Karlton Dennis: How To Pay Zero Taxes (Legally)

It's tax season, folks, and everybody's talking about tariffs, Trump, and how to avoid taxes as much as possible. And our guest today on the Pace Morby Show is Carlton Dennis. He lights the show on fire. I hope you enjoy it.

Carlton, what do you think most people are missing when it comes to taxes? Like, what's the dumbest mistake that everybody makes? They don't understand the differences between their tax accountants versus their tax professionals.

Bro, here's why I say that. Tax accountants typically just file your tax returns. The average CPA goes to school to study to become an accountant. They're going to file everything inside of your return to make sure it's done accurately. But tax professionals are out outside of the tax and accounting realm where they're helping you make decisions in real time around how to reduce your overall tax bill. We're making financial decisions every single day, Pace. And a tax professional should be able to meet you where you're at to help you formulate strategies to reduce your tax bill. So when you go into your accountant's office, all you're doing is filing a tax return.

Yeah. I had a lady a couple years ago I interviewed about nine years ago, referred to her. She's a CPA. She's a tax professional. She's a this, that, and the other. Yeah. I walk in her office. I said, "Hey, I want to make it so I buy enough real estate that I don't pay taxes." Her response was, "All of my clients pay taxes. You can't get out of taxes." Uh oh. I go, "What's your consultation fee?" I'd like to pay that and just get the hell out of here. Cuz I realized in that moment that you're so right that she was not a tax professional. She wasn't a strategic thinker. She wasn't looking at how do I manage what the IRS has laid out by law. I'm just going to take your number, all your numbers. Yeah. And I'm going to submit it to the IRS. 100%.

Do you feel like most CPAs are doing that? Or do you feel like a CPA gives you the ability to be a strategic thinker just by being a CPA? I feel like most CPAs are just numbers people. They want to crunch the numbers, get an accurate tax return, and they value themselves on accuracy. They don't value themselves on a knowledge base around how to reduce your tax bill. So, what I did when I came into the tax and accounting space was I studied all of the strategies and how to communicate the strategies. So when you come to me, we can actually talk and have a conversation. When you go to a CPA, it's just normally yes or no answers you're getting from a CPA because they're basing it off of what they can enter into the tax software.

Love it. What are some of your favorite tax loopholes? Even though I don't really think there's a really good loop, I don't think there's loopholes. I think it's just the way they're legal loopholes. Okay. So, what are your favorite IRS legal loopholes right now? The short-term rental strategy. Absolutely. Because I have a lot of W2 taxpayers that are super high net that don't have any write-offs other than their 401k. So, if we get them to invest in a short-term rental, manage that short-term rental themselves for 100 hours in the year, but the customer has to stay in the property 7 days or less on average, we can turn an Airbnb or VBO into an active business on the tax returns. So, if I accelerate depreciation with the cost segregation study, I can force a paper loss and that paper loss flows over to offset W2 and 1099 income. That's a loophole because most people were investing in real estate and only were able to offset just their passive income. Now, you have the ability to offset both passive and active income. So, this is the Augusta rule, correct? This is the cost segregation study on a short-term rental. The Augusta rule is where you're able to rent your house to your business for 14 days tax-free. As an S corporation owner, we can do this every single year.

That doesn't sound that great. Only 14 days. 14 days. That doesn't sound that powerful. The short-term rental sounds way more powerful.

It is way more powerful because you're taking the building's purchase price and saying, "Hey, I want to depreciate around 20 to 30% of this in year one." Whereas an Augusta rule is just saying I just want to rent my house to my business and charge a rental rate for 14 days. You may get 2500 bucks. Every time somebody talked to me about the Augusta rule, I'm like that sounds like a waste of my time.

For you, absolutely it is. But for a small based business owner doing anywhere from 2 to half a million a year getting an extra 25 to $50,000 deduction on the tax return, that could put another 10 to 12,000 back in their pocket. Okay. But the the short-term rental tax loophole sounds way more legit.

Oh, way more legit. Okay. So, you said what's the part about the seven days or less? So, the IRS says that in order to run a short-term rental business as an active business, it has to be treated like a hotel or motel, rented on a transient basis. Transient is 7 days or less by IRS definition. So, if I have tenants staying in my property 7 days or less, it's a transient or hotel-like business. It's active in the eyes of the IRS. Now, I need to materially participate, which is the where the 100 hours comes in, which is where the 100 hours in. If I show the IRS I'm spending 100 hours managing that property and I'm managing it more than anyone else. My cleaning lady, my handy people, it's an active business that I get to utilize now on the tax returns.

Have you ever had a client audited on their 100 hours? Yes, I have.

Interesting. Yes. And you have to show your log booklet in the audit.

Damn. Yes. And they look at your time. This is why I'm not participating in this at all. Zero zilch. Nada. But I'm a I'm a full-time real estate professional, so I don't have that issue. But this is really good for a W2 earner that says, "Okay, if I could I just get an Airbnb or VBO, yes, I make my rentals 7 days or less. I limit that on the on the um portal inside of Airbnb. I then manage that in a log book or whatever where I'm spending my time. I'm good. And I can use all the cost the same way I can use a cost."

Yes. Now, here's one thing that people need to know about. If you're W2, you have what's called excess business loss limitation rules. Okay. What that means, Pace, is that if you're a W2 taxpayer that's single and you did a cost segregation study on a short-term rental, you can only take up to $35,000 in rental losses against other W2 or 1099 income. If you're married, it doubles.

Okay, so how do I become just a full-time real estate professional? Being a real estate professional is tricky for the average W2 or 1099 taxpayer because they have to show the IRS they're spending 750 hours in their real property trader business, which is about 15 to 20 hours a week. So that's no easy thing to do. But the harder part is is that I do that in one day per week for you.

It's easy. You call easy. But for like a W2 person, that's pretty challenging.

It's very challenging. Do you have any clients that are doing it as a W2 that do actually get that 15 hours? And if so, what would they what would be something that they could do during those 15 hours? So you could manage the property, uh, negotiate leases. Um, what about finding deals? Finding deals will work, but if you're spending too much time in what's called investor-related hours, then the IRS will disallow that time because let's just say in the year you spent 250 hours just researching deals. That technically doesn't contribute to your real property trader business. You're just researching deals. So, the IRS will count that as investor time and disallow it on your log booklet. But if I was like at 100 hours, they'd be okay with it. It all depends on how you're running the business. Let's just say the research that you're doing actually contributes to you making more money, then yeah, absolutely they'll be okay with it. But if the research that you're doing doesn't contribute to anything, you're not making financial decisions around which properties you want to buy that year, how you're going to do renovations, how you're going to increase rents, then essentially you researching is just garnering time to try to qualify for that real estate professional status, and they may disallow that time.

Okay. Are you a Trump or Biden fan? I'm a Trump fan.

Why? Um, primarily because I value entrepreneurship. My mother has been an entrepreneur since I was born. Um, she's ran at her own tax and accounting firm. Uh, my mother got connected with Robert Kiyosaki at a really young age and got to meet Trump and so she's always looked up to Trump as well and what he's been able to do to support and build his family, the way he thinks. Um, I like the way Trump thinks personally. I like some of his policies on the tax side of it. Um, I like the way he he thinks about long-term vision of estate law. And a lot of the things that I'm doing right now is to set my family up in similar ways that he has set his family up.

Okay. So tax law, what is he bringing back now that Biden's out, he's back. Is he bringing back full depreciation? Is that going to be a thing again? I am 99.9% sure 100 bonus 100% bonus depreciation will be coming back in 2025. It was one of the only things that did exactly what it was meant to do, which was give people access to upfront depreciation and stimulate the economy by allowing for more purchases. That's what we wanted.

Greatest thing for me. I haven't paid a federal income tax bill in seven years. I haven't paid a federal tax bill since 2021 because of depreciation being at 100%. But then I started looking at, oh my gosh, I got to buy now. I'm It's getting discounted. It goes from 80% now to 60%. I'm like, holy crap, I might have to buy a jet.

Bro, the jets are a little bit of a stretch. I have I'm not interested, dude. I'd rather charter a flight to be honest. Honestly, I'd rather fly Southwest, guys. Like, are you kidding me?

Yes. Okay, so this is an interesting thing. Yeah. All right. So, let's see how much you know about this. You seem to know something about everything, which is great. So, my friend Steve Harward, your friend Steve Harward had two private jets. He got rid of both of them. He did both of them. Yeah. Because all they do is hemorrhage money. Y it's like, okay, they're always they're always at a loss. But I got a great tax benefit in the process. And so him and I talk about all the time. He's like, dude, it wasn't the lemon was not the juice wasn't worth the squeeze. So, he sold both of them. Now, he has depreciation recapture recapture. So, he's paying a big tax bill. He's like, "That didn't work out." Y. So, I'm I've avoided going down the private jet route for years and years.

Yes. Ken Moy, he says, "Yeah, I spend like $160,000 a month on my jet, but it's worth it because I got 10,000 units. We're flying around." I'm like, "Okay, I'm not at that point yet." Yeah. Can I afford the $160,000? Yeah. I'd rather just put it somewhere else, though. Dean Graiosce, good friend, same thing. Couple hundred,000 a month. I'm like, "It's not worth the freaking time, the money, the effort, whatever." So, I recently run into a guy and he says, "Look, let me get you into like a 1990 turbo prop. Mhm. Can get you just about everywhere. You do split ownership on the deal."

Correct. And you can get the tax benefits. You just can't sell a spot on the plane.

Mhm. And I'm like, "Is that like a law?" And he goes, "Yeah, you cannot charter the plane to get the tax benefits."

Correct. Okay. So, that is true. That is 100% true. You can do a split ownership like that. We have clients that did that last year in 2024. Okay. But I can't And then you can claim your percentage of depreciation relative to But it can't be an income-producing thing. Like I can't charter out and make money on it.

No. F you, IRS. Okay. So, how does somebody how does somebody go from college football into knowing all this stuff? Um, you have a mother that owned a tax and accounting firm for all of your life and she made you go into the office and pick up staples off of the ground at 14 years old and then by the time you were 17, she was making you answer the phone and talk to people about what the pricing was to file a 1040 or an 1120S. By the time I was 20, I had my own LLC and I was already figuring out who Uncle Sam was because I was getting letters in the mail telling me I didn't report all my self-employed income. So, that was my first big no-no. Called up mom and she said, "What are you doing? Let's go ahead and structure you correctly." Left my my sales job at Gallow Wine Company and started a sales division inside of her company. Purchased Grant Cardone's Cardone University. Studied it like, you know, like it was the Bible. And within 6 months, I was selling tax plans, but I had no tax license. So, I was super lethal, but didn't have a whole lot of information around tax. I just knew sales. I ran into this guy that was worth $100 million and he humbled the hell out of me in person and made me read his tax returns to him and I couldn't do it. You see all this muscle and all this testosterone. I had so much of that leave my body that moment and I felt embarrassed. I went online that day and I said, "What is the highest designation that I can get for tax?" And it was the enrolled agent without having to for me to go back to accounting school and take a million classes. I can study to get the enrolled agent's license. The enrolled agent is the highest designation that the IRS gives out for tax professionals. Allows you to do tax strategy and consult with people. As soon as I got that enrolled agent's license, Pace, it felt like I was a a little kid that got hit by a bus and woke up with superpowers. Not only did I have the sales knowledge, I got the tax knowledge. Like, let's go. I want to talk to any business owner, anybody that thinks they're making a lot of money because I know what I can do now.

That's incredible. Yeah, that is incredible. 100 million bucks the guy was worth.

Yes. Humbles you But you didn't go and get a college degree.

No, I I already had a college degree in kinesiology. I didn't go back to get an accounting degree. Okay. So, this is interesting. So, as you grow a brand, Yeah. you get hate.

Yes. Okay. I get hate. You get hate. I I've never seen your hate.

Yeah. But I want to ask you about that in just a second. I've never seen your hate. I don't look at my comments. I don't look at that stuff. I don't get mixed up. But I just know that as you grow your brand, you get people that hate what you're doing.

Yes. Partly because they're jealous. It's usually other men. Like you're not getting a you're not getting women attacking you. It's always another dude.

Yeah. Right. So, as you've grown your brand, is the lack of an accounting degree something that you get attacked for? Yes, it is. Is that the number one thing? No, it's not the number one thing. I would say probably the the number one thing is people get upset that I language things in a particular way to get people curious enough to go do research. So, I may say a 60-second clip how you can run an Airbnb and manage it for 7 days or less and do a cost segregation study and create a paper loss. But then I get all these CPAs, well, you don't you didn't tell them about depreciation recapture if they sell the property. You didn't tell them that there's seven parts to material participation and that they're going to need to create a log book. Yeah, but that's on my YouTube channel. And the reality is, you're a marketer 100% through and through. If I'm Ronald McDonald selling hamburgers, I'm not going to tell them where I got the meat, where I got the bun. I'm just gonna say, "Do you want this hamburger?"

100%. That's your job.

That's my job. And I'm great at that. Right. And I get the same hate, too. People like, "Well, you didn't explain the thing and the thing and the thing and the do on sale clause and the paperwork." I'm like, "Bro, I had 13 seconds." The average attention span is seven, right?

Yes. So, what they're really upset at is that you're just a better marketer. I think that's exactly what it is. And what's tough is I think the people in the accounting world are not great marketers just naturally by default.

No. And so when they get a guy that comes along with a marketing prowess and has a sales background that basically cleans the floor with all of these guys, it's just a little bit of jealousy. A lot of these accountants are super introverts. They don't even want to talk to their clients. Which is why when you message a CPA, you sometimes don't get a response back for like 72 hours to a week and then they send you a link to go research something on the IRS's website and you're like, "What the hell am I paying you all this money for?"

Right? And then you get with a tax professional, somebody that's able to meet you where you're at and your understanding. Now you actually have a relationship with this person. You can sense that they're actually doing things as if they were in your shoes for you. And that to me is like the best part of being in a relationship with a client is them understanding that I'm almost advising them as if I was in their shoes.

How should somebody pick an adviser? And and should I call them first question, should I call them an adviser, an accountant, a CPA? Like what would you prefer to be called? Yeah. So I'm a tax professional. A CPA is a tax accountant. The first thing you have to understand is, are you at a point where it makes sense to have a tax professional or are you only at a point where you just need to file your tax returns because you don't have a tax problem yet? Most people don't have a tax problem until their income is over 300K because now you're paying about 65 to $70,000 in taxes. That's a whole employee right there coming out of college. So, if you have that much money going to Uncle Sam, somebody should be doing something for you outside of telling you to contribute to a 401k and just write off your property taxes from your your primary residence that you have. So, this is when we start opening up that strategy conversation. We say, "Okay, your CPA is great. He's serving you over there with your tax returns. Here's the tax professional conversation. What are we doing with the money that's coming in every single month? This extra money that we have, could we go buy an investment property? Should we put some of that into oil and gas? Should we put that into a film a film credit?" So, now we're moving money around in real time to create deductions for you before you get to April 15th.

Besides real estate, what's one of your favorite tax strategies? I like oil and gas investing.

Why? I think because it gives people the ability to have an active business like real estate does. You get to take active deductions. The intangible intangible drilling cost leads to an active loss in the first year of your investment. So I have clients that put in like 100k last year and got $70,000 back in year one loss. Whereas I had clients that put 100k into an investment property with cost segregation study. They may have only got 25,000 40k in a deduction that came out from the cost segregation study. So I like to stack strategies together. I might do a cost segregation study on an Airbnb or a multi-family if you qualify as a real estate professional. I may have you park some money in oil and gas. I may have you set up a private family foundation and roll over some of your money into a PFF. So, I'm stacking strategies.

Why do I need a PFF? A PFF allows you to roll over 30% of your adjusted gross income into your own philanthropic structure. You have control of the charitable assets, which means that you get to choose how you wish to be philanthropic. If you want to put on your own fundraisers, your own events, your own sub 2 community, um, events on a boat, whatever it is, you can choose to do that.

5% of the charitable assets inside of your PFF have to be donated to another qualifying 501c3 outside of your own. Okay.

So, somebody pitched this to me years ago. Mhm. But I only pay myself a W2 income of like 80 grand a year. Mhm. Everything else goes through all my corporate structure, which all gets a K1, and we use depreciation to wipe it all out. Your adjust gross income is non-existent. So much of your income coming in. So, I don't need a PFF. You probably don't need a PF, but you may want to utilize a PFF for some of your philanthropic um endeavors that you wish to do instead of just doing it as pay Morby. I'm not very philanthropic. It'll happen over time. I'd rather just hire more people. I mean, we and that's an expense, but we donate money, but then I get the So, let's say I donate I donated a million dollars to um human trafficking over the last couple years. Okay. Which I'm passionate about, too. So, I'm grateful that you did that. What's the right vehicle to do that through? Cuz I just did it through my my company. I got the write-off and we just let it flow up.

Having that go through a PFF, would that have been better? It's about how you wish to be philanthropic. If you just say, I just want to write a check to this organization and let the organization do whatever they want with the money. Great. Just write it as space morb. But if you say, I want to be involved. I want to host my own events too with them. Then you're going to say, I'm going to write a check to my own private family foundation. My foundation has employees. They're going to go carry out the philanthropic um endeavors that I may have and I am a shareholder underneath that foundation. So, I can oversee everything as well. Okay.

So, a PFF allows me, let's say that I'm making a million dollars a year. It allows me to take my my million bucks, 30% of it. $300,000 can roll into that PFF. Yep. Tax-free. Yep. Tax deduction right there, at a 37% tax rate. That's about $100,000 you save in tax. Okay, cool. So then I can use that $300,000 how I see fit as long as it's philanthropic. Correct. Can I donate to like a college or this or that? Can I make money? The foundation can make money. It doesn't pay taxes though. Okay.

So, I have money now in this PFF. Let's say I take that $300,000. I go do like donations to research on science. Those patents pan out, pays out a whole bunch of money. It turns out to be a great investment. Wasn't a donation. It was actually an investment. Let's say yes. That money comes back into my foundation. Correct. I have to use that money in the foundation. And I can't take a distribution. No, you cannot. You could take a salary though, but it's taxable to you. And you could take a salary by having a bonafide duty that you're serving in the capacity of the foundation, which means that maybe you decided you want to go out to Africa and actually set up the water wells yourself. You're working. So, you can give yourself a salary for doing so through your foundation. You could also place your children on payroll if they're helping and coming out there, too. Now, you're shifting income from the foundation into people who are working for the foundation. Your children are going to inherit the foundation if something happens to you. God forbid. This probably would make sense for me later in my years, right? Like Correct. Like right now I'm in the phase of wealth accumulation. I'm Yeah. I'm I'm buying real estate. I'm using cost aggregations to wipe out all my my active income. Yep. I'm then primarily selling those pieces of real estate every 3 to 7 years. 1031 into larger real estate, refinancing that money out cash tax-free. Yep. Tax-free. I'm then lending that money out, creating active income, which then gets wiped out by the next real estate that I buy. Yes. So right now I don't need the a PFF. Not yet. No. But as I retire, let's say I'm in my 70s and I'm like, "All right, I'm done buying real estate." Yes. I'm still going to have a lot of active income coming in. So I can then take that 30%, put it into a PFF. Yes. Okay. And that's wealth preservation. Why? Because a PFF is outside of your estate. Pace Morby's family is going to deal with Pace Morby's estate taxes because his estate is over 20 million. So they're going to inherit all your assets and still have estate taxes unless you start shifting assets out of your estate. Irrevocable trust, private family foundations. See what I'm saying? Because your family members are going to be in control of all these things. Okay. Interesting.

What do you What are your thoughts on infinite banking? Uh my thoughts is that it's great. I do infinite banking. I borrow from my life insurance or from the cash value, however you want to state it, the insurance company. That's another thing. The insurance people will hit you really hard. You don't say it politically correct. You didn't say it perfectly. All your own cash that you're borrowing from. You're borrowing from the insurance company. But you you like the that strategy. I do like this strategy. I don't want people overleveraging themselves, but I do like the strategy. Absolutely. Okay. And who should not who do you think should not be using infinite banking? Um, people who don't have the means to park money into something that they're going to have to continue to pay for because when you think about it, you're making payments like a car payment on the infinite banking. And typically those payments are a lot higher when you're doing whole life whole life policies versus term policies. I can get a $5 million term policy and pay $150 a month. I go get a whole life policy with the cash value to it. My monthly might be $500, $600 a month in order to have that liquidity, right? So for a lot of people who want to do infinite banking, they hear these concepts, but they may not be in the income place to focus on infinite banking. So I'd rather them protect home plate and just get term insurance policy. Cover your family and get a good term insurance policy until it makes sense for you to start thinking about infinite banking. See, this is the way I think about it. I listen to Dave Ramsey and I'm like, bro, you are so intelligent, but he's a great marketer. Yeah. And so, and I know the product he's selling. And so, at the end of the day, if he's not selling somebody fear, then that product that he's primarily selling is not a good fit for those people. So, he sells a lot of fear and he talks to I think to like 97% of the audience. Those people do not watch me. Okay. I'm way more risky than that. Same. I do believe in term policy, but I look at whole life policy and when he says, "Oh, it's a scam." I'm like, "No, it's a scam to if you get to a certain income bracket, yeah, it's a scam not to use it." Like, it's it's genius. It's like a gigantic rock virra for me. It's the craziest thing ever. I think it's just I realize as a marketer he it's he has to tell people if he's selling bananas he has to tell people avocados are disgusting. You know what I'm saying? Yeah. I understand completely and he can't change his sentiment. Do you get that a lot in the accounting world as well that people market against what is holistically right for the industry to just sell a product? 100% man. Is there any product that people are constantly selling right now because they get a big commission on it but they're teaching it the wrong way just so they can sell a product? I think I see a lot of people selling like land conservation easing like a lot of CPAs and financial advisors get kickbacks on, but I I don't touch that with like a 10-ft pole. Okay, explain that to people what the hell that is. So you can invest in like like land development and roll over capital gains into a land conservation easement and offset your c offset your capital gains or you can get like a three, four or sometimes a 5x multiple if the land conservation easement is in a historic place that they're going to develop and there's going to eventually be a certain value associated with the land that's going to be developed there. So, they have rights to build on this land and so they're giving you this upfront tax deduction by you investing in it today. I personally am not a big fan of these. We've had some of our clients get audited with land conservation easements and every single person that's ever done a land conservation easement gets a letter, at least that I've seen, okay, from the IRS questioning it. I had somebody 10 years ago come to me. I've switched tax professionals since then. And they came to me and they told me, "Okay, you're going to put half a million dollars into this thing that is worth $2.5 million." I go, "But why is it worth 2.5 million?" And they go, "Because it has oil reserves under under it." I'm like, "Well, why don't they pull the oil reserves out?" And they go, "Because they can't. The technology doesn't exist, but the value of the land is XY and Z." I go, "R flag. Red flag. Red flag." So they go So I go, "What am I doing? I'm buying I'm donating $500,000 to this thing essentially and that 500 grand never comes back to me. They go, "No, but you're saving a bunch of money on taxes." I'm like, "But I still had to write the check for the $500,000." Yeah. I don't want to do that. And then they park some of your money too and it's like some escrow account for audit risk because they are anticipating there could be a potential if that audit escro account. You want to have an audit risk escrow account for some of my funds. They're essentially saying we are 100% going to get audited. Okay. So, this was pitched to me and I said, "Okay, I'm just going to keep buying real estate." Yeah, I like simple things based. It seems like you do too. I do. I do like the simple thing of just let me buy the thing. So, for me, create I have a a cheat code which you're aware of and we have some fellow members in your community, my community that are using creative finance where I'll go buy a $5 million RV park with $200,000 down. Okay. 4% down and I get a 4% interest on that deal. I can do a cost study on that beautiful thing. I'm $200,000 in but I get a million dollar tax write off on the deal. So I get really good great leverage using creative finance. If I didn't have creative finance and real estate wasn't a thing. Your first thing is gas and oil. Your second thing is go get an Airbnb, right? We'll keep that in there. Is there anything else that I'm missing? Wow. You could start looking at solar. You could start looking at equipment financing and maybe having your own truck business and you're depreciating trucks and then the third party company is running the trucking company for you. We have some clients that did that where they just put money up, bought some trucks because trucks are depreciated under depreciate the piss out of them, depreciate the hell out of them, create this loss, right? Um and then waiting for the trucks to cash flow, but they're earning cash flow off of it. So, we had some clients that did that equipment leasing. Um we had clients that did uh third party solar. So instead of you having solar on your own house or one of your own investment properties, you work with a third party company that sources solar for other people. So you put money into an LLC yourself. I'll explain this really quick. So you put money into an LLC. Are you guys learning anything? So you put money into an LLC and then um the person is going, let's just say the customer wants to purchase power. So they'll pay for 20 years of power up front. They'll fund the LLC. that LLC will go buy the solar equipment from third party solar company and they'll go and install it. You got to depreciate the solar equipment plus you get the tax credit of 30% relative to that LLC. So, let's just say you put in 10K, they put in 20K. There's $30,000 in there. You're going to get 30% of that, $9,000 in a tax credit, but you get to depreciate the equipment too at 60% or 40% bonus depreciation. This year, Trump brings it back to 100%. That's 100% bonus depreciation on that equipment. We had probably like 10 to 15 clients do that. It's definitely um private um deals. It's interesting to me that there's so many tax b there's so many tax legal loopholes. Yeah. That smart people don't pay taxes. Like no matter what is going on in the world, I'm like I don't care what they do to the tax rate. I'm not paying any taxes. No. If Trump changes income tax to zero, do you think he Do you think that's possible for him to actually do that? I don't know. Pace, I don't know. I thought a lot about it. I mentally I can't put my my brain there to say we're going to abolish federal income taxes. I've been trying to wrap my head around it. I just don't know. I thought I I look at him like where did the money come from? Exactly. And I I see what he's doing with the tariffs, but how long term is that? Okay. I think here's my belief on Trump. He's a dealmaker. Yeah. He's one of the greatest dealmakers on the planet. This guy's a gangster. Can I tell you a two-minute story about how good he is? So, from a real estate perspective, I've read all a lot of his books and like case studies on how he's done some deals. So during the foreclosure chaos back in 2008, 2009, 2010, there was a lady that came to him who has a winery in South Carolina, she says, "I'm losing this thing. I owe the bank $30 million and we've lost a lot of business because of, you know, the economy's x, y, and z. Can you help me negotiate with the bank? I owe 30 million bucks." And he goes, "Yeah, I'd love to. I'd love to come in there and help you out." So he comes in, he goes, "But I'm going to be a partner. I'm going to come in here. I'm gonna partner with you. I'm gonna negotiate with the bank and get better terms. So, it turns out he she doesn't owe 30 million. She owes 50 million. So, he goes to the bank and he goes, "Hey, I'll pay you $40 million, but you need to pay you need to pause payments, restructure the debt, do the X, Y, and Z PDQ." They go, "No, we're taking we're taking the asset. We're going to take the freaking asset." She's behind on payments. So, he goes, "All right." Couple months later, he comes back. He goes, "Okay, you won't take you won't take 40 million. How about 30?" Okay, this is how gangster this guy is. They go, "No." In fact, they're pissed off. They've like at this point like do not call us again. We're going to take this this this back. He calls them back up a couple months later goes I'm going to offer you my final offer. It's $21 million. He just keeps coming down on price and they say no. So they go to foreclose on the property and they find out that what Trump had been doing this last like four or five months is buying every piece of land around the winery and he's now landlocked their ability to actually own or even control the the roads and the easements and everything. He stole every ability for them to even get into the property. Number one question I get every day is how do I get everything done? I have nine companies, 600 employees. We have customers all over the globe. We're doing fix and flips. We're doing buy and holds, apartments, RV parks, all of those things. Everybody wonders, how did I scale? How did I get to a higher level? And the answer is that go high level. I use a CRM that allows all of my customers to come into one database. And instead of me hiring more employees to go and do all the follow-up, Go High Level has systems and automations that does all of that for me. So, not only can I have my employees focus on higher-end tasks, money-making tasks. GoHigh Level avoids all of the extra payroll. When you're brand new, having GoHigh Level is like having five different employees doing all the work for you just for a monthly fee. Go to gohighlevel.com/pace to learn how I'm using it. Not only in my lending business, but my wholesale business, my fix-and-flip business. Literally, GoHigh Level controls the entire backend of all nine of my companies. Go to gohighlevel.com/pace to learn more. Did he come back and get it at 21 million? He got it at 18 million. Oh, let's go. So, I I look at this and people that don't understand the art of the deal. Yeah. Is that he's over here talking about Gulf of America. Gulf of America. And you all caught up on that. But that's genius. I'm sitting there going, "Look, the guy's a lunatic." I'm like, "No, no, no. Hold on. Remember how smart he is. It's slight of hand." Yeah. Let me keep you busy here while I'm doing this. The Greenland thing, the Canada thing, all the craziness he's doing. Meanwhile, what they've been doing is they've been conspiring to go, "All right, let's get the tariffs. Everybody pissed off about tariffs. Let's go to everybody and go, we're going to tariff, tariff, tariff, tariff. We're going to raise tariffs." All this kind of stuff. Just to see who reacts to him. Mhm. And he sees all the countries that are reacting positively and negatively. And the ones that are reacting negatively, he just says, "I'm going to double." Mhm. Well, guess what's happened? Everybody on the planet has now come back to say, "We'll do zero tariffs. We'll wipe everything up except for China." So now China is at 105% tariff. Everybody else, we have free trade with no taxes across. He pauses all tariffs and now you start seeing the game unfold and you go, "This guy just single-handedly got China to stand out like a a sore thumb. Everybody's make them look like the idiots. Make them look like the idiots and they're going to come back. The guy is so good at making a deal done." So, I think I look at the at the tariff situation goes, "We're going to tax the hell out of everybody else in the world with tariffs. They're bleeding us dry." and that's how we're going to get rid of the IRS. I think he has to say that on camera. He has to say that on news broadcast for the rest of the world to go, "Okay, he's serious about these tariffs." Just to find out he actually is not serious about the tariffs. He's just trying to get China. He Dude, he's too smart for me. Yeah, he's playing chess, bro. We're playing checkers. He's like in 20 56 right now. I'm playing Uno, bro. I'm not I can't even play checkers. He's so far advanced. And so he looks, but if he lands on lower tax rates with all this, not abolishing the IRS, because that was the narrative coming out, we need to abolish the IRS, abolish the IRS, but if I could land on something almost similar to my tax cuts and jobs act, right? Lower corporate tax rates from 21% down to 15%, bring 100% bonus depreciation back, no taxes on tips, no taxes on social security. I think the other smart some of this is going to land. Some of it's going to land. I think one thing that will land is he's talking right now about getting rid of income tax for people less than $150,000 a year in income, which is a voter base that is primarily Democrat. So, he's genius. How I how do I tee my party up? How do I pull all the Democrats, all the people that are making $150,000 a year or less, get rid of tips? That's the other thing, too. Look at the people that are living on tips. Are they primarily Democrat or rep Republican? Primarily Democrat. So he's going and benefiting the Democrat voter base and he's changing. He's shifting. Bro, the guy is a freaking genius. Y changing the landscape right now in the first 100 days. Yes. And my my my argument with him is I go, you look like a jackass. You make our country look like a jackass because you're out there on TV talking all sorts of Yeah. But when you realize what he's actually doing, okay, keep talking that You're so genius. Yeah. You're he's he's rebuilding things. It's so fun to to watch it. Now, forget about all the political stuff, but from the financial and fiscal part of our country, I am so proud that somebody's actually doing something. Okay. He's trying to level the playing field, Pace, right? So, okay. So, about leveling the playing field. Yeah. I'm a regular person watching this. I make $100,000 a year.

Okay. What are things I can do to pay less taxes?

Well, first thing that I'm going to tell you to do is open a business. I know it's an unpopular, you know, sentiment coming out of a tax professional's mouth to just say open a business, but the real reason why I'm saying that is I can't help you save money on taxes until you have some type of business on the tax return. Code section 162A is still going to be the most powerful tax code. I love costs and everything, but your and my ability to turn everyday expenses into write-offs is what makes entrepreneurship so amazing. Yes, we're putting money back in our pockets every single day just by the decision. Your shirt, your hat, your watch, your car, your everything. It's part of your brand. It's part of your business. It's a uniform expense. Meanwhile, everybody else is going out to Amazon trying to save money on a $20 t-shirt, and you and I can buy whatever we want. We get a full tax write-off for it. And that's code section 162A that you and I are playing into. So, if everybody in the United States has the exact same expenses and all I need to do is just have a business to start claiming all these expenses, well, then why wouldn't I at least try to figure that piece out?

Do you help people with that? I absolutely do. But most of the people that I'm talking to are high net worth individuals that are either high-high net worth W2. I'm talking 700k plus W2, or they're self-employed business owners. So most of my clients already are in the idea I need to have a business. I just don't know what business to start, Carlton, because I'm working 40 hours a week for Tesla. I'm working 40 hours a week for Facebook. I don't have time to go start a dropshipping business or this. But if I invite the conversation of investing your money into something that creates a business, aka a short-term rental or qualifying that spouse who's not working as a real estate professional. That's a pretty simple one. That's a simple one. Now, now it's like, hey, do you believe in real estate? Yes, I believe in real estate. Do you want real estate to be your business? Well, I'm okay with that being my business. Okay, cool. We're going to go park some money into real estate and offset your taxes with depreciation. You're not losing your money; it's just sitting in equity.

Okay. Other businesses, any other business that you suggest to your clients that are making about a hundred, $200,000 a year to go create, or is that the best business to create?

I will always double down on real estate because it is the most tried and true thing. I mean, real estate was here when before Jesus was here. So, if you're going to ask me what is something that's for sure, I'm going to say real estate is for sure.

What's the biggest mistake people make on their taxes? Like a normal beginner, I would say.

Oh, for sure. Uh, co-mingling their expenses. The beginners co-mingle their expenses like crazy. They'll use their personal credit card because it gets them all these points, and then they'll take their expenses off that personal credit card as business expenses. They're essentially piercing their corporate veil. If I come and sue you, bro, I'm coming after all your personal assets. I'm coming after your personal IRAs, your bank accounts, all of that because the I can't distinguish your business from yourself. You co-mingled everything. Your business has an EIN number. You have a social security number, but you blended everything together. So now if I sue you, all of it's in one lawsuit. Hey, IRS, I've never done that. Not one time. And people that are going to sue me, I've never once done that. It's never happened. I This actually the last time I did that was 10 years ago. I'm at Disneyland. I'm like, "Oh, credit company credit card. No problem. I'll they can take it out of whatever." My partner calls me, "What the f are you doing?" I'm like, "I I left my debit card." He goes, "Dude, you cannot put corporate expenses or your family expenses on the corporate credit." I'm like, "It's not a big deal." He's like, "Corporate veil. You are you are piercing the veil." Yes. like, "Bro, I don't even know what that means." Yeah. And then I he had explained to me if we have a tenant that slips and falls or something happened and they want to sue the corporation, the corporation's blocked and all that kind of stuff, they can go and sue me personally if you have an attorney that is worth their freaking weight and gold. Yes. And they say, "Okay, well, what about personal expenses and how are you co-mingling your things? And do you really have a corporate structure or is it all just a farce and you're using these things and co-mingling?" That's like number one big beginner mistake. Yes, that's absolutely the biggest mistake new business owners make is co-mingling their

Is it because people don't want to start an LLC? Is that what it is?

I think what it is is just laziness. I mean, when you think about it, most business owners are just going to swipe their cards, bro. And then they'll figure it out later. Figuring out later, though, I've never done that. Yeah. Figuring it out later sometimes ends up causing such a big headache and stress for you. We have clients in their first two years of starting their business getting audited, and it's just like damn it's your first two years of business. You haven't even made a million dollars yet. You're already getting audited and you co-mingled your expenses. Next thing you know, they're like, Carlton, I'm shutting the business down. You know, it was just so much. Was it really that much, or was it the fact that you didn't want to deal with this IRS audit because they're so persistent on you because you co-mingled your expenses and you're being lazy?

Any other things that a beginner should watch out for?

A beginner should set up their entity structure correct from the onset. I set up LLC's, and nine 90% of the LLC's that I set up for sing uh for self-employed business owners get switched over to S corporations because most business owners profit more than $50,000. So, it doesn't make sense to pay in the self-employment taxes. It makes sense to take payroll taxes. When you take a small salary out of your business, you're only paying 15.3% or payroll taxes on what you gave yourself versus 15.3% on all of the business's profits when you're an LLC. So, if you're an LLC doing over $50,000 in business profit, you absolutely have to look into the S corporation. Most people I know will make 50 thou or let's say $200,000 in their LLC and then they just pay all their personal expenses with that $200,000 co-mingling essentially. Yeah. And then they just live out of their LLC instead of actually filing as an S corp and actually getting to that point.

When do I need to get my point or when do I need to have the call with somebody like you and say let's switch this over to an S corp, or would your company tell them when they should be doing that?

Absolutely. There's a 2553 form that we would file switching you over to an S corporation. We're going to run the numbers to figure out is you switching over and paying payroll taxes and filing as an S corporation net net you more savings than you remaining as an LLC and paying self-employment taxes. That's really what you want. And your your number that you find is like 50 grand. 50 grand because I've done the I've done the math a million times. Base like you're going to probably pay $1,500 to file your corporate tax returns and then you're going to give yourself a salary after 50k of around 15 to $20,000 if you're netting 50 grand. That right there in itself, that setup saves you more than paying 15.3% on $50,000 just flowing over in your LLC. Yeah. So, a good professional like yourself and your team will actually advise people on when they should switch over to an S corp.

Absolutely. Okay. And I I imagine people are trying to do this crap themselves.

Yeah, people are trying to figure it out themselves. They'll actually go on the IRS website, print out the 2553 form, download it, and then try to fill it out themselves, and then fax it to the IRS. Then the IRS doesn't receive it. Then they try to file their tax returns. Then they get rejected, and then they're sitting there forking over a tax bill. I mean, what does it what does it cost to work with somebody like yourself?

Like to fill out a 2553 form, we maybe charge 50 bucks, 100 bucks. I mean, it's so simple to do that form. So save yourself the time and have somebody else do it 100%.

What are the things that people should not be doing themselves?

Bookkeeping and accounting is the one thing that you should not be doing yourselves. If you did not go to school to learn how to categorize expenses, then why do you want to download QuickBooks and start categorizing expenses yourself? 90% of the time you're going to make a mistake. And what most business owners do is they just stuff everything into the category called miscellaneous expenses or other expenses. Pace, to this day, as a tax professional, I do not know what a miscellaneous expense is, brother. But all these people that set up their own QuickBooks accounts use this category because they're like, Carlton, I didn't know if it was marketing. I didn't know if it was advertising. Miscellaneous looked so I just dropped it there. You and me are gonna have this miscellaneous letter that comes in the mail from the IRS and we're wondering why we have a miscellaneous offer. I think people just don't know how to value their time. That too, which is crazy, too.

100%. Because when you understand my time is worth x amount of dollars, there's no way you're getting me to do bookkeeping. Hell no. But I I I did the stupid thing, too, where I downloaded QuickBooks. I was spending the monthly fee and I was doing the thing. Here's how bad I did it. I go I downloaded the QuickBooks, but I never used it. Yeah. So if I I fell behind on things for like 3 years and then I had to pay somebody to go backwards and do the thing forensic all my crap. That's called forensic accounts. And I was stressed out the whole effing time.

Oh, tax professionals will mark up the fees if we have to go do forensic accounting because if you're 3 two years past the year that you're supposed to file the returns, somebody has to go back to January of 2022 and start categorizing expenses all the way back in January and ask you questions about it that you don't know the answer to that you sometimes don't know an answer. Then they have to be patient with you to give them the responses through January, February, March, all the way through December, which most people are not even replying to their emails.

Yeah, exactly. So, but do you guys do that stuff?

Yeah, absolutely.

What is your main business?

Main business is tax planning for high net worth individuals doing anywhere from two to 100 million, and we're going to leverage advanced tax strategies and we have a guarantee. If we can't save you more than what we cost, it's full refund.

That's crazy. Yeah. That is crazy. Yeah. So, somebody comes to you is making a million dollars a year, you don't want to work with them.

Oh, I'll still work with them for sure. I would say the sweet spots two to 100 million.

And why is that? Is it a higher level client for you or is it more fun because it's more strategic for you? There's more things to play around with. Or is it just that why why two to 100 million?

All the above. I would say the ability for us to move fast. Clients that are doing two to 100 million put so much trust in us. Whereas it seems like clients a million and below are trying to wear the hat that we're wearing for them. Yeah. They'll hire us, but then they'll also want to go and jump off of a call and go do additional research and then take forever to make a decision around a strategy. Whereas some of the clients that are doing two to 100 million put all the trust in us when they get on the phone, they put the trust in the tax professional to help make the decision. They go make their own money doing what they're supposed to be doing.

Absolutely. Absolutely. And plus, you have the liquidity to actually do tax strategies because what people don't understand about tax planning, tax planning requires you to spend money. If you don't have money to spend, you're not going to save money on taxes. Period. Okay? So, I will fight you on that.

I'm 90% in agreement. Okay. 90% in agreement. There are times Yeah. where I will buy a deal with like no money out of my pocket. Say that. So, I I've got a I've got a little plane right now. I just bought a plane. Okay. For my son.

How did you set up the deal?

Uh, zero down, 0% interest, no payments for two years. Okay. But the plane is now in your name. Yep. The Yeah. And I'm it's a I'll get the full write-off, right? 40% bonus depreciation on purchase price year one, right? So I, you know, if you're using creative finance, yes. But if you're not using creative finance, then the typical answer is that yeah, you need to deploy capital.

Correct. Or you need to be good at raising capital. So you can still do, let's say you do an Airbnb, right? And you tell you advise your client, hey, let's go buy this half a million dollar Airbnb. The client goes, yeah, but the bank wants 30% down. Okay, that's 150,000 bucks. I don't have 150,000 bucks. Okay, bring in a partner. Have that partner. I don't know if you can. You can. Okay, go raise $150,000 from your partner. Split the deal with them 50/50. You get half the depreciation. They get half the depreciation. As long as you guys aren't managing the property more than each other, you can split the depreciation on a deal like this.

Okay, cool. So, there's a good creative strategy that you can do and go, I don't I need to save money on taxes. Now, I think the other value that you bring to the table is you're educating your clients before December 30th throughout the year. Yeah. Right. Are you guys tracking your because you're doing their bookkeeping as well. Yeah. So you understand, hey, you guys, you're on track to make $15 million this year. You are going to have a tax bill. Are you guys forward thinking right now? Like while people are filing their tax returns from last year, we're already doing tax planning for 2025. Why wouldn't I? I already have four months of income. So I can project out the remaining eight months to know what your estimated tax liability is right now. And then I'm going to back into what we can do. So if I know how much liquidity you want to have by the end of the year that you want to keep, then I can leverage the other amounts to park that into strategic investments that can offset your tax bill.

Who's your number one person behind behind you? Do you have a girl that's running the show? Do you have a dude that's running the show? Like, who do you got?

Yeah, my president, his name is Kyle Baska. He runs the show, so I can pretty much do this 24/7. I'm the marketer. I'm the face. I love being behind the camera and doing this, but when it comes to sitting behind the computer and running the numbers, hiring and firing, that's absolutely Kyle, my business partner.

Love that. And how did you meet him?

Me and Kyle met uh right before COVID in our apartment complex. I was growing and scaling my mother's company at the time. Um, and Kyle was working for another sales company, and when I ran into him, I was I had just picked up a brand new Porsche and I parked it right in the front, and he's like, "Dude, what did you do to afford a Porsche like this?" And I was like, "This is like at a Wolf of Wall Street, bro. This show me the check for $70,000. I'll quit my job." That's exactly what I did. That's exactly what I did. As soon as as soon as I got out of my black Porsche, he's like, "What did you do to afford a car like this?" I was like, "Bro, I just came back from the beach. I took a few tax strategy consultations. this is how much commission I just made. And he said, I am very much interested in changing up my sales career. I would love to know a little bit more about this. Can we schedule time to talk? We met by the barbecue pits, fire pits at the apartment complex. I told him everything that I was doing for my mother's company. I outlined what it would look like if I were to bring somebody on to work with me. He said, "If you could set up a role for me, I would be more than happy to read all the books you tell me to read and I can come back and you can quiz me and if you think I'm ready for this, I'll leave my job and I'll come work for you."

Wow, dude. He got those books read within two and a half weeks. I gave him Rich Dad Poor Dad, Tax-Free Wealth by Tom Real, Wright and Great and maybe like a Grant Cardone sales training book. Those three books he got read, and he was able to recite them back to me. I knew that that was the guy. I brought him into my mother's company, and he like he like broke my mother's company. We sold so much tax planning business into my mother's company that my mother said, "You guys just need to leave for a month and go on vacation." She literally paid for us to leave the company. She didn't even want us to round to us. We're selling so much tax planning business into the company that our CPAs were trying to quit. They're like, "This is this is crazy. This is too much work. Like, what's going on?" We couldn't hire people fast enough to keep up with the work.

Wow. That's what led to me starting Tax Alchemy.

Is your mom still around?

Oh, bro. My mom was speaking on the news today. She speaks on the news.

So, you guys are still partners?

Well, yeah, we're still partners in that business. I created Tax Alchemy because what I realized is a lot of the clients that are attracted to me are like super sophisticated high-net worth individuals that require a lot of hand-holding and they don't want to call into the office and get the runaround. They want to talk directly to the person. And so I started catering to some of these people, these celebrities, these actors and actresses because that was that was what I was attracting with my social media network. But I was funneling them to my mother's company, and these people didn't want to talk to all of these random people. And so they said, "Carlton, listen. this ain't working out. Either you figure it out or I'm out. And so that's when I started Tax Alchemy, a boutique tax planning business. Um, that's almost like a sister or brother company to my mother's company. She has the workhorse strategies and works with thousands of clients. I have the high-level strategies and work with a few hundred clients, but I charge a completely different pricing model.

Freaking love that. Yeah. Your mom's a badass.

She is a badass, dude. She's definitely the one that got me all hooked on costs. I'll never forget it when she sat me down and she broke down the cost irrigation study to me. I was 22 years old and she's like, "Carlton, residential real estate depreciates over 27 and a half years." Watch me take 30 to 40% of this and put it into a a five and a 15-year bucket. And then it showed up on the tax returns. And then when her client came in and got to see that for the very first time before COVID, when people actually used to go in and meet with people face to face, I got to see on that client's face what it looked like to get a refund back of over $50,000. And I said, "This is what I want to do. I want to get everybody to have that face."

It is the ultimate cheat code. Yeah. It is so great. I feel so guilty not paying taxes because I get why

Well, because I get hate. Which is my question. You know, you sit there on social media, you crush it on social media. Your your short form content crushes it. Yeah. I can't even imagine the type of comments you get from people are like, "You don't pay your fair share. You're avoid you tax avoider. This is you're breaking the law." Do you get all that kind of stuff?

I do, bro. But I'm grateful for it because I'm a pioneer in the tax and accounting space. I'm the reason why people are actually going out there and questioning things. I'm the reason why they're saying, you know what, I think there's something else

I could be doing. And I want that to be the sentiment every single time you're filing your tax returns. There is always something else that you can do. So yeah, if I have to be the person that takes the grunt of it, that says I'm not paying any taxes since 2020 and be the pioneer, then so be it, because I know what I'm doing is helping save millions of Americans from overpaying. Incredible.

Now people see your short-form content. How much time you spend on your long-form stuff? Um, I dedicate probably a whole day every single week to long form. About 9 to 10 hours on a Tuesday. Every single Tuesday I'm doing all my long form. And then every single Saturday I do all my short form. So I'd say about two days out of the seven days I'm doing content.

Okay. So on your long form, who's planning that out for you? You? Uh, no. No. I have a team. Ryan, he runs my social media content. Another guy named Alexander. We've been working together for a little over two and a half, three years now. And they map out all of my content for me. So they come up with the titles. They come up with videos that worked last year that we're going to recreate, thumbnails, and all I have to do is just sit down and record. So dope.

Yeah. So good. Yeah. I mean, think about all these tax—No wonder you're smoking everybody. None of these tax guys want to be online. No. I mean, honestly, they—the industry of tax is super weird. It's like CPAs don't want to go out there and tell people what they're capable of doing because it feels like they will lose business by doing so, as if customers won't want to come to them. If I share what's possible, you'll just go off and do it with your own CPA. The exact opposite happens though. If you think that's what it is, I do—I talk to these CPAs, they're afraid to share information because they think their clients are just going to go run off and do it with somebody else. And I'm like, that's crazy, Tom. The more value you create, the more it attracts customers. It's the law of reciprocity. So, what these guys are doing is they're thinking, well, if I give you all the secrets, then what do you need to pay me for?

Yes. Oh my gosh. They've been—But you have to look at the tax and accounting industry, bro. Every CPA firm was gatekeeping all this information until YouTube came out and I got on YouTube and said, "Oh, by the way, you could switch over to an S corporation. By the way, this is exactly how you place your children on payroll." Before you used to have to pay somebody to teach you that. Now it's like, bro, you just go to YouTube University, type Carlton Dennis, how to put—how to pay—pay your children on payroll. He will walk you through the exact process. Now, it's just a matter of are you going to do it yourself? They won't. Or are you going to find somebody to do it? Which is the point. And the quality client that you want goes, "Oh, this guy knows what he's talking about and he's highlighting how much work this actually could be. I'm just going to hire him to do it." Done.

Now, now, now I'm going to do the—take a note out of Pace Morby's book and say, "Okay, if this is what my client's looking for, then I'm going to take over all the real estate on YouTube. I'm going to take over all the real estate on LLC's, how to place your property inside of an LLC, how to do a sub2 deal with an LLC, how to place your children on payroll with an LLC. Now I'm going to do S corporations. Now I'm going to do C corporations. Now I'm going to do foundations. Now I'm going to do cost segregation studies. I'm going to do self-directed investing." Anytime you look up something, anything related to tax, if I don't have a video about it, then I'm not working hard enough.

Yeah, that's how I feel. We—we did—we've been doing that on real estate—it's not creative finance. Real estate is a much smaller niche. Yeah. You're—you are United States-wide, which is awesome. I'm not—I'm United States real estate, off-market real estate, off-market creative real estate, but I dominate that niche, which is great.

Yeah, you do. You can't do tax planning worldwide, can you? No, I chose not to. Okay. Yeah, I would have. I could. Yeah, I would have to get international. If you wanted to go, all right, I'm going to go talk about this on the worldwide and I'm going to go to hundreds of millions of views type of thing because obviously you're opening it up to another two billion people that are watching YouTube that don't look up US tax planning.

Yeah. Why wouldn't you want to go that route? It is very, very, very complex to study multiple tax jurisdictions, brother. I'll be honest with you. Like I'm—I'm still a student of the game when it comes to mastering the US tax code, row, and it just expanding 24/7.

Okay. So that's what I was going to ask is that they're changing the laws frequently, right? Yeah. Like I ventured into like studying Mexico law. So I had so many clients that were like doing stuff in Mexico, but then they just changed their stuff and I'm like, "Okay, now I got to do—do another 25 hours of continued education for the seven clients that own assets down there." It's like, "Okay, okay, I got a client that's in Belize. Uh, not worth it. I'm not worth it. There's only one client that's in Belize. I have a bunch of clients I just moved to Singapore. I kind of want to do Singapore stuff, but I'm like, uh, is it even worth it? I have somebody there that's already in Singapore that I could just consult with and just forward the business. The reality is you're probably not even touching 1% of what you could touch in America.

Correct. So, you just 10x what you're doing here. Exactly. Love. Okay. What does the future look like on your content? What do you guys need to do better? What we need to do better is collaborating with people. One of the things that I didn't do um early on is I didn't network with anybody else that had businesses that were paying high taxes. So, I just focused on teaching tax content. Just put my head down. I'm just going to teach all the tax content. And it wasn't until about a year ago that I ran into the School of Hard Knocks.

Yeah. Good. Yeah. They ran into me in Hollywood and they're like, "Who are you? What do you do?" And I'm like, "Oh my gosh, this did so well for my business just collaborating with these guys, right?" And so started collaborating with Ryan Panas, collaborating with yourself, Grant Cardone, and some of these other people. And um it's definitely doubled, almost tripled our business just having more leaf flow. Their algorithm is bringing in people that are specifically looking for their thing, which is a different person that what you naturally attract. So you're basically stealing that audience, which is amazing. School of Hard Knocks, by the way, these boys borrowed my Blackwing and they lived in—they stayed in my guest house.

Really? And they dented my rims. You guys owe me a thousand bucks. Come on, James. Pay us. They're like, "We're Ubering around town." I go, "Bro, just take the keys to my car. What are you doing Ubering?" Which is like a very young like, you know, Gen Z type thing to be like, "We don't want to own anything." And minimalist. Minimalist. So good. But super Gen Z. He's doing a great job. You're doing a great job on content. You're killing the game.

How can people get a hold of you? Carlton Dennis on all platforms. If you're looking to do tax strategy, you would go to our website, www.taxalchemy.com. Is that the number one thing that people should be doing business with you on? Yeah, tax planning for sure. Nothing else. If you're somebody that already has a CPA, great. I'm not there to replace your CPA. I understand that most people already have a CPA that they love. We're here to serve a very particular role. How can I help you pay less in taxes? The person that files your tax return is just simply doing a job. The person that's helping you save money on your taxes is somebody that is your wealth planner. Just like your financial adviser, it needs to be someone you love.

You said this at the very beginning. It cannot be overstated. I know that—know this now. For anybody that stuck around this long, you need to understand that your CPA—when I first got into the game, started making money. I thought my CPA knew everything. Yep. I thought he knew bookkeeping. I thought he understood tax returns, which he did. And I thought he actually had my best interest regarding taxes in mind. Like, why are you filing taxes without—Why are you filing my taxes without asking me questions? So he—I just go, "Have I done everything I should do?" He goes, "Yeah, it's all looking good. Everything looks good." And I'm sitting there paying taxes. I watch guys like you on YouTube saying you don't pay taxes.

Mhm. Then somebody told me, you know, you need a tax strategist, correct? Somebody that's asking questions—how to place your money, those types of things. So you guys do bookkeeping. Yep. You guys do CPA, file taxing, correct? File tax. You also do tax strategy. Yep. Which is what Tax Alchemy does. That's correct. And you cannot file tax returns or do bookkeeping with us unless we have built your tax plan. Period. Why is that? Because I'm not soliciting for tax prep business or bookkeeping business. I don't want to be the biggest bookkeeping company, the biggest tax preparation company. Let's leave that to H&R Block or TurboTax. I want to be the best tax advisory firm. I want to value—I want people to value great tax advice and strategic tax planning. And I want them to understand that filing a return and a book and doing bookkeeping is just a byproduct of you being a business owner. Anybody can do that, but not everybody understands how to leverage the tax code and can structure things for you. Tax code. Anything the IRS doesn't want the normal person to know about tax deductions.

Man, I truthfully believe the passive activity loss rules is what I've been like exposing that the IRS didn't want people to know because they haven't changed those laws since 1987, brother. The passive activity loss rules were incorporated during Ronald Reagan's tax reform act. And what he essentially did was he separated passive income from non-passive income. But inside of the passive activity loss rules, they gave us three ways to get around what Ronald Reagan had put together as a part of his rules, which is if you want to use depreciation to offset your active forms of income, you have to earn less than $150,000 adjusted gross income. Well, most of my clients don't earn less than 150,000. Then the second step is is that you have to sell your property or dispose of your investment. How are we supposed to build wealth if we're selling our property? And the third way to get around the passive activity loss rules is qualifying as a real estate professional, which both you and I do very well. And then the loophole that got created was really a byproduct of us just studying the tax code. No one updated the tax code since 1986. So of course, when Airbnb came out in 2008, nobody knew that that's related to being a hotel business. So, if you can run an Airbnb or VBO as an active business for 100 hours and your customers are saying 7 days or less, you have an active business on the tax return that you can depreciate. That in my—in my mind is one of the best loopholes for people to exploit because it's all about your time.

Gosh damn, I didn't know that. Yeah. Yeah, man. Guys, Carlton Dennis, um, where can they find you again? All—all social media, but then also taxalchemy.com. www.taxalchemy.com. taxalchem.com. Be sure to go ahead and subscribe to our YouTube channel if you guys are interested in learning more about tax information. It's been a pleasure being on, bro. You kill it. Thank you, bro. Appreciate you.

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