Call 9: Tax & Legal

Okay, so I’ll go first for Christmas. I am thinking of buying myself a venom back brace. If you guys have seen like Dwight Howard where these things in the NBA finals, but it’s expensive, but because I drove my AGI so low, if you guys look it up I think you can write off all your expenses that exceed a certain percent of your AGI, like five or 10%.

But if you make a hundred grand a year five to 10%, five or 10 grand, like you never have that much inexpensive, but because my AGI is so low, that threshold actually is very attainable. So I’m trying to write off a lot of medical expenses that come off, everything I can. I’ll probably have. Somebody prescribed massages and stuff like that for me or whatnot, but that’s what I am buying for Christmas.

And I also bought a conference table to use here. It also is a combo pool table also. Actually let’s go in order. Chad, why don’t you go? And then we’ll go to the gives and gets you have time at the end. Okay. Yeah. So this is kind of stuff I got over the year. Not really necessarily for Christmas, but I thought it’s applicable to tax savings.

So I guess the first thing is a computer monitor, an extra screen. Cause pretty sure it’s deductible, if you can just do it for administrative office. Yeah. I agree. Get yourself one of those curved ones. It’s a pretty nice Costco and the next one’s kind of a. Iffy. We have all these investor calls and all that.

So soundproof, acoustical panels to limit all the background noise and all that. If you’ve got noisy neighbors or something or kids. Yeah, sure. Desk lights, if you have poor lighting in your The blue light glasses, I would push. So all the business stuff might be a little more riskier. Yeah. I would always push it to more of the less risky category if you can. So like the blue light falls in the health category, but you make a lot of money AGI wise. I don’t know if you can write it off, but just thoughts there.

Yeah. I just put all this stuff on just because, so we can talk about it. The Google drive storage, I thought that one’s definitely. Oh yeah. Yeah. That’s for sure. It sounds like 20, 30 bucks a year. I think now

you Phillips you smart bulb. I would just write it off as a light bulb. Yeah. I just put it on to be specific, but yeah, it’s just the light bulb because what’s the thing he has to be reasonable. I don’t know if that’s very reasonable and that term is the cheapest one. It’s 20 bucks. Yeah.

But one could make the argument that you could just go with a 99 cent fault, but there’s really no sense to join too much attention to it. You know what I mean? When you actually document it? Yeah. The main one is just the computer monitoring and the Google drive storage. Yeah. You’re going to buy yourself some cool Apple Macs, headphones.

I don’t know if that’s a reasonable 500 bucks or headphones. I was going to buy it if I I wrote off my AirPod pros. I just don’t really use headphones. Maybe someone else will buy one.

Okay. Justin, you want to go or.

Oh right here. Yes. All right. So yeah. We’ve got a Pocono ski trip next week and it’s in the Eastern half of Pennsylvania where our property is more Western half of Pennsylvania. So trying to finagle a way to make that some sort of business expense. That would be nice. Okay. We’re talking about short-term rentals.

So maybe short term there, so that short-term rental, you cannot write off the trip until you’ve picked up an asset that makes at least a dollar. You get that, right? Yes. So save the receipts and then a year from now, when you did that thing is put into service. Now you can come back to previous years and deduct it.

So long as that. So how long can you hold on to it? I’m assuming that it’s forever. Within reason, right? Pete went on us. If you bought a property here. No, you can’t write off the other one you tripped, you took back in 2016. I don’t think that’s reasonable. But make sure when you go on the trip, you like, you grab you make notes in your calendar, you grab like brochures.

Like one time I went to Vegas and actually was legitimately looking for commercial properties in Vegas being very honest, but then my. I think just my girlfriend at the time, but my girl, my wife was like, are you really interested in buying a property here? Are you just doing it for Texas? I don’t know.

It’s just looking how the market is, but because I write, I wrote it off because I have this all incumbency, very vague business that I do all over the place. And I happen to also happen to meet an investor. Actually I met a bunch of investors there. We had a big party.

So that’s why I was able to write it off. Let’s talk about the ski trip when you guys leaving just get a sense of the timeline, next Tuesday. Okay. So when you guys going skiing, and when you actually going to do real estate work, Okay. So we’re meeting someone from the Latvian Kenji group to talk real estate on the way up there in Philadelphia.

So that’s a business meeting, so that falls under the realm of education, technically. So be careful of that. That’s not as strong as talking to vendors. Oh, okay. So I would. Look, you could probably write it off and go on earning it audited. What? Maybe 5% of the time. And when you are audited, he probably changed the story a little bit around that.

You’d probably say that these are your partners or whatnot, but. Go do Brandon Hall’s e-course and he’ll say no, this is a no go.

We’re going to, we’re going to try it. Let’s see. Yeah. So you have to, you gotta meet vendors, right? Like you gotta, when I go to Vegas, I’m meeting a broker professional by meeting a carpet person. I don’t know. But not you guys meaning each other, going to California, going to Seattle, having a beer at Shawn does not technically count that counts under education, unless you’re going to buy one of his properties that you need to save their receipts to.

When you finally buy the thing, then you can write it off. But Hey, you can take your chances. So when people have business meetings, it’s always with some vendor or somebody they have to buy from, it falls under the realm of education, in my opinion. And I’m pretty, I think I’m pretty aggressive, but I would not feel comfortable with that, to be honest.

That makes sense. Why don’t we stop by and just see the property? Yeah. Yeah. Now you’re probably like, screw that. We don’t want to talk to these guys anymore if it doesn’t count. Yeah. We’ll talk, we’ll go interact with property managers. Go talk to prop go view properties. They do have Real estate people that aren’t looking to sell them Airbnb types.

Places. Yeah. So that’s a possibility then. Yeah. So switch up your interactions that way. Yeah. Office chair and office desk I’ve had for six, seven years. So be nice to upgrade and something nicer.

I can bend the bull, found a good deal to Hawaii. That’s in may. So if we can expense that. Yeah. It’s in Kona and I think you’re in a wahoo, right? Is that right? Yeah, that’s not, yeah. There’s a big ocean clean us. I don’t know.

Yeah. I don’t know how we can finagle that. I thought I have a buddy that’s in Japan and he’s a I think he’s a trustee and my estate. So I’ve gotten the idea of having him when I go to Japan. We’re doing our state meeting. We’re going to Japan. Oh yeah. It lets me meet your guy, but they’re not your trustee.

You see what I’m saying? I see. Let’s try to figure something out though. Living trust. Do you guys do one of those things? Yeah. We just got that last month. You guys have trustees or is it just you guys did you make your mother or your brother? Yeah, we have trustees there in Chicago and stuff.

So I check with your tax guy, but I think that’s a lot more legit than meeting some random couple ski scope to me. Like you see what we’re doing? We’re trying to think broader, right?

No.

That’s all right. Okay. Yeah. And when, yeah, when your guys’ net worth is five to $10 million, and you just want me to be a trustee, then I guess you could write off your whole trip to Hawaii, but that’s. I know when I was going getting, trying to get to on the ski trip was like, so you’re going on Tuesday.

You’re hitting the slopes for how many days. Two or three days, two or three days back Christmas Eve. Okay. So just be mindful of the sandwich rule, right? You can’t deduct the whole thing if you’re only getting business for a couple hours on Thursday, right? Yeah. It has to be an appropriate amount.

So if you fly in. Tuesday on Wednesday, you take a business meeting with a broker there, grant granted, or you own rental properties in the area, right? You can, that’s the same broker, just four hours away. You’re making this hard, man. It’s I don’t know. I don’t know, but I know I don’t, you can do whatever you want, but I don’t know if I would push it.

Because here’s why look big picture guys. You guys are potentially doing real estate professional status. Don’t these little whimsical trips. What do you have to gain maybe about a thousand bucks of cash tax savings? Who cares? Stop thinking small ball. Don’t let that something like that.

Blow up your real estate professional status down the road or now. Right where now you’re using all these a hundred. Maybe you don’t do it fully, but you use like a hundred grand of passive losses to bring your AGI down from 500 to 400, with $50,000 of tax savings there, don’t let some stupid ski trip where you save a thousand dollars blow up.

And now they’re harassing you every year after when you’re trying to write off 50. Yeah. Okay. Yeah. That makes sense. Sure.

But yeah we’re nickel and diming. We’re trying to see. Yeah. You got to get up that, until you think about big picture, you don’t think about it, but yeah, stay under the radar. If it’s not more than like 10 grand I tax savings, I be careful. I may not be worth it. And that’s the whole.

Bigger pockets, crowd, right? They like nickel and dime. I hope you can make your property magical down the 8%. All right. He’ll just screw you some way or another. They’re always trying to grab that penny, but the news track with the bigger picture and that’s what they’re always stuck on that website all day long.

I dunno, man. I would try and find out what I would do is try and look for a short-term rental there, keep the receipts. You can’t write it off until you buy something there. But I think that’s, as we were talking earlier, that would be a better Avenue for doing real estate professional status, which is the ultimate goal, I think.

And then see if there are seats for that. And then only when you do two years from now, when you do have that rental. Right off. You’re going to go on like the Wednesday for the day, for half the day. And then the other time you’re going to be screwing off skiing. Definitely don’t write off your ski lift tickets and all the meals for that, but maybe write off a third or a quarter of your flights, and then that first night’s hotel, I think that’s appropriate.

Okay. Not this year, right? When you buy it, the rental after you, right? Yeah. Yeah. Once we get that short term rental. Yeah. Yeah. But by then, you’re like, who cares? Not even worth it? No, I don’t know. I C I would rather put the effort into this stuff than the trading, all these penny stocks and all these other things, but I haven’t taught at all.

Yeah, take a nap day. Cause it’s time for you. I don’t want to do all that. Okay. Oh Justin too. Or what are you buying there? You have the dentist practice too. So you gotta, so I had a couple of quick questions. You’re talking about writing stuff off or saving the receipts to write something off after buying a short-term rental later.

I’m imagining that this is very like. Analogous to just buying any sort of business. So like a lot of the expenditures that I’m doing in terms of meeting people, trying to build out a network to find a dental practice, to buy, I can save these receipts. And then when I have a dental practice, I can write that off against the business.

Would that be a sort of a similar situation outside of my realm, but I would say that’s seems very reasonable. Okay. So I had talked to another CPA on that point too. And he was mentioning that if I were to like, do that, save all the receipts and stuff. I could like personally get my money out of the business as well, by I dunno, more or less like paying back a loan to my person from the business.

Does that sound? Yeah, a lot of, a lot of people will do stuff like that. I don’t understand. I think when you’re doing like bigger stuff, that makes sense. Like, when you’re saying bigger, you’re talking dental practice versus single family house. Yeah. Yeah. Like they, what they’re trying to do is they’re trying to make it where they borrow.

You’re going to have to put in a cash disbursement for, as your owners state, or you can lend money to your company. Yeah, you can lend it at 10% or 30. Know you can’t do crazy rates, but maybe you lend money to your company at 15%. That’s enough. So it’s like passive income, or I don’t know if it’s passive, ordinary, but as opposed to, in lieu of taking a salary in a way or your own living expenses, so people can play games with that.

I think I’m missing something like, I don’t understand why people really do that. But like in a situation where say you have a strategy for five, 10 million net worth families as they do a nonprofit. So what they’ll do is once it’s in a nonprofit, it’s locked up.

That money is off the table of litigators, which is nice, but it’s off the table for you, unless you make provisions in there where the you lend money to the thing, and it pays you with the interest. More than exceeds your daily expenses is the picture. Okay. So it’s the same idea, a little bit different example, the same idea.

Okay. But I haven’t really figured it out. What’s the, I think that I speculate the reason why they do that is because your business is likely a C corporate eSport, and two, you want to run as much stuff to do that funnel because you don’t have to pay the self-employment taxes, pseudo food of a, that stuff.

And that’s why it’s better to run the money through there. And it take your salary, not as a salary, but as interest you give to the company, because you got to give the company money anyway, in the beginning, you’re in it. You have a feed the beast. So you might as well take it as distributions interest distributions that way, as opposed to just putting in there and getting gloss.

Okay. That makes more sense. Yeah, whatever they’re doing, I think they got the right idea. So I would just go with it. Okay. And as far as like administrative office furniture, I’ve just have a bunch of like random stuff in here, but does the administer, does that kind of furniture need to be business specific?

So I get like a desk and a computer monitor. That makes a lot of sense. But if I also wanted to have a little bit of exercise equipment in the corner to blow off a little steam while I’m, working in the administrative office, or if I need a little Zen garden where I can start plants indoors, and then transplant them out to my garden, later on in the year is that all.

Legitimate. I’m not, I don’t want to get you in trouble, Kathy, but the way I interpret that is I would do it. You would do it, but I would be careful. How do you label it? Like again, if you go back to the old video, I did, I have my ledger. Like things like that would be vague. It would just be on there and a line item, $250 or whatever.

Okay. I wouldn’t, I would be vague and HUD write it off because it’s, for me, it’s easy because I have this long ass list of ledger items. It just gets lost in the shuffle. Okay. But I think for you, I would put most of these expenses under your operational dentist’s business, not your real estate stuff.

Because I think that’s stuff is more a legitimate business then. Let’s make no mistake here as real estate investors. You technically don’t need much. And there is risk involved with that by writing out some of this stuff. But again, we’re putting it under the thing that can support it the best.

But if I were to, and so instead of having a real estate business for this with the dental practice, I can still get an administrative office in my home. And then, yeah, I guess I would just be able to write it off through the app. Business expenses saying the same things, right?

Like it’s furniture for the admin office. It’s a Zen garden. It’s a, yeah. Whatever. Your dentist practice. Are you the only partner? So I haven’t gotten into one yet. Like I’m still looking for that practice to acquire. And that’s actually my last part on the, get the business mindset shift for me.

I know. We’ll get to that a little bit later. Let’s talk about this now. Cause I thinking of it. Okay. For you guys. Try, whatever you can do to not take like a salary, but shifted more towards equity. So you’re getting compensated, not with ordinary income, which is your salary, but with K one passive income, because that’s, if you guys haven’t gotten a sense, this is the big gain.

Shifting money from ordinary income to passive slowly today, I don’t make any ordinary income. I don’t need real estate professional status. But I think we all start off, especially in this group, we’ll see all ordinary or trying to shift. So when you’re setting up your stuff, I would take, you can, this kind of opens up the pie or the negotiation pie, right?

With who you’re working with, that you’re taking your share via passive income or equity, as opposed to salary. Because you’re able to use passive losses from other real estate deals to offset the passive income without real estate professional status. Sorry. Say that one more time. So you’re saying that if with a, like a dental practice, if I were to shift my compensation from a salary, like ordinary income stuff to somehow get a disbursement via a K one or something, I could then take those gains and offset it from the loss passive losses from like the syndication deals.

Is that what you’re saying? Correct? Because those gains would be passive income. Okay, you following? Yeah. So I’m following that part. And I liked that because I hadn’t actually considered that. I don’t know if I’ve ever heard of a dental office being able to give out, payouts as far as like a K one, but I have no idea the structure that would need to be in order to do that in the first place.

Yes. It’s uncommon. Because most people don’t think this way, but like there, I have this doctor group. They run up emergency metal coal hospital, and they pay themselves via equity, but there’s, don’t get me wrong. They’re slaving away at that thing. They’re active, slaves to their business and yeah they do take a salary because their CPA makes them do it and appropriately, but the majority of it trying to come out as like a K one distribution.

So I don’t know. I don’t know if that’s majority, it’s probably not majority. But at least some of it as much as feasible per the CPA, they push to that passive income side. Okay. So I feel like I’ve heard something similar with dental practices, but it’s mostly about the dental practices are set up as escort.

So you’re taking the dividends and stuff, but is that going to be different than the K ones? Like generating passive, I don’t know. I don’t think it matters. I think it’s how the partnership is structured is the main thing. Okay. Because if the partnership is structured where you’re not, you’re a shareholder versus employee.

And then so the shareholder, you’re seeing that’s getting paid with the K one income passive income, but the shareholders, the employee side, That can float through it as corporate C corporate, whatever sole proprietorship. I think that’s the way to distinguish. So what you’re asking is it S-corp secret?

I don’t think that matters. This is okay. This is the split prior to that. Okay. Just something that not many people do this, because they don’t get that. This is why they’re slaving away. Cause they don’t understand this concept. Are any of those, the dentist that you like, introduced me to you, like I’ve never discussed this particular topic with any of them.

Are any of them doing something like this or do you know, or wouldn’t might be able to put me in contact with maybe that doctor’s group and how they set that up? Just so I have an idea, I mean your CPA should, this is a prime example where you have to drive the ship, no CPN there. And I would propose this stuff to you because most people don’t even not don’t have passive losses. Majority nine, nine, 9% of people out there are slaving away with ordinary income. They don’t have passive losses. So this is all a moot point to them. So no CPA would advise it because they don’t have it in the first place, but this is where you have to propose the strategy Hey, I’m a real estate investor.

I get a lot of passive losses. I’m thinking of setting things up like this so I can utilize my passive losses and to push as much stuff to passive. Or Q1, but then this is where you have to get a lawyer involved. Because this is not a CPA thing. It’s more of a lawyer, how they set the partnership.

So yeah, another S another scenario. I got another guy he’s like a chiropractor and he’s got a few extra rooms in his office, or one extra room that he wants to push to, like a massage person. And obviously the normal route would be yeah. Charged the massage person thousand dollars a month rent.

Problem with that is that’s ordinary income. So I was like, yeah, I want you like off. Tell them to run it at, pay me 400 bucks a month, but I want a 20% of your revenue per a K one, but shake on it. A JV. I’m a pass entity. You pay me via K one.

But you see how, if you have to get the CPA and lawyer involved in setting this stuff up, people will wonder, what the hell are you doing? Like, why are you making things so complicated? If you can take, a third of your income as passive income that you wouldn’t have, otherwise you sheltered a third of your income.

From taxes, assuming you have the passive losses. And this is what I was talking about earlier. It’s like the deals is just one third of this fixture, which turn off passive losses. But unless you have this stuff structured, you cannot use those passive losses efficiently. Like in your case, this is where the W2 workers screwed.

They don’t have these levers, but like dentists and, business got on their own businesses. I dream situation.

But, it’s hard. I think a lot of people don’t think this way, so you’re going to be pushing a pill with this probably, but it’s good to hear it and to talk through it. I like to explore that a lot. Yeah. I don’t think the guys, I think, I don’t think the younger guys are doing this in that group.

I know one of ’em, It’s super smart, how he gets the real estate professionals that so Justin, you better listen to this. So he owns the dentist practice, but he makes the wife, they own the dental practice and the building. Which isn’t necessarily a good idea, in my opinion, I think it’s a bad waste of money to buy her own building, but he has the wife be the property manager to the building.

So he, every month when he pays the rent, he pays the property manager, which is his wife for it. So the wife is turning 750 hours doing this, getting real professional status. So that’s another little, it. Everybody else. I think who are not dentists are the the medical practice people with a building should probably just forget I said this, but in this, your particular situation, this is very possible and it’s super smart.

You don’t have to screw around with this. Some you definitely don’t want to screw with burst. That’s just idiotic. I think this is a waste of time and too much risk, but. Justin, you’re going to go down this rabbit hole of this short term rental, and there’s a lot of nuances to it, but you can like just circumvent all that with this, renting out your dental practice to your, or the building to yourself and having your spouse, but then you need to stop that doesn’t have a job too.

At least she can’t have a job that. Does more than this, right? Like it has to be the real estate stuff more so than anything else. You can’t have a 40 hour a week, day job. He’s got to go part-time at least. Okay. But as you can see, as you guys have seen the reason I bring this up is. It helps Justin, but it doesn’t apply to most people here, but hopefully it gets the wheels turning because these are how the idea of the ideas have to come to you guys.

It’s not fear of CPA, accountant. If it came from them, they wouldn’t be working that,

and these things change all the time, like real estate passive losses and bonus depreciation is a newer thing. Once Trump took office, he made this thing and it’s not going to be around forever, actually. It’s phasing out in year 20, 22, but these things change all the time, which is why you guys network, you guys connect with other people getting around the right people.

Okay. But I would just let that simmer, now that she can look for it now, it’s a possibility. Now you go find some models that do it, and then you ask them about the nuances. Cause I don’t know how they do it. Okay. Yeah. If anybody in your group would be like is doing that and would be willing to shed a little light, I would be happy to talk with them and in some way, shape or form.

Come to the bubble. Okay. Yeah. Come to the bubble. I don’t know. We’ll talk from there. Cody there, Teresa I’m here. And what do you want to buy for Christmas? Just got myself, some reading glasses that I needed that they had the blue light lenses. So it was the same thing that I think Chad was talking about earlier and then getting myself a new laptop as well.

So the glasses stuff to me that falls under the health category. And I forgot to mention you technically use, you could be doing like an HRA. Or a health savings account. Okay. Does everybody know the difference between us it’s there’s so many articles written on this thing and it’s confused.

They confuse it even more, but I’ve written a little bit about that. Yeah. So you can, if the HSA is better because you don’t use ax, you don’t lose the ability to, you can carry for the set aside money every year, basically. The problem is you can only do it if you have a high deductible plan. So if you don’t have a high deductible plan, you can’t create one.

The HRA is if you have anything else, but a high deductible plan, your that’s the only option you have. But the problem there is you have to set aside, you have to proclaim that you’re going to need this much money to use on health expenses, and it’s a use it or lose it thing.

So the trick is at the end of the year, you tally up all your health expenses, like $150 on glasses, $50 knee brace, $250 on your doctor visits. And you set aside that much money into your HRA or HSA and you pay out of that. And then that way you lower your taxable income just by that amount.

Depending where you are, it might be a waste of your time, but that’s how you should do it. Or are you doing any like HRA or HSA stuff or. I’m not, no I think that’s what hung me up the last time when I was looking at it was doing the high deductible, because I just didn’t want one. But I did the fact that you could use pre-tax income to go towards any of your health costs that was in, in the fact that you can invest it in, grow the money in there.

That always appealed to me. But I think I got hung up on that deductible. Yeah. I’m going out on a limb here with this advice, but if you’re younger and you’re generally in good health, I think it’s a no brainer to go with the high deductible plan. And then a nice for multiple reasons for insurance, less costly. But then you can use the H S a and now you can put I think three or five grand every year into that thing. And it. It’s actually way better than a Roth account, way better, because you can spend it tax free too on you don’t get texted at the beginning. You don’t get taxed at hand and you get tech and you don’t have to pay taxes on health-related stuff.

And it carries for indefinitely. I actually have a health savings account with $14,000 that I bought that coffee farm out of. So you can self-direct it too. But I stopped contributing that stupid thing cause they just got annoying. And I don’t know, to make a self directed HSA plan. There’s a lot of administrative fees from the custodian to use and trusts, I think.

And I just thought it was just not worth my headache, but I would say if your employer has one, whether the administrator or usually it’s free. You could put money into there every year, but I know this is where I’m torn. Like you guys are investors. I would rather not put my money into that stuff and just invest it.

You guys are going to make a better ROI on it anyway, even if you don’t pay taxes on it, on the entrance and the exit or what you spend it on, if that makes sense. Yeah. Yeah. No, that makes sense. I didn’t know that you can get self-directed either, even if it’s through your employer. Yeah, you can take it out.

Okay. Is it like alone that you have to pay interest back into it or anything like that? No, you just take it and just take the container and put it somewhere else with another custodian. Okay. So like when you have that HSA with your current employers folks, You can’t invest on anything other than the garbage investments that they put you in, or they have options, right?

So you can self-drive, you can take that container, take it to entrust or new view wherever. And now they have a lot less restrictions on where you can use the money for. But the problem is it’s such a small amount of money. What can you buy for five grand a year? It takes a while to build this up.

Yeah, and I think you’re better off just investing it in cash, but I don’t know. I just know what’s out there if you guys want to play that type of game, but the nice thing with the, what you could do is you could fund the HSA or HRA, just keep it really neat where you just put in there.

What, you’re going to spend in the next. It’s 12 to 18 months. You’re going to buy the glasses for a hundred bucks. You put a hundred bucks in there, you pay it out, HSA done. That’s another option. Or like a lot of people use that stuff for like healthcare or daycare. I don’t know.

So what did, what do you guys send your kids to daycare? Yep. Three of them or something like that, wrap the flex spending account for the daycare. And that gets eaten up in two or three months. It helps in that respect that it is a tax free or pre-tax, but it’s just not enough to cover childcare expenses.

Yeah. So yeah, the flex spending account is like an HRA. You put it in there and you pay it out of that thing. So you don’t have to pay the taxes on the loan on the whole or the pre-tax, but that HSA rollover self-directed thing is interesting because my partner does contribute, I don’t know, a thousand or two, whatever into that account.

So that’s then. I think our max is 7,000, so I’ve been putting that into it. It’s like 10,000 that I could play with and realize you could do that, but you’re seeing what I’m saying. Drain it out, don’t try and build up much money in the HSA because I think that money is better off somewhere else.

Just like for the same reason why I’d rather have your money not be an IPC. I’d rather have it cash so you can make money. You’re more flexible. The same reason, but if you want to run it like a slush fund with the HSA for 18 months, 24 months call it that. I think that’s a good usage, but don’t try.

And every year put in six grand to try and build it up to 30 grand in five years. That’s just not, I don’t think that’s a good idea,

but what do you guys spend on like daycare? For one kid. I don’t know. That’s all I’m asking you.

It’s it’s not map it’s 900 now, 900 a month. For the youngest. Then the other two, it’s mostly the summer camps and day camps and those are a couple of thousand a month, so yeah. Okay. So 10 grand a year or something like that. So that would more than that would be a no brainer to put in the.

That amount into the HRA or six grand to HSA, we shelter that. Cause you’re going to spend that. But, yeah, so Cody, so your laptop, I think that’s fair game too, but you gotta make money right on the rental first. What about the cause I have I’m in a couple of syndications right now.

If I have that and they have the K one, can I still take the laptop in that case? I think it’s a little bit more sketchy. I would try and write. This is all kind of fringy stuff we’re talking about. So whenever you can put it under something that’s less that warrants it more like your direct rental.

I would push it to that side if you could.

That makes sense. Yeah. No, that makes sense. It seems a little bit more directly tied. I just closed on my rental in mid November. So even though I’ve had it, I’ve gotten my first cashflow payment for it. Can I still take it for this year or is it better to take it next year? Once I’ve had a full year of income.

The laptops 1000 bucks, your cat year profit on that property is 500. If that, yeah. Something like that. I would wait until next year, because this year you’re probably going to be negative anyway. Because you’re going to take the depreciation for the full year. Yeah. So that’s the key, right?

That’s the overall goal is like drive you down to zero. That’s essentially what we’re trying to do. So just put it off to next year. Okay. And I think that’s the trouble is like, what I’ve found logistically is like keeping track of this stuff. And we give all this stuff to your CPA and you don’t really know it’s hard to follow if they did it or not, or if they just threw it out.

So I would just float this on back and then pop it in there next year.

But yeah. Next year you’ll probably make what, $3,000 profit or something like that. How much is the property worth? The property was 96,000.

And then your depreciation, I’m guessing one 27th of let’s call it

60,000. So I’m guessing you’re taking that 20 or two grand deduction every year for depreciation. Just my guess. So you’d probably be.

You’re going to be negative anyway. I think, but I would just throw it on next year. So would I be taking a full one 27th of a deduction, even though I’ve only had the property for about a month and a half before year end? Is that how it works? I think so, but I’m not sure on that, but I think that’s how it works.

Okay. Yeah. Ask the CPA, but I think on the schedule, E they ask you like how many days that’s been in service. I never followed like the forms and how that actually used. They use that number or why they used it, but I kind of feeling like they, they prorate that the depreciation for the first year.

Okay. But I know on this indications, if we close it before the end of the year, it doesn’t matter. We take the whole thing and full year bonus appreciation, but I’m not sure on the single family, but if that’s the case and they only give it to you partially the author on that laptop and go negative.

I think that would be a big distinguisher. You can run. You can run a bit the business at negative for a few years, nothing wrong with that. But I’m just trying to throw that laptop in the year where it can fly under the radar at the most. And under the right business unit.

It’s, there’s always a chance of audit and getting throwing out, but I think you’ve got to give yourself the best chance.

But that it that’s all you want nothing else. Cause I was going to get more creative and laptops and glasses do light glasses, I guess is the thing this year,

trying to look at my desk. Oh, one, one exercise I do every year is I go back to my Amazon payments and I just look at what I bought and just think can this remotely be used for my business. And I do that because it’s easy, right? Amazon makes it so easy to go look at your past orders. So everything I do is always the ease.

What is the minimum effective? Those are the easiest thing that I can grab some of these. Mini deductions is everything you do. Even if you’re in the lowest tax bracket, it kinda is like a 20% savings discount. People will jump out of the building for a 10% discount. Why would you not do this is what I think.

Any other questions or is who else is out here too? Tara. You got any fun one? Sean, you got any fun ones?

Yeah.

I don’t know if you guys are doing board meetings or if you guys set up like your board of advisors, but you could probably take your friends out to dinner or something like that. If they’re on your board.

I buy myself a lot of these Amazon smart plugs I have in my office trying to see what else they got. Tape office supplies, stamps, surge protectors, camera stuff.

Oh, wait a minute. Isn’t there a provision where as long as you’re in the North American zone. You can do any business trip that is like an executive business trip or something like that. Yes. But if you own one rental property, I think that is hard to justify, and that’s why once you go and once you take your business negative, which you already are, because of all the appreciation you’re getting, even at one 27, Per year, because you will have things that break, you will have to pay your property manager that the 10 98, I think you’re going to be negative. Anyway, I think so. I don’t think you’re warranted some kind of executive business ship until you own a bunch of these things you’re talking about, going with the spouse to. Vacation or something. Talk about goals or something.

Yes. Yeah. I think, yeah, that’s again, that’s like another marketing trick by cGAS. It kinda gets you by that, but I think you can only do it if it’s practical, like you’re making money, you’re already positive, but you can play that game, however you want. I’m just telling you the more conservative side of being something like that.

So an observation that I wanted to make. And in one of the past, or maybe it was the recent Cambridge webinar that you did lane, I think you cited as an example where if someone works in best offer of, into that deal, they probably get 40 10 cost segregation, like depreciation that they take.

That’s a lot of pal. And so in that scenario, is it even worth the time to, go through the Amazon list and, I identified a search protect, you know what I’m trying to get at? You’re in a syndication is it worth doing this or are you doing it because your pal, you don’t have enough pills right now to offset your passive income.

Is that why you’re doing it? Put it this way. I have hundreds of thousands of dollars of passive losses suspended. Passive losses is the definition, but I just, in the, just two minutes, I was just scrolling down my Amazon thing. It’s easy. It’s fun. Makes me suck it to the man.

Or uncle Sam. I enjoy it.

I think it’s okay. So put it here, put it this way. Here’s the difference is the passive activity losses from deals. Technically, you’re gonna have to pay that back at some point, right? When the deal exits five, 10 years later, but me writing off $20 for Amazon plug. That never comes back to me. That’s an expense and they never have to pay that back so hard to quantify, but I think it’s worth it.

I’m going to keep doing what I’m doing. Okay. I see. Okay. So yeah, if you put it like that we’re almost talking apples and oranges. Yeah. They’re all passed out. Yeah. But when you have to pay it back, you have to recapture the depreciation. Got it. And that’s when the deal exits after like your Fiverr.

Yeah. And of course you’ve probably gone into a dozen deals by then. So he’s like a rich guy in his bank account. It goes down a lot, but it goes up twice as much again, but it, and it doesn’t matter, but I don’t know. I always, I grew up with a scarcity mindset, so I’m going to keep picking up passive losses if I can.

Yeah, but yeah, I get to your point, you’re not paying off the reading lessons and the laptop. You’re not having to, I can’t remember the terminology you used earlier, but to recapture it down the line. Yeah. Yeah. And technically, I think with a laptop, depending how your CPA looks at the world, if they’re like by the book, you have to depreciate that asset depending on what category of asset it is.

In five, 10 years, but who does that? Who has a life? I think if your CPA is doing that, they obviously don’t have enough clients because they actually spend their time doing that nonsense. And they’re not being practical because that’s just dumb. And like we were saying We’ve mentioned this a long time ago, but say you were, you had a big repair, like your HVAC gets stolen.

Sorry, Chad again, but you should be technically, you’re supposed to write something like that off in five years, you’re supposed to decrease capitalize. The asset is what it’s the terminology, but there’s a diminimous law. I think it’s $250,000. If you can. If it’s under that threshold, they say, screw it.

It’s not worth, but IRS has time. It’s not worth your time. Just write the whole damn thing off first year. So with that diminish this law, you a wink, wink, try and make everything from it. So these videos are ever shared, and it’s not to be contrary to speak our tax advice, but if you have something large, that’s there.

$3,500 work with your vendor split invoice. That’s when I work, I don’t know. That’s when I was a project manager and we had to, I had my delegation of authority of how much money I could spend. I don’t know, like 50 or a hundred grand per vendor invoice. I told them to split all the time. I don’t want it.

I don’t want to send the email to my boss’s boss to get some DocuSign thing or. Both your workflow. Like I’m not an idiot. I got to get the job done. So that’s what I’m going to do. And I think that’s where you have to make the call as a real estate investor or business owner. How you do that stuff?

Justin’s in a hard part. Cause he got a Bible and like on a dentist chair, or a drill, how much a jewel costs by the way.

There, there are a lot. It’s funny in the dentist circle, like sometimes people will look for the deals and try to find stuff on eBay. But if you go through the vendors, they can be depending on the type, they can be several hundred dollars to like a thousand dollars. Okay. Okay. Let’s take something bigger.

Like a chair. Okay. Something that’s five grand or something like that, probably about right. Yeah. How do you guys write that off? Is it all in the first year or two? To be totally honest. I don’t know. I’d have to talk with some people who go in do these practices, like Denovo, just like from the ground up building it.

And then I don’t really know how it comes into play. If it’s in my position where I want to buy an existing practice. But I would imagine most of it gets depreciated out over time. But I’ve only just recently heard about this diminimous or what is it the minimum, whenever you’re just talking about like law it’s in the e-course the write-up is in there, but yeah, this is why we do this, right?

So that you are educated and empowered to ask the right questions to guide the conversation the right way. Now their next step is to go talk to other dentists. Hey, just out of curiosity, did you write that off? Unfortunately, they won’t know, they won’t have a free prompt. Probably not.

Dentists are notoriously bad. That isn’t doctors. I feel like I, I get the rap that we’re all very bad investors, but that’s maybe the right question would be go to your CPA and say Hey, just hypothetically, I bought an office chair. Is, does this fall on, this is something I can write off the first year or do I have to capitalize it over five years or 15 years or whatever and see what he says.

And then you look into it, then you ask the question. Is there, have you heard of the minimis law? Because I don’t know if the Munis law applies to this real estate only are businesses. I don’t know. But I’m sure there’s other things in other arenas, but. Say, Hey, I’ve heard of this minimis thing. How do you, what’s your interpretation of this thing and how can I take advantage of this?

And then you nod your head and you walk away and you work with your vendors appropriately to bill you accordingly and to label it as such,

because that’s a big deal, right? Like you saving 50 cents on every dollar on that $2,500, 500 bucks in year, or that’s a lot of money. That you can bring to today as opposed to in the future.

Very true. I’m not in your industry. I’m just, I don’t know. I don’t know that type of English do what you guys do, but to me, it’s all, I would look up section one 79 other tax schools

looking it up right now. If you want to sound smart and I would have read this before you go talk to your CPA. So my understanding section one 79 is like above the line type of stuff where you just appreciate it right away. You can have the discussion with your CPA where Oh, it’s, this is just one sec.

Is that chair one 79? Or is it something else? So these they’re chipped off to the, what the hell is going on. So don’t just tell you no, go away like any other dentists. So I’m looking at a solar deal right now. And these are the questions I’ve asked. Cause I don’t know. I’m like, is it one 79?

Because if it is then all these other rules apply where it’s just a business deduction.

See, that’s how you got to spend your time. Reading things like that. I think

makes sense. So I’ll look into this. I appreciate the the direction. Yeah. Look into that. Yeah guys, I think we’ve overshot the time here. I gotta get run in. We’ll come back to some of these gifts and Getz next time. But if not, have a great holidays and new years, we’ll see.

Third.

Hi.