On this episode of Investing for Freedom, Mike talks to Casey Meyeres, a tax expert at ProVision Wealth. Casey gives you all the information you need to legally maximize your earnings by paying as little tax as possible. Casey also gives some insight as to what he sees coming with the Biden administration in the coming years and how it will differ from the Trump administration.
“If you’re paying zero tax and you’re a successful entrepreneur, you’re doing exactly what the government wants you to do.”
FIND | CASEY MEYERES:
Text the word TAX to 480-531-7519 to get some tips and tricks
ProVision: provisionwealth.com, 480-467-4400
HIGHLIGHTS:
0:00 – Intro to Casey Meyeres
2:06 – Casey says his wife has had the biggest impact on his life
3:33 – Joining ProVision is the one thing that has had the biggest impact on his life
5:39 – Casey talks about his greatest setback and what he learned from it
8:59 – Casey shares the advice he finds himself sharing the most
13:25 – Casey talks about employees and says he wants to hire as many as possible
14:12 – Everyone can do a tax return and Casey touches on the process
19:04 – Casey says it’s really hard to do retroactive tax planning
21:30 – Casey talks about depreciation and why property owners should do cost segregation studies
25:32 – If you’re paying zero tax and you’re a successful entrepreneur, you’re doing exactly what the government wants you to do
28:58 – Casey explains bonus depreciation
31:28 – Casey looks at the IRS tax code as a manual
33:32 – Mike talks about how his son Dylan took advantage of the tax code with his wake surfing
35:02 – The tax code will change quickly because it’s easier to change than the law
41:04 – What to expect with Joe Biden
49:42 – Casey talks about what’s got him excited for the future
51:24 – What is something that people leave on the table that’s legal but CPA’s tell you not to do?
FULL TRANSCRIPTION:
Mike Ayala: Thank you for joining me on The Investing for Freedom Podcast. Today, we have a really exciting show that I’ve actually been waiting for a while to get Casey on because he’s just a wealth of knowledge and experience and just super excited to bring him and his background and everything that he knows to you guys. I think it’s going to be a lot of value. I’ve been working with Casey for, gosh, I don’t even know. I was thinking about it before we hopped on here. I think it’s been five or six years. Yeah. Maybe even longer. I was trying to think back to when I sold plumb line and I know you guys came on right around then, and so yeah, might even be six or seven years. But anyway, Casey Meyeres is my CPA with Pro-Vision wealth and you know, a lot of times we think about you know, making more money and just, you know, how do we buy more properties and how do we earn more income? And I love what Casey says, because I think one of the fastest ways to create more income and create more wealth is to pay less in taxes. And so, and in doing that legally, right, so we don’t go to jail. So Casey, I’m excited about the conversation and thanks for coming on the show.
Casey Meyeres: Hey Mike, thanks for having me on. I appreciate it. And really, I’m here today to kind of talk about taxes and wealth building and any other relevant topics you have.
Mike Ayala: Well, we’re going to stay with the show format. So guys, I’m going to take you know, Casey, through the four questions. We’re going to find out a little bit about his background and then we’ll dive into provision and what they do and how they add so much value to the world. So Casey, who has had the greatest impact on your life?
Casey Meyeres: That’s a good question. I would probably say my wife, so she’s probably not going to be listening to this so I can say it and give her kudos for that. But you know, I met her when I was 17 and you know, we got married, I think when I was like 25. So we were together as friends and that, you know, well through college and that kind of stuff. And as far as like, you know, direction, moving to me forward, you know, I grew up in a family that besides my older brother there was no college graduates. So, I come from a line of you know, we work hard, a lot of construction in the background, that kind of stuff. So, you know, kind of similar background to you Mike, but I knew from an early age, I grew up in Phoenix and it’s really hot in the summertime, so I did not want to work outside. So I do going to college was the best route to go. And, you know, as far as my wife she’s been there from the very beginning and you know, we have a great partnership together. So I would say probably her.
Mike Ayala: That’s awesome. Congrats. How long have you guys been married?
Casey Meyeres: So we got married in 1999, so I always do the math, but it’s in June it’ll be, I guess, 22 years.
Mike Ayala: Yeah. Yeah. So we just celebrated our 22nd anniversary last weekend. So we’re right there with you. We got married in May of 99.
Casey Meyeres: Okay. June of 1999, that’s funny.
Mike Ayala: If you could narrow it down to one thing that has had the greatest impact on your success, what would that be?
Casey Meyeres: So really, I would say probably joining prohibition. So prior to prohibition, you know, I went to university of Arizona. I graduated, I got my accounting degree, finance degree looked at different options as far as do I go the finance route. Do I go the accounting route? And I ended up with a CPA firm and kind of going the traditional CPA route, which is, you know, you basically put in 10 to 15 years to become a partner. And then, you know, 25 years you retire, and you know, life is happy. So prior to joining Pro-Vision in 2012, I was working for Deloitte. So at the time it was the world’s largest public accounting firm. Great experience, great knowledge base, great set of people that you’re dealing with. But I mean, you are an employee, even if you become a partner there, you still have, you know, essentially shareholders that you have to report to. It was really definitely that employee mindset. So coming over to provision, it was you know, we focused on entrepreneurs. And so, you know, kind of switching the mindset from employee, this is what you do to entrepreneurship. That really kind of shifted my thinking. And, you know, since joining Pro-Vision, I was a partner. And then me along with some of my other partners became equity partners of it. So, you know, going from employee or even a profit partner to, okay, I’m going to own the company, that’s the biggest mind shift. And you know, kind of seeing the potential opportunities out there as far as being a business owner versus being an employee, kind of, not only does it build wealth, but you know, there are hundreds of ways to lower your taxes just based on, you know, being an entrepreneur versus being an employee. So that’s, I would say probably the biggest shift.
Mike Ayala: That’s cool. I love it. What was your greatest setback and what’d you learn from it?
Casey Meyeres: Greatest setback. I guess setback as far as just, you know, so my son is graduating high school tomorrow, actually. So he’s kind of putting this journey in front of him. And he’s, you know, he’s kind of has grown up differently where, you know, we have, you know, we’re okay, we’ve never gone hungry, anything like that. So I would say for me, kind of navigating the world that you know, I had no customization to, you know, going to college was just something that I was supposed to do or thinking about doing, and then just kind of jumping in into the world. So, you know, through that time, there’s been, I was telling my son this the other day too, I was, I created my own internship at an automotive company. So they had a job fair down in Tucson. And I was looking at sales or finance and accounting, different positions. I started talking with the sales manager at a big automotive chain in Tucson. He’s into sales. I said, great. I have no ambition to do any kind of sales. So we just started talking kind of going through things anyway, you know, that half hour. And he was like, well, here’s the controller. I’ll give you his number, call him up and see what you could do. So I created, I called him up and then he’s like, well, we don’t do any internships or anything like that. And I’m like, well, that’s fine. I’ll, you know, I’ll do a job. He’s like, well, we don’t have anything open. I said, well, you know, this is what I can do. I can jump in and do this, this, and this. And so I created my own kind of internship, paid internship cause I definitely, I was paying my way through college. So I wanted to make sure I was making money when I was doing it. But created my own kind of internship for the last year and a half of college before I graduated. I ended up getting fired from that job and it was not because I was doing a bad job or anything like that, that the assistant controller really wanted to force me out of it. So he kind of talked with that you know, once Casey graduates, he’s going to be leaving anyway, we’ll move an office location. So, you know, really, we don’t need Casey around. And so I got fired, went home and, you know, I guess texting with my wife April. We weren’t married at the time, but I got home and I’m like, geez, you know, never been fired in my life. I’m a straight A student, you know, I tell you about the book you know, do everything right. And so, you know, kind of lost at that point and, you know, huge ego blow. So, you know, I waited a couple hours, calmed down, picked up the phone called the controller, the guy that makes the decisions. And I’m like, you know, this is not right. You know, you might’ve heard some things and this, but you know, I do a great job for you. If I’m not doing a great job, let me know, you know, I’ll walk away. But anyway, long story short, I came back the very next day. We’ll find a spot for you. They created the desk for me and, you know, it ended up when I did graduate, I had to go different things, but you know, just kind of that ego blow of like holy cow, you know, that’s and then what do you do from that? So, I guess that would be my biggest setback.
Mike Ayala: What is the piece of advice you find yourself sharing the most? You probably have a ton of them.
Casey Meyeres: Right. I know it kind of depends as far as, I think the biggest thing when I talk to clients that call in, or potential clients they’re in, it’s tax and wealth, they’re successful in what they’re doing, whatever business they happen to be doing, whether it’s real estate, whether Amazon sales, whether it’s being a doctor, whether it’s whatever service or whatever business they’re doing, they’re great at. And they don’t really think about too much besides that business. So when I get on the phone or zoom call or in person, meet with them and kind of go through and just talk about like strategy, as far as, you know, what do you plan to do in five years? What do you plan to do in 10 years? What are your current taxes that you’re paying right now? Most of them have no idea, except for the fact that they’ll say, you know, April 15th, I had to write a check for a hundred thousand dollars or something to that. That’s really the extent of what they know. So I try to, you know, help them see the big picture. So, you know, they might’ve written a check for a hundred thousand dollars, which is a huge blow, but maybe that’s all they owed, and they made a million dollars. So at 10%, that’s not too bad. So trying to, you know, help them put together a plan as far as thinking about things. And then, you know, really with that plan, trying to build wealth, reduce their taxes and look for ways to redeploy those tax savings into future investment vehicles that are going to grow well, but also help lower your taxes. So I guess that’s the biggest thing is just taking a step back. And instead of working in your business, you’re looking at it from, you know, kind of a CEO perspective. Not only your business, but life of, you know, which direction you’re leading.
Mike Ayala: That’s so good, man. You know, I was sitting here thinking like, where do we go from here? Because there’s no way we can even scratch the surface in 45 minutes. And so I’m sitting here thinking not to put you on the spot, but maybe, you know, maybe we could like once a quarter or once every six months or something just have like a 20, 30 minute like state of the union update. Like just kind of because there’s just so much we could talk about. But before we go into your background, when you were just talking about that, it made me think about something that I’ve been, you know, really just like thinking about a lot lately, but also sharing a lot. It’s interesting as real estate investors, which a big portion of your clientele is real estate investors, business owners, entrepreneurs as real estate investors, like all day, every day, we’re just looking at return on investment, right? Like, okay, if I put a hundred grand into this million dollar property and it produces, you know, let’s say you put some debt on it and it produces, you know, $10,000 a year or whatever, or even if it’s a house or whatever, it doesn’t matter what the asset is. But if I have to put a hundred thousand dollars in and I get $10,000 a year, here’s my ROI. I’ll do it all day long for a 10% cash on cash return. So we’re always thinking in terms of like, if I invest a hundred grand and I get 10 grand back, I’m happy. But I’ve talked to so many business owners lately that really struggled with investing in employees because we can’t think of that through the same perspective and taking it a step further when you were talking, I realized that as entrepreneurs and investors and business owners, it’s the same thing with our accountants, and our attorneys and the external team members that we hire. Like, we have a really hard time of putting an ROI on your guys’, like skillsets and knowledge and ability. And the other thing that I was thinking about this too, and then I’ll just leave it for you to comment on, there’s just like, we’re ingrained to just like invest in the stock market, you know, give these wealth advisors, your 401k and just, you know, set it, and forget it until you’re 65. We’ve also been ingrained to just pay taxes. Like it’s just something you do, right? Like the government gets theirs first. It comes out of your paycheck. So we’re taught to go to school, get a job, you know, work till you’re 65, put your money in the stock market. And we’re also taught to just ignore the taxes that come out of your cheque And so I think when you were saying that, like you talk to entrepreneurs all the time and we don’t really actually know what the ramifications are on the taxes, like we never actually even build that in. It’s almost like we’re numb to it.
Casey Meyeres: Definitely, definitely. And I’ll kind of touch upon your first point before, as far as expense versus investment, looking at your employees, you know, if you have an employee and you pay them a hundred thousand dollars a year, okay. Some people might look at it and say, well, we can’t hire any more employees. That’s an expense. We don’t have that, to me I would look at it as far as well that hundred thousand dollar employee, hopefully they’re going to make you 120,000 on top of that. So maybe, you know, 220 versus their hundred thousand, now you’re 120,000. To me, my question, would be, you know, I can’t afford that expense. It’s how many employees can I hire? You know, I mean, if I’m going to make 120,000 on a hundred thousand dollar employee, I’ll take 10, I’ll take 20, you know, how can we scale that up as quickly as possible? And so when you, when you go that, you know, kind of that same philosophy towards your service providers, whether it be attorneys, whether it be accountants, you know, everyone can do a tax return. Tax return is really just kind of a product. Whether or not that product is good or bad, it’s debatable, but as far as, you know producing the tax return, getting it out there, something quick, easy that you end up paying, you know, $50,000 more in taxes. You know, if someone’s looking at paying $500 for a CPA to do their tax returns, because they’re, you know, the next guy was going to charge them $2,000. They, you know, they think, Hey, I saved 1500, but if they don’t realize that other 50,000 was in the background, you know, it’s really short-sighted. But, you know, trying to get our clients to think past that, that’s why, you know, typically with our clients, we bring them on board, and we make them do, you know, tax reduction plan where we sit down with them and say, Hey, over these, you know, 4 to 10 meetings, however complicated your situation is, we’re going to get to know you, we’re going to understand your situation. And we’re going to tell you, you know, you do A, B and C, you’re going to lower your taxes on each of these things. So it’s really a process as opposed to someone just calls up and you know, I recently got a few phone calls before it was May 17th was the deadline this year. Cause IRS pushed it back a month to the COVID, but get a phone call someone two days before the deadline. Hey, can you do my taxes? I mean, I could, but it’s not going to be good. So you know, at a minimum we can extend you and then look at it. But those, you know, those clients are just looking for something, a product, a good, something that the end of the day, without giving much thought or, you know, strategy behind it. So, you know, with all of our clients, we take them through a process. We get to know their situation, look at their tax opportunities that are there. And you know, if a client comes to me and they have, you know $50,000 W2 job, they invest in their 401k plan. Probably not much that I could do with them if that’s all they have. And if that’s all they want to do, if they were the same $50,000 W2, but Hey, you know, my wife is going to get into this. My spouse is going to get into this. I’m going to start a business. I’m going to start doing real state. Now we can talk because there’s lots of incentives that we can walk through. So I guess that’s kind of a long explanation of expense versus investment. You know, a lot of clients just won’t ever get to that point. And a lot of people won’t get to that point because they just see that initial fee. And so, you know, that’s fine because you know, we’re working with people that see things a little bit differently.
Mike Ayala: Yeah. Well, that’s the thing at the end of the day. I mean, you know, it’s the same with anybody that’s listening right now. They’ve got a business. And the last thing, Kara, my wife always says, if the energy exchange isn’t equal, then I don’t have time for it. And she says that in terms of like relationships and stuff, but the reality is it’s the same thing, like with our relationship. So you guys put a lot of time and money and energy into studying the law and understanding what the law is, you know, the tax law and the ways that we can do things and how you protect us. And I happen to know, I’ll just drop this in there. I mean, your guys’ audit rate is like slim to none. And so it’s not like you guys are doing stuff that you shouldn’t be doing. The tax code is literally an incentive, which I’ll let you talk about. But when Kara says that the, if the energy exchange is an equal, I don’t have time for it. I so relate to that, because I think a lot of times clients that are like pinching pennies all the time are just so focused on, you know, how much it’s going to cost them, or, you know, how much they could save. But like you said, going to H and R block, I’ll throw it out there. And the reality is like, if I invest 50 grand a year in, you know, my advisors and that kind of stuff, that’s just a round number if I invest that, but it saves me, you know, 50 grand or a hundred grand or whatever. I mean, even if I don’t break even, it’s not, you know, that’s not how I’m looking at this. This is about a long-term strategy. And the thing that I think about having worked with you guys for a while, and, you know, even my, like my brain has evolved to where I’m starting to think longer term, which I can’t say that I’ve always done that, but just thinking about wealth planning and the way people do things, the successful people in the world, the people that are super you know, I’ve been saying this a lot lately businesses create liquidity, and then we take that liquidity and we convert it into assets and then the assets create long-term wealth. So that’s like where my brains at, and the reason why I want to work with people like you is because you, I look at it like, you know, bumpers, when you’re bowling, you keep me out of the gutter. Cause I’m just like going 110. And I’m just like making decisions and everything else. And what I’ve really appreciated about you. We just did a transaction recently where, I mean, we just closed like last week and I’ve had three, four or five conversations with you along the way, Hey, we’re thinking about doing this. What does this look like? And you’re advising us along the way. That’s when you talk about that client that comes two days before tax time and wants you to do a tax return, you’re stuck with whatever they give you. That’s already happened. What I love about you guys is you’re forward-thinkers, it’s wealth planning. It’s truly, you guys are strategists, right?
Casey Meyeres: Definitely. Definitely. Yeah. It’s really hard to do a retroactive tax planning. I mean, there are a few things that you can do, but it makes it much more difficult to be that. So if you can be on the front end of things. So, you know, I have had some clients that have recently sold their business and, you know, there’s many different ways to sell your business as far as asset sell or stock sell, different tax implications, but then also going through and kind of looking through to say you know, what, how are we allocating that purchase price? And so, you know, a lot of people might say, Hey, I’m selling my business for $2 million. Great. It’s $2 million. Woo, you know, like is good. I’m moving on. But if you’re going to pay, you know, almost half of that in taxes, but you know, let’s slow down a little bit because a lot of times, if you’re selling a business, they’ll come to you with the offer prepared, they already have it up and running. It’s really easy to sit back and just say, yep. I agree. I agree. I agree without really knowing what you’re doing to where if we can be a part of that plan. And I had one client, it was a large business sell. So, but we allocated the purchase price that saved the most tax. But then we started looking at the actual assets that they were selling, some assets create ordinary income, which is a higher tax than capital. And so we were able to really de-value some of those assets that they were selling, which on the surface, just look like, you know, yeah, that’s straightforward, but you know, we kind of dig into it anyway, save the client a ton of, you know, in the hundreds of thousands of taxes just by, you know, looking a little step deeper, which yes, at the end of the day, you’re going to be happy if you’re selling the business for 2 million, 5 million, 10 million, whatever the price be. But if you can, you know, let’s say save a few hundred thousand and let’s say that you put it in an investment, let’s say you put it in real estate and you use the leverage of 20%. So that 300,000 times five is what? $1.5 million property that just by taking the time to understand what you’re doing. Now, you have a one and a half million dollar piece of property. That’s probably going to generate cash flow and that kind of stuff. And you know, just again, just not taking that, sell my business and I’m happy because I got a payday and I’m running, let’s take a step further or two steps or three steps.
Mike Ayala: Yeah. And I like how you said that two steps or three steps, cause even buying the building now you’ve got this depreciation, which you guys say that’s like the silent magic, right? Like that’s a lot of people don’t even understand it or know about it.
Casey Meyeres: Definitely. So, I can’t tell you how many real estate clients that I’ve had, and you know, they’ll have many doors, many, you know, quite a bit of wealth wrapped up in real estate. And then I talked about the cost segregation and you know, their eyes kind of gloss over. And they’re like yeah, I think I’ve heard about it, but my CPA doesn’t want to do it or, and I’m like, okay. So tell me what you know about it. Well, I don’t really know anything about it. And so, you know, if I look and I say, Hey, you know, you bought a million dollar piece of property. We did a cost segregation study. Maybe there’s a chance that we can get a $300,000 tax deduction. Your other income was 300,000, maybe you’re now in a zero tax position. Which is great. So, you know, I have a lot of clients that come to me real estate have not gotten the forward kind of thinking advice. And you know, one of my questions is okay, you know, a million dollars of real estate, $5 million real estate, whatever that number be, happens to be, and I’ll ask them, so are you tax-paying individual or not? And they were like, well, yeah, of course I pay my taxes every year. And you know, I just write a cheque for a hundred thousand dollars or whatever. And you know, my first question is like, why? Well, I don’t know, that’s what my accountant does. So then have you considered this, have you thought about this, have you done this, there’s all kinds of planning opportunities that can be involved if you take the time. So again, forward thinking, as opposed to just, you know, cranking out a tax return and being done with it.
Mike Ayala: So, I don’t know if you remember this, but my brother-in-law was my first controller at my first company plum line. And he’s now, he’s on the finance team at Newmont gold, but we were just having a conversation a few weeks ago and he was talking, so he was so tired of accounting, because he loves strategy. And so even in this organization, like he was growing, and he’s reached like this pinnacle in Newmont gold, which again is a huge company, but he’s on the accounting team. And so he’s switching over to projects and doing more like long-term, like strategy around their products and capital investment. And he’s so excited. And he said, when you were just talking about this, it reminded me of this. He said, the thing that he doesn’t like is accounting is just accounting for things that already happened. And I’m like listening to what you’re saying and I’m having this epiphany, even though, you know, I would consider myself, you know, I guess a little bit more seasoned and taught by you specifically. But when he said that, like he doesn’t like it because it’s things that are, he doesn’t have a lot of influence over like the company itself, because he’s just accounting for things that these people are doing out in the field and at corporate office and all this stuff. And so he really wanted to move to strategy. And I see that like, that’s really where you guys can help us as entrepreneurs. If we stop thinking about accountants, like why does accountant not want to do this? Well, if we switch our mind around that, and we work with people like you, that are strategists, you also obviously are accountants, CPAs, and all that. But you guys understand the strategy portion of that and can help us understand, like, it’s not what we think about every day as entrepreneurs. But we need to begin thinking about that because we work so hard and the government has allowed us, you know, a lot of people call these things loopholes and, you know, they think automatically, like when you ask that question, you know, are you a taxpayer? And they’re like, well, of course, well, why? Like, why are we not even questioning that? It’s crazy to me, but we just don’t know, again, where we wake up, we’re scared of the government. And we think that they actually, like, if I’m not paying taxes or I’m reducing my taxes, then I’m doing something wrong and that’s just not true.
Casey Meyeres: Right. And as far as, you know, if people are not a taxpayer, they might say, well, I have a more obligation to pay taxes, you know and you know, you can always donate to IRS anytime you want, or the federal government anytime you want. But as far as your moral obligation, to me, if you are not paying taxes, so you’re, maybe you’re a business owner and you’re writing off expenses, whether it be for employees or other things. So the government is basically saying, Hey, we want you to do this. We want you to walk down this path. And if you do, you’re going to get these tax incentives. So if you’re paying zero tax and you’re a successful entrepreneur, you’re doing exactly what the government wants you to do, whether you’re creating jobs. And so let’s say that you create a hundred employees, jobs, they’re all paying social security tax, Medicare tax They’re all paying their W2 tax on that. So you’re doing exactly what the government wants you to do. So, you really shouldn’t feel bad about not paying taxes, assuming you’re doing things legally and that kind of stuff, you know, goes without saying. So as far as bonus, or depreciation on a building rental property, really the government is coming in and saying, we want you to purchase property, and we want you to do it the right way. And if you do it the right way, you’re actually getting a huge tax benefit, a huge tax write-off, so to speak or kind of loophole. But it’s really just, you know, the code is, you know, thousands of pages and you know, the first kind of a few pages of the code is everything’s taxable. And then the other remaining 5,000 pages are except for, if you do this, this, and this. So, you know, we’d look for those except for and, you know, if you know that, and when you’re planning as a business owner to go forward with that, you’re walking the path the government wants you to walk, you’re going to lower your taxes, maybe getting a zero tax position. And you’re doing exactly what they want. So I have no, I have no qualms about people being zero taxpayers, legally. If you owe the government money and you don’t pay them, that’s a different story.
Mike Ayala: Well, I think people have just not had their eyes open to it. Cause, you know, as again, as you’re talking through that, like I’m sitting here thinking the thing that people understand is like, okay, if I donate a thousand dollars to my church, you know, every month, then I get this, like people understand that most people are like, okay, that makes sense. Because if I give to a nonprofit or a church or whatever, like, it makes sense to me why the government would give me a tax break.
Casey Meyeres: Even on that. So if we step back a second and let’s say, I’m going to donate $12,000 to my church. Okay, great. That’s what you’re doing. I could donate cash or what if I had this stock or Bitcoin or who knows what, I bought it at a thousand, now it’s gotten up to 12,000 donate that, you’re only out of pocket that thousand dollars, but you get the same tax benefit of that 12,000. So, you know, why not, you know, keep doing what you’re doing, but why not, at least have a plan to kind of look and say, what’s going to be most efficient with this.
Mike Ayala: Yeah. It makes total sense. And I think just the mindset, like again, you know, people understand when you donate to a nonprofit, like I’ve never heard somebody argue that that shouldn’t be, you know, tax savings. And then also like even recently, just, you know, being able to write off a bigger portion of the meals, which maybe we should talk about, but I’ve had a lot of people say to me, well, that makes sense. Because they want to get restaurants, get going and things. So I think people conceptually understand it at like a small scale, but then when we start thinking larger on like investing in real estate, why does the government incentivize it so much? Because they want us to provide buildings. The government doesn’t want to do that. They want us to provide housing. The government doesn’t want to do that. They want us to employ people. The thing on even vehicles, like people understand conceptually, I think about depreciation on vehicles, but then you start asking like why I’ve had a lot of people say, why? Like, why would the government want to do that? Well, if they didn’t then us as business owners being super frugal, we’d keep that truck for 25 years. And we would just, you know, drive it to the wheels fell off, but they want to incentivize us to keep buying new equipment. Is that true?
Casey Meyeres: Exactly. Exactly. And if you look at kind of the history of a bonus depreciation, so bonus depreciation right now is basically a hundred percent right off. So let’s say that I buy a hundred thousand dollars piece of equipment, the government, even if you’re making zero profit in your business, the government will let you write off a hundred percent of that, assuming that’s all business-related. So you get a hundred thousand dollars deduction. So which, you know, in the past it would be, let’s say for simplicity, it’s a computer equipment, a hundred thousand. The IRS would say, okay, we’ll take, you know, 1/5th each year, 20% each year over the life. The government in 2001, basically after the 9/11, sorry about that. So, you know, 9/11 the, the attack on our country, George W basically put into place a bonus depreciation, which was never even in existence before that, and the main incentive was, Hey, we need this economy to go out and to keep moving. So we’re going to incentivize people to go out and new equipment to get that deduction. So instead of taking one fifth for the next five years, we’re going to give you a hundred percent of it right off, because we’re trying to get that. And so, you know, with anything that was the government, trying to keep the economy going with anything you have different presidents come in or different congresses come in and they change the Taxact, you know, with Trump, I would say that he took some of those same bonus depreciation and changed it to make it even more lucrative, especially with regards to real estate. So, you know, one example of that was, you know, in 2001, when we had the bonus depreciation, it was for new equipment. You know, the government wanted you to go out and buy new equipment, keep the factories moving and keep the inventory flowing, that kind of stuff. With Trump, it was new or used equipment. So it wasn’t necessarily the equipment that you had to get manufacturing or anything like that. So you know, different incentive and maybe that incentive was to, you know, make the stock market go up, or, you know, whoever who knows what different political reasons to do it. But essentially the government wants you to do things, whether or not, you know, it’s good for the common good or not, that’s, you know, to pick it up with your local officials or government officials. But you know, our job is to basically look and say, what is the tax law? What do they want us to do? And how can you take your situation and maximize that.
Mike Ayala: Yeah. And I know you kind of are, you already said this, but I just want to reinforce it. So I can’t remember if it was Tom or you, or whoever I first heard say this, but like, literally you guys look at this as a set of, a lot of us look at the IRS code as a bunch of rules of like things that we’re going to get in trouble for. Right. But you guys look at this different, you guys look at this as like the manual of what we can do.
Casey Meyeres: Exactly, exactly. And what the government wants you to do. So, you know, part of that is to make sure that, you know, you know, what the government wants, but you also have to, you know, substantiated, it has to be ordinary. It has to be a business use. So, you know, there, there are many times clients will say, Hey, I want to write this off. And you know, well, you know, how is this a business? Well, I don’t know. Well, okay, well, how can we create a business for this? A legitimate, profit looking business, and then, okay, we can go into that. So that you know, there’s different ways, as far as, you know, you might have one expense or one cash outlay that might be tax deduction in one scenario, and it may not be in another. And so our job is to kind of help you, you know, change your tax to get to that situation, to where it is a tax deduction possible. If not, then, you know, that’s fine. And you have your own reasons of do things, even, you know, non-tax related.
Mike Ayala: Well, and what’s interesting. And again, we do this all the time, but, you know, we’ll be in rooms with friends or whatever, and somebody will say something, and it’ll blow our mind. But then again, we don’t want to invest in, you know, somebody who’s an expert there’s so much changing consistently. I mean, even if things weren’t, we can’t get, our job is to go earn money and build our businesses and keep people employed and hire good people like you. And I think we just miss that again, we’ll sit in rooms, we’ll pay to be in masterminds and, you know, real estate organizations and all this stuff. But then we think that we’re going to just go, you know, I literally have talked to guys that are worth like $3 million in the last three months. I know for a fact, cause you know, we are in a group that called GoBundance and we share one sheets and stuff and they’re filing their own tax returns. And I’m like, what are you doing? Like, there’s no way that number one, even if they think they know the tax law, you can’t tell me that they’re going to be comfortable doing the things that they should be doing because they’re filing their own tax return. And I just don’t understand it, but to put a bow on that, we pay all this money to be in smart rooms. Yet we pinch pennies when it comes to like our tax advisors and all that. And I’ll give you like a scenario of you know, you and I have, again, like I said, we’ve worked together for a while. My son’s a professional wake surfer and he’s literally been, he’s sponsored, he’s number five in the world. He’s got deals with jet pilot. You know, he sells boards, does all this stuff. And then all of a sudden, one day I was hearing, I think it was, you talk about bonus depreciation and I’m like, wait, we should start a business out of, it was literally a business. He coaches all the time and I’m like, Casey, like I should put this in an LLC and start a business. And you’re like, well, yeah, not only from liability, but for tax reasons. And then I’m like, well, what about, so he has a truck and a camper, and he tours the country and then he has this boat and I’m like, that’s actually equipment that he uses for his, but that wasn’t even clicking to me because I’m like, I would have never thought about, you know, being able to depreciate a boat or a camper, but he literally uses it for his business. That’s like his business.
Casey Meyeres: Exactly. Exactly. And so, you know, you definitely, if the code is there to take advantage of, you might as well take advantage of it. And, you know, the businesses is, you know, wake surfing or, you know, all of that and you can’t wake surf without a boat. So it’s really hard to not take that as a deduction. When you talked about things changing quickly, so one point that I like to say on that as it doesn’t really matter your political affiliation, but things will change quickly on the tax code because the politicians have figured out that it’s so much easier to change the tax code than actually change the law. And, you know, if you, you know, to shape society, how you want to do things, it’s so much easier to just change the tax code as it is opposed to, you know, getting everyone on board with these different social agendas and that kind of stuff. So it is a powerful tool that, you know, in the past 20, 30 years has been even more utilized to really get people know us, US taxpayers to do what they want us to do. And so, you know, whether it’s Democrat, Republican, it’s always going to be changed quickly, because it’s such a powerful tool.
Mike Ayala: And I remember one time to you guys and, you know, I know this happens all the time, but for some reason I’m sitting in an office with you and Jonathan, and I remember there was a big Congress had changed some big things. I don’t even remember when this was, but then you guys were saying that you were waiting for like the, I guess the code or whatever to come down really. Cause it’s like two different things, right? Like there’s the law. And then there’s the interpretation that the IRS does.
Casey Meyeres: Yeah, especially so during COVID, I’m trying to think of at least three major tax reforms or legislations that have gone through since COVID came about. And so if you’re rushing things out that quickly, you’re going to have problems. You’re going to have things that they didn’t think about because, you know, they’re politicians, they’re not, you know, they might have a tax team helping draft it, but you know, it’s not until you actually go to do things as far as like, you know one example I can think of is on the PPP. So that paycheck protection program that gave up, you know, hundreds of millions of dollars to businesses to basically keep those employees to keep the money in the economy, to keep them from collecting unemployment, I think was the real takeaway on that. But you know they passed the law saying it’s not going to be taxable, so, okay, great. Nontaxable, the IRS on the other hand came out and said, that’s fine. They can say it’s not taxable, but there’s something in the code that basically says, if you receive tax exempt income, so income that’s not taxable, for expenses, you can’t deduct that. So if you got a $5 million loan, you paid your employees that $5 million, the IRS is saying under current code, you can’t deduct that $5 million payroll. So, you know, if you think about the restaurant owner that just paid out, let’s say $5 million in wages, Okay, that money came in, it went out to their employees really kind of government welfare to keep those employees from filing unemployment. So again, it could be political reasons, as far as, you know, whoever’s in charge doesn’t want unemployment to be, you know, 35% or whatever. So if we can keep them technically employed, have the money funnel through. So if you’re a business owner, you pay that $5 million to the restaurant workers. Great, Everyone’s happy. Then IRS comes out and says, okay, that $5 million, it’s not going to be taxable. However, that $5 million expense that you did is not a deduction. So, you know, let’s say that now you owe, you know, on that $5 million, you know, $2 million in tax, that cash is physically not in that restaurant anymore. So that’s where you have the IRS on one hand doing something, the government or Congress, or the president on the other hand doing something. When you’re rushing through these things, not enough foresight has been done on all these to kind of vet out the potential issues. So fortunately things have been fixed on that and you know, it’s not taxable and you get the deduction. That’s definitely things happening quickly. And then, you know, it takes a while for the government to catch up.
Mike Ayala: Well, and again, I can’t say this enough, I think it’s probably the third time I’ve said it since we started recording, but this is the reason why we can’t look at this as an expense, because the reality is, I mean, if somebody hires you, you’re probably going to do a pretty good job of, I mean, you’re not going to take a client that you can’t help anyway. I know that enough about you guys, but the reality is like, we can’t look at this as, okay, I’m going to spend $10,000. And even if you didn’t get some of that money back, like with these things changing so fast, even if it’s a forward-looking investment, even if you can’t save a client money today, you’re going to save them money in the long run, through strategy and planning. And so I just want to shift our listeners mindset around that because, you know, I think a lot of times we think, well, if provision is going to cost a 1000 or 2000 or 10,000, depending on, that’s not the way we should look at this. Because everything you just said would scare the living hell out of me if I didn’t have you guys on my team. And so really if we’re just you know, pinching pennies and staying where we’re at, we’re looking at this all wrong because we need to be looking at how to, especially with all the money printing and everything that’s going on today, we need to be figuring out how to make more money faster and keep as much of it as possible and pour it into assets. And so I’m speaking to the audience right now, but if you’ve been pinching pennies, like you need to get off the fence and find someone like Casey and provision and get some of this stuff figured out. So Casey, we have about 10 minutes left, if you’re still good. I’d love for you to just kind of take it wherever you want to from here. I know you’ve had a pretty cool road. You’re now a partner at Pro-Vision which is just an amazing firm. But what I’d like for maybe you to share is just, you know what, we could look at this two ways and you go wherever you want, but there’s a lot of changes that are happening that I think entrepreneurs, investors, and everybody need to know about, but then also possibly like, what are the things, you know, top three, four or five things that you guys automatically see that people are not taking advantage of that if they came and worked with someone like you you’d feel comfortable helping them take advantage of that.
Casey Meyeres: Sure, sure. So, yeah, definitely with, with some of the changes that are coming through. So when you had Trump, it was definitely pro real estate. You know, Trump had quite a bit to gain with the real estate benefits. So to me you want to take advantage of that. The current law basically goes through 2025. So the government will basically create tax acts that, you know, basically pay for themselves. And so they have an expiration date. So that’s the way to truly get tax legislation through is they all have sunset provisions. And so the sunset, you know, for the Trump tax act, the major one really goes through 2025. So, you know, that being said things are going to change by 2025 anyway, but you have Biden who has a different a different take as far as what he feels his tax policy should be. And so, you know, Trump might be more on the business side, entrepreneur side things were very incentivized. Now with Biden, you know, they’re kind of pulling out a $400,000 income as kind of the benchmark that if you make 400,000, you know, you’re rich. And so you should be paying a lot of taxes. So I have many clients in California. I have clients across the US, but many clients in California, in New York that, you know, they might be making 758, 800, a million dollars of income. You know, they would not look at their lives and say that they’re rich by any means. And then if you have a California that, you know, let’s say federal rate right now is 37% of California might add another 13%, if you’re going on top of that. So now we’re at 50%, and then you add social security tax on that, and you might have, you know, 60% of your money got away. So yeah, you know, I might have a million dollars of income, but I’m only seeing 400,000 of that. And you know, I have kids that are in college, whatever, that kind of stuff, you’re not feeling rich. So to me, 400,000 is kind of a low benchmark to say that you’re rich and wealthy. But so a lot of those changes that Biden’s kind of posing in his latest, I think it was about a month ago that came out as far as the direction they want to go is, you know, 400,000 is kind of benchmark. They want to increase the tax rates back to the, you know, Obama level. They want to throw out some helps for the middle-class family, like child tax credit and that kind of stuff. But lot of that get spaced out by, you know, majority of my clients because of their adjusted gross income is too high for a lot of those benefits. There’s also kind of a backdoor tax. So they might take the tax rate from 37% to 39.6%. So you’re thinking, okay, at 39.6% federal, that’s what I’m paying, but then there’s also some incentives to basically limit your itemized deductions to 20% of your income. So they might add the, which is limiting your production. So, you know, you might be at 39.6, but you actually might be paying more because of these kind of backdoor tricks that they use to lower your deductions, but actually makes you pay more in taxes. I’m trying to think some other things too, I think Biden wants to get rid of possibly the step up basis. So, you know, one of the beautiful strategies with real estate would be, you know, let’s say I buy a million dollar property. I put $200,000 down. I have 800,000 leverage. I get these texts deductions. Maybe it’s 300,000 deductions. The income that comes to me is not subject to self-employment tax. So don’t have to pay social security, Medicare, which if I was flipping a home, I would have to pay the social security Medicare tax on top of that. So I have real estate, it’s providing passive income. I’m getting these great tax deductions on it. Let’s say that I go to sell the property and now it’s, we’ll try and keep it simple since I’m kind of pulling it out of there, but let’s say that million-Dollar property. Let’s say 10 years go by, now it’s worth 5 million. So the government, okay. Get a $4 million gain plus depreciation, maybe we’re at four and a half million dollar gain. IRS wants to collect their tax on that. Currently, there’s, you know, the section 1031, like kind of exchange that you can basically trade that property for something bigger and essentially not pay tax on it. So that might be something that goes away. I’ve seen some things recently that they want to cap that to where only 500,000 of that like kind exchange is going to be eligible for that. But let’s say that I don’t even trade the property and I don’t sell the property. I just hold it. And 20 years go by and worth $10 million. So, you know, my kids would get that in this hypothetical example. I’m not planning on giving them anything, but $10 million property, it’s now, my kids inherited it and they sold it the day after I die for $10,000,001, they would only pay tax on that $1. So the step up, so that’s called a step up in the basis. So they’re looking at basically reducing that step up or putting a value on it. So now, you know, if you were to pass this $10 million property, million-dollar basis, so you’d have to pay it. So, you know, with real estate, if you basically buy the property, enjoy the tax benefits, you borrow from it, you trade from it, you trade the property and then you go to die and then it gets to stepped-up basis. You basically turn these deferral tax savings into permanent based on the Step up rule. So that’s the basis rule. So without getting, you know, I try to keep it 30,000 foot level on that, but you know, some of those strategies may or may not go away. But again, it depends on Congress because I don’t even think all the Democrats are on board with some of these things. But I guess the takeaway is just on things will be changing to always be changing no matter what party’s in control or not in control. It’s the easiest way to manipulate what you want as far as policy. And so he definitely want people that are staying on top of it, and also not on the stand on top of it, but, you know, you could have a tax code genius that knows everything in it. But if they don’t listen to the client, understand what that client is doing or what the client wants. It’s really not a benefit. So we try to understand our clients on the human level, on the business level, and we’ll help them plan for what they want. But with all of my clients, I basically from the beginning, put myself in their shoes and I say, okay, if I’m Mike Ayala, what would I be doing in this situation? And you know, I am a wealth builder. I’m trying to build my own wealth, save taxes, that kind of stuff. So, you know, if someone’s in a different situations, I put myself in that same exact situation. Okay, what would I do? And then I help explain to you, okay, well, if I were to do this, I would do this, this and this because of X, Y, and Z. I say because of X, Y, and Z, because I heard from you a few meetings ago that you wanted this, you know, one of these, what’s your desired outcome. So, you know, let’s walk the path to get there.
Mike Ayala: What I’ve realized and appreciate about you guys. You know, a lot of, you know, whether it’s our controllers in-house or accountants or bookkeepers or whatever, it’s like, I feel like a lot of people just think in a box like it’s, you know, it’s accounting, right? It’s a ledger. But what I like about you guys is you do, and I’ll just reinforce what you said. Anytime I’ve ever called you, even if we haven’t spoke for six months, you know, like I’m like, Casey this is what I’m doing. This is where we’re at. And you’re like, okay. And like two seconds later, you’ve got answers for me. So you guys have really, I don’t know what you’ve done on the backend, but I can testify to what you just said. Like, you guys understand your clients and you understand the strategy and the bigger picture. That’s what I was kind of saying about the ledger, because I think most CPAs just think black and white, like, no, this is, you know, I don’t care how many businesses you have. This is what we’re going to do. And they actually don’t want to get to know their client and they don’t take the time to do that. And I’ve really appreciated that about you guys. You guys understand us, so that’s been cool. And I appreciate it.
Casey Meyeres: Definitely.
Mike Ayala: So what’s got you excited. I got to, I think we got to wrap this up, but what’s got you excited about the tax code in the future.
Casey Meyeres: You know, really the, which change creates opportunity. And so even when they change the tax code, we try to scrub it and figure out, okay, what incentives can we do to do that? So, you know, with COVID last year, I guess the last year and a half, you know, I tell a lot of clients that, you know, last tax season, typically the deadline is April 15th. So April 15th of 2020, the IRS pushed it back to July 15th. So you think, okay, great. You know, CPAs get to rest around the world, that kind of stuff. But I feel like I became a small, an SBA government advisor during that time because, you know, the IRS is handing out money, whether it be tax incentives or whether it be PPP funding or other different types of grants or loans. And you know, I’m not a government expert on SBA loans or anything like that, but I can quickly get up to speed on things and figure out how to maximize. So anytime there’s opportunity, we’re trying to jump on it and trying to figure out what’s going to help our clients, even if it’s not income tax-related. Because the PPP was not income tax base, but, you know, with, you know, a great crisis that comes through, but there are many people that came out even better than they were before we COVID. Not based on some of the government programs that were out there. So I guess, you know, with Biden in politics kind of changing, you know, maybe for a few years who knows, take advantage of that, see what’s on the horizon. Take advantage of that as well.
Mike Ayala: I got one question, I’ll put you on the spot real quick. And, again, I’d love to bring you back, cause I think we just scratched the surface, but what’s one thing, it could be something small, but what’s one thing that you see most entrepreneurs, investors, business owners leaving on the table that’s perfectly legal that most of their CPAs are telling them you shouldn’t do that.
Casey Meyeres: So there’s, you know, there’s definitely low hanging fruit on most of my clients. And from our perspective, we always try to go big first, try to get the big items and then then we’ll go the smaller, low hanging fruit. And so lying fruit might be, you know, I’m a business owner, let’s say I have, you know, 10 rental properties and I have three kids, which I do. My oldest is 18. And so I manage these rental properties. I go around and have them helping me clean up the properties, do landscaping, cleaning and that kind of stuff. So, you know, they’re my kid you know, basically using free labor for them. But on the other hand, I’m going to be paying for their college. I’m going to be paying for their club sports or their dance lessons or whatever it happens to be. Why not basically have them employees. So they’re helping me manage these 10 rental properties. They’re employees of mine. If basically it’s about 12,000, 12,500 is the limit. I could actually pay them. So I have three kids. I can make 30,000 almost $40,000 of wages to them, with them in their situation. If they’re making less than 12,500 of income adjusted for inflation, they’re not going to pay any tax on it. So if I’m in the highest tax bracket paying 40 50% tax and I pay them 36,000, 40,000, I am saving 18,000 to 20,000 of taxes by really doing nothing different because I’m paying, you know, the 12,000 per kid with their club sports or college or whatever. Anyway, the kids are working for me anyway, that they were doing it for free. Why not kind of flip that switch into something where now we have an extra 20,000 of cash. And again, back to that real estate example, 20,000 cash, he turned it into a hundred thousand dollars piece of property that the government basically just gave you, which creates another tax deduction and just kind of keeps that hamster wheel going.
Mike Ayala: And I love the way you just wrapped that up there too, because again, sometimes we as entrepreneurs think about this linear, okay, I’m going to pay Casey $5 and it’s going to, you know, save me four. So I’m actually costing me a dollar. No, the reality is you’re probably going to pay KC $5 and you’re probably going to save $5 or $7. I’m not guaranteeing that for you obviously.
Casey Meyeres: Definitely we earn our fees have no, like, I am absolute confidence that we earn and more so, yeah.
Mike Ayala: And again what you said there at the end is even with the savings, then you go and invest that, and you can’t like, I can’t even quantify. I mean, I guess I probably try to go backwards and do it, but I can’t even quantify how much money you’ve saved me that I’ve been able to reinvest, which is what the government wants us to do. It’s crazy. So we got to stop pinching pennies and just hire experts. So Casey, I’m going to work on a white paper that you sent me some tips and tricks over. So if my listeners want to text me the word tax, to (480)-530-7519, I’ll get that over to you. And then how do people find you Casey?
Casey Meyeres: So the easiest way is just to go to www.provisionwealth.com. You have my contact information there. You can sign up for a consultation. You can sign up, send me an email directly. You can call our number, our number is (480)-467-4400. So again, we are out of Phoenix, Arizona, but I would say probably 80% of my clients are not in Arizona. And actually with COVID, you know, we’ve all been working from home. We have expanded our employee base. So typically most of my clients have employees in your same state, which, you know, kind of coincidentally, but, you know, COVID has allowed us to really open up. So now we’ve added more team members, great team members, because, you know, if you’re limited, but geography, as far as who you’re talented, you’re kind of limited, but if we can open it up and so, you know, we work with individuals across the state.
Mike Ayala: So basically any state, is that what I heard? Yeah. I love it. Awesome. Well, Casey, thank you for your time and appreciate you being with us on the show.
Casey Meyeres: Thanks, Mike. It’s been fun. Appreciate it.
Mike Ayala: Thank you.
