#139 - Q4 Tax Tips with Lee Ferguson of CLA

Hey everyone. Welcome to another episode of the Independent Dealer podcast. Today we have Lee Ferguson, my CPA from Clifton Larson Allen out in St. Louis. Right, Lee?

Yes, St. Louis, St. Louis, Missouri.

He's going to give us a bunch of great takeaways. Number one is make sure that you got your inventory depreciated properly before the end of the year. There's some bonus depreciation we can take and I think that's probably the biggest thing you can do as a dealer. Am I right there, Lee?

Yeah, I mean, of course look at your notes, see if any of that you may be able to write off at year end, those type of things. I mean, just the big dollar items there on your balance sheet. Let's see what we could do to get them down as much as possible. That's my general advice.

Yeah, this is a great episode. Take notes. And my disclaimer on this, Luke, is we're not. Ask your accountant. I'm going to throw some stuff out near the end of the episode that gets the gray area. Very scary. Don't take our word for it. Sit down with your accountant, call Lee over at Clifton Larson Allen and get signed up with them. But other than that, awesome, awesome episode. A lot of great information coming your way. Here we go.

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Thank you so much for tuning in.

Let's do this. One of my, some of my big tips for Q4 would be be definitely related to inventory. I know a lot of dealers are struggling to get the inventory they need on hand and that could mean if you don't have significant, the similar amount of inventory that you had last year, you could have quite, you could have a bit of a pickup as far as if you use the lower of cost or market method to write down your inventory. Not only that, but vehicle prices are also up. So there's a possibility your write down this year is not going to be as strong as it was last year. So that's something to consider.

Let me ask you a question on that while we're on it. Sorry to jump in so quickly, but that really kind of makes me think because I know right now I've got five to six to seven cars that I'm just in deep. Like I know we bought them deep, we paid retail, we had some surprises. Now if book values kind of correct come December and I look at these things and I'm still sitting on them and I realize I'm completely upside down, that might be a good time for me to write down some of those heavy, heavy units.

Right, right, absolutely. If that's the kind of situation you're in, if you believe you are underwater on those units. Yeah, I mean, that would be okay. But I'm just saying in general, there's a general trend of the inventory prices creeping up, and the write down may not be as strong as it had been in prior years, is what I'm saying.

Well, Lee, like something we took advantage of last year was kind of depreciating all the inventory. Zero. Lee, can you kind of walk us through the rule that allowed us to do that?

Yeah, there was a. So there was. The IRS came out with this new tax law that Trump passed a few years back that basically says, hey, we've got the. If your gross receipts are under 25 million, under 26 million for 2020, you basically, you can account for your inventory the same way you do on your taxes, the same way you do for your books, for your financial statements. So if you reduce, if you're reducing your inventory on your financial statements to zero, you are basically able to completely expense your inventory. Now, the problem is the IRS has come out with some regulations in the past month or so, and they basically said if you're tracking inventory of any type, that's part of your books and records. Now, these are temporary regulations. So what that means is they're not final regulations. And you don't, you don't necessarily have to rely on them. But the IRS is basically saying, we're taking the position that if you even track inventory, you now have to capitalize it. So in your situation, Luke, we did expense.

How to get hammered here.

We did expense it. We are probably gonna have to do like a change of accounting method to pick up the spread over the next four years. That's something I'd like to talk to you. I knew this was gonna come up. But, but, you know, we were, we were a little. We were aggressive with it, and we knew we would be a little aggressive with this, but they did come out. And I think, you know, it's. We don't necessarily have to go back, but it's something I would strongly want to discuss with you as far as changing. Yeah.

So if we go back just the regular. The regular way to write down your inventory, you know, and a lot of people write down their inventory every month, which, which is done to get back. Right. With your inventory. Right, right. You know, if you get 90 day inventory, Jeff, you should have really written it down a long time ago, but mentally.

Right.

But at the End of the year, what we would typically do is book every single car. And you and Lee will tell you you have to use the same book, the same, you know, average nada or whatever you're going to use. But it's got to be tracked. Right. And every piece of inventory, you write down to that number and some of them go up. You know, it's not, you know, it's not. Everything's written down. Some, some of them appreciate.

Well, now that you'd never adjust them upward, though. You only adjust them down. So never write them back up. Always. Only if there's a write down.

Okay.

It's the lower, it's the, it's the, it's. The method is called the lower of cost or market. So you never write it back up. And that's, you know, that's why I.

Always like, did mentally.

I hope so. But, you know, you never want to write them back up. So. Yeah, and maybe have your CPA look at the calculation to make sure that ties out to the financial records that you have. Just to make sure everything's, everything's good.

You know, what you can do depending on the amount of inventory you, you keep on hand. You know, a lot of people's inventory in our business is pretty high at the end of the year because you're getting ready for your big time. This could be a hundred thousand dollar write off, right, Lee?

Oh, absolutely, absolutely. I mean, I've, I've written, had some legitimate write downs. Close to 20%.

Yeah.

I mean, that's expensing 20% of your inventory right there. So I mean, that's obviously a big deal.

So Luke, when you do this though, in your inventory, you have to physically write them down in your dms, right, because you're writing down the inventory. But then if you still hold your same retail price that you had before the write down, all you're doing is then adding that money back on the books later.

Sure, yes. But. So Jeff, you know, the reason a lot of people have inventory that's aged.

Is because, because they're in it too deep and they can't sell.

They're in too deep. They don't adjust well.

They're just not willing to take the loss at the time of sale. Then you know you're going to adjust it down and. Right.

And so if you're adjusting that down, in my opinion, if you don't, if you feel like that is a true market of that car, if you're just in it down, adjust your price down as well, because you'll move that unit a lot faster if you do it, if you do it that way and you'll get the tax, you know, advantage of doing that.

The rub would be those dealers that pay their salesmen and or managers on gross profits. Right. Because if you're going to write that thing down. Yeah. Now you're creating a larger gross profit for the salesman to be commissioned on. But it also incentivize them to then move that car which they've completely ignored. And you don't know why they ignored it. They ignored it because there was no money in it for them.

Those same people you're talking about, Jeff, are spiffing their salespeople to sell that whole unit. So that's not, I wouldn't worry about that.

Yeah. So what else Lee?

What else should we do with any year?

Well, I mean the, so I mean this year is, it's, it's obviously been a very crazy year. But I mean so just getting back to the inventory for a second though, I mean if, you know, it could be possible. I don't know how many, you know, used dealers are actually considering used lifo, but that is another possibility and something you, somebody should talk with their CPA about. Especially if those car prices are higher this year, that could be more beneficial.

And what is that, Lee?

I'm sorry, I missed that used car lifo.

Please explain.

Please explain. Okay, so LIFO is basically it uses an index to compared to a prior year, your prior year inventory and it basically captures the inflation based on your current year inventory based on your prior year inventory. So it's capturing that inflation amount in those inventory vehicles. Okay so the write down, basically it's similar to a write down concept except there's an actual LIFO calculation your accountant would have to do and it would give you like a LIFO reserve on the books. So you would get an expense and then put a reserve on the books. Okay.

Okay.

Now you can't be on both the lower of cost or market and lifo. The benefit of, the benefit of LIFO over it, over the lower cost or market is that that, that, that reserve that's on the books continues to, usually continues to increase and increase because the inflation on the vehicles has continued to increase and increase. Now if there was a decrease in the, in the inflation on used inv, it could go down. But the major benefit of it is it goes up and up and up instead of having to switch it over year after year as you do with the used inventory write downs. So now the benefit, the initial benefit isn't going to be as great as the write downs. It's going to be more of an incremental savings to somebody. But new car dealers are very familiar with this type of concept. You know, they do it on new, all their, almost all, a lot of new car dealers have it on their new inventory.

Okay, so we're, we fixed our inventory problem in Q4 on the books. What do we do next?

Q4. Okay, so we do this CARES Act. It did come into, it did allow for bonus depreciation for some building improvements. I don't know if any one of you, if you guys are aware of this, of this retail glitch where certain interior improvements were able to be, were at least initially wanted to be eligible for 100% bonus depreciation. Well, when they wrote the tax law they kind of messed up the language and instead of being eligible for bonus, it became 39 year commercial property that's depreciated over 39 years. So but this, with this CARES act, this, it fixed that glitch. So now any interior improvements to the non structural interior improvements to a building could be eligible for a 15 year depreciable life. Which means you basically could take 100% bonus depreciation on any interior improvements that are not part of the building structure.

Well, that's, that's a good thing to do especially if you're trying to, you know, get your place looking a little better and you've got a little extra capital right now. We should probably try to get that done I guess before the end of the year.

Well, I mean you could do that and you could Also have your CPA look back at 2018 to see if there was something that you, because they, they, they made this change retroactive to 2018. So that's something you could do with, you could file a change of accounting method with the next tax return to basically do what's called a bonus, a depreciation, catch up and get that deduction on your next year's tax return. Okay. The other thing is, I don't know how many dealers are still doing this, but section 263A, this is basically where you have to, you have to include some indirect costs into your inventory. I know some people who are with CPAs who may not be familiar with the auto dealer industry. Some of them still have this 260. They're still using this 263A calculation to basically account for some of these indirect inventory costs into inventory. So what this would mean is you could actually elect out of this 263A if you're one of those small dealer. Small dealer that I mentioned earlier as far as under the $26 million in gross receipts. So this is. That is something you may want to talk to your CPA about. If they're still doing this 263A calculation. You just barely.

Luke, you just barely squeeze in under that 26 million mark. Right. I think you're just slightly sliding in underneath there. Lee, tell me this. So Luke was telling me the other day that he is not going to take his PPP forgiveness this year. He is going to wait till next year. I didn't even know that was an option. I thought we were all scrambling to get this thing forgiven as quickly as possible and we needed to be in line. What's the strategy there for dealers that. I mean, what's the deal?

Well, I mean, right now I've been telling all my clients it's kind of in a holding pattern. I mean, there's still some. There's still not. We're still missing guidance from the SBA on how to handle these PPP loans. If they file after the eight week period, but before the 24 week period, we're not sure how they. What the. What the wage limitation is during that period. We're not sure how to calculate the headcount during that period. So if you're still in between that 8 and 24 week period, there's really not guidance on how to file for these PPP applications. So you either have to file at the 8 week mark or file using the full 24 weeks at this point. And you know, a lot of people, if they took out the loan in early, early April, I mean, their 24 weeks is getting pretty close to ending by now.

But do we have to have that filed before that? Is there some sort of a deadline?

It's 10 months after your covered period.

I was gonna say I made us. I didn't. I'm not in any hurry to jump on it or get my name on the list under those same circumstances Luke did. I figure I'll either push it through in November, December if I'm. If they've got their. I just don't feel like they've got their eggs in a basket. So why am I trying to freaking rush this through if it's not even getting. I'm not even gonna get a forgiveness.

And as. Lee, is there. Is there any. You keep hearing, oh, PPP loans under 150 that May. They may just forgive them anyway? I mean, is that a possibility still?

Oh, I think it is, I think, I know the Treasury Secretary, he mentioned wanting to do that, making the, any loans under $150,000 just completely forgivable. I mean, they may have to, the borrower may have to sign like an affidavit or something like that stating that they use the funds appropriately.

Makes sense.

But I mean there would be, and honestly that would be a great thing just to relieve some of the administrative burden on some of these smaller dealers who are just, I mean, I mean, let's face it, some of the, the accounting office help is not always the best. They may not know how to do some of these calculations for as far as the headcount and it could just get confusing if they don't have that type of, if they don't have something along those lines. Now there is currently, there is currently a simplified application that people could use if their headcount has not decreased over the covered period compared to the, their, their two look back periods. But you still have to know what your, your actual headcount is using the rules of the sba, if that makes sense. So Lee, what would, what would happen.

If your head count decreased but not by your actions? Has there been any guidance on that? Like you just had people who quit or, you know, yeah, there's able to hire somebody back?

Yeah, there's a, there's a number of exceptions that basically say, you know, if somebody was fired for. Cause if somebody voluntarily left and there's a number of others that you just can't hire somebody back, you won't. Those people who left will not be counted against you for your, what's called the head, what we call the head count. It's just the, the full time employee equivalent count. So there's a number of exceptions. If you're tried to hire somebody back and you're not really trying to game the system, there's probably an exception. And again, that goes back to the complication of filing these applications. I mean, I mean is, you know, do you have the staff there on hand who's going to know how to, you know, how to do that and how compile all the documentation for it?

And I mean, I think I've talked to you about that, but I'm, whenever we do file, if we have to file, I'm gonna, I'm gonna have you do it because I think, I mean, honestly, it is complicated and I'm pretty good when it comes to the books. I mean I can do pretty much everything. But something this important, I think that dealers out there should probably get their CPA to handle that, Right?

I would think so. I mean at least somebody who's in the know, somebody who's familiar with payroll, somebody along those lines, there's gotta be some knowledge of this program and some knowledge of just, you know, just payroll and accounting in general I think would have to help assist. So, and I think, you know, just from my experience, a lot of office managers, they don't really, you know, they really haven't followed, followed all the changes in the, in the, in the rules regarding ppp. So it's, it's you, I think you should get somebody who really knows what they're looking at and who's dealt with it time in, time out.

So let's, let's just talk, let's, let's educate people on why we would want to maybe push, push the buck to next year. So if I tell you, if I let's, let's use $100,000 for example, if I got $100,000 PPP loan, I decided to get it forgiven this year because it's sitting out there on my balance sheet. Why does it matter when I get it forgiven?

Well, so one of the big things is as you're alluding to here is the timing of the, the forgiveness. So our position is that if these loans are not forgiven before year end, you're basically, you shouldn't have to reduce the related expenses on your financial statements. So just, and just to kind of give you some background on this, the IRS has basically come out and said, hey, if, if you receive the PPP loan themselves will be tax free income, but the problem is the related expenses to the tax free income are non deductible. So it basically just kind of undercut the entire purpose of the tax free loan because you're getting either, you're going to pick it up as a reduction in expenses.

Yes.

So, so you either pick, you're either going to pick up those reduction in expenses in 2020 or if you don't get it forgiven until next year, 2021. Now the thing of it is there's, there is some bipartisan support to say hey, these expenses should still be deductible. However, you know, obviously, you know, we all seen what's going on in Washington. They're not able to come to any kind of agreement on any kind, of, any kind of relief packages. So until it's done, I wouldn't, I wouldn't, I wouldn't count on that happening.

Well, that would be another reason to push it to next year. Hoping that right that would come out.

Right.

Then you would never have to take it as income.

Right?

Right.

Well, I mean, even if you did, even if they did come out and later say, hey, you don't have to pick this up in income. You would just. You would just go back and amend your return, get the money and fix it. But, I mean, instead of doing all that, like I said, there's still missing guidance from the SBA on this stuff. You know, there's a possibility to defer it for an extra year. You've got 10 months after your covered period. So after your eight or 24 weeks, you still got 10 months to file for forgiveness. Don't be in such a hurry. You know what I mean? That's all. That's all I'm trying to be.

If you think you're going to be making more money next year than this year. Right. If you think your tax burden is going to be larger in 2021 than 2020, would that be a motivation to say, hey, man, I don't think 2021 is going to be good at all. I want to take that this year because I actually had a really good year despite Covid. I need that.

And here's. Here's the other reason. I don't know. Even if you were to apply today and, you know, the bank accepts it, the SBA still has, I believe, 90 days to approve these applications.

So you may not even get it through.

You may not even through this year.

So I want to push it off to 2022, right?

Yeah. I mean, that's interesting. That's an interesting thought, though. I mean, it could be possible that you would still be able to reduce it. You reduce your expenses for 2019 in some way and take the position. Hey, it related to. Even though it's not forgiven yet, we don't want to go back and amend or something like that. So, you know, talk to your CPA about that and see if there is something that they could, you know, if that's what the route you want to get. Nobody wants to pay more in income, though. I never. That's rarely something I, you know, people really want to fight for, you know, so.

So one other thing that Luke mentioned the other day. He's. He's the. He's gonna buy a big, heavy car and he's gonna write that thing off. Yeah, I know. That's something that dealers talk about all the time, and I. Maybe I can. I know. We know. All dealers should know.

Let's.

What's that rule?

Let's use a. Let's use a tow truck as an example because we bought one earlier in the year. I think that. I think that makes more.

Yeah, it's called the whatever. 192. What rule 179 rule. If it's over £6,500, you can take it as a one time expense. Right?

Well, I mean, so. So there's a. There's a couple. So I mean, if you buy some new equipment, like it. Like a tow truck, you know, any kind of equipment before year end, there's. We currently have 100% bonus depreciation right now. Okay. Where you could basically expense the entire thing off now. And you've also got this section179 option to also. It basically accomplishes the same thing. The only difference between these is, I mean, they're. So the bonus depreciation, there could be some limitations if you, you know, if you're a larger. A larger dealer, like I said, over that $26 million threshold, there could be some interest limitation issues that interact with the bonus depreciation. But for most. Most dealers who, as long as they purchase under, I believe it's like $2.5 million in new assets. I don't know any buy who pay dealers are buying anywhere close to 2.5 million new assets.

So. Yeah. Help my. Help my little brain figure this out. So you're buying a tow truck, Luke. You're putting it in service in your dealership, not as inventory. Right? It's not coming in as inventory. You're actually owning it. The dealership is buying it. Now, do you have to title that tow truck in the dealership's name so that it's technically owned by the dealer?

Well, I think everybody should do that because you don't want to be running around with a dealer tag on a tow truck. I mean, you want to ask for some trouble. So.

But you'd still title it. But you could. But you wouldn't have to. If you could put the title in your dealership's name and take the ownership. But then you. You could still run it around on a dealer plate.

Well, not in my state, you can't.

Really?

Yeah, just.

I think.

I think that's state dependent. But, Lee. Yeah, I mean, you would have to title it in your company's name, correct?

Yeah, I mean, it would have to be in the company's name. Yeah.

So if you had a separate LLC for liability purposes and you wanted to title it in that llc, would that void the deduction because it's not technically owned by the same entity?

Well, I mean, I don't know. It depends on how the LLC is structured. If the LLC is a disregarded entity of the dealership, then no, there wouldn't be any issues there at all.

Yeah, because I'm just thinking we have our rental pool, our loaner cars in a separate LLC for liability purposes. I would just think for liability would I want my tow truck in a separate llc and then yeah, I mean, I would use that, depreciate that deduction.

Well, how is your LLC structured? Is it as an S corp, a disregarded entity? Do you, do you know how your LLC is?

Probably a disregarded entity that passes down to the owners.

So it's, if it's, let's say it's a disregarded entity, you put it in there. You would get the deduction on the LLC through the disregarded entity and it would flow through the deduction personally to you personally.

Elite. We can use this to buy new lifts. We can use it to buy paint booth. There's all kind of things we can use this. Any kind of depreciation, Right?

Right.

Yeah. I mean, you know, if you've got, if you've got a new location, if you've got a new building, if you've done some renovation of your old building, I mean, we could. There's these things called cost segregation studies. If you've, you know, if you look into that one day, if you paid more than $500,000 for, you know, a new building and a new location, I mean, these cost segregation studies are definitely something to look into. I've got some big dealers who spend, you know, several millions of dollars on their new buildings, locations. And you know, even if the dealer is extremely profitable, you can completely wipe out your income by just accelerating the depreciation on these buildings using these cost segregation studies. So. Yeah, pretty. Yeah.

I had a friend, I think did $2 million one year because of the cost segregation study. How much they cost? Typically 10 grand or so.

Yeah, five to eight, eight to 10.

I mean, it's, it's not, they're not, they're not extreme. I mean, you know, maybe between 5 to 10, I mean, depending, depending upon the size of the building. If there's any complicating factors. I mean, it's, it's just like anything else. How much time is it going to cost to, to get these things done?

Can you do it on. Does the one building have to be over 500,000 or could you do it? And I guess if one, let's say I would assume most dealers have a An LLC that probably owns all their property. Right, right. That property. Let's say we had three different pieces of property that comprised of the dealership's property and multiple buildings. Can you, can you put it all together in a.

So you mean they've got multiple pieces of property, but it's under the same llc, Is that what you're saying?

Yes. And all used as dealership.

Yeah, you could, you could. Yeah. I mean, that's the same. Even if it's under the $500,000. Have your accountant take a look at it because there may be something they could do to kind of separate some of the costs of that building without doing a full blown cost segregation study. So, you know, that's certainly something to consider though. Absolutely. Yeah. And even if you've had a building that's been in service for a while and you paid quite a bit for it, these cost segregation studies may still be beneficial. I find clients all the time who've, you know, who've had put in buildings five, six years ago, and we're still able to go back and do these cost segregation studies and then file a change of accounting method and do get the catch up and bonus in depreciation on those, those buildings.

So everybody listen, this is the reason it, it pays to pay cla and other other big accounting firms to do your taxes and to make sure you're doing what you're supposed to do. Because you know your friend Bob down the street, who's never looked at another car dealership doing your taxes as it's probably not a good idea. There's a reason, you know, Lee makes the big bucks and that's to make sure that we, that us as car dealers doing things the right way. Right, Jeff?

Yeah. And my question would be too, along those lines of deductions. If I have a reinsurance company and the way that dealer reworks the birds over there is when I go to fund, say I sell a 3 a year 36,000 mile warranty, only pay for that as it's earned, right. I finance it in, and instead of paying the $900 the day I sell the warranty, it's split up into 36 payments that I pay them. And I don't know if it's possible to. Is it possible to prepay into your reinsurance company or to make an agreement with your reinsurance company to say, hey, I want to completely fund my reinsurance company this year? You know, I don't want to wait and parse it out in monthly payments. I had such a great Year. I'd like to prepay it all.

Yeah.

I mean I would definitely talk to your. About your, to your reinsurance administrator about that. As far as what they. What could be funded for the year.

Yeah. If they could do it, would that be a good deduction to take up front if you think you had a particularly great year?

Yeah, I mean it could be. It could be. It depends on how the deal structured though. I'd have to kind of having to think that through. So you've got, you've got a, you sold a contract and it's like a 36 month contract. Right. And then I'm trying to think of that because that may be more of a. I'd have to think about that one, to be honest.

Yeah. Well, I just wonder in general, is there any of those opportunities where if my reinsurance company allowed me to fund it or pay it now instead of pay it in payment?

Oh, absolutely, absolutely.

It's probably like with any vendor that you owe money to. Right. If you're on payment terms, pay it now, prepay.

Right.

I mean if we're on, if we're on reinsurance companies here. Lee, is there a, isn't there something as a buy here pay here dealer you can do where you can reserve a certain amount for losses within the reinsurance company in there, something to that effect or am I dreaming this up?

Well, I mean there is a reserve as far as losses on the reinsurance company as far as in that kind of, that kind of. That's kind of based on how much you could take out of the reinsurance company. Those, those large reserves.

Yeah, that's not what I was talking about. I remember sometime last year, I think one of our friends, our 20 group was talking about, he essentially through his reinsurance company bought like an insurance policy on each account.

Okay, that was good.

I think it was Caesar that somehow. And they, and I think he's with another reinsurance company. But what he did was he, he bought a, I guess an insurance policy because a certain amount of the accounts were going to fail. And this was kind of like just. I can't remember exactly what he called it. I wish I could remember you're familiar with that at all.

Is it a clip? Is that what. Anyway, anyway, I'm not sure. I'm not sure.

I had to get to the bottom of that one this coming week.

But you could. I mean, you should talk to your administrator if there's more you could fund into the program. That would certainly be helpful as well. During the year, one thing that I.

Started this year and I'll let you guys know how it pans out. Tax, end year. But if you are a single, if you own your dealership on your own as an llc, I think, or you and your wife, you can actually pay your kids as employees, right up to the standard deduction, 12,500.

You could. Yeah, you could. Yeah, yeah.

Or if you, if you have your home based business and your dealership is paying you as a consultant and your home based business is now paying your children.

Well, I don't know about that, but.

No, no, really, look it up, guys. You can pay your children as employees. Pay your children as employees. Right. Yeah.

If you, if you, yes, if you, if you legitimately have your children working at the dealership, you could pay them as.

And they're under 18. You pay no federal or federal tax. I don't know about state tax, but.

Right.

No federal tax. You pay no Social Security matching up to this standard deduction of 12,500. Right, right.

So it's. Yeah.

Luke puts his daughters in ads. She is in ads. Right?

Yeah.

And as a model. I don't know any model you're going to find for under $500 a month to use their image over and over and over in your Facebook ads. So your daughter should be getting paid $500 a month to use her image in your marketing. Yeah, I mean, $12,000 a month. I got five kids. You times that by five. That's some serious tax savings.

Yeah, well. Right. Yeah. I mean, you know, you certainly can hire kids as employees. My only thing I would say just to kind of be cautious of that is just, you know, make sure that they're. You could let. You could basically substantiate that they, you know, the actual money you're paying them. You know what I mean?

Facebook catalogs. You've got Facebook catalogs that go back years and years and years. And you've got your infomercials and your television and your. I mean, it's very easy to write up a simple modeling contract. $500 a month. You're giving me the right to use your image. I mean. Yeah. They're not sweeping the floors and filing, you know, picking up stuff. Cigarette butts and making $500 a month. Modeling is very.

Yeah. Can we do that and then use that money to pay for their private school? You could.

I mean, you could.

I mean, my kids aren't getting paid that money. I'm not giving them cash every month. That's going into the account that pays for all of Their expenses, food, Christmas, birthdays, school.

I mean, no, that certainly is something you could do. And it's, you know, you could, like you said, you could pay them basically up to that, that standard deduction amount and that would be tax free to them and to you. You would get a deduction based on the amount you paid them. Of course.

Doesn't work if you're a c. If you're a corporation, and it doesn't work if you're a multi entity owner. I think you have to be a. You have to.

Well, you could, it could work in any scenario as long, any kind of business. It would work in just a C corporation. You could still have the same structure, except the corporation would get the deduction instead of the individual, the owner. I mean, depending on how it's structured, there shouldn't be too much of a difference.

All right, let's wrap this thing up.

Jeff.

I know Lee's got, he's got a lot of billable hours to make.

He sends you this bill, right?

Lee gotta advertise for cla, man. Yeah.

Great information. I mean, anything that you would want to leave with our audience, tips of wisdom, ways to get ahold of you.

Yeah, well, I mean, I'm, I work, you know, I'm here at CLA, based out of St. Louis. You know, CLA's dealership group is expanding throughout the country. We've. We're getting people set up in North Carolina, in the Charlotte office, in Atlanta, Washington state. So we're kind of growing everywhere. We've got it, We've got a decent presence in Minneapolis as well. So I mean, we're really, we're really expanding everywhere throughout the country.

You know, you work with dealers everywhere. I use you guys. I'm in Utah. You don't have a physical base in Utah. But yesterday I was on a zoom call with I think your assistant or someone, and we were going through my bookkeeping and seeing where I had some, some screwy stuff coming over from my DNS and was coding wrong.

Yeah, no, we, we basically could work from anywhere, but we do have locations popping up. I know there are some who are, you know, they like to work with local CPAs. But, you know, there's a good chance that there is a cpa, a cla, near you. And I think we do have one in Utah somewhere, just not dealer specific, so.

Awesome.

But yeah, we appreciate you being here, Lee.

No problem. Thanks for having me, guys. Thank you for joining us today.

Hope this episode inspired you to take positive action. Remember to subscribe so you get each episode the day it comes out and we would love your help spreading the word. Leave us a review and share this podcast with your dealer friends. Dealers helping Dealers learn and grow together.