The Rentish Podcast

Tax Strategies Every Real Estate Investor Should Know with Tax Strategist KC Chohan

• Zach and Patrick • Season 2 • Episode 28

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In this episode, Zach and Patrick sit down with KC Chohan, founder of Together CFO, to talk about one of the most overlooked parts of real estate investing—tax strategy. KC has helped investors at every level save money, protect their assets, and build long-term wealth using strategies most landlords don’t even realize exist.

We dive into KC’s journey, the most common mistakes landlords make, and practical tax-saving moves for both new and experienced investors. From asset protection to simple strategies that can save thousands, KC shares real-world examples and actionable advice you can put to use right away.

If you’ve ever wondered when to start working with a tax professional, how to keep more of your rental income, or what hidden tax tricks most landlords miss, this episode is packed with insights you won’t want to miss.

If you want to schedule time with his team or want to learn more about KC, visit him ---> Here 

Learn More https://innago.com/podcast/ 

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Innago is a free, online property management software designed for landlords, particularly those managing small to medium-sized portfolios. It offers a range of features to simplify tasks like rent collection, lease management, maintenance requests, and tenant screening.

Ledgre is an All-in-One Accounting Software Built for Rentals. Organize property transactions, track expenses, and automate rental accounting with simple software focused on your industry.

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SPEAKER_01:

What's going on, everybody? Welcome to season two of the Rent Ish Podcast. I'm Zach and I'm here with my co-host Patrick.

SPEAKER_00:

We're two rookies chasing the dream of real estate investing. In this podcast, we'll talk about property management, wild stories, and everything in between. We don't know it yet.

SPEAKER_01:

But that's the point. We're learning as we go, just like you. We'll bring in the experts to educate us and inform us and we'll figure it out together. So let's laugh, learn, and dive into real estate side by side. Patrick, this is the new frontier of the Rent Ish Podcast because this is all digital. We've given up, we've given up on being face to face at this point. We got tired of each other's company, so now we're all Zoom. We're in the 21st century. So high tech. High tech, high tech, high tech. Yeah. So the listeners out there, thank you for dropping by for this episode of the Rentish Podcast. You know all the places that you can typically follow us, social media at the Rentish Pod. You can email questions at the Rentish Pod.com. And there's plenty of other places to find us, like us, and subscribe on your podcast, feet of choice. But there's no sense of really kind of dilly-dallying around. Usually I would ask Patrick how his day is going, but I don't really care right now. We don't care, yeah. Yeah, no. Because we've got much more important things to do right now because we've got a very, very, very special guest. We are joined today by Casey Chohan. And in this segment, we're going to be talking about a smart tax planning, asset protection, and how it can help landlords and real estate investors keep more money in their pockets and protect what they've built. Founder of Together CFO, Casey is known for helping real estate investors and business owners save money on taxes and protect their wealth. He's all about showing people strategies that most of us don't even realize exist yet. And he's worked with investors at every stage of their journey. Casey, we're so excited to have you on the Rentish. Welcome to the show.

SPEAKER_03:

All right, let's go, boys. I love the energy already.

SPEAKER_01:

Yeah. We're trying to keep it up. How many cups of coffee have you that can we do or we on the room?

SPEAKER_03:

I'm on like third one and it's about 12 o'clock, so I'm doing all right.

SPEAKER_01:

Okay, you fit right in that. Yeah, knowing Patrick, he's probably on the floor.

SPEAKER_03:

Like I'm kind of addicted to Nespresso right now.

SPEAKER_00:

Yeah. We just got in the office, we got a new uh Nespresso machine like a month ago, and I've been hammering that because we we had like the crappy cure eggs before, but now it's like water, muddy water, it's disgusting.

SPEAKER_01:

Yeah. Welcome to the coffee cast. We're gonna talk about uh the differences between no, no, no, no. Casey, we brought you on board because you're an expert in your field and uh we wanted to hear about all the things that you have to tell us about uh Together CFO, along with uh tax planning and asset protection. So without belaboring the point at all, I mean tell us a little bit about you. But you know, how did you get into the industry? What's your passion? What makes you tick here?

SPEAKER_03:

Well, I stumbled into tax savings because as you can hear, I'm not American. I'm born and raised in England and I have no real business over here doing tax stuff, but I fell into it and I doubled down on it, and now I own my own small little niche within a sub-niche. So my background is in accounting and finance. I was working for a big Fortune 500 company for eight plus years. I did four in Europe and then I transferred to America, did another four here until I uh got my green card and started my own company. I didn't really like corporate America when I landed here, but um, it is what it is. You gotta pay your dues and you move on, right? So uh I started my own business as an outsourced fractional CFO, as the name suggests, together CFO. And then what happened was in the first year we we stumbled into a huge success with a client. We took him from five million a year to 120 million a year, and that created a huge tax problem for him, or it was about to if we didn't fix it. So he then kind of begrudgingly pushed me into figuring out how to reduce his taxes at that high level, which is very different to fixing a tax problem at a million dollars a year or like a couple of million, like 120 million is a lot of money, right? Right, so the loopholes that most people use were not going to be applicable at that huge level, right? So when we look at real estate, so many great loopholes you can use, you know, uh bonus depreciation, cost segregations, hub zones, there's loads of them, right? And uh, you could be a professional real estate person. Obviously, all of these go without saying. I'm sure the listeners already know a lot about all of them. But when you get into like millions of dollars and we're talking multi-seven, multi-eight, multi-nine figures, you need structures to go on top of the loopholes. Like everyone should be using loopholes, regardless of if you're starting day one or if you're just entering year 10. Everyone should maximize all of those because that's what the government is incentivizing us to do. They're saying take this action and we will give you a credit for it, whether it's as simple as going to buy a car or an electric car because you get an extra seven and a half thousand dollars off that, right? So they're saying do this activity and we will reward you with a credit. Okay, great. But they're gonna cap that credit, they're not gonna give you an endless amount of credit. And a great example of this is retirement accounts. You can only put tens of thousands into these retirement accounts, but if you're making a couple of million dollars, tens of thousands just aren't gonna cut it. You need something more robust, something bigger than just ordinary loopholes, and that's really where we come in. So we take the structures and the entities that are used by family officers and the elite billionaires, and we simplify it so that it can be used by the modern day multi-seven, multi-eight figure business owner. And then that has a few knock-on consequences. One, you significantly reduce your tax burden, it's asset protection, it's legacy creation, and there's often a bit of philanthropy thrown in there just for the sprinkle on top.

SPEAKER_00:

So, Casey, I don't know if I maybe like misunderstood, but it sounded like when you started the company, which it this is all super interesting, but when you started the company, you had maybe like different ideas for what the company was gonna be. And then because of the client, like this lot huge client, you kind of like totally had to shift gears and and kind of like like how what what was that like? And like, was that kind of a jarring experience for you? Is it was it interesting to you? Was it kind of scary, like having to kind of go down the top?

SPEAKER_03:

So scary because, like, in my mind, what's happened is I've gone from a really good, comfortable corporate job that I've been at for eight years, making multi-six figures, living a good life, right? Moved to LA, the sun's shining, I'm in a shorts and t-shirt, there's lots of beautiful women here, and I'm a single guy, so you know you can figure out the rest yourself. Um, and then it's like, holy shit, I'm I'm not having that comfort anymore, and I'm starting my own business, and I've kind of backed myself, and it's like, all right, now it's go time because if I don't get any clients, I don't make any money. Now that's on me, right? And again, I mitigated that. I didn't just split the switch and go. I knew that was coming down the pipeline, so I took steps along the way to make sure it was as smooth as possible. So I had a handful of clients before I put my notice in. So I knew I would make X amount of money regardless of what, unless I lost some of those clients. What actually ended up happening is one of them took off and it went crazy. And yeah, I pivoted because you've got to be flexible, right? You've got to be able to go with the ebbs and flows of a business because it's not always gonna be a smooth, straight line. And in fact, none of them ever are a smooth, straight line, right? So there's always gonna be massive ups and massive downs, but you're totally right. We started off doing fractional CFO services, but then once we figured out, hey, we saved him, let me close the loop on that. We saved him about 12 million dollars in that first year on taxes by creating the structures that we're talking about. Wow. So for me, it was like, oh, holy shit, if we can save this guy this much money, there's plenty of other people out there that have we can use similar structures for and have the same level of savings. Why should the family offices and the elite billionaires get to use all of this? But the people that need it the most, they're just kind of priced out of it because they can't afford a five million dollar a year family office. Right. So we kind of took that subset of hey, maybe you don't need all 12 people of the family office, maybe you just need us. So we can significantly cut down on that five million dollar overhead and give you one piece of the family office that is probably the most valuable to you right now, and then you can add the other pieces in later as you go. Very cool.

SPEAKER_00:

Yeah, it makes a lot of sense. And so, in terms of because I I am speaking for Zach here, I I'm I'm not 100% I'm accurate on this. I'm not any sort of tax expert. No, Zach. Okay. Yeah, we're uncharted. Yeah, I I you know we'll use the turbo tax at the end of the year and call it a day sort of thing. Um but um how how does like with working with several different clients is a lot of the sort of like the tax breaks and these sort of incentives and different loopholes, as you've said, does that shift radically from client to client based on their business? Or is it kind of like do you have like a set sort of procedure on how to how to help people out with this kind of thing?

SPEAKER_03:

Yeah, so let's break it down into two different levels, right? Okay, so the loophole level, which everyone should be using as much as possible, is gonna change all the time uh based on administration that's in, how long they're in, and what they want to incentivize in the economy, right? Because their global macro picture is hey, we need to boost these three areas. What can we do to boost that? And use EV cars as a prime example of that. Okay, so since Tesla kind of kicked off, they've been doing this$7,500 credit for electric cars, right? But if you want to go in an electric car, you're gonna get an additional seven and a half thousand dollars. So if you've got two cars that you're looking at, let's just call one of them uh let's use a camry, right? Let's use a camry versus a Prius because they're both Toyotas. One can be electric, one can be petrol or gas, as you guys say. And then if I'm gonna get seven and a half thousand more off this one, I'm gonna do that. That's gonna incentivize me to take the action that they want, go buy a car, or maybe if I couldn't quite afford a car, but now I can because it's seven and a half thousand dollars cheaper, maybe I'll go and buy a car. So now you get more people doing that action that you want to stimulate the economy in the way that you want it. So that's like a government thing, and then on top of that is more of a longer standing legacy thing, which is structures. Because when it comes down to it, the bottom line is you are only as good as the team around you, which you can apply to real estate, property management, software, whatever company you want. Because if you're only relying on one person's expertise, like a CPA as an example, then you could be leaving so much money on the table if they don't know what they're doing. So this is why 92% of people overpay on their taxes because they are too reliant on one person. And then the deeper question is people get it so twisted. The CPA's job is not to save you money on taxes. Look at your agreement with your CPA. It doesn't say that anywhere. It says that their job is to make sure you file and pay your taxes. People just automatically assume that, hey, just because you're filing it and you're telling me how much my quarterly estimate is and you're making sure I pay it, and how much to pay to who, because there's like five million agencies you've got to pay around here, that you're also helping me save money on taxes. That's not true. A tax strategist will help you save money on taxes because you are paying them a percentage of whatever they save you versus a CPA who's gonna get a flat fee regardless of if he saves you$100 or$10 million.

SPEAKER_00:

Interesting. I never even thought about that. I I guess I'm sort of thinking, like, oh, you pay the CPA, their job is to help you, but I guess that makes sense. A tax strategist is what you want to be able to save the money.

SPEAKER_03:

Well, think about it, right? So if you speak to your CPA, let's say once or twice a year, like the average person, and you're flapping around at the end of the year to say, hey, what else can we take to write off? I don't want to pay this much in taxes. He doesn't really care at that point. He's like, Well, I've got another 500 clients here, another thousand clients I have to do the exact same thing for. And me taking five more hours to figure out what loopholes we can jump through for you, or learning and going uh across the country to do a seminar or actually reading some of these stupidly boring books behind me in terms of figuring out what is available, it's not gonna happen because he is not getting paid to do that. And unless you're consulting him at$500,000 an hour and paying him to do that, it's not in his best interest to grow his business by saving you money on taxes. Just keep filing, send me a referral if you can, and I'll talk to you once or twice a year. That's kind of the mindset of the CPA.

SPEAKER_01:

$500,000 an hour sounds like a reasonable rate for a CPA, I'd say. There you go. Okay, that was I heard that number I was like, that was my rate I was giving you. Um well, you might have kind of answered it with like kind of getting off on the right foot with figuring out where you need to go in terms of your own portfolio or whatever, but like what's that most common mistake that you see so many people make with with their taxes at the very like at the jump? Like, is that the common is that the most common thing is that people just don't don't know where to go from the jump? They don't know where which way to handle their money.

SPEAKER_03:

There's a couple of things that most people don't even realize. So Pat's a prime example, right? Because you're very honest. You're like, well, I didn't even think of that. Most people don't, and it's like step one is is your CPA working for you, or do you need to go find a team that is working for you? Because you have to have your goals aligned at every level, and we use like EOS as a great base for that, and it's helped us align all of our internal staff to be on the same page so we can effectively row together at the same time, and we're gonna go much further if we do that. What's the point of working so hard, buying these properties, managing these properties, if you're then overpaying on taxes at the end of the year? Right, it kind of defeats the purpose, right? Of it's like having a bucket with holes in it and then putting water into it. Okay, you can keep topping it up with water, but it's always gonna drain out because you've got too many holes in it. So let's patch up the holes and keep the water in the bucket. How do you do that? You do it by having a better team, right? So the team that's got you where you are today isn't the team that's gonna get you where you want to be in the future. And it isn't the team that you started with on day one, right? You have to constantly evolve that team. And I'm not saying go fire your CPA. Your CPA could be doing a good job and keep them in place, but just bring in additional eyeballs around certain things that you want to focus on to give you the best outcome possible for reaching those goals.

SPEAKER_01:

Right. Well, let's say uh I've got a question because uh a lot of our rent-ish listeners are also, you know, smaller mom and pop property managers or landlords, people that manage maybe a few units, college housing, you know, what whatever the case may be. I mean, are are there tax strategies that you would you would recommend for like are these strategies that would work for people of that scale too? Or is it really only for these big investors, like these big clients that want to go above?

SPEAKER_03:

No, it would work. Anyone, I would say, as a ballpark, if you want to pin down a number, anyone whose tax liability is over$200,000 or is expecting to be over$200,000 in any given year needs to look into a structure. Up until that point, I would argue there's enough loopholes that you can use by just Googling it. Chat GPT, it'll give you them all, right? That you don't need our services or another tax strategist because below that you can get it down to a very reasonable, manageable amount. And most people, honestly, they don't mind paying some tax, they just don't want to be overtaxed for stuff that then goes into like a$37 trillion deficit, right? So it's like they get the to pay their fair share. But what is their fair share when there's a crazy amount of potholes in the roads and there's people going off to wars and shit like that that you know we don't need to get into. But the bottom line is most people are good, hardworking, and don't mind paying something, but they don't want to overpay. And the the reality is that 92% do overpay, and that boils down to generally just not having a good enough team right now uh to help you save that extra 50-60% a year, because that saving can go on to compound and create a great legacy. So imagine if you're making let's just say 500k in taxes a year, if you're paying that much, right? And you can save 50% a year, that's 250,000. How much more real estate can you reinvest that into and leverage and kind of extrapolate on top of? Sure. And then not even to mention the uh the amount of structure, the benefits of these structures are it can eliminate capital gains tax. So you don't have to worry about doing a 1031 exchange every few years and kind of getting into a bigger and bigger property, you can diversify, you can actually take some of that equity out and and spend the cash however you want to a degree, rather than leaving it all tied up and being asset rich and cash poor.

SPEAKER_00:

Once you get the let's you build your team, which you said is like a great first step. Don't just rely on just the CPA, get a tax strategist, get multiple eyeballs on it. After that, is it kind of like a hands-off sort of thing for like let's say the landlord or the property owner or property managers or who whoever is gonna is going to use the tax services, but or is are there things that they should continue doing once they've kind of assembled a team of experts, even if they're not like tax experts themselves?

SPEAKER_03:

Yeah, I would say that that never ends, right? Because building a team is um is always an ongoing thing. You and because once you build your team, you then want to build a bench. Like you look at the likes of these big Fortune 500 companies that operate tens of thousands of people globally. How do they do it? And that's my background, right? I was working for a big Fortune 500 company, and it was like I learned how to do all this stuff, but that was just my norm because that was the environment I was in. So it's like, okay, let's build a team of A team players, and now we need to build a bench of 18 players because if any of my A-team get poached by someone else, I'm gonna miss a trick here, and then I'm gonna be out. So I need to make sure I've got the next position filled, or at least two or three people identified for that. And that could be as simple as let's let's just bring it back to real estate as a property manager. If you've got a really good electrician that you like that works across your properties or in an area, then that's fantastic. Keep hold of that guy, but make sure you hire the next electrician or at least have two or three people that will also give you quotes for that job. So, one, you know the first guy's not getting complacent. And secondly, if something happens to him, you've got two or three other options. So you're not the one then flapping around on Yelp or Google to try and find the next electrician, right? So I think strength and depth is really important. And we talked about sports before we started recording, and think of it as having a really good bench on your baseball team, right? Which are not probably as good as the Dodgers, but we won't get into that either. Um, we certainly don't have to get into that, but thank you for bringing it up. That's very kind of you. That's how to run a business, right? So, again, if you use a good methodology, what we use is a mix of EOS, which is entrepreneurs organization. Uh, sorry, EOS is uh what's it what's the guy's name? Traction. Traction is the book, and uh Gino Wickman is the author. It's fantastic methodology on how to run an organization. And then if you have a good book for the HR stuff and the hiring stuff is top grading, that's what we use. So we you we use like a mixture of different things over the years that we've liked, and then we've kind of took the best bits of other things and kind of made our own little Frankenstein. But generally speaking, it's all about people, right? Any business that runs well, it always boils down to the people. And the hard part for me as a finance guy is the people are not valued on any financial statement at all. Yet without them, none of these businesses run at all. So it's like make sure you have a really good team and a backup team in place. Everyone knows what they're doing, they have really solid standard operating procedures so that if one person's off sick or another person's on maternity leave, that the shit doesn't hit the fan, right? Right. People can step into that and do it. And then if they've got a great software like what you guys produce, then they'll know what's going on clearer and easier in their business, and that'll equate to better financials and better numbers and then better multiples and better cap rates. It kind of all stacks on top of each other, but you have to have that solid foundation first.

SPEAKER_01:

Yeah, definitely. Well, we've talked a lot about uh the tax side of what it is that you do, but I want to ask you about your about asset protection. This is a term that we've not really covered on the rent ish quite yet. We do a lot of episodes where we'll kind of deep dive into a specific real estate term, but in terms of asset protection, can you elaborate on exactly like what that might mean for someone that's brand new into property management or into into home ownership or anything like that?

SPEAKER_03:

Absolutely. So when we look at asset protection, really what we aim to do with all of our clients is we want to make them like a ghost. You shouldn't be able to find these people at all or what assets they own. Uh, and that's the best way from a liability standpoint because here in America, it's such a litigious country, it's ridiculous, right? You can sneeze in the wrong direction and you're gonna get a lawsuit. And it's like, what? I just sneezed, but uh, that's just the way it is. So the way to protect yourself, um, and especially as you're growing an empire, right? This is really, really important to make sure you have levels of entities, whether they are trusts, whether they are LLCs, uh, whether they are whatever it is, it just shouldn't be in your name directly, right? Because, and then there's levels to that. So if you go down, let's just use a simple example. Let's just say one LLC per property. Now make sure that that LLC is in a really good state, like Delaware, Wyoming, or Nevada, because you don't want your information to be public to anyone, right, who owns that LLC. And you can have a registered agent and all of those types of things. And there's so many companies out there that do a good job at kind of pre-building all of that. So you just one click and boom, away you go. Because if you do get into a lawsuit, the first thing these ambulance chasing lawyers will do is call an asset search. They will literally search every database they can see whatever assets are in your name, and then they'll assign a value to that, and then they'll look at the case and they'll assign a settlement value to the case. Now, if that value is substantial and they can find a lot of stuff in your name, they're likely to take that case on. But if nothing comes back or very little comes back, they won't take the case on. So the person trying to sue you will not find a good lawyer and they'll likely lose the case, or they'll just drop the case completely because I'm assuming for your listeners, nine times out of ten, it's going to be a frivolous case anyway. And people just trying to shake people down. And we see this all the every day. We have a lot of uh doctors as clients of ours, and what happens is they'll open a practice and they'll open a second practice, and then they'll start getting stupid lawsuits for like, hey, this disabled sign is actually two centimeters too high, it needs to be two cents, and that caused me a lot of harm. So now you have to uh pay me a hundred thousand dollars. Like you think you might think that's stupid. It happens here in California way too often. So you know, you gotta just protect yourself. So if that property isn't in your name and it can't be easily traced back to you, those ambulance chasing lawyers will find a zero settlement value and they won't take the case. So uh it's really important from that. And then again, if you're getting into marriages, let's say we get this one a lot from a lot of our rich clients. So they're like, hey, I want to protect my assets from this person who I may or may not end up marrying. How do I do that? And it's like, all right, okay, now we're talking. So again, we'll show them structures on do it this way, because then you never own the property. Because when you when you look at the mindset of the elite and the billionaires, they are very, very comfortable with this one strategy, which is own nothing, control everything. And you may or may not have heard of that before, but it's really, really important. Own nothing, control everything. So let's use an example of a private jet. If you don't own the jet, it's not a big deal. As long as you can go on the jet when you need to, and it can take you where you want it to be go whenever you want. Does it really matter if that jet is in your name, Zach, or Pat's name? It doesn't really matter at all, does it? No. But regular people get so caught up on that. No, it has to be in my name. I have to own it. Well, taxation follows ownership. Taxation doesn't follow control. So if you don't own it, it's actually in your best interests not to own it, and it's in your best interest to control it. Okay. Gotcha. Interesting.

SPEAKER_01:

Okay. No, well, if Taylor Swift ever asks us about her private jet fleet and needs some advice or whatever, we'll tell her, we'll let her know exactly what she needs to do. I bet you send her over. I can have her hours, but she's the guest next week, so it's a you know good uh good timing.

SPEAKER_03:

We'll do that one in person and I'll fly in for it.

SPEAKER_00:

Okay, perfect. I yeah, I'm I'm really interested in all of this. So do you have like an example? Do you have an example of like maybe like a simple strategy that like you know anyone can sort of understand without having like a deep knowledge of of sort of like the tax code and stuff that has saved like one of your clients or somebody you know like a lot of money, and it's just like a simple thing that you might not think of. I'll give you two. I'll have to achieve.

SPEAKER_03:

All right, the first one. The the first one is for all those people that are uh employees, corporate employees, right? W-2 employees. So if you've got a job and you're working for someone and and it's a good job, so you're making a lot of money and you're paying a lot of taxes. Again, a lot of our clients are lawyers and doctors, right? So they fit that mold of making multi-six, multi-seven figures, but it's all as a W-2 salary, so they are in the system and there's not many loopholes or deductions they can take. So, what they can do is they can create a private non-operating foundation. I'll say that again, it's a bit of a mouthful. Private non-operating foundation, and what that will allow them to do day one is donate 30% of their top line salary into the foundation, and they can invest that money through the foundation. So let's break that down into what that actually means. Then let's use simple numbers because I don't have a calculator next to me. So let's just say that a doctor makes one million dollars a year salary from a hospital. Usually they'll pay 40% tax in California, let's say it's 400k. Now they can donate 300,000, 30% into that private foundation, right? So now their tax rate will drop down to 700,000 rather than the million dollars. So 40% is 700,000 as well, 280. So now instantly they've gone from paying 400,000 a year in tax to 280,000 in tax. So they've saved 120,000 by donating 30% to themselves, effectively, that they still control in the other hand, and they can then reinvest that money in a tax-exempt environment. So, what does that mean? So that means now I've just saved you 120,000 on your right hand on your day-to-day job, right? But on your left hand, you've got 300k now. You can go invest in real estate, you can leverage it, you're only gonna pay a 1.4% tax rate on any income it produces if it's passive investment. I'm gonna completely eliminate capital gains tax. So let's say we go buy a building for a million dollars and we put down 300,000, right? Right. So it's gonna cash flow a little bit, so we're happy. So anything that it cash flows. Flows we pay 1.4% tax on, and now let's fast forward four years, and the property's doubled from one million to two million, and we want to sell it. You pay zero capital gains tax on that. Wow. Wow. All while paying a 1.4% tax rate along the way. And now you've got two million dollars in this foundation. Go do the same thing, keep going.

SPEAKER_00:

Yeah, that's so that seems so obvious, but I that's so interesting. I never knew about that. So that's number one. Let me give you number two.

SPEAKER_01:

Yeah, he's like keep going. All right, I've already hit, I've already hit one ball out of the park. Let's see if we can get number two. You're on a roll, Katie.

SPEAKER_03:

Call me Bib Ruth. Well, actually, Atani is the guy out here now, right? That is the guy there. Yeah. He is the man. So anyway.

SPEAKER_01:

Second Dodgers reference in one single podcast. I don't know if I can handle it.

SPEAKER_03:

And then okay, so the second one is actually more powerful because it applies to all business owners, right? So simply put, your net profit that flows to you is technically called your AGI in accounting terms. Let's just call it net profit because most people will understand that, and we don't need to get into the tax jargon. So let's say your net profit is one million dollars again. We'll use the same numbers. You can donate 50% of that to a limited partnership. Now, if people don't understand what a limited partnership is, it's similar to an LLC, S Corp, C Corp. It's just a type of entity, right? It's an entity type. But the difference with a limited partnership is you have two partners. You have a general partner that has power and control, and then you have a limited partner with no power, no control. Effectively think of the limited partner as a silent partner, right? So it's perfect that we have two of you on. So let's call Zach the general partner, and let's call Pat the limited partner for this example, right? And now we've got me that's got this million dollars that's come to me, and I'm gonna put 50% of it into your partnership. So with that 50% is$500,000 that's now in this partnership. And Zach, let's say you are the general partner but own one percent, but still have full power and control, and Pat, you're the silent partner, but you own 99%, but no power, no control. The 500,000 is in Zach's hands, and he can do with it pretty much what he wishes, right? So let's just say that Zach invests that in some multifamily real estate and he grows it because Zach's a smart guy, he knows what he's doing, right? Thank you for the compliment. I think someone out there would argue that. Maybe Zach's mother would argue, but nobody else. But Zach, she's there, so we'll we'll take a view. And then now that 500,000 grows to let's just say a million dollars. So you doubled your money, right? Great, you'd have to pay capital gains tax, right? If it was, let's say, a property that went up in value, or even if it wasn't, even if it was just on passive income that produced dividends, you pay some sort of tax on that growth, whether it's annual ordinary income tax or whether it's passive or capital gains, there would be some tax on that incremental growth. But if Zach only owns one percent of it, then he would only be taxed on his one percent, right? The majority of that tax bill has come into Pat because he owns 99% of it. We agree, yeah.

SPEAKER_01:

Sounds like sounds like a good deal to me.

SPEAKER_03:

It gets even better. So listen to this. So what if Pat was a non-profit? So he doesn't care. So 490,000, 95,000 can come into part as a K1, again, technical terms, but generally speaking, there's a difference between a distribution and a K1. Let's get into that first before we get into the next step. So the the that means that that$1 million that Zach's made in the LP can stay there, it does not have to be distributed. There's no law saying you have to issue a distribution every single year or at all, right? But what you have to do every single year is issue a K1 because someone has to pay for the profit of that business that given year. So Pat is gonna pick up 99% of that K1, and Zach is gonna pick up 1% without the money leaving the company. The money stays where it is, so Zach still has all of the money in his hand to go play with. Pat gets a K1 for 99%, doesn't care because he's tax exempt, and then Zach will pay his fair share of taxes on his 1% and happily pay that, right, Zach? Quite happily, yeah.

SPEAKER_01:

Call me the happiest man alive. Yeah, sure. Wow.

SPEAKER_03:

That makes sense. That's a lot of levels and a little bit more complex, but that number two is really where the where the rubber meets the road. Cool. Well, that's awesome, Casey.

SPEAKER_01:

It's a great way to break it down. I think it's very clear for a lot of people to kind of hear the visor the visualization of everything. It's been great listening to your passion about you know everything that Together CFO does. Uh, I mean, tell us where tell the audience, not just us, all the people that are listening to the show, like where can they learn more about your guys' company, what you guys are doing, anything that you basically like to plug about together.

SPEAKER_03:

Yeah, so uh you can find us. Our website is togethercfo.com. We're all over YouTube if you want to watch some more videos of me talking. Uh, and then there's loads of uh Instagram, YouTube, Facebook, all the rest of that, all the socials are all together, CFO. Uh, and then we have a school group as well. So school.com forward slash tax. We have the top 50 loopholes for every anyone who wants to actually reduce those loopholes and doesn't need to be in the top levels, but you know, something for everyone there. So if you join our school community, you get that for free. And what I recommend is to download it, send it to your CPA, and ask them how many of these 50 loopholes are we using right now? And then you'll have a list of what you're using. More importantly, ask for an explanation as to why you're not using the others. Right. Because if you don't get that timely and you don't get that detailed, it tells you everything you already need to know about your CPA that you need to upgrade. That's like what we touched on earlier, right?

SPEAKER_01:

Yeah, yeah. Grilling the CPAs. I think we're gonna get a lot of comments on this thread about uh I talked to my CPA and they were doing what? They didn't do this, they didn't do that, the other.

SPEAKER_03:

So gonna be a lot of upset people, but 92% of people are overpaying, and that's for a reason. So if we can help reduce that and get some money back in the people's pockets, then I'm all for that.

SPEAKER_01:

Okay. Awesome, Casey. Well, thank you again for joining us on this episode of the Rentish Podcast. It's really been fun to listen to you talk and just kind of hear about your your passion and everything. Uh, we'd love to have you back on the show anytime that you'd love to swing by and hang out with us. We have one fun question we always end the our guest segments with. And I've gotten criticism for asking what's your favorite movie of all time? Because certain people are like, Oh, I don't know if but is that easy for KC? Okay, so perfect. So best movie of all time.

SPEAKER_03:

Gladiator, hands down, Gladiator. Gladiator.

SPEAKER_00:

Okay.

SPEAKER_01:

Good pick, Ridley Scott. Great movie.

SPEAKER_00:

I love how you had an answer because most people, it's like as though they've never been asked that question before about what their favorite movie is. You know what I mean?

SPEAKER_03:

Just one. There's so many good ones, but when when I go back to my default, Gladiator just has it all, right? Yeah, it does.

SPEAKER_00:

Sweet movie.

SPEAKER_01:

Well, what we do on this pod echoes an eternity. And I've been Zach, that's been Patrick. You can find us at the Rentish Pod on social media questions at therentish pod.com. Follow us there, like us and subscribe if you uh use Spotify. Give us a five star rating. If you use Apple, just give us one of those likes or a rating, whatever they do on that service over there. And then you can comment, download the podcast, listen to us. Thank you guys very much for listening, and uh, we'll see you next time. Thanks for having me, guys.