Tax Strategies The IRS Don't Want You To Know

Every one of your listeners today, I'm going to save you at least $5,000 in taxes and make your corporation or LLC far more bulletproof. Right here. When a client comes on board, we do a comprehensive consult and what we build them is called a trifecta. A trifecta is a picture that says a thousand words will take your family trust at the bottom, which essentially is you also, where all of your money flows to your temporary. And then from there, we split your life into two steps. Side. On the right side, we're going to put your operations, which is going to, could be a day job, going to be two. But also this is going to be that side hustle that we're going to turn into an S corporation. On the left side, we're going to use our LLCs for holding companies, holding oil and gas, note real estate, crypto stock, because I want asset protection, I want operations, and it's all going to flow down to my Trust on my 1040. That's the trifecta. Now that picture right there, I'll do that for $100 million client or a brand new business owner, age 25, they're like.

Guys, I'm going the one and only Mark Kohler. How you doing, man?

Doing great. And it's a Friday for me. Some of you listening, it might be a different day of the week for me. I'm, I'm looking forward to the weekend.

Yeah, me too, brother. Well, look, I want to jump straight in. You know, I'll be the first to admit I have not really invested hardly at all in crypto, mainly because for me, I tend to like hard assets that I can kind of evaluate quicker. And for me, crypto has always been a bit more of an emotional roller coaster from what I've seen in the marketplace. Help me understand, like, why so many people lean towards crypto as a primary method of investment and financial growth.

Well, let me just say I completely agree with the word you said. Just replace the word crypto with Wall street, okay? I feel the same way. I'd rather be in hard assets than Wall street because to me it's dippy doo and I have no idea what the hell is going on. So I think that's a very, very similar feeling for me. So let's, I want to agree with you and get on the same page. I own a lot of real estate. I do hard money lending. I've got raw land, I've got commercial buildings, low income housing, a duplex, two commercial buildings, three Airbnbs. I love it. Yeah, I can't have all my money and one asset class, I. E. Real estate. Now I'm a firm believer. Over the years I've done the 10,000 consults as a tax lawyer. I've met with thousands of investors and business owners and the far majority of them have the bulk of their assets in real estate. But what do you do with the other 20, 30, 40%? You want to roll the dice in Wall Street? Feel free. Want to think about crooked? I think it's pretty kill.

Yeah. Well, most of the vehicles that I've chosen to invest in are operating companies that I have some level of insight into or advisory capacity. So I can kind of help, kind of, you know, help them kind of, you know, move, move forward, you know. And then I've got, obviously I got real estate. Real estate is something I'm, I understand coming from a construction background, all that kind of stuff. So I built my first company and, and you know, so. But I, I'm also aware that, you know, there is, there is a crypto economy that's been bre and developing for some time. It's obviously been successful enough to get the government's attention and began some basic level of what seems to be regulation. You know, I'm a little concerned about not fully understanding how taxes work with crypto. You know, I, you know, I was listening to some of, some of the things you said. You're talking about, hey, you know, you actually could get taxed on your gains on crypto. You know, rather than just thinking through like concepts of, you know, it just, you put it over there and when you pull it down like you would a 401k or something, that's when it kind of gets hit for a, for a tax kind of thing. So I want to understand more, I think first of all, why crypto would be a great investment. Specifically Bitcoin is kind of what I hear most of my understanding is they have the largest server network and farm in the world. I could be wrong. But again, I'm, I'm a novice when it comes to crypto specifically. And then also my, my, the things I should be considerate of as well as like, you know, kind of be aware of, I guess is the best way to say it.

Yeah, you bet. And I'm so glad we're, you're having me answer some of these questions from my perspective because I want you to know, I think you already know this, but your listeners, I'm not a crypto expert. I mean, I can explain the blockchain, I can explain Daos and the Metaverse and all that. But again, we have a tax law firm and a trust company helping clients all over the country invest in every asset class, save taxes, build wealth, and da, da, da. Now we're going to answer how it's taxed. Absolutely.

Sure.

But there's one more point I want to make here that's so important, is when you say, well, why should I invest in crypto? What is your alternative? Okay, and now I'm with you. I own at least six operational companies, too. Yeah, I'm with you. But one of the mistakes I made over my years, Stephen, is for 25 years, I thought, okay, I'm my best investment. I. If I've got 100 grand in profit, I'm going to put it back into my business. I had a business partner was like, yeah, I'm going to peel 20% of that out and diversify it. I might pop it in some real estate. I might put it in some crypto or some Wall street product. Okay, cool. Now, 10 years later, he's got a nest egg that's insulated from my operational businesses that could have problems in an industry disruption or a market disruption, embezzlement, partnership issues. And so I'm with you. I love. Control my operational investments. I love real estate. But we can't have everything there. So when people go, well, why should I do crypto? Okay, after the real estate, after your operational, where are you putting it? Well, I'm not doing anything. Well, that's the problem. See, that's bigger than what's next. So. So when I talk about crypto, I'm comparing it against a Wall Street ETF S&P 500 fund, a bond or an annuity, and I think I win that effing argument all day long. Now, here's why.

So.

So thanks for letting me frame it, because I think that's the bigger issue is you. We all need to be setting aside some money somewhere and diversifying it better. And crypto should be one of those choices. And here's why.

It'S coming.

To think that, I mean, 10 years ago, you could go, that was a crazy idea. You know, these little techies out of Silicon Valley. But they create. Who knows? I can't explain it, but Trump is completely behind it. Wall Street's now behind it, and hedge funds and venture capital is all behind it. Banks are starting to figure it out. And banks. And this is where it gets technical. And we could go down that path. Banks are blockchains. Wells Fargo system of tracking your money, your Debit card and your deposit is a blockchain technology. But when you have a debit card and I give that and I go to a 711 and buy a Rockstar, I'm not really giving them money. It's going through the, their blockchain technology to put it on their blockchain report. And the, the currency involved is not, it's paper, it's numbers. And so that's all the bitcoin is, that's all these tokens are, is a blockchain that's tracked just like any other bank. We've had blockchain technology for 80 years. So. But this is open source. Banks don't control it, Wall street doesn't control it. And so that's the beauty of it. And so bitcoin is around to stay, it's going to grow. It's a token.

And I, I think it's exciting because there is an opportunity for three types of opportunities. I'll shut up and then you can, we can unpack whatever you want. Trading, trading tokens, it's like they get, buy a stock, sell a stock. Some tokens are wild and crazy like the dogecoin or something. Some are solid, like bitcoin. Number two, you can do what's called staking. And that is where you let your crypto almost be lent out, if you will. In a sense, you're going to be making money off the crypto you already own. So the third, yeah, you're becoming a bank. It's, it's really, you're getting paid dividends because your crypto is being used as collateral. And the third aspect, which is mining, mining is the verification of transactions and you can get a service fee for that. With your crypto you can get staking. There's some other ways of making money. Obviously you crypto experts are out there telling you, fringing that Mark Kohler's butchering this.

You're coaching a novice. They shouldn't cringe like, you know, because I don't need to be, I don't want to be a fire hose. Yeah, actually want to. I'm actually looking for knowledge here.

So, yeah, so, yeah, so there's different ways to make money with crypto and that's an important point too. And if the safest thing to do, to be honest, is say bitcoin's not going anywhere, there's a finite amount of it, it's trading 50, 60 grand right now, I'm going to buy it. And predictions are to break 100 grand or 200 grand in the next five, ten years. So you might get a 4x on your money. Now I'm a little more bullish with Solana and Ethereum and other blockchains that have a utility purpose. People are building on them. One of the thoughts in the country is that title transfers are going to go away from paper and go digitally. And the way to do it digitally is put it on a blockchain. And that's not going to happen on Bitcoin. It's going to happen on the Ethereum network or Solana network. Solana is trading at 150 bucks. There's predictions it could be as worth as much as Ethereum. Okay, now they got a 10x on that. So I, I'm bullish on that. Everybody don't go out and buy because Mark Kohler said, but man, I'm throwing 5k here, 10k there, and I'm just buying salon or whatever you can. And it'll bump to. It was bumped up to 200 three days three weeks ago. I sell out. I just made a 20 return. I can go back and it's, it's pretty anyway.

So, yeah, I mean, again, it's, you know, it's a new world. Those that don't recognize that there's a pattern in the new world will typically the world will largely bypass them. Eventually the wealthy become the impoverished because they're not paying attention and things of that nature. I think I understand everything kind of at that level. I think one of the things that I'm a little fearful of, and I'll use fear as a very loose term, concerned, mindful of, is this concept of a buddy of mine dumped 100 grand into Bitcoin like three years ago, lost his fricking password information, has no access to the money. So that scares the hell out of me that I might go dump a million bucks into something, you know, to get a strong return and then not be able to have access to it.

Yeah, this is the.

These passkeys, we'll call it that or your code.

This is a pro and a con. This is a good and a bad thing. The good thing is if you can keep that safe, it's extremely secure. No one can feel it. It's more secure than a vault with money in the bank or gold under my mattress for cash. If I have that phrase and I can restore my wallet, I've got that money wherever, whenever. And people, I'm going to say this as a lawyer. We help a lot of people with their estate plans. And in your revocable living trust, you Want to list those wallet IDs and those different pass keys so that if you died, that's a bigger issue. A lot of people have them, but then they don't tell anybody about it and they die. And then the family's like, where the hell did they go? And so that can be a concern. But on the flip side, it's kind of, you want to look glass half full and go, man, no one forget that. That's pretty cool. That's pretty asset protected. And when I start doing asset protection planning and a lot of people like that feature. One other thing, I'll say this too. The people that are losing those keys and those codes are the ones that are taking their tokens or bitcoin off of a trading platform like crypto.com. when you have crypto.com and you log in, it's there, you're not going to lose it. But when Voyager crashed two years ago, which was unfortunate, and then to scale up of all the different movement.

People lost some of their money and so they've now taken their bitcoin and put it in these wallets where all you have is this passcode that you can't lose. And so you have to decide what level of security you want and what level of risk. I don't, I, I put my.

Investments in crypto on platforms like crypto.com and Gemini. Yeah, I'm not going to lose my stuff.

Yeah.

But a little more aggressive crypto trader might think I'm crazy. So.

Yeah, I mean, that's the thing again, these are, you know, if for someone like a novice like myself, you know, it's, these are the questions that I think keep people from getting in the game. I know, I know they have, for me, it's like, you know, first of all, how much? What's the ratio? You know, if I have, we'll call it a million dollars. Like what ratio should I put towards crypto versus towards other asset classes? What, what is my risk profile? The tax tolerance risk, you know, risk mitigation and the two risk mitigation I can think of. Or one, it's, you know, it's not, it's, from what I can tell, it's not really highly regulated yet or not regulated at all in some cases. But they, they have every intention of trying. So what does a regulation do to investments and scalability and all of those types of things? Those are the types of things that I think about in getting in the crypto game.

Yeah. But let me make two points. One, I, I like your comment There was fear, concern, apprehension, whatever word you want to label it. One of the best antidotes to fear, or antidotes or. Yeah. Is knowledge. Yep. The more you learn about it, the less fearful you are. Yep. And so if. And if you see our friends and others in the market making money at this, and rather than it passes by, we don't want to take action without knowledge. That's smart. Smart, successful people don't do that. So the more we learn about it, that's going to reduce our fear. And number two, I'll be bold enough to say this. I'm not an investment advisor, a licensed investment advisor. I feel I give a lot of financial advice. I can do that as a lawyer and a cpa. And what I see among thousands and thousands of my clients is they're going to allocate maybe 10% of their portfolio to the crypto experience. And if they hit. And a lot of them, oh, my gosh, dude, I've got clients that have got $10 million in Bitcoin and started with $10,000 10 years ago. There's an opportunity there. But so many of my clients, over 50% of their net worth is in real estate, even including their own home. They understand the rental real estate, the power of it, the tax benefits. I could talk about it all day long. And then they've got some liquidity here, there, and another and different other alternative assets. And. But that last 10%, that's the fun money where it's like, man, I can hit a dark horse here. I'm going to learn a little bit about it. I'm not going to be afraid about it, and I'm going to put down some money, and if you like going to Vegas, it's even better. Yeah.

Yeah. Well, I was just thinking that, you know, I guess if I'm going to get in the game, I'm going to start it from a place of money that I don't. That I'm. I'm, you know, I'm okay if it doesn't work out.

Right.

Right. So, you know, call it, you know, five, $10,000 if it doesn't work out. It didn't work out. It's okay.

Right.

And then I'll. And then I can watch a compound. But I also, again, one of the. From my understanding, Chastity's oldest boy's got bitcoin. And he's told me, he told me he's had it for a while. He told me recently he's doubled his money. Like whatever his investment was. It's the value is double, you know, so is there a. So then that begins. Okay, I guess you can't do it like the stock market or you shouldn't try to do it like people try to do with the stock market. I would never do it this way. And quote, unquote, timing the market right when is the right time to then, you know, test the waters and kind of like gain the knowledge and gain the wisdom. And you know, that's, that's, you know, it's a timing thing. So you got the, you got the risk, risk mitigation on the asset class itself and you got the timing of when's the right time to actually get involved, you know.

Yeah. And oh my gosh, again, if we just change the word to stocks. Welcome to MSNBC or Fox Business. You know, this is, it's the same conversation because so many people have been timing the stock market for a hundred years, you know, or trying to, so. Trying to. So it's the same battle. So what I, I see my successful crypto investors do is with that 10%, a bulk of that is just buy and hold. Yeah. You know, I'm going to put, I'm going to put maybe some in Bitcoin and I'm going to go with the more stable coins like the Ethereums, the Solanas, they're out there and I'm just going to go buy 100 grand, 50 grand, 20 grand, and I'm just going to sit, I'm going to wait. We know that with more regulation, the more valuable they become. So I want that SEC involved. Yeah. Because think about it, when it's volatile and no one knows what's going on, is this scary? Am I going to lose it if the sec, which they've already started to do and the IRS come in and go, all right, it's here to stay, let's regulate it. It makes it more stable. And when it's more stable, what's going to happen in the Valley? It's going to go up. Yeah. So buying now and expecting regulation and maybe a Trump presidency that says I'm behind bitcoin, we're going to see a boat.

Yeah. How much administration or you know, a government, because obviously regulation follows administration in many cases, like whether you, whether you're reducing regulation or you're adding regulation or whatever.

Right.

Is there a, is there a segment of the, the government that is more pro cryptocurrency based blockchain technology versus another or they kind of both equally in and kind of in the game? You know, I Just thought, I don't. It's hard to, it's hard to get a heartbeat on where people really stand with it. Obviously, I watched.

Former President Trump, obviously, with bitcoin, doing a keynote with them recently. Watched that on YouTube. I thought was really, really good overall, you know, so trying to understand like, you know, does what's really, what's really going to cause it to go up and down in value from, from things beyond our control.

Yeah. And this is where I said at the beginning of this interview, I am just not a policy expert or. And there's many more that are better than me with that topic. But I, I really use the where how I. My lane, let me say. Okay, I'm going to try to say it this way. I listen to the policymakers. I see what's happening in the government. I see the SEC taking a more active role. They're worried about Fraud and all FTXs and all those things that went down in the last two to three years. And then we see the IRS saying, hey, people, you don't think this is tax? So we see that the government's getting more and more involved. It's creating more stability in the industry. We see prices going up. That's all I know. And so I'm very bullish, meaning I'm going to keep buying crypto. I think I'm going to be okay. Now with that said, my lane, and this is one of your questions you had earlier on. The IRS is going to tax is not this fallacy. And I meet so many young people in crypto that are like, oh, it won't get taxed till I turn it back into US Dollars. No, that's not how it works. And so we could break that down a little bit if you'd like, but the IRS is very active. This is the first question on your 1040, your 1040 tax return, did you have any transaction in cryptocurrency? Essentially the question if you say no, and you did buy, sell any crypto during the year and you follow that's penalty is a perjury under penalty. Yeah, that's tax fraud. And then if you check, yes, the IRS is going to go, great, where's it on your form?

Yeah, I got to just lose it.

And then they go to their accountant and their accountant's like, I don't know how to do this. And so my practice as Main street tax pros, I'm training accountants all over the country on how to report crypto taxation, how to understand it, and done. So it's it's here to stay and the IRS taxing it only makes it more valuable to me.

Yeah, yeah, yeah. Now it makes a lot of sense. Again, I'm, you know, I'm a bit of a novice, so having someone with extensive experience in, in both tax, you know, law as well as crypt, you know, having some crypt like it just, it's, I'm always looking for the well rounded approach. Right. You know, I always want to.

I try not to take investment considerations from a place of bias, or if I have a place of bias, I have to have the polar opposite place of bias to get the other piece. And I'm making, typically, if I can make a comment, a really good decision for myself, my own investments and whatnot. One of the things I'm excited about is this new crypto summit you got coming up to help people understand how crypto actually gets taxed, why it's important how to properly position yourself to be the most tax favorable environment. What caused you to want to put this together? Because I can't find anything like it on the Internet whatsoever.

Yeah, well, it's actually our third 1 3rd annual crypto tax summit.com and it's just wholly dedicated to how is crypto taxed and what are strategies to get around that tax.

Yeah.

And so we're probably providing solutions too. We've helped clients save hundreds of thousands of dollars in tax. And my guarantee for anybody that attends to come conference, if I don't save you in tax your cost to come, I'll give you money back. I mean, I, I already know. And so it's that easy. So when we first did our, our first conference three years ago, crypto was a little more on fire. It's, it's been a little more stable and it's still growing and improving. But we've had thousands of people attend the conferences and just really feel their empowerment. They're gaining knowledge again, taking away fear. And when they know how it's taxed, they can make better decisions. And it's, it's a cool thing. Let me say this, I want to clear this up for everybody. So just let me tell the three instances, instances where it's taxed. If I go buy crypto, let's say I go buy bitcoin, I buy it for 50 grand, I buy one Bitcoin and next month it goes up to 60 grand.

And it's now got a $10,000 gain. If you say, well, I'm going to go into my wallet and I'm going to trade that for a Bunch of Solana or Ethereum or another token. That was a fun little run. I made 10 grand, I'm going to trade it for this crypto. 90% of people think that's not taxable because they haven't brought it back to your fiat currency, which was US dollar. You started with US dollar. So you think if I go into this little world, magical wonderful world of Disneyland and I trade crypto, I don't pay tax till I leave the gate and turn it back into US Dollars. And the IRS says the minute you trade for another type of token, you have to pay tax on any appreciation with the token you own. But that's. The listeners are all going, that can't be true, Mark. No, it is true. There are IRS tax forces that are now going into the blockchain, which is public, and tracking this down. And so you, so you know, paying tax whenever you trade a token for another token. Second, obviously if you take your money and go buy the Ethereum, which is trading at about 2500 and it goes up to 3, 500, I got a thousand dollar gain and I go back to US dollar. Yeah, I'm going to pay tax. Most people get their head around that. But then if I take that token and I go buy something with it, you're seeing this more and more where you can, there's crypto.com debit cards and I get coinbase debit cards so I can go into a store and buy stuff with crypto. At my law firm, we take crypto. You want to buy, you want a new estate plan, you need an llc, you need a corporation, you want a console you can pay with crypto. When you use crypto to buy a service, some people think, well, that's not taxable. I'm just trading crypto for some. A service or product. Yeah, no, you have to claim the gain of what that crypto was worth the day you used it to buy something based on what you bought it for your basis a year ago, two months ago, and then you're going to pay tax on that difference. So there's services like Coin Ledger and Coinly and software that will go into the blockchain, find all your transactions and give you a report at the end of the year of all your staking income or your mining income and all of your trades and then you put that on your form in your tax return and you're good. It's all good.

Yeah, man, such good advice. And again, this is why I, I think that this is one of the more important conversations Given the fact the world is moving to a, a blockchain technology of some kind, whether it's. It lands on Bitcoin, Ethereum or some other new creation for the federal government kind of comes up with, which I'm kind of a little more, I'm probably more scared of that than anything else. But you know, just trying to like walk through that. I want to pivot the conversation just a little bit just to make sure we get a little more of your insights. A lot of entrepreneurs, right? So I've been building businesses now for close to 30 years. I built my first one from the trash piles of a construction site while I was fresh off the street from being homeless and then grew that joker and just recently sold it and exited last year. I've also done a thought leadership business and helping thought leaders win and monetize their business models. I've done media and events. I've done all these other kinds of businesses and I've always self funded all these, all these individual businesses. Like, you know, I just, I built the business as fast as cash would allow me to do. It's a, that's a Dave Ramsey corny phrase that I heard his CFO say one time and it stuck with me. The reason I say that is every single entity outside of my real estate holding company was an S Corp, not an llc. Now my holding companies are typically LLC based on the, you know, the rules, regulations of that area and kind of the portfolio and whatever. I always got a lot of benefit from having an escort, but I see a lot of entrepreneurs, even solopreneurs, going towards llc. And I'm curious to know why, when it seems like there's a whole lot more tax benefits with S Corps.

Well, your approach in general is absolutely correct. The S Corp is going to help an operational business far more than an LLC. And let me just say this for everybody listening, LLCs, limited liability companies, don't call them limited liability corporations. Limited liability companies do not save taxes in any way, shape or form. They don't. Even if you think, oh, I'm going to set it up in another state because I don't want to get taxed in California, they do not save you taxes. LLCs are for asset protection and partnerships and establishing a relationship and a joint venture, but essentially protection. But what you don't see sometimes, Stephen, is that an LLC behind the scenes can be taxed as an S Corp. It's a 2553 form. It's super expensive to do. We charge 200 bucks. So at our law firm so if someone walks in and goes, hey, I've started my landscape company, I'm making now 50 to 100 grand a year, it's starting to scale, I'm making more money and I'm paying self employment tax out the butt. We're going to convert them to an S corp with a simple form 2553. And that form now allows them to report as an S corp. But what you see out in the public is they're still John and Mary Landscaping Comma llc. Yeah, their bank account name, their company name doesn't change, the ein doesn't change. But at the irs they just turned from blue to red. And so now I'm going to report as an escort. So just realize that a lot of the LLCs that are operational, they're an S corp, they figure it out. But we primarily use the Non S Corp LLCs, obviously as you said, for holding and very, very much so.

Hey guys, I hope you're enjoying the show. Steven Scoggins here. I've got something that I think is actually going to blow your mind. Imagine taking your life and your business to the whole nother level. I'm talking about eight figure level and beyond. You see, you've been working your butt off to build your business where it is now. But what if you could work smarter, free up more time, make more money and impact along the way? How much would that be worth to you? You see, I can prove that basic steps, basic mindset shifts and subtle changes can make the biggest difference. I want to introduce you to the eight figure mindset Makeover. It's absolutely free and it's here for you. It's a powerful summary of my top strategies that help propel me from the streets, if you will, to upwards of nine figures and quote unquote success as we like to chase it. This is more than just tips though. It's a complete mindset overhaul with simple hacks that you can apply today to begin working your unprecedented heights in your own business. I would like the honor to share these types of things with you that turn my dreams into reality so you can experience the same type of joy and freedom that I now get to live out in my own day. In other words, it's time for you to build your own unstoppable enterprise. And if you're really ready to take it to the next level and elevate your life and your business, this is an absolute game changer for you. So if you want to take advantage of this free resource, simply go to the show. Notes can Click the link or you can go to steven scoggins.com backslash8figure. That's steven scoggins.com Backslash8figure. Until then, much love, God bless. Let's get back to the show. Take care. Well, before we get going, I want another thing on that same kind of topic is with entrepreneurs who are trying to build businesses or they're doing their best or grinding it all out. And one of the things that I see or I see them making mistakes with their corporation, whether it's an LLC or an S corp, that causes them to open themselves up to unneeded risk that is piercing the corporate veil, right? So they get themselves in a little bit of a pickle. They're not, they haven't done their, their records and their books properly. They go to look at it and all of a sudden attorney has access to their business. Had they followed rules and stuff like that have been made it made it a lot more difficult. What types of pitfalls or advice could you give to entrepreneurs right now to keep them from getting themselves in trouble with their actual entities?

Oh, my gosh, I'm so glad you asked us because every one of your listeners today, I'm going to save you at least $5,000 in taxes and make your corporation or LLC far more bulletproof. Right here in just a moment. Now, let's put it in context first, what you were talking about using that S Corp, llc, it can be really confusing. So let me say one thing. We do for our clients and been doing it for 20 years. When a client comes on board, we do a comprehensive consultation. That's a tax law firm. We have 14 tax lawyers. We hook all over the country on zoom. I have my network of CPAs around the country and enrolled agents called my Tax Pro Networks. We're helping people do this all day long. And what we build them is called a trifecta. A trifecta is a picture that says a thousand words. And so if I were looking at your structure, Steven, do it right after this golf and say, and I do, a lot of people are like, oh my gosh, build my trifecta is we'll take your family trust at the bottom, which essentially is you also where all of your money flows to your 1040. So you got your family living trust, the John 40. And then from there we split your life into two sides. On the right side, we're going to put your operations, which is going to be, could be a day job, W2, but also this is going to be that side hustle that we're going to turn into an S corporation. Operational income goes through S corp on the left side. We're going to use our LLC for holding companies, holding oil and gas notes, real estate, crypto stocks. Because I want asset protection, I want operations, and it's all going to flow down to my Trust on my 1040. That's the trifecta. Now that picture right there, I'll do that for $100 million client or a brand new business owner, age 25, and they're like, oh my gosh, now makes sense. It makes sense. Okay. Now with that said, each one of those entities has to have their own set of books, has to be filed properly, maintained properly, and flow down into your 1040. My successful business owners. And the older you get, you know why you're asking this question.

I got to maintain those things. I can't just have a sheet of paper and put it in a drawer and think, I'm okay, yeah, I'm over.

Here trying to build a business. I'm gonna work. I'll file that later.

Yeah, yeah, exactly. And so. And they don't want to talk to accountants. It's complex and lawyers are expensive. And. And.

So what. What we do to. So here's the trick of the strategy. I want to tell everybody we're going to knock out two birds with one stone. Every one of your entities should have minutes. It should have an ongoing corporate book with an operating agreement and bylaws, and that should all be capitulated in that corporate leather binder that you're going to have on your shelf whenever you set up an entity, people. If you're just going online trying to set up your own Damn entity for 200 bucks and think you're done, you're totally exposed. The lawyers like Butterfly and the IRS loves to audit because you've got to have an accountable plan in your minutes to write off home, office and auto and do reimbursements. If you don't have that type of paperwork, it makes your LLC won't work. So we want to have that annual meeting. We want to have good documentation and minutes.

Main Street Business Services, one of our companies and some lawyers around the country do this. They provide the service where they're, okay, let's do these minutes every year. Make sure all the provisions in there and your company's corporate veil for your LLC or corporation is solid. It's the easiest asset protection in the world. Just go have a freaking meeting and document everything. We charge 200 bucks once a year to help the client have that meeting with a 25 point check, do their BOI report, which is now required under FinCEN. It's got to be done by the end of the year and then make sure you're done with the state. So many people forget to pay the fee to the state and their company gets dissolved and they didn't even know it. That little maintenance could be super affordable, but often forgotten. Okay, so step one, here's what's going to come together. You're going to love this step one, we need to have that meeting, we need to create that protection. It's affordable, simple, just make it a habit. But guess who's going to be on that board. You can have a board of advisors as an llc. You can have a board of directors with your little S corp. Your parents could be on that board, your spouse could be on that board. Your teenagers, your college student kids, maybe even kids under age 12 could be sitting there watching at the board, being secretary, shredding paper and being involved in the family business. Business is family. Family is business. So the second piece of this is that corporate meeting, all of you listening should be having every year, even if it's just a rental property with an llc, you're going to have a company board retreat. Yeah, we're going to go ski in the, go to a ski, ski and ski out in the winter, we're going to go to a cabin in the summer, we're going to go to here, we're going to go to there and we're going to have a family board meeting. 100% write off for airfare and hotel, Uber, the food, all write off. And now when my kids are going to college, I can compensate them for helping me in my family business by being on board. I do not pay taxes and give my kids money, whether they're 18, 16 or 24 for college and they're needing some help with tuition or broken down car. I do not pay taxes in my high bracket and give them money. I pay them for serving on my board of advisors, which is also providing that asset makes an expense. Yeah, it creates an expense. So all my kids at Christmas time, they come down the tree and they come down to the tree and they're.

So excited to open the first, then.

They open up their little stocking and what's in there at 1099. And kids under age 18 is a whole different strategy. This is in my book Tax Legal Playbook, how you pay kids under age 18 is different than how you pay kids 18 and older. But this is a huge strategy. I Have a client that are like, oh my gosh, I raised my kids for 15 years and never put them on the payroll. I never had a board meeting. I'm like, it's the easiest thing in the world to have a board meeting. Put your kids on the board, have two annual or two semi annual meetings. Teaching your kids financial literacy, talking about your investments. How many families do not pass on the legacy of teaching financial wisdom and how to start a business. When we have a family board meeting, we go around the room and talk about each kid's business. When you graduate from college, I want no student debt and I want a family business. I want your business. I don't care what your grade drug, want to go to graduate school and be a doctor, knock yourself out. But you're going to graduate with no student debt and a small business because that's what American dream is about. And I get a tax write off to pay for that one. To go on that family trip. Every Thanksgiving is a tax write up on my house. We're going to have a turkey dinner and a family board meeting.

Yeah, dude, that's so good. I was also thinking too, there's so many day to day, week to week, month to month, annual expenses that you have in a family. This is what we think of it that if it was conducted within a business is a tax deduction via expense. So it makes me think why doesn't everyone have a freaking their own little entity and run things as if it's a business?

A lot of it is lack of knowledge right now. This year it's estimated there's over 50 million Americans with a side hustle, A freelance gig, a side gig. Those are 1099 that's going to go on a schedule C as a Charlie. And we need to have an LLC for that. They don't need to be an S corp yet. They might graduate to them. The LLC is great. I'm not saying LLCs are bad, but they're going to graduate to the S Corp in the Times, right? I've got podcasts after book after that but so these family businesses you're talking about need to embrace the fact that a rental property is a business. My side hustle is a business. I'm going to treat it like a business. I'm going to set up an llc. My kids are going to be on the board. My teenagers. And I put Molly, my youngest, age 6, on the payroll. She was our office paper shredder administrator. She was our cleaner, our janitor. My teenage girls helped run my social media My son helped run my YouTube YouTube video. I started on YouTube in 2009. My kids were helping me with my business, and I would pay them, and they go buy good their school clothes. Oh, my girls, we own a problem. That's great. I'm not paying for it. You're paying for it.

And you're teaching, and you're teaching your kids much better financial principles along the way.

Yeah. How many kids. How many of us grew up where mom and dad made money?

Dad, Maybe we got an allowance, maybe we didn't.

And.

But allowance is a bit more like an entitlement program.

Exactly. Was there accountability and sitting down and going, hey, kids, let's tell you what we're doing this year. We're buying another rental property. Let's show you how we calculated the numbers on that. It was pretending to be a funny story.

Yeah, absolutely.

I haven't told this story in probably several years, and it just came to me. So my daughter Allison, who's now married with two kids.

Adorable. When she was 15 or 16 years old, she was taking tennis lessons, and I would have to drive her twice a week down to the tennis academy, and she'd be doing her tennis. And I was thinking she was going to be the next stephie graft. Didn't work out. It was a lot of fun. Anyway, so I'm taking her down to these tennis lessons, and I had a commercial building right around the corner for this tennis academy at the time. So we leave the tennis academy, we pull over there. I'm like, hey, I got to pick up rent. And she's like, okay. So I run in, pick up rent from the tenant, and I throw up this envelope on the dash, and we're driving along. I can see her over there going.

She goes down, what do you mean? What is that? And I go, well, we own that building. We own that building. And it was a building. And she's like, and. And they pay us to use the building. How many of us talk to our kids like this at age 13, 14, or 15? Right. I was making. Trying to make a commitment to do this early on, and I said, yeah, they pay us rent. And she goes, we own that building, and we have enough money for that. We put down about 10% of the value in the bank, lent us the rest of the money. So when I get rent, I pay the bank for the loan, and whatever's left, we get to keep. That's us. She started thinking, and I didn't say anything, and she says, yeah. She goes, so if we own that can we live in it? I go, yeah, but you don't want to live in a commercial building, do you? But, but it's an investment. We bought it. We invested. We got the bank to help us. They pay rent and we make money. And she goes, well, what do you do with that? I go, just to live on, or I can save it and buy another building. And I, then I got excited and I'm like, if you won't believe it, I could take write offs for depreciation and our auto deduction just to go down and take her to tennis. I'm writing off the auto deduction because I didn't come down to take you to tennis. I came down to pick up rent. So I'm writing off auto, I'm writing off dining, I write it off the conversation, I write it off everything. I'm getting excited about depreciation. And now I start to freak her out. She runs inside. That's. Well, mom, Dad's talking about depreciation. He's freaking me out. I'm like, oh my gosh.

But the beauty was I tried to tell her it's not even taxable income. It's not even taxable because the depreciation is wiping off the cash flow and the interest payments to, from the mortgage. I go, my tenant is building me well. And we would then have family meetings after that experience. It really fit for me. You've got to talk about this more now. Guess what? Oh my gosh. I just got chills. Her husband and her bought a rental property two years ago and I just talked to him last week and they're now selling it at age 27 for about $150,000 product.

Wow.

At age 27 and they learned how to buy rental properties.

Is it safe to assume they're not going to do a 1031 exchange for the next piece?

Yeah, I don't know. I don't think they're doing it.

I just, I built a lot of real estate wealth through 1031 exchange. I kind of forget it kind of mentality. So I was just curious.

Yeah, yeah, I, I'm interested to see what they're doing. They're doing some crypto, they're doing some investments. But the fun thing is that two out of my four kids, I have four kids. Two of them now have owned at least one rental property and they're still all in their 20s. My next two are going to get their, their thing going. So it's really exciting. And as a family, you, as a parent, you can take tax Write offs for this entire process, be passing on a legacy, teaching about financial literacy and getting full circle, better asset protection, better audit protection because you're respecting the corporate bail, you're doing better record keeping and you're teaching your kids at the same time.

Yeah, they are so good. I got one more question when we wrap up here. Has to do with asset protection, because asset protection.

I thought you were going to talk about my fantasy football league, but okay.

We'Re going to do that too, right.

With the asset protection specifically. A lot of folks don't fully understand what asset protection is. As someone who had an exit, obviously there's a lot of discussions around tax planning and all kinds of stuff before the exit occurs, after the exit occurs. And now I'm going through yet a third round of, you know, getting my estate plan in order, making sure that I'm protected as much as I can against tax and then life insurance policies and, and then this other thing which was kind of new to me a little bit, which I, which I know you also share in this is this own nothing but control everything kind of concept through an asset trust. Like so I'm learning about all this is kind of new, which is, which has been awesome.

What are the basic bones of an asset trust to begin to help people protect themselves?

Well, it's interesting you bring this up. You're not going to maybe like my answer. And the people that are advising you are going to send you some hate now and I get hate mail about this.

This concept of own Nothing, control everything.

90% of that process and procedure his bullshit. There's a. And I guarantee you, you don't have to say this on camera, recorded. I guarantee you the conversations you're having, they are charging you no less than 15, $20,000 for the little packages and this and that.

I haven't found anybody's dotted line because I'm a student. I student first.

Good job. The people that sell these types to trust charge 10 to 20 times what we would ever charge to help a client with good asset protection. It's a very dirty industry. And the people that sell this stuff disappear. They're not the ones doing your tax returns five years from now when you've got to unravel this irrevocable trust because it's going to be irrevocable. And you got tax problems and you want to control the property or do some different things and now you can't. And they never told you good, the bad, the ugly. So I would say this continue to get 2, 3, 4 opinions about any sort of asset protection structure from people that are not going to sell the asset protection structure but maintain it for you because there's going to be a maintenance aspect and the fees they charge are highway robbery. Now that said, can and do people that have 10, 20, 30 million, 40 million estates do more in depth asset protection? Absolutely. Maybe they are going to put a little something offshore. We're going to use charging order protection entities. Maybe we might use an irrevocable life insurance trust, a charitable remainder trust, maybe a spendthrift trust. But the fees involved, watch out. And the companies that think that are going to value billion, you know how much money you got? 50 million. Okay. It's going to cost us. Say I'm not going to tell you how much money I'm dealing with. How much should a lawyer charge for a trust like this if their fees are Normally, let's say $500 an hour for their work? We don't charge in our office for any trust more than five to six thousand dollars. And that's for the one of the most complex trusts we would implement and that's going to be a charitable loan address. And so in my book.

Tax legal paper, I do an asset protection section and I call out what I think is the crap in this industry. So be careful. So if you want to talk about the fundamentals of it, you're giving up control. You're going to use an irrevocable trust, you're going to appoint a trustee to do it for you. You're not going to control it. I'm sorry, you're not going to own it, but you're going to control it. And okay, so who owns it and what type of tax returns are you going to have to file? And they don't talk about that piece. What does it look like two years down the road? So be careful. I'm not a fan. Sorry.

Yeah, no, it's good. Again, this is, this is why historically, if I'm trying to make a wise decision with finance and risk mitigation, stuff like that, I always get multiple opinions from thought leaders in that industry. You know, to your point, I've got, I had three different large firms give me similar advice to you and saying, hey, if we really want to protect these assets and we really want to do this is the right way to do it. And they explained it and it was very similar kind of what you were explaining. Meanwhile, I've got friends, two or three others that are, that are like try to do it. I'm like, I that's they're you know coming at me. Well you should do it over like I'm like I don't, my gut does just doesn't, doesn't sit well. So until it sits well, I'm not moving. Dude, I love you.

You know I love you man. I love you.

That kind of thing. So.

Right on.

Awesome. Well dude, I know we're out of time but I wanted to maybe give everybody one more chance to obviously find out and attend the crypto summit you've got as well as get your get your book. So help us understand the best ways to stay connected with you and where we should go. Yeah yeah.

Let me give you several resources if any of you found and I'm going to throw out a bunch here and because some people because we have different things. Yeah.

We'll post shop in the show links as well.

So yeah. Yeah. If I could is it first of all any of you that were listening going oh my gosh, I need a review. I just need someone that's not going to take me to the cleaners. They don't. I don't have to fire my current account. I don't have to find my current lawyer. I just want a third party. Give me a trifecta, a picture, a plan. We charge around 16, 1700 bucks. What we call a comprehensive tax consult or a comprehensive business consult. We build your structure out, tell you where the holes are and what you should be doing. You can choose to end as you can. These are real tax lawyers trained by me. Some of them been with me over 10 years and we can meet with any client on zoom around the country. We've been doing it for 20 years. So go to kkos as in SAM kkos lawyers.com and set up a consult. I have to do a discovery call, see what we're about. I know many, many of you can find that super, super helpful and it'll be a tax deduction in your business.

There you go.

There you go. Now number two, if you're looking for an accountant to prepare your taxes and have an ongoing advisory meeting, what's a quarter? Let's talk about strategy. I got my kids on payroll. What am I doing with my health savings account and health insurance? What am I doing with self directed, my Ila, my Roth or my 401k? Am I writing off my auto properly? My home office, my travel and my trips? What can I do better to get my estate plan done and do some better privacy? And what about real estate Self rentals sell real estate professional all Those I have 80 strategies I teach my tax pros. They have to do 1,000 questions to get a 90% and then meet with me weekly in order to stay on my tax pro network. So if you want to meet, do a discovery phone, find one of those tax advisors that speak smart. Kohler and I make no money off you hire. That's your relationship. You see what they are charged and they're going to very young, old, male, female, west coast, east coast. Go to Mark J Kohler.com Mark J. Kohler.com and right at the top it's going to be a tax pro network. It's like a LinkedIn page of over 200 accountants around the country. Go find them, go, go interview them and get a second opinion. Again I'm not saying you got to fire your sister in law that's doing your taxes on TurboTax for spaghetti dinner. Maybe you need to upgrade. Right? Maybe we need to upgrade. The last thing is of course I've got books all over Amazon. Just go to marketing for. Com I have a podcast with over 500 episodes. 3 million downloads on all these topics and more. That's the Main street business podcast. We self direct retirement accounts. This year we're going to hit $2 billion clients that have self directed their Roth IRAs and 401ks buying real estate, doing notes, doing crypto, doing syndications, doing venture capital all inside your retirement accounts. You do not have to do Wall Street. So you can go over to directcom and then our events. I've got.

Crypto tax summit coming up next month in Orange county. Crypto tax summit.com we have the all assets summit.com that's in Phoenix in October and that's where we parade 15 different types of investments that are outside Wall Street. And that's a great workout. And then my tax legal360 in December. Three days, 25 different classes on tax and legal strategies that are going to save you thousands. Network with accountants, lawyers, other business owners. We've already reserved the entire spot hotel. It's going to, it's, it's not sold out yet. It will. And that's in Phoenix the first week of December. And who doesn't want to be in Phoenix the first week of December? Get your Christmas shopping done, enjoy good weather and.

Yeah, I have 15 different speakers. Everything from privacy to asset protection to taxes. And it's what a business owner needs to do to captain their own ship. People. You can't find an accountant or lawyer that's going to think about your stuff all the time. They're not. That's not their job. You got to pay them a lot of money to be thinking about you all the time. You need to be thinking about you all the time and use professionals as needed. On your ship, you're the captain. You're steering the ship where you want to go. And if you've got a bad advisor, throw them overboard and get a new one.

And the way you discover that, by the way, is getting a third party review. That's how you discover if you've been treated well. And I'll say this, and as we wrap up the show, because I think this is important and thank you so much for that. We'll make sure we put all the links in the show.

That was a mouthful, but just.

No, no, it's great. No, I think, just let me dawn on something I think is super important for our viewers and our listeners, which is at different stages of the businesses that I built. So zero to a million, million to 10 million, 10 million to 20, 20 to 50, 50 to 80 and beyond. I had to change key attributes of my legal team and my accounting team not because they were bad people, but because at some point in time, my business and my overall net worth outgrew their level of competency. In that time, you know, I had a couple of them that went out and got all the extra, went out and got extra training and all kinds of stuff and it stuck with me. But for the vast majority of the folks that I had working with me over the course of the last 30 years, you know, I had, I had these different partners for different seasons of the business and it was okay. And I always figured that out when all of a sudden the things that were working don't seem like they're working as well anymore. I bring in and I get a third party opinion. The third party opinion would tell me objectively, not picking apart any other person, just saying objectively, I think we're missing the boat here, here, here and here. By the way, do you know about this, this new change that's happening this year, as opposed to last year that wasn't here last year? Those third party discovery sessions I think have saved me, I would say probably 7 to 8 million dollars in my business history.

Love it. Love it. Wow. Love it.

And so for 1700 bucks to save me 7 or 8 million over the course of a business lifespan, I think it's a good trade off and I highly recommend a third party opinion.

No, it's true. And the way I frame it is that I'll just Restate it another way. As we scale, we're going to have break points where we ourselves have to learn new things and go through an uncomfortable growth period. And some people are going to make it to the next level with us. Some are. And we're respectful, we're kind. We appreciate those that gave us so much loyalty. We just let an employee go last month. A beautiful, wonderful woman. She was with us over 10 years, but the business got to a point where it. And she knew it, too. She was overwhelmed. She didn't get it, she didn't understand it. And she got us to where we needed to be, but she couldn't take this to that next level. And we had a big party. We gave her a huge severance package, told her thank you, and treated her with respect. And it was hard. It's always hard. But you're saving. You're not. You're on the battlefield. You're captain winners and band of brothers. I mean, you got it. You know, someone's gonna die to get the rest of everybody else to the next level. And you're trying to make an impact in society. You're trying to help your other employees. Some people have to be left behind. It's sad, but it's true.

Well, Mark, I can't thank you enough for coming on the show, man. I can't wait to do this again. Highly recommend getting that third party opinion. If you're into crypto, you need to.

Absolutely go to yes for.

Oh, you lose all of it in taxes.

Oh, my God, man.

Thank you so much.

Thanks for having me. Oh, my gosh. I love what you're doing. Keep up the good work and I hope I can come back again. And we're going to see a lot of tax legislation in the next 12 months, no matter who's in the White House. So when you have a question and your listeners are scratching their heads, I'd love to come back and help unravel it.

So I'd love to have that happen as well. Awesome. Thanks so much. Take care, buddy. See you.

Take care.

I hope you liked that video. And if you did, make sure you check out this next video right here. When we can look in the mirror and like what we see. It's funny how much, much, how much more confident we are. So therefore, we take advantage of opportunities. We have more date nights with our spouse, our girlfriend, boyfriend, or whatever. We start to hang out with friends. Like, we become more social as a result. Just feel more confident.