Why Most CPAs Are Failing You: Tax Strategies the Wealthy Use with Mark Kohler – EP 209

Justin Donald: Hey, Mark, great to have you on the show.

Mark Kohler: Hey, thanks for having me. Whoa, we get to talk taxes, how exciting.

Justin Donald: I know. It’s so funny because the general response that you get when you say, hey, we’re going to talk about taxes, sometimes you see people’s eyes glaze over. But the funny part in our community, in the Lifestyle Investor community, our people actually geek out on it. They love it. And it’s because they see long term the benefit, short term and long term. But we’re talking about saving real money, real dollars, and it’s not that much extra work. And if you hire the right people, it’s not any extra work for you. It’s just the work to find that person. So, I’m excited to have you on the show, and I’m excited to uncover maybe some myths or some mistruths about what having a great tech strategy can actually do for you.

Mark Kohler: Thanks. You bet. We’ll get to it, but I’ll probably take issue with a little bit of what you said, saying, oh, you just need to find the right person and then your job is done. No, well, I’m sure you didn’t mean that. So, we’ll talk about that. But it is true. It is so amazing how it’s easier to save money than make money. And if I can save some money on– and I’m not talking woo-hoo crazy strategies. And everybody thinks, oh, well, my accountant’s doing everything. Really? Really. You’re the captain of your ship, you know. You know. Well, they were recommended by so-and-so, and I’m sure they’re great. Well, we’ll see.

Justin Donald: Got to do your homework. Got to do some due diligence, do a deep dive. And I’ve just learned that most CPAs and most tax professionals file taxes. They fill out the forms, they click the button. They don’t actually proactively strategize. And I created this tax strategy masterclass that’s been a huge hit in the Lifestyle Investor community and beyond. And one of my big firm points that I kind of outlined everything through is that there are some people that don’t do anything. There are other people that they think they have someone great, but they aren’t really doing anything proactively for them. And then there are people that really take their strategy seriously.

So, there’s tax evasion, which we don’t want to do. There’s tax avoidance, which is what most people do, deferral programs and stuff. And sometimes, it makes sense, but not always, but a real tax strategy, top down, thinking from 5, 10 years out, that’s a game changer. And I’m excited to interview you and ask you questions because I know this is the world you live in.

Mark Kohler: Well, thank you. Well, let’s get to it. So, we’re not going to talk about the NFL season or your fantasy league, okay? I got the wrong memo, I guess. So, okay.

Justin Donald: I like it, I like it. So, I’ve always had this feeling, or I shouldn’t say always, I have educated myself enough to realize a mistake that I had when I first was learning taxes, and that was I thought the tax code was built to tell me all the things I couldn’t do, when in reality, it’s built to say, hey, when you do these things, we as a government partner with you. You can get tax credits, you can get discounts, you can get deductions, you can get all these things. And I’m curious how you look at the tax code. You’ve been an attorney. You’ve been a legal professional, for most of your career. So, I’d love to hear you outline some of your professional life, but then also just talk a little bit about how you see the tax code.

Mark Kohler: Well, to take off for you what you just said, I don’t think there’s any. All knowing even a conceptual person or group behind the scene saying, this is what we want to do. We’re going to work with you or we’re going to stop you or we’re going to do it. It is such a mishmash of thousands and thousands of regulations and cases and statutes that change on a regular basis. And it’s really a puzzle. I love the tax code for the opportunity to dig for gold and find those strategies that work. There’s no one or the IRS isn’t after you, but they’re also not there to help you. The IRS is just trying to implement this massive structure of law and do it to the best of their ability. I know a number of IRS agents, and they’re great people. They’re just as frustrated at times with the complexity, but they just do their job and put their head down.

And so, it’s up to us to be captain of our ship and work with our professional. I’m going to try to change you today. It’s not finding a professional. It’s working with one. And I’ll make some suggestions on how to do that. And I know you already believe in that, but yeah, I just think it’s a big puzzle that we get a chance to dive into and play with, and we shouldn’t be intimidated by it or frustrated by it. We should see it as an opportunity.

Justin Donald: Yeah, I think that’s really well said. And for the record, my team meets with our CPA and their firm once a month, and then I join in once a quarter. So, I’m a huge believer of working arm in arm to figure it out and not just wait till the last minute. And it’s like, oh, well, there are very few strategies we can use because you waited until basically the end of the year versus if you have a good game plan and can figure out where you are, month one, month two, let’s just say Q1, you know where you’re probably trending, you know what strategies are available. There’s a playbook you can run. And the earlier you start it, the better, right?

Mark Kohler: Yes. Yes and no. I totally agree with you. Except there are strategies that you just do it, you’re in. Like, how much are you going to pay the kids? What am I going to write off or some year-in deductions I’m going to go after? There’s deadlines involved with health care, deadlines involved with IRAs, 401(k)’s. And that’s okay. Fourth quarter is our busiest time because that’s when you kind of bring together what you just said. You’re kind of meeting quarterly, you’re making game plans, you’re doing projections. But then at the end of the year, there’s just no way around it. There’s some tidying up, there’s some checks to be written, strategies to be employed.

And sometimes, you don’t know what those strategies are going to look like dollar-wise until you get through the year. How good a year did you have? How bad a year? Where would you fall? And that’s going to also dictate how much you might employ your strategy for or not. So, it’s a year-round process, and I love that you’re doing those quarterly meetings. We call that a tax advisor relationship. Not just a tax preparer or compliance accountant, they’re a tax advisor. And my network where I trained advisors around the country, we’re teaching them how to build that journey and relationship.

Justin Donald: Yeah. And I think that there’s something else also to be said about having a great tech strategist in the realm too. So, maybe your firm doesn’t have that and you need to bring that person on, but hopefully, you can find a firm that it’s all in-house and you have people that file, but also the people that strategize with you and on behalf of you. And so…

Mark Kohler: You mean that third-party firm you’re talking about?

Justin Donald: Yeah.

Mark Kohler: Not when you say in-house, not your own company, but when you hire that accounting firm.

Justin Donald: Correct.

Mark Kohler: I’ll say this right now, they go together. Because think about it, whoever’s doing the compliance and filing your return, they’re not going to take orders from anyone. They’re not. They’re going to poo-poo them. They’re going to complain about it. Accountants are egotistical SOBs. They really are. And so, I know, I’m a CPA. I’ve been there, done that, I do that. I’ve worked at the big six. I’ve worked at the tax court. I’m a tax lawyer. I’ve checked all the boxes. I know how they think. They mean well, but they’re very territorial and opinionated and some can be extremely conservative.

So, your tax strategy plan has to be implemented with the same company that’s doing your tax reporting. And if they’re not willing to go there, you’re going to get rid of them that you have to have them. If you just look in rearview mirror accountant that just does the tax returns and that’s what some of you listening are facing and you already know it, as I say it, just come to reality, have a reality check. You’re going to be upgrading.

Justin Donald: Yeah. It’s one of those things where I remember I kept one of my CPAs around because he was friends with someone that I knew. I had another one that I kept around because I didn’t know who else I was going to go to, and they weren’t doing great work, but it was just almost easier to keep them on until I started learning how much more I was paying in taxes, and I had someone else do an audit. I had a few people do an audit, and they were just leaving so much on the table. So, it’s tough when you’ve been with them for a long time or they’re a close friend, but I do think it’s important that you get the right group for you. And so, I’m curious, what would you say people need to have in their CPA legal team? What needs to exist?

Mark Kohler: You bet. And by the way, for those listening, I’m going to give you some strategies today. We’re going to get there. I don’t want anybody. We’re just talking a high level here, but it starts here because even if you do have a strategy, it’s like, what do you do on day two? So, we’ll get there, folks. But I like the word to use, Justin, audit. Now, I like to add the word strategy. So, it’s a strategy audit. I don’t need someone to go through my return and go, didn’t you put it on the right line? Did you not put it there? What I want is a strategist to go, oh, yeah, you’re leaving money on the table with this strategy or that strategy. Are you self-directing your IRA? Are you self-directing your Roth? Are you doing Roth conversions, Roth chunking? What bracket are you in? Where are we at on that?

I’ve got a 34-point comprehensive checklist that when we do a strategy audit, we’re looking at 30 to 40 items. So, in that strategy audit, you can then take and go, okay, my accountant is knocking it out of the park or, oh, there’s some holes here. And then you go to your accountant and go, do you want to talk about this? Do you want to realize you might not know it all? Do you want to work with this other team and learn some few things? Maybe you want to go get certified with Mark Koehler and his program and learn a few things.

And I’ll tell you, 80% of the time, they’re going to be like, oh, you don’t trust me? And oh, you don’t, you’re going to question my strategies or my skill set. Oh, my gosh, how dare you? I’ve literally had clients wait and they go, just a moment, and they go in the other room, box up all their files and bring it back and say, we don’t want to work with you anymore if you don’t trust us. The accountants can be that egotistical that you brought them strategy, and Justin, do you want to know something deep? This is deep. I’m going deep with you.

Think about it. If I go to an accountant and go, hey, you know what? Why haven’t I got my college-aged students on a 1099 on the board of directors of my LLC? Well, I don’t even know you could have a board of directors on it. Yes, you can. This is why I’m a lawyer as well. So, we can have a board of advisors with my adult children on that board getting to 1099 while they go to college. I’m getting a tax write-off. They’re in a lower bracket. Get that strategy alone. That’s like one of many of my strategies. Very standard, safe, audit proof, clean, very common among those that have strategy on their return, but you go to your accountant, they’re like, think about this. If you go and bring that, if they say, oh, yeah, we should be doing that, what are they really saying?

Justin Donald: That they missed it.

Mark Kohler: They missed it. That scares the hell out of them. In their mind, they’re going, ding, ding, ding, ding, ding, I’ve got a malpractice suit. I’m going to get sued. I screwed up, whatever, blah, blah. And they go down this path that their only option, well, they have a couple options, but one of them that they often choose is, oh, that’s too aggressive, that you can’t do that. That’s wrong. Because if they go, oh, my gosh, you know what? That’s a great strategy. Let’s get on board. Then, but what is the claim one? You don’t want to fire your accountant, just own it. Just say, you know what? Damn it, Mark, that’s a great strategy. I need to follow this guy or this whatever. And let’s get it on. Let’s do it. Let’s tear it apart. You know what? I’ve been waiting for you to come in. I want to get into some strategy, too. Let’s change our relationship. Let’s have more of an advisory relationship. Come on. Move around the table and sit next to me. Let’s not be across the table from one another. Sit next to me. Let’s get on it. They can’t do it. Scares the hell out of them.

Justin Donald: Yeah, and I can see it. And I’ve experienced that. Maybe not to the extreme there, but I have experienced a derivative type of situation there. And I even had a situation where I said, “Hey, this is something that I’ve been advised that I should do.” Many other people I know were doing it. Many other CPAs are doing it. And he just didn’t feel comfortable doing it. And so, it was either time to walk away. And it was funny because he actually got to the point where he’s like, I think you’re suggesting things that are too strict and maybe we should part ways. And so, it was just a great eye opener.

Mark Kohler: That’s just cop out, right? That’s a safe place because the only other alternative was, he didn’t know.

Justin Donald: Yep.

Mark Kohler: They don’t want to go there, you know? And I never knew that when I started doing a training program for CPAs or enrolled agents around the country. It’s called Main Street Tax Pro. We now have over a thousand accountants around the country that I train weekly, twice a week. They have a certification program, blah, blah, blah. Anybody listening, I’ll give you a link later and you can interview one of these accountants. I don’t make money off of them. With your relationship with them, that’s a relationship you build. They are trained as advisors. They speak Mark Kohler, blah, blah, blah.

But when I started this program over two years ago, I didn’t see this coming. I didn’t see, I thought, CPA is big, like Kohler, great. Mark’s here. He’s got all these great strategies. Oh, my gosh. Come on in. Tell us what we don’t know. That’s not the welcome I got. Now, the younger, hungry accountants are like freaking, hey, bring it, because we don’t learn this on the CPA exam. We don’t learn this in the master’s program. We don’t learn this as an enrolled agent. Mark, we need a tribe. We need a community. We want to learn together. And Mark, please be our fearless leader. And I’m like, I’m there with you every week, learning with you because there’s so much to know here. This is thousands of pages of tax code. Let’s figure it out. Heaven forbids.

Justin Donald: Yeah. Well, I would love to dive into some of the weeds and figure out what are some key strategies you think everyone should take advantage of and what are the ways that we should be working with our CPA, or how do we find the right CPA, the right team, and what needs to exist for us to even consider them? Why should we consider you and your firm, too, Mark?

Mark Kohler: Well, you threw out four different questions. Just getting to weed some strategies. How do you find this person? What should I look for? And how do I know? Okay, those are four. You choose. It’s your show.

Justin Donald: Let’s get into the weeds first.

Mark Kohler: Okay. Let’s draw out three or four. We can unpack these as much as you want. And we don’t have hours on in. For those that have an operational entity, if you’re doing consulting, small business, services, product, online sales, influencer rev, marketing rev, whatever, affiliate rev, any sort of small business where you generate on your income, what are your number one problem is going to be self-employment tax. So, we are going to need to implement an S corporation at the proper time. That could be an LLC taxed as an S corp. It could be an Inc., PC, a PLLC, blah, blah, blah. It’s not something you’re going to go knock out on LegalZoom and think you figure it out. You’re going to have to hit reasonable comp throughout the year.

I teach a payroll matrix on how to do this. This scares a lot of accountants that have a stick up their button or more nervous than they should be about reasonable comp. I teach classes on reasonable comp. I’ve been to every reasonable comp, CE in the country. I teach CE on this. I want accountants out there to know. I’m actually on the board of the state of the AICPA. I am not on the aggressive end of this. And so many people are far, far, far too scared of reasonable comp in the S Corp strategy. So, if you’re not in tune with that as a business owner and understand what you’re doing for reasonable comp and how the S Corp works, and you’re letting your accountant make that call, 90% of the time, they are way, way, way too conservative and leaving your money on the table. So, that’s number one.

Justin Donald: And by the way, just to jump in, I found that most CPAs are scared of the IRS, which just to me means they’re not educated enough on what can and can’t work. And I don’t want a CPA that’s scared in that way where they’re not actually utilizing tax code the way that it’s written.

Mark Kohler: Yeah. I mean, yeah, it’s interesting you say that. What are they scared of? If you’re doing the strategy properly, okay, so the client number comes up. They get audited. You got a reasonable position. We could get into the code and what position an accountant needs to have when they take a strategy on a tax return in order to not even have preparer liability, the threshold is so low. And you can help your client through it and be fine. Holy crap. Yeah, they shouldn’t be scared.

Okay, another strategy, let’s just go on in the investor realm. Oh, my gosh, we could get into real estate. Such an important strategy. We’ve got short-term rentals. We’ve got long-term rentals. We’ve got self-rentals. We’ve got syndication rentals. Each one of those is taxed differently. They’re going to be, whether they’re going to be considered active income, ordinary income. Do you need to be a real estate professional? What is the material participation test? Because I can get around that with a short-term rental and not have to worry about real estate professional. The self-rental, one of the best rental properties is when you rent to yourself. So, if you have an operational business, I want to buy your own building and rent it to yourself. I can do cost seg.

Cost seg is segregation is oversold because a lot of times, people aren’t going to get it. We need to make sure we’ve got the right real estate strategy to get it. So, number two, we’re always going to be talking to our clients about real estate, 95% of my clients, my wealthy clients, some sort of rental real estate. And so, if you think you need to be all in the market, I think you’re going to have a reality check. You’re going to get great tax strategies, real estate. And that’s what rich people do. So, own it. And you don’t have to go out and do single-family home rentals and plunge toilet. Holy crap. There’s plenty of better real estate. There’s so many options in real estate that will fit your style.

Justin Donald: Yeah, 100%. I love telling people that, I mean, a number of things. Number one is that the right tax strategy can make you so much income over the course of the year that can then be invested into. Instead of being paid to the government, it can be invested into buying more real estate, which I think is so important. And there are a lot of great strategies around real estate. And I just think real estate rentals is a huge opportunity. I could go on and on and on, but this has been something that. for us, it’s been a game changer, a total game changer.

Mark Kohler: Yeah. And I’ve got a podcast now with over 500, 600 shows, and we’ve got shows over and over again on the nuances of all these different real estate strategies. I’m sure Justin will put it down in the description, Main Street Business Podcast. Get over there, folks. Now, the third, we’ll throw it. I’m just going to bundle a bunch together here. So many clients leave money on the table with travel, dining, electronics, equipment, all of the expenses that can– office supplies, I mean, anything you’re buying at Best Buy, Apple Store, Home Depot, tools, equipment, especially when you have rentals and to make sure, every time you go to the store, we should be finding a way to write that off unless it’s your groceries or clothing or underwear. We need to be thinking about those alternative uses.

Fourth, let’s throw into their health care. Oh, my gosh, I’m doing a podcast, a show later today, training, let’s call it properly, a training today with over 200 accountants today just on the health care strategies, health savings accounts, health reimbursement arrangements, how to write off health insurance, and bring in health insurance to play on your reasonable comp because I can say, FICA on health insurance deductions inside the S Corp. So, there’s so much to be done in health care. I have a whole chapter in my book on that.

And then I’ll throw out, let’s just go to self-directing. Self-directing your retirement accounts. This is what the true wealthy do. They’re not going to pay taxes ever. We should be converting every one of your retirement accounts to Roth whenever possible through Roth chunking strategies, where I look at what bracket you’re in and getting you there. The mega backdoor Roth this year, I can put over 60 grand in that for a client, and then times two if you’re married. Holy crap. Self-directing, their trust company, Directed IRA trust, the fastest-growing trust company in the country for self-directing with more five-star ratings. And then, all our competition is incredible.

And then I’ll throw out another strategy. And then, Justin, you can pick on one of these if you want to unpack it more, is getting your family on payroll. Family on payroll is so critical. Kids under age 18, kids 18 and older, which do we put your spouse on payroll, when and how? And it’s not always the case. We’re not going to chase Social Security. And all the family members should be on the board of advisors, board of directors. Travel is going to be a write-off. Dining is going to be a write-off, electronics, cell phones, everything. Business is family and family is business. And we need to embrace that. And too many accountants leave out so much money on the table there. So, I mean there’s just six or seven little strategies that we should be talking about.

Justin Donald: Yeah, those are great. And you mentioned something earlier where you said 95% of your ultra-high-net-worth clients have real estate rental properties and that you’d be surprised at how many aren’t invested in the markets. And so, I’ve done all kinds of research here. I share this all the time. But even the newest reports that just came out from the family offices, from JP Morgan, from KKR, from Goldman Sachs, like all of them, they have alternative investments between 50% and 59% of the net worth of the wealthiest people in the US. And so, that means that most of them are generally about 15% to 25% in public equities, though I know a lot of people that aren’t in the stock market at all. But it’s interesting to see that the wealthiest people are putting their wealth, their investment capital into something that Wall Street has labeled alternative investment when it is the single greatest investment vehicle of the wealthy.

Mark Kohler: Yeah, Alt Assets is kind of the street term for everybody. And I know you use that term, Justin. So, we’re holding our third annual Alt Asset summit in October this year. It’ll be in Phoenix. We have a total charity golf tournament after. It will be virtual. We bring in two days. We just parade through different Alt Asset strategies from oil and gas to promissory notes and hard money lending to real estate. The list goes on and on. And syndications, venture capital.

So, if you want to learn more about that, it’s a tax-deductible trip and costs come in with your tax advisor, come yourself, and we will sell out. It’ll be fairly intimate, that 300 or 400 people max, and then online. So, that’ll be in October. So, get to AltAssetSummit.com. And it’ll be like, I think, our biggest ticket is like 500, 600 bucks. Super affordable. And we’ll do some panels with all sorts of financial advisors that are in the Alt Asset arena, which means self-directing because, again, 80% of self-directed assets are in Alt. And that’s where you’re getting 10%, 15%, 20% returns. What do you think about family offices are in Alt Assets? They don’t want to chase an ETF for 8%, people. And you think anything more than 8% is heresy? No. Oh, my gosh, you’ve been brainwashed by Fidelity. Wake up.

Justin Donald: That’s right. I love hearing you say it. And I love that you are exploring all the other avenues and the places that we hear these stories about how the wealthiest people have all their money in the stock market. So, I love that there’s someone else here that’s preaching the message. It is a big lie. But Wall Street and the financial service…

Mark Kohler: They’ve got money for Super Bowl commercials.

Justin Donald: That’s right. They control the messaging. Yeah, they control the education around it.

Mark Kohler: Yeah. Who do you think owns the Wall Street Journal and the Washington Post and Forbes magazine? The people selling Wall Street products, not the Alt Asset people, whatever.

Justin Donald: Now, you personally are a fan. So, you’ve talked about how the wealthy own real estate. You personally own real estate, right? This is something that you’ve been investing in for quite some time. What do you invest in?

Mark Kohler: Well, it’s funny you say that. I might even be dropping by one of my short-term rentals on the way home tonight. We got a repair on a door, and the handyman is sick, and I’m like, I got to get a new thumbtack handyman over there. My property manager, they’re befuddled. Anyway, that’s my happy place, is I love putting on a tool belt at night. Chip Gaines, Fixer Upper, he’s my hero.

So, I love to go demo. And we’ll probably pick up another STR, short-term rental, before year end. We love that space. The tax strategies are incredible, and you don’t need to be a real estate professional. Cash flow is great. You got to be in a perfect market for that and understand that process. I would readily recommend anybody interested in STRs. I’ve interviewed Daniel Rusteen. You would love him, Justin. Daniel Rusteen has two best-selling books on STRs. He’s wonderful. And I just last night was reading through his book on some marketing strategies there.

I also have an industrial building. I love industrial because it’s a triple net lease. It’s going to not get the appreciation of a short-term rental, but you get different benefits for different asset classes in real estate. So, I love the commercial. It’s a manufacturing facility. My short-term rentals are over in Scottsdale. My industrial is over in North Salt Lake. I also have a duplex up in a college town in Idaho. I love college towns. They’re going to give you another type of return. And so, it’s a little up-and-down basement upstairs rental duplex. We’ve got some land. You’re not getting tax strategy with land.

And I’ve got a little low-income housing rental in Chicago that’s held by my health savings account because you can self-direct your health savings account. So, my health savings account owns a little meth lab. I mean, it’s adorable. And it just cash flows great. And when you have a meth lab paying for your health care, you work the system, let me just say it, Justin.

Justin Donald: Wow. That is hysterical. And it’s great because one of the things I love is when legal professionals actually do the things that they teach their clients to do, right? That to me is really important because I’ve had people say, well, you could do this or you should do this, but they weren’t living that out. So, to me, I love getting strategies that are actually used by my legal team. And to me, that gives me all the assurance that I need.

Mark Kohler: Well, not that I haven’t made mistakes along the way, of course, but no, I love talking real estate and the different assets. And we have some syndications, too. So, just own 2% of something or 1% of a bigger fund. But I love crypto, too. I just say, when you said I’d love to see legal advisors that do what they talk about, I’ve got a crypto mine in my Roth and seven video cards mining crypto right now as we speak. I’m getting paid in Bitcoin, mining Solana, and self-directing in crypto, and my Roth and my 401(k) staking as well. So, if there’s a strategy out there, before I talk about it, I’m going to do it.

Justin Donald: That’s awesome.

Mark Kohler: I took my health savings account. Because I’m a big fan of Yellowstone, everybody, get out and watch Kevin Costner’s new movie. He was freaking behind it. He put his own money on that production, and I’m so excited. Part 2 will be coming out later this summer. But anyway, so I set up a company called Kohler Dutton Livestock for you, Yellowstone fans, out there.

Justin Donald: Nice.

Mark Kohler: And I went and bought cattle inside my health savings account in an LLC. So, I had a little cattle operation, which I had a relationship with a rancher because you have a prohibitive transaction for me to go out and manage the cattle myself. So, think of it like a property manager with real estate. But anyway, so it was a great little project. Cows had their heifers, ended up with bulls, actually. And I don’t need to go through the birds and the bees, but they ended up steers. I’ll leave them at steers, Justin. You can think through that. And then, sold them off all at an auction with the pregnant moms and made about a 25% return on my cattle inside my health savings account. And so, I want to let people know you can do this. What do you think? Peter Thiel has 6 billion in his Roth IRA. He started with five grand in 1999 with his Roth IRA. He has 6 billion. You’re like, well, you can only put in 6 or 7. Correct. Yes, but the rate of return is unlimited.

Justin Donald: That’s right.

Mark Kohler: Mitt Romney did this with Bain Capital in Boston inside his IRA. He was putting a little bit of his Roth in every deal. Holy crap, people, you got to get on the bandwagon of self-directing. This is crazy.

Justin Donald: I love hearing that. And we can talk more about that. Certainly, something I thought would be really important because you just talked about doing a bunch of deals. You talked about syndications. And today, we live in a day and age where people who don’t know better are actually investing in other syndications or other deals or other education based on how many followers they have. So, it’s like the influencer credentials, not the expert credentials. And I know you and I have a very similar belief on this. And so, I’d love to just hear you kind of rant on this and the problem with utilizing influencers as experts.

Mark Kohler: Well, I would not– this is a tricky one because I don’t have a problem with an influencer promoting a syndication. I’m cool with that. I will give him a look. Okay? Now, it doesn’t mean I’m going to invest, but they’re going to get my attention. I’m cool with that. Then I want to look at, okay, what’s the underlying investments? How many of these have you done? Who’s on your investment team? What are your monthly calls looking like? And let’s look at your track record.

And so, there are influencers that do it right. I’ve had some on my podcast that I believe in and just because they’re an influencer, I’m not going to discount it, but I am going to look at their underlying leadership team. There’s other people out there that have great leadership teams without an influencer in the mix, and that’s a drawback because they need to raise money. You can’t do the deal if you can’t raise money. And so, you really need that marriage between the influencer and the leadership team. And if you can find that, I think that’s, I’ll even say, step one.

Step two is syndications. You might get the ROI you want on that, but you have to look at the drawback. You lack a control. How are you going to get out of the syndication? And it’s up to the leadership team to decide when they’re going to sell that outside. They might hold on to it for 15 years. How the hell do you know? And you look at your prospectus or you’re not going to have a choice. And number two, you’re not getting any of those pass-through losses.

And these influencers, some of them like to talk about overdo the cost seg. And you’re going to get tax benefits. Really? Because if I get passive losses, they’re only deductible against passive gains. There is no way in hell that’s going to be a write-off against my other income, even if you are a real estate professional. So, we have to be careful with influencers making too big of promises with the pass through on the K-1.

So, I’m not a big fan of syndications, generally, if I can take an active role. And think about everybody, when you take an active role, you’re going to get a better return, but you got to be able to take an active role. If your life is so busy, you can’t take an active role. I’m going to take a syndication over an ETF every day.

Justin Donald: Oh, yeah.

Mark Kohler: But we’ve got to know what the pros and cons are.

Justin Donald: Yeah, that’s well said. I think my disappointment is with the people that represent themselves being experts but have really only been in this space for two or three, more four years. And in some cases, one year, they just picked it up. But I think you’ve got a lot of naive investors, a lot of retail investors that don’t see through that. And they say, well, this person has millions of followers, so they must know what they’re talking about.

Mark Kohler: Yeah, like Bryan Cranston and Aaron Paul, they totally know tequila. And so, I’m on board. I’m behind them. And they’re great influencers and they’re good to go. And I think who’s got, oh, and it’s– oh, I was going to joked about another producer of wine that is doing a great job, but I love it when influencers do pick up products and help take them to the next level if they have the right team behind him. And obviously, I joke about Brian and Aaron and what they’re doing with their tequila, and they’ve got an incredible team.

Justin Donald: That’s so important. The team is important, and whoever the influencer is promoting, you got to do a deep dive on the team. We just released here at Lifestyle Investor our vetting deals course, and it was a full-day live audience where we dissected everything under the sun for real estate deals. And I just think it’s important that you do your homework and you learn how to actually vet deals and vet sponsors and what type of track record you look for. And just because someone did well the last 10 years doesn’t mean they’re actually good. Most of the time, you need to find people that have actually weathered the storm of some financial crisis in the past and have actually been able to do well with it or have learned from it and have kind of created a plan just in case that happens again.

Mark Kohler: Yeah, yeah, I’m with you. Love it. You’re doing a great job. I love your courses. And it’s a unique skill to analyze a deal. You don’t learn that in school. You don’t learn it from your mom and dad around the dinner table. And so, we have to take the time to learn those skills. And I’ll sign up for a class like that. I mean, we never– you just don’t know what you don’t know. And when I started my little network of these CPAs and enrolled agents, really, another fallacy I had was, hey, I’m going to get all these guys and gals in here on a call, and I’ll start training them on my strategies, and they’re going to love it and they’re going to pay me to get trained, and I’ll certify them. Then I’ll send people to a site where they can interview them and find them.

And then within a month, we’re on training calls, and I’m like, “Holy crap, I am learning more from them in this community.” He’s like, “Oh, yeah, Mark, I’ve been following you for years, but did you know you can do this?” I’m like, “No.” And I’m like, “Holy crap.” And all of a sudden, I got so humble and realized I was going to be a facilitator more than a trainer. And it’s been incredible.

Justin Donald: That’s the holy grail right there. I mean, that to me, I mean, that is Lifestyle Investor, as I see it, is that my role is I am a facilitator of brilliant people, brilliant strategists, brilliant tacticians, and that’s it. So, one thing I’d love to do before we wrap up is just have you share what you think people need to have in a tax professional, legal professionals, someone advising you in that role.

Mark Kohler: You bet. Well, do they drink Rockstar? Are they a valid Rockstar? I am sponsored by Rockstar. They send me free Rockstars on occasion. I’m trying to work that in. I don’t fly motorcycles over big ramps or skateboard, but I’m just trying to be an accounting rockstar, so it’s very important. Got to own it. So, what you need to look for an accountant, and then number two, where to find them, they’re so interrelated. What you want to look for is someone that at least holds them out as an advisor. Are they even offering a quarterly meeting and a pricing model that’s not just one time of year? Thank you, bam, bam, boom. Get to tax return, done out the door. That is not the account you need to be looking for.

So, if you’re interviewing someone and they are not already actively saying, I want to be a strategist and an advisor for you, in conjunction with preparing your return, that’s question one. And if they’re not doing both of those, and by the way, it’s probably 60% to 70% of accountants in today’s market don’t, you’re moving on to the next one. Just be nice. Listen to their pitch. Bye-bye. And you know what? Accountants want this. This is why my network is growing because the accounting industry is on fire. We’ve got all the baby boomer accountants literally walking away from practices that can’t sell them, and accounting program enrollment at all the universities is down. And because of the barrier to entry to be a CPA, enrolled agents, I love them. They’re scrappy and they want to learn, but they’ve got so much education to overcome without a master’s in tax. And so, the accounting industry is just starving for someone to pick up the flag and just run through the field and go, let’s do it. And I’m trying to do that and let people know you can become an advisor. There are strategies.

So, number one, you want to be interviewing and finding someone that at least understands that, recognizes it, and wants to be an advisor, even if there– then we’re going to get to where they’re good at. Because if they’re not even trying to be an advisor, you already got an uphill battle. And I know your mom or dad that had an accountant for 30 years, you play golf with, you love him, it’s time to let him go. All right? Maybe your sister that you cook a spaghetti dinner for and she does your taxes on TurboTax once a year, that’s not cutting it either. All right?

Justin Donald: Totally agree.

Mark Kohler: Right? So, then once you start interviewing, you want to ask some easy questions. Just take today’s podcast, for example. Say, hey, how do you feel about the S Corp strategy and reasonable comp? If they look like a deer in headlights or poo-poo it and go, yeah, there’s way too many people out there that are too aggressive, there’s an answer. Your answer is done.

Number two, say, hey, what do you think about putting family members on payroll and on the board of directors and board of advisors? How do you feel about travel deductions with my real estate and conferences around the country? How do you feel about self-directing a retirement account? How about a self-directed 401(k)? Hey, can you explain to me the back door, mega backdoor Roth? How do I get money into a Roth if I make too much money? Because some people say, I can’t do it. Just ask him five or six questions. If they literally can’t answer those questions off the tip of their tongue, you got the wrong person. And if you listen to one of my podcasts for just a weekend, I mean, my podcast channel and get five or six shows under your belt, you’re going to know more than probably 40% of the accountants out there. And so, just ask them some basic questions.

Justin Donald: I’ll just chime in real quick. We’ve got a downloadable document on our website at LifestyleInvestor.com. That is the 25 questions to ask your CPA to figure out if they’re the right fit for you or not, and I think it’s important that you have a lineup. So, use these questions, use those questions. Just have a lineup of questions that you can vet them with.

Mark Kohler: Yeah, yeah, totally. I’ve got a repentance in my book with these questions. But remember, you don’t need them. They need you. And you want to create a marriage between the two. And so, you don’t get befuddled and talked down to and demeaned and pushed around. You’re the captain of your ship.

The third thing I would just say is to find these, just at least do a discovery call with some accountants on my network. You can go to MarkJKohler.com, go to the Tax Pro network. It looks like a LinkedIn profile page with hundreds-plus accountants and enrolled agents around the country. And do not, can I just repeat this, people? Do not worry about them while they’re there in Houston because I got to help someone in Houston. No, you don’t, freaking hey, get someone to speak your language. I don’t care if they’re in Boston or Salem, Massachusetts or Miami or Anchorage, Alaska. If you can get on a Zoom call and have a productive meeting, holy crap, that’s what you want. So, find someone young or old, male or female, big firm, little firm, speaks Spanish, doesn’t, knows crypto, doesn’t, knows real estate, doesn’t, whatever, I have all these little toggles, you can find the right accountant and interview them. And if they don’t float your boat personality-wise, or they don’t jump off the page for you in the discovery call, do another one.

Justin Donald: Yeah, I love that.

Mark Kohler: But at least you’re going to know they all speak Mark Kohler. They have to watch over 80 classes, do over a thousand questions, and get a 90% on it, and meet with me weekly on a training program to stay current.

Justin Donald: Wow. I love hearing that.

Mark Kohler: So, I’m trying to tee it up for you, people.

Justin Donald: That’s powerful. And by the way, without this, without credentials, without a system like this, I do think most CPAs are not what you want, most tax professionals are not what you want. And really, the trend that I’m seeing is people are wanting to move into scaling their tax practice, and the way that most people are looking to do that is by incorporating AI to actually file the returns. And so, you have most of these CPA practices that are going for high volume versus you’ve got these other ones that are more white glove and really consulting, strategizing type of firms where they bring on the number of clients that make sense for the firm. And it’s not about scale, it’s about quality service. And so, I do think that’s an important thing to be looking at right now, too.

Mark Kohler: Yeah, I like the way you said that. There are accounts out there that are scaling on compliance, is what you’re saying, I’ll use another word, and they’re using AI to do it. They’re fine and they’re using foreign country prep, which is fine, but that’s not advisory. And I have clients that are wanting to scale with advisory, and they’re making three times as much money. They’re enjoying the practice. They’ve fallen in love with accounting again. The clients are happier. They have fewer clients and make more money. How is that? That’s a nice equation.

And so, scaling with advisory is what I teach. I have a business builder piece in this. And if you love your accountant, you’re like, I love my accountant, they just need to get over the hump, go to them on bended knee and say, hey, I need this. Go over to MarkJKohler.com, do a demo, and get trained on some advisory strategies. I’m not going to hold you accountable if you’ve missed a strategy in the past. I want to work with you moving forward. But I need an advisor, and either you get there and go get the training on this or I’ve got to go somewhere else, and just tell them that. And if they go, I know it, all right? Really? Are you proactively calling me in once a quarter and giving me strategies? And what about these five or six strategies? Are you going to poo-poo them? Are you going to really talk about them? And they’ll know right there that you know what you’re talking about. So, people, be the captain in your ship. You might have to throw someone overboard, but give them a chance. Get them out on the gangplank and say, hey, do you want to do this or not?

Justin Donald: Yep. And I’ll just follow that up with saying, earlier in my career, I outsourced my tax knowledge, my tax education, and it was a disservice to me and to where I needed to go. And today, I take ownership of educating myself in this area. And really, when I enlist the help of a professional, a legal professional, a tax professional, you name it, I always say to them, “Hey, I of course want you to perform these things, but I want you to teach me what you’re doing as we perform them. I don’t want you to just do it for me. I want to be educated in the process.” And I think it’s important to find people that are willing to do that with you, where it’s a real partnership. It’s an education partnership.

Mark Kohler: Yeah, yeah. No, absolutely. Well, I love what you’re doing. Justin, this is just such a fun conversation for me because I’m trying to just spread the good word, if you will, and the importance of a Rockstar drink at 11 a.m. every day and owning meth labs. What else do we cover? Cows.

Justin Donald: We got into it all.

Mark Kohler: Yeah. We didn’t even get into your fantasy team.

Justin Donald: Crypto, Bitcoin, yeah.

Mark Kohler: Whatever.

Justin Donald: So, Mark, where can our audience learn more about you, get some people reach out?

Mark Kohler: Well, thanks. Well, if you start out at MarkJKohler.com, that’s where our network is. Right there is a link to our law firm. We’ve got now 14 lawyers doing consults around the country every day on Zoom, helping do a comprehensive consult with our 35-point checklist, giving you a game plan, a trifecta, a structure that you can use and take to your accountant, and sometimes your account is not as threatened if a tax lawyer gives you the plan. You may already know you’ve got to make a change. Fine. Look at the network, do some discovery calls, but you can get to the law firm through MarkJKohler.com. It’s KKOS Lawyers. You can follow me on my podcast, Main Street Business Podcast, and then our directed trust company, it’s so important, DirectedIRA.com. And we’ve got a podcast there once a week. And on the website, DirectedIRA.com, look under education, get to the podcast where we talk about the power of the Roth or self-directing. Oh, my gosh, so much. There’s so much.

So, just start getting educated on it. And if I’m not the tax legal guy you guys want to follow, find. Find a gal or guy you trust. Send a link to me because I’ll follow him too. But if you don’t have someone, this is a huge blind spot if you’re not following someone because you got to captain it, people.

Justin Donald: Yeah, and I’d like to sum up this episode by sharing something. I’ve shared this before, and if you tune in regularly, you’ve heard me say this, probably shared it once or twice, but I want to share it again because, when I keynote, I off it, like the number one question that I get and I address this early on in my keynote is what’s the best investment I’ve ever done? All right? And people ask me this all the time. And so, in my keynote, I’ll say, “Hey, who here wants to know what the single best investment I’ve ever done is?” And everyone raises their hand and it’s like, well, what do you think it is? Real estate, private credit. I mean, actually, very few people know what private credit is, but lending, whatever.

And then, all of a sudden, I say, all right, well, what if this is something that you can do, you can do yourself, you can do in partnership with someone else, but everyone here can actually do this. And they get excited. And I say, the number one investment that I’ve ever done is world-class tax strategy. And then, it’s like people don’t know how to respond. But then I give some examples of like $30,000 a year for 10 years, compounded at 15%. You’re talking over a million bucks, but you do that over 30 years. You’re talking $13 million. It’s profound. So, I just really want to encourage everyone to make this a priority. Reach out to MarkJKohler.com. Learn more about what he’s up to.

And I like wrapping up every episode with the same question that I ask each week. And that is this. So, this is to our audience, answer this yourself, but here it is. What is the one step you can take today to move towards financial freedom and move towards the life you truly desire that’s on your terms, not by default? So, think about that. Think about something you can take from Mark’s message today and implement it immediately. Thanks, and we’ll catch you next week.

Mark Kohler: Thanks, Justin.