the way how people talk about it. It's like, let's. How do we get more people to have a larger retirement account that they could rely on to retire? Not like, let's not have. Let people have large retirement accounts. No, we want people to make great investments and have a large account. Doesn't everyone listening here want to have a retirement account that's large enough that you can feel comfortable retiring with? That's what we're trying to do at our company. Directed IRA. Directed IRA.com, by the way.

Shameless plug.

That was not very slick, you know. But I'm just serious. That's what we're doing every day. That's the business we're in. And helping people take control of their retirement account. We don't pick investments for you. That's not our role. We want you to take control and kind of the master.

You can lose your own money.

Yeah. Or make it, you know, and that's the American way. It should be on you. Don't just give up and let it go to Wall street for them to decide. Take some control of it.

Yeah. So I. Here's what the word I was looking for. We empower you now at your family reunion this summer, the barbecue for the 4th of July, whatever it may be, the European cup. Whatever you're watching, you are now empowered to help be a spokesman that self directing and building a billion dollar Roth is okay. And you should be doing it. So folks, let's represent. Let's represent those Americans out there that want to build wealth. And this show to you is brought to you by our producer Corey, who has done a fantastic job today being our punching bag. Are you okay? He's curled up in the corner of there, folks crying. Yeah, go to college. You got a liberal arts degree. I don't know, something. Pottery basket weaver.

We've all forgotten the math we learned in college within six months of graduating. Yeah. No one remembers.

All right, well, we love you guys. We'll see you next week for another episode of Main Street Business. Please pass this along to your friends and family and help us find more geeks out there just like you.