005: Maximizing Your Tax Savings: Expert Tips on Leveraging a Tax Planner for Radical Reductions

Greg O'Brien  0:00  
There's no nothing in the tax law that says you have to make a billion dollars to do this. It's all there. And it's a matter of can you apply it to your specific situation life? And if not, can you follow that roadmap to get there over time?

Narrator  0:13  
Welcome to tech careers and money talk. What if you could hang out with experienced tech industry executives, ask them about career growth, equity compensation, investing financial strategies, and more, then take an insight or two to guide your own career and lifestyle. Each week on the show, Christopher Nelson shares an in depth look at how to navigate tech careers in hyper growth companies select the right companies to work for earn equity and build a passive income portfolio. Christopher is an author, tech exec and principal and co founder of Wealthward capital. His goal is to give you the information you need to grow your career, build wealth, and make an impact. Now, here's Christopher.

Christopher Nelson  0:56  
Welcome to episode number five of tech careers and money talk. I'm your host, Christopher Nelson. I've been in the technology industry for 20 plus years, and after climbing my way to the C suite working for three companies that have been through IPO and investing my way to financial independence. I'm here to share with you everything that I've learned and introduce you to people that can help you along the way. And today, I'm excited to introduce you to Greg O'Brien and John Malone of Anomaly CPA, because they can help so many technology employees tremendously. And people like them. They are certified tax planners. certified tax planners are not your average CPA. They are a specific breed, they've gone through a certification program that focuses them on a way to actually look at the tax code. And the tax code is something that shows them the way so that you can pay less taxes. I'm telling you the way that they think opens up your mind to a lot of possibilities about how this can help you build a financial fortress for you and your family. So let's get into the episode. All right, welcome to this episode of tech careers and money talk. I'm your host, Christopher Nelson. I've been in the tech industry for 20 plus years. And after climbing my way to the C suite working for three companies that have gone through IPO. I'm now financially independent in sharing everything with you so you can do the same. I'm super excited today to introduce Greg O'Brien and John Malone of go CPA. They are a premier certified tax planning organization based out of Boston. Yes, I didn't write this Greg O'Brien, John Malone from Boston. Yeah, it's good. But the fascinating thing about their company is they focus on, you know, small businesses, high net worth individuals to be able to combine premier tax planning services, as well as technology to be able to streamline and make this effortless. And one of the things that I think is amazing about their group as they talk about, they want to make tax planning and tax efficiency, really part of your wealth strategy, which you don't hear a lot. So I'm excited to introduce today, Greg O'Brien, John Malone, welcome.

Greg O'Brien  3:13  
Thanks for having us. Christopher. Excited to be here.

John Malone  3:15  
Yeah, Christopher, it's super excited to be here and love kind of the movement you've started. So hopefully, we can really contribute to your audience.

Christopher Nelson  3:23  
Well, great. And this is where I'm excited to introduce what you do, because many people do not understand the difference between a tax preparer and a certified tax planner. And when I'm out with friends, and I say, you need to understand what a certified tax planner is because it's going to change your life and your approach to taxes. They asked me, What's the difference? I say, well, a tax preparer is very similar to the crime scene investigator that comes in draws the chalk outline around the body, like the crime has been committed, you can't go back, really you owe what you owe. Where I think of a certified tax planner is like Tom Cruise and Minority Report where you're looking into the future and you're saying, hey, what do we need to do, to try and avoid something to try and actually get the government to work with us and make more money? And so I really want to try and understand first and foremost, like, what's the journey from you know, I'm going to college in Boston to now I'm a certified tax planner.

Greg O'Brien  4:31  
Yeah, I love it. I'll start with that one. Because the beginning part of this story is kind of the same for us. So John, and myself, Greg, we went to college together at a smaller college called Bentley University outside of Boston. That's where we met. We played football together. We were co captains as well our senior year. So that's kind of where our leadership journey started together. And then you know, I was a... it's mostly a business school, so I was an accounting major there. For some reason I stayed and got my Masters in taxation, which is a weird Masters degree to have, but it was fascinating at the time. So I went there.. five years to get my master's. And then I worked at a traditional firm. So think of your regional firm you might have in wherever you live, you know, 75 person firm, it was very, very heavy tax season, we're talking 70 hours, six days a week, just a mil of preparation, right. And it was very interesting to me at the time, I got to see a lot of people's x returns right from, you know, Uber, Uber wealthy to normal people, and just seeing how people made money, which was very, very interesting to me. So I kind of got my entrepreneurial mind churning a lot. And I was on the account of somebody that owns a pretty famous restaurant chain across the US. And you know, this guy was filing and 50 States International, like, wow, this is amazing. Like, it was very cool to be a part of that. But I started getting a dive into like, what his team had a full time family office, what his team was suggesting, and the different maneuvers he was making, right, especially around real estate. So that kind of got my mind churning at a younger age. Well, from there, I kind of got burnt out of that. And I went into actually went into real estate. So I worked for both a privately held real estate developer here in Massachusetts and also a publicly traded REIT federal Realty which I which I love both those companies worked on the financial accounting tax side of both those companies for both four or five years that really got my real estate journey started in my head, I just was like, wow, this is amazing what people can do with real estate. So did that. But it was also a corporate grind. Right? So I was, I was in the corporate world. And I was, I saw my path right to kind of going the financial CFO route. And it was a very well defined ladder, and the ladder was long, there are many rungs ahead of me. So in 2016 ish, I decided, hey, I'm gonna be an entrepreneur. I don't know how I'm gonna do it. I just really started studying self education. Tony Robbins, podcasts, you name it, I was listening to it, just figuring out how I was gonna get the courage to quit. John was one of my mentors as well, you know, he's my best friend, but he also a mentor. And I said, Hey, I'm going to do this. And they were like, just go for it. So I have an accountant by trade. So I had everything mapped out, planned out, budgeted out everything five year forecast, everything was ready. And then in 2018, I woke up one day, I said, I quit. I just quit. And I started the journey. So starting off, I didn't know anything else. But the tax preparation game, right? Because that's where I came from. So I said, Hey, I need to just be a tax preparer. I need to require 1000s and 1000s, and 1000s of clients to make money. Right? I was very fortunate within probably three or four months of starting, I was in a networking group, and someone said, Hey, you should check out the American Institute of Certified tax planners, they offer a different designation, it's really cool and charge a lot of money for these things. And but I, I figured out how much it costs to get licensed, and I'm like, is it worth it? So I got in the budget. Yep, it was not in the budget. So I flew out to San Diego and 2018 or early 2019, January, break a week long intensive and then had a big horse afterwards, I'm testing them eyes are open, right? I was like, wow, these are all the strategies that the 1% Uber wealthy are using. And now that we can bring them down to a normal client base, right. And we can also show them, hey, you can really save money and increase your ROI on whatever you're doing, if you're active throughout the year in your tax planning journey. So we're talking about three months into business, I completely pivoted the model, and said, we need to do this differently, right. We don't need a lot of clients, we need fewer clients that were very, very in depth with that want to be educated and wanting to learn. So that was, you know, early 2019. Now, you know, here we are four years later, things have grown a lot and alleged kind of John jump in here as well. But you know, we've grown into a team of about 25. Now headquartered in Boston, we are fully virtual, just John and I, John iron, Boston, the rest of the team is across the US. But John's background a little different than mine, and we kind of converged back in 2021. And I'll kind of let him pick up from there.

Christopher Nelson  9:03  
Well, yeah, and I'll help tie it in and lead into to John is because you got the CPA, you got the accounting side, John's a lawyer.

John Malone  9:12  
I am yeah. So I guess I'll pick up we obviously met each other at Bentley, that's kind of where our journey started. Then I went to law school and my kind of idea was like, I'm going to go to law school, I'm going to be this, you know, big wake lawyer, kind of climb the ladder and do that thing. I think that's kind of where my mindset was post college, and I got into litigation and you know, worked at small firms. And then, you know, one of my good friends started his own firm, who I'm very close with, and then I jumped on with him and it kind of built that firm up and helped him build that firm up and, and that kind of really spurred like the entrepreneurial side of what I wanted to do and and I think just as I got into that, I just I just realized my passions really weren't for what you would say is like your a prototypical lawyer, right that's that's looking to just kind of litigate, be in the courtroom. While I don't, I admire that profession significantly. And, and there's parts of it that I, that I do really love, I just realized that my passion was just for business and was for was for helping businesses grow. And I didn't really know how to do that, but I just knew that I was kind of addicted to business, and how it could evolve. So I jumped up on my own. And I started doing kind of corporate work helping businesses off the ground, helping startups and and then started doing a lot of Business with Greg and with go CPA or Greg O'Brien, CPA PC at the time, which is, which is how it really started. And he, Greg opened my eyes to tax strategy, and how he's applying it to businesses, the type of clients that he's working with. And it was amazing to me, because I was like this is, this is something that is directly, it is the biggest, really the biggest expense. And the biggest investment that people are making is the the amount of taxes that they're paying that could be used for investment, right or could be used to be reinvested in their business or reinvested in themselves. So I just saw this as, like, tremendous value add in something an angle that I had not thought of, or really contemplated as it relates to taxes, so and the tax code, and it's a book of laws, right? So it's very much akin to what, you know, the analysis and how my brain works. So we joined forces, and, you know, started really honing in on this model of, you know, how can we drive and optimize our business clients? Right, from a tax perspective, I think our focus has always been on generating a return on their investment in us, right, we want to be right as any other investment decision, and really having them understand the opportunities that are before them that are not really like out there. They're not people don't know, I mean, there's so much, there's so much information in the tax code is changing, like week by week, right? So being at the cutting edge of that, and delivering services that can really get them on the right track, but then, like, be their execution partner throughout, has really been like, what drives us?

Christopher Nelson  12:22  
And so do you find that, you know, Greg, having the accounting background, you John, having the legal background, that you create this double threat up? Or this double opportunity where you see lenses from both sides? And you understand then how to make these strategies work?

John Malone  12:38  
I totally do. I mean, I think it's something that we talk about a lot, right, where there's, you know, I think you kind of take for granted that like the tax accounting, CPA industry, I think there's so much overlap, but there are, there are nuances on both ends that's like, this is the lawyer's job, this is the CPAs job. And there's this like Chinese wall. So while there's like regulations that we have to tip tone, careful about and make sure that we're kind of we're walking the line appropriately there. I think that there is there's just so much from an analysis perspective that we can kind of bring together, which makes a very, like holistic approach to what we do, which I think is very valuable. 

Christopher Nelson  13:18  
Well, yeah, and I think it's important, I think that as especially as you know, this for technology employees, as your network climbs, and there's more at risk, and you want to execute more advanced tax strategies, because you don't want to pay as much having that level of comfort that I'm getting a lens through a CPA perspective, okay, this is financially how it can be advantageous for me, and then legally, yes, it meets the laws, I think that having that service can create a great level of comfort.

Greg O'Brien  13:49  
For Christopher, I'll just jump in there. You know, one thing I always tell people is, you know, we we've seen so many successful entrepreneurs, people that have sold, you know, nine figure companies in our client base, and oftentimes we're learning from them, right? We're saying, oh, boy, like, this is very interesting. This person had this company, this is how they skill this is what they did. This is how they then took their net worth after that protected it, right? So we're constant learners as well. We don't have all the answers. We always look for our clients as well to say, Hey, this is very interesting. They've been there done that they've sold 10 companies, or they ash out of these four or five investments, what did they do next? Right. And that just kind of accumulates in our brain, our new knowledge base in our brain of what's out there. And we're always learning new stuff. And John mentioned, the tax code is a book of laws. The tax code is approximately 77,000 pages long if you print it out. Nobody knows everything. If you meet someone that says they know everything about it, they're not telling the truth. We don't know everything about it. We just focus on the air as we know drives value, particularly people.

Christopher Nelson  14:50  
That's great. I do want to take a moment in double click into begin this your awakening of saying, you know it sounds like you are following the path of most people, I'm going to prepare taxes. Then you said, Wait a second, there's this Tax Planning Institute, walk us through a little bit of, you know, what, what was sort of that inciting incident that said, I need to go down this path, this is different, this can provide better value to clients and also change your business.

Greg O'Brien  15:21  
I think I was just fascinated by the amount of strategies that were out there, that I had never heard of right now, you know, again, I spent three years in the actual gonna grind and public accounting 1000s of tax returns, maybe like the partners knew about these things back then. But we didn't learn them as staff. And then all of the people I had kind of networked with, when I was starting a firm in 2018. No one mentioned anything about any type of business model other than just preparing tax returns, right? So he was very fascinating to me that as what was out there that is possible to implement. But what I also learned was, the reason a lot of people weren't doing it is because it's a lot of work. There's a lot of work to learn it, there's a lot of work to properly educate the client in and help them implement it. Right. So we figured out very early on, okay, well, this is not something you can really have 10,000 clients, right, it doesn't work like that, you need to have the right type of client that has the right sophistication and the right issues, right, that you can help them through. And as long as they are buying into that, hey, I do want to reduce my generational taxes, we can do it. And it just really just changed my mindset right around is Hey, like you mentioned at the beginning, Christopher, on the analogy there, I always tell people that it's a new client, if it's if they come in right now, and it's April, I say, Hey, we're gonna start planning for 2023. Right? The past is the past what happened in 2022? Is kind of milk honestly, you can't wait, the biggest misconception out there is, I'm going to do tax planning in December right? Too late, you got to do it throughout the year. And it's systematized, right, so you got to get stuff in motion throughout the year. So it just completely pivoted the business, you know, in the iterations of event there over the past four and a half years, but I've always now encourage younger CPAs getting into getting into the business, right? This Hey, not that you have to do this. But I would take a look at this. Because I think this is where this is kind of where the world is moving. More people are interested in this type of stuff. More people are coming into wealth, they have issues right dealing with in the tax codes ever changing. But we always say with change, there is opportunity.

Christopher Nelson  17:30  
That's great. What I was going to ask is, do you know how many tax preparers versus tax planners that are out there in the United States today?

Greg O'Brien  17:39  
There's approximately licensed about a half a million CPAs. Now the thing with a CPA designation, right, it's like kind of saying I'm a doctor in that there are CPAs that can't prepare their own tax return on corporate tax because a CPA could mean you're a governmental auditor, give me your an assurance person at PWC. It's a very wide ranging desert designation, you do have to pass a tax or the CPA exam. But like, you know, you forget that stuff pretty quickly. So the actual certified tax planner designation that John and I hold, there's about 850. So, again, it's pretty niche. And again, the the institute, that license is called the American Institute of Certified tax planners, they're a nonprofit, right? They have no skin in the game other than just to kind of spread their education. The founder, her name is Dominique Molina, very, very smart person that she's very, very smart tax people on her team that have worked with the IRS that are, you know, lawyers, CPAs, right, all these different backgrounds, and they're just on the cutting edge of everything that kind of comes out that we're able to take advantage of.

Christopher Nelson  18:46  
Excellent. Well, so thanks for the origin story. I think we've covered the origin story, we understand, you know, certified tax planner versus tax preparer. We're gonna take a quick pause. And then when we come back, we're going to talk about what are some strategies for high net worth individuals and that they can think about to reduce their tax burden today. We're also going to have an exciting update and announcement around go CPA, so hang in there

Okay, welcome back. Here we are Greg O'Brien, John Malone from Boston. Yes, I didn't write that. Let's talk right now. Let's get back into it. technology in place, the ones who I know many of them have a lot of holdings in stocks, single stocks. They also have maybe some venture investment, but that's their exposure and the complaint that I heard and is complaining all the time. is, this is the time of year right in in April, where everyone is just crying going, Why are my tax bill so high? Why we have you on the phone? And again, I'm glad that we have, you know, Greg, the strategies we got John, the lawyer, we're not this is not advice. We're just talking about some strategies here. Why don't you share with people today? Like when you're thinking about this type of scenario? What are strategies that are available today for people to lower their tax burden?

Greg O'Brien  20:29  
Yeah, let me just start off with the first thing, Krista. I mean, we see. And we've seen a lot of people that especially in the tech world, they have RSUs, are they have different kind of bonus compensation plans? They get there's often a surprise, right come April, because they have a large balance due right. So the tax that you owe, and say, April, right, that is just a true up of what happened now. Right? People will sometimes say I don't understand, because Google, whoever I work for, they're withholding taxes. The issue is, and this is kind of a epidemic among tech employees is that when they receive RSUs, or they receive these supplemental wages, commissions, bonuses, the companies take a position which they legally can do under the tax code to withhold that what's called a supplemental rate. So if you're under a million dollars, you're gonna withhold at 22%, if you're over a million dollars is gonna be 37%. Let's say for example, your actual tax rate is 32%. But they withhold at 22%. On $100,000, that is a large delta right there, right? Yes, you psychologically, probably don't see that when the bonus comes into summer, you're all excited, I got all this money in my bank account, you may not reconcile that they actually under held by 10 to 12%. Right. And you don't figure that out till April. So that's the first thing we always do recommend people check with their HR to make sure that, hey, my CPA said, My effective rate is 32.5%. I want to increase my withholdings here, so I don't get slammed on April, right. That's not saving you money. That's just helping you avoid the surprise. Now, as far as the saving strategy there, right, so let's just have to go through a couple basic concepts. First, w two income is what's considered active income, right? It's ordinary income and subject to both income tax but also FICA, and Medicare tax, right. So on your W two, you're gonna have Medicare tax, Social Security tax up to the wage base, taken out of every paycheck, plus whatever you choose to withhold income tax, that is the deep, most difficult income to offset and attack that right for a reason. The W two employees pay the most taxes in the country, for the most part, it's not easy to offset those, you need what's called a non passive loss to offset those. Right. So the typical person that's just investing, say, in a syndication, that loss may not offset that w two, right? I show you how to do that in a minute. But that's just kind of the baseline, right? There's active income. And then there's also this concept called passive income. There's also confusing here, what's called portfolio income. portfolio income is what you talk about with stocks, dividends, capital gains, interest on banks. Don't confuse portfolio income with passive income. Passive income might be a syndication, right, limited partner interest in a business, right? So there's all these different technical terms here, that can be overwhelming. So with tech employees, especially right we see people, oftentimes the hate and this is the same that goes for other professions, like doctors, for example, they have very, very high W, two income and they feel stuck. Well, yes. The first thing, right, I think, if you aren't doing vendicari, cursory Metro vest venture investing, right? So if you're, if you have the cash flow, and you're investing in, hey, I get these startup deals that I'm investing, I'm taking the swing at this AI company, or this is really technically, you should be very educated on the long term benefits of that there's something out there called Section 1202. We'll call it 1202 stock or Q SBS stock. Some people in Silicon Valley may have heard of this. But if you're if you're investing even 50k, say into a startup, you should always ask that startup, are you qualified for 1202 stock? What that means is that if that company hits, you could potentially have a $10 million capital gain exclusion on your game. So for example, if you're 50k turned into 9.2 million, you literally Pay Zero Taxes on that. It's one of the best tax breaks that exists. They've tried to reverse it several times. But the powers that be and lobbyists have kept it around. So some people think that, oh, I have to start the startup to get that benefit. Not true. If you there are rules to follow. But if you properly invest into a C Corp startup, that's under $50 million, your game could be 100% tax free. There's also ways to multiply that benefit, right? We've had people that have gotten 40 $50 million tax free. So that's number one, right? That's not going to save you in the short term, but you can have a huge windfall in the long term.

John Malone  25:00  
I'll just jump in too Greg and and Christopher. I mean, that is probably the most powerful tax code section as it relates to, you know, the, the tech startup world, right? I mean, right 12 USBs. Doc is is kind of the gold standard for really tax strategy, right, there's nothing else that you're going to get a $10 million exclusion per share.

Christopher Nelson  25:20  
I know, I know that that number is just in and I've heard about that before. And the one thing I also want to tease out and I'm also also want to go back to what Greg, you were talking about, you know, RSUs, tech employees, you know, all of this, what, what is clear to me, is that, the advantage is, when you understand what you're trying to do up front, you get educated on all the pieces, and you understand how it works together. Because I know plenty of people that have, you know, in this secondary use case that have invested in venture that I don't believe have asked that question. I don't think that they're thinking about the wait, is this an LLC? Is this a C Corp? Can you offer this? I'm going to do 250 500k, like this would be worth my investment for you to make that change?

Greg O'Brien  26:07  
Right? Totally. Because I think you need to when you're making an investment, right need to look at the after tax returns. Obviously, venture investing is inherently more risky, but the returns are greater. And then if you can also say, Hey, I'm not going to pay that 23 20% capital gains on top of it. That's pretty nice. Right? So it can also be a negotiation tactic we've seen for people that are kind of being, you know, early founders of co founders of startup, so But John, I'll let you continue there.

John Malone  26:32  
Yeah, I don't say that. I mean, Christopher, it's a great point, I think, I think the our savviness clients, and whether they're investors, founders, whatever, like they are in, in this world, they are ensuring that their investment, or that their company that they're starting is 12. To eligible, right? Like that is like, first box to check has to be done. Right. And it goes to your point of, you know, just just knowing the outcome, and planning for that right before because once you do something to jeopardize 1202 You can taint the pool for everybody. Right? So like, that's something that there needs to be clear guidelines, and there's probably going to be some unhappy people if you do that. Right. So sure, yeah. If that's the kind of a planning technique where it's, you know, we're talking about, you know, a couple of, you know, at the high level, they look at pretty simple things, but there's layers to them. And it's more of, you know, just ensuring that you're you're abiding by those rules throughout the life of the company through exit.

Greg O'Brien  27:32  
Absolutely. So the second kind of topic to hit on here around, you know, the the W two world with tax strategy, we're gonna go into real estate, right. So real estate, again, it is one of the more confusing parts of the tax code, because the government, but a lot of barriers in place, back in the 1980s, a lot of high net worth, people were taking advantage of the tax code back then. So they change the laws to make it more difficult. So generally speaking, a real estate investment, it's considered passive, I went through passive versus active for most people, it's passive. The burden of proof on like, the court of law is actually on the taxpayer to prove that you're not passive, right? So the first way to do that is becoming what's called a real estate professional, that does not mean just getting my broker's license, right? It means that I am actually in the trader business of real estate full time. Now, here's the here's the loophole for tech boys. A lot of people right may have a spouse, that does not work a full time job, if that's the case, you can absolutely structure your lifestyle and your real estate investment portfolio, or your spouse to qualify as a real estate professional. from a tax perspective. You're a one joint individual, right? You file together, you're one unit. So if I'm just a single person trying to get into this, and I have a W two job, you can't you can't become a real estate professional, right? Tax Court overturns that all the time. But if you're married and your spouse does not have full time employment, yes, you can figure that out. There's ways to do it. We've done it with people, that a spouse becomes a real estate professional. Now what? Okay, they'll say why why didn't they be real estate professional? Well, within the tax code, this is where the huge advantages come out. Every thing you do in real estate, right, you're gonna have you're gonna hear the word depreciation, you're gonna have ability to write off your investments that cost eraser investments through the tax code, right? The US is one of the only countries in the world that allows investors to depreciate or write off us real estate Right? Or example, I can go buy a building here in Boston that was built in 1726. And I get to depreciate it, even though someone else has depreciated it 100 times already. So it's a very unique tax code, right? So within a real estate professional setting, if your losses that we create losses are what's called Cost Segregation and accelerating these, these write offs, if your losses exceed your income you go negative per se. You can take that loss from your Real Estate and you can directly offset it against your W two income. If you're a real estate professional now, my Asterix here is that again, it is very difficult to do this. If if you are single and have a W two job, but if you're married and have that situation, it absolutely is possible. So that's situation one, right. And there's there's all sorts of rules I'm not going to bore you with. But it's possible right now, I've actually seen more than the medical profession, actually, people that have decided that one of the spouses was better off staying at home with children, raising the family and getting into real estate than having a part time job, because the overall tax benefits their overall ROI. And all right, and was stronger doing that, right. So people do do that. The second one here, right? And this is the kind of cutting edge newer one that I will bet you, four to five CPAs will immediately say you can't do that, because that's the mentality that people have. It is short term rentals. So a short term rental, by definition in the tax code is a what's called a transient rental. Now, I think we have to understand the tax who doesn't get updated every year right? Releasing greatest version was largely written in 1986. Long time ago, they've updated it through different tax changes, right TCGA. And back in 2017, the Trump tax laws that was a big update, but it's not a complete rewrite. So they use the term transit rental Airbnb was not around in 1986. But the concept of someone coming and staying in your house, or a property you own for a few days. And as a bed and breakfast. It existed, right, right. So there's very nuanced rules of short term rentals. What some very smart people figured out about a year and a half ago, and I was not the person to figure this out, is that if you navigate through section 469, the tax code appropriately, there is a sweet spot where you can have a short term rental like an Airbnb or VRBO, where you do just enough activity that you can create a non passive rental activity, right? So you become non passive. And what does that do as we just explained, if you're non passive, you can create losses, non passive losses can offset w two income up to $540,000. So I'll just kind of give the mathematical example here, I buy an Airbnb property for $1 million. I have some creative financing and put 10% down right so I'm out of pocket $100,000 I talk to my smart taxpayers and they say hey, you need to make sure this is rented for an average of seven days or less I need to make sure that I spend 100 hours on this property and more than anyone else. I also want to make sure I don't operate this like a bed and breakfast and not providing daily linen, daily food services right right. I'm checking some boxes here but those aren't extremely high barriers to do that million dollar Airbnb I buy in October, right some automatic amount of pocket 100k For my down payment. I then figure out okay, I'm going to do what's called a cost segregation study which is going to look at all of the components of this home from the the HVAC, the windows, the lights, doors, the cabinets, floors, everything. And I'm going to assign new new new tax lives to these pieces. Okay, generally speaking, right stay with me are generally speaking about 25 to 35% of the value of the of the of the building, right the building value, but 25 to 35% of that is eligible to be written off in a period of 357 or 15 years. Wow. Now in 2023 80% of that amount can be written off right away. So example $300,000 falls into that class 30% Of the million, you can take an immediate deduction and 2023 of 80% of that 300,000. That loss, let's make the math simple, right, that $250,000 loss that you just created in year one, right? If you follow the rules of short term rentals properly, that loss will offset your W two income up to 250,000 or whatever that overall losses. If you have two Airbnbs, you can go more Euston. You can offset w two income single to about 270,000. Married to about 500,000. Right? Pretty powerful. Now we've seen people with high w two income we've executed executed this strategy many times doesn't 21 doesn't 22 that they have offset almost 100% of their W two income right on the West Coast tech people. And now but here's the trick. You do this, you save 100,000 150,000 in taxes, keep the snowball going, you get you just recouped your downpayment money. Right, right. You just got 100% ROI. You take that cash and you go buy the next one, right, you gotta keep it going. Keep the strategy going. And then he that's how he started scaling. Yep. So again, that one is very specific, a lot of rules and nuance that, but oftentimes, I mean, we've had dozens of clients come in from other CPAs say, they say you can't do that. Understand that but When you look at all the regulations, all the laws, it actually is the proper way to do it. Right. You follow it properly, it's the proper way to do it. So that's a newer strategy not Yeah, you know, in my and John knives world, we hear it. We hear this all the time. So we're in all these chatters about it but like in the general grand scheme of things, not many people know about that one. And it's probably the best way for a W two employee to offset their income right now that also is a pretty good investment. So

Christopher Nelson  35:27  
investment strategy, right? In one of the things I think we get into, and I want to I want to so I think you have a lot of strategies. And I would encourage anybody to, you know, book calls, we'll make sure there's contact information below if you want to get some calls with these guys and understand what they can do for you. But investments themselves, right, there's a new class of of investment, be out there, you know, some eco friendly, I know carbon cleansing a lot of these that the government is doing some very interesting incentives to actually then provide some write offs against WTO and active income. What what are you seeing and hearing about those?

Greg O'Brien  36:08  
Yeah, let me just jump in here at the start. And then I'll pass it to John to go through them. As a general theme, we always tell people you can't, when the tax code changes, right, changed in 2017, there's been some updates, again, from the recent acts that were passed at the end of last year by the Biden administration, we always tell people don't get so caught up in the headlines of like the polarization of the good and the bad, right? Right. Just take a step back and know that there's opportunity. The tax code is written as incentives, right? Think about like people who say, Oh, why do insurance companies make so much money because they don't really pay taxes, right? There's all these incentives out there for certain industries, but they change over time. So generally speaking, the 90s and early 2000s, the incentive there was an was in the old school energy, right? Oil and gas, great incentives for that, right now. They're changing now they're changing to green energy. So you need to follow government policy. They're trying to incentivize us to behave in certain manners, whether you agree upon it or not. That is where they're steering the current tax benefits. And we've just seen it double in the last in the last year. So but I'll let John kind of go into some of the specifics of the green energy policy.

John Malone  37:18  
Yeah, like Greg, like Greg said, I mean, it's it's a, the tax code is a book of incentives. So as long as you follow kind of the government's lead on those things, whether you agree or agree with it or not, you're going to there's going to be incentivizing items as it relates to investment. So I mean, thinking obviously, like electric vehicles, which is popular among people, solar, right, solar on your home, your personal residence, and on investment properties. And then in terms of like, getting back into real estate, right, like whether you're, you know, renovating properties, you're, you're you're developing, you're gonna do fix and flips, high, you know, energy efficiency is rewarded on a significant basis. Right. So those are kind of all things that like, if you're thinking that way, and there's opportunities that way, more often than not, there's going to be a tax incentive, as it relates to, you know, green energy and kind of the, the the prominence that it's becoming in a lot of these different industries.

Greg O'Brien  38:19  
Yeah, and like all those things John just mentioned, right, solar, there's solar tax credits, there's solar depreciation, there are electric vehicle credits, both for personal use, right, they actually just were in April, they just published the final list a few weeks ago, what qualifies up to 7500 bucks. There's also business electric vehicle credits with no income cap, meaning you can make $37 trillion and still get a nice $75 tax credit as your business owners. And then with John was alluding to there at the end with real estate, right? There's these two niche sections that have been around, but they just got boosted in last winter, section 45 l and 179. D, they're both energy efficient upgrade sections, meaning new windows, new doors, new HVAC, new envelope, renovations, if you meet ENERGY STAR or greater for some of them, right, you're gonna get either a large deduction or a large credit. Now, I would say that, even though these are becoming a little bit more prominent 90% of investors missed them because they're not educated about them. The thing with the tax system is the government's not gonna say, oh, Christopher, you, you really should have, you really should have claimed that 45 on that project. Right? That's not how it works. They're like, that's great. Another, another guy that didn't know what he's doing. So they, they're not going to come and tell you this, you need to get around the right people are going to tell you about this. And then you can start looking at a project saying, Okay, well, I'm going to put 500,000 into this project. But based on this thing I learned, I'm actually going to get an immediate tax incentive refund of 25,000 Because Because of this type of project, right, that helps in your underwriting. So yeah, again, a lot of these things it's our biggest struggle is making sure people get educated on it. so they can bring that idea to us, Hey, I'm gonna do this project, let's make sure we think about these kind of weird tax sections that are out there.

Christopher Nelson  40:06  
Well, and this is all great. And I know we can continue to talk about these strategies for hours. And this is what I love geeking out on too. But I think what's really important, and I really want to share with people is that, you know, both Greg and John, you and your company believe wholeheartedly in this advanced planning, and a lot of education and also delivering automation, the way to serve people. And because of that, you have a big announcement to make about your company. Today,

John Malone  40:33  
We do have breaking news breaking those, we still kind of with that, like with our vision, we kind of understand that where we're different than kind of your normal professional services provider. And we always have kind of wanted the brand that that meets that. So we were officially changing our name to anomaly which the definition of that is deviation from what's, you know, normal, standard or expected. And I think it's for us to definitely characterize us, but we also want it to characterize our clients, we want them to be the anomaly in kind of an industry where, you know, it's reactive, and you're in, you know, the, you know, focusing on taxes and focusing on the strategies is maybe a bit devalued. I think we want our clients to be empowered to be to be that anomaly as well. So, and it also, like you said, Christopher, lends itself to, we're trying to be on the cutting edge of tech technology, too, and how it's right for our server. Right. So that goes on the tax strategy point, right, like, like, Greg, and I just did, and like you said, we could talk for hours about strategy. And these things are all true, and they apply to a lot of people, but you have to do them, and you have to execute them, right, there needs to be that follow through. And that's a lot of what we're trying to do is be that execution partner with our clients, not just give them the strategy, but but help them implement and actually do it. And a lot of our kind of technology, you know, education guides and resources are really, really trying to be innovative in that respect to be able to kind of walk lockstep with our clients and catch them where they're at. So those are kind of all blended to the new brand, which we're very excited about.

Christopher Nelson  42:11  
Well, and I think it is, it's very exciting. And I think that it also is something to me as a technology employee really resonates because they talk about the fact that all companies are becoming technology companies, right? You need right technology now. And when I think about, you know, your firm being, you know, remote first, and you really are technology driven, and not just that, but you're really trying to make a name for yourself in and amongst the certified tax planners being somebody that's different. I think anomaly fits, I like it. I'm excited about it.

Greg O'Brien  42:45  
Love it. Yeah, no, we're excited. And we have some, some big things in the work and the next next year as well. doubling down on technology and just trying to make people's lives more efficient and, and easier as part of our goal as well.

Christopher Nelson  42:57  
Well, because I think when you get into the cadence, right, when you think about, I'm no longer working with a tax preparer, right, which, and I want to bring to life that experience what that experience was like, for me, is, you know, you, you do the best you can you write and you said it earlier, Greg, like you read the thing, oh, they're withholding taxes, you get to the end of the year, and you're like, Oh, crap, and there's this look, there's this feeling there's, you know, writing that check, or making that transfer this brutal, versus when you're working with a certified tax planner, right? You're getting text messages, you're getting like, Hey, did you remember to do this? Okay, great. And you're doing these little micro movements, micro management throughout the year, that leads to then, to your point, ROI, I mean, this to me is was fascinating, as you know, hey, here's going to be the certified tax planning fees, but we're going to deliver that back plus more. That to me, is then a partner, you're dealing with a partner, and not just a, you know, somebody who's just a commodity or service provider.

Greg O'Brien  44:03  
Absolutely. And one of our core values is being partners in success. And you mentioned, you know, the ROI. And we always tell people look, doesn't matter where you're at, there is probably something out there you can do. And if it saves you $500 Next year, that's great because or $1,000, right over 10 years. That's $10,000 reinvested seven or 10%. That's a nice ROI, right? So we never say like, Don't be lazy and don't leave things on the table, just because it requires a little bit of effort to get a system in place. Most people the government does publish these studies once in a while, like the amount of overpaid taxes, it's incredible. So figure out what applies to you, and then just start chipping away right you might not overnight, you know, achieve tax free wealth, but you got to start somewhere, right? So I think people can get overwhelmed like oh my gosh, I'm such high taxes. Well, if you if you paid 20%, maybe get down to 26% next year, right? Right, a couple of different strategies. So start somewhere and then just know that those savings compound. It's not just one time, it could work for 10 straight years. So that's what we always try to teach people to they're at the beginning of this journey.

Christopher Nelson  45:07  
That's right. And then I can't remember what it what is it that you talk about, you say that you want to be, you know, working with the tax code, because you can achieve all its benefits, or you have a phrase or something like that. You said...

Greg O'Brien  45:17  
Yeah we like, said that to say that the tax codes are your roadmap to wealth, right? Because, as I kind of alluded to before it really although, you know, as we said, it's a book of laws. It's also a book of incentives. So if you follow it properly, it's going to say, what you can do to not pay tax, right? Everything is taxable. Everything is taxable, unless the tax code says it's not. So finding those different areas and opportunities is awesome. And, you know, I think that people will say, like, Well, why doesn't the Uber Uber wealthy, why their tax rates so low? Well, ultimately, Christopher, is because they have invested in the right type of activities, they have structured things the right way, they have found the missing, they just live off the leverage that they've created in these massive brands and companies. So right, it doesn't mean that someone had 1/10 of their net worth can kind of do the same thing, right? There's no, there's no, it's nothing in the tax law that says you have to make a billion dollars to do this. It's all there. And it's just a matter of can you apply it to your specific situation, right? And if not, can you follow that roadmap to get there over time?

Christopher Nelson  46:20  
Oh, that's great. All right, we have definitely gone long, but I have had a blast. This is awesome. We're gonna go into the fire round, where we asked five key questions. I don't even know who's going to answer him. But we're just going to dig into it. So what soft skill has helped your career the most so far?

John Malone  46:37  
I will first I think, well, I don't know that I'm good at this, though. I mean, I can I say what I want I want it to be or,

Christopher Nelson  46:43  
yeah, what you're focused on.

John Malone  46:46  
I think being like listening and be patient, right. I think I think my wife has beat me over the head with that. So I think I think those are things that maybe are more, I want to strive to be like, but I think those are those are those are those are big, big soft skills that are needed, right to be able to listen and evolve with the feedback that you get.

Greg O'Brien  47:06  
For me, I'd say it's asking questions, right. So always, always asking why of clients of other tax professionals, just asking a lot of questions. Not having all the answers, just asking questions to try to keep learning and picking up little tidbits here and there.

Christopher Nelson  47:20  
That's great. What is the worst money advice you've ever received?

John Malone  47:24  
I mean, I think what's common among the industry and Greg will agree with me is that like, maybe this is more of a tax tax repair advice is, you know, hey, why don't you go buy this car and December 31, or something like that, you know, or you made too much money. That's why you're paying so much taxes. I think we hear that as a revolving door. And it just makes no sense to me.

Greg O'Brien  47:42  
Yeah, I mean, I'll double down on that. Like, there's, I mean, it's kind of a running joke in our, in our communities of, you know, just hey, go go spend $200,000 on a terrible asset just to save 30,000 in taxes, right. Like, when is that a really good investment? Probably not. In the second one is John mentioned is a good that's a very old school saying is, you know, the multimillionaire complains the CPA and they say, oh, sorry, you just make too much money, right? It's like, no, that's not, that's not good advice. So that says, Do you think we commonly hear in our industry?

Christopher Nelson  48:10  
Wow, no, that's great. That's actually great. How do you both keep learning?

John Malone  48:15  
Right, you can start so I don't I don't steal your answer this time. Sure. 

Greg O'Brien  48:20  
So, for me, I'm particularly keen on podcasts. I'm a podcast junkie. And I listened to like literally dozens per week, probably every time I'm outside, walking, commuting, but I'm doing I'm almost in podcasts. I do focus on obviously, niche specific industry stuff. But I also listen to a lot of entrepreneurial ones as well. And just learning trying to learn from people that have been there. Right. And I probably, you know, I pestered John all the time with these things I'm hearing, it's like a new idea every every five minutes, but there's just so much education out there through the podcast these days. Like, what what generation did you have access to have these one hour listening sessions with billionaires, right, that exists now and exists every week? So podcasts to me has been spent, you know, life changing on an education standpoint?

John Malone  49:05  
I mean, it's along the same lines, but I just think like, you know, there's like concept of like being the listen and be like, the dumbest person in the room, or you want to be the dumbest person in the room. And we just speak with so many different people even like you, Christopher and just, you can learn something from everybody. Everybody's doing something a different way. And just taking the time I've learned so much from our clients, or mentors, from people, from people on our team, right? And just being just kind of going in with that mindset has been huge for me.

Christopher Nelson  49:34  
That's great. What do you what do you both do to recharge?

Greg O'Brien  49:38  
I would say, you know, my best kind of recharging is actually exercise right? So so trying to work out be active, be outdoors, gym, I love to I love to be active that helps me kind of stay mentally clear and sharp. So that's the big one for me.

John Malone  49:50  
Yeah, I would agree with that. I mean, I think family time to for me right to spend time with my family. I have two young kids which, you know, actually it's probably not a recharge, but it's yeah...It recharges my soul.

Christopher Nelson  50:02  
Yeah, that's right - not my body but my soul.

John Malone  50:06  
Exactly. Which is, which is more important. That's right.

Christopher Nelson  50:09  
And then what's the advice that you give to your younger self in your career?

Greg O'Brien  50:13  
I would say it's taking risks, right? So take risk and be open to change. So, you know, I made the kind of jump to change, entrepreneurial jump in my career ever. I'm 28 years old. And you know, sometimes I'm like, why wish I was taking more risks earlier, but take risks when you're when you're younger in your career, because there's always a fallback plan, right? There's, I always had the fallback plan that if this doesn't work, I was doing pretty well as I was, so just be open to risk open to change.

John Malone  50:42  
Yeah, I would say, you know, be ready to figure it out. It's kind of like a saying that, I would say, you know, that you're not I think, I think too, like, if you're going to go on your own or kind of like take an entrepreneurial journey, there's like, so much stuff that you're just not going to be taught how to do, right. Even if you go to the best institutions in the world, they're not going to teach you I mean, a lot of a lot of colleges teach you how to be an employee. So which is good, which is really, really good. And I think it's great. But I think that is something for me is like there's a lot of stuff, you just got to figure out on your own and you gotta be okay, making mistakes, and learning from them. Those are some big things that I would say to my younger self.

Christopher Nelson  51:20  
Excellent. Well, I can't tell you guys, this was phenomenal. Had a blast, I could definitely keep going for another hour or two having having so much fun. But where do we get in touch with you? What is the new and I'll put all this on the episode page so that people know, but how do they get in touch with Anomaly?

John Malone  51:40  
I love that. Well, the new website is anomalycpa.com. So that's easy enough. You can find Greg and myself on LinkedIn. And then Greg, in terms of the social handles, we're on all social media platforms at anomaly, underscore, CPA. Okay, so that's kind of where you can see us.

Christopher Nelson  51:59  
Okay, great. I'll get all that stuff loaded. Well, hey, thanks so much. I really appreciate it fellas. And I think you added a ton of value today. So thanks so much.

Unknown Speaker  52:08  
Thanks for having us Chris, we had a great time.