September 19, 2023 • 61 mins
Join us for an enlightening journey into the twisty labyrinth of asset protection with our esteemed guest, Lee Phillips. Prepare to have your misconceptions about Wyoming LLCs shredded as we expose the truth about asset protection and tax strategies. Lee, with his wealth of knowledge, sheds light on the major threats to your assets, including lawsuits and the IRS, and offers some golden nuggets of wisdom on how to protect what's yours.
We'll guide you through the complex maze of LLCs, trusts, and corporations, helping you understand their unique roles in providing asset protection. Lee will unravel the enigma that is the charging order protection, a concept unique to LLCs. We'll also dispel some myths surrounding privacy in today's world, explaining why setting up your LLC in the state where you operate is not just a good idea, it's essential.
The podcast wouldn't be complete without an exploration of tax strategies and retirement planning. Did you know that the decision by Wyoming to allow LLCs to be taxed differently has opened up new avenues for tax shelters? We compare Roth IRAs and Standard IRAs, considering how the tax rate at the time of withdrawal could tilt the balance in favor of one over the other. Finally, we'll dive into the legal maelstrom surrounding LLCs, state laws and the high-stakes implications of not registering your Wyoming LLC. Hold tight, because this is going to be a wild ride!
if you enjoyed the show be sure to check out my info:
https://app.wingcard.io/ROB3SA64
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to the Josh Bolton show what we've done in
the interesting and inspiringconversations, and now your host
Josh Bolton.
Hello everybody, Today we haveLee Phillips.
We've been having a great chat.
Before I hit the record buttonFrom what Lee's been hinting at,
(00:23):
he has great specialty inknowledge and LOCs.
Asset protections have improvedbid, but if your company gets
sued, how to protect yourselfthe best so you can still keep
retain most, if not all, yourmoney?
This man has a lot of knowledge.
I'm looking forward to chattingwith him.
Lee, take it away.
Speaker 2 (00:41):
It's good to be with you, josh, not sure quite where
to go.
I work with a lot of people whohave set up businesses.
I've actually dealt with over amillion people in my career and
taught them about assetprotection, taxes, small
business structuring, identitytheft protection.
I mean.
(01:02):
Everything melts together aftera little while so we can get
started, and I'm assuming thatmost people want to talk to a
lawyer.
I guess I'm a lawyer.
My grandson went to school thisfall and the teacher says what
is your grandpa doing?
(01:22):
He said well, he's a lawyer,and the teacher said honest, and
my grandson said no, he's justa regular one.
At any rate, I'm actually acounselor to the United States
Supreme Court, a counselor inthe United States Supreme Court.
I'm a federal tax courtattorney, I'm a federal court of
(01:43):
appeals attorney, and so I dealwith the federal government on
a lot of different levels, andwe'll talk about asset
protection.
You'll be stunned to know whatyour asset protection threats
are.
You alluded to the lawsuit.
The lawsuit is only a littletiny bit of it, though.
(02:07):
Really, yeah, no, 56% of allbankruptcies in the United
States are a result of.
Speaker 1 (02:19):
Not budgeting or.
Speaker 2 (02:22):
Somebody in the family gets sick.
Really 56% of all bankruptcies.
So the question is are yougoing to lose your real estate
investments?
Are you going to lose yourlittle house, your big house?
Are you going to lose yourhouse?
Are you going to lose your bankaccounts?
Are you going to loseeverything when somebody in the
family simply gets sick?
And that's not even yourbiggest asset protection threat.
(02:45):
You'll be stunned when I tellyou what your biggest asset
protection threat is.
What is it?
Speaker 1 (02:52):
The IRS.
Speaker 2 (02:54):
The IRS has taken 20, 30, 40% of everything you bring
in the front door guys.
Is that an asset loss?
That is, I mean you'll spendmore money with the IRS than you
do your kids, college education, your mortgages, everything put
together.
(03:15):
So one of the goals is to cutyour taxes 10 to 20%.
It doesn't sound like a lot,but it's huge, because people
don't understand what the IRSdoes to them.
You have no clue what the IRSdoes to you.
Let's take a dollar and doubleit 20 times $1, $2, $2, $4, $8,
(03:38):
$8, $16, $32.
You got it, josh?
Yeah, I got it.
You end up with a million48,000 and change Okay, over a
million dollars.
But wait, there's no tax onthat, is there?
So let's tax it at 40%.
I have $1.
I double it to two, but I'vegot a dollar in profit so I have
(03:58):
to tax that at 40%.
So I take 40 cents off of them,so I don't end up with $2 and
with a buck 60.
I double the buck 60.
That's 320, but I don't get thefull 320 because I had the tax,
the extra buck 60.
I end up with 256.
So over on this side we have amillion dollars.
(04:21):
Over on this side We've taxedit at 40%.
40% of a million bucks is400,000.
So over here I've got 600,000.
Over here I've got a milliondollars.
That's a huge loss, that is.
I mean, that's unbelievable.
It is.
(04:42):
You have no clue.
Okay.
How much do I have over here?
I've got a million 48,000 overhere.
How much do I have over here?
When I tax it at 40%, I'll cutto the chase.
I can have fun with you, Josh.
Okay.
The answer is you have $12,089.
(05:03):
So we've gone from a millionand 48,000 to $12,089.
What people don't know?
Well, the eighth wonder of theworld is Compounding interest.
Compounding interest.
What people don't understand istaxes are compounding interest
in reverse.
I mean, if compound interest isthat powerful, taxes are that
(05:30):
powerful in reverse.
And so if I can save you just10 or 20% on your taxes, that
isn't 100 bucks out of $1,000.
That's millions of dollars overyour lifetime.
It's huge.
So how do we do that?
(05:53):
Well, we use certain legaltools, and one that's I would
recommend today for most peopleis something called the limited
liability company in LLC.
The problem is, you set up yourLLC, you set up your
corporation, you have yourlittle business, sole
(06:14):
proprietorship, whatever it is.
You have your little business.
Your accountants never broughtyou in, put his arm around you
and said you know, we need toteach you how to use your little
business as a tax shelter.
They've never done that, andyet your little business is your
most important tax shelter.
It's huge, and the reason is itworks above the line.
(06:40):
Oh, what's above the line?
Well, it's an accounting term,so we got to understand a little
bit about accounting.
Okay, your financial plannerdude says you're going to take
off your home interest, mortgagestuff, you're going to deduct
your medical expenses, you'regoing to deduct your charitable
(07:01):
contributions, all that crap,everything your financial
planner dude does is below theline.
What's the line?
The line is the adjusted grossincome line on your 1040 form,
your AGI.
Why is AGI important?
Well, it basically determineswhat tax bracket you're in, and
(07:24):
the accounts just said now,phillips, that's not what you
figured.
Well, it basically is, guys.
It determines whether or notyou get your Roth IRA, whether
your child care deductions comeoff, whether you get alternative
, whether you pay alternativeminimum tax.
Most people don't even know whatAMT alternative minimum tax is.
(07:47):
What you don't understand iswhen Trump put his tax laws in
effect.
Before, that, alternativeminimum tax was a calculation
that your accountant applied toyour tax numbers to make sure
(08:08):
that you paid more than younormally would pay, to make sure
that the rich paid their fairshare.
Well, I've got news for youguys.
Before Trump, the rich startedat $80,000 a year in income
that's not exactly the rich inmy book and yet your account
(08:32):
never even told you that he wasusing an alternative tax
calculation to make sure thatyou paid more money.
Trump raised it from about$80,000 up to $400,000 for a
couple, and it depends on howyou make your money whether it's
capital gains, whether it'searned income and a bunch of
(08:53):
crap, but we're basicallydealing at $80,000 versus
$400,000.
What people don't understand isTrump didn't have enough votes
in Congress to make his taxchanges permanent.
So well, january or December 31,2025, everything twinkles back
(09:16):
to what it was in 2016.
So you're not going to be at$400,000 calculating an
alternative minimum tax, you'regoing to be at $80,000.
And that's a big hit, guys.
The adjusted gross incomedetermines whether you get your
$199 deduction.
(09:37):
You need to pay attention tothe $199 deduction.
$199 is something that Trumpput into place when he took the
corporate tax and lowered itfrom the 35% and all these
percentages down to a flat 21%.
The little guy said, hey, hey,wait a minute, what about us?
(09:58):
And so they said okay, you getto take 20% of your profit.
Wham right off the top.
Not bad huh Right, the problemis you've got to pay yourself a
salary during the period.
You've got to do this, you'vegot to do that.
(10:19):
We've actually developedcomputer programs that maximize
where that is, but youraccountant doesn't do this for
you.
And we took a guy who had apretty good business.
It was taxed as a partnership.
Well, a partnership a partnerdoesn't get a wage, a W2.
(10:41):
They get a distribution fromthe partnership, so they don't
count towards the $199.
The guy got zero in $199.
The next year we calculated, wegave him a salary yes, he had
to pay the Social Security taxesand stuff on a salary, but it
(11:03):
wasn't that much and on $199deduction we got him an extra
$723,000.
So this is a big deal, guys, andyour accountant is not
maximizing it for you.
You've got to go to him andyou've got to say how can I
maximize this $199 deduction?
(11:25):
So you got to worry about yourAGI.
If your AGI is under like250,000, no problem.
If it's over 400,000, you got abig problem.
So we need to play this gameand adjust your AGI, your
adjusted gross income.
(11:46):
The problem is, as anindividual you can't do a thing
to adjust your gross adjustedgross income.
You can't lower it.
The only thing you can do tolower it is basically contribute
to a standard, not a Rothstandard IRA, and that will take
(12:07):
the 6,000, whatever it is 7,000, if you're old you get more but
that will take that much offyour adjusted gross income.
There are two things that youcan do that come in above the
line, the adjusted gross incomeline.
The two things you have are,one, your business and two, your
(12:29):
real estate investments.
Those two things come in abovethe line.
So if I can use the littlebusiness as a tax shelter, it's
huge, it compounds itself andit's just something that you
need to inherently know how todo.
Because I will guarantee youraccountant is not doing it.
(12:52):
He's taking the numbers thatyou give him or her and they are
plugging them in the computerand they are spitting out your
tax.
They will not counsel you.
The reason is, if they tell youto do something and it doesn't
work, they're liable.
They've learned to keep theirmouth shut.
(13:13):
If they take your numbers, plugthem into the computer, spit
out your taxes, there's zeroliability in that.
But if you go to them and saywe need to do this, they'll look
at you and say, wow, you'resmart and you look, that's a
great idea.
You thought of it, didn't you?
Can you see what we're doing,josh?
(13:37):
So you've got to learn to useyour little business as the tax
shelter, and the way you want toconduct your business is
undoubtedly with a limitedliability company, not a
corporation.
If you are currently acorporation, you need to change
from a corporate legal structureto an LLC, a limited liability
(14:01):
legal structure.
Now it's easy.
You go to your state, they havea form, you fill out the form
and it will change you from acorporation to an LLC.
You don't get a tax, new tax IDnumber, the IRS doesn't know
and they don't care whether youhave a corporate legal structure
or a limited liability legalstructure.
(14:24):
They don't care.
So you're going to make thischange for asset protection
purposes, and the reason is theLLC gives you twice, two times
as much asset protection as acorporation, and that's
significant.
Speaker 1 (14:43):
That's what I was going to ask is because I've
been thinking of getting an Scorp because I do a service
business, so I should just doLLC instead.
Speaker 2 (14:52):
Well, you've made I'm going to say the classic
mistake.
Can I pull you apart, josh?
Speaker 1 (14:58):
Of course go.
Speaker 2 (15:00):
Subchapter S is a subchapter in the IRS code.
It controls how your taxes arecalculated in a business.
That subchapter S can beapplied to a corporate business
structure or it can be appliedto an LLC business structure and
(15:23):
the IRS doesn't know whetheryou've got a corporate or an LLC
.
All they know is your taxedunder subchapter S, so taxation
and legal structure have nothingto do with each other.
Okay, that's interesting.
It's a concept most people havenever grasped.
(15:44):
So you're going to have the LLClegal structure because it's a
better legal structure.
Then you get to pick how youwant it taxed.
If you are selling goods andservices, doing pool businesses
or whatever, then you want asubchapter S taxation.
(16:05):
If you are investing in realestate and the income that
you're getting is rents, youwant a partnership tax structure
.
And very few people will tellyou this, but you either want a
subchapter S or partnership.
You do not.
No.
(16:26):
No, no, no no no, no, you do notwant a sole proprietorship.
The reason is the IRS.
They've added 30,000 new IRSagents this year.
Before Biden took over, theyhad 85,000 IRS agents.
Biden is giving them anadditional 87,000.
(16:48):
He's more than doubling thenumber of IRS agents.
Every one of those IRS agentscan audit at 1040.
With a schedule C, that's yourlittle business, or a schedule E
, that's your real estate.
Less than one half of 1% ofthose agents can audit a
(17:11):
partnership or a subchapter S.
Speaker 1 (17:16):
Read the guidelines guys yeah, that makes sense.
Yeah, I'm still for me.
I like, like I told you earlierbefore, hit the record like I'm
just starting a pool businessand that's where even my agents
like first year, they'reprobably not going to even look
at you, but you're like next,the second year and third year,
yeah, they're probably going tolook at you.
Speaker 2 (17:37):
Well, if you, if you're set up as a subass or
you're set up as a partnership,now you're selling goods and
services, you're putting inpools.
So you want a subchapter Staxation.
Speaker 1 (17:51):
And it's more.
I'm more offering your servants.
I'm subcontract, so I'moffering a service to my boss,
kind of thing.
Okay.
Speaker 2 (17:58):
Well, you're still selling goods or services, so I
would need to you're not gettingrent.
Rent is what we call passiveincome.
Right, you're getting what wecall non-passive or active
income.
Now what you're going to do isyou're going to take a
reasonable salary out of yourcompany and then you're going to
(18:20):
distribute the rest of themoney, your profit, out of the
company.
You take off the 20% for 199A,then you distribute the rest of
it and that distribution comesto you without having to pay the
employment tax and SocialSecurity.
If I could feed it all thatmoney.
(18:42):
So you're going to do that.
The 15.3% is the unemployment.
Taxes and stuff do not apply topassive income.
That's why you want to have ataxed as a partnership, because
all of it passes through to you.
(19:04):
If you have a taxed as asubchapter S, the law says you
have to take a reasonable salaryand then and that subject to
the Social Security, fike ofFeud and all that crap.
Okay, so why pay the 15.3% onanything if all of your income
(19:24):
is passive?
But you have non-passive income, so you need to take it as a
subchapter S.
Speaker 1 (19:34):
Okay, subchapter S got it.
So then here's a side technicalquestion, and I'm more than
certain you actually know this.
I've always been told you wantto form a trust in whatever a
lot of people say Wyoming forsome reason.
But they say you also want toform a holding LLC in Wyoming
for your real estate and thenput that holding company in your
(19:56):
trust.
Is that getting a little jinkyand kind of thing, or is that a
good strategy too?
Speaker 2 (20:03):
It's basically BS, really, yeah, you want me to
tell you what BS means.
You're good there.
Speaker 1 (20:12):
Yeah, I'm good.
I was trying to think of asmart alec comment.
Speaker 2 (20:18):
So look, this whole concept of Nevada, delaware,
Wyoming LLCs is basically BS.
Okay, you're going to put yourLLC in the state where you are
doing business or where you ownthe property.
(20:40):
End of discussion.
Okay, I do not have a holdingcompany, because if you have a
holding company, I can attack aholding company and then I can
get all of the companiesunderneath it.
If I have separate LLCs set upside by side but independent,
not linked to each other, then Ihave to sue each one
(21:03):
individually, and I can't dothat because I can only sue
somebody who has a causalconnection to the problem.
They acted, they caused theproblem, they owned whatever
caused the problem or theymanaged whatever caused the
(21:23):
problem.
That's the only way I can sueyou.
So if this LLC, if your poolcompany is one LLC and your real
estate owning company is theother LLC, your pool company
causes a problem that hasnothing to do with your real
estate owning LLC.
(21:43):
If there is an upper LLC, maybeI can go through this LLC, the
pool company, and I can get tothe holding company.
If I can get to the holdingcompany, then I own everything.
Speaker 1 (22:02):
So it's actually a linchpin, essentially.
Speaker 2 (22:05):
It's a linchpin in a way.
They say it's private.
Let me just tell you, anonymitytoday is a myth.
We can literally, josh, tellyou what underwear you're
wearing.
I mean, there is no privacytoday.
I was doing asset protection 10, 15 years ago for a guy and he
(22:31):
kept saying I'm off the grid,I'm off the grid, no, I'm not
going to do that.
That exposed me and finally Ithrew up my hands and I said
give me an address With oneaddress.
Does the tenant know theaddress of the property that
they live in?
I said give me an address.
I don't care if it's in an LLC,I don't care if it's in a land
(22:53):
trust, I don't care how it'sowned.
Give me an address With thataddress.
I came back with a 40-pageprintout.
I had every bank account thisguy had ever had.
I had every company he had everowned any stock in, including
private companies.
I had every insurance policy hehad ever bought.
I had everything on it.
(23:15):
I faxed it off to him.
I didn't hear back from him.
Lee, I talked him through.
But yeah, you had everything onhim I had everything on him.
I faxed it off to him and Ididn't hear from him for two or
three days and he called me upand he says okay, anonymity
(23:40):
doesn't work.
Now what do we do Interesting?
So if you think you'reanonymous today, I got another
thing coming for you, buddy.
Oh yeah, it's only gettingworse too.
Speaker 1 (23:53):
And I'll give it to you.
Speaker 2 (23:54):
I have access to databases the general public
doesn't have access to, but wecan tell you everything about
you.
That's crazy, so the LLC is theway you're going to protect
yourself.
Now you mentioned a trust.
The trust is going to own theLLC.
The trust is what we call adisregarded entity.
(24:17):
Everybody ignores it.
It's you.
You use your Social Securitynumber.
The IRS doesn't even care thatit's there.
It's you.
But when you die the companythat's owned by the trust we
don't have to probate itsownership Because technically,
(24:39):
you don't have to use your owntrust Because technically, if
the trust owns the company andthat means you're going to put
the trust's name on theownership documents it's going
to be in the operating agreementas the person who owns the
(25:00):
company, the member, and so whenyou die, the owner of the LLC
didn't die.
We get a new director, a newtrustee of the trust and they
have full authority to dowhatever the trust tells them to
(25:20):
do.
The written document.
So the trust is a probateavoidance tool.
It is not an asset protectiontool, but it is critical that
you avoid probate with the trust.
That means the trust has to ownyour stocks, your bonds, your
bank account, your safe account,your safe deposit box, your
(25:42):
automobile, anything that youhave to sign your number,
anything that you have to signyour name for, and that includes
your little business ownership.
Speaker 1 (25:54):
So the trust owns the business too, which is a layer
of protection.
Speaker 2 (25:59):
Is that a layer of protection too?
Speaker 1 (26:01):
What's that?
Is that like another layer ofprotection?
Because then they can only goafter the trust, not you.
Speaker 2 (26:06):
No, it's no layer of protection.
You are the trust.
The trust gives you zero assetprotection.
Speaker 1 (26:15):
So tying into that, one thing I've been thinking
about and you're definitely theguy I've been needing to talk to
about this is I do futurescontract trading.
I'm certain you know what thatis, I don't explain it anymore
to anyone else, but there's alot of taxes with that, like the
whole 60, 40, 60% at 40, andwhatever.
(26:35):
I was thinking of forming anLLC just for the trading.
So also, if shit blows up, ithits the LLC, kind of thing.
Speaker 2 (26:44):
Well, the LLC isn't gonna reduce taxes on the trades
any more than they would benormally.
The LLC, if it's taxed properly, would reduce the chance of an
audit.
You can structure it withoutthe LLC and get the same tax
(27:12):
advantage or benefit.
The LLC gives you the assetprotection.
So if it's in an LLC and you'vegot a large pot of trading
money, then the LLC wouldprotect that pot of trading
money from what happens to you.
(27:32):
The LLC I said had twice theasset protection of a
corporation.
The corporation has thecorporate shield.
It's the veil I hide behind it.
It protects me from whathappens in the company, from the
slip and fall of the tenant orfrom the pool has a problem.
(27:55):
It protects me and my assetspersonally from what happens
within the company.
The LLC, that's the corporateshield.
That's what the corporationdoes.
The LLC has another assetprotection facet to it, which
the corporation and no otherentity.
(28:16):
Well, that's not true.
Partnerships have it.
Oh, you just said, wait,partnerships don't have any
asset protection.
Well, they do.
I'll explain it in a minute.
I'll give you a listen.
Okay, All right, but itprotects the assets of the
company from what happens to theowner of the company.
(28:37):
So if you get in troublepersonally.
You get sued because you hit akid in the crosswalk on the way
to church.
That's not a business problem.
You get sued because somebodyin the family gets sick and you
have to clear bankruptcy.
You get sued because you getdivorced.
You get sued personally.
(28:59):
The assets of the LLC are notavailable to satisfy that
lawsuit.
The assets of the corporationare available to satisfy that
lawsuit.
That's a huge difference.
Speaker 1 (29:15):
That is huge actually .
Speaker 2 (29:17):
That's huge.
I've seen more people losetheir company and your company
is likely your biggest asset.
I've seen a lot more peoplelose their company because the
person gets in trouble than Ihave ever seen the person lose
their house because there's aproblem in the business.
(29:38):
So it's a big deal.
Let me explain it to you.
It's called charging orderprotection.
Okay.
So 400 years ago in England, meand you, josh and Joe, we formed
a great business.
The only type of businessstructure 400 years ago in
(30:03):
England was a partnership.
So me and you and Joe werepartners.
Well, okay, joe gets in troubleand I'm not exactly sure how
you got in trouble 400 years agoin England.
You didn't pay the king, youhit somebody with your horse.
You got divorced.
There was a problem.
Joe got sued, got it.
(30:24):
His creditor, the guy suing him, gets a judgment against him
and they take away hispartnership interest.
Josh and Lee now have a newpartner.
By definition of law, that newpartner can come in.
They don't need our approval.
They sell our company right outfrom under us.
(30:46):
And yet we have spent 30 yearsbuilding this company with Joe
and Joe lost it in the lawsuitand you and I just lost
everything because Joe screwedup.
That's not fair, right?
And the Brit said, yeah, that'snot fair.
So they passed the law.
(31:07):
That said, when Joe's creditor,the guy suing him, gets a
judgment against him, they can'tcome and take his partnership
interest.
They can't take his partnershipinterest.
They have to go back to courtand get an order which charges
the debt that Joe owes hiscreditor against his ownership
(31:32):
interest in the partnership.
But the creditor can't come in.
They can't sell the partnershipinterest out from under me and
you.
They can't decide what we payourselves a salary.
But if the partnership declaresa profit, not Joe but Joe's
creditors now get that profit.
(31:56):
So it's called charging orderprotection.
It protected our partnershipfrom Joe's creditor and likewise
it protected our partnershipfrom your credit If you got in
trouble.
So it protects the assets ofthe company when an owner of the
(32:17):
company gets in trouble, andthat's a big deal.
That is now.
Ibm is a corporation.
Ibm doesn't have charging orderprotection.
But if you own a bunch of IBMstock and you get sued, you're
going to lose your IBM stock.
But your IBM stock in no wayhas any controlling interest in
(32:42):
IBM.
You can't sell IBM.
You can't do anything with theamount of stock that you have,
right, and if you're the onlyowner of that corporation and I
get your stock, I now own yourcompany, lock, stock and barrel.
I do whatever I want with it.
So the corporation does not havethe charging order protection
(33:06):
the LLC does.
Okay.
Speaker 1 (33:11):
I'm catching up, we're going.
Speaker 2 (33:14):
When Wyoming 1977, wyoming created LLCs in the
United States.
They're actually old Europeanentities.
We have the LTDs in BritainYou've probably heard of that.
We have the GMBHs in GermanyGershelschoff, miss Rancor,
(33:35):
hoftung I just screwed the poochon that German pronunciation.
It's okay, but it's companywith limited liability.
So Wyoming in 1977 says we'regoing to create this in the
(33:57):
United States.
So they did.
Basically, what they did isthey took a corporation and a
partnership and they marriedthem.
We got the genetic corporateshield from the daddy
corporation.
We got the charging orderprotection from the mommy
(34:18):
partnership DNA.
So we have a mixed DNA ofcorporations and partnerships
and we got twice the assetprotection.
The first thing that happenedwhen Wyoming created the LLC is
they said okay, mr IRS, how areyou going to tax it?
Well, it took 20 years for theIRS to come back and say we
(34:44):
don't care how you tax it, youchoose.
So you can have your LLC taxedunder sub chapter S as a
partnership, as a soleproprietorship, under chapter C,
like a C corporation.
You can have your LLC taxed anyway you want, they don't care.
Speaker 1 (35:01):
As long as they get their money.
Speaker 2 (35:03):
As long as they get their money.
Yeah, they want their money.
But that gives you anopportunity because your little
company has the tax sheltercapabilities that you don't have
.
It has the 199A.
It can write off your computer,it can write off your cell
(35:24):
phone, it can write off mileage.
It can do all sorts of thingsto appreciate realistic.
It can do all kinds of thingsthat you can't do as an
individual.
It can put a benefit plan inplace and make all your medical,
not tax deductible tax free.
That's huge guys, that is huge.
Speaker 1 (35:48):
That is huge actually .
Speaker 2 (35:50):
So these are big deals.
You can have the benefit plans,the HSA, the HRA, the 125, the
105.
You can have all of thesebenefit plans that basically
make your medical expenses taxfree, not tax deductible, and,
as an individual, your financialplanning dude says you can
(36:15):
deduct your medical expenses.
Well, yeah, but no, you can't,because you have to meet 10% of
your adjusted gross incomebefore you can deduct a dime off
of your medical expenses.
So most people can't reallydeduct their medical expenses
(36:36):
because that means if you make$100,000 a year, you've got to
have $10,000 in medical expensesand the $10,000 in first dollar
you can deduct the first dollar.
Speaker 1 (36:50):
Man, you would have to make a lot of money to try to
use that as a leverage.
Speaker 2 (36:54):
Yeah, no, you can't do it.
But if I set one of these HSAsor HRAs in place, then I can
fund that with money from thecompany, which is a tax
deduction from the company,which would have ended up in
your pocket and you would havepaid tax on it.
But you can fund it with a taxdeductible dollar and then you
(37:16):
can spend this money in thebenefit plan on your medical
expenses and you get 100%reimbursement.
It's not income to you, it'sjust and basically what you've
done is you've made your medicalexpenses tax-free.
Speaker 1 (37:34):
Okay, so you mentioned earlier as well.
On the health HSA, you said anormal IRA, not a Roth IRA, just
a normal IRA to help yourincome.
I have a Roth because I stilldon't make that much.
That helped me.
Speaker 2 (37:52):
You're paying with an after-tax dollar, so you didn't
get a deduction for puttingyour Roth in.
I just get the growth tax-free.
You get to take it out tax-free, which is pretty cool, Right.
But you didn't get a deduction.
You didn't lower your adjustedgross income.
(38:12):
You didn't lower any incomebecause you didn't deduct the
expense that you paid into theRoth IRA.
Now the question is which one'sbetter a Roth IRA or a standard
IRA?
Speaker 1 (38:31):
Or let's say trading.
Let's say I'm doing futurescontracts and I could wait.
I don't care.
Speaker 2 (38:35):
I don't care how it's invested.
Got it which one's betterSounds like a normal IRA.
Let's take $10,000 and sayyou've got a 25% tax.
So forget about the IRA numbersand everything.
I'm just using $10,000 becauseI can think of it.
So if it's 25% tax, that meansif I can put it in with a
(39:02):
pre-tax dollar like a standardIRA, I get a deduction.
Right, so I can put my full$10,000 in.
If I do it with a Roth, I'vegot to pay 25% tax and then
whatever's left I can put in.
So over here I put $10,000 in.
Over here I only put $7,000 in.
(39:27):
So now let's run it for 10years, 20 years doesn't matter,
they make the same return.
Doesn't matter where they'reinvested, they make the same
return.
At the end of the period I takethis money out.
Now I've got a full $10,000.
That's been growing over theyears.
(39:49):
I've got more money in mystandard IRA than I do my Roth
IRA because I didn't start withas much money, right?
So I take the money out of mystandard IRA.
I pay the tax 25%, right, I getto take the money out of the
Roth IRA no tax.
Speaker 1 (40:12):
Can you have both at the same time though?
Speaker 2 (40:14):
Well, no, you can't basically but which one gives me
more money to spend thestandard IRA or the Roth IRA?
Because it grew without a taxand I spent it without a tax.
I got a deduction for puttingit in so I could put the full
$10,000 in.
Then it grew without a tax, Itook it out and I paid the 25%
(40:37):
tax.
The numbers are identical.
Speaker 1 (40:42):
Interesting.
The right Okay.
Okay, you've got a full $10,000.
Speaker 2 (40:49):
Which one's better there's.
There's an assumption that'swrong in what I just told you.
What is it?
Speaker 1 (40:59):
That it's the same amount of money or same amount
of losses.
Speaker 2 (41:02):
Either way, that it's the same tax going in today as
I pay, coming out right 20 yearsfrom now.
20 years from now, if the taxis greater, then I win on the
standard IRA Because I have topay more in tax than the 25%.
(41:24):
Mm-hmm that it cost me in thebeginning of the Roth IRA.
If the tax is less 20 yearsfrom now, then I got screwed
Because I can take more moneyout of the standard IRA, pay a
smaller tax on it.
I end up with more money than Iwould have done over here in
(41:45):
the Roth.
Speaker 1 (41:47):
And, generally speaking, taxes are going up, so
it would be better to get thenormal that's the, that's the
assumption.
Speaker 2 (41:53):
It's better to do the Roth, then it is the standard
IRA, because we're gonna bet thetaxes are going up mm-hmm.
Speaker 1 (42:03):
Have you noticed that in your your career that
generally taxes keep going up,not down, other than Trump?
Speaker 2 (42:09):
Ah Well, I wish I had the the diagram to show you,
but that was cool.
I Can find it and share myscreen, although we're probably
gonna get screwed up as soon asI try and do that.
Right?
Speaker 1 (42:26):
No, we're good, I have a set for you can share too
.
Speaker 2 (42:31):
Just a minute, let me look it up.
I got to go to my my slideshere.
I've got to get my my diagrammyhere, diagrammy.
There we go.
There's the diagrammy.
(42:54):
So now I'm gonna go back tozoomie.
One gotta go back to zoom, goto zoom and Come back to here
and now I am going to Sharescreen and I'm gonna take that
(43:18):
one right there.
Can you see that, josh?
Yep, you're coming throughreally good, loud and clear huh.
Yep, I'll even put it onbig-style How's that?
Oh, that's it.
Okay, the tax we didn't.
We didn't have income taxesuntil 1913, okay, and we made an
(43:40):
amendment to the Constitutionthat said that the government
could tax, and the politicians,the Congress, the president,
everybody Swore on a stack ofBibles 50 feet high that they
would never raise the tax above8.5%.
So in 1913, we started outwitha 8.5% tax.
(44:04):
Can you see my cursor there?
Yes, yes, within a few years ithad gone up to 73, 75 percent.
You want to know something,josh?
What politicians lied just asgood in 1913 as they do today,
and they're really good at it.
Speaker 1 (44:23):
That's their profession.
Speaker 2 (44:24):
That's their profession.
And In the early 20s the taxcame from 70 percent down to 25
percent.
What did they call a 20s?
They called the 20s the roaring20s.
When the interest, or when theinterest, when the tax rate
(44:45):
dropped down to 25 percent, theeconomy went nuts.
The economy in 1933 wassputtering and Hurt.
This is Herbert Hoover, rightthere.
Herbert Hoover raised the tax,figuring he'd save the economy
hit.
And he raised it from 25percent all the way up to 79
(45:09):
percent and that put the economyinto a tailspin and the economy
died.
It couldn't recover.
That's the great impression.
Right, you realized during the50s and 60s you could make a
million dollars and pay 920,000of it out in tax.
Hey, I actually remember a clipof Ronald Reagan, long before
(45:34):
he was president.
Reagan said he was an actor youmight remember.
Mm-hmm.
Reagan said I will never makeanother movie.
I don't make any money.
That's it right there.
This is Reagan as president.
He brought it from 70 percentdown to 28 percent.
This is Clinton, this is Bushy,this is Obama and this is
(46:03):
Trumpy.
Basically, we are at howhistoric tax laws right now.
You're probably right, josh,interest rates are gonna go up,
or tax rates, rather, are gonnago up.
Interest rates are alreadygoing up.
The Fed raised the Raise theinterest rate again, didn't they
?
Yep, but Ah, we're basically athistoric tax law.
(46:28):
So does that give you an ideaof where taxes are and what
we're doing?
Speaker 1 (46:36):
Yeah, so the the Roth IRA is the safer bet in this
situation.
Speaker 2 (46:41):
Probably it's a safer bet.
In this, in this situation,we're gonna escape, we're gonna
close this, close this.
This screen is top-sharing.
Okay, we're back and we didn'teven lose you.
I'm stunned.
(47:01):
Wow no done at any rate.
Does that help, josh?
How long do you want to go here?
How long do you want?
Speaker 1 (47:12):
to go.
Speaker 2 (47:14):
As long as you need me.
I don't want to bore people.
Speaker 1 (47:17):
Ah, if they they're a rayboard, they didn't make this
point of conversation alreadybored, huh.
Okay, they would have leftalready.
I'm enjoying this.
Speaker 2 (47:25):
You're saying we don't have anybody listening is
what you're saying.
Speaker 1 (47:29):
May or may not be.
Listen to.
Retention, especially withtick-tock, has gotten really bad
as it.
Mm-hmm.
I know this on my data on theback end after about three
minutes.
Speaker 2 (47:40):
Just tails, just dives, huh well, I'm uh, you
know, we can go on and we cantalk for hours, but I think this
gives you an overview of whatthe LLC does.
I have a 30 pages you aboutthis, on how to, how to work
(48:01):
with an LLC, how to use an LLC.
I would, I would love to getthat you book.
I'd be happy to give it to you.
I'd be happy to give it to yourfolks.
Why don't we set up a sitewhich is, let's say, legalese?
It's a pun on my name, legal legal and then it's EES.
(48:21):
There's only one L in themiddle of it legalese, only one
L in the middle Dot-com.
And let's say forward, slashJosh, and We'll give them the
LLC ebook.
It's free, don't worry about it, and I'm not gonna sell your
(48:43):
Information or anything.
I don't use it it's.
I'm just giving it to you as a,as a promo, and I told Josh
earlier I don't take clients.
I'm old, I'm senile, I'mretired and I don't want any
more clients.
I have my fun people and happyto educate them.
Speaker 1 (49:04):
Now this was extremely educational.
You, you set me straight on alot of things because I was like
I was talking with, like the oh, I'll form a trust in this area
.
I get my LLC in Wyoming, do theholding company, so I make all
the money, do the holding to thetrust.
And now you just say that theholding company, so it's printed
in let me go into that a littledeeper, okay.
Speaker 2 (49:24):
Okay, because you can't give me a reason why you
set it up in Wyoming.
They say anonymous no it's not.
Okay, you're gonna take yourWyoming LLC and you've got your
registered agent up there andthat guy's name is on it.
You're going to Bring it downand you're gonna register it in
(49:50):
which state of you and Josh.
Speaker 1 (49:51):
California.
Oh, I know, I already know I'mgetting just annihilated in
Texas.
Speaker 2 (49:59):
Hell.
No, you're not gonna have aWyoming LLC because by law, any
entity that you have more than25% interest in you have to
register in California and paythe eight hundred and fifty
bucks a year franchise fee andall the taxes.
Okay but let's say you're inOhio, so, or even in California.
(50:25):
You take the Wyoming LLC, youregister in California by law.
You are now subject to all ofCalifornia laws.
I Don't give a damn.
Speaker 1 (50:37):
Everyone says that I don't care what.
Speaker 2 (50:39):
Wyoming says Now the registered agent may use their
name to register the new LLC,the, the LLC in California.
But if you get sued inCalifornia, that registered
agent in Wyoming that you'repaying In 200 bucks a year to,
he ain't gonna defend you, heain't gonna do a damn thing.
(50:59):
He's gonna turn over you in 10seconds mm-hmm.
So you're right back to squareone in court.
Any money that you make inCalifornia is taxed in
California, anybody that suesyou.
They don't have to go toWyoming, they sue you in in
California.
And and, like I say, if youdon't register in California,
(51:22):
california finds you 300 or$3,000 a year that's, they're
fine For not registering inCalifornia.
It you and I can set up acompany.
I can buy a house with themoney that you give me in Utah
and I'll tell you what you get40% of the deal.
You put up all the money.
(51:43):
I get 60% of the deal.
I found it, I manage it, I doeverything with it.
Sure fact that you own 40% ofthat company, even though you've
never seen the property in Utah, you've never done anything,
you've never been to Utah.
The sheer fact that you own 40%of it means that you have to
register In California and payall the taxes in California and
(52:07):
the franchise fees.
That's the only state thatrequires that.
But All the taxes will be paidin Utah.
If, if you have a Wyomingcompany and you're doing
business in Ohio, a hundredpercent of your taxes are gonna
pay paid in Ohio.
You don't have to pay any taxesin the world because you didn't
(52:30):
earn any money in Wyoming.
Speaker 1 (52:33):
Okay, okay.
So yeah, really it wouldn't bethat smart, because they all the
internet gurus are saying likeI think, but they're talking
real estate, though for Wyomingthey're saying I don't care what
the LLC holds.
Speaker 2 (52:47):
Okay, if you set up a Wyoming company and you buy a
piece of property in Ohio orNorth Carolina or Tennessee or
Nevada or wherever and you don'tregister the Wyoming company in
Florida, then I'm the tenant.
(53:07):
I ain't gonna pay any rent.
There's nothing you can do tome.
You don't have any rights inFlorida until you register that
company in Florida.
Speaker 1 (53:17):
So at that point, like, let's say I bought a
really big swamp for cheap, likeunder a million bucks, hundreds
of acres, I wouldn't.
The legal advice would be, butget the LLC to own that land,
I'm gonna think.
Or a truck?
Why?
Okay, let's say there's atenant there too.
Bye, I don't know.
Speaker 2 (53:41):
When you bought that piece of property in Florida,
you became subject to all of thelaws associated with Florida.
When you registered the WyomingLLC in Florida which you had to
do in order to buy the propertylegally, you had to register in
Florida to buy the property inFlorida.
Okay, when you registered it inFlorida, florida law
(54:04):
specifically says that companyis now 100% subject to Florida
laws.
We don't care what Wyoming says.
You will pay property taxes inFlorida.
If you make income from thetenant in Florida, you will pay
Florida income taxes.
(54:24):
Now, florida doesn't havepersonal income taxes, but they
have company income taxes.
The tenant does not have to goto Wyoming to sue you.
They will sue you in Florida.
The trial will be in Florida.
They will use Florida law.
(54:45):
You can't give me a reason.
You can say well, I'm anonymous, my name's not on it in Wyoming
BS.
I can find everything out aboutyou in two seconds.
Flat One, two.
We're going to what's calleddigital currency in the next
couple of years.
(55:05):
At that point, the federalgovernment will see every dime
that you spent.
There will be no privacy period.
Right now, I can give you $100bill and nobody ever knows that,
do they?
Josh?
Speaker 1 (55:20):
Nope.
Speaker 2 (55:21):
I can't do that.
In the future, when we havedigital cash, it'll have to go
through the government computerand they'll know that you got
$100.
So there is zero privacy inanother two years, and even at
that, there's almost no privacytoday.
You still can't give me areason why you have a company in
(55:47):
Wyoming.
Speaker 1 (55:51):
That's very valid.
I was just like I was sayingit's just those internet gurus.
They always talk a good talk.
Speaker 2 (55:56):
Well look if I can get you to pay me $200 to be the
registered agent in Wyoming andI get 1,000 people paying me
$200 a year as a registeredagent.
As a registered agent, I getone piece of mail from the state
(56:19):
of Wyoming and forward it on toyou.
That's my only responsibility.
If you get sued, if the LLCgets sued in Wyoming, I hurry
and send the lawsuit to you.
But the Wyoming company isnever going to be sued.
It's going to be sued inFlorida.
So the registered agent inWyoming has zero to do.
(56:44):
If I get 1,000 people paying me$200 a month or $200 a year,
that's $200,000 for zero, notbad, huh?
Speaker 1 (56:57):
Yeah, I could convince about 1,000 suckers so
they can pay me, kind of thing.
Speaker 2 (57:01):
Yeah, I mean, it's great business.
Plus, they get the $700, $800for setting it up in the first
place and it takes five minuteson a computer to put the
information in the state website.
You can do that too.
You can access Wyoming'swebsite and you can set up an
(57:24):
LLC in Wyoming just as fast asthey can, and you pay the
Wyoming fee with your creditcard.
You now have a Wyoming company.
You do have to have aregistered agent in Wyoming.
That's where they come in, butthey've made $1,000 up front.
So if I get 2,000 people payingme $1,000, what's that?
(57:46):
$10,000, $10 million.
Speaker 1 (57:49):
A thousand by a thousand, I think that would be
at least a million.
Speaker 2 (57:52):
That's six.
So that's only one million,isn't it?
Yeah, so I get a million bucksfor setting it up and then I get
250,000 the first year forbeing the agent doing zero.
That's pretty good business,guys it is.
It takes me all of 10 minutesto set up that Wyoming LLC.
(58:15):
You pay me $1,000 and then Iget an additional $200 every
year.
Speaker 1 (58:23):
And you have to have the agent, so it's not like, oh,
I don't want Josh, I want to goto Lee, kind of thing.
Speaker 2 (58:28):
Yeah, I've got to have a registered agent in
Wyoming.
So but Wyoming, nevada, there'sa group running around it's
selling you get three Utah LLCsfor $5,000.
I'm licensed in Utah.
Why would I?
Unless I'm doing work in Utah?
(58:49):
You can't give me one reason,not one, to have a Utah LLC if
you're doing business in Florida.
But if you're something likeyou can't do it.
Speaker 1 (59:03):
What I would say.
But if you're something likeCoca-Cola company where you're
doing business in all states, ifyou're a Coca-Cola company, you
need to go to Delaware.
Speaker 2 (59:14):
Delaware, over the decades, has passed very good
laws that allow transfer ofownership of corporations and
stuff.
90% of all publicly tradedcompanies are in Delaware.
But yes, coca-cola has to beregistered in all 50 states.
Speaker 1 (59:35):
So that's where I've noticed a lot of Pepsi Coke
FritoLays.
They have Coca-Cola Coke, butthen they have the FritoLays LLC
.
Speaker 2 (59:45):
Yeah, they have dozens of companies.
If you're doing business inmultiple states, you're not
trading stock.
Okay, go do it in Wyoming.
Wyoming's as good as any otherplace.
So, yeah, go do it.
But other than that, the answeris no.
(01:00:08):
So I hate to throw water on you, oh no it's good.
Speaker 1 (01:00:14):
That like popped all their bubbles.
It makes sense that they wouldwant to push something like that
where it's like oh I'm anexpert in this and if you buy my
$2,000 course, I'll cover yoursetup thing and retain you for
whatever price.
It makes sense that they marketand hype it the way they do.
Speaker 2 (01:00:31):
Well, the good news is, I'm not marketing LLCs.
I'm not marketing anything toyou, right?
So wonderful.
Speaker 1 (01:00:41):
There you have it, josh.
Thank you, lee, it's actuallybeen an honor and a pleasure.
I learned a lot.
It's great to be with you.
You set me straight on a lot ofthings, all right.
Speaker 2 (01:00:52):
We'll catch you later , sir.
Sounds good.
Welcome to the Josh Bolton show what we've done in
the interesting and inspiringconversations, and now your host
Josh Bolton.
Hello everybody, Today we haveLee Phillips.
We've been having a great chat.
Before I hit the record buttonFrom what Lee's been hinting at,
(00:23):
he has great specialty inknowledge and LOCs.
Asset protections have improvedbid, but if your company gets
sued, how to protect yourselfthe best so you can still keep
retain most, if not all, yourmoney?
This man has a lot of knowledge.
I'm looking forward to chattingwith him.
Lee, take it away.
Speaker 2 (00:41):
It's good to be with you, josh, not sure quite where
to go.
I work with a lot of people whohave set up businesses.
I've actually dealt with over amillion people in my career and
taught them about assetprotection, taxes, small
business structuring, identitytheft protection.
I mean.
(01:02):
Everything melts together aftera little while so we can get
started, and I'm assuming thatmost people want to talk to a
lawyer.
I guess I'm a lawyer.
My grandson went to school thisfall and the teacher says what
is your grandpa doing?
(01:22):
He said well, he's a lawyer,and the teacher said honest, and
my grandson said no, he's justa regular one.
At any rate, I'm actually acounselor to the United States
Supreme Court, a counselor inthe United States Supreme Court.
I'm a federal tax courtattorney, I'm a federal court of
(01:43):
appeals attorney, and so I dealwith the federal government on
a lot of different levels, andwe'll talk about asset
protection.
You'll be stunned to know whatyour asset protection threats
are.
You alluded to the lawsuit.
The lawsuit is only a littletiny bit of it, though.
(02:07):
Really, yeah, no, 56% of allbankruptcies in the United
States are a result of.
Speaker 1 (02:19):
Not budgeting or.
Speaker 2 (02:22):
Somebody in the family gets sick.
Really 56% of all bankruptcies.
So the question is are yougoing to lose your real estate
investments?
Are you going to lose yourlittle house, your big house?
Are you going to lose yourhouse?
Are you going to lose your bankaccounts?
Are you going to loseeverything when somebody in the
family simply gets sick?
And that's not even yourbiggest asset protection threat.
(02:45):
You'll be stunned when I tellyou what your biggest asset
protection threat is.
What is it?
Speaker 1 (02:52):
The IRS.
Speaker 2 (02:54):
The IRS has taken 20, 30, 40% of everything you bring
in the front door guys.
Is that an asset loss?
That is, I mean you'll spendmore money with the IRS than you
do your kids, college education, your mortgages, everything put
together.
(03:15):
So one of the goals is to cutyour taxes 10 to 20%.
It doesn't sound like a lot,but it's huge, because people
don't understand what the IRSdoes to them.
You have no clue what the IRSdoes to you.
Let's take a dollar and doubleit 20 times $1, $2, $2, $4, $8,
(03:38):
$8, $16, $32.
You got it, josh?
Yeah, I got it.
You end up with a million48,000 and change Okay, over a
million dollars.
But wait, there's no tax onthat, is there?
So let's tax it at 40%.
I have $1.
I double it to two, but I'vegot a dollar in profit so I have
(03:58):
to tax that at 40%.
So I take 40 cents off of them,so I don't end up with $2 and
with a buck 60.
I double the buck 60.
That's 320, but I don't get thefull 320 because I had the tax,
the extra buck 60.
I end up with 256.
So over on this side we have amillion dollars.
(04:21):
Over on this side We've taxedit at 40%.
40% of a million bucks is400,000.
So over here I've got 600,000.
Over here I've got a milliondollars.
That's a huge loss, that is.
I mean, that's unbelievable.
It is.
(04:42):
You have no clue.
Okay.
How much do I have over here?
I've got a million 48,000 overhere.
How much do I have over here?
When I tax it at 40%, I'll cutto the chase.
I can have fun with you, Josh.
Okay.
The answer is you have $12,089.
(05:03):
So we've gone from a millionand 48,000 to $12,089.
What people don't know?
Well, the eighth wonder of theworld is Compounding interest.
Compounding interest.
What people don't understand istaxes are compounding interest
in reverse.
I mean, if compound interest isthat powerful, taxes are that
(05:30):
powerful in reverse.
And so if I can save you just10 or 20% on your taxes, that
isn't 100 bucks out of $1,000.
That's millions of dollars overyour lifetime.
It's huge.
So how do we do that?
(05:53):
Well, we use certain legaltools, and one that's I would
recommend today for most peopleis something called the limited
liability company in LLC.
The problem is, you set up yourLLC, you set up your
corporation, you have yourlittle business, sole
(06:14):
proprietorship, whatever it is.
You have your little business.
Your accountants never broughtyou in, put his arm around you
and said you know, we need toteach you how to use your little
business as a tax shelter.
They've never done that, andyet your little business is your
most important tax shelter.
It's huge, and the reason is itworks above the line.
(06:40):
Oh, what's above the line?
Well, it's an accounting term,so we got to understand a little
bit about accounting.
Okay, your financial plannerdude says you're going to take
off your home interest, mortgagestuff, you're going to deduct
your medical expenses, you'regoing to deduct your charitable
(07:01):
contributions, all that crap,everything your financial
planner dude does is below theline.
What's the line?
The line is the adjusted grossincome line on your 1040 form,
your AGI.
Why is AGI important?
Well, it basically determineswhat tax bracket you're in, and
(07:24):
the accounts just said now,phillips, that's not what you
figured.
Well, it basically is, guys.
It determines whether or notyou get your Roth IRA, whether
your child care deductions comeoff, whether you get alternative
, whether you pay alternativeminimum tax.
Most people don't even know whatAMT alternative minimum tax is.
(07:47):
What you don't understand iswhen Trump put his tax laws in
effect.
Before, that, alternativeminimum tax was a calculation
that your accountant applied toyour tax numbers to make sure
(08:08):
that you paid more than younormally would pay, to make sure
that the rich paid their fairshare.
Well, I've got news for youguys.
Before Trump, the rich startedat $80,000 a year in income
that's not exactly the rich inmy book and yet your account
(08:32):
never even told you that he wasusing an alternative tax
calculation to make sure thatyou paid more money.
Trump raised it from about$80,000 up to $400,000 for a
couple, and it depends on howyou make your money whether it's
capital gains, whether it'searned income and a bunch of
(08:53):
crap, but we're basicallydealing at $80,000 versus
$400,000.
What people don't understand isTrump didn't have enough votes
in Congress to make his taxchanges permanent.
So well, january or December 31,2025, everything twinkles back
(09:16):
to what it was in 2016.
So you're not going to be at$400,000 calculating an
alternative minimum tax, you'regoing to be at $80,000.
And that's a big hit, guys.
The adjusted gross incomedetermines whether you get your
$199 deduction.
(09:37):
You need to pay attention tothe $199 deduction.
$199 is something that Trumpput into place when he took the
corporate tax and lowered itfrom the 35% and all these
percentages down to a flat 21%.
The little guy said, hey, hey,wait a minute, what about us?
(09:58):
And so they said okay, you getto take 20% of your profit.
Wham right off the top.
Not bad huh Right, the problemis you've got to pay yourself a
salary during the period.
You've got to do this, you'vegot to do that.
(10:19):
We've actually developedcomputer programs that maximize
where that is, but youraccountant doesn't do this for
you.
And we took a guy who had apretty good business.
It was taxed as a partnership.
Well, a partnership a partnerdoesn't get a wage, a W2.
(10:41):
They get a distribution fromthe partnership, so they don't
count towards the $199.
The guy got zero in $199.
The next year we calculated, wegave him a salary yes, he had
to pay the Social Security taxesand stuff on a salary, but it
(11:03):
wasn't that much and on $199deduction we got him an extra
$723,000.
So this is a big deal, guys, andyour accountant is not
maximizing it for you.
You've got to go to him andyou've got to say how can I
maximize this $199 deduction?
(11:25):
So you got to worry about yourAGI.
If your AGI is under like250,000, no problem.
If it's over 400,000, you got abig problem.
So we need to play this gameand adjust your AGI, your
adjusted gross income.
(11:46):
The problem is, as anindividual you can't do a thing
to adjust your gross adjustedgross income.
You can't lower it.
The only thing you can do tolower it is basically contribute
to a standard, not a Rothstandard IRA, and that will take
(12:07):
the 6,000, whatever it is 7,000, if you're old you get more but
that will take that much offyour adjusted gross income.
There are two things that youcan do that come in above the
line, the adjusted gross incomeline.
The two things you have are,one, your business and two, your
(12:29):
real estate investments.
Those two things come in abovethe line.
So if I can use the littlebusiness as a tax shelter, it's
huge, it compounds itself andit's just something that you
need to inherently know how todo.
Because I will guarantee youraccountant is not doing it.
(12:52):
He's taking the numbers thatyou give him or her and they are
plugging them in the computerand they are spitting out your
tax.
They will not counsel you.
The reason is, if they tell youto do something and it doesn't
work, they're liable.
They've learned to keep theirmouth shut.
(13:13):
If they take your numbers, plugthem into the computer, spit
out your taxes, there's zeroliability in that.
But if you go to them and saywe need to do this, they'll look
at you and say, wow, you'resmart and you look, that's a
great idea.
You thought of it, didn't you?
Can you see what we're doing,josh?
(13:37):
So you've got to learn to useyour little business as the tax
shelter, and the way you want toconduct your business is
undoubtedly with a limitedliability company, not a
corporation.
If you are currently acorporation, you need to change
from a corporate legal structureto an LLC, a limited liability
(14:01):
legal structure.
Now it's easy.
You go to your state, they havea form, you fill out the form
and it will change you from acorporation to an LLC.
You don't get a tax, new tax IDnumber, the IRS doesn't know
and they don't care whether youhave a corporate legal structure
or a limited liability legalstructure.
(14:24):
They don't care.
So you're going to make thischange for asset protection
purposes, and the reason is theLLC gives you twice, two times
as much asset protection as acorporation, and that's
significant.
Speaker 1 (14:43):
That's what I was going to ask is because I've
been thinking of getting an Scorp because I do a service
business, so I should just doLLC instead.
Speaker 2 (14:52):
Well, you've made I'm going to say the classic
mistake.
Can I pull you apart, josh?
Speaker 1 (14:58):
Of course go.
Speaker 2 (15:00):
Subchapter S is a subchapter in the IRS code.
It controls how your taxes arecalculated in a business.
That subchapter S can beapplied to a corporate business
structure or it can be appliedto an LLC business structure and
(15:23):
the IRS doesn't know whetheryou've got a corporate or an LLC
.
All they know is your taxedunder subchapter S, so taxation
and legal structure have nothingto do with each other.
Okay, that's interesting.
It's a concept most people havenever grasped.
(15:44):
So you're going to have the LLClegal structure because it's a
better legal structure.
Then you get to pick how youwant it taxed.
If you are selling goods andservices, doing pool businesses
or whatever, then you want asubchapter S taxation.
(16:05):
If you are investing in realestate and the income that
you're getting is rents, youwant a partnership tax structure
.
And very few people will tellyou this, but you either want a
subchapter S or partnership.
You do not.
No.
(16:26):
No, no, no no no, no, you do notwant a sole proprietorship.
The reason is the IRS.
They've added 30,000 new IRSagents this year.
Before Biden took over, theyhad 85,000 IRS agents.
Biden is giving them anadditional 87,000.
(16:48):
He's more than doubling thenumber of IRS agents.
Every one of those IRS agentscan audit at 1040.
With a schedule C, that's yourlittle business, or a schedule E
, that's your real estate.
Less than one half of 1% ofthose agents can audit a
(17:11):
partnership or a subchapter S.
Speaker 1 (17:16):
Read the guidelines guys yeah, that makes sense.
Yeah, I'm still for me.
I like, like I told you earlierbefore, hit the record like I'm
just starting a pool businessand that's where even my agents
like first year, they'reprobably not going to even look
at you, but you're like next,the second year and third year,
yeah, they're probably going tolook at you.
Speaker 2 (17:37):
Well, if you, if you're set up as a subass or
you're set up as a partnership,now you're selling goods and
services, you're putting inpools.
So you want a subchapter Staxation.
Speaker 1 (17:51):
And it's more.
I'm more offering your servants.
I'm subcontract, so I'moffering a service to my boss,
kind of thing.
Okay.
Speaker 2 (17:58):
Well, you're still selling goods or services, so I
would need to you're not gettingrent.
Rent is what we call passiveincome.
Right, you're getting what wecall non-passive or active
income.
Now what you're going to do isyou're going to take a
reasonable salary out of yourcompany and then you're going to
(18:20):
distribute the rest of themoney, your profit, out of the
company.
You take off the 20% for 199A,then you distribute the rest of
it and that distribution comesto you without having to pay the
employment tax and SocialSecurity.
If I could feed it all thatmoney.
(18:42):
So you're going to do that.
The 15.3% is the unemployment.
Taxes and stuff do not apply topassive income.
That's why you want to have ataxed as a partnership, because
all of it passes through to you.
(19:04):
If you have a taxed as asubchapter S, the law says you
have to take a reasonable salaryand then and that subject to
the Social Security, fike ofFeud and all that crap.
Okay, so why pay the 15.3% onanything if all of your income
(19:24):
is passive?
But you have non-passive income, so you need to take it as a
subchapter S.
Speaker 1 (19:34):
Okay, subchapter S got it.
So then here's a side technicalquestion, and I'm more than
certain you actually know this.
I've always been told you wantto form a trust in whatever a
lot of people say Wyoming forsome reason.
But they say you also want toform a holding LLC in Wyoming
for your real estate and thenput that holding company in your
(19:56):
trust.
Is that getting a little jinkyand kind of thing, or is that a
good strategy too?
Speaker 2 (20:03):
It's basically BS, really, yeah, you want me to
tell you what BS means.
You're good there.
Speaker 1 (20:12):
Yeah, I'm good.
I was trying to think of asmart alec comment.
Speaker 2 (20:18):
So look, this whole concept of Nevada, delaware,
Wyoming LLCs is basically BS.
Okay, you're going to put yourLLC in the state where you are
doing business or where you ownthe property.
(20:40):
End of discussion.
Okay, I do not have a holdingcompany, because if you have a
holding company, I can attack aholding company and then I can
get all of the companiesunderneath it.
If I have separate LLCs set upside by side but independent,
not linked to each other, then Ihave to sue each one
(21:03):
individually, and I can't dothat because I can only sue
somebody who has a causalconnection to the problem.
They acted, they caused theproblem, they owned whatever
caused the problem or theymanaged whatever caused the
(21:23):
problem.
That's the only way I can sueyou.
So if this LLC, if your poolcompany is one LLC and your real
estate owning company is theother LLC, your pool company
causes a problem that hasnothing to do with your real
estate owning LLC.
(21:43):
If there is an upper LLC, maybeI can go through this LLC, the
pool company, and I can get tothe holding company.
If I can get to the holdingcompany, then I own everything.
Speaker 1 (22:02):
So it's actually a linchpin, essentially.
Speaker 2 (22:05):
It's a linchpin in a way.
They say it's private.
Let me just tell you, anonymitytoday is a myth.
We can literally, josh, tellyou what underwear you're
wearing.
I mean, there is no privacytoday.
I was doing asset protection 10, 15 years ago for a guy and he
(22:31):
kept saying I'm off the grid,I'm off the grid, no, I'm not
going to do that.
That exposed me and finally Ithrew up my hands and I said
give me an address With oneaddress.
Does the tenant know theaddress of the property that
they live in?
I said give me an address.
I don't care if it's in an LLC,I don't care if it's in a land
(22:53):
trust, I don't care how it'sowned.
Give me an address With thataddress.
I came back with a 40-pageprintout.
I had every bank account thisguy had ever had.
I had every company he had everowned any stock in, including
private companies.
I had every insurance policy hehad ever bought.
I had everything on it.
(23:15):
I faxed it off to him.
I didn't hear back from him.
Lee, I talked him through.
But yeah, you had everything onhim I had everything on him.
I faxed it off to him and Ididn't hear from him for two or
three days and he called me upand he says okay, anonymity
(23:40):
doesn't work.
Now what do we do Interesting?
So if you think you'reanonymous today, I got another
thing coming for you, buddy.
Oh yeah, it's only gettingworse too.
Speaker 1 (23:53):
And I'll give it to you.
Speaker 2 (23:54):
I have access to databases the general public
doesn't have access to, but wecan tell you everything about
you.
That's crazy, so the LLC is theway you're going to protect
yourself.
Now you mentioned a trust.
The trust is going to own theLLC.
The trust is what we call adisregarded entity.
(24:17):
Everybody ignores it.
It's you.
You use your Social Securitynumber.
The IRS doesn't even care thatit's there.
It's you.
But when you die the companythat's owned by the trust we
don't have to probate itsownership Because technically,
(24:39):
you don't have to use your owntrust Because technically, if
the trust owns the company andthat means you're going to put
the trust's name on theownership documents it's going
to be in the operating agreementas the person who owns the
(25:00):
company, the member, and so whenyou die, the owner of the LLC
didn't die.
We get a new director, a newtrustee of the trust and they
have full authority to dowhatever the trust tells them to
(25:20):
do.
The written document.
So the trust is a probateavoidance tool.
It is not an asset protectiontool, but it is critical that
you avoid probate with the trust.
That means the trust has to ownyour stocks, your bonds, your
bank account, your safe account,your safe deposit box, your
(25:42):
automobile, anything that youhave to sign your number,
anything that you have to signyour name for, and that includes
your little business ownership.
Speaker 1 (25:54):
So the trust owns the business too, which is a layer
of protection.
Speaker 2 (25:59):
Is that a layer of protection too?
Speaker 1 (26:01):
What's that?
Is that like another layer ofprotection?
Because then they can only goafter the trust, not you.
Speaker 2 (26:06):
No, it's no layer of protection.
You are the trust.
The trust gives you zero assetprotection.
Speaker 1 (26:15):
So tying into that, one thing I've been thinking
about and you're definitely theguy I've been needing to talk to
about this is I do futurescontract trading.
I'm certain you know what thatis, I don't explain it anymore
to anyone else, but there's alot of taxes with that, like the
whole 60, 40, 60% at 40, andwhatever.
(26:35):
I was thinking of forming anLLC just for the trading.
So also, if shit blows up, ithits the LLC, kind of thing.
Speaker 2 (26:44):
Well, the LLC isn't gonna reduce taxes on the trades
any more than they would benormally.
The LLC, if it's taxed properly, would reduce the chance of an
audit.
You can structure it withoutthe LLC and get the same tax
(27:12):
advantage or benefit.
The LLC gives you the assetprotection.
So if it's in an LLC and you'vegot a large pot of trading
money, then the LLC wouldprotect that pot of trading
money from what happens to you.
(27:32):
The LLC I said had twice theasset protection of a
corporation.
The corporation has thecorporate shield.
It's the veil I hide behind it.
It protects me from whathappens in the company, from the
slip and fall of the tenant orfrom the pool has a problem.
(27:55):
It protects me and my assetspersonally from what happens
within the company.
The LLC, that's the corporateshield.
That's what the corporationdoes.
The LLC has another assetprotection facet to it, which
the corporation and no otherentity.
(28:16):
Well, that's not true.
Partnerships have it.
Oh, you just said, wait,partnerships don't have any
asset protection.
Well, they do.
I'll explain it in a minute.
I'll give you a listen.
Okay, All right, but itprotects the assets of the
company from what happens to theowner of the company.
(28:37):
So if you get in troublepersonally.
You get sued because you hit akid in the crosswalk on the way
to church.
That's not a business problem.
You get sued because somebodyin the family gets sick and you
have to clear bankruptcy.
You get sued because you getdivorced.
You get sued personally.
(28:59):
The assets of the LLC are notavailable to satisfy that
lawsuit.
The assets of the corporationare available to satisfy that
lawsuit.
That's a huge difference.
Speaker 1 (29:15):
That is huge actually .
Speaker 2 (29:17):
That's huge.
I've seen more people losetheir company and your company
is likely your biggest asset.
I've seen a lot more peoplelose their company because the
person gets in trouble than Ihave ever seen the person lose
their house because there's aproblem in the business.
(29:38):
So it's a big deal.
Let me explain it to you.
It's called charging orderprotection.
Okay.
So 400 years ago in England, meand you, josh and Joe, we formed
a great business.
The only type of businessstructure 400 years ago in
(30:03):
England was a partnership.
So me and you and Joe werepartners.
Well, okay, joe gets in troubleand I'm not exactly sure how
you got in trouble 400 years agoin England.
You didn't pay the king, youhit somebody with your horse.
You got divorced.
There was a problem.
Joe got sued, got it.
(30:24):
His creditor, the guy suing him, gets a judgment against him
and they take away hispartnership interest.
Josh and Lee now have a newpartner.
By definition of law, that newpartner can come in.
They don't need our approval.
They sell our company right outfrom under us.
(30:46):
And yet we have spent 30 yearsbuilding this company with Joe
and Joe lost it in the lawsuitand you and I just lost
everything because Joe screwedup.
That's not fair, right?
And the Brit said, yeah, that'snot fair.
So they passed the law.
(31:07):
That said, when Joe's creditor,the guy suing him, gets a
judgment against him, they can'tcome and take his partnership
interest.
They can't take his partnershipinterest.
They have to go back to courtand get an order which charges
the debt that Joe owes hiscreditor against his ownership
(31:32):
interest in the partnership.
But the creditor can't come in.
They can't sell the partnershipinterest out from under me and
you.
They can't decide what we payourselves a salary.
But if the partnership declaresa profit, not Joe but Joe's
creditors now get that profit.
(31:56):
So it's called charging orderprotection.
It protected our partnershipfrom Joe's creditor and likewise
it protected our partnershipfrom your credit If you got in
trouble.
So it protects the assets ofthe company when an owner of the
(32:17):
company gets in trouble, andthat's a big deal.
That is now.
Ibm is a corporation.
Ibm doesn't have charging orderprotection.
But if you own a bunch of IBMstock and you get sued, you're
going to lose your IBM stock.
But your IBM stock in no wayhas any controlling interest in
(32:42):
IBM.
You can't sell IBM.
You can't do anything with theamount of stock that you have,
right, and if you're the onlyowner of that corporation and I
get your stock, I now own yourcompany, lock, stock and barrel.
I do whatever I want with it.
So the corporation does not havethe charging order protection
(33:06):
the LLC does.
Okay.
Speaker 1 (33:11):
I'm catching up, we're going.
Speaker 2 (33:14):
When Wyoming 1977, wyoming created LLCs in the
United States.
They're actually old Europeanentities.
We have the LTDs in BritainYou've probably heard of that.
We have the GMBHs in GermanyGershelschoff, miss Rancor,
(33:35):
hoftung I just screwed the poochon that German pronunciation.
It's okay, but it's companywith limited liability.
So Wyoming in 1977 says we'regoing to create this in the
(33:57):
United States.
So they did.
Basically, what they did isthey took a corporation and a
partnership and they marriedthem.
We got the genetic corporateshield from the daddy
corporation.
We got the charging orderprotection from the mommy
(34:18):
partnership DNA.
So we have a mixed DNA ofcorporations and partnerships
and we got twice the assetprotection.
The first thing that happenedwhen Wyoming created the LLC is
they said okay, mr IRS, how areyou going to tax it?
Well, it took 20 years for theIRS to come back and say we
(34:44):
don't care how you tax it, youchoose.
So you can have your LLC taxedunder sub chapter S as a
partnership, as a soleproprietorship, under chapter C,
like a C corporation.
You can have your LLC taxed anyway you want, they don't care.
Speaker 1 (35:01):
As long as they get their money.
Speaker 2 (35:03):
As long as they get their money.
Yeah, they want their money.
But that gives you anopportunity because your little
company has the tax sheltercapabilities that you don't have
.
It has the 199A.
It can write off your computer,it can write off your cell
(35:24):
phone, it can write off mileage.
It can do all sorts of thingsto appreciate realistic.
It can do all kinds of thingsthat you can't do as an
individual.
It can put a benefit plan inplace and make all your medical,
not tax deductible tax free.
That's huge guys, that is huge.
Speaker 1 (35:48):
That is huge actually .
Speaker 2 (35:50):
So these are big deals.
You can have the benefit plans,the HSA, the HRA, the 125, the
105.
You can have all of thesebenefit plans that basically
make your medical expenses taxfree, not tax deductible, and,
as an individual, your financialplanning dude says you can
(36:15):
deduct your medical expenses.
Well, yeah, but no, you can't,because you have to meet 10% of
your adjusted gross incomebefore you can deduct a dime off
of your medical expenses.
So most people can't reallydeduct their medical expenses
(36:36):
because that means if you make$100,000 a year, you've got to
have $10,000 in medical expensesand the $10,000 in first dollar
you can deduct the first dollar.
Speaker 1 (36:50):
Man, you would have to make a lot of money to try to
use that as a leverage.
Speaker 2 (36:54):
Yeah, no, you can't do it.
But if I set one of these HSAsor HRAs in place, then I can
fund that with money from thecompany, which is a tax
deduction from the company,which would have ended up in
your pocket and you would havepaid tax on it.
But you can fund it with a taxdeductible dollar and then you
(37:16):
can spend this money in thebenefit plan on your medical
expenses and you get 100%reimbursement.
It's not income to you, it'sjust and basically what you've
done is you've made your medicalexpenses tax-free.
Speaker 1 (37:34):
Okay, so you mentioned earlier as well.
On the health HSA, you said anormal IRA, not a Roth IRA, just
a normal IRA to help yourincome.
I have a Roth because I stilldon't make that much.
That helped me.
Speaker 2 (37:52):
You're paying with an after-tax dollar, so you didn't
get a deduction for puttingyour Roth in.
I just get the growth tax-free.
You get to take it out tax-free, which is pretty cool, Right.
But you didn't get a deduction.
You didn't lower your adjustedgross income.
(38:12):
You didn't lower any incomebecause you didn't deduct the
expense that you paid into theRoth IRA.
Now the question is which one'sbetter a Roth IRA or a standard
IRA?
Speaker 1 (38:31):
Or let's say trading.
Let's say I'm doing futurescontracts and I could wait.
I don't care.
Speaker 2 (38:35):
I don't care how it's invested.
Got it which one's betterSounds like a normal IRA.
Let's take $10,000 and sayyou've got a 25% tax.
So forget about the IRA numbersand everything.
I'm just using $10,000 becauseI can think of it.
So if it's 25% tax, that meansif I can put it in with a
(39:02):
pre-tax dollar like a standardIRA, I get a deduction.
Right, so I can put my full$10,000 in.
If I do it with a Roth, I'vegot to pay 25% tax and then
whatever's left I can put in.
So over here I put $10,000 in.
Over here I only put $7,000 in.
(39:27):
So now let's run it for 10years, 20 years doesn't matter,
they make the same return.
Doesn't matter where they'reinvested, they make the same
return.
At the end of the period I takethis money out.
Now I've got a full $10,000.
That's been growing over theyears.
(39:49):
I've got more money in mystandard IRA than I do my Roth
IRA because I didn't start withas much money, right?
So I take the money out of mystandard IRA.
I pay the tax 25%, right, I getto take the money out of the
Roth IRA no tax.
Speaker 1 (40:12):
Can you have both at the same time though?
Speaker 2 (40:14):
Well, no, you can't basically but which one gives me
more money to spend thestandard IRA or the Roth IRA?
Because it grew without a taxand I spent it without a tax.
I got a deduction for puttingit in so I could put the full
$10,000 in.
Then it grew without a tax, Itook it out and I paid the 25%
(40:37):
tax.
The numbers are identical.
Speaker 1 (40:42):
Interesting.
The right Okay.
Okay, you've got a full $10,000.
Speaker 2 (40:49):
Which one's better there's.
There's an assumption that'swrong in what I just told you.
What is it?
Speaker 1 (40:59):
That it's the same amount of money or same amount
of losses.
Speaker 2 (41:02):
Either way, that it's the same tax going in today as
I pay, coming out right 20 yearsfrom now.
20 years from now, if the taxis greater, then I win on the
standard IRA Because I have topay more in tax than the 25%.
(41:24):
Mm-hmm that it cost me in thebeginning of the Roth IRA.
If the tax is less 20 yearsfrom now, then I got screwed
Because I can take more moneyout of the standard IRA, pay a
smaller tax on it.
I end up with more money than Iwould have done over here in
(41:45):
the Roth.
Speaker 1 (41:47):
And, generally speaking, taxes are going up, so
it would be better to get thenormal that's the, that's the
assumption.
Speaker 2 (41:53):
It's better to do the Roth, then it is the standard
IRA, because we're gonna bet thetaxes are going up mm-hmm.
Speaker 1 (42:03):
Have you noticed that in your your career that
generally taxes keep going up,not down, other than Trump?
Speaker 2 (42:09):
Ah Well, I wish I had the the diagram to show you,
but that was cool.
I Can find it and share myscreen, although we're probably
gonna get screwed up as soon asI try and do that.
Right?
Speaker 1 (42:26):
No, we're good, I have a set for you can share too
.
Speaker 2 (42:31):
Just a minute, let me look it up.
I got to go to my my slideshere.
I've got to get my my diagrammyhere, diagrammy.
There we go.
There's the diagrammy.
(42:54):
So now I'm gonna go back tozoomie.
One gotta go back to zoom, goto zoom and Come back to here
and now I am going to Sharescreen and I'm gonna take that
(43:18):
one right there.
Can you see that, josh?
Yep, you're coming throughreally good, loud and clear huh.
Yep, I'll even put it onbig-style How's that?
Oh, that's it.
Okay, the tax we didn't.
We didn't have income taxesuntil 1913, okay, and we made an
(43:40):
amendment to the Constitutionthat said that the government
could tax, and the politicians,the Congress, the president,
everybody Swore on a stack ofBibles 50 feet high that they
would never raise the tax above8.5%.
So in 1913, we started outwitha 8.5% tax.
(44:04):
Can you see my cursor there?
Yes, yes, within a few years ithad gone up to 73, 75 percent.
You want to know something,josh?
What politicians lied just asgood in 1913 as they do today,
and they're really good at it.
Speaker 1 (44:23):
That's their profession.
Speaker 2 (44:24):
That's their profession.
And In the early 20s the taxcame from 70 percent down to 25
percent.
What did they call a 20s?
They called the 20s the roaring20s.
When the interest, or when theinterest, when the tax rate
(44:45):
dropped down to 25 percent, theeconomy went nuts.
The economy in 1933 wassputtering and Hurt.
This is Herbert Hoover, rightthere.
Herbert Hoover raised the tax,figuring he'd save the economy
hit.
And he raised it from 25percent all the way up to 79
(45:09):
percent and that put the economyinto a tailspin and the economy
died.
It couldn't recover.
That's the great impression.
Right, you realized during the50s and 60s you could make a
million dollars and pay 920,000of it out in tax.
Hey, I actually remember a clipof Ronald Reagan, long before
(45:34):
he was president.
Reagan said he was an actor youmight remember.
Mm-hmm.
Reagan said I will never makeanother movie.
I don't make any money.
That's it right there.
This is Reagan as president.
He brought it from 70 percentdown to 28 percent.
This is Clinton, this is Bushy,this is Obama and this is
(46:03):
Trumpy.
Basically, we are at howhistoric tax laws right now.
You're probably right, josh,interest rates are gonna go up,
or tax rates, rather, are gonnago up.
Interest rates are alreadygoing up.
The Fed raised the Raise theinterest rate again, didn't they
?
Yep, but Ah, we're basically athistoric tax law.
(46:28):
So does that give you an ideaof where taxes are and what
we're doing?
Speaker 1 (46:36):
Yeah, so the the Roth IRA is the safer bet in this
situation.
Speaker 2 (46:41):
Probably it's a safer bet.
In this, in this situation,we're gonna escape, we're gonna
close this, close this.
This screen is top-sharing.
Okay, we're back and we didn'teven lose you.
I'm stunned.
(47:01):
Wow no done at any rate.
Does that help, josh?
How long do you want to go here?
How long do you want?
Speaker 1 (47:12):
to go.
Speaker 2 (47:14):
As long as you need me.
I don't want to bore people.
Speaker 1 (47:17):
Ah, if they they're a rayboard, they didn't make this
point of conversation alreadybored, huh.
Okay, they would have leftalready.
I'm enjoying this.
Speaker 2 (47:25):
You're saying we don't have anybody listening is
what you're saying.
Speaker 1 (47:29):
May or may not be.
Listen to.
Retention, especially withtick-tock, has gotten really bad
as it.
Mm-hmm.
I know this on my data on theback end after about three
minutes.
Speaker 2 (47:40):
Just tails, just dives, huh well, I'm uh, you
know, we can go on and we cantalk for hours, but I think this
gives you an overview of whatthe LLC does.
I have a 30 pages you aboutthis, on how to, how to work
(48:01):
with an LLC, how to use an LLC.
I would, I would love to getthat you book.
I'd be happy to give it to you.
I'd be happy to give it to yourfolks.
Why don't we set up a sitewhich is, let's say, legalese?
It's a pun on my name, legal legal and then it's EES.
(48:21):
There's only one L in themiddle of it legalese, only one
L in the middle Dot-com.
And let's say forward, slashJosh, and We'll give them the
LLC ebook.
It's free, don't worry about it, and I'm not gonna sell your
(48:43):
Information or anything.
I don't use it it's.
I'm just giving it to you as a,as a promo, and I told Josh
earlier I don't take clients.
I'm old, I'm senile, I'mretired and I don't want any
more clients.
I have my fun people and happyto educate them.
Speaker 1 (49:04):
Now this was extremely educational.
You, you set me straight on alot of things because I was like
I was talking with, like the oh, I'll form a trust in this area
.
I get my LLC in Wyoming, do theholding company, so I make all
the money, do the holding to thetrust.
And now you just say that theholding company, so it's printed
in let me go into that a littledeeper, okay.
Speaker 2 (49:24):
Okay, because you can't give me a reason why you
set it up in Wyoming.
They say anonymous no it's not.
Okay, you're gonna take yourWyoming LLC and you've got your
registered agent up there andthat guy's name is on it.
You're going to Bring it downand you're gonna register it in
(49:50):
which state of you and Josh.
Speaker 1 (49:51):
California.
Oh, I know, I already know I'mgetting just annihilated in
Texas.
Speaker 2 (49:59):
Hell.
No, you're not gonna have aWyoming LLC because by law, any
entity that you have more than25% interest in you have to
register in California and paythe eight hundred and fifty
bucks a year franchise fee andall the taxes.
Okay but let's say you're inOhio, so, or even in California.
(50:25):
You take the Wyoming LLC, youregister in California by law.
You are now subject to all ofCalifornia laws.
I Don't give a damn.
Speaker 1 (50:37):
Everyone says that I don't care what.
Speaker 2 (50:39):
Wyoming says Now the registered agent may use their
name to register the new LLC,the, the LLC in California.
But if you get sued inCalifornia, that registered
agent in Wyoming that you'repaying In 200 bucks a year to,
he ain't gonna defend you, heain't gonna do a damn thing.
(50:59):
He's gonna turn over you in 10seconds mm-hmm.
So you're right back to squareone in court.
Any money that you make inCalifornia is taxed in
California, anybody that suesyou.
They don't have to go toWyoming, they sue you in in
California.
And and, like I say, if youdon't register in California,
(51:22):
california finds you 300 or$3,000 a year that's, they're
fine For not registering inCalifornia.
It you and I can set up acompany.
I can buy a house with themoney that you give me in Utah
and I'll tell you what you get40% of the deal.
You put up all the money.
(51:43):
I get 60% of the deal.
I found it, I manage it, I doeverything with it.
Sure fact that you own 40% ofthat company, even though you've
never seen the property in Utah, you've never done anything,
you've never been to Utah.
The sheer fact that you own 40%of it means that you have to
register In California and payall the taxes in California and
(52:07):
the franchise fees.
That's the only state thatrequires that.
But All the taxes will be paidin Utah.
If, if you have a Wyomingcompany and you're doing
business in Ohio, a hundredpercent of your taxes are gonna
pay paid in Ohio.
You don't have to pay any taxesin the world because you didn't
(52:30):
earn any money in Wyoming.
Speaker 1 (52:33):
Okay, okay.
So yeah, really it wouldn't bethat smart, because they all the
internet gurus are saying likeI think, but they're talking
real estate, though for Wyomingthey're saying I don't care what
the LLC holds.
Speaker 2 (52:47):
Okay, if you set up a Wyoming company and you buy a
piece of property in Ohio orNorth Carolina or Tennessee or
Nevada or wherever and you don'tregister the Wyoming company in
Florida, then I'm the tenant.
(53:07):
I ain't gonna pay any rent.
There's nothing you can do tome.
You don't have any rights inFlorida until you register that
company in Florida.
Speaker 1 (53:17):
So at that point, like, let's say I bought a
really big swamp for cheap, likeunder a million bucks, hundreds
of acres, I wouldn't.
The legal advice would be, butget the LLC to own that land,
I'm gonna think.
Or a truck?
Why?
Okay, let's say there's atenant there too.
Bye, I don't know.
Speaker 2 (53:41):
When you bought that piece of property in Florida,
you became subject to all of thelaws associated with Florida.
When you registered the WyomingLLC in Florida which you had to
do in order to buy the propertylegally, you had to register in
Florida to buy the property inFlorida.
Okay, when you registered it inFlorida, florida law
(54:04):
specifically says that companyis now 100% subject to Florida
laws.
We don't care what Wyoming says.
You will pay property taxes inFlorida.
If you make income from thetenant in Florida, you will pay
Florida income taxes.
(54:24):
Now, florida doesn't havepersonal income taxes, but they
have company income taxes.
The tenant does not have to goto Wyoming to sue you.
They will sue you in Florida.
The trial will be in Florida.
They will use Florida law.
(54:45):
You can't give me a reason.
You can say well, I'm anonymous, my name's not on it in Wyoming
BS.
I can find everything out aboutyou in two seconds.
Flat One, two.
We're going to what's calleddigital currency in the next
couple of years.
(55:05):
At that point, the federalgovernment will see every dime
that you spent.
There will be no privacy period.
Right now, I can give you $100bill and nobody ever knows that,
do they?
Josh?
Speaker 1 (55:20):
Nope.
Speaker 2 (55:21):
I can't do that.
In the future, when we havedigital cash, it'll have to go
through the government computerand they'll know that you got
$100.
So there is zero privacy inanother two years, and even at
that, there's almost no privacytoday.
You still can't give me areason why you have a company in
(55:47):
Wyoming.
Speaker 1 (55:51):
That's very valid.
I was just like I was sayingit's just those internet gurus.
They always talk a good talk.
Speaker 2 (55:56):
Well look if I can get you to pay me $200 to be the
registered agent in Wyoming andI get 1,000 people paying me
$200 a year as a registeredagent.
As a registered agent, I getone piece of mail from the state
(56:19):
of Wyoming and forward it on toyou.
That's my only responsibility.
If you get sued, if the LLCgets sued in Wyoming, I hurry
and send the lawsuit to you.
But the Wyoming company isnever going to be sued.
It's going to be sued inFlorida.
So the registered agent inWyoming has zero to do.
(56:44):
If I get 1,000 people paying me$200 a month or $200 a year,
that's $200,000 for zero, notbad, huh?
Speaker 1 (56:57):
Yeah, I could convince about 1,000 suckers so
they can pay me, kind of thing.
Speaker 2 (57:01):
Yeah, I mean, it's great business.
Plus, they get the $700, $800for setting it up in the first
place and it takes five minuteson a computer to put the
information in the state website.
You can do that too.
You can access Wyoming'swebsite and you can set up an
(57:24):
LLC in Wyoming just as fast asthey can, and you pay the
Wyoming fee with your creditcard.
You now have a Wyoming company.
You do have to have aregistered agent in Wyoming.
That's where they come in, butthey've made $1,000 up front.
So if I get 2,000 people payingme $1,000, what's that?
(57:46):
$10,000, $10 million.
Speaker 1 (57:49):
A thousand by a thousand, I think that would be
at least a million.
Speaker 2 (57:52):
That's six.
So that's only one million,isn't it?
Yeah, so I get a million bucksfor setting it up and then I get
250,000 the first year forbeing the agent doing zero.
That's pretty good business,guys it is.
It takes me all of 10 minutesto set up that Wyoming LLC.
(58:15):
You pay me $1,000 and then Iget an additional $200 every
year.
Speaker 1 (58:23):
And you have to have the agent, so it's not like, oh,
I don't want Josh, I want to goto Lee, kind of thing.
Speaker 2 (58:28):
Yeah, I've got to have a registered agent in
Wyoming.
So but Wyoming, nevada, there'sa group running around it's
selling you get three Utah LLCsfor $5,000.
I'm licensed in Utah.
Why would I?
Unless I'm doing work in Utah?
(58:49):
You can't give me one reason,not one, to have a Utah LLC if
you're doing business in Florida.
But if you're something likeyou can't do it.
Speaker 1 (59:03):
What I would say.
But if you're something likeCoca-Cola company where you're
doing business in all states, ifyou're a Coca-Cola company, you
need to go to Delaware.
Speaker 2 (59:14):
Delaware, over the decades, has passed very good
laws that allow transfer ofownership of corporations and
stuff.
90% of all publicly tradedcompanies are in Delaware.
But yes, coca-cola has to beregistered in all 50 states.
Speaker 1 (59:35):
So that's where I've noticed a lot of Pepsi Coke
FritoLays.
They have Coca-Cola Coke, butthen they have the FritoLays LLC
.
Speaker 2 (59:45):
Yeah, they have dozens of companies.
If you're doing business inmultiple states, you're not
trading stock.
Okay, go do it in Wyoming.
Wyoming's as good as any otherplace.
So, yeah, go do it.
But other than that, the answeris no.
(01:00:08):
So I hate to throw water on you, oh no it's good.
Speaker 1 (01:00:14):
That like popped all their bubbles.
It makes sense that they wouldwant to push something like that
where it's like oh I'm anexpert in this and if you buy my
$2,000 course, I'll cover yoursetup thing and retain you for
whatever price.
It makes sense that they marketand hype it the way they do.
Speaker 2 (01:00:31):
Well, the good news is, I'm not marketing LLCs.
I'm not marketing anything toyou, right?
So wonderful.
Speaker 1 (01:00:41):
There you have it, josh.
Thank you, lee, it's actuallybeen an honor and a pleasure.
I learned a lot.
It's great to be with you.
You set me straight on a lot ofthings, all right.
Speaker 2 (01:00:52):
We'll catch you later , sir.
Sounds good.
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