The Tax Loopholes You’re Missing - Carter Cofield
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If your tax strategist can't tell you before you hire them how much money they're going to be able to save you, walk away. Because we work with all of our clients for free. I know how much I'm going to save you before I pay you. So I'm an investment more than I am a call. Yeah, I always say that. I say the best

Attorneys and accountants should save you money, not cost you money. It's an investment. So if someone's listening that's in that income bracket, they're maybe doing a mil or two a year growth, and they're taking home three, four, five, six hundred K, what are some other more advanced things they're not thinking of? Spending money for deduction is just awful. But investing money to get deduction isn't even better. Another strategy that I think is big in today's space is...

My name's Rudy Moore, host of Living the Red Life podcast, and I'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in Wonderland and change your life.

what's up guys welcome back to another episode of living the red life today we're going to talk about your favorite topic taxes i'm here with my friend carter he is one of the top tax experts you've probably seen him on social media with the viral reels but here we go let's talk taxes welcome to the show buddy happy to be here brother so

Fun topic. Yeah, fun, right? Yeah, yeah. I don't actually mind it because I've learned it. Yeah. Your job is to educate entrepreneurs like me 10 years ago that had no clue what the heck to do with taxes, right? So how did you get into this? Well, so it was funny because we all want to make money, right? And so when I...

Started working corporate America in the tax field Our clients will make a lot of money, but they were really upset because they were paying a lot of money in taxes So I learned very early on that's not about how much money you make

It's about how much money you keep. Right. And so I decided I want to leave corporate America to start a company where I can just help entrepreneurs save on taxes because we work the hardest. We put our butt on the line. We do everything. And then a silent business partner says, hey, you made a million. I want to take 50 percent of that. So and that's not fair. So I found out we can do two things. We can get upset about it or we can get smart about it. So that's what I decided to do.

Yeah, I think there's this like general misconception of taxes that they're all bad, terrible, blah, blah, blah. But it's just like it's kind of the famous saying, right? There's two parts of life that are for sure death and taxes. Right. So once you accept that you're going to die and pay taxes. Yeah. Then you just got to figure out how do I legally maximize, you know, my tax strategy. That's the thing. One of my favorite quotes is that.

We should all pay what we legally owe in taxes. Let's not leave a tip. Yeah, right. You know, a lot of people are tipping the IRS unwillingly or unknowingly because they don't have a tax strategy. And that's where I come in. That's where me and my team comes in because there are strategies that we can implement to make sure you minimize your tax bill. And that's what our goal is. Yeah, I kind of...

I think I'm pretty good in business at like hiring experts and the right people. So as soon as my tax bill started getting over like six figures, I was like, okay, I got to go see someone. And you know, I'm lucky because I've been in masterminds for eight, nine years teaching Facebook and marketing. So you, you always meet a lot of really successful people there and they intro you. And, and I learned so much in the last few years. Like I went down a rabbit hole, studied it a little, um,

And now, you know, I know how to really navigate it. But if someone's listening and they've not done that, what are a few just like intro tips on like understanding taxes and entrepreneurship?

Yeah. So intro tip is understanding that the IRS says any expense that is both ordinary and necessary for your business, you get to deduct. So it's up to you to define if something is ordinary or necessary for your business. So if you buy a drone, a lot of people, that's a personal expense, but you as a marketer understand that a drone is a perfect way to shoot amazing content for your business. So now we are in this position of shifting personal expenses from our personal expenses

books to switch them to business expenses, which the IRS gives us

a tax deduction for these expenses. So I think the simplest level is what am I already paying for personally that I can turn into a business expense so my business can start paying for it versus me having to pay for it. So I think that's the base level for people to understand. Yeah, yeah. And I've seen that like with members and stuff. They tell me what they're paying and buying. I'm like, yeah, I mean, you're using, are you using that for business? Yes or no? Yeah, yeah. Yes, you are. Okay, well, well then it maybe should be a business expense. And I think the other thing that I learned, like,

over the years with taxes is um you know a couple of tips like splitting bank accounts obviously first thing and then just being smart with cards and how you're spending stuff like uh being conscious of okay i'm on ebay to buy this macbook that's going to be for my office with streaming live content i'm going to use the business card and then okay now i'm buying a

you know, blah, blah, something for my house, a pair of trainers for me to wear personally. Well, that's personal trainers. But now next week I'm buying red trainers for a photo shoot. Well, they're just intended for this photo shoot for my business. And that's the next thing. Yeah. So you have to...

So I love what you said because you determine on the front end, right? Before you spend the money, is it a personal expense or is it a business expense? And then use that card for it. Yep. Right. So now that we understand the basics, we can expand and get a little bit more creative. So one of the most profound examples that we've seen in our company recently of somebody turning a potential personal expense to a business expense was the following. So our client was in the coaching space, high ticket mastermind client. He wanted to purchase a yacht and it was expensive. Yeah, it was going to be about three to four million.

And he came to us and said, is there a way that I can write this off in my business? We said, yes. If you're buying the yacht for the pursuit of income...

You can't. So his mastermind program, I think, was $50,000. And then he added a monthly yacht experience to it. So he took his price of mastermind from $50,000 to $75,000 just for adding the yacht. And that's literally the pursuit of income going from $50,000 to $75,000. That is why he's buying the yacht. So he purchased the yacht and he ended up selling like a $10,000

tickets to that new mastermind immediately. So that's $750,000 of income. And he takes his clients out on a boat every single month, has the log, and now he's able to write off a portion of that yacht and all the expenses that come with it. So that was a million plus dollar tax deduction for him getting that yacht. Yeah. And I mean, just to add to that, like what I started to learn is a lot of it is common sense and segmentation. So common sense is

Am I using it 70% of the time for business? And can I prove that? Great. I can write that amount off, right? And then also segmentation, like, you know, if you want to be really clean, my understanding at least is, well, if that's in a new LLC bought by the LLC for the yacht rent, like if you were doing yacht rents. Yeah, exactly. That would be the cleanest way to do it, right? But we...

Entrepreneurs don't always know that so we buy with our personal car and we have to try and justify it Then we get audited on the back foot. Yeah, so I and I have been audited. I paid zero in fine fine. Really? Yeah. Yeah. Yeah, so you're stuff is hi I spent 30 grand with attorneys. Yeah, okay, you know explaining it all in six months, but yeah, I paid zero in fines Yeah, but that actually taught me like a lot because

Because there's so much to prep when you get ordered to. And we had most of it, but it's like hunting it down. Yeah. So now you get on the front end, so the back end is a lot easier. Yeah, yeah. But the first time we weren't. So if you're listening, I mean, wow, Rudy's a tax expert. He's like an expert in the school of hard knocks. Knocks, right. Which is sometimes a really good school. Especially at young age. Yeah, I'm 33. So now for the next 20 years of business, I know. Yeah. But...

But yeah, I think it's so needed, especially once you're, you know, once you're earning over half a mil or even two, three hundred grand net. Yeah. Like that's when you can get more creative with, you know, tax strategies that are, of course, legal. But I think it's so important. So if someone's listening in that income bracket, they're maybe doing a mil or two a year growth and they're taking home three, four, five, six hundred K. What are some other more advanced things they're not thinking of?

- Yeah, so I love that. So two things I like to let our clients know that's in that price range is that spending money for deductions is okay, but investing money to get deduction is even better. So we tell them the more you invest, the less you pay the IRA. So setting up some specific self-directed retirement plans, solo 401k is my favorite if you don't have any full-time employees in your business, you can put up to $69,000

And you can invest that money and you will get a $69,000 tax deduction for doing so. You bring your spouse into the business, it doubles. Now you get $138,000 tax deduction for investing $138,000. If you don't like the stock market, cool, we can do a self-directed version. Now we can invest in crypto. Now we can buy other businesses. Now we can do whatever we want. That's how Peter tells me. That's such a good one because I learned that a few years ago. So it's like basically just to break that down, if you're listening, you

You finish the year, 400K in profit. You have 200 grand sat in your bank account. You can put some of that money into an investment fund that you still own and control. And then you can now use that money to then go and invest in a new business or something that you were going to do next year anyway. But now because you're doing it as an investment vehicle versus leaving it in your personal bank account, which most of us entrepreneurs do, we would just take the money back out next year. Exactly.

But now we've lost 40% of it because we pay tax. So it's so important that one, once I learned that one, it's a great one. Yeah, so that's...

a self-directed solo 401k strategy. Another strategy that I think is big in today's space is a lot of companies, especially in the consulting and coaching space, they need to have some type of media to their company if they want to grow. So this strategy is called the self-rental strategy. We did this for our company. If you were to purchase a building, let's say it costs a million dollars, I'm using that for math purposes, and we bought a building to turn into a content studio, and then we leased that building

to our business. It's called the self-reinforcing strategy. We can do a cost segregation study and write off 30% of the value of the building in year one. So we went and bought a million dollar property for our company and we got $3,300

$310,000 tax deduction for a studio that we already had to use. And we were able to put like 10% down. So we exchanged $100,000 for a $310,000 tax deduction. And then now we're going to obviously next year rent out the studio to other content creators and things like that. And I think the key there, because people have missed it, but I learned this too, is you get a million dollar place, you get a $300,000

cost seg and ride off but the key part that you brushed over is you only put 10% down yeah so you're putting 100k in to get a 300k deduction and if you pay 40% in tax yeah you're actually making saving about 40 grand physically the taxes plus that 100k went into a property that you now own that's going to go up in the value yeah right so so and we've started doing that and and

Now I married my wife's real estate. - Are you serious? Can you explain that? - That's huge. - That's the Trump strategy. - Yeah. - That's the Trump strategy. I learned that too. So if you, again, I'm not a tax expert. This is not tax advice, et cetera.

speak to this guy i'll prove it though i'll prove it yeah but if you're married and one of you is uh spending over 50 of their time as in real estate and full-time real estate professional and i mean you have to log minimum 15 hours a week or something we log in a spreadsheet and track what she does uh again because i've been audited yeah i was happy dude you're fucked up brother

Then, you know, and now we buy real estate, then we can do a cost seg. And because you're a full-time real estate professional, you get like what's called accelerated depreciation. So you can write off more in advance versus a normal person is my understanding at least. Absolutely right. And I think the biggest part about having the wife be the real estate professional status is that

If that wasn't the case and you were to buy a long-term rental, they would cap your write-offs at 25. Yes, exactly. But now there's no cap on your write-offs and you can buy two, three properties. Let's say you bought a $3 million property. That's a $900,000 tax deduction and you're building your real estate portfolio at the same time. So that's huge. Yep. And another good one that we've used a lot is

I rent very, I own or rent very expensive places to live on the ocean, you know, penthouses. And we run mastermind events there, VIP days there, staff days there. So we do what's called the Augustus. We use the Augustus rules. So we get, I mean, 11 or 14 days, 14 days a year. Um, and basically we do comps against the Hyatt hotel next to us and nearby. And,

We get a quote from them that say three thousand dollars a day rental. We save that and then we bill 14 times free Thousand and then we can actually write that off as an expense too So that's a big one because a lot of people don't know that. Yeah, I don't know who's teaching this me or you man But yeah, so the augusta rule just to clarify so people know how to do it at home You can legally rent out a property that you own to yourself for business and the other key problem went to this hurtful one is that that

you know, you get $3,000 a night times 14. It's about 45 or something. Yeah, so let's call it 45,000. That's tax-free income to you. And that's also a tax induction for your business. So it's a double...

It's a double win. I got one more. Is that okay? Yeah. And I would just add to that. If you're going to do it, again, not a tax expert, but my advice or what I've at least done is log the days in a spreadsheet and then we film each mastermind day. So we have plenty of proof. We never need to prove on that day what happened. We're filming the eight-hour mastermind event so we can say, yeah, here's the- Here's the eight-hour proof. You want to go through all of it? Yeah.

Another tip there is that if you strategically do your masterminds around high season, you go from 3,000 a weekend. Exactly. So the days matter. So we tell our clients to do is look at the days in your city that a big event is coming. So we had a client do it in March.

um phoenix when the super bowl or art basil in miami this weekend right or that yeah or that so so absolutely so those are some huge strategies a way to increase that and i learned this the person that taught me a long time ago told me a funny story i don't know if it's true but

Basically, all the politicians invented it because they owned houses on the Augustus Golf Course and they wanted to rent it out in Augusta. So they created this tax rule for them. Yeah, those tax rules come from people of wealth that have stature to actually get things done. So they were getting $100,000 tax-free income because the properties of Augusta go absolutely crazy. Yeah.

Good. So we took some sexy, you know, advanced strategies. I think they're super cool. And of course, you know, they should all be done legally and correctly. Don't make it up or scam. We're not obviously suggesting that and it should be for genuine purpose. Attack strategy done 50% right is 100% wrong.

Period. If you do a half-ass, it's not going to work. So it's either done 100% right or it's 100% wrong. I want to be clear on that. Yeah, and we always, for me at least personally, if I want to buy something or write it off or understand it, even before I buy it, if it's a big purchase like a boat or something, I'll say, hey,

this is what I want to do and how I want to use it for my business. And then I'll go to my tax expert or whoever, accountant, and I'll say, how do I do this the right way to make it clean? And again, you know, I sound very organized, but for four or five years, I wasn't as organized and I had to go back and catch it all up and hire, spend a lot more time cleaning it up. So I've just learned from people way more successful than me that get it clean up front, it's going to be a lot safer and easier and

more efficient 1000 so next couple of questions for you people are listening they're like holy cow there's a lot to this yeah how do they fight and you know for a few years i hired terrible cheap people messed it all up had to redo it refiled absolute nightmare and i know most people listening and going through that how do you find someone good

Well, you can just reach out to our company. If you find me on Instagram, coalfield underscore advisor, shoot me a DM. Let me know that you need some help. We have a team that will get you on a call with our team to hire us. But I mean, if you're...

tax strategist can't tell you before you hire them how much money they're going to be able to save you walk away because we work for all of our clients for free i know how much i'm gonna save you before i pay you so i'm an investment more than i am yeah i always say that i say the best attorneys and accountants should save you money not cost you money it's an investment yeah absolutely yeah and i think another like general vetting practices i would love your opinion but like

I actually, obviously I know a lot about it now, but I'll quiz them on a couple of these things. Yeah. So if I'm using my house for, yeah, I've had my guy a long time now, but I guess if I was approaching it again, I'd be like, if I was using my house for a few weeks, a couple of weeks for business and events,

"Can I do anything with that?" And if they say no, I'm like, "Okay, next." - Yeah, yeah. - So I think it's like, what's some good questions to ask, I guess? - You have to have some background in tax strategy or whatever you're trying to hire for because educated answers only come from educated questions. - Yeah, yeah, yeah. - So the better the question, the better the answer. So I would ask them,

What are some strategies I can use to save on taxes with my family? There are so many tax strategies. Hire your kids, hire your spouse, the spouse of Lupo. So I would ask them, how can I leverage my family to save on taxes? How can I leverage my home to save on taxes? And what are some tax strategies that I'm not currently doing that you think you could help me implement? All these are open-ended questions to make them fill in the gap. And one good one, too, is I always ask, what's your biggest problem?

client net income. Because if you're the biggest client, I moved a accountant one time because he literally said to me, oh, you're the highest earner out of all my clientele. I was starting to ask him to do these advanced things. I was learning from other people. Yeah.

And then I was like, that's a big problem. You're the experiment now. He's like, I don't really know about it. I'm teaching him like the conservation easements. Yeah, yeah, yeah, yeah. These things, right? So I love that. So last couple of questions we wrap up today. We talked a lot about taxes and all the tax stuff, but you've built big companies too, right? And big successful companies. I would love a couple of tips more on the building of the business side. You've

you know, hundreds of thousands of followers and views per video and the social media side. So two questions, business tip, give us a top business tip and then top social tip. Okay. Top business tip is if you want to go fast, go alone. If you want to go far, go together.

Love it. Right. And I had learned that the hard way. I was a hard nose. I can have everything on my own and I have to find the right team of people that can support me to build a bigger vision. You can get to a million dollars a year kind of on your own. But you're trying to get to eight, nine figures. There's no way you're going to do that without a team. So hire the team. I think the best personal advice I got was if you do what is easy, your life will be hard. If you do what is hard, your life will be easy. Right. Let's shout out to Les Brown.

Because so many times early on we like we start a business. They were like this is hard like this sucks I don't know what I'm doing. I'm stressed out what that's okay because if you take care of the hard stuff now The rest of your life is gonna be so much easier later. So That's one thing that I really harp on and then if I could add a bonus, you know, um When it gets hard get happy and I'm always at this easy because when it gets hard

After you get through it you gonna look back and anybody who wants to have what you have they have to go through that gauntlet too So it goes from poor me to poor everybody else and fucking try to catch me. You know what I'm saying? The way I always explain hard things like I used to computer game a lot as a kid Okay, and I always say the hardest thing you're facing is like the end boss of the computer game level, you know in played places Yeah, yeah, yeah, yeah, yeah, you have to kill the boss to get to the next level right? That's how I've like learned to consume business. Yeah, and I think I

I think successful people have coping strategies like that. They're different for everyone, right? Like that's your one. You just said my one's like, okay, I'm facing the big boss on the end of the level now to get to the next part of the game. And it's true. You know, I always say boxers are...

used to getting punched in the face every day and you have to learn in business it's just the same yeah right so last question on social media too yeah you get millions of views on your content what are some social media tips show up every day and i'll give you a story on that because i didn't take social media seriously to my a good friend of mine gave me this analogy i said she posts she posted every single day three times a day and will live every day for a year wow i said

Why do you commit so hard? She said, okay, Carter, if it was the NBA playoffs and you turned out ESPN and they weren't playing a replay, how would you feel? I'd feel upset. She said, okay, what about day two? You missed the game. You're working. Did they have the replay set?

I said, no. She said, how would you feel? I said, really upset. She said, what about day three? You go to ESPN, they don't have any of the recaps. I said, I'll probably stop watching ESPN. And she said, that's how your followers feel when you stop showing up. That's good, that's good, yeah. And I was like, wow. Especially as a sports junkie. So, like, if you stop showing up for people, like, they will stop following you. They will stop consuming your content. So, that's how it made me show up every single day. Yeah, we're pretty good at that. Like, probably not as good as you, but...

but it's funny 'cause I have a big community and they'll ask me this and then you pull up their profile and they posted three times in the last month, right? And they're like, how do I go viral and get following? And it's like, guys, it's foundations, right? You can't be the next LeBron if you play basketball three times a month, right? Like they're playing three times a day

they're the best players in the world and that you know so there's so much in business i think it's that so last actual last last question how do they find you if they want tax help tax advice see more of what you're doing yeah so our company's uh name is melanin money so on youtube is where our main focus is we put out content three times a week um so they can call melanin money on youtube um and they get my social media personal handle is cofield underscore advisor where i give out

three tax tips every day. And if you don't see free a day, make sure you call it. Call me. Call me. Let me know I'm slacking because I show up every day. Yeah, good. Love it. All right, guys. Well, that's a wrap. Hopefully you got some inspiration there to learn more about this side of business, which is often ignored and so important and some good tips. And hopefully you can make tax year a little better next year. Until next time, keep living the red life. I'll see you soon.