Open Forum - The New Tax Bill with General Q&A

There are some poison pills in this bill. There's a lot of good stuff in the bill. And yeah, there's going to increase taxes on the wealthy. But there's a couple provisions that affect you and me. The average income American that wants to build wealth. Those are the two provisions we're scared to death about. That's what we're trying to get the word out on. So Matt, I'm going to pose the question to you, keeping it simple. Why should the average American care about the bill, the tax bill that went from the House to the Senate? We're in the middle of it right now. Why should anyone care about it? Okay, now everybody, we do have a lot to cover so we're going to jump right into it. I think we got to dispel with this House bill situation right away because this is affecting everybody. Now Matt's written an article, I've written an article, I published some videos, some social media posts on this topic. We need everybody to get engaged and contact your representative or senator on the topic. I will explain why in a moment. But the biggest question we're getting is why do I need to worry about this House bill? Isn't it just for the super rich? And I'm not super rich. I'm not Peter Thiel, I'm not a 1 percenter. So aren't you just trying to deceive me as an average American to get excited about this bill when it's really only going to hurt the super rich? The answer is no. There are some poison pills in this bill. There's a lot of good stuff in the bill. And yeah, there's going to increase taxes on the wealthy. But there's a couple provisions that affect you and me, the average income American that wants to build wealth. Those are the two provisions we're scared to death about. That's what we're trying to get the word out on. So Matt, I'm going to pose the question to you, keeping it simple. Why should the average American care about the bill? The tax bill that went from the House to the Senate, we're in the middle of it right now. Why should anyone care about it?

Well, if you're an everyday IRA owner, your ability to self direct and invest in assets you know and want in your IRA is going to be significantly limited if this bill is enacted.

If not halted. If not halted.

Yeah. And if you've already done it, you're going to have to get out of it in two years or you're going to face taxes and penalties. So that's one point when we talking about talking to our congressmen and senators that we've been really hitting home. That frankly, a lot of Democrats understand. Yeah, yeah.

This is not a Republican or Democratic issue per se, because we're not talking about just the wealthy. If you want, we're not even going to go there. So everybody chill out. I don't care if you're a Team Biden or Team Trump. I just want to say this. If you want to take your IRA or your Roth IRA or your 401k and invest it maybe in real estate, pool some money and do some crypto, maybe do some crypto mining, do some crowdfunding, just take your IRA and invest in small business, period. We could almost say it's impossible after this bill. Now, it'll be severely limited with some restrictions. It'll be cost prohibitive. Prohibitive in some ways. So I'm going to leave it at that. And maybe, Matt, you can unpack it a little further. But that's the big question we're getting in our office. Why should I read your article? Why should I contact my congressman? It's because we want you a year from now, five years from now or right now to be able to use your IRA and invest in what you know best and not be forced to go to Wall street like a sheep. Or we want you to be a wolf. We want you to be out there,

not a sheep or a sheepdog. Be the sheepdog. You know, that protects the sheep from the wolf. The sheepdog.

No, we're the sheepdog. They're the wolf.

Oh, we're the sheepdog.

Yeah, yeah. We're protecting you so you can eat what you want. Eat what you kill. We just want you to be a sheep.

That metaphor was twisted up there. Okay, well, let me say this. I think the IRA LLC is one strategy. You real estate investors listening, many of you that have bought real estate with your IRA have used where you manage it, many of you doing crypto where you want the keys or mining. Need an LLC to execute and pull that off. Can't do that anymore. Under the bill, you can't be the manager of your llc. And if you are, you're gonna have to change it. So that's a, that's a big one. That one's a frickin doozy.

Yeah, yeah. And I think we can leave it at that. Now we could go into the backdoor Roth, maybe some mega Roth type issues. And I'll be blunt. It is true. If you're killing it and making 2, 3400 grand a year or more on whatever business model you have. God bless you, enjoy the ride, be careful, save your money, pay off debt. But you're going to be doing the mega Roth type of stuff, the backdoor Roth type of stuff, and they're talking about limits on Roths. I'm just going to tell all of you for the most part, that is a wealthy issue. And some of you may want to contact your congressman or your senator about that. I get it. But just all of you, please take a moment to check out the link below in this podcast alone and on our articles and on any of our social media posts or videos and just click, click, click. You can easily write in 10 minutes a quick message to your representative and say, don't kill my IRA. I'm a regular tax paying American. I only make 100 grand a year and I self direct my IRA. And we tell you the provisions to note in your message and you're good.

So yeah, if you're following our newsletter, you're going to be hearing all about this. So make sure you get over there@mainstreetbusiness.com Sign up for our newsletter. You'll get all the links and where to go for this. But yes, and now, now I'll say this, we're going to have lots of strategies and planning about this. We'll be talking about it, but this is not the only thing going on. We still got the rest of tax and legal coming in from like, like Valerie's question in here. By the way. You want to just start with that one. Not to stay on a political topic, but there's, you know, President Biden has a vaccine mandate on businesses with 100 employees or more. And she's asking how do we get, is there a way to get out of this mandate if we have 100 employee employees or more? Okay, Matt, all right.

I don't know.

Yeah, yeah, this is the, this is where you're going to, this is the moving employees around other companies and stuff is not going to get you around it. I guarantee you. That's already thought about in the regs. Now these regs are coming through. Oh, osha. So this is, you know, the Department of Labor and the Office of Safety and Health or something like that that really goes over like safety issues in a workplace. You know, this is the federal agency that did this. And so they're saying, hey, the vaccine needs to be required. And so, and they're trying to mandate this. But now moving employees around LLCs is not going to work. There's there's already lawsuits brewing on this. We're going to see the constitutionality of this. But frankly, there's so many businesses that are just not going to comply with that. There's so many employees that are going to just quit if you force it on them. Yeah. So in terms of a solution right now, besides engaging your attorneys and following the lawsuits, I don't know. I don't know what you can do at this point.

Yeah.

There's a timeline to going into effect. Yeah.

And it just keep watching the news. I would not change or implement it yet until you get you see how it's developing out in the court system. For example, remember just a couple months ago when the eviction ban was coming to an end and the CDC and a couple other federal agencies tried to extend it, there was a lawsuit immediately filed. It went to the Supreme Court within a few days. Supreme Court said no, time is over. We need to let people run their property the way they want. There's money in a kitty for those landlords and tenants that want to go get assistance. It's over. That may happen here. Now, by the way, we don't want this to turn into a political show on the mask mandate or vaccinations because it is a landmine. Matt would talk about it all day, but not me.

I'm just reading the questions as they come in.

Whatever. I, I'm just a little more politically savvy than Matt.

So that was Valerie's question. And so now there are, I'll just say on this, on the vaccine, there's also negative testing rules you can do if you have 100 employees or more where there there's exemptions if people are getting negative tested within certain time periods. There's also people can opt out of it for certain legitimate basises to say I don't have to get the vaccine for health or other reasons. So. So that's out there. Just to know that there's other workarounds around it. If you got over 100 employees, for

those of you that are regular listeners to our show, and we hope you become one if you're not, of course, you know, my comments were tongue in cheek just a moment ago because I am the one that will usually stick my foot in my mouth on some political matter and take a stand and piss off half of our listeners in one fail swoop. So I was just joking around, just saying Matt wants to talk about masks and vaccines. Go ahead. I'm not touching it. Just, you know, do your thing. You're just Alienate half of our listeners.

Somebody's. Somebody's got to do the hard job around here, you know.

Okay, now I'm going to go to a question just because I like this handle. I think this is, you know, this is Flipper, Flipper in Texas. Now, I don't know if they're talking about real estate, Flipper, or maybe they're a kind of a Dolphin fan. You know, they like porpoises and dolphins. But anyway, we have Flipper living in Texas with a question. Now. I think this is good.

Back at the end of this event, the end of Flipper's question here, I'm going to come back with a one of my favorite Saturday Night Live lines.

Oh, okay.

Yeah. All right. Stay tuned while Mark bores you with his answer. Just know there's something coming on the other end of it.

Yeah. And some of you may be anticipating Matt's going to tell a joke that might be funny. Right there. We've got you, you know, we shall see. Okay. Flipper says, I live in Texas and I funded a plant nursery for my wife and I with my 1099 sole prop. Now, bless his heart, I don't know what that kind of means. I funded a business with my 1099 sole prop. What is this sole prop you're talking about? You got a 1098 for something else and you started planting. I'm just going to say this Flipper apparently has a plant nursery in Texas, and that's a small business. Let's go with that. So no matter what state you live in, you might have a little small business like Flipper. Theirs happens to be a plant nursery. Pretty cool. If it was in Colorado, we might know what they're planting. But in Texas, not sure. Okay. Now, I also, he says, we have 50 acres in Kentucky with timber, land of timberland. And then he says, stacked up again, this kind of got translated poorly. But I'm just going to summarize that and say he's got land in another state with timber on it. Now, for some of you, that could be farmland. That could be just raw land. But he's not running a business on the land. It just has timber on it. And his question is, first, do I need an LLC for the Kentucky farm? And number two, can I deduct my travel to go check on the farm? Well, first of all, we're going to sidestep the plant nursery in Texas situation for a moment. So he's got a small business in Texas. Now, to have a timber farm, there's got to be Ongoing things that constitute a farm. Maybe you're planting every year, you're harvesting every year, you're watering, you're trimming. To just have raw land with some timber on it doesn't constitute a farm. It constitutes an investment. Now that's not a bad thing because if you go to sell that timber, we, you're going to get a different tax treatment than if you were running it as an actual timber business or timber farm. See, there's a difference. I could go buy some timberland in Northern California and say, oh, I'm just going to sit on it and then maybe a timber company will come along and buy it someday. Okay, that's an investment. So first of all, Flipper, the first thing I would do is you need to meet with your accountant and really kind of nail down what you're doing in Texas and then look at Kentucky and go, is this really constitute a farm, an ongoing business, or is it just an investment? If it's just an investment, you're not going to be able to write off your trips there. But maybe we could write off the trips because your plant nursery in Texas is going to the timber farm in Kentucky to check on some other plants that you might be growing there, other operations that could be in the corner of that plot. So if you can tie the trip to Kentucky to the operations that are helping your nursery in Texas now I can take a tax write off. Don't feel like you've got to write it off in Kentucky. Write it off under the business in Texas. That's creativity. That's saying, ooh, ooh, I need a reason to go to Kentucky because it helps my plant nursery. So I'm going to write it off in Texas business and then leave the Kentucky thing as an investment where you might get a better tax treatment on a short term or long term capital gain. That's my first response on the write off piece. Matt, what do you think about an LLC in Kentucky?

Yeah, I love that. On the, on the write off. That's a great little strategic tax tip right there. Llc. I mean, we're going to do the LLC simply for asset protection so that, that, you know, 50 acres in Kentucky, we'd probably do a Kentucky LLC is what we'd recommend. We're not doing it for tax purposes. And like Mark said, if this is just an investment asset, you're not really, you know, this isn't going on your sole prop like you have already with your plant nursery. This is going to be a separate asset.

So.

But we want to keep it Separate for liability purposes. If something does happen in the nursery business, if something happens to you, you know, any other business activities or things that you may have going on, I don't know the full picture of what you're doing. But we do know that we want to keep this land separate and isolated so that it's protected from liability that you might have in your personal business, this plant nursery and other activities. So consider the LLC not for taxes, for asset protection.

Okay? Now, on that note, Kentucky is quite affordable. And I think just knocking out an LLC there is good.

It just.

You add it to an insurance policy you might also have on the property. Because I don't know if this timberland is next to a freeway in somewhere where there might be trespassers and you don't want some kids getting in there, you know, filming a little movie for the next whatever YouTube show they're trying to do and someone gets hurt or whatever. So you might want an LLC to protect you from things that could go poorly on that piece of land when you're not there. Some trespasser situation or if you end

up, you know, actually starting to cut the timber on it, you know, or whatever. Or there. There's people in there harvesting the timber now and trucks and people with chainsaws. I don't know.

Yeah, yeah.

Liability problems written all over it. You don't want that coming down to you personally if something happens.

And lumber companies are near and dear to my heart, so, you know, I want to make sure they're okay. Now, on this note, though, Kentucky is not a Cope state. Now, for some, I just literally had to open my own book here. This is a tax and legal playbook. You can get a copy at your local Amazon online retailer. In the back, there is an appendix seat where I go through every state. Now, see, here's what's unique. I'm just going to say this quickly is you may think, well, I'll set up a Kentucky LLC to protect the property. Kentucky LLCs don't protect the property. It's a foreclosure state. So if you're driving down the road in Texas, texting and driving, and run over a family of five on a crosswalk and kill everybody and there's a lawsuit they can go to Kentucky, foreclose on the property, even if it's in an LLC and pay off the family, you're like, well, what the heck? Why did I set up this LLC if it doesn't protect the property from me or my teenage driver? That's where a Cope entity Comes in cop charging order protection entity. So we might set up a Wyoming LLC to own the Kentucky llc or have a Wyoming LLC registered to do business in Kentucky. Now we're adding an extra layer of significant protection, but that's a topic for another day. You can read it in my book,

blah, blah, blah, blah, blah. And for those listening, like, ooh, should I have had that for my properties or assets? Okay, if this is a thousand bucks an acre, you know, 50 acres, 50 grand of value. No, don't worry about it. This is a hundred thousand an acre. All right. Okay, we're thinking about this now for this property. So it all depends on the value of the property.

Yep. Okay, Matt, do you want to choose the next question? Oh, no, sorry.

You had a flipper job on my Saturday Night Live.

Yeah, we're on pins and needles. Yeah, pins and needles.

Yeah, this is. I don't know if I told this one before, but you know, it's one of these dry ones. I don't know it's that funny. But do you remember like Deep Thoughts by Jack Candy? They used to come on Saturday night, it kind of like scroll the words and there'd be like some like cheesy music playing. Deep Thoughts by Jack Candy. Yeah, it was like. It's like if you ran into two guys walking down the road and one of them's name was Hambone and one of them was Flipper, which one do you think was a dolphin? You'd think Flipper, wouldn't you? But it's Hambone. I don't know why I think that's so funny.

Yeah, that wasn't funny. Okay, so let's move on to our next question.

Somebody like, like one person.

Yeah, one person out there is probably pulled over on the side of the road in their car going, oh my. They're just gut laughing.

Mom, mom, come on.

Mrs. Sorenson, that was for you. Oh my gosh. Okay, so now Matt, do you want to choose the next question?

Yeah, let's go to Brendan's. So this is this one.

Oregon. We're headed over to Oregon.

Packet. Yeah, from Oregon. Brendan says my wife and I are starting an exporting business. Importer exporter are starting an exporting business titled Vandalay Industries. My wife is starting an exporting business in Oregon shipping pre ordered products out of North Carolina with my brother in law who is on the receiving end in Egypt.

Wow.

A little confusing, but I think I know what you're saying.

We went from Oregon to North Carolina to Egypt. And you trust him? We're Going to assume we trust brother in law.

Yeah.

Okay. All right, keep going.

Let's just, let's not worry about that. We'll get to that.

Yeah, yeah.

How should we structure our business relationship? FYI, we are new to business. Okay.

Could I ask for more of a recipe for disaster? Like where's the, where's the nuclear button? Yeah. Brother in law, first of all.

Okay. Anyway, let's start here.

Okay.

What do we have? We have a partnership. We have a US resident in Oregon and we have a non US citizen or resident in Egypt.

Okay.

Now those facts are important. The fact the products come out of North Carolina doesn't really matter. Who cares? You're in Oregon. You're going to get taxed, Brendan. Based on Oregon income tax.

Now, as a. Now let's just stop there for one quick moment. Some of you may go, well, I'm drop shipping out of North Carolina. Don't I get sucked into North Carolina tax or need an LLC in North Carolina? Not if you do not have employees there or have a building there or lease space there and it's literally a subcontractor. That's drop shipping your product. Then we're not going to worry about the North North Carolina organization. But you're answering the phone. You're taking orders and running the show out of Oregon. As an aside, some of you in California are like, well, I'm doing that too. I'm not going to get taxed in California. Yes, you are, because you answer the phone in California. The end. Seriously? That's what the state said. So Oregon's going to grab you too. I actually clerked for the Oregon State Tax Court back in the day. I worked for the dark side and then came over to the light sign and said, you know, I'm for the Empire. No, I'm not for the Empire. I'm for the who fought against the Empire.

The Rebel. The Rebel Alliance.

The Rebel Alliance I'm part of.

We're terrible at Star Wars.

Yeah. Okay, so Matt, keep going. So we're in Oregon. We're not worried about North Carolina. Okay.

All right. First because you got a, you've got a partnership here. We're going to want an LLC for the partnership business. So the exporting business. Our recommendation would be an llc. Now, can a non US Resident own an llc? Yes. Can a non US Resident own a. Or citizen own an S corp? No. Okay, so we're going to do an LLC as the partnership. Brendan, your brother in law is just going to own it personally. A non US Citizen could own An LLC and your brother in law is going to do that. He's going to have to file a tax return in the US for income being generated here on your side we depending on how much revenue is being made here. But if you're making more than you know 100 grand total in this thing net between the two of you and I don't know if you're 5050 or what the deal is but if you're getting more than 50 grand on your side of the deal after all the expenses we're going to want you to own your share of the partnership LLC in an S corp. So you're a US citizen we want you to have and we probably do an Oregon S corp. Probably do an Oregon Oregon LLC for the partnership again you'll own an S corp. Your S corp is going to own your share of the partnership llc. The partnership LLC is the business that does the interfaces with customers that pays for products that you know pays all the expenses and then it splits the profit down to your side which is going to be your S corp and over to brother in law which will be brother in law personally because brother in law can't have an S corp under tax laws because he's not a US citizen or residential.

Now this top this whole issue and Brendan in Oregon love the question. You've got all sorts of issues embedded in this. We could talk about it for the whole show. I totally concur on Matt's recommendation. Here's a couple other thoughts. When you set up an LLC with a foreign owner you have responsibilities as a manager of that LLC because if we got anti laundering rules now we've got Patriot Act 1 and 2 since 9 11. There's someone down in trust me there was someone in the basement of the Pentagon tracking your payments to your brother in law in Egypt. You just can't send money all over the world and not someone go what's going on here? So you're going to want to make sure you follow the rules on proper reporting for having a non US partner. I've got an article on this. If you go to my blog and just type foreigner you can see a nice little article that opens up the doors to this your brother's going to need a special tax ID number to be doing business in the US you're going to have to report some certain things. So just know that there's some baggage there. He's just not going to walk away in Egypt and not you'll be the one in trouble if he doesn't get his crap together. So again you're relying on your brother in law. We won't go there. Okay, now the next topic is I

said one comment on that. This is for everyone doing a partnership with brother in law, best friend, whatever, you know, just other business or real estate person you run into the LL the reason we like the partnership llc, there's a number of reasons. One is it's a great entity. You've got asset protection, liability protection. But that LLC is going to have an operating agreement that's like your partnership document has terms built in there. What happens if we may have a dispute? Happens if one of us dies or becomes disabled. You know, how do we share profits and put in more money if it's needed? Like this is your partnership agreement. You need to have something like that. And that's why consider that partnership llc. That's the only thing I just want to add on that that I think is helpful for anyone partnering and is a helpful tip on why we like the llc. Make sure you get the operating agreement and you have the provisions in there that represents how you guys have agreed to do business.

Yeah. So good. Now a couple thoughts are also if you are submitting questions to our show, you will be typing those up@mainstreetbusiness.com and when we reply we will put a couple comments in your statement or your post to point in the right direction. So I cut and paste the article on foreigners in your reply in your comment. And also keep in mind chapter 22 of the Tax and Legal Playbook goes into partnerships. And I love what Matt talked about, having your share of the ownership in an S corporation. That's what Flipper's going to be looking at doing in his nursery down in Texas too. So lots of good things going on. By the way, if some of you are already enjoying this and you're like, oh my gosh, this is so much to learn, I don't even know what to ask. Please know that I've got four more four workshops this fall around the country. Chicago coming up in a couple weeks, Texas doing a one day in Dallas, then Orange county and also in Honolulu and then doing a virtual broadcast the first week of December as we talk about this IRA stuff. Also we're going to be in Phoenix and next month in doing our semi annual summit. This one will be live in Phoenix and then we'll be doing and you can already go get sorry, bad grammar. You can also go purchase the previously recorded Summit, I still think on the website. Correct Matt?

Yep, absolutely. That's sdirasummit.com to register for those or check those out. All right, you ready for me? Hit the next question or you got one queued up there?

Yeah, this is. No, you go ahead because I'm in order to post my link on the podcast.

All right, this one, this one kind of goes in a similar vein on this s Corp and LLCs.

We'll.

We'll get that one and then we got another one coming up on Trust, Living Trust. So Joseph asked, He says, hi, my name is Joseph. We have a master S corp that owns a few llc, different businesses. How should the accounting be set up? Bank accounts just under the llc? Bank accounts under just the S Corp or both. When taking the salary draw, does it go from the LLC to the S Corp to your personal bank account? Thank you. Okay, Joseph. Yes is the answer to your questions. You have the structure, right? So if you have an S corp and maybe you have some income that goes directly into the S corp, you need a bank account for the S corp. Let's say you've got some LLCs. Like I have my own S corp. It has its own bank account. Some income just goes directly in there. It also owns some of my other businesses, like the law firm with Mark. Mark and I don't own the law firm. Our S corps do. Okay, the law firm has its own bank account. It doesn't pay me, it pays my S corp. So you're gonna have a bank account at your llc. That LLC is going to send money down to your S corp, which has a bank account, and then you're going to send money from your S corp down to yourself personally. Okay, so as you outlined it here, it will go from LLC to S corp down to you personally. So yes, you're going to have multiple bank accounts. I like to just keep them at the same bank in this structure because it's simple. You just kind of transfer money around, keep it nice and easy. It does. It is an extra step there in the middle with the S Corp, but I mean it's, it'll take you moments to just transfer that. If you got all the same bank. So you got the bank accounts, right? And this is something for everybody. Just for asset protection purposes. Really important. You need separate bank accounts for your separate business entities. Do not be lazy and keep all your income or and pay all your expenses out of one bank account because you're like, Well, I got five LLCs for five rentals and I don't want to have to deal with all those bank accounts. But you want separate Liability protection. If the lawsuit happens on one of those, you better be treating those entities like they're separate if you want the court to treat them like they're separate. Because a plaintiff can come in and say, eh, he was paying all the bills and receiving all the income in this LLC over here that owns another property. Why are we respecting that as a separate llc? And we can't go after that as a plaintiff. So keep those things separate. Helps keep your asset protection clean.

I love it. I'm multitasking here for those watching on YouTube, trying to make sure I can reply to all these comments on our Main Street Business blog, Main Street Business podcast, question and answer page.

So also, how's your fantasy football team done?

Crappy.

All right, let me get the Kristen's question here.

Oh, I got one, I got one.

Okay.

All right.

Oh, you're back.

Okay, well, I'm, you know, I'm still listening. I just, I was just multitasking, letting you do your thing. Okay, this is, I want to go down the crypto path for just a moment. We got a lot of clients following us on crypto and that invest in cryptocurrency. And so the big question I've been responding to lately is the Charitable Remainder unitrust and how can I save taxes with cryptocurrency? Now I've got a video on YouTube that's, gosh, almost had a million views and it's on the Charitable Remainder Annuity Trust. So we're going to shoot a new one, kind of update it with cryptocurrency and Unit Trust and how unique they are. But I had a call this morning again with a client saying, now, why am I doing this? Why am I considering this? Please just give me the basics one more time because people want to check those boxes, you know, make sure I'm not being crazy. And I applaud any of you that, that are doing that type of research. Retain a professional on a base, a regular basis, and just say, look at my structure, look at my tax return. What am I missing? Sometimes they don't even know what questions to ask or not to ask. So anyway, here's how this charitable trust works. Many, many people have a low basis crypto wallet or crypto portfolio, meaning you bought a bunch of cryptocurrency over the last two years, 10 years, that might have basis of five grand or 50 grand or 500 grand, but it's worth now several million dollars. Well, if you go to sell that in your own name, you go, well, I'm just Going to transfer it to another currency. I'm just trading, I'm not taxed. We got articles and videos on that to explain. The IRS is all over this. You trade it, you turn it into your fiat currency or whatever, you, you move it to another exchange, you're getting taxed. So you got to be careful. So one of the strategies we've been recommending, and we're swamped helping clients around the country with this, is creating a charitable trust of which you donate your cryptocurrency into a wallet owned by your charitable trust. And there's no tax. The cryptocurrency goes into the crt, it can be sold, continue to be traded, whatever you want. And that CRT is now asset protected, locked down. And you get a tax deduction for donating your cryptocurrency to it. Now in a unit trust, not an annuity trust. So that's unit trust as you as an umbrella based on your age, the IRS will go, you know what, since you put this money in, you get a tax deduction. You're 40 years old, 45, 50 years old, maybe you're 30, 35, based on your age. We're going to let you take out a payment every quarter for the rest of your life based on an annual percentage rate of maybe 8 to 10 to 12%. I've seen it all over the board. Depends on your age. Then every year for the rest of your life, you get a stream of income asset protected based on the value of your cryptocurrency right now without paying any tax on the sale. Now as you get those payments, in years to come, you'll pay tax on it, but you're now guaranteed a stream of income. I had a client, we did a charitable remainder unit trust for this past month. They're going to drop in $2 million after this next bull run before the, hopefully before the end of the year. That's the plan. It's going to happen. We're going to see ups and downs in the crypto market. Not making any guarantees here, but most experts expect there will be another run. And so the time is to contribute that crypto into the trust when that next run hits. And in their example was about $2 million was the plan. They'll have a stream of income, he and his wife, for the rest of their lives, around 250 grand to 300 grand a year in perpetuity, period. Done. And it can even grow. So today I had that consult again where someone just wanted to know the basics. I wanted to Run through it real quick. Encourage you to get over to YouTube and just type charitable trust Kohler and you'll see some of my videos on that. You can set up a consult for an hour just to see if it's a good fit for you. We charge around five grand to take it from start to finish, which is extremely affordable as you go out and talk to these big city law firms. But check in, check it out. I think you crypto investors need a way out without paying hundreds of thousands of dollars tax. You, you talk about the wealthy and the 1 percenters. Start selling some crypto. Join the club. Be careful. So

a little crypto update there. Okay, let's hit Kristen's question next. Kristen asks, she says, I would like to know if you have set up the trifecta and everything is under the living trust. So for many of you don't know that. If you don't know the trifecta that consists of. Typically, your living trust is the base foundation and your living trust is for your estate. This is a revocable living trust you're doing for estate planning. That trust will own your LLCs or your assets. It's going to own your home, which is the right side of the trifecta. And then on the left side of the trifecta would be your businesses, your operating businesses, your small business, your side hustle, your day job. Okay? And so We've got those three pieces, your foundational estate plan, your assets and LLCs, your operations and small business S corps, whatever it may be in those three little sections there, the trifecta. Now, the base of that is the living trust, as Kristin talks about. And she says, what happens if later on I have to file personal bankruptcy? Well, the trust, he asked what will be impacted? Would your personal lender be able to collect after you? Yes. Okay. The trust is not an asset protection tool that's going to stop someone in bankruptcy. So a creditor is going to blow right through that trust, frankly, they'll be able to get up in your LLC and your S corps in bankruptcy. There's someone called a trustee that's appointed by the court that says, hey, you're empowered by the court to go chase down any assets this person has. Because if you file bankruptcy, you have to put all your assets on the table. Those assets include your businesses, the interest you own in those businesses. So those assets are going to be at risk in a bankruptcy. It's not like you got to go into bankruptcy and say, hey, you know, I don't own anything. I'm Filing personal bankruptcy. But nothing's in my name. I put it all into my trust or my businesses. Now they're going to pull that those assets back. So I wish I had a better answer, Kristen. That would be a great strategy. Of course. Right. Let's just throw all of our assets in our trust or business and any of our debts that we have in our personal name, we'll just file bankruptcy. But. And if there was that option, we would definitely be teaching it. But there's not.

Okay. And thanks everybody again for on YouTube, please know you got my 98 attention. I'm trying to make comments here on again our podcast question page. And I had a new laptop. I got a new laptop and getting authenticated to post all these questions. I'm gonna post these answers. It's driving me crazy. So we're trying to make that happen. Oh, there's my code. Okay, now I have another question here that I love, I would love to answer. So this was a client that said, I have an S corporation and his name's Mark as well. I was like, how do I say who this question's from? His name is Mark as well. He's a good longtime client, but great name. His question was, I have an S corporation but it hasn't made any income this year. Maybe a little bit, but with expenses it's basically zero. Do I still need to process payroll? What am I supposed to do now? This is going to happen in the life of your S corporation. Any of you out there, if you're going to set up an S corporation to save on self employment tax, there's going to be quarters where you make no money or a certain year. And does that mean you just get to go on autopilot and don't have to report anything? Regrettably, no. Because the IRS doesn't know what's going on. They're your boyfriend or girlfriend and you just ghosted them, they're going to freak out. They're going to be like, what the freak's going on? And they're going to come key your car door. So I've heard. I mean, but that's another country song there. But they're not going to be happy. The IRS wants to know what's going on. So if you have an S corporation and you don't have income, you have to at least file zero payroll reports. You can oftentimes do them yourself once you get them down. They're simple, they're easy. I want you to pay minimal fees to do this. And at the end of the year, you may not even issue yourself a W2. You'll just do 0,941s. But then in the IRS system, there's not a big question mark like, who's this, you know, nut job out there that's not filing payroll? So at the end of the year, you'll still file a zero tax return, maybe report a little income, some expenses. But if you're not taking money out of the business, it doesn't mean you still don't have to let the IRS know what's going on. Keep the S Corp around. You can use it for many years to come. Just like Matt commented earlier, it could be a partner in other operations. It could do its own thing with websites and affiliate fees, marketing, consulting. I've had the same S Corp now for 22 years. It's been wonderful. And I want all of you out there to have an S corporation to use for your ordinary income. So don't give up on those reports.

All right?

Hmm.

Let's hit. Ooh, I did have a question on. On 1031 exchanges. Sorry, that came in by email on this. I forgot I had a question. Someone selling. Can I sell a property in the US and do a 1031 exchange to acquire a property in the UK?

Ooh, great question.

Yeah.

Now, spatting of the UK I've got a bucket list item in UK that Matt Sorenson has been allowed to check off his list. Do you want to tell them what you did? Which is really cool.

Yeah, I mean, Premier League, soccer, football, whatever you guys want to call it. Game. So I went to one in London. I saw Arsenal play, which was pretty awesome. I tell you, like any US Sporting event, the energy and excitement and passion of the fans was nothing compared to the opposing team. If you are wearing opposing colors, you're on from the opposing team, you are required to sit in a specific section that is lined in the aisles by security guards all around. Fans mix and mingle in to the. To the home team. It's insane. It's crazy. They just the soccer hooligans or whatever you want. Football, whatever you want to call them, you know.

Well, that's on my list. I'd love to go to England someday and sit in the evening, rained out, not rainy game in my dead poets coat, Dead Poet society coat and just watch a soccer game and then eat fish and chips after. I think I'd be pretty darn cool.

That's just pretty great.

Okay, so now can I 1031 my rental property over to the UK so I can go check on it, Matt?

No, I'm sorry, you can't. Foreign real estate is not considered like, kind property, interestingly enough. So, of course, you know, the U.S. wants you to buy more property in the U.S. so why are they going to give you a tax deduction on the way out to go buy property for them? But good question. So stay, of course, in the US and you'll be able to get that. That'll be considered, like, kind.

Now, I will throw out a little tip here. In fact, I want to throw out a couple cautionary points. The 1031 exchange is actually still alive and well in the new house bill.

Side note, that was one that did not get on the chopping block. It got left out.

Yeah. And surprisingly so. Joe Biden actually campaigned on limiting the 1031s for more wealthy people. But a lot of times I think it didn't end up on the list because sometimes you're not wealthy, but you've got to sell the family farm. You've got this little rental property you invested in 20 years ago, and now you're looking down the barrel, their big tax bill and trying to limit the 1031. I think unnecessarily limits the average person, too. And they just didn't have a good way to tackle it. So anyway, but if you are still going to consider a 1031 before you pull the trigger, look at the opportunity zone strategy where you don't have to roll the entire amount of the sale into another property. You might take just the capital gain portion and invest in an opportunity zone type property. And I was gonna say a couple other, but I'll leave it there. So opportunity zones close second on the 1031 strategy. So I think if you're considering one or the other, you need to look at both and just compare. That way you know what you're dealing with. All right, next question. Thank you, Matt, for your patience. As I was trying to reply to everybody here and those out there that are like, is Mark engaged here? I'm engaged. I'm trying to help all of you here. I love it.

Okay.

Diana says hello. Mark, I'm a big fan of your podcast. I just want to point out. She said your podcast, implying. Yeah, my podcast.

And she only dropped your name. I get it, Diana. I get it. I can see. I hear what you're saying.

Hey, I don't. Matt's so smart.

I feel like Andy Richter on the Conan o' Brien show, you know, just like, show up.

Yeah. I just want to point out Paul

Schaefer on David Letterman.

I'm Batman, Matt's Robin. That's.

Yeah.

No, I'm just joking. I. Matt's so smart. I got to look for a little kudo here when I can get it because he's just so dang smart. Okay, she says, thank you for doing what you do. I have a question regarding home office deduction. If I have a business structured as an S corp, do I take a home office deduction on my business tax return? On. On my personal. Technically, the way you said it, Diana? Neither. Okay, everybody. Is she going to get a deduction? You bet. Let me explain what. Let's look at what she said. Can I take a home office deduction on my business tax return? No. The home office deduction does not exist. Corporations don't have a home, so we're going to take a lease expense. So we're going to come back to that. Now, on the personal side, can she take a home office deduction? No, because she doesn't have a business. Her S corp has a business. So I'm mincing words here, but it's important. So, Diana, you're never going to think of the home office deduction again because your corporation doesn't have a home office, nor do you run a business. Your S corp runs a business. So what we want to do is called the home office reimbursement expense, which is going to be written off as a lease expense in your S Corp. We may run the numbers to see what it would look like if it was an actual home office and kind of come up with a figure that is not fair market value. Rent. Because I don't want to create rental income for you. I just want to create a reimbursement for you. So I've got some articles on the home office deduction on my blog. Go Google them. I break down in a section there what to do if you're an S corp owner, but you're going to basically calculate a lease expense, book it in your S corp and it's tax free to you as a reimbursement. I have some clients that say, oh, my home Office reimbursement is 300amonth. And they just literally write themselves a check for $300 every month. That is a tax deduction in the S corp and tax free income to you. Pretty cool. I have other clients that are like, I'm just going to do it at the end of the year. $3,600 write off 300 times 12. And now I'm just saying 300 as an example everybody's going to be a little different. But so, Diana, great question. Just I minced words a little bit there, but I want you to be. Make sure your accountant is writing it off as a lease expense in your

S Corp. All right? Awesome. Good question. Marva asks, what happens if tenants refuse to apply for rental assistance. Do you think in the future landlords will be allowed to apply? Now, Marva, landlords are allowed to apply, actually, but they must get the approval and consent of the tenant in order to do so. Now, what I've seen property managers do on this, and for everyone, the nose, right. We've had this foreclosure eviction moratorium. Now it's passed as ruled unconstitutional on the foreclosures. And for many of you landlords out there, particularly small landlords that have happened to pay mortgages and not been getting rent during the pandemic, we know it's been frustrating. The rental assistance has been very generous. I've had to use it for some of my tenants in my rentals before. And what I've seen from property managers that kind of manage properties is I have some property managers that manage them on my own on this is they're really trying to give tools to the tenants who are not paying to make it easy for them. Give them an easy consent form that just says, sign this. We're going to go get your rent so we don't have to sue you. We're going to go get your rent paid from, you know, the rental assistance fund. And so if you put it that way and try to really engage your tenant. Now, your tenant may be, you know, not taking your calls or responding to anything. But the least, the, the way that the, when they renewed the funds, they did allow landlords to apply on behalf of their tenant if the, if the tenant consented. So you might try and just get a consent from them and say, hey, just give me your consent so I can go apply for this on your behalf. I'll do it. Don't worry. I'll fill out the paperwork. They're going to pay me. But I have to have your, your consent on this because if you don't, I'm going to be chasing you down for the rent and you're going to have to pay me.

And I think landlords that take a more active role and just say, hey, you're busy. I get it, Lieutenant. Don't go in and be a jerk. Don't go get in a fight. Just say, hey, I'm going to go apply for this. And your rent's going to be covered for you. Just sign, let them know.

Let them know you found this great program that's. They probably don't even know. They don't understand.

And frankly, they're avoiding you. They're scared to death you're going to knock on the door. Yeah, but.

Exactly. Great.

Be a team player. Be a team player. Show up and try to do the. Help them is helping you help me help you. Help me help you. Do you have that?

Jerry Maguire.

Thank you. Just want to make sure.

That was an easy one.

I mean, that was that too easy.

You can't pick that one up. I mean.

Yeah, you're living.

I knew that one. Groundhog Day. I. Yeah, I know that.

Yeah, Matt, you had me at hello. I'll just say that. Okay, now even Cory's popping off over here. Our producer. Love it. Okay, now I want to go back to one more crypto question. This may be my last question. I'll field. And then Matt, you get. You can choose your favorite. This was a question on crypto that kind of relates to what I said a moment ago regarding charitable remainder trusts, but it is a little different and so got started. Where to go? Where was it? Did it get lost in the feed here? Okay, I'm going to paraphrase now. I can't. I thought it was right here. Okay, the question was. Mark, I'm. Is there any way to save on taxes for actively trading crypto? Because other than just pay the tax bill and now this is really. Okay, here it is. Sorry, I'm going to rephrase it in his exact words because it's kind of a tricky way. The way he said it. Is it possible for you to save or avoid high tax bills if you are actively trading cryptocurrency or once you sell it, are you screwed? Now let's unpack that. If you've already bought crypto and sold it in your own name, game over. There's nothing I can do. So just. You're going to have a tax bill. Now, we might be able to minimize the taxes from other strategies, but not in the crypto world per se. Maybe there's some other write offs or tax credits we can go look for. But listen to the first part of Richard's question too. Is it possible for you to save or avoid high tax bills if you are actively trading crypto? Now, what does that mean, actively trading? Okay, I'm going to say if you could hold onto the crypto and put it in a crt, yes, I can save you on big Tax bills. Now if you're trying to resell it and resell it and live off the income, it's going to be hard to save on taxes there. And I had a consult with a client the other day too that said, well, I want active trader status. Oh you do? Well then I get to take tax write offs because if I'm active trader status, I read on a website I get write offs because I'm an active trader. Oh, did they mention that you lose short term capital gain and long term capital gain treatment and now it's subject to ordinary income tax and self employment tax? No, they didn't say that. They just said I don't get write offs unless I'm an active trader. Well folks, ying and yang, double edged sword, whatever you want to say. If you want active trader status it's not, you know, the pot of gold at the end of the rainbow. There's some crap that comes with it. And that means you're going to need to deal with self employment tax because now you're in the business of trading. So I tell many of you, think twice before you say you need active trader status. Maybe you don't get a consult. Don't search on the web for the answer you want. Pay for a real professional. Helps everyone. Hurts no one.

It's good for the economy.

Good for the economy. Sorry I had to get that. Okay now that's all I said there Matt, last question. You got a good a goodie a doozy. Yeah, finished with it. I got woozy.

I got, I got one here.

Okay,

I see Eric in here says still waiting for Matt to wear his cowboy hat. I know, I know, I got it. By the way, it looks pretty pro. I have to say Mark did a great job.

Oh I heard yellow.

First one we got, I got a new one, we kind of swapped it out. Mark got a new one that fits. Turns out I have a big head.

So yeah, little reveal there. But I got him a much better hat form fitted in Jackson Hole, Wyoming. And the reason why I had to go to the next level and get him a hat is because he needed to look like John Dutton. And man folks you got to see the pics. He's looking pretty hot. And, and I did find out Yellowstone's next season comes out first week of November.

That'll be exciting.

Little little reveal there.

The holidays get a little, little, little Yellowstone in. Okay. Jen asked. Jen Hunt. I've reached the point of full capital gain exclusion on my home and want to sell it to a friend at cash market Value. I will rent it back from him and eventually buy the house back. Is this legal? Essentially. Would this reset my cost basis and give me the equity? No. Okay.

Pray tell, Matt, why it would not?

You want to say yes?

Yeah. I'm so far in. I do this with parents all the time. I have kids. Buy the house for mom and dad, take the capital gain exclusion and then rent it back to mom and dad so they can go get Medicaid. Tell me what you don't like about this.

Yeah, but you're not going to be able to stack another capital gain exemption on the same house. There's gonna. This is gonna be like a collapsed transaction of. All right, well, you built up capital gains, you took advantage of the exclusion up to 500 grand. Great. You sell it. Okay. With the rent back, there's no reason you can't rent the property back after selling it. But now you wanna then buy it back. Well, hold it.

You missed a keyword in there. Eventually buy the house back.

Okay.

Okay, now, so I'm on Matt's side. If you try to turn around and buy this back two days later, you got a problem. Absolutely. The IRS calls this a step transaction doctrine. They're going to collapse the whole thing. You're screwed. But look at eventually. So what I would say, Jen, if you rent this for a couple years, maybe a couple tax years and then buy it back. Sure. Matt, you okay with that? I don't know.

I don't like it. I just. I just think on the same home where you don't leave possession of it and you have a pre arranged agreement that you're going to be able to buy it back.

Whoa, where did you see prearranged in here? You are making all sorts of susiness

before she's even done it.

What kind of tax lawyer are you?

Okay. Kind that doesn't want you to lose in an audit.

Look at this. I would say. Hold it. Okay, we're going to say you eventually buy it back. So we know you're going to have at least a year or two as a renter. This is the sale leaseback strategy. That's quite common out there. You sell your home to someone and lease it back from them. That's cool. Does that mean you can never buy it back? Hell no. I can buy it back now.

Okay, sure.

You buy it back at fair market value. You sold at fair market value. You're a renter. You paid rent. They claimed as a rental property. As long as you're following all the boxes and checking them Off. I, I mean I would do this the day after, but a year later, I mean, folks, I'm looking for solutions here. I am what you call the good cop. Okay, Matt, go ahead and make your comment.

How much you call the guy that's going to keep the tax court. You know,

I do not agree on this one. Okay, you know, this is a good debate. Okay, keep going.

Yeah, yeah. I mean, hey, this thing, I was actually looking to see if there's a rule against this, but just the general tax concepts of it. Whenever you're trying to engineer a transaction where you get a, where you come right back to where you started and it's all pre arranged, it's going to get collapsed. Like if you have contracts in place, the friend that's going to buy it, you're then going to lease it, then you have the right to buy it back. I guarantee you that's going to be collapse. You will not get the sold home exemption on the second round.

I don't know, once I bought this little boat dock gas station down on the Ozarks and I didn't have a problem. I mean, it really worked out well.

Yeah, that's because, that's because you discovered millions of dollars hidden in cash in there. Oh, that's how that one worked out.

Now I will throw this out. You know, No, I'm not going to concede on any point of Matt Sorensen's on this one. You know, and that's okay. We can have a friendly debate. I think you need to follow through, follow the proper paperwork. Let a couple years go by, marinate and I think a prearranged document that allows you to buy. But what's a sale? Leaseback with an option to purchase. There you go.

I got a saying like if you agree to sell with the right to buy it right back, lock it in. I just, I just don't know you're gonna get it.

Well, I would do a lease back with an option to purchase because you may be a tenant and say, I don't like being a tenant, I'm gonna buy it back from you. I would let it.

And that's fine, you can do that. But again, am I gonna get another dip on the same house on the sale of home exemption? I get resetting my basis and everything.

Yeah, I buy it back and then I live in it two more years, get an appreciation the second round.

Okay, well, you know, we can't settle every score here and yeah, Mark Kohler and I will disagree.

Yeah. And you know what?

And I'm looking for an answer that'll support my position here on I'm, you know.

Yeah. Google until he finds the answer he likes, which we always recommend, you know,

it will come from a respectable source.

Why don't you go to markjkohler.com and

that guy will say anything, huh? Going there.

You know, I'm going to put this by my parents home. I'm going to put that in my blog, see if anything comes up here. Oh, oh. Here's an article@markjkohler.com from June 18, 2019, still very timely, titled when to buy your parents home back and rent it back to them. When to buy your parents home and rent it back to them. Sorry.

What?

Sounds like a pretty good article. Why don't you google that one? Baby, that's different.

That's a different strategy.

What? Mom and dad could buy it back anyway. This is good.

Buy it for mom and dad or buy it for mom and dad and then have mom and dad buy it right back from you.

No, no, no, no. I'm going back to the question at hand. We're just flipping it around. I'm going to let mom and dad sell their home to me, take their sale of home exemption, cash it in, stepped up basis, no tax. I now own the home. I'm going to rent it back to them with a lease option, maybe to purchase it back for me if they want to someday. But now they're a renter, the equity is out of their estate and with the right time period and they wait with Medicaid applications, they could probably go get Medicaid and the home is no longer an asset of theirs after the respectable time period then if mom and dad wake up totally healthy in five years, three years and they want to buy it back from me, feel free. Now they get a new basis when they buy it and they can play the game again right there in writing. I'll send you the link, Matt.

I mean I just, I'm just a little more leery on that but. Okay.

That's okay. This is good stuff. Well, Matt, take us out. Give everybody thanks everybody.

Thanks everybody for tuning in. Of course we have 400, 500. I don't know, we have a lot of episodes here on the Main Street Business podcast from talking about saving on taxes, setting the right legal structure, protecting your wealth, asset protection, saving for retirement, all those great topics. Go get over to mainstreetbusiness.com sign up for our newsletter, you'll get more information on this upcoming tax bill. Mark and I are doing webinars on it. We got lots of articles coming out on it, and any changes in the law that happen, we're going to come right back with strategies after they happen. So every time this happens, and it's happened many times over Mark and I's career, there's some good news and there's some bad news and then there's some new strategies. And being the captain of your own ship and learning what works in your situation is what's most powerful. That's we're hoping to give you the information here on this podcast so that you can go out and execute on it. Thanks for being here, Sam.