The 7 Best Investments To ELIMINATE Your Annual Taxes w/ Tom Wheelwright

Tom Will Wright, welcome to the show, buddy. How are

you? Great, Brian. Good to be with. I'm

excited to talk about the wonderful, popular, sexy world of taxes. Man, it's everyone's favorite subject. It's what everyone's talking about. All the cool kids are talking about it, and I will tell you this. I will give you full 100% credit before your book and before being introduced to you and your brand. I did not think about taxes whatsoever , besides as a thing that was just like this pain in my side at the end of the year. And now, since that point, since reading your first original Big Smash book it's been a complete reframe of how I view the game. And so I'm very excited to talk to you today. Going to Tax Strategies, go into the new book and what you're up to currently, man. So it's just an absolute pleasure to

have. No thank you. It's great to be with you and that I'm so glad to hear that, cuz that's the point of the book is people ignore taxes and it's like a, at least a third of most people's income goes to taxes. And to ignore a third of your income is just a, it's a crying shame, frankly.

You said a quote in the book where you were talking about like the context of that third of income going away. And for people listening like, yeah, that's your tax bracket, like 30%, 40% for high earners is disappearing to the US government to just waste and squander as they see fit. And you made an example of the book about you're like, that's 30, 30% of your life. That's like a prison sentence is what you refer to it as. And I was just like, holy crap. When you come out the gate with that and then you realize what freedom is on the other end of this, taking this from being a pain to almost like playing a game of tax preparation, it's insane. So for you, I'd love to go into. To begin your backstory about how you transitioned from managing thousands of people in Big four accounting to meeting Robert Kiyosaki and then joining in him into this wonderful world of media personal brand in your own thing. Cuz that's very

interesting to me. Brian, actually, it took getting fired from Pricewaterhouse. For me to actually start my own business. And I, people just asked, once I started it, people said, why did it take you so long? We always knew you were gonna do it. It took me 13 years. It took me probably at least eight years longer than it should have. It was that that really is what got me going. I'm just going, why am I sitting around having people tell me what to do? Cause I never liked being told what to do. I started my first accounting firm. I had two clients to start out with and beat the bushes and literally did cold calls for nine months and doubled my business to four clients realized pretty quickly that is no way to build an accounting firm and went out and bought. I bought one, and a friend of mine actually financed it. He had money sitting around. He said, I'll finance it for you. And within a year and a half, we'd paid that off. So we were off and running and I had really good referral sources. So we were going pretty strong, but then about four years into it, I. My partner, my original partner and I broke up. We had a difference of values, which is where most people break up in their partnerships, frankly, or their relationships. And all of the staff stayed. So we had 10 staff at the time. The entire staff stayed with me and a good and half the clients left with him, right? So I, so we now had this large staff compared to the number. Clients. And so I actually took one of my staff members, my senior most senior manager, and asked her to be my business partner. I thought she was brilliant, by the way, 21 years later. We're still business partners. It was a very good move for me. She , very smart person. And I asked her and I said, what do you think? Do we fire half the staff or do we go. Twice as many clients. She said it's, we just decided it's really hard to find and train good staff. So instead we went looking for new business and I got a postcard of the mail, said Practice CPA Firms for sale. I called on a couple of them and one of 'em looked really. And the owner said before you do anything more, you really need to read this book. Rich Dad, poor Dad. I said, why is that? Because. Because the author is one of our, one of the clients in this practice. And so I went out and read Rich Dad Port. I'm not sure I would've read it otherwise. I grew up on, in an entrepreneur family. I read it, I'm going yeah, this, of course, this is the way, life works. But I hadn't grown up in an employee family. My, my father, my grandfather, my great grandfather, all entrepreneurs. So I come from a long line of entrepreneurs. It's in my blood. And my brothers have all been entrepreneurs. So I read at Port Dad, I got to know a little bit about Robert and then eventually went to a conference that he was putting on. And the other, the CPA who had sold me to practice was speaking for him, but she decided not to. So he calls me up on stage, first thing says, explain Depre. And I get up there and this is actually where the title of Chapter seven of Tax Free Wealth comes from, and I said depreciation is like magic. You get a deduction for something that's going up in value. I said and he looked at me, he goes, really? And I said, yeah, that's really all it is. It's a deduction for something that's going up in value. That's why it's magic. And that kind of started our our friendship. And that was back in, I think like 2003. . So it's basically 20 years we've been working together and Robert's been a great influence on me and we trade a lot education between. So

A couple points I wanna bring out of that, but first we'll start at the end and kind of work backwards. I think a key point there that many people don't talk about is the ability to articulate technical or complex material to where the majority can understand it. And I think that's a skillset that you and Robert both possess that's not really talked about or celebrated enough with how you're able to take depreciation and say, Hey it's taking, it's them being able to write off money for something that's appreciating and value that goes up, you. It's just like such a simple way. It's essentially copywriting on steroids. Have you always been that way or is that a skill set that you acquired as a business owner?

It's actually something that Robert's kind of pounded into me. He says, you gotta get, you gotta get more simple. I'd be on stage with, literally, I could be on stage with him in front of 2000 people and he'd like, Stop Tom. They're not understanding this, and he'd just get right after me. And so we've had lots of that training. It's a training of hard knocks on stage with Robert and he is very generous to put people on stage that, really Don't have the training that he has. He's an amazing trainer. But, Albert Einstein once said that any six year old could explain something to a genius, but it took a genius to explain something to a six year old. Ooh. And and I've taken that to heart. I just think the simpler we can get the better off we are, was talking to a group of CPAs. These are, a lot of, these are members of our CPA network. And I said, Your clients don't understand 80 to 90% of what you say. Yes. And they're nodding their heads. And all that means is that they're okay with you talking. But they don't know a word. They don't understand a word you're saying. So you gotta stop and you gotta say, wait a minute, let's make this simple. And let's really bring out what's really going on.

Yeah, I wanted to ask you about that specifically and punctuate that. So for business owners that are listening to this, please apply what Tom and I are talking about in your industry, in your profession, because the more jargon you use, we tend to think that makes us sound more professional, more experienced. But the better you are at explaining it in simple terms, that's the better value that you're providing to the customer. Before we move forward, I actually am curious about the difference in values that you saw between your original partner. For the firm that you bought and then also this CPA that you are working with, that you're now 21 years later still together with as a business partner, what were the differences between the values that you saw? What did you do wrong and what did you remedy to fix in the second relationship?

I, first of all, I recognized pretty quick that it was a difference in values. There was a reason that half the, that all the staff stayed with you. And that was the difference in values. He actually told me once he goes, I think we should fire our entire administrative staff. I think they're worthless. And I found out later things that he was saying in doing with them that. Probably would get me in trouble now if it happened, 21 years ago it didn't get me in trouble, but these days it would get get the firm in trouble. It was just, what do you care about? That's what you value is what do you value? What do you care about? And the very first thing I did with my new partner is I said, let's figure out our. Let's write 'em down. And this is middle. We are literally doing this the middle of tax season and she, wow. , I've add it to her. She's going,

Okay, those that know, it's like

March and she's going, okay, and we spent two hours. And I'm going, we've got to do this because this is gonna be the foundation for everything we do. And in our current company Wealth Ability, we we spend a lot of time talking about our values and we've got 'em real simple and everybody knows them off the top of their head, and that's what we follow. And if you don't follow the values, you're not a good.

Yeah, I just had an interview with another author, Cameron Harold, I don't know if you've ran into him before, A vivid vision, and he was talking about how you need to have everyone on the same page and everyone rowing in the same direction to be able to do it. Otherwise, you're just going just sideways or diagonal. You have no clue what you're doing. Another point that you said there was really important, and I want to make this the segue to where we talk about taxes in general in differences in being, having a proactive strategy as opposed to a reactive strategy. Most CPAs have no idea about the stuff that you talk about. Why is that?

You know what? It's interesting Brian, because I say think they do. I think they just. Are so afraid of the tax law and so afraid of the detail details. And the problem with most people is most people start small and then get smaller, and so they, they start with the details and they get into more of the details and it, you have to pull back. You have to look at the big picture and say, what's really going on here? It's like in the FBI and the caa, they always say, follow the money. , that's what's really going on, right? You follow the money and then you probably find the culprit and the motive and all that kind of stuff. In the tax law, it's what's really going on here, and you don't find that out by delving into the details. So I, the CPAs, they tend to get lost in it. They get lost in the weeds and they don't see what's really going on. Fortunately, I've got enough experience and background. I'm old enough that I could figure that out. So that's that. He, hence we have two books on the subject.

Can you talk about the tax code overall because you were the single person That completely reframed how I view it to where the tax code is actually a, basically a play by play guide issue to us by the US government in what to do as opposed to what not to do. Can you speak a little bit on that and expound.

First thing you have to understand we have to understand Brian, is that there's one line in the internal revenue code. There's 6,000 pages and there's small print and big pages and there's one line that says all income is taxable unless we say it isn't. And there's another line that says nothing, no expense expenses, deductible unless we say it is. And then there's a few charts and tables tell us how much tax to pay. Then you go, okay. Presumably then the tax law could be 30 pages. That's right. It could be, except what we have is that governments around the world, not just the US, have been using the tax law as incentives to get things done, the government wants done for the last 60 years. Okay. Since the early 1960s, John F. Kennedy was the first one to really use the tax code this way in the us And then other countries have followed suit. So it doesn't matter whether it's retirement, whether it's real estate, whether it's jobs, whatever it is the government wants done, the government says, wait a minute, people hate paying taxes. They finally figured that out. And so if. If they hate doing something and we make them not have to do it so much, maybe they'll do what we want them to do. And so really the tax law is a series of incentives and when you follow that, then you go, then wait a minute. Then all of the, those details of the tax law must really be a guide as to how to utilize those incentives. And so that's where it becomes the roadmap and the tax-free wealth goes through that roadmap of here's the roadmap for reducing your taxes. This is what you need to do in order to get that. Yeah, it's

funny whenever you look at like the current market sentiment I wouldn't even say the market sentiment, but the sentiment on social media, right? Where everyone's tax the rich. He's an asshole. He is not paying taxes, blah, blah, blah, blah, blah. And a lot of people are raised with this notion that. If you are a good red blooded, hard working American citizen, you're paying your taxes. But then once you actually start making money, you realize that the opposite's actually true. The majority of the taxes are actually paid by people that don't understand any of these incentives or these tax codes. And then that goes perfectly into the different cash flow quadrants and different quadrants of whether you're an employee or a business owner investor. Can you speak to a little bit of that, because I've recently just made that transition. In my business to where I have now gone from employee in corporate America to now business owner, and I've been following your playbook and Robert's playbook to be able to implement this. And now this last year I was able to write off $37,200 of expenses of things that you would've just paid money for and just forgot about. But now I can write them off as a business owner. See, can you speak about those different quadrants and the different advantages of each?

Yeah. Here's basically the way I look. , we're partners with the government, right? We're all partners with the government, and we can choose whether we're a passive partner with the government or a silent partner or whether we're an actively participating with the government. So typical employee go to work. Get their paycheck, pay their taxes, it's withheld, right? And then as soon as they can, they file for whatever refund. Or, they owe something. But, taxes are just a nuisance at that point. It's just wow, this is, I don't wanna pay attention to this. It's too complicated and it's just a lot of money outta my pocket. The reality is you're just at being a silent partner. I'll tell you a funny one though. Robert calls those people tax mules. They're the mules carrying all of the weight and the burden of the taxes for the rest of society. But then you get extra education, you become a doctor, lawyer, accountant, you're. Now you own your job, right? You're a small business owner. You basically own a job. You're not working for somebody else. Wow. You are, you're working for your clients, your customers not for some boss and twice the amount. So you're basically spending twice as much time to earn half the pay. Basically is what's going on as a small business owner and most small business owners, they also. Our silent partners and they pay even higher taxes cuz they're paying Social Security taxes on their income as well as on, on their employees income. And that income rate gets really high. But then you look at, okay, so who are the rich people, right? The rich people are the big business owners. And they're the professional investors, right? If you really look at the US and in fact, most societies that's who the rich people are. How come they're paying so little tax? The reality is they are, they're paying less tax, but why? And so if you look at the, like the big businesses, 500 employees or more, they're paying less tax because their employees are paying the. So , so the government says, look, we want you to hire people. If you hire people, you'll pay less tax. If you create technology, you'll pay less tax. So all they're saying is, look, if you do these things we want you to do, you'll pay less tax. It's a trade off, right? You're actively participating with us what we want done. Then you look at the investors, look, the investors created housing. They're producing food, they're producing energy. They're producing things that the government doesn't wanna produce. Those things. They don't want to build housing. , they're terrible at it. Nobody really dreams of living in government housing. This is not something the government should be doing, and they can leverage it. So if you think about this, the government wins on this because the government's only put in. Anywhere from 10 to 40% of the investment, but they're getting this huge return on investment. Literally, any investor that could do what the government does with taxes would take that on every single one. Say, look, you have a valid business. You're starting up your business. You're, we're gonna give you all the rules for how you're gonna participate with us in this business. We're gonna enforce those rules. And we're gonna reap the rewards because when you make the money, we're gonna take that 10, 20, 30, 40% back from you unless you keep investing. And so the government's just saying, look, here's the rules, here's the playbook. And and if you wanna be an active participant in this, like we talk about in Win-Win Walt strategy, that's what we call it, win-win. Government wins, taxpayers win. If you wanna do that, great. If you wanna be a silent partner, that's okay.

Yeah. And what's some advice that you can give? I love all of that, by the way. Thank you. What's some advice that you can give on how to search for a CPA or one of those local partners that can partner with you on this stuff? To be actively working and on your team to where you can play offense as opposed to defense? You have your own network of CPAs.

We do. So I can give you a couple of ways to do this. In chapter 23 of Tax for Wealth, I actually go through how to find the right tax advisor. And if you really wanna do it on your own, that's fine. If you want to hit the easy button then he just calls at Wealth Ability or go to wealth ability.com. And we literally the most common question as I've traveled around the world with Robert is how do I find somebody like you? How do I find somebody who understands the tax law this way? And because of that, about four years ago, we sold, I guess five years, going on five years, we sold our CPA. My partner and I, and what we de decided was let's build a network of CPA firms instead so that we can serve more people and we can serve at different levels. Because if you have a CPA firm, you've got a small segment that you can serve, but if you have a network of CPA firms, you have a very large segment of the population you can serve. So we decided to do that cuz we were getting. Anybody from somebody just starting out to somebody making, seven figures or eight figures, right? So we created this network and then mostly what I'm doing with my time is training these people. And the other thing we've done, of course, is develop a system. So if you kinda look at tax free wealth or win-win wealth, they. Giving you a formula. That's what they're doing. I've had people all over the world. I had somebody in a Bucharest come up to me and say, you've completely changed my life. And I'm going, really? You're using tax free wealth. You live in Romania, , he said, absolutely. He says it, it applies everywhere. Actually. Win-win wealth, we actually looked at 15 countries, but it applies everywhere. And he goes, it's just a it's. It's a system. So what we've done is we've actually created a whole system for our CPA firm members. We have about 60 CPA firms around the US and Canada, and we've just created a system for it and they follow the system. And once you understand the formula, once you understand the system you can replicate that over and over again. You can either choose to rely on you, you can go through chapter 23 tax. You can choose to rely on what that person knows, or you can choose a system like we've developed at Wealth Ability. It's really what you want outta your.

Yeah, and I completely agree with you. And now I've also used, so it's like for me, I had a personal CPA that I was using. Shout out to Lacey Harder over in Atlanta, Georgia, . And then your service is fantastic as well. I wanna talk, I wanna hit a little bit more before we get into some specific tax strategies. I wanna hit a little bit more. Some of those other pillars in win-win Wealth, you said two of them. Can we name a couple of these other areas where the government is incentivizing people to move towards and problems that they're trying to solve, but they don't wanna directly

do it? Sure. I'll just give you all seven. There's seven investments. Oh, ladies. And you

better

buy the book, . You gonna buy the book to learn how to do this, but here's the seven. So jobs is number one. So that's business all over the world. Business is the most incentivized activity that people can do. I'm related to business is technology. Now, interestingly, we're probably the worst. In the world on incentivizing technology in the us. There's a lot more. For example, Singapore. Singapore, you get a 400% tax deduction Here you get a what? Yeah, 400% tax deduction for for certain research and development activities. In South Africa, it's 150. In France, there's all sorts of incentives. So literally everywhere you go there's incentives for technology and really any kind of research development. And then you have, you kinda keep building on that. Okay, what about real estate? Yeah, real estate's, huge incentives, tax incentives in real estate for housing, commercial, industrial, all types of real estate. And then you. And one of the biggest benefits of real estate course is debt. Cuz debt is not taxed. You borrow money that's not taxed. And real estate's the easiest way to borrow money, frankly, cuz the banks are pretty comfortable with real estate. But then you have energy, whether it's oil and gas fossil fuels, or whether it's renewables. They're energized all over the. And agriculture, food, wanna produce food. So those are really your top five. And those are all on the being the eye side, the quadrant. So they're the business investor side. But then there are a couple of incentives that are a little more personal and anybody can take advantage. So E, even if you're a W two employee, life insurance. Life insurance has huge tax benefits, just huge. It grows tax free. You never have to pay tax on it. You don't pay tax when you die. If you do it right, so it's, it's a huge tax incentive. And then the other one is retirement plans. And retirement plans. Everybody would agree yeah, 401k, that's okay. So my tax incentive is okay, but your tax incentive is bad. That's pretty much the dialogue that's going on right now, which is why I wrote Win-Win Walt's strategy. Is that the dialogue's too much geared towards certain. Tax strategies we're okay with, but other tax strategies were not when the government's, none of these are loopholes. , of these are mistakes. These are all intentional and they're doing things government wants done. Interestingly enough of all seven, the one the government makes the least amount of money from is retirement plants. That one, they break even on, but everything else they make money on. So is that by. You know what? It's just by, by the nature of the beast, because the whole idea with retirement plans is it's all about you. It's just your security, right? There's nothing that you're really doing for society there. You're just trying to stay off the stay outta the unemployment lines basically. So retirement's very, it's a little selfish, frankly. , it's a more selfish activity. I always say that if you really want good tax benefits, then you need to be generous. So if you create jobs for other people, that's way more generous than having a job just for you. If you create housing for other people, that's way more generous than just buying a house for yourself. If you create. For other people, that's way more generous than creating energy just for yourself. For example solar tax benefits are better if you're a business owner than they are if you're an individual. Okay, that's because you're only benefiting one person if you are an individual, but you're benefiting at least your entire business, employee staff and maybe your other maybe your tenants, et cetera. If you do solar on a business or investment property,

That's a really cool perspective shift to where, once again, it goes back to the people that are crying and screaming about tax the rich, eat the rich. And so how you just framed that actually just snapped something in my head about the concepts of generosity in general to where people see these business owners and they're like, oh, look at the this rich, greedy person, but. They are 10 times more generous than you, if not a hundred or a thousand times, because they are providing jobs, they're providing the housing, they're flipping the real estate, they're making something better, as opposed to you who is on the internet saying nothing about nothing. So I love that. And so to recap for people listening, that's business tech, real estate, energy, agriculture, and then life insurance and retirement plans on the personal side. There's a line, there's a quote from a movie called Margin Call, and I'm not sure if you've heard of it. But I love it. It's a movie about Wall Street, like going bankrupt in 2008. But there's a line that I love, which kind of ties back to what you and I were talking about before, where it's like the CEO and he's like, , listen, I didn't get here by being complicated. Explain things to me like I'm a fifth grader or a golden. Okay. And so that's my favorite line to use. Now, tell me, Tom, explain to me as if I'm a fifth grader or a golden retriever, I have a hot take. Tell me if I'm a complete idiot. I hate 401k. Like I was the 401K guy in my W2 when I was in corporate America. I was contributing over and over again into my 401K until it came time to leave, and I realized how difficult that money was to access. So what are your opinions on this? Because people are split right down the middle in this entrepreneurship world about 401ks and about the access to the capital. And then we can get onto life insurance too, cuz that's another one that's split right down the middle where it's like half the people, it's the greatest thing in the world. The other half are like scam. So I'll let you hit whichever one you wanna hit

first. Let's start with the retirement plan. Near and dear to my heart, basically you have two types of retirement plans. The 401K is what we call a qualified plan, which means government sponsored, which means government regulated plan. And then you have the non-qualified plan, which is real estate energy technology. Et cetera. Okay. That's still a retirement plan. It's just a non-qualified plan. It's not directed by the government. Okay. And what happens is, the reason I don't like retirement plans is because of what you were talking about. I have no control over how much I can put in. The government determines that I have no control. I have very little control over what I can use it for. Yes, I have very little control over when I can take it out. I have pretty much only two choices of how I'm taxed on it. I can either be going in or I can be taxed coming out. That's that. Those are the choices. So there's a lot of control here. And I mentioned earlier on, I don't like people telling me what to do, and so I don't like those because I don't like the government telling me what to do. If you're not gonna get educated, it's probably the best thing you can do. Something, at least you're putting some money away and that is better than not doing. But let me tell you another thing, another problem with 401ks is you put money into the market, whether the market's going up or down. So you're you let, cuz you're putting in every month. , right? So as the market comes down, you're putting money into a falling market. Okay, , maybe not the best idea in the world. But that's what financial planners will tell you is general from a general standpoint, if you're willing to get educated, and I show this in chapter eight of win-win Wet Strategy, if you're willing to get educated, the non-qualified plans, again, business, real estate, energy, et cetera, are. Rock light years. Light years. , because here's the thing, I can determine how much money put into real estate. I can determine how to hold it. I can determine when I can determine what to do with that money. I can borrow the money out tax free. So I don't have to pay tax when I take money out. I'm not limited to 50% of my 401k balance. If I borrow money against my real estate and I use it for other investments, I can deduct that interest. Can't do that on a 401k. , so there's all sorts of handicaps. That you have in a 401k. And it's really for people. I think the 401K and the retirement plan is for people who don't want to be involved in their financial success. They want somebody else to do it for them. And they go, I'm not gonna do it. I don't wanna learn about it. I'm not gonna take the time for it. I, I'm happy just putting all in the stock market. That's fine. I'll take my chances with stock market, cuz you get all. These people telling you look, the stock market's done over the years. But the reality is it's just cuz the stock market's done well doesn't mean the investors in the stock market have done well. . And it's really a matter of how much you're willing to learn, how much you want, how much control you want. So that is the, that's the issue that I have with 401ks and other retirement plans. And seriously they don't benefit. They really, they benefit wall. Which I'm not a big fan of. Wall Street. . I think they're a great way for people on Wall Street to make a lot more money. And if you really are complaining about how much the rich people on Wall Street make, then maybe shouldn't be funding their retirement , which is what you're doing when you put money into the stock market. They're the ones who make all the money on it. It's not, you're not gonna make all the money. They're gonna make all the money. The other problem is, You know this, the whole idea of diversifying is such a misunderstood concept. Diversification is what you do once you've already made your money because you don't wanna lose it. If you really wanna make a lot of money, you have to get you, you really have to specialize. Elon Musk doesn't diversify. Are you kidding me? Jeff Bezos didn't diversify to make his billions of dollars. You don't see billionaires diversifying to become billionaires. Even Warren Buffet. He not diversify. That guy is so targeted in what he invests in. He's not diversifying. He's actually quoted as saying diversification is a bad idea. It's a great idea once you've made all the money you wanna make, because it will help you prevent the losing money. But the point of diversification is to not lose money. It's really not about making money and why you're in your, why you're young like you. You wanna be making me? Now, when you get my age, you might wanna diversify some of that money, right? Because you wanna make sure you're not losing money, but yes. But until you get to the point where you have all the money you want I'm a huge believer in a niche will make you rich. Be specialized, get really good at one thing.

We'll write bomb. We'll write bombs. You just dropped an entire, you just leveled. An entire country will write bombs. I love it. All right, so we'll put a pin in life insurance. I don't even care about that. Throw that for another day. Throw that for another episode. Now you

got me fired. Can give you one thing on that though? Give one.

Tom didn't gimme anything

you want. Okay, here you go. The difference between term insurance and whole life term insurance is an expense you'll never collect. Whole life is an asset that you can use for multiple different purposes. So while it's a, it's a pretty moderately producing asset. It is there, there are some benefits there. Almost all whole life policies are collected on almost no term insurances collect on. So if you are looking in insurance, just keep in mind that you might really want to think about that whole life policy a second.

Perfect. And guys, if you want more information on that by the freaking book, he's already earned it. You need to go buy Win-Win Wealth, and you will learn more about the whole life insurance policies. But another thing that you said about the 401k, because I was freaking crucified when I liquidated mine, so what I did was back in C everything tanked. And so I was just like, oh, like a lot of my 401K was in company stock, like my company stock. So then I bought it all back, spiked it up, cashed it out, paid the 10% penalty, used it to invest in real estate. Where are we now? So I'm somebody now that is 27. I'm essentially retired. So a lot of people that listen to this show are listening to this show, the Action Academy, so that they can have the mindsets, methods, actual steps to have a life of fun and fulfillment and freedom to where they don't have to wait until they're 65. 401K is not the move. But do what Tom said. Invest in energy, invest in business, invest in real estate instead. Tom, I want to ask you I wanna be conscious of your time, so I wanna take you down a couple of different rabbit holes. One is selfishly specific, but I think it would be an interesting rabbit hole for the audience to listen to. So I'm someone that now travels around the world full-time and essentially that's part of my brand, that's part of my business. And I'm wondering how I can proactively plan and prep. To have this be a business expense and a business deduction. I know there are specific ways to do this as there's a percentage of business that you need to do as opposed to leisure. There's like the rollover days. Can you explain a little bit about this concept to people that are listening when it comes to business travel and writing an office expense?

It's actually pretty simple. So if the, if you're in the US it's an all or nothing. Okay. In other words, if the primary purpose of your travel. Is business. It's a de the whole trip's deductible. If it's not the primary purpose, none of it's deductible. Okay? And primary purpose typically means you're spending more than half your day, your bus your day during weekday on, on business that you could only do in that location, right? So carrying your laptop with you and working on your laptop, that does not count. That is not a business expense. That is not business travel. That's just, that's a personal decision. To do the work you would otherwise do in your home office or your office away from home. That is not, that's not business. But if you go meet clients, you go get education, if you're in real estate, you go looking at real estate, whatever, it's that more than 50%. What's the predominant rule? If you're looking at international travel, like you're, like you've been doing Brian, then it's proportionate. So if you spend 40% of your time, Doing business, you get 40% of your travel is deductible. It's, ah, it's really that simple. So it's, but again, the reason for the travel has to be business, right? . For example, if you were a, if you were in the travel business and you're traveling to see, you're going to all these different places to write reviews and stuff like that. Not a problem. If you're like for example, let's say you're doing some travel. You're gonna go to Neer Island to meet with Richard Branson for a few days like I'm doing next year. That's business, right? Yeah. I'm not going there for vacation. That's business. That's gonna be deductible. So it really is, what's the purpose of your travel? And you have to document it. You have to be really careful in your document.

Is there any tips that you can give on the documentation and also sidebar? I just had multiple friends. I probably had a dozen friends go do exactly what you're about to do with the Necker Island trip this last year. So that was super cool. So you're catching, I think you're catching one of Richard's last ones this next year. Si complete sidebar. But how can you give some best practices on documentation to make sure, because I know a lot of people listening to this are. Taking as much advantage of this expense as they could in their businesses, and they need to be proactive about it moving forward, myself

included. Yeah. First of all, remember we. 87,000 new IRS employees coming on, and a lot of 'em are gonna be auditors. And the very first thing they're gonna ask you for is show me your receipts and your documentation. So if you if you pretend to document it, you're gonna get a pretend deduction. They're gonna dis allow the whole thing. So you need have receipts. By the way, credit card statements are not receipt. Okay. You have to have the actual receipt and it's easy. Just scan it. Just scan it in, give it to your, better yet, give it to your assistant to scan in and make sure you put down who, what, when, where, and why, who, what when, why, why'd you go on, why'd you do the travel or have the meal, whatever the business expense is. Who were you with? Where were you? Those are who, what, when were, and why. It's pretty simple. And then write that right on your. Scan it and file it, you're done until tax return time, it's

easy. So it's basically just a matter of just like purely being like, okay, like I had this dinner, let me make sure to build the habit and build the muscle of documenting this specifically after the dinner so I can go ahead and have that cashed away. Yeah,

Just write it. Just write it on the receipt. As when you're signing that that, that bill, you're giving them the restaurant. Their receipt. But your receipt, you just take another 10 seconds. You write down who you're with and what your discussion was, and then scan it. You're. Got it.

Love it. So to be to be cautious of your time here a lot of real estate investors listen to this show a lot, and a lot of them are pretty high freaking levels. So you got anywhere from seven to eight figure entrepreneurs that have massive real estate portfolios right now. If you could give some advice, what are some maybe blanket. Best practice pieces of advice that you're giving to your high level clients about maybe some different opportunity zones or tax shelters as we're moving through this inflationary period, which is probably only gonna get worse. I think. The Fed's raising another 75 basis points to my knowledge, and then we'll see where it goes from there. But if you can give some best practice tips about what you're advising your clients to do for people that are listen. Yeah.

Yeah. Two biggest mistakes that I see first is they don't do a cost segregation. Cost segregation is you bring an engineer CPA in, they determine how much is deductible this year versus how much you have to spread out over 20 to 30 or 40 years. , not doing a cost regulation. Huge mistake. And I see. Intelligent syndicators and other people not doing it, and it's terrible. And the reason they don't do it is the number two mistake, which is to presume that if you are not a real estate professional, you will not get those losses until you sell the property. That is not necessarily true. This is where you need a better cpa. Because I will tell you, I've talked to some pretty high level tax attorneys. I've talked to accountants every time, and I explain, okay, look. You just need more passive income. If you have passive losses, you don't have to convert to be a real estate professional. And they go, what? I'm going? Yeah, a passive, just cuz it's passive doesn't mean you don't get it. It just means you only get it against passive income. So why don't you change the nature of your income? That's a conversion process. That's one of our, that's one of our basically five areas in our tax reform. We talk about to reduce your taxes, change it from active to passive, or change your losses from passive to active. Doesn't matter. But those are two huge mistakes that people make. And it costs them, hun, a lot of people, it cost them hundreds of thousands of.

Yeah. For people listening, this is going to air one week after Terry Judge. So if you guys will go back and listen to the episode on cost segregation that we did with Terry Judge. He goes over specifically in depth how he runs and organizes and engineers his cost segregation. So guys, go back and listen to that episode. Are you seeing any other investment zones, investment vehicles that are maybe more advantageous during this? I have a lot of people asking me where to park capital. During this, and this may apply back to your life insurance example.

Wait, you have a couple of choices. Yeah. Life insurance. But remember the problem with parking and life insurance, you don't get deduction for going into the life insurance. Exactly. So rather I think you got. A couple of choices, maybe three. One is that you do an opportunity zone, which you can roll that capital gain into an opportunity zone. But of course, that has to be a, you look at the project first, determine is there a good project, but you do have some time. You have over a year to roll that into an opportunity zone. But you have to create your fund immediately, so you create your fund. Put your money in the fund and then go find an opportunity zone project. That would be one of 'em. Number two is everybody's heard of 10 31 or like exchanges. That's gonna be my next question. That's basically 180 days. So the problem with With that is you only have 180 days, right? But you can't span tax years, right? So you have 180 days from when you close on the property you sold. But here's what people don't do. They don't look at doing a reverse 10 31 exchange, which means I buy the new property before I sell the old property. So that's another opportunity. You might go out and be fine, go looking for a good deal and say, oh look, I'm gonna put this into reverse so that when I sell my next property, I can actually roll the property I sell into the property I bought. Wait, what? I can roll the property. I'm going to sell into the property I already bought. So this is called a reverse 10 31. Reverse 10 31.

Can you hit a little bit more about this? Because as soon as you said Opportunity zone, my next question outta my mouth was gonna be, would you maybe recommend this as opposed to the 10 31 exchange? Because a lot of people are having issues with 10 31, or they're not wanting to do the 10 31 for that exact point where they're like, okay, I wanna sell this, portfolio. 30 single family houses and then put them into something else. But everything is dog shit. The cap rates are terrible and they can't find a deal. So talk a little bit more about this reverse 10 31

exchange. Yeah. So I, I think if you've got properties that you're looking down the road, you're thinking of selling, you ought to be looking at properties to buy immediately. Okay. And you, and there's still good properties out there. Just because. In a market that not everybody and their dog can make money in, doesn't mean you can't make money. , in real estate. But you've gotta find them. But remember, you only have 180 days after you sold. But that doesn't mean you can't buy it before you sell. But you have to use the qualified year. You need to go through all those technical details. But I'll tell you another place that I find if people think that this is gonna last for two or three years and that, and it's not next year that things are gonna come down, but it's two or three years from now, then you might look at doing something like a triple net lease property, like a Walgreens or Walmart or whatever sell. Either do a 10 31 into that or. Sell it and then buy the new property and take the bonus depreciation so you don't have to do a 10 31. The difference between taking the bonus depreciation is you have to do it in the same year. . So if you sell in November, you're not gonna find another property probably that in December. So you then you do it 10 31, but if you sell in January, if I am, I'm just looking for a new property. I have until December 31st to close on it. If I use bonus depreciation and cost segregation, whereas I only have 180 days, six months to do it if I use 10 31. So what you do is you sit down with your cpa, you walk through all of these different opportunities, and you decide what one makes sense for you first as an investment and second for tax planning cuz the tax tail should never wag the investment dog.

Okay, so maybe if you were to provide a weight to investment versus tax strategy, like what weight would you give? Like maybe 70, 30, like 70%. Make sure it works as an investment. 30% or would you weigh them more? 50 50.

Just remember that all the tax benefits doing is reducing the amount that you're putting into the in. That's all it's doing, saying look, if you're in a 30% tax bracket, then the government's gonna put in 30%. You're gonna put in 70%, but you're already putting in, you're, you are putting in 70%. . So I think it depends on your tax bracket. If you're in a 40% tax bracket, the government's putting in a 40%, you're putting in 60%. So Id wait at 60 40. If you're in a 10% bracket, I'd wait at 90. It's actually that simple because you have, that's how much money you have invested and at risk is whatever the government doesn't put.

Okay. That is actually a very simple way of thinking about it. I didn't think about it like that. So thank you for that. So I'd be remiss if I didn't ask you, since you and Robert obviously have a very high level overview of everything. I think we all know Robert's sentiments on the market for the last decade now,

ha. Yes, we do. He's been very clear.

Oh my God, man, you just made me lose it. So for people listening, me and Tom are just losing it over here. Yeah. So we all know Robert's sentiments, but you guys have very high level access and very high level views of this. All of us know that this is bad. So what are you seeing whip out your Ouija board, your crystal ball? If you were to make an educated guess that you wouldn't be held to in a court of law, what would you say?

Here's the thing. We don't know what's gonna happen. Nobody knows what's gonna happen. Robert doesn't know what's gonna happen. Federal Jerome Powell doesn't know what's gonna happen. Nobody knows what's gonna happen. There's, there are too many. I subscribe more to chaos theory than anything else. There's. There's too much chaos going on and too many things. Who knows when, some major country's gonna invade another country, right? I You just don't know. So I think I, I think, yeah, COVID, for example or Russian invading Ukraine. But here's the thing, here's what we do know. We do know that the tax laws are pretty. So you're, you can plan from a tax standpoint, you're not gonna have major tax disruption, especially with the Republicans splitting con, they're, they've got Congress and the Democrats have the Senate. You're not seeing any major tax changes for the next two to three years. So that's something we do know. We do know that the Fed is focused on raising interest rates enough to slow down demand Inflation can come down. Now, can they do that and not put us into a massive recession? Who knows? They haven't done it before. But remember in 2008 they weren't doing this and they didn't put enough money into the market in 2008 they did. The problem is forgot. They forgot. The simple rule in that debt is money. . And so if you take, if you. 10 million foreclosures, you're taking all that money out of existence, and that's exactly what happened in 2000 8, 9, 10. Okay, now they're taking money out of existence two ways. They're raising interest rates and they're actually doing quantitative tightening, and so they're pulling money out of the market. Remember, inflation. Too much money. Cha chasing too few goods. . other side we don't know is supply side, right? I know Jim Rickard's coming out with a new book and talking about the supply side of it, right? Is supply chain going to continue to be disrupted? That's something we don't know. So I think the best answer is prepare for the worst, but realize that it may never happen. And a lot of people got caught on the sidelines. In 2015 and 16 when they should have been investing in real estate. Because they thought, oh, the market's gonna turn in 2017. But what they didn't plan on was the 2017 tax Act. , which just supercharged real estate again for the next few years. And then Covid hit people goes, oh my, that's over. The world's falling apart. It's over. They didn't count on the government putting in five, 6 trillion in the, in 12 months back into the economy. You have to prepare for the worst, but at the same time, realize that if you sit on the market on the sideline too long, then you lose so much money because of opportunity cost that you'll never make it up on those great deals. I love it.

I absolutely love it, and I talk to people about that all the time, about the opportunity cost of like money in hand today versus money in hand. 10 years from now it's gonna be astronomically different. And then once again, that is why I elected to willingly pay the 10% penalty on an early withdrawal of my 401k. Use it now. Use it today. Go ahead and pay the taxes because I fully intend to be making more. As I'm older, as opposed to today, which is a novel idea. Tom, as we finish up here, I wanna be conscious of your time. What is some advice, if you could maybe narrow down out of all the chapters that you've written and revised, if you could maybe narrow it down to a couple chapters, a couple key concepts for somebody that's just now listening to this episode and waking up from the matrix to being like, I'm going to proactively. Have a tax strategy moving forward, what are some key pieces of advice that you think is important for that

person? Let's start by motivation. And for that, I go to the bonus chapter in the Win-Win Walt strategy where I talk about how to get the government to pay for your Ferrari. There you go. So if you're not motivated, just realize that the government centers are so great. That was a true life. Of a client of mine that used the tax benefits to pay for his new Ferrari. Now he was in very high tax brackets, but a lot of your clients are too. And he was able to utilize the, and by the way, while he was reducing his taxes, he was increasing his cash flow. So here's what I just focus on. The more income you make, the more tax you pay, the more wealth you build, the less tax you. So if you're constantly chasing income, you're gonna pay more and more tax. If you chase wealth in, in terms of hard assets, business, real estate, energy, agriculture, you chase real wealth, you're gonna pay less and less tax and you have to just continually reinvest your money. You really investing needs to become an addiction. That you're constantly investing the money and you don't let it sit on the sidelines for too long. Otherwise you're gonna, if you take 40% off the table, how long's it gonna take you to recapture that? No matter how good the market is, the government's giving you a 40% discount. Don't ever forget that. If we go to sales, because there's 20% off we buy insurance because we could say 15%, but the government's giving you 40% off. So it, it makes no sense to me that people don't pay attention to taxes. That and that's the number one thing is pay attention, find the right advisor chapter 23 of Taxi Wealth or wealth ability.com. And then go from there and start, look at your big picture. What do you wanna accomplish? And and just let your CPA really help you understand the details of it. Perfect.

And then tell us where we can find you and more information about the.

You find win-win Wealth Strategy. It's been a top bestseller. It's been on it's been on wall Street Journal bestseller list. It's been on all the bestseller list. Except the New York Times. We fought really hard for that one. Damnit New York Times. We didn't quite get that one. We did get Publishers Weekly, which is a really hard one to get on. And it's both Win-Win Walt Strategy and Tax Free Wealth are perennial best. Our best sellers on Amazon, of course, easiest place to get 'em and they both are on audio books as well. So you can go that way as well. For me go to wealth ability.com. That's where everything Tom Wheel. Is found as relatability.com and that's where our network is. And just go ahead and schedule a free call and we're, we'll help you any way we can. Perfect.

Tom, long time coming. Greatly appreciate it, my friend. Thank you for coming in and knocking it out the park as per usual. Thank you. All right, with that ladies, gentlemen, that has been Tom Will Wright and Brian Lubin, your host as always with the Action Academy podcast signing off.