August 7, 2025 • 24 mins
As a past President and 10-year Board Member of the American Society of Cost Segregation Professionals, Gian has helped shape the standards of the industry and is one of the few experts who has testified before the IRS on cost segregation matters. His work has been published over 20 times in top journals like AICPA’s Tax Advisor and BNA Bloomberg, and he’s been a featured speaker to thousands of CPAs and real estate investors across the country. Gian also created the first-ever online cost segregation platform, allowing real estate owners to access advanced tax strategies without needing a third-party specialist. Since 1999, his firm KBKG has helped clients save over $10 billion in taxes—unlocking capital so they can reinvest and scale.
Gian also created the first-ever online cost segregation platform, allowing real estate owners to access advanced tax strategies without needing a third-party specialist. Since 1999, his firm KBKG has helped clients save over $10 billion in taxes—unlocking capital so they can reinvest and scale.
CONTACT DETAILS
Company: KBKG
Website: https://www.kbkg.com/ and https://www.kbkg.com/residential-costsegregator
Social Media Address
LinkedIN - https://www.linkedin.com/in/costsegregationservices/
Facebook - https://www.facebook.com/KBKGTaxIncentives/
Instagram - https://www.instagram.com/gianpazzia/
X - https://x.com/KBKG
Gift: For anyone interested in doing cost segregation, you can get a discount using this code for your listeners. - go to www.costsegregation.com and use the JUSTMINDING2025 that is in all caps. you will get a 10% discount for first time users.
Remember to SUBSCRIBE so you don't miss "Information That You Can Use." Share Just Minding My Business with your family, friends, and colleagues. Engage with us by leaving a review or comment. https://g.page/r/CVKSq-IsFaY9EBM/review Your support keeps this podcast going and growing.
Visit Just Minding My Business Media™ LLC at https://jmmbmediallc.com/ to learn how we can help you get more visibility on your products and services.
Gian also created the first-ever online cost segregation platform, allowing real estate owners to access advanced tax strategies without needing a third-party specialist. Since 1999, his firm KBKG has helped clients save over $10 billion in taxes—unlocking capital so they can reinvest and scale.
CONTACT DETAILS
Company: KBKG
Website: https://www.kbkg.com/ and https://www.kbkg.com/residential-costsegregator
Social Media Address
LinkedIN - https://www.linkedin.com/in/costsegregationservices/
Facebook - https://www.facebook.com/KBKGTaxIncentives/
Instagram - https://www.instagram.com/gianpazzia/
X - https://x.com/KBKG
Gift: For anyone interested in doing cost segregation, you can get a discount using this code for your listeners. - go to www.costsegregation.com and use the JUSTMINDING2025 that is in all caps. you will get a 10% discount for first time users.
Remember to SUBSCRIBE so you don't miss "Information That You Can Use." Share Just Minding My Business with your family, friends, and colleagues. Engage with us by leaving a review or comment. https://g.page/r/CVKSq-IsFaY9EBM/review Your support keeps this podcast going and growing.
Visit Just Minding My Business Media™ LLC at https://jmmbmediallc.com/ to learn how we can help you get more visibility on your products and services.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to Just Minded My Business Media LLC, where you
get information that you can use.
Speaker 2 (00:10):
I'm your host, Ida Crawford. But before we dive in,
subscribe to Just Minding My Business on YouTube and wherever
you get your podcasts. Shape Just Minded my Business with
your family, friends, and pile leaders. Engage with us by
leaving a review or comment. Your support keeps this podcast
(00:33):
going and growing. Visit our website at JMMB mediac dot
com to learn how we can support you and get
more visibility on your products and services. So grab a
center paper and get ready for information that you can use.
Speaker 3 (00:56):
Are you a woman with big dreams? Ready to amplify
your voice and grow your business. Join assist 's Circle
Empowerment Network and step into a community that truly supports you.
Boost your visibility with our SEO optimized platform and connect
in our vibrant LinkedIn group. Showcase your achievements in our
(01:17):
quarterly magazine and shine in live interviews. Want a broader platform,
gain access to exclusive discounted opportunities to feature your brand
or insights on conversations that matter. Join us today and
unleash your true potential with Assista's Circle Empowerment Network visit
the website and schedule a discovery session at Assista's Circle
(01:41):
dot org.
Speaker 1 (01:42):
Welcome, Welcome, Welcome, today, I have the honor of bringing
such a smont in my business, mister Pazzazia, who helps companies,
real estate owners and CPAs unlocked proven tech strategies and
incentives created by Congress so they can invest in growth.
(02:05):
He has been doing this for over twenty five years.
Mister pos Asia.
Speaker 4 (02:12):
Pazia Hazia, thank you. This right.
Speaker 1 (02:18):
Started his career at the Big four accounting firms, not
as a CPA, but as a structural engineer. He became recognized.
He became a recognized leader in the cost segregation field,
serving as a former president of the American Society of
Cost Segregation Professionals and sitting on their board of directors
(02:42):
for a decade. Wow, welcome, welcome, welcome. I'm glad to
have you here. We always like to talk about money finance.
So my first question to you is what is cost.
Speaker 2 (02:58):
Segregation?
Speaker 3 (03:00):
Is it?
Speaker 4 (03:00):
Yeah? Yeah, sure, I had First off, thanks for inviting
me to the show. Really glad to be here. And yeah,
so cost igregation's been my specialty for a long time.
And what it is, it's it's for real estate or
businesses that own real estate, or any investors that own
(03:21):
real estate. And so cost segregation is a way for
real estate investors to pay less in taxes by speeding
up how fast they write off parts of their building.
So normally the tax rules say that you have to
write off a building really slowly. So if you buy
(03:45):
a building for your buildings business, normally you'd appreciate that
over twenty seven or thirty nine years, right, But not
everything in the building lasts that long, and so there's
things like final flooring and cabinetry and wiring in the
building that you can actually write off much quicker, okay
(04:07):
than the thirty nine years. And so a cost segregation study,
it breaks out a property that you bought into pieces,
and you get to write off a lot of those
pieces in year one, right, and so you get this,
You get a much bigger tax deduction by doing this
instead of spreading out those deductions over decades. And so
(04:33):
I can kind of put this to numbers, right. So
let's say let's say you buy an investment property a
rental home. Okay, it's an investment, and you pay it's
two hundred and seventy thousand dollars normally you get to
write off. Normally your deductions would be about ten thousand
(04:56):
dollars a year for twenty seven years, okay for rent properties.
If instead you did a costic study on that rental home,
you would get about twenty five percent of that would
be considered short life property that you get to write
off in year one. So that's fifty four thousand dollars
(05:19):
of deductions versus the normal ten thousand dollars the deduction.
So you get a big jump by doing this, and
that's kind of the name of the game. And in
real estate is uh is you know, taking you know,
getting getting your cash flow up as high as possible,
(05:40):
as early as possible, and so that's what costs aggregation does.
Speaker 1 (05:45):
Okay, that's very very interested. So what about if if
an investor works a full time job as well as
real estate, how does that work?
Speaker 4 (05:58):
Yeah, So so when you uh, when you're a passive investor,
like you have a full time job. Let's say you're
a lawyer or doctor and you invest in rental property.
Speaker 2 (06:16):
M m hm.
Speaker 4 (06:18):
There's a couple of considerations here. So normally you don't
get to go buy real estate and create these deductions, right,
you can you can pretty easily create paper losses on
real estate through depreciation like I just described. And so
normally you're not allowed to use these paper losses that
(06:41):
you from real estate and apply those to your other
income that's not real estate related, so that that that
would be considered a passive investor. And so if you know,
in the real estate world, if real estate is your
business all you do, the tax rules are super friendly
(07:05):
to you to where most people in the real estate
game pay very little tax. But most normal people don't
meet that definition in the tax code of what a
real estate professional is, and so they kind of have
to keep their income from their normal business separated from
(07:25):
their real estate income or losses.
Speaker 2 (07:29):
And so.
Speaker 4 (07:32):
Cost segregation can still benefit you as a passive investor.
You just have to have passive income from your real
estate and so you know, as far as you know,
when when does cost segregation make sense? It really comes
down to one, can you know, do you have income
from your real estate properties that you're paying taxes on?
(07:55):
The answers, yes, then cost segregation will benefit you.
Speaker 1 (08:02):
Okay, okay, So tell us about the software that you
that you work with the residential cost segregated software.
Speaker 4 (08:12):
How yeah, yeah, yeah, yeah. So so cost segregation has
been around for a long time and normally, you know
a lot of bigger real estate companies, even corporations like
retailers like Target or own their own stores, like, they've
(08:33):
been doing these costic studies for a long time. And
normally the IRS wants to see somebody that's qualified with
an engineering background come in, go visit the property, do
an analysis, list out everything that you know should be
written off quicker. And this can cost thousands of dollars.
(08:55):
It can cost you know, tens thousands of dollars depending
on the size of the property.
Speaker 1 (09:02):
And so.
Speaker 4 (09:04):
We launched a software, a self service software that allows
smaller investors to to do these studies themselves. They can
go to our website. It's it's cost segregation dot com.
And you know, if you have a rental property, you
spend about ten minutes on the site answering questions about it.
(09:27):
And instead of paying five plus thousand dollars for one
of these studies, you can get it done for about
five hundred dollars and and you know, get some pretty
massive tax savings from it. So the software we have
it's like I said, you can go to cost segregation
dot com uh to go straight to it. And if
(09:48):
you have a residential rental property, a rental property that's
six units or less, you can you know, basically do
it yourself and lize of these tax savings.
Speaker 1 (10:03):
Wow, that's amazing because you know, just listening to you
talk about cost segregation, that's got to be very tedious
work and definitely detail work to say the least. And
like you said, most smaller investors, they can't afford the
(10:24):
money to be able to pay for having someone come
out to perform set cost segregation for you for them.
So having this software is definitely key to helping the
smaller investor. So what makes this tool unique compared to
other cost segregation options.
Speaker 4 (10:48):
Yeah, there's only a handful of firms that do this
with software like we have. We were the first to
launch it back in twenty sixteen. So for five hundred dollars,
our software includes audit support. It also includes the recalculation
(11:10):
of depreciation that is typically needed by your tax prepared
to get it on the tax return. And yeah, like
I said, we're unique because we're one of the largest
companies in the country that does cost segregation studies, and
(11:33):
so we're not a software firm. You know, software is
a smaller part of our business and our bigger businesses
we have. You know, it's a large team nationally that
has been doing this type of work for twenty five years.
And so if it does get audited by the IRS,
we you know, we'll stand behind it and defend it
(11:53):
and make the higher r S go away.
Speaker 1 (11:59):
Okay, So couldn't you do you give us a little
success the story for the costs segregated?
Speaker 4 (12:08):
Yeah, you know, we had a we had a client,
a user of that of that software that was audited
by the i r S, and the i r S
was you know, it's funny, the i r S is
going through their own issues right now with with all
(12:30):
of the cuts in the government. But this this was
initiated about a year ago. The i r S was
really getting in there and starting to question, you know,
the validity of the study. A lot of times I
(12:50):
r S agents don't really understand there's lots of different
parts of the tax code things like this, and so
we got involved, uh and you know, essentially showed the
i r S exactly how the analysis was performed. All
the calculations that went into it, and that the I
(13:12):
R S was Frankly, they were impressed that we were
able to uh do this level of detail with the
software that we had, and and you know, they they
went away, they didn't make any adjustments. So the taxpayer
was thrilled that they didn't have to give back any
(13:34):
of these tax benefits that they received.
Speaker 1 (13:37):
Wow. Wow, And they probably I mean you probably were
educating them, you know, because like you said, the RS,
not everybody knows everything and the tax code because I'm
sure the book is probably super thick, and not all
(14:00):
of them because of the volume of work that comes in.
You know, you have to really educate yourself as things
present themselves. And like you just said, the call segregation
is not a real thing that they're really versedive.
Speaker 4 (14:20):
Yeah, that's right. I mean it's not super common like
form most tax payers. Right, the DIARIS definitely has teams
of people like kind of at a higher level that
really understand this stuff. But when somebody, you know, that
initial auditor that fields agents, that first opens up an
(14:42):
audit with somebody, you know, they they they're very uneducated
on how it all works. And so yeah, there's there's
definitely some handholding that goes on, Yes, I can imagine.
Speaker 1 (14:57):
So, so what's the next big thing that your company
will be offering.
Speaker 4 (15:06):
Well, you know, before the show, I was telling you
one of the things that we also do as a firm, KBKG.
We do a hand you know a number of other
tax incentives. One of them is called the research and
development tax credit. Okay, and this R and D tax
(15:27):
credit has been around for since the eighties, right, It's
you know, something that I think is very well known
because a lot of other countries have R and D
tax credits. It's kind of like a competitive thing in
our country that we want the good jobs here in
the US. We want you know, stem jobs, the scientists,
(15:50):
we want the innovation here. Right. So one of the
ways that we incentivize that is by this tax credit
R and D tax credit. And so how it works
is any business that is doing R and D gets
you look at how much they spent on the R
(16:12):
and D and I'm going to simplify this, but you
get about ten percent of the spend back in the
form of a tax credit. Okay. So, if you're a
let's say, a startup software company and you have six
or seven employees. They're all doing coding of software, trying
(16:36):
to build something. Let's say you got about a half
a million dollars of payroll for those people, right, and
they're all doing what I would call qualified research. Okay,
you'd get about a fifty thousand dollars credit, right, half
a million dollars of qualified research, and the credit's worth
(16:58):
about ten percent of that and you would get that
every year if they're continuing to do what we would
call qualified research. So yeah, qualified research is basically when
you're trying to develop a new product. So it doesn't
have to be software. It could be some widget that
(17:19):
you're trying to manufacture. Right, all these people on Shark
Tank that are inventing things like there's time that they're
investing to figure out how to make these things better.
It's that time. It's the cost of the people that
are spending the time, or the prototypes, the supplies, et cetera.
All those costs are eligible for this credit. So we've
(17:43):
been doing that a long time. Ida we've also created
a self service software product for that as well. Okay,
so normally we're working with these huge companies that are
spending tens of millions of dollars right and getting you know,
a million dollars of tax credits. But a lot of
(18:04):
the smaller businesses listeners of your show, it's harder for
them to claim this credit because it's usually not worth
hiring a third party to come in if the credit
is very small. So we have this product called dash
dot tax Right, and you can go online and start
(18:27):
in putting your information about your business if you think
you qualify, and it'll tell you how much your credit
is worth. You can basically go through the entire process
and not pay anything until the very end when you
know roughly how much your credit is going to be.
And then the cost to run that report would be
(18:48):
twenty five hundred dollars. So you might get a you know,
forty thousand dollars credit. The cost would be twenty five
hundred bucks to run this report which basically gives you
the irs forms and everything you need to claim the
credit on your tax return.
Speaker 1 (19:09):
So if you're doing research, like you said, I know
quite a few businesses that create products. Okay, so what
is the the minimum amount you can use this product for?
Speaker 4 (19:27):
Yeah, Well, first off, I should say, you know, the
research has to be done in the United States. Okay,
you know I mentioned software, right, and a lot of
times people are building software here and they have some
people here, but they also are hiring people offshore, right,
(19:47):
And so any portion that is being done offshore does
not qualify for this credit. But to answer your question,
what is kind of like the minimum? So I would say,
if you're spending you know, one hundred, about one hundred
(20:14):
you feel like one hundred thousand dollars or more on
on costs in the US, whether it's labor, materials, it's
probably gonna make sense for you to use this software
because you know, just off back of the envelope you're
going to get maybe a ten thousand dollars credit, right,
(20:36):
So yeah, you could be a little bit less. You know,
the credit might be seven thousand dollars, but at some point, right,
it's maybe not worth doing it if the credit is
too small. But but but like I said, you can
go in there dash dot tax. You can enter in
(20:57):
all the information for free, you know, just to see
where the number lands before you decide to pay.
Speaker 1 (21:08):
Okay, what types of products we're qualified for this?
Speaker 4 (21:15):
Yeah, it's very broad. It could be anything. So it's
it's the key is is what you're doing to create
the product. Okay, so if you're I don't know, creating
(21:36):
you know, a new hand cream or something. If you're
spending time trying to figure out the formulation, uh that's ideal,
and you're testing and there's uncertainty like how is this
gonna come out? And oh, I want the hand cream
(21:56):
to oysturize or have other kind of properties about it.
The criteria to be eligible for the credit is that
the activities that you're doing, there has to be some
level of science involved. So whether it's chemistry or engineering
(22:19):
principles or physics, right, there has to be some level
of science, could be computer science, et cetera. The second
thing is there has to be some level of experimentation,
like you can't like kind of know exactly how this
is going to end up. There has to be uncertainty.
(22:40):
And there's a couple other kind of rules that kind
of fall in line with that. But those are kind
of the two kind of key areas that for your listeners.
I mean, if you're doing those, if you're doing things
that kind of fall into those categories, it's worth looking at.
Speaker 1 (23:00):
There's been so much information mister Pazia did I say
that right, I cannot name right, Did I say it right?
Speaker 4 (23:09):
You got it? Alrighty?
Speaker 1 (23:11):
Now, Yes, this has been a lot of information and
I know that my listeners and viewers are going to
definitely especially the real estate investors that are a part
of my listening audience, They're really gonna love this because
I know probably the smaller investors probably don't even do
(23:33):
cost segregation, probably don't even do it because it's very tedious,
and they probably don't even know their software available to
help them do it. And then you also added in
a bonus for you know, research developers. You know that
(23:53):
that can you know, get text deductions for you know,
the research that they're doing to create product. So wow,
lots of gyms today. I appreciate it. So I am
so grateful that you decided to come on my show
and share all this good stuff with my audience, and
(24:15):
I know my audience is grateful as well. Thank you
so so much, Hoozzia.
Speaker 4 (24:23):
You're very welcome. I appreciate being on absolutely.
Speaker 1 (24:31):
Thank you to our guests and you our value audience.
Speaker 2 (24:37):
Let's stop you by. We truly appreciate you. Many blessings
to you and yours
Welcome to Just Minded My Business Media LLC, where you
get information that you can use.
Speaker 2 (00:10):
I'm your host, Ida Crawford. But before we dive in,
subscribe to Just Minding My Business on YouTube and wherever
you get your podcasts. Shape Just Minded my Business with
your family, friends, and pile leaders. Engage with us by
leaving a review or comment. Your support keeps this podcast
(00:33):
going and growing. Visit our website at JMMB mediac dot
com to learn how we can support you and get
more visibility on your products and services. So grab a
center paper and get ready for information that you can use.
Speaker 3 (00:56):
Are you a woman with big dreams? Ready to amplify
your voice and grow your business. Join assist 's Circle
Empowerment Network and step into a community that truly supports you.
Boost your visibility with our SEO optimized platform and connect
in our vibrant LinkedIn group. Showcase your achievements in our
(01:17):
quarterly magazine and shine in live interviews. Want a broader platform,
gain access to exclusive discounted opportunities to feature your brand
or insights on conversations that matter. Join us today and
unleash your true potential with Assista's Circle Empowerment Network visit
the website and schedule a discovery session at Assista's Circle
(01:41):
dot org.
Speaker 1 (01:42):
Welcome, Welcome, Welcome, today, I have the honor of bringing
such a smont in my business, mister Pazzazia, who helps companies,
real estate owners and CPAs unlocked proven tech strategies and
incentives created by Congress so they can invest in growth.
(02:05):
He has been doing this for over twenty five years.
Mister pos Asia.
Speaker 4 (02:12):
Pazia Hazia, thank you. This right.
Speaker 1 (02:18):
Started his career at the Big four accounting firms, not
as a CPA, but as a structural engineer. He became recognized.
He became a recognized leader in the cost segregation field,
serving as a former president of the American Society of
Cost Segregation Professionals and sitting on their board of directors
(02:42):
for a decade. Wow, welcome, welcome, welcome. I'm glad to
have you here. We always like to talk about money finance.
So my first question to you is what is cost.
Speaker 2 (02:58):
Segregation?
Speaker 3 (03:00):
Is it?
Speaker 4 (03:00):
Yeah? Yeah, sure, I had First off, thanks for inviting
me to the show. Really glad to be here. And yeah,
so cost igregation's been my specialty for a long time.
And what it is, it's it's for real estate or
businesses that own real estate, or any investors that own
(03:21):
real estate. And so cost segregation is a way for
real estate investors to pay less in taxes by speeding
up how fast they write off parts of their building.
So normally the tax rules say that you have to
write off a building really slowly. So if you buy
(03:45):
a building for your buildings business, normally you'd appreciate that
over twenty seven or thirty nine years, right, But not
everything in the building lasts that long, and so there's
things like final flooring and cabinetry and wiring in the
building that you can actually write off much quicker, okay
(04:07):
than the thirty nine years. And so a cost segregation study,
it breaks out a property that you bought into pieces,
and you get to write off a lot of those
pieces in year one, right, and so you get this,
You get a much bigger tax deduction by doing this
instead of spreading out those deductions over decades. And so
(04:33):
I can kind of put this to numbers, right. So
let's say let's say you buy an investment property a
rental home. Okay, it's an investment, and you pay it's
two hundred and seventy thousand dollars normally you get to
write off. Normally your deductions would be about ten thousand
(04:56):
dollars a year for twenty seven years, okay for rent properties.
If instead you did a costic study on that rental home,
you would get about twenty five percent of that would
be considered short life property that you get to write
off in year one. So that's fifty four thousand dollars
(05:19):
of deductions versus the normal ten thousand dollars the deduction.
So you get a big jump by doing this, and
that's kind of the name of the game. And in
real estate is uh is you know, taking you know,
getting getting your cash flow up as high as possible,
(05:40):
as early as possible, and so that's what costs aggregation does.
Speaker 1 (05:45):
Okay, that's very very interested. So what about if if
an investor works a full time job as well as
real estate, how does that work?
Speaker 4 (05:58):
Yeah, So so when you uh, when you're a passive investor,
like you have a full time job. Let's say you're
a lawyer or doctor and you invest in rental property.
Speaker 2 (06:16):
M m hm.
Speaker 4 (06:18):
There's a couple of considerations here. So normally you don't
get to go buy real estate and create these deductions, right,
you can you can pretty easily create paper losses on
real estate through depreciation like I just described. And so
normally you're not allowed to use these paper losses that
(06:41):
you from real estate and apply those to your other
income that's not real estate related, so that that that
would be considered a passive investor. And so if you know,
in the real estate world, if real estate is your
business all you do, the tax rules are super friendly
(07:05):
to you to where most people in the real estate
game pay very little tax. But most normal people don't
meet that definition in the tax code of what a
real estate professional is, and so they kind of have
to keep their income from their normal business separated from
(07:25):
their real estate income or losses.
Speaker 2 (07:29):
And so.
Speaker 4 (07:32):
Cost segregation can still benefit you as a passive investor.
You just have to have passive income from your real
estate and so you know, as far as you know,
when when does cost segregation make sense? It really comes
down to one, can you know, do you have income
from your real estate properties that you're paying taxes on?
(07:55):
The answers, yes, then cost segregation will benefit you.
Speaker 1 (08:02):
Okay, okay, So tell us about the software that you
that you work with the residential cost segregated software.
Speaker 4 (08:12):
How yeah, yeah, yeah, yeah. So so cost segregation has
been around for a long time and normally, you know
a lot of bigger real estate companies, even corporations like
retailers like Target or own their own stores, like, they've
(08:33):
been doing these costic studies for a long time. And
normally the IRS wants to see somebody that's qualified with
an engineering background come in, go visit the property, do
an analysis, list out everything that you know should be
written off quicker. And this can cost thousands of dollars.
(08:55):
It can cost you know, tens thousands of dollars depending
on the size of the property.
Speaker 1 (09:02):
And so.
Speaker 4 (09:04):
We launched a software, a self service software that allows
smaller investors to to do these studies themselves. They can
go to our website. It's it's cost segregation dot com.
And you know, if you have a rental property, you
spend about ten minutes on the site answering questions about it.
(09:27):
And instead of paying five plus thousand dollars for one
of these studies, you can get it done for about
five hundred dollars and and you know, get some pretty
massive tax savings from it. So the software we have
it's like I said, you can go to cost segregation
dot com uh to go straight to it. And if
(09:48):
you have a residential rental property, a rental property that's
six units or less, you can you know, basically do
it yourself and lize of these tax savings.
Speaker 1 (10:03):
Wow, that's amazing because you know, just listening to you
talk about cost segregation, that's got to be very tedious
work and definitely detail work to say the least. And
like you said, most smaller investors, they can't afford the
(10:24):
money to be able to pay for having someone come
out to perform set cost segregation for you for them.
So having this software is definitely key to helping the
smaller investor. So what makes this tool unique compared to
other cost segregation options.
Speaker 4 (10:48):
Yeah, there's only a handful of firms that do this
with software like we have. We were the first to
launch it back in twenty sixteen. So for five hundred dollars,
our software includes audit support. It also includes the recalculation
(11:10):
of depreciation that is typically needed by your tax prepared
to get it on the tax return. And yeah, like
I said, we're unique because we're one of the largest
companies in the country that does cost segregation studies, and
(11:33):
so we're not a software firm. You know, software is
a smaller part of our business and our bigger businesses
we have. You know, it's a large team nationally that
has been doing this type of work for twenty five years.
And so if it does get audited by the IRS,
we you know, we'll stand behind it and defend it
(11:53):
and make the higher r S go away.
Speaker 1 (11:59):
Okay, So couldn't you do you give us a little
success the story for the costs segregated?
Speaker 4 (12:08):
Yeah, you know, we had a we had a client,
a user of that of that software that was audited
by the i r S, and the i r S
was you know, it's funny, the i r S is
going through their own issues right now with with all
(12:30):
of the cuts in the government. But this this was
initiated about a year ago. The i r S was
really getting in there and starting to question, you know,
the validity of the study. A lot of times I
(12:50):
r S agents don't really understand there's lots of different
parts of the tax code things like this, and so
we got involved, uh and you know, essentially showed the
i r S exactly how the analysis was performed. All
the calculations that went into it, and that the I
(13:12):
R S was Frankly, they were impressed that we were
able to uh do this level of detail with the
software that we had, and and you know, they they
went away, they didn't make any adjustments. So the taxpayer
was thrilled that they didn't have to give back any
(13:34):
of these tax benefits that they received.
Speaker 1 (13:37):
Wow. Wow, And they probably I mean you probably were
educating them, you know, because like you said, the RS,
not everybody knows everything and the tax code because I'm
sure the book is probably super thick, and not all
(14:00):
of them because of the volume of work that comes in.
You know, you have to really educate yourself as things
present themselves. And like you just said, the call segregation
is not a real thing that they're really versedive.
Speaker 4 (14:20):
Yeah, that's right. I mean it's not super common like
form most tax payers. Right, the DIARIS definitely has teams
of people like kind of at a higher level that
really understand this stuff. But when somebody, you know, that
initial auditor that fields agents, that first opens up an
(14:42):
audit with somebody, you know, they they they're very uneducated
on how it all works. And so yeah, there's there's
definitely some handholding that goes on, Yes, I can imagine.
Speaker 1 (14:57):
So, so what's the next big thing that your company
will be offering.
Speaker 4 (15:06):
Well, you know, before the show, I was telling you
one of the things that we also do as a firm, KBKG.
We do a hand you know a number of other
tax incentives. One of them is called the research and
development tax credit. Okay, and this R and D tax
(15:27):
credit has been around for since the eighties, right, It's
you know, something that I think is very well known
because a lot of other countries have R and D
tax credits. It's kind of like a competitive thing in
our country that we want the good jobs here in
the US. We want you know, stem jobs, the scientists,
(15:50):
we want the innovation here. Right. So one of the
ways that we incentivize that is by this tax credit
R and D tax credit. And so how it works
is any business that is doing R and D gets
you look at how much they spent on the R
(16:12):
and D and I'm going to simplify this, but you
get about ten percent of the spend back in the
form of a tax credit. Okay. So, if you're a
let's say, a startup software company and you have six
or seven employees. They're all doing coding of software, trying
(16:36):
to build something. Let's say you got about a half
a million dollars of payroll for those people, right, and
they're all doing what I would call qualified research. Okay,
you'd get about a fifty thousand dollars credit, right, half
a million dollars of qualified research, and the credit's worth
(16:58):
about ten percent of that and you would get that
every year if they're continuing to do what we would
call qualified research. So yeah, qualified research is basically when
you're trying to develop a new product. So it doesn't
have to be software. It could be some widget that
(17:19):
you're trying to manufacture. Right, all these people on Shark
Tank that are inventing things like there's time that they're
investing to figure out how to make these things better.
It's that time. It's the cost of the people that
are spending the time, or the prototypes, the supplies, et cetera.
All those costs are eligible for this credit. So we've
(17:43):
been doing that a long time. Ida we've also created
a self service software product for that as well. Okay,
so normally we're working with these huge companies that are
spending tens of millions of dollars right and getting you know,
a million dollars of tax credits. But a lot of
(18:04):
the smaller businesses listeners of your show, it's harder for
them to claim this credit because it's usually not worth
hiring a third party to come in if the credit
is very small. So we have this product called dash
dot tax Right, and you can go online and start
(18:27):
in putting your information about your business if you think
you qualify, and it'll tell you how much your credit
is worth. You can basically go through the entire process
and not pay anything until the very end when you
know roughly how much your credit is going to be.
And then the cost to run that report would be
(18:48):
twenty five hundred dollars. So you might get a you know,
forty thousand dollars credit. The cost would be twenty five
hundred bucks to run this report which basically gives you
the irs forms and everything you need to claim the
credit on your tax return.
Speaker 1 (19:09):
So if you're doing research, like you said, I know
quite a few businesses that create products. Okay, so what
is the the minimum amount you can use this product for?
Speaker 4 (19:27):
Yeah, Well, first off, I should say, you know, the
research has to be done in the United States. Okay,
you know I mentioned software, right, and a lot of
times people are building software here and they have some
people here, but they also are hiring people offshore, right,
(19:47):
And so any portion that is being done offshore does
not qualify for this credit. But to answer your question,
what is kind of like the minimum? So I would say,
if you're spending you know, one hundred, about one hundred
(20:14):
you feel like one hundred thousand dollars or more on
on costs in the US, whether it's labor, materials, it's
probably gonna make sense for you to use this software
because you know, just off back of the envelope you're
going to get maybe a ten thousand dollars credit, right,
(20:36):
So yeah, you could be a little bit less. You know,
the credit might be seven thousand dollars, but at some point, right,
it's maybe not worth doing it if the credit is
too small. But but but like I said, you can
go in there dash dot tax. You can enter in
(20:57):
all the information for free, you know, just to see
where the number lands before you decide to pay.
Speaker 1 (21:08):
Okay, what types of products we're qualified for this?
Speaker 4 (21:15):
Yeah, it's very broad. It could be anything. So it's
it's the key is is what you're doing to create
the product. Okay, so if you're I don't know, creating
(21:36):
you know, a new hand cream or something. If you're
spending time trying to figure out the formulation, uh that's ideal,
and you're testing and there's uncertainty like how is this
gonna come out? And oh, I want the hand cream
(21:56):
to oysturize or have other kind of properties about it.
The criteria to be eligible for the credit is that
the activities that you're doing, there has to be some
level of science involved. So whether it's chemistry or engineering
(22:19):
principles or physics, right, there has to be some level
of science, could be computer science, et cetera. The second
thing is there has to be some level of experimentation,
like you can't like kind of know exactly how this
is going to end up. There has to be uncertainty.
(22:40):
And there's a couple other kind of rules that kind
of fall in line with that. But those are kind
of the two kind of key areas that for your listeners.
I mean, if you're doing those, if you're doing things
that kind of fall into those categories, it's worth looking at.
Speaker 1 (23:00):
There's been so much information mister Pazia did I say
that right, I cannot name right, Did I say it right?
Speaker 4 (23:09):
You got it? Alrighty?
Speaker 1 (23:11):
Now, Yes, this has been a lot of information and
I know that my listeners and viewers are going to
definitely especially the real estate investors that are a part
of my listening audience, They're really gonna love this because
I know probably the smaller investors probably don't even do
(23:33):
cost segregation, probably don't even do it because it's very tedious,
and they probably don't even know their software available to
help them do it. And then you also added in
a bonus for you know, research developers. You know that
(23:53):
that can you know, get text deductions for you know,
the research that they're doing to create product. So wow,
lots of gyms today. I appreciate it. So I am
so grateful that you decided to come on my show
and share all this good stuff with my audience, and
(24:15):
I know my audience is grateful as well. Thank you
so so much, Hoozzia.
Speaker 4 (24:23):
You're very welcome. I appreciate being on absolutely.
Speaker 1 (24:31):
Thank you to our guests and you our value audience.
Speaker 2 (24:37):
Let's stop you by. We truly appreciate you. Many blessings
to you and yours
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