Joe Biden's Tax Plan Explained with Q&A | Mark J Kohler LIVE |

Welcome, everybody, to an exciting live broadcast. My name is Mark Kohler, a CPA attorney, partner in a law firm, accounting firm, and trust company. Helping you on Main Street America. Live your American dream. It could be Broadway in New York. It could be Main street in Duluth, Minnesota, wherever. I just love small business and building wealth saving taxes. And I'm here every Thursday answering questions from around the country. And Americans around the world may be stationed abroad working for a company corporation or the government in the military. So thank you for being here. Today's topic is I'm going to try to break down Biden's tax plan. I'm going to give you the bullet points and answer questions on that. But as soon as you guys want to quit talking about it, we can get on to some basic tax and legal business questions, as difficult or as simple as they might be. I'm here for you. I also want to point out I've got Darren Charrington and Max Merritt, who. Who are both. Well, Max is a law clerk. Darren is an attorney. Max, soon to be an attorney. Gotta be careful, right? Disclaimers. Both these guys are here on Live with all the chat. We're on YouTube and Facebook and Instagram and, I don't know, we're out there trying to make it happen. And I've got Jack, my marketing director, Cory in the studio. So if you hear someone pop off named Darren or Max, they're on my team, so don't beat them up. If you're like, hey, shut up. Let's listen to Mark. They're trying to help me out answering questions. Now let's get to it. I'm going to joke around. I'm going to have some fun with you. Where'd my shirt go? I was going to show my shirt. What the heck? We got to keep this light. Okay, now for some that already follow me on a regular basis. You knew I grew up in the Northwest. You know, I was born in Oregon, raised in Washington State. Love Seattle. Go U Dub. The Huskies. Cougars. That's Washington State. Whatever. But anyway, so I grew up in the Northwest, so you know I'm a believer in Bigfoot. Yep. I saw the documentary Harry and the Hendersons. If you haven't seen that, it's got John Lithgow in it. Some call it a docudrama. I think it's just legit documentary level. And my friends got me a shirt this week says bigfoot saw me and nobody believes him. I know that's a little passive aggressive, but decided to throw that out, hoping to have some fun here with you today. All right. Okay. So I'm gonna keep it light. This is a tough topic. And thanks for being here. Also, I want to give away some books. Cory. I'm gonna give some stuff away. Some might say other than stuff, but I'm trying to keep this a family show. So I'm gonna give stuff away. I've got my book, the Tax and Legal Playbook, second edition, will probably have a third edition if Biden gets his way on a lot of these tax plans. I also give away some books on my. What your CPA isn't telling me. What your CPA isn't told me. That's funny. Oh, well, your CPA isn't telling you. Maybe my CPA isn't telling me either. Anyway, this is a story that brings tax planning live for you. It's a gateway drug. Then you're going to be so excited for taxes. And then the Business Owner's Guide to financial freedom, how you can save taxes, build wealth. What do you do with your profits? Anyway, we're going to have some fun. I'm going to give away some books. Okay, nice. Look at this. We've got Biden lovers and Biden haters already commenting. Now, I'm going to say this, okay, we got to call a truce. So if anybody comes out there and starts attacking each other from a political standpoint, let's just, let's just. We're one big happy family here today. We're all Americans trying to make ends meet and live well. And here's my disclaimer. I don't want a bunch of hate mail from those that are Republicans or Democrats saying, mark, obviously you're leaning one way or the other. Here's all I'm saying. Trump did some dumb things. He did some good things. Biden's going to do some dumb things. And some good things. We're talking about taxes. I'm just going to set forth what President Biden. I don't want to just call him Biden. I'll be respectful. I want to call president, call out what he's planning to do. He's going to need the Senate's approval, who it's going to come down to. He'll need every Democrat and the vice president to vote to pass anything. And even though there's a majority in the House, he's going to need a lot of support in the Senate to get a big plan passed. Now he wants to do some good things. Now, for those of you that didn't vote for President Biden, don't get Upset. Let me just say it's important we know where we're coming from on this tax hike and tax proposals. He wants to raise money. We're in a deficit. Covid kicked our can, right? So we need some money. So he wants to raise taxes in a variety of ways to do it. And he wants to fund the American Families Plan, which will spend a trillion dollars over the next 10 years, including 800 billion in tax credits to help the country. From his perspective, you may not agree with his perspective. You may totally love it. That's okay. I'm just telling you what his plan is. To provide more education training after high school and help hire more teachers, help schools in education with more funding. And I think all of us can agree schools need money, and we love education. Child care for those workers that need child care. Tax cuts for the middle income, paid leave when you need leave from work. Nutrition, better nutrition plans, and a whole host of nutrition items for kids in school, and a tile tax credit for families that are middle class. So he wants to pay for all this. He's got to raise taxes to do it. So that's why it's happening. I just wanted to give you the why. All right, now, like I said, we're just going to go through, I think. Which way do I want this? I want this. This way. No, I want it this way. All right, we're going to go through and do some planning. Cory, you need to help me get rid of my little thing here. I've got this typewriter thing going on. There we go. See, I'm such a dork. I should know what to push. I got so many different devices between phones, iPads, laptops, and desktops. I never know what button to push. All right. Yes. Corey. Oh, do something with my hair. I'm getting a comment from my studio. Jeez, you know, it's hard. You know, I'm growing this long, flowing hair here at this. This guy has no hair. That's why he said that. Okay, let's go through. I'm gonna make a note of all of Joe Biden, President Biden's plans, and we'll try to break this down, and then we'll get into some regular questions on small business and taxes or the plan. Okay, now, the first thing you're gonna see here is a theme, is that President Biden said, anybody making more than 400 grand, I'm going to tax you. I want to get more taxes out of you to pay your fair share. Okay? Now, many of you are going to go. That doesn't affect me. I don't make more than 400 grand. You have to keep in mind that you might have a year where you do, for example, you might sell some cryptocurrency, make a million dollars. You might sell a piece of real estate that you invested in years ago, have a big gain. You might have the California 401k which is your home, and now you're selling it for 2 or 3 million. And you don't normally make a million dollars or 400 grand every year, but you do when you sell your business, your real estate, your stock, your cryptocurrency. In those instances, you might pay more in taxes. And so you might pay attention for that reason. Next, a lot of economists are saying, hey, even though you don't make 400 grand, the taxes won't hit you. But people that do make more than 400 grand may increase their prices or not hire as many people or change their business model to make up for the higher taxes which could trickle down. Now, I'm not an economist. I'm going to leave it at that. And I'm grateful for any of you here that make less than 400 grand are saying, hey, I want to learn what President Biden's trying to do. So again, I don't think these tax, many of these tax plans are going to affect directly many of you if you make less than 400 grand. But you might have again, that off year where you're selling a business, real estate or stocks or crypto. Okay, number one, he wants to increase the top marginal tax rate, which is currently. Okay, which is, I'm going to put top tax rate is currently 37%. Now, by the way, if I say anything crazy, you guys got to yell out here, Max and Darren, okay, help me out. He wants to raise that to 39%. Okay, now, 2% may not sound like a lot, and I guess it doesn't, except when you're making more than a million dollars. That adds up, right? So whatever. So you got a tax rate of increase of 37 to 39%. And this would only affect people if you make more than 400 grand. Now, there's also the Affordable Health care or Affordable Cares act tax, some people call it Obamacare. That is 3.8% on investment income over 400 grand as well. 200 grand if you're single, 400 grand if you're married. So this plus 3.8% on investment income could push the highest rate to 43.4. Now, regrettably, you got to think about your State too. Some of you may be doing some state tax planning going. I need to move out of a state where the taxes are higher. Now this is my little MJK 2021 tax calendar. I've sold out for this year. We're almost halfway through the year, but I go through here and go through all the different state tax rates. There's nine states that have no state tax, but there's others that have some pretty hefty ones. California at 13.3, which is the highest. We're looking at 9.9 in Oregon, 8.95 in Washington D.C. 9.85 in Illinois. So if you've got a state tax rate of 8 to 9%, whoo. This ends up being 51% or higher in your effective tax rate, sorry, marginal tax rate. So the next dollar you make up in these higher levels would be taxed at 51%. Not all of your income is taxed at that rate. It starts out at 10% and then 22, 15 and 22 goes up. But anyway, your next dollar would be taxed that. Okay, that's number one. Now again, if you make less than 400 grand, who cares? Less than 200 grand. Single, who cares? All right, now he wants to impose Social Security tax on people making more than 400 grand. Now. Right now. And this is where I teach the S Corporation. So let's just digress for a moment. I'll do a little image here. We help clients do an S corp, take a salary, pay their FICA and then take everything else out as pass through. It's pretty cool strategy. Every dentist, doctor, engineer, lawyer, accountant, landscaper, plumber, online retailer, Internet marketer, affiliate marketer. Blech. We're all S Corps. S Corps are a great strategy when you're making more than 50 grand a year. Been teaching it for years. I'll take anybody head on. Watch out for the C Corp in Nevada. This is okay. Now what we do is we only pay FICA this year. What's the amount, guys? It's only on the first 134,142. Okay. It's around 140 grand. So you only pay this on 140k. And then you pay just Medicare, which would be around 3, 2 point whatever percentage. Then you have Obamacare that kicks in after 250 and so it could get up. But this is how it works. Now what he's saying is President Biden is saying is anybody that makes more than 400 grand, we're going to kick in Social Security back. So there'll be this window, this gap that closes between 140 grand and 400 grand. He wants to close that gap. And so more people are paying Social Security, if you haven't heard Social Security, more money's coming out than is going in. And everybody's like, when they're gonna run out. Right, okay, that's number two. So Social Security on those making more than 400 grand, next we have the 199, a pass through deduction. Now I love this deduction. I don't benefit from it because lawyers can't. But if you make more than 400 grand, this pass through deduction, that's 20% a deduction against your pass through income. You take 20% of it. It's a write off. Pretty cool. Have lots of clients using this. It's going to phase out, it's going to be gone. And it's going to be gone for people that make more than 400 grand. Can you see the theme here? If you make more than 400 grand, you're like, damn, this is going to suck. But again, some of you could be selling your business, having a big year in your income. You could be again selling a property or crypto or stock, and all of a sudden you're in this realm. So again, just throwing that out. Okay, now number four, the capital gains rate now this is a big one. He wants to make capital gains right now goes from 0 to 15 to 20%. Plus you have this 3.8% Obamacare, I call it ACA Affordable CARES act stuff. Well, if you make more than 1 million in a given year, $1 million, you make more than $1 million. Now that's not just your W2, that's your wages plus capital gain. So let's say you live in California, you make two or 300 grand a year. So you're poor. And you then in some parts of California, right? Can you live on that? In San Francisco, you're probably living on the streets with 200 grand. But anyway, you've got your wages plus capital gain. So let's say you sell your home and you get your $500,000 exclusion. 250 if you're single, 500, you're married and all sudden you make a couple mil on the sale of your home in California, which isn't unrealistic. Add that to your wages, you're over a million. So you're going to pay this 39% tax rate plus the 3.8 on your capital gain, over a million. That's not chump change. 40% on a mil could be 400 grand if you had a 2 million dollar capital gain. See what I'm saying? So keep that in mind. That's number four. Number five, corporations, he wants to raise the tax rate from 21% flat on corporations, he wants to raise that to 28%. Now just today on June 3rd, there was a number of news articles that came out where Joe Biden in some meetings with the Republicans today said, hey, I don't want to repeal a lot of what Donald Trump passed in 2017, the tax cuts and Jobs act that helped a lot of small business owners. I want to keep that. And see everybody, this is where I don't want you to think I'm beating up on President Biden. He wants to keep a lot of the things President Trump passed. But if you make more than 400 grand, we want to get rid of those. That's his point. If you make that much money, you can pay more in taxes. Now some of you may agree with that principle, some of you may disagree, but he wants to keep a lot of what Trump did. If you're a middle income or lower sort of situation, alright, number six, he wants to create, this is new, a corporate minimum tax. So if you've got all these cool strategies on your corporate return where you don't pay taxes, he wants to say, nope, you're going to at least pay 15% on your book income. That's a big topic, very complex. But he wants to, a lot of corporations have a lot of tricks and strategies to reduce their taxable income. He's like, you're going to pay a minimum tax on one of the greater of the two. All right, number seven, these go into his tax plan is to create more credits for middle income people, folks single and married. He wants to have eight. I'm going to put middle income. More tax credits for middle income and low. Middle and low income. He wants to, number eight, provide more. Okay, how can I say this? More tax credits for middle and in middle and low income. Oh, the child tax credit. He wants to expand the child tax credit for those people that have families. Hey, if you've got kids, you need every money dollar you can get, right? Especially if they're teenagers. Double down because they ain't worth it. Nope. Everybody that has teenager says why did I become a parent? Okay, now that hopefully none of my kids are listening. Okay, now number nine. Now this is a big one again for those in the real estate industry. You say what about 1031 exchanges? He wants to eliminate 1031 exchanges. If you make more profit than 500 grand, so on profit above 500 grand, you can't 1031 that that again, some of you are like, mark, I don't make more than 500 grand a year. But you sell a property and do. Now the 1031 grabs you, pulls you into this problem. Now, a 1031 exchange, I've got other videos out on that. It's basically selling one property, buying another one of equal or greater value. I don't pay the tax right now. I can kick the can down the road. That's a 1031 exchange. And some of you that would not normally be affected by President Biden's plan say, ooh, that could hurt me because I buy investment property. All right, number 10. We're doing okay, guys. Are we good? Is everybody sick of this or are people enjoying it? Comments wise. You got to give me some love. Oh, look at someone spamming in there. Come on. All right. Oh, someone says, is number five and six for C Corpse? Yes, Bella, great question. Gorgeous picture. All right, so 5 and 6 are for C. Corporations. I'll put that in red. So C Corp. All right, good question. Hey, if anybody throws out a question like that, I should comment. Tell me. Okay, all right, number 10. Okay. This is so hard. You don't know, but I'm having fun. I need a rock star. Can someone hook me up? Can I get a rock star? Damn it. Okay. What'd you say, Corey? Oh, great content. Thank you. Who keeps spamming? Just sit back and listen. All right, What I'm glad is no one's being mean. Okay, now number 10. Now I'm going to put this. See, I'm going to put the good stuff in blue. So good. Good stuff is more tax credits for middle income, more child tax credits. All right, now another one is this. This was exciting. I don't. You know, I love college education. And I need to reward my sponsor, Rockstar. Look at that. Rockstar recovery. Zero, no. Ten calories, no carbonation, no sugar. All right, now four years of free college education for those that qualify. So if you come from a lower income family, probably pushing up into the middle income, he says, I want to fund through the tax plan. Four years of college education, four years of partying at asu. Whoo. All right. Okay. That's a good thing, I guess. Okay. More help with child care. I mentioned that, but this is in the tax plan. Isn't this good, guys? I should at least say it, right? Okay, so child care tax credits. So if you have to pay for child care. And I've got family that does, and they could use some tax credits. That's cool. Okay. That's a good thing. Okay, number 12, child tax credit. Did I write that one up here? No, I didn't. Okay, number 12, let's put that in black. Child tax credit. Expand it. So if you want to have a tax credit this year. Ooh, do you have nine months to do it? We're in June. I don't know. I don't think you could pull it off. July, August, September, October, November, December. Six months, nine months gestation. I think you missed the tax credit for 2021. Is your wife pregnant, Darren? Nope. You're out. Okay, so next spring, get your 2022 tax credit going. Child tax credit, more child tax credit. Let's get the country having babies. All right, that's what he said. Okay, now here is a big one. All right, enough joking around. I'm just telling you what his tax plan is. Okay? Now, everybody pay attention. No more screwing around. When you die, the IRS takes a picture. How much are you worth? If you're worth more than 10 million, $11 million. What is it this year? 11.58 million. If you're worth more than 11 million bucks, the IRS is going to tax you. They're going to look at your home investments, retirement accounts, and whatever you're worth. Now, some of you may think, Mark, you're a rock star because you drink rock stars. You're probably going to pay estate tax. No, this won't even affect me. 11 mil. I'm okay. But here's the thing, though. When you die, all of your assets step up to fair market value. Now, this is important because Joe Biden wants to change this. So let's say you have a farm, and here's your little farmhouse, and they always have one of these grain silos there. So there's your farm. Let's say your farm. Grandpa and Grandma settled it 50 years ago for $10,000, right? That's how it happens. Right? And so Grandpa and Grandma are living on the farm and their basis, what they bought it for, and their improvements. Let's give them 100 grand. Let's give them 100 grand. Now the farm is worth $3 million. Three million. Now, what happens now is, currently, under current law, the property steps up in basis to fair market value. So if the kids inherit the farm, they can sell it on day two, tax free. The basis steps up to 3 million. Joe Biden said this is not fair, and it creates more of this disparity between the wealthy and the poor, that the wealthy keep passing on these assets to the next generation with stepped up basis, they never pay tax. So here's his plan. He says, oh, boy, this is really difficult language to say. You're going to have to help me out, guys. The basis will step up with. Will not step up with taxpayers with income above 1 million. Now, the tricky part for me is is that the income of the person that died or the income of the person that inherited it, does that include the capital gains or just your ordinary income? Now, this is just a proposal. It's going to have to get figured out when Congress writes the law, but. Right. Don't you think, guys? I mean, is there an answer to that? He says, no more stepped up basis. If your income's a million, what the hell does that mean? You know, the income of the person that died, the one that received it. There's some questions, okay, But I'm gonna put no stepped up basis. And some you may go, well, Joe Biden's tax isn't gonna. Tax plan isn't gonna affect me. I don't make 400 grand. Well, is your. Are you gonna inherit the family business, the family farm, the beach house, the cabin, the ranch? I watched Yellowstone. Yellowstone ranch worth some money, right? Go, Kevin Costner. I'll do this for Kevin Costner. There you go. You guys don't even appreciate that. You don't. Thank you. Thank you, Little Yellowstone. Shout out. Okay, so no stepped up basis if over 1 million. Now, I don't know what that again means. Okay, end capital gain tax breaks. I think we already covered that. That did we say already again, the capital gain rates will go up. No, we didn't. Oh, no, we did. Here's the capital gain. That's number four. Capital gain rates go up. Okay. All right. Okay, that's 14. 14. I'm done. 14. Is there anything I missed that you think I should say? Okay, well, 14 was really number four for me. So we're 13. Ooh, unlucky number 13. Okay, hey, everybody, I'm trying to make this interesting. I appreciate your patience. This is crappy stuff to talk about, but again, I want to say this. Gosh, I got a ting of emotion. I want to say this to everybody. Don't let emotions get the best of you. Whether you hate Democrats or hate Republicans or hate President Biden or hate Trump. We don't need that much hate in our lives. It's unhealthy. It's no good, it doesn't help. And so do I. Am I already thinking of loopholes to get around some of this stuff? I am. I'm gonna wait till the law comes out, and I'm gonna try to help all of you. I don't care if you're Democrat or Republican. Want to help you save taxes. If you save taxes, you build wealth. Life's a little less stressful. You pass on a legacy and Main Street America, business helps this country. Don't give up on entrepreneurship. Don't let hate consume you. Don't spam on my open forum. Just take. Take a chill pill. So it's all good. So we don't know what this is all gonna look like when President Biden finally gets Congress to pass a law. So don't let it stress you out. I'm not gonna lose sleep over this. Many people have said, never watch hot dogs or sausage being made. Never, ever, ever go to a sausage factory. You won't eat a hot dog the rest of your life. You don't want to go watch Capitol Hill debate this. Wait till the law comes out. We'll see what it is. That's what we've elected our senators and representatives to do, is to figure this out for us, and hopefully they'll do a good job. Is that okay? That's my disclaimer. The rest of the time is yours. People, what can I talk about? Cory, you're going to put some questions up here, all right? Do you want me to go with Zach first? Zach. Hey, everybody, let's make some money. Let's save money. As a small business owner, I'm excited to be with you. Okay? Zach McPhee on YouTube says, I'm going to keep putting my glasses on here a little bit. Can you explain why you should have one S Corp and why it should own all your entities? This is a great question. All right, so, everybody, what I love is the trifecta. You know the trifecta if you followed me. I want to split your life into two sides. Operations and assets. Down here is your family trust. Make sure you've got your foundation done. You need a will and a trust. For privacy. For hiding. For making sure your life isn't a disaster. Your all your assets go to the wrong people when you die and to lawyers and courts. And we're doing an estate planning special right now. Twelve hundred bucks. Across the country, any state, no matter how much you're worth. Get your estate plan done. Go to kkoslawyers.com. all right, sorry, little shameless plug, but the special only lasts two more weeks. We do it every year around Memorial Day, 11 years running, knock off 20%. All right, now, what I've said before is an S Corp. S corporation, that's not an escort in Vegas. This is an S corporation. That would be very inappropriate. Okay, so some of you might have a little side gig, a little llc, and you're going to transfer or convert to an S corp when the time's right. Some of you might be a sole proprietorship, and you're going to convert to an S corp when the time's right. The reason why I like an S Corp is you take a salary, everything else is passed through, and we save on fica. The F word. Fica. What? The fica. All right, now, Zach's question is, Mark, why do you, Mark Kohler, only have one S Corp? I do. In my whole life, I only have one S Corp. Some of you are like, well, Mark, the S Corp, pretty freaking awesome. You probably own five or six different businesses. Why don't you have five or sixs corps? Because I don't want a five or six W2s. I want one W2. This is my family. Board of directors. Board of directors. All my kids and their spouses are on the board. The guy at 7:11, that gives me a great deal, I put him on my board of directors. No, I didn't. But you can put anybody you want on your board of directors. Okay, so here's my S Corp. It owns part of a law firm. It owns part of an accounting firm. It owns part of a real estate development. It owns part of a restaurant if I want. I don't. But see, these are all LLCs with other partners. But my profit funnels through One S Corp, where I can do One W2, pay for my health insurance, do any special planning with my auto, home, office, travel, dining, cars, equipment, laptops, phones, headphones. But mics. I try to write all this crap off in my S corp, one S Corp. So, Zach, what I'm trying to do is save costs. I want 1s corp. Now, with my real estate, I might have 1 LLC with two or three rentals, I might have a really valuable rental, 1 LLC. I might have an LLC in Mississippi. I might have an LLC in Arizona. You know, I'm going to put my assets in different structures, but when it comes to operations, I want 1s corp and let it flow through. Saves time and money. Hope that helps. In my book. Oh, let's give away some books. Okay. In my book Tax and Legal Playbook, I have a whole section on partnerships and one S Corp. So I want to give away a book to someone on YouTube and someone on Facebook. Entrepreneur and my Facebook. Does that sound okay? Okay. Tell me, Cory, who's our winner on. On YouTube? Don Hobley. Don Hobley, you're the winner. You've got a text you. Sorry. You got to email Corey, by the way. Go back up. Go back up to Dawn, Mark. Luke says Lokes says four years of college. Who's going to pay for that? All these taxes. I know, I know. He's like, lol. Well, that's what this tax raise is going to do. I'll tell you who's going to pay for it. The wealthy in America. All right. Okay, so Don Hobley, you've got an email. Cory White. So it's Coreyark J. Kohler. So no one else. That's a. Don't email Corey except you ladies that are single. He is single. He's a good looking guy. We should have you come over here, Cory. And you're good. Okay. Okay. You're happily single right now. No girlfriend right now. Okay. All right. Sorry, ladies. Cory's not available this week. Last week he was. Next week might change. Okay, Tax and legal playbook with a bookmark here for Don. Okay, who's on Facebook? Another one on Facebook. Let's go with. Jericho Arsenu. Jericho Arsenau on a cool motorcycle racing. Jericho, you are a winner of what your CPA isn't telling you. But story. There will be a made for TV movie someday. Make sure you email Corey your contact info. By the way, at the end of this broadcast, I'll give away three more books. Who gets the Business Owner's Guide to Financial Freedom? Graham Hemmings. Look at him. Gosh. Good looking guy. Kind of a Justin Timberlake looking guy. He's got some girl, you know, jumped into the picture with him because she wouldn't be with him. But Graham Hemings, you are the winner of the Business Owners Guide to Financial Freedom. So all three of you winners. You know what those look like? All three guys. I think the next three realtors need to be girls. Cory, we want to be PC. Politically correct. What is that? It's hot in here. Okay, all right, next question. Who we got? What's our question? Okay, Chris Rule from YouTube says if I open an S corp this month, can it be retroactive to January 1st? If not, is there another retro option? Oh, Kris, I cannot retroactive an S corp to the first of the year. But Kris, if you were as LLC operating, I can convert an LLC to an S corp retroactively so let's look at our timeline. Here's 2020. And here's 2021. We're right here, almost in the middle of 2021. If you were an LLC, I can backdate that to an S Corp. But if any of you were just a sole proprietor, sp. Sole proprietor. I'll set up your S Corp now. And you're only going to see savings for the last half of the year. So the moral of the story is, any of you out there to think you might have a good second half of the year, set up your llc. It's like, I call it S Corp insurance. Set up your llc. Even if you're in California, we're going to save you more than 800 bucks. Do not freak out. Get your LLC done. See how it goes. If in December you make more than $50,000, call me. We're going to convert it back to an S Corp. If you don't know the rules on why S Corps are so awesome, YouTube, just type Mark Kohler, S Corp. I got two or three videos. You'll freaking love them. All right, next question. Anything over there on Instagram or. Okay. The Augusta Rule. Okay, thank you, Darren. Okay, people, we are going to talk about renting your home to your business now. Sounds pretty sexy, right? On the face of it, right? I'm going to rent my home to my business. My business gets a tax write off. Ooh, but do I have income? Well, one of the rules is that if you rent your home to anybody, including your business, for less than 14 days. So this is the home rental rule. If you rent it for less than 14 days, the IRS says keep the change. They say you don't have to pay any taxes. We don't want to deal with the paperwork. We don't care. So whatever you rent it for is free money. If you rent it for less than 14 days during the year, no tax on that money. All right. Sounds pretty cool. Where this came about was from Augusta, Georgia. There's a little golf tournament down there in the spring in Augusta, Georgia called the Masters. The Masters. People in Augusta rent their houses for, gosh, awful amounts of money. 10, 20 grand. Leave town and keep all the money tax free. A lot of people around the Olympics in Atlanta, Salt Lake, New York. Whenever there's an Olympics event, Olympic Summer Games or Winter games in the U.S. people will rent their home for those two weeks. Leave town, pay no tax. So it's kind of been called the Augusta Rule now. Sounds great. The problem is it gets abused a lot. Rarely do we Sign off on someone's tax return with the Augusta Rule. And here's why. A lot of jokers like to say, oh, well, I'm holding a meeting in my house every month and we're having a barbecue. And I'm going to write off, I'm going to rent my house as if I rented a hotel. Now, if it's legit, I'm all ears. Now, that means you're going to keep a log or a guest list of all the people that showed up. You're going to. I'd probably keep a recording or video or. What did you pitch business wise? What business came from it? And it better be freaking legit. But just to say you're going to have a little family board meeting and watch the super bowl is not official corporate meeting which would allow you to rent your home to your corporation for $1,000 or $2,000 or some crazy number. People abuse this. Pigs get fat. Hogs get slaughtered. So what I'm asking you to do, if you're going to do this Augusta Rule and rent your home, keep some darn good records, you better have a pretty darn good legitimate business. And making money at that stupid meeting at your house. But just writing off some pizza party ain't gonna cut it. So it's legit. Just be careful. Sound okay, Darin? We're good. Darren agrees. Okay, next question. I'm gonna jump over to Facebook. This is Pietro Giuliano. Oh, IRS, Augusta Rule. I'm starting to read it. Up to 14K. It's not up to 14,000. It's up to 14 days. So if the rental of your home was $2,000 a day, then you could write off 24 grand. So. Pietro, it's not 14 grand, it's 14 days. Ever successfully deployed? Yeah, some people do it. So you're good. Vanessa Vollmer. You are what you drink, Mark. That's right. Damn it. I'm a rock star. I'm just joking. By the way, I've got to show you my new shirts. Should I demonstrate my new shirt? Okay. Now, I get paid nothing for this. The people that made this shirt don't even know I exist. Probably. It's called and Collar. Kind of a stupid name anyway. But if you want to YouTube it, they've got a really funny video. So what's Ampersign and whatever the. And collar, that's the name of their shirt. Whatever. They're made of plastic bottles. Wrinkle free, huh? Waterproof. Watch this. I will. You know, I'm gonna use this just because it's kind of. I don't want to waste my precious rock star. This is my diet. Diet Mountain Dew from this morning. What? What? What? You don't want me to do this? Because Cory's gonna have to clean it up. Oh, I'm gonna do it over here. Sure. I. Okay. What? Gosh, my tech is all worried I'm gonna jack something up. Okay, watch this. Okay. Diet Mountain Dew waterproof shirt. Watch this again. Can't even feel it. It just went right off my shirt. Haven't you seen that yet? I have. Okay. Cory was freaking out here. Dangerous. So I did this with soy sauce the other day out for sushi. The soy sauce just went straight off my shirt. Look at that. Crazy. Waterproof. There you go. And collar. Send me some money. I just sponsored your freaking shirt right on my show. All right. I don't know why I got into that. Okay, Elaine Flores says, how does this affect on a fix and flip property? We just started our real estate company this year. Now, Eileen or Elaine? Eileen, I believe it is. Flourish. Thank you so much. Beautiful picture, Eileen. I think she's asking about Joe Biden's tax plan and how it's going to affect their fix and flip business. Now, everybody, when you do a fix and flip, let's go through it real quick. So here's your trust. When you do a fix and flip, it's kind of on a bubble. It's kind of in the middle here. I don't know if it's going to be ordinary and subject to self employment tax, or is it going to be long term or short term. Well, a fix and flip would never be long term even if you worked on it for a year. It's got to be finished with a renter in it and then sit for a year. So it's going to be short term capital gain, which means no self employment tax. See the difference? Everybody, when I do a fix and flip, so I'll call it fix and flip, it's either going to be ordinary income because I'm in the business of flipping, or it's going to be short term capital gain because I held it less than 12 months. If I turn it into a rental once it's done now I get long term capital gain. Now, long term capital gain is one of the best taxes at all. Right? It's a good rate. Better than the other two. But if I'm holding it for at least a year now I can do a 1031 exchange too. Now let's look at this. What does Biden Have a target here. He's got a target on a bead on with his gun here, whatever. I don't know if he owns a gun. Probably not. But if 1031 exchange, he says, Eileen, if you make more than 500 grand, I'm going to tax that on this 1031 exchange. If your rental that you make and you get long term capital gain and you make more than a million, I want to increase your tax rate there. Also, he said if you make more than 400 grand on your fix and flip, I want to increase your FICA. But that means you have to make more than 400 grand. If your short term capital gain is taxed to ordinary rates, which it is, it's taxed at ordinary rates and you make more than 400 grand, he wants to increase your rate from 37 to 39. See. So Eileen, everybody out there, you're not going to pay more in taxes on your fix and flip unless you fall in one of these categories of making more than 400 grand here, 400 grand here, a million here, or 500 grand here. So Eileen, you're going to be okay. Maybe, I don't know. Now, Chip and Joanna on fixer upper the they're making some bank, right? They're down in Waco, Texas making good money. So they're probably going to pay more in tax. So a fix and flipper that does more than three deals a year, you're going to have to deal with self employment tax. If you do less than three deals a year. We typically call those short term capital gain. All right, well, where are we at on time? Couple two, three more questions and then I'm going to give away more books and I'm going to give away some books to the ladies and then one more guy and one more lady. How about that? We'll do three books to some ladies and then a guy and a girl. So we're, we're equal sexed. Four books each. Alright. Charles Gallucci says for someone who has a day job, W2. Alright, so let's do our little trifecta. Charles has his revocable living trust. He called our office, got the special. Okay. He says I've got a W2 day job. All right? He doesn't say married or single. Okay, so he's got his W2 day job and he has a side hustle. One in three Americans now have a little side hustle. Okay, so let's see. Oh, Corey, we got to move this back over. Okay. All right, we good here? I'm gonna try to Work my own set. We're good right there. Okay, so Charles Here has a W2 day job and a side hustle. And then he says, I've been told that there are W2 income thresholds at which forming an S corp for a side business wouldn't make sense. Okay, he said 142,800 of combined net earnings are subject to self employment tax. Is this true? What are those thresholds, Charles? That is true and you nailed it. That's exactly right. That's what I was talking about a little bit ago. Okay, now everybody, let's look at this. Let's say that Charles. Let's put it in red. Let's say that Charles makes a W2 of 100 grand. He's going to pay his share of FICA on that, which is 7.65 up to 142,000. Well, he didn't get to the 42,000. All right, so let's say in his side hustle he makes 80 grand. All right? Net. Now, I know this is pretty high. Some of you are like, man, Charles is killing it. But I'm just trying to give the example here. So if he gets 80 grand of net income, he's going to pay 7.65. Well, no, self employment tax is 15.3% on the first 42,500. See, because this 80 grand is split into two pieces. So that way you can see Charles paid his FICA on 100 grand, which is 7.65, and the employer matched it. Then he paid 15.3 on the other 42. The remaining 40 grand you only pay Medicare. Well, sorry, 37,500. In this example, he would only pay Medicare, which is about 1.6, 1.4. It's going to be about what, 2.8. So about 2.8%. So that's how that would work. 2.8% on 37,042. Now his question is, well, Mark, why would I do an S corp? Because if I do an S corp. So let's say I do my S corp and I net 80 and I split my salary 40, 40. Well, I end up paying the FICA and over here I only save 2.8% on the 40. Because see, on this 40 there would be no self employment and no Medicare. So let's do the math. 2.8% times 40,000. Okay, $1,120. So now everybody, this is what accountants do. When you get on a phone call with Darren or Max or any of my attorneys, they're going to say, Charles, give us your numbers. How many rentals do you have? Are you married or single? What's your W2? What's your side hustle? And our job is to save you money. So we would save if we did an S corp. In this example, we would only save $1,120. Probably not worth the cost of doing an S corp. Now. Alright, ready everybody? Let's say Charles is mining crypto. Oh, now his side hustle is mining crypto. Hmm. Does he have to take a $40,000 salary in that example? No, I may only take a 5 or $10,000 salary because the crypto mining is very low on labor. It's not very labor intensive. So the IRS would allow him to take a much lower salary. So Charles, and anybody out there, what I'm doing in a consultation with you, when we get one on one, any of my attorneys, they're going to go, how much is your labor and what could we get away with with salary and how much is your day job salary? We want to see if there's a play on the difference. So let's say in this example, I'll go to blue. We say he's going to net 80. Let's take a salary of 10,000. And the rest of the 70 is no self employment tax, no SE tax and no Medicare. Ooh, now okay, so he paid his 7.65 on the 100. We're going to pay 15% on 10. So now what do we save? We saved 15.3% on 30 grand and 2.8% on 40. Okay, are you guys doing the math over there? Okay, so 15.3% on 30 grand would be 4,502.8% on 40,000. 2.8% times 40,000. The answer is 1,200. Oh, I'm back to my same dumb number that's over here. I already did that one. Okay, so 1120. So let's add this up. I'm at 625. Okay, now Charles, in this example, if I could take a lower salary in my s Corp, maybe 10 grand if it was crypto mining, who knows, maybe online selling, affiliate marketing, very low labor. Now you're saving $5,620 to do an S corp on your side hustle. Is that worth setting up an S corp? Damn right. So we got to run the numbers and I think everybody that's still here with me, we're only going to do another question and then we'll take, we'll give away some books. I know with all my joking around and I have fun. I really appreciate you being here. This is what a consult should be. Whether you call our firm or not, I don't care. I'm here just educating and I love it. And I'm grateful that you're following me on YouTube or Facebook or whatever. But if you call a law firm, whether it's ours or not, I would hope that that lawyer has some tax education. All of my lawyers are tax lawyers. They're going to get on the phone and go, married or single? What state do you live in? How much is your day job? How much you making on your side? Hustle? Do you have rental income? How many kids? Head of household do you have? Social Security? How old are you? See all these factors playing together and we're going to build a diagram and we're going to do your trifecta and we're going to figure out. How much do you have in your IRA? How much do you have in your 401k? Are you self directing? Do you have a Health Savings account? Do you have a Roth? Do you have a kids? Are you paying your kids? Are you doing the Augusta Rule? Do you have a day job? Are you married? Did your spouse have a day job? Do you need an S Corp? Can we start out with an llc? Maybe we stick with the sole proprietor. How many rentals do you have? What states are your rentals in? How many LLCs do you need? How much equity is in your home? See all of this, we can freaking knock this out in an hour. Darren, come over. Let me. Let me introduce Darren. Can I bring Darren on the set? Is that okay, Corey? Please do. Okay, Darren. He's one of my lawyers. I love Darren. I'm gonna break this thing. Darren. Darren Charrington. Where'd you go to law school? Michigan State. Michigan State. Is that Wolverines or is that the other one? Yes, the other one. Spartans. You're Spartan. Okay. Sorry for you Michiganians. But married. How many kids now? I got three kids. Three kids. Married, graduated from law school. He was an engineer first. Where you worked at Honda, Hyundai. Hyundai, same thing. Ikea, Hyundai, Hyundai, whatever. Anyway, Darren's one of our lawyers here in the firm. And how many appointments are you doing today? Four or five. Yeah, four or five. Yeah. I've got quite a few appointments every day. And you're out about a week or so? Yeah, maybe two weeks. We're a little busy. We've got some new attorneys coming on, though, so things are looking good. Yeah. So now. But this is what I want you doing when you go out and look for a tax law firm anywhere in the country, you don't have to have a lawyer down the street is get on the phone, interview, say, hey. Tax experience. Yep. Do you know the difference between an S corp? Do I know how to put my kids on payroll? That's. Darren, you want to say anything? Any final words? Words of wisdom? No, not. Keep watching the videos. You'll learn everything from me. Here's his tip. Here's his tip. Buy low, sell high. That's true. Boom. Pen drop. All right, there we go. Okay, everybody. Thanks for hanging out. Oh, Abdiel from Texas. Sole Prop is a boutique. What's the easiest way to go about this second year? I could just answer questions all night. I would love it. Any of you that are a sole proprietor and you need to change your business to an S. Corporate llc, get with a law firm. Don't go Knock it out on Legal Zoom. I love LegalZoom if you know what you're doing. But I have two pair of legals. All they do is fix my Legal Zoom entities. That's because they check the wrong box. Abdiel, get an appointment with Darren in the next couple weeks. See which entity fits you and your wife's boutique the best. Get it going. Start your bookkeeping. Get your estate plan done. Make some freaking money. Save taxes. Abdiel, I love it. Jafar, I have crypto gains this year. Can I do Jafar's question? Okay, Jafar says I have crypto gains this year. Do I open a charitable remainder trust and then sell my crypto on an exchange? Wow, I'm glad I took this. Jafar, you could do. You know what I should do? A video on charitable Ranger trust in crypto. Ooh. Okay, Jafar, I'm making a commitment to everybody. I promise, Corey. I promise on my honor. I will be in the studio Tomorrow for a 30 minute video on cryptocurrency and charitable remainder trusts. Okay, what do I. What do you get if I don't do it? You guys are my witnesses. What do I. What does Corey get? What do you get? You don't get anything. Okay, Corey. Corey, I will give you a hundred bucks if I don't do it. Okay? These. All these guys are my witnesses. Okay? $100 for Cory if I do not shoot that video tomorrow. Cryptocurrency and Charitable Remainder Trust. Now, anybody out there? You've got real estate gains. You got a small business. I once did a charitable Ranger trust with a cement company that was being sold. Cabin ranch, beach house, crypto stock. We can all do that in a charitable remainder trust. So tomorrow, Jafar, I will shoot that. We will put it up on YouTube tomorrow. I can shoot it tomorrow. I promise. I always make these promises to Cory, and I never come through. Okay, who are my winners? Okay, Three books for ladies. That a guy, and then a lady. Okay, first one is Tax and Legal Playbook. We got Janet Mersado. Janet Mercado. Janet, you get a book. Tax and Legal Playbook. Now, everybody remember, you've got to go to. You got to email Corey. Corey. Damn it. Coreyarkjkohler.com. you email Cory, and he'll hook you up. Okay. What your CPA isn't telling you. We need a lady. We need a lady. Terry Sawwell Adams. Terry Sawwell Adams. You win what your CPA isn't telling you. It's PG13. I worked in a little sex scene. I know it's very inappropriate, but when you find out Viagra's tax deductible, everybody. Whoo. Okay. All right. I'm gonna get in trouble. No one's gonna watch anymore. Okay, do you have a money printer? No. Dr. Wolfgang Cheshire and Do Chaucer. I do not have a money printer. I wish I did. If you know where to get one, let me know. Okay? Okay. Millie. Millie Diaz. What kind of. She's at a baseball game. Is that a Yankees shirt? Yankees. I'm going to New York in next week. I need to go to. Yankees are out of town, so I might go to the Shea Stadium with the Mets. But are the Mets still at the Shea Stadium? I don't know. That was 20 years ago. Okay, who was that? That I love Mark stuff. I love this. This is good. All these. All these beautiful people. Guys and girls. Okay, now. Oh. Millie wins financial freedom. You got to email Corey@markjkohler.com and I'll send it out to you. Okay, now, I need a guy. A guy's gonna win. Tax and Legal playbook. Scott Van Campen. Scott Van Campen. Msu. Oh, no. Go blue. Does that help you out? No. That's Michigan. That's you. University of Michigan. Okay, well, what's his name? Scott Van Campen. Even though you're not a fan of Darren's team, you win a book. What? Yeah. I'm sorry. Scott Van Kampen, winner. Email Corey. Okay, then. One last lady. Tax and Legal Playbook. Bella G. Wow. Very pretty, too. Oh, she asked a question earlier. Bella G. You win a book, tax and Legal playbook. Jack, if you get those names to me, I'll personalize the book, too. Okay? We're wrapping it. Oh, YouTube. Everybody, two last calls to action. Let me say this. And I make so many deposits with all of you. And if that means. What that means to me is I want to give as much free education away and give things away as much as I can. Let me ask you to do a couple things. Please subscribe on YouTube. Hit the bell, icon. Whenever I go live, you're going to get a quick ping. I want to make it always worth your while. I want to save you money, make you money, and share my videos with your friends and your network. Next. If you don't have your will or Trust, get to kkoslawyers.com kkoslawyers.com and you can sign up for our special right there. We do it once a year. You only have to update your estate plan maybe every five or 10 years. You can take it in any state, wherever you go. And if you get divorced, you get in. You need to do a new one. If you get married, I'd want to do a new one. If your kids go into rehab, I do a new one. What else? You watch Dateline and kill your spouse? I would do a new estate plan. That was just a joke. Never do that. But on Dateline, whenever you watch Dateline, it's always the spouse. They're always the killer. It's like, I watch it, spouse. Thirty minutes later, the spouse did it. I mean, you know, whatever. Okay? That's what marriage will do to you. Okay, everybody, I love you. I'll see you next week on Thursday. I may be on a plane next week. We're gonna have to figure that out. Okay, everybody. Talk to you later. I'll let you know when my next live is. Keep living the dream. Don't give up. This is for you, Rockstar. Hold it like this. They need to put the mouthpiece right where the name is so that it's better.