How To Master Your Taxes with Mark Kohler

Summary

The Candy Valentino Show
Episode: How To Master Your Taxes with Mark Kohler
Release Date: February 3, 2025
Host: Candy Valentino
Guest: Mark Kohler, Senior Partner and Founding Partner of KKOS Lawyer

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Introduction

In this episode of The Candy Valentino Show, host Candy Valentino delves deep into the intricate world of taxes and legal strategies essential for sustaining and growing a business. Joining her is Mark Kohler, a seasoned expert who is not only a CPA and lawyer but also a thought leader in tax planning, legal structuring, and asset protection. Their conversation aims to equip entrepreneurs with the knowledge to navigate the often-overlooked financial aspects that can make or break a business.

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The Crucial Role of Tax and Legal Management in Business

Candy opens the discussion by emphasizing the importance of moving beyond just starting a business. She notes, “It's really easy to start in today's world... but it is really hard to sustain in business” (01:00).

Mark Kohler echoes this sentiment, stating, “The biggest pieces that will crumble a business are taxes and legal” (02:00). He elaborates that while operational challenges like firing employees can be managed, tax and legal mishaps can have devastating, often irreversible impacts.

Key Takeaways:

• Tax and Legal as Pillars: Proper tax planning and legal structuring are foundational to business sustainability.
• Subtle but Critical: Overlooking these aspects can lead to sudden financial crises, such as an unexpected IRS audit.

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Common Mistakes Entrepreneurs Make

Mark shares insights from his extensive experience, highlighting that many business owners mistakenly believe that merely hiring an accountant or lawyer will suffice.

Mark Kohler warns, “The biggest mistake business owners make is thinking they're going to find an accountant or lawyer that's going to do it all for them. People have got to be the captain of their ship” (05:00). He stresses the importance of understanding the basics of tax and legal matters to effectively collaborate with advisors.

Candy Valentino concurs, expressing frustration with the misconception that professionals are a "holy grail" solution. She points out, “We have to be the ones that are educating ourselves on what these tax codes mean to you” (06:00).

Key Takeaways:

• Active Involvement: Entrepreneurs must take an active role in understanding their business's financial and legal framework.
• Educate Yourself: Continuous learning is essential to effectively direct and utilize the expertise of professionals.

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Strategies to Legally Reduce Taxable Income

Transitioning from common pitfalls, the conversation shifts to actionable strategies that entrepreneurs can employ to minimize their tax burdens legally.

Mark Kohler introduces a plethora of strategies, likening tax tools to items in a toolbox: “It's like opening up that toolbox. What's a screwdriver do? ... We have these strategies and how they layer” (06:30). He emphasizes the importance of being knowledgeable enough to apply these tools effectively.

One of the standout strategies discussed is the Health Savings Account (HSA). Mark explains its benefits extensively, comparing it to a "Roth IRA for medical expenses," highlighting its tax advantages and flexibility.

Mark Kohler states, “A health savings account is like a Roth IRA for medical. But it's even better. You get a tax deduction on the front page of your tax return... It grows tax free and comes out tax free for medical” (14:00).

Key Takeaways:

• HSA Benefits: HSAs offer significant tax deductions, tax-free growth, and tax-free withdrawals for medical expenses.
• Strategic Use: Utilizing HSAs in conjunction with high-deductible health plans can optimize tax savings and financial planning.

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Deep Dive into Health Savings Accounts (HSA)

The discussion delves deeper into HSAs, addressing common misconceptions and providing practical guidance on maximizing their benefits.

Mark Kohler underscores the importance of proper HSA utilization: “Half of small business owners, especially those with S corporations, aren't even writing it off in the right spot under audit” (12:00). He warns against complacency, noting that many miss out on potential deductions due to lack of knowledge.

Candy Valentino seeks clarity on HSAs for those already having healthcare benefits, questioning, “Can you break that down a little bit? What is the benefit of that, of having that and how you actually take distributions” (09:54).

Mark elaborates on the operational aspects, explaining the necessity of having a qualifying high-deductible health plan and the process of setting up an HSA through a third-party administrator.

He emphasizes urgency, stating, “The deadline for setting up your health insurance for this year is January 15th... you got a week” (16:17), prompting listeners to take immediate action to benefit from HSA advantages.

Key Takeaways:

• Eligibility: Must have a high-deductible health plan to qualify for an HSA.
• Setup: HSAs must be established through third-party administrators, not directly through traditional banks.
• Deadlines: Be aware of critical deadlines to maximize HSA contributions and tax benefits.

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Business Structure and the C Corporation Debate

A significant portion of the episode is dedicated to discussing business structures, particularly the pitfalls associated with C Corporations.

Candy Valentino raises the topic, considering potential tax rate changes: “If Trump is going to take the tax rate down to 15 or 17%, which he wasn't fully successful in his first term” (19:00).

Mark Kohler responds emphatically against C Corporations, warning of the complexities and disadvantages such as double taxation: “Stay away from the C Corp. And Trump's not going to get it lower than 21%” (20:00). He advises entrepreneurs to stick with S Corporations for optimal tax efficiency, especially for businesses making over $50,000 a year.

He further elaborates on the complications and long-term consequences of converting to a C Corp, sharing personal experiences of unwinding C Corporations and labeling it a “nightmare” (21:00).

Key Takeaways:

• Avoid C Corps: Generally not advisable due to complex taxation and double taxation issues.
• Prefer S Corps: Ideal for small to medium-sized businesses seeking pass-through taxation and simpler structures.
• Consistency: Entrepreneurs should maintain their current entity structure unless there's a compelling reason to change.

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Real Estate Investing and Tax Implications

Mark transitions to discussing real estate investment strategies, emphasizing the diverse categories and their respective tax benefits.

He outlines four main categories of real estate in the tax code:

1. Long-Term Rentals: Includes single-family homes and duplexes. Requires qualification as a real estate professional for depreciation benefits.
2. Short-Term Rentals: Such as Airbnbs, offering tax loopholes that don't necessitate being a real estate professional.
3. Self-Rentals: Renting property to one's own business, enabling depreciation without the need for professional status.
4. Syndications: While popular, they often complicate pass-through losses for passive investors.

Mark Kohler advises, “Do you understand why you're buying it? What are you good at? What are you bad at? How is it going to impact your tax return” (28:30), urging investors to align their real estate strategies with their tax planning.

Candy Valentino adds a cautionary note about the risks associated with syndications, highlighting potential pitfalls like lower returns or complete losses due to inadequate vetting (31:00).

Key Takeaways:

• Diverse Strategies: Different types of real estate investments offer varying tax advantages and require distinct management approaches.
• Informed Investing: Investors must understand the tax implications and operational requirements of their chosen real estate strategy.
• Caution with Syndications: While appealing, they come with risks that necessitate thorough due diligence.

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Final Tips and Resources

As the episode nears its conclusion, Mark shares final tips aimed at empowering entrepreneurs to take control of their financial and legal strategies.

He introduces the concept of the Family Office, adaptable even for small business owners, to manage finances, asset protection, and tax write-offs effectively.

Mark Kohler encourages listeners to proactively manage their business structures and seek comprehensive consultations: “Find someone like me and they're very rare that has these sources to help you get there” (33:00).

Candy Valentino reinforces the message of self-education and active engagement with financial strategies, summarizing the episode's core theme of empowerment through knowledge.

Key Takeaways:

• Family Office: A strategic approach to managing business finances and family wealth, tailored to individual needs.
• Comprehensive Consultation: Engage with knowledgeable advisors who offer holistic and forward-thinking financial strategies.
• Continuous Learning: Stay informed about tax laws and financial strategies to maintain business resilience and growth.

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Resources Mentioned

• Mark Kohler's Website: markkohler.com
  A hub for comprehensive tax and legal resources, including blog posts, podcasts, and certification programs for tax professionals.

• KKOS Lawyers: kkoslawyers.com
  Mark Kohler's law firm offering a wide range of services including trust management, self-directed IRAs, and business entity structuring.

• Main Street Tax Pro Certification:
  A certification program for tax professionals to become proficient in advanced tax strategies and client management.

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Notable Quotes

• Mark Kohler (02:33):
  “People have got to be the captain of their ship. ... You need to know why you're doing it, what you're going to be doing, and then turn to your first mate, your tax and legal advisors to get it there.”

• Mark Kohler (05:05):
  “You have got to be the captain of your ship... But you need to know why you're doing it, what you're going to be doing, and then turn to your first mate, your tax and legal advisors to get it there.”

• Mark Kohler (14:57):
  “A health savings account is like a Roth IRA for medical... It grows tax free and it comes out tax free for medical.”

• Mark Kohler (20:25):
  “Stay away from the C Corp. ... S Corporation is the perfect strategy for Main Street business in America making over 50 grand a year.”

• Mark Kohler (33:10):
  “One major tip that every small business owner in America needs to use in their small business is the family office... It makes your company better asset protected.”

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Conclusion

This episode of The Candy Valentino Show serves as a crucial guide for entrepreneurs seeking to master their taxes and legal structures. With Mark Kohler's expert insights, listeners gain a comprehensive understanding of the strategic financial maneuvers necessary for long-term business success. From leveraging Health Savings Accounts to optimizing business structures and navigating real estate investments, the conversation underscores the imperative of proactive financial management. By equipping themselves with this knowledge, entrepreneurs can steer their businesses towards sustained growth and resilience.

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For more episodes and insights, follow Candy Valentino on all social media platforms and subscribe to her YouTube channel.

Transcript

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[Candy]

Hey guys, welcome back to another episode of the show. Thanks for tuning in and spending this time with me today. I am super excited about this interview because as you know, I nerd out on all things taxes and legal and all of the things that actually you need to grow a business because oftentimes it's super simple for us to talk about mindset and what you need to do to start, but it's really easy to start in today's world. As you know, it is really hard to sustain in business. And so these conversations are really important. So today our guest is Mark Kohler. He is a senior partner and founding partner of KKOS Lawyer. So he's not just a cpa, he's not just a lawyer, but he's bringing it all, talking about tax and legal and asset protection, which, you know, we talk a lot about on the show. So, Mark, thanks so much for being here with us today. I'm excited to have you.

[Mark Kohler]

Oh, and thanks so much for dedicating time to this. Like you said, so many people want to talk about the rah rah rah, let's walk on fire and get excited. And then on day two, they're like, what the hell is QuickBooks? I got to do what with taxes? All right, now I'm screwed. So this is good.

[Candy]

This is going to be a good conversation. I can tell. We already talk the same language and it is so easy to start. And I always say that the biggest pieces that will crumble a business are taxes and legal. Right. Everything else, if you fire somebody or that, you can typically overcome it. But the one thing that entrepreneurs I think learn last and they need to be learning first is the finance aspect of their business. So can we.

[Mark Kohler]

Yeah. And Candy, I want to comment on that. I like the way you said it just came to me and I want to just point this out. Some of you may be going, why would tax and legal, you know, undermine a business? Well, think about what the, what does the legal mean? It means contracts with vendors. It means your partnership agreement. It means your service contract, collection Procedures, that's legal. And then when you get to tax, how much money you set aside for taxes, so, so you don't get blindsided and the IRS is pounded down your door and all of a sudden you're like, oh my gosh, I'm upside down. And that. So that's how the tax and legal does it. It's subtle, you don't think it's important, but then it can come up and bite you in the. You know what?

[Candy]

Yeah, absolutely. And like, it will be the one thing that you can't get over. Like most businesses can't sustain a massive legal or a massive tax issue. And I think that oftentimes people think it's just boring, like, oh, I don't want to talk about that. Let's talk about the new Instagram hack or marketing strategy. It's like, so go ahead.

[Mark Kohler]

I'm bringing sexy back. I'm bringing sexy back. This is awesome.

[Candy]

That's right. So tell us a little bit about. Obviously you've been doing this a long time and you were more of the practitioner in the beginning. Right now you're teaching other people about tax, you're talking about it, you're writing and speaking, but you were a practitioner of it, Right? Like with clients, building a book, actually helping business owners not have these types of issues. So tell us some of the biggest mistakes that you have seen, entrepreneurs in general, because we have 95% entrepreneur audience that you've seen them make in just business in general.

[Mark Kohler]

Wow. Okay. So, well, thank you again for that. I have done my 10,000 consults and I had a text this morning from a client. I'm still meeting with clients. We have a full service law firm, a trust company, helping people, self direct IRAs, 401ks doing tax planning, business entities, legal. And I'm training my attorneys every day, staff meetings, I'm in the office. So now I don't take as many consultations. And it's typically the clients that I've been with for years that I'm still maintaining or a family or a friend. But I'm in the trenches, Candy, I want you to know that. But we are training thousands of attorneys and CPAs around the country because they're, they're starving for the tools too, to help you, the business owner. You think that these professionals learn this in school or the bar exam or a CPA exam? They don't. They get out and then they go to a firm and hopefully they learn from the right people. But we've got old attorneys, old accountants that are Burned out. They're not looking for new cutting edge strategies and that's what you get. So it's up to you, the entrepreneur, the biggest mistake. It's funny, I'm going to make this point with your question, Candy, is the biggest mistake business owners think is they're going to find an accountant or find a lawyer that's going to do it all for them. People, you have got to be the captain of your ship. Now, I'm not saying you're prepping your freaking tax return or you're filing your llc. That's the last thing you should do. But, but you need to know why you're doing it, what you're going to be doing, and then turn to your first mate, your tax and legal advisors to get it there.

[Candy]

Yes. Oh my gosh, I was trying so hard not to hit my desk. So it didn't break up the audio. But 100%, yes, I agree with that. Because people think any expert, the bookkeeper, the tax strategist, the whoever is going to be this holy grail that comes in and saves them and knows everything. And I'm like, we have to be the ones that are educating ourselves on what these tax codes mean to you. Because it's not just the information, it's how it applies to you, where you are in your build and they're not cookie cutter. So something that maybe you took when you were first in business in order to reduce your taxable income, you don't want to do now because you're prepping it to sale. Right. So there's like all of these strategies and how they layer. And I love this thing too because I have a lot of people that also. And I'd love if we could speak to this. They're like, well, my LLC is in California, but I'm moving to Florida and so I want to not pay income tax in Florida. Right. All of these strategies that people hear, the clickbait that social media influencers share because they probably saw something that you or I posted and they stripped it off with no context and reposted it. Is there a way that entrepreneurs can legally reduce their tax structure, taxable income so that they don't have to pay as much in taxes? And what are some of the first things that they need to ask themselves, Questions that they need to cover, or that first conversation that they're going to have with a pro? What does that look like?

[Mark Kohler]

Okay, so we're, this is good. We're shifting from mistakes now to the are there things people can do to save Taxes. Yeah. Hell yeah. Um, but so we could start hitting. I mean I've got 30 point ultimate guide on things to do so we can try to choose some of the, the big ones. And I love candy that it's just have. I want to leave with everyone listening today with some practical tips. But just to button down our last point, I when we're saying you've got to understand the tax and legal it's, it's at a 30 or 20,000 foot level. And then having conversations with your advisors, can you find that accountant or attorney? That's the holy grail. Sure, they'll do, they'll do great. They'll focus on all your pieces. But then you got to pay them so much to spend the time getting to know every little fact pattern in your business. It's not worth it. They'll do it, but it's not a good ROI on your money. So what do you do? You geek out like you said Candy on podcasts and books and just know enough to be dangerous. Am I going to put my kids on payroll? How am I going to write off my auto this year? What am I holding my board meeting? Am I going to write off the travel and dining related to that? Am I going to own real estate this year and use a depreciation strategy? I'm going to self rental my own building back to my own business. Am I going to write off the equipment in a more strategic way? What am I doing for my health care expenses? Am I using an HSA or an hra? Now I just rattle off six or seven things. I got, I got a whole toolbox here. But when I say what's an hsa? All of you listeners should be able to go, okay, a health savings account. That's how it generally works. That's it. You don't have to know how to fill out a form. You don't have to be, you know how to sell it or you know or even go know where to go get it. But you want to know what that tool does? It's like opening up that toolbox. What's a screwdriver do? Okay, I think we can all explain that, but we have these blinders that, oh, it's complicated, it's boring and so you're not even going to open up the toolbag. And so I know we're probably belaboring it but like can you said this is the biggest mistake is that people don't take time to just learn. Some of these two have a podcast you love. If it's not Mark Kohler. Then tell me the number one tax podcast you listen to. Oh, crickets. You aren't listening to one. The. This, this is the number one cost in your freaking business and you don't even have one podcast you listen to on a regular basis on cutting edge tax strategies. What? Donald Trump's going to come in and turn the whole thing around with the Expiring Tax Cuts and Jobs act this year. We're going to see again the biggest tax legislation in eight years and you're not even listening to a podcast about it and you're expecting your accountant to do it for you. Sorry, Ken, I'm losing it. But. Right. I mean, this is. You're like, tell me how to put my kids on payroll. I'll tell you. But that's just one of 40 people.

[Candy]

Yeah, right. No, it's good. And if. Okay, so one thing I want to circle back to. We talk about this on the show. I'd love for you to explain because there probably are people that are like hsa. I have healthcare benefits already. I have them for my company and my employees. Can you break that down a little bit? What the benefit is of that, of having that and how you actually take, take distributions, if you will, that I call them out of that to pay for things. I think there's a lot of confusion around it.

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[Candy]

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[Mark Kohler]

You bet. And so, and this answers your last question was what are some of the big tax strategies that people are missing? Well, the HSA is one of my top 20 because medical expenses people fall into several traps. One, they think oh, I have good health insurance or might have it through my spouse at work or I got a good health policy so I'm done. No. Are you writing off your premiums correctly? Half over 50% of small business owners, especially those with s corporations aren't even writing it off in the right spot under audit. There's new laws in the last five years that you could lose your write off for your health insurance premium. Boom, right there. Do you know where you're writing it off? No, my accountant does it. Do you know how many accounts I'm training that are dumb asses? That's what I do. Okay, all right, so. So number one, you've got to know where you're writing off your health insurance premiums and what are you doing about your out of pocket medical. That's number two because out of pocket is going to be your co pays deductibles, dental, eyes, physical therapy, massages. WHO. The publication 502 of the IRS is over 50 pages long. Of all the things you can write off, people don't even know I could write that off.

[Candy]

Right.

[Mark Kohler]

So we want to know after health insurance, what are we going to do? Number three reason why you need to know this. The number one reason for bankruptcy in America are medical expenses.

[Candy]

Yeah.

[Mark Kohler]

And half of these people already have insurance. The number one reason in retirement people pull money out of an IRA or 401k are for medical expenses. If you think insurance is the holy grail to use that term one last time of your your solution for medical costs, you're crazy. So, so we have to take an active role in thinking, okay, how am I going to write off my medical expenses? What's my plan for the future? Because that can undermine your entire life. Heaven forbid you get cancer or have to have a knee surgery or who knows what the cost could be. You want to talk about a scam, talk about health insurance. Right? So we've got to be prepared for this. So what is one of those tools that I freaking love and you know about it too, Candy is the health savings account. Now I've do entire shows on this and trainings for accountants on this, but just did a few highlights. A health savings account is like a Roth IRA for medical. But it's even better. You get a tax deduction on the front page of your tax return at any income level, no matter how much you make, young or old. You don't even have to have a small business. You can take a deduction on the front page of your tax return to put money in the hsa. It grows tax free and it comes out tax free for medical. Not when you're 59 and a half tomorrow. So this is like a tax free ATM that you can invest and grow tax free and it pays out for your medical. So you want to build this little pot of gold called the Health Savings Account, which you get tax deductions to do and pay for that future medical that you might have. It goes hand in hand with your health insurance. You have to have a high deductible health insurance plan for so 80% of you. You don't even use your health insurance. So what we want to do is get that high deductible plan because you're not even using it and take that extra savings and drop it in your hsa. Boom, boom, boom, boom. And I'm getting a write off to do it. Then you can invest it in crypto. You, you can invest it in real estate, you can invest it in notes. I bought livestock with my hsa. I have a crypto mine with my hsa. I can. I own a little meth lab in Chicago with my HSA. It's adorable.

[Candy]

Which we don't recommend.

[Mark Kohler]

It's a section 8 low income housing. What they do in there, I do not know. But anyway, so. But the point is that HSA is growing tax free and I can use it anytime I want. If some of you are like, oh my gosh, this has got to be a scam, how would he, how would my accountant not know? This is because your accountants do not go to the continuing education. They should. They're in a rut. They just plug numbers into a return. You have to find an advisor. This is why you're back to captaining your ship. So I could go on and on to Andy. But that's the Health Savings Account. There's so many other little benefits. They're amazing.

[Candy]

Let's give them the, the raw numbers for 2025. How much can they put in for this year?

[Mark Kohler]

Well, the new number just came out two weeks ago. Yeah, it's, it's 8300 for last year. And I'm going to quote last year's number. Here's why. You can still put money in it for last year and get a tax deduction up until April 15th. 8300 if you're head of household, single mom or single dad or married or 34. 30. No, 4150 if you're single. 4150 because half of 8300, 4150 or 8300 if you're 50 or older, you can even drop an extra thousand in it and get a tax deduction dollar for dollar on the front page of your return.

[Candy]

Also.

[Mark Kohler]

Oh my God, Candy, I got to say this. I'm going, I'm going to be doing a selfie on Instagram and YouTube here this morning and I've got over 600,000 followers. So people, you're going to hear this first. The deadline for setting up your health insurance for this year is January 15th. We're a week away. And if you don't get the right policy, you can't do an HSA this year. So you've got one week right now to make this decision for one of the best tax strategies for your wealth building and your tax return. You got a week.

[Candy]

So you have to have the right health insurance policy in order to be able to do it right. So it's not just everybody can do it. If you have some Cadillac plan that has super low, you know, $20 co pays, you may not be able to do it. And is there another caveat? Do you have to have a separate account? Do you have to keep this money separate outside of your business or your personal account? Where do you actually take this money to deposit it?

[Mark Kohler]

Great question. So completely correct on the first count. The right type of insurance and when you're on the marketplace or you're going to your health insurance agent or when you're maybe your spouse or yourself at your day job, many, you know, 40 million Americans have a side hustle. So many of your listeners have both a W2 and a side business. The HR department is going to say, here's your health insurance choices. You want to look for the little blue square icon or badge that says this is HSA qualifying. And so that's the policy you're going to be looking for wherever you're shopping. So that point number one. Now once you're saying, okay, I've got the right insurance policy, you can go set up your HSA account anywhere you want. Now this is not a self administered account. You can't just go down to Wells Fargo or Chase and open up a bacon coat and go, okay, that's my health savings account. Nope. Now I've got an HRA plan called the 105. Another frickin amazing strategy. Whole chapter in my book, easy to read by the way. If you but the HSA, you have to go to a third party administrator. The third party administrator is going to maintain your HSA, a directed IRA direct. You can open up a new account for 400 bucks tax deductible. That HSA account, you get an app on your phone to buy crypto or invest in whatever the hell you want. That's the HSA crypto. You get a regular hsa, you can go to a. There's multiple. Just Google it. There's HSA companies out there. You're going to pay for that account in one way or another. Either they're going to take a fee for managing your money in it or you're going to pay a fee to open it. So. And then you can self direct it. So you've got all sorts of options, but you have to open an HSA with a third party that'll hold that money and invest it the way you want and then you pull out the money when you want.

[Candy]

So good. And I think it's so important for people to understand too that you can't just claim this and not actually do something with the money. That's why I wanted to lead into that question, because I've heard that before. Oh well, I'm just going to say I have an HSA and I'm going to use these. I paid for massages for the last 12 months, but they didn't actually do anything with the money into that third party party. So I think that that's really important. You talked about something I can't let go because we've done so many podcast episodes on this personally. Obviously the 2017 jobs tax cut and jobs acts is going to be expiring now. Trump is coming back into office. The audience knows I talk about positions and policies, not necessarily the person. So we do have a new administration coming in. We obviously have heard a lot of the positions that he is going to drastically change the tax tax code, lower the corporate tax rate in an effort to bring more jobs back into the country. So people who are sitting here with maybe an S corporation or an LLC who never even thought of being a C Corp before can hear these things where maybe Trump is going to take the tax rate the whole way down to 15 or 17%, which he wasn't fully successful doing in his first term, got it down to 21%, but if he gets it down into those numbers. What does that mean for business owners and their business structure? Is there ever a situation where a business owner may be like, huh, maybe I need to restructure my business as a different entity in order to pay less in tax.

[Mark Kohler]

What are your thoughts on that? No, no, no and no. Any of you business owners thinking of being a C corp? I don't care if the tax rate 17% do not do it. You've got building gains tax in the conversion. It's a nightmare. I've written about this for 25 freaking years. I stand behind it. I'll debate any CPA, any attorney. I'm licensed in multiple states. No one has more books than me on this. Stay away from the C Corp. And Trump's not going to get it lower than 21%. Holy crap. He's got to deal with maintaining our individual tax rates at the current level before they expire. We've got bonus depreciation sitting there, auto depreciation hanging out there. We've got opportunity zones, we got 30 other tax strategies that are expiring that need to be renewed, going after and trying because we're going to reduce the corporate tax rate and he already did. It's phenomenal. It's the best it's been in 50 years and he brought back all the business. There's no more business to go get. So people don't think that's a pipe dream. The people talking about that, I don't believe it. I haven't seen even close to it. I'm going to be at the inauguration a week and a half. I have the cell phone of senators and I answer questions on this. Do not waste your time with a C corp ever. The S Corporation is the perfect strategy for Main street business in America making over 50 grand a year. It's time tested, it works, it's perfect. Anybody selling you a C corp, make sure they're the ones filing your tax return in the next three years. Looking at you in the eye when you've got built in gains, stupid loans out of your C corp, double taxation and then you're stuck. And I've had so many tearful conversations on Zoom and in person over my career unwinding C Corps and it's a nightmare. I'm in the trenches. I, I see it, I know it. Be careful.

[Candy]

So anyone that's already in the entity that they are obviously strongly don't change. Why do some companies have to or choose to structure as a C corp then Shareholders.

[Mark Kohler]

I want to go public. Yeah, I'm going Public. Yep, that's it. Now we might set up a sister isolated C corp structure for some medical planning. Maybe out of a thousand entities we set up like we gosh, last year we probably set up four or five thousand entities for clients over the country. If you want to work with a real lawyer and do it right, do not go to just an online non lawyer to hopefully get you to get it right. We've set up Thousands of entities. 0.0001% are C Corps. So now. But you said something interesting there too. Well, whatever you are, stay there. Well, I'm not saying that either. We've got right now is the time to take your LLC for last year and do a retroactive S election which you can do back to January 1st of 2024. Can, if you should. I don't know. We got to look at the facts but the C Corp is definitely not on the table. We might want to revoke an S election. We might want to implement an S election. We might want a partnership LLC and two new S corps for their partners. There's all sorts of structures there. But the C corp. Holy shit. I mean I can't say it enough.

[Candy]

I love it. It's good, it's a good conversation because these numbers come out and people think, well if I'm paying X amount in tax and now I can pay this. I'm like no, no, no, now you're going to be double taxed. It's called double taxation. So I love that you said that and that you feel so strongly about. It's a very, very small percentage unless you're going to be going public. Multiple complexities in a partnership or something like that. So that's great for someone that already has a very successful business because we do have a lot of listeners that aren't just starting out. They have, you know, millions and millions in revenue. They're looking to restructure and do some different holding companies, perhaps have different entities hold other companies or parts of the companies and get into a little bit more of the advanced strategy side of things. Are there ways that you can break apart businesses, companies if you will, and set up holding companies and setting up IP companies in order to lower the overall tax rate or the overall tax burden that an entrepreneur would pay.

[Mark Kohler]

Maybe just moving your operations to another entity is not going to save you freaking taxes. If you're the ultimate owner and it all flows down to you and you haven't changed underlying ownership and we want pass through structures all down to your 1040 of what tax savings did we create now? Am I going to set up separate entities for exit strategies, for partnerships, for future expansion, for asset protection? Sure. Very important to do. But to think I'm just going to peel off this operation over here and then I'm going to put this here and then I live in California, but I'm going to set up an entity in Florida. I'm going to save tax. Bull crap. Now, here's the recommendation. I don't want to just be. No, no, no. Here's what you do. You get. I'm just going to call it what I call it. You get a trifecta. A trifecta is a diagram that we've coined. You call it whatever some other law firm might call it, something we've trademarked. We've done thousands and thousands of these all over the country. Just go Google Kohler trifecta. You're going to see a structure where you bring together your operations, your assets and your estate planning. You bring it all together and you look at it from different angles. You look at the asset protection, you look at the finance, you look at the accounting needs, you look at the tax planning. Where is my family in this? What is my future wealth? Am I owning real estate? Am I owning securities? What's my home in the mix? What am I doing with my revocable living trust? At the end of the day, that is bringing the whole picture together, whether you're wealthy or not. Everybody needs to have that big picture look that says, okay, let's bring this all together. And that's where the synergy is. So if you're wealthy and listening, going, all right, Mark, you're just blah, blah, blah, blowing smoke or tell me what I can't do. Here's what I do tell you to do. Get a second freaking opinion. If you're not into, if you don't feel wholly satisfied that you're a tax advisor or legal advisor are on the same page and they brought together a picture for your legacy operations and assets that you can understand. Get a second opinion. You can work with one of our tax lawyers. We're not going to steal you away. You don't have to bring your entire business here. But we're doing comprehensive consults, building these diagrams and doing a review of your structure, making sure all your LLCs are properly structured, your assets are in the right spot, are your trust funded? There's a, I, I, I did a conference in Phoenix a month ago. It was in November, I mean, sorry, first part of December, and I had 400 people in the room. And I said, I'm going to ask you eight questions about your structure. Keep your hands up if you can answer in the positive that you have this under control. I was to question six and there was no hands up. And these were basic questions. Is your minutes done for all of your entities for last year? Are all the addresses updated? Are all the titles in the right names? How's it are on your tax? And people are so disorganized they want to chase the shiny gold new thing. And listen about what Trump's going to do. Holy shit. I'm not even watching what Trump's going to do. I'm waiting until he does it, then I'm going to move into action.

[Candy]

Yeah, it's so true. Oh my gosh, it's so good about just all of those things. Minutes. And you know, what's one attorney, one lawsuit going to do? Can cripple your entire business by not having some of those super boring. I think they're sexy. You think they're sexy. We can bring sexy back as it goes in tax and legal. As we wrap, just one final question. You had mentioned real estate in there, which of course we have a lot of real estate investors. There's a lot of transition right now, certainly. So I can't let it go without at least touching on that. We've had high interest rates. We've had frozen markets. We've had a lot of markets that are just kind of stale. Are there anything that you feel real estate investor specific that you see in teaching CPAs and EAs that they are leaving on the table often and not taking as a deduction, whether it's cost segregation or something else that you see as common. Remember last year's amazing trip, that cute.

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[Mark Kohler]

Okay, it's bigger than that. It's not like, oh, here's the little strategy they're all missing. Here's the bigger picture that so many investors and business owners and their advisors are missing. There's four categories of real estate and some of you may go, oh, commercial residential storage units. No, no. In the tax code, you have to think, okay, what is my product mix or my Investment portfolio look like on a tax return. There's long term rentals which you might have single family homes, duplexes, whatever. Long term rentals. You're renting. Renting, you have rental property. It could be commercial. Do you qualify as a real estate professional or not? Do you have material participation? I'm sure you've talked about the rep status a thousand times on your show. So long term rentals and to get the depreciation flow through requires this real estate professional. Professional classification, but that's one. Then we get over to short term rentals. I own three Airbnbs. Short term rentals have a loophole where I don't even have to be a real estate professional. Absolutely critical strategy for someone that wants to generally be hands off. Do a cost seg. Get massive write offs this year. But that's a short term rental. It's going to be certain rules and you've got to be able to know what the average rental stay is and am I doing substantial services and am I materially participating in checking those boxes? But it's much easier to qualify than a long term rental. Third, do you have self rentals? Do you have 80% of small business owners rent from someone? Your best tenant is yourself. Are you buying a commercial condo or a building or a warehouse or going in partnership with someone? You should be renting to your own business, owning that real estate. It's called a self rental. A Dash 4 election. You don't even have to be a real estate professional. You don't have to be any of those other rules. And I can throw down a cost seg and take massive depreciation on a self rental. I own a self rental, four or five of them. I'm in real estate. I'm doing the same damn thing. Then number four, you get into syndications. Everybody, every influence out there is trying to sell their next syndication. Whatever. Okay, you see a candy, right?

[Candy]

So, oh my God.

[Mark Kohler]

But, but you don't get, you don't get the pass through losses on a syndication as a passive investor is very, very difficult to do. But promoters out there are like, oh, buy into my syndication. We're doing a cost seg on our apartment building with 80 units or 8,000 units and you're gonna. No, you're not. They're not there to do the effing tax return at the end of the day. And so when you go into your real estate investing, which I'm a huge proponent of, in my book, I talk about buying into a rental property every year. One rental a Year keeps the tax man away. And we want to be buying rental properties or a portion thereof. But what type of rental are you buying? Do you understand why you're buying it? What are you good at? What are you bad at? How is it going to impact your tax return? The depreciation and writing off the kids and the trip and the tools and the equipment. That's. That's child's play. It's. How are you going in structuring it? That's.

[Candy]

It's so good. I'm so glad you talked about the self rental. I actually don't know if anybody else other than myself has ever talked about this on the show. So I was like, yes, keep going, Mark. This is awesome. And the syndications and I feel like that's a whole episode because, man, I feel like there's a lot of people again that are trying to buy into a hack or into the shiny object or somebody's hype and they're giving money to people that they haven't vetted, that they can't trust and they're getting lower than they would if they just stuck, stuck it into some non correlated asset. And it is heartbreaking. You know, I know people that gave massive amounts of money to some of these syndications and they get 3, 4, 5% return or some that just lose everything because they never actually did what they sold this bill of goods on. So it's a really scary world out there, which I think people need to be very cautious. You need to work with professionals. Which brings me back to you. Tell our audience how they can find more information about you, what you do. Because you have a bunch of different things. You don't just do the law stuff. You don't just do the tax stuff. You also have directed Ira, which I love. So tell us where we can find more about.

[Mark Kohler]

Oh my gosh. And I want to in 30 seconds, maybe 45 seconds and I know we're on it. I want to give one last tip if I can. Can please, please, please, please.

[Candy]

Yes.

[Mark Kohler]

One major tip that every small business owner in America needs to use in their small business is the family office. The family board meeting. You don't have to be a billionaire to have a family office and write off expenses related to your small business. You have a family office. It's your third bedroom down the hall with a piece of crap IKEA furniture in it. That's your family office. And it's okay. I've got a family office. I don't need to have full time employees and I can Save money by building my own family board of advisors with an LLC or an S corporation doing my annual minutes Getting better asset protection More Tax Write Offs My Christmas was a write off. We had a board meeting on Christmas Eve for fun talking about future and money and finances. Families need to be talking about money more talking about the future, their entrepreneurship and it's called a board meeting and you get a tax write off to freaking do it and it makes your company better asset protected. So do it. I've got tons of writings on that and podcasts and videos and trainings and you can go to your account and go we're doing this because I teach rooms of accountants that have not even thought of talking about this with their clients. You gotta be the captain of your ship and lead your advisors to the promised land if you have the wrong advisor. So how to Get a hold of me? Markjkohler.com Markjkohler.com is a one stop shop in a sense. You can see my blog, you can see my links to our two podcasts that we do every week and if you are an advisor in any way, shape or form a tax professional, check out my Main Street Tax Pro certification. I will certify you on how to be an advisor. Now for those that are looking for a good [e-mail], you can go to the services and the network. I have a tax pro network of now over a thousand advisors around the country that speak Mark Kohler. They have to take over 900 quiz questions, 75 modules and meet with me weekly in trainings. I have close to six trainings a week for our advisors on all these strategies so that you can have a collaborative meeting, not just someone looking in the rearview mirror. So kkoslawyers.com, our law firm, we can do your comprehensive consultant a trifecta for you. Our directed ira. You can open up an IRA or a Roth or an HSA today. All the links are there at march. Com. Just if you don't like me, that's fine. But find someone like me and they're very rare that has these sources to help you get there. So Candy, thank you for having me and you're talking about the tough topics. I'm so grateful.

[Candy]

Oh my gosh. Thanks so much for being here. We'll link all of that in the show notes so everyone can learn more about you and really get this information dialed in. I love how you say be the captain of your own ship. You have to be just know enough to be a little dangerous so that you can direct that. And I love that you're putting together a lot of advisors and pros that are speaking this language and that are being a little aggressive with the information. The tax law, the tax code is there for us to use it or not. And I think that a lot of people don't use it to their advantage because to your point, they think their accountant's going to handle it all. So I love what you're doing. Thanks so much for the time today and thanks for spending this time with our audience.

[Mark Kohler]

The BiggerPockets Podcast Network is your home. Get it for real estate investing. I am very tired of people saying that your primary residence is not an investment. Get real talk from real estate pros.

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About investing strategies that work.

[Mark Kohler]

I bought a house for a dollar and it makes me a million dollars.

[Candy]

You can become a real estate millionaire.

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[Mark Kohler]

They need a house. Bigger pockets.

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