U27 – LLC Purposes and Techniques
Hello everyone, This is John Jay.
Today’s May 13th.
Welcome to Thursday, evening with John Jay. We’re gonna talk about the purposes of the LLC.
I’m gonna explain a list of things. I’m sure you guys have heard before, but I want to kind of put it together.
I don’t know that we’ll have time for Q and A But I do intend to do a Q and A session because it’s a lot of information.
Just real quick, I wanted to mentioned, if you want more information on many of these topics, you can look at ACEP coins dot com. That’s more of a blog.
And at privacy fight dot IO for right now you can see there’s we have a video membership, which is separate from the Ace of Coin service.
And then also there are a lot of good free videos in which I’m going to bring two in here. two of the videos I’ve done on my YouTube channel, which is called Privacy, Fight and Privacy Fight as one word.
So, um, with that, I’m going to start with this talk, the topics here, and throughout this presentation, I’m going to give you a couple of URLs.
I’m going to put it here in the, uh, the chat window.
And you should grab it. You should make a copy or link to it, or something, I may put it also in the ASAP coins list.
See, you guys have access to it. Just like I do every weekend, I’m gonna publish this call. It’s probably gonna be in the morning, as I’m recording it right now.
Alright, so I wanted to start first with a story.
And it’s kind of embarrassing, but, um, way way back when I was still in college, I worked for IBM, and I was doing this job, where it was overpaid.
And it was, you just hardly had to do any work. And basically, I just answered the phone, and I help people with their software, technical aspects of their software over the phone.
And so one night, it was, no, my shift was by myself usually because it was, it was a small operation at that time. So anyways, this gentlemen calls me and he needs help on a spreadsheet. Now, you know a spreadsheet, it’s a very intensive, right?
There’s lots of data, there’s lots of little no rectangles and fields and all this stuff.
So anyways, I’m helping them with this spreadsheet over the phone. I can’t see him.
This is not like Zoom, world. This is back in the early nineties.
So, after about 20 minutes, he could tell that I was really frustrated, because, what was what was happening is, you know, I was like in my early twenties, and I was anxious, and I didn’t really want to sit on the phone with some guy, you know, at the middle of the night talking about this stuff. And so, I was getting a little frustrated. Because, when I would tell him something, It would take them a few minutes, maybe NaN or so to respond.
And so he could tell by the tone of my voice that I was actually getting annoyed, and I’m not supposed to do that, because you’re supposed to be polite and patient, all this stuff.
And so, he actually No, he, actually.
I said, Look, I need to tell you something. I’m really sorry about the delay.
But, I’m using a reader, too, to use my computer. And, I said, What’s a reader? I didn’t even know what a reader was. You guys might know what it is.
And he said, Well, I’m blind.
And so the computer has to audio has an audio feature that tells me what cell I’m in on the spreadsheet. And I just just lost it.
I mean, I was like, Really, and I felt, like, such a jerk.
And It’s it’s always stuck with me, you know, like, How dare I think this guy has a mental problem, or He’s slow when he’s blind. And he’s using a computer, and I’m sitting here and I have all the knowledge, and all the books, and I have two computers on my desk. I’m calling, but I want for help, and this guy’s by himself. And he’s blind all, he needs is a couple of tech things for me.
So it just completely, you know, changed my attitude forever.
And I just, I don’t know if this story relates, but I just, I want to let you guys know, I never assume a thing.
I never, I don’t want to prejudge like when you guys call me and stuff and ask questions. I’m just neutral. I don’t, I don’t care what the situation is. My purpose is to mitigate risk.
I don’t care. I mean, I’m not going to help you break the law, but.
You know, I’m gonna, I’m gonna do whatever’s needed to, to get you what you want. OK? And if I can’t do it, I’m gonna tell you.
And that’s why, for example, um, like, if someone comes to me with an IRA, he’s asking me, what do I do with my IRA?
And I think to myself, well, I have a bias towards IRAs, but my thinking is, if someone went to the trouble of setting and setting up an IRA, he’s probably planted out with his family and they have some sort of plan and maybe they should stick to it. My recommendation is, stick with your plan.
No, I mean, unless there’s some, like I’ll say that to open with, you know, in my response.
And then sometimes you guys want me to really tell the truth, right? Like, what do you really think about it?
So, anyways, I just wanted to share that with you. I hope it’s a topic.
I know, I tell a lot of stories, but, in any case, I just want to say, I like to just not prejudge things. And because you never know. I mean, sometimes people have done something for reasons, which are really incredible.
And you really don’t know. You can’t always judge on the face of what’s happening.
So, in any case, if you come to me, you’re gonna be talking to a person who’s investing, and it’s an entrepreneur, and has probably similar interests and concerns that you do. I may have been able to solve those types of situations over the years. And when you see my documents, it’s the result of, let’s call it reverse engineering problems that I’ve seen over the years.
OK, people call me up with a situation, and I look at and go, OK, well, let’s do this: Whatever, 1 to 3 step to get out of it, and then later on, over the week after I addressed it with the client, I’m thinking, Man, if only that person had done this other thing, or had this other policy, or, you know, and so, over the years, I started with standard documents. There was no reason not to. OK, I do still use standard documents.
A lot of times, I do need a blank document, nothing on it, and I sit there and I type out what’s needed for the client, like like a contract or something like that. But, um.
That’s what I, that’s what I try to do, is.
Re like reverse engineer what risk is, and prevent risk. And as I go to this list here, I think you’ll recognize what we’re trying to do, OK. It’s not, it’s really my documents are foundational and you need them.
Really what, the important part of this is that you understand how to use them. OK? Just like flying a helicopter, I can watch a helicopter fly. I don’t know if I can fly one. I’d have to, you know, learn how to do it, and this is what we’re trying to do. So, I don’t, I don’t mean to be too verbose, but let’s just talk about the LLC and its purpose. My purpose is anyways.
What I’m trying to do for you.
I’m just using it as a conduit, so that you can interact with third parties.
It’s that simple.
OK, so, what we’re trying to do is, we’re using the articles now, when I create articles for an LLC, all I’m doing is answering some questions the state has because right now, we are registering articles with the States now, I believe, in the near future. We’re not going to do that. We’re going to be registering articles in the way that it used to be done a long time ago, like, 100 years ago, where people would just publish the articles in the Newspaper, OK. And that’s how companies were formed.
They were announced, and they’re a matter of contract.
But for right now, you can’t have a company that the state doesn’t approve. I mean, if the state approves it, it’s valid. Right.
So we set companies up and I use the fact that the articles are public.
So I want to show property rights in a certain way. And that’s why I like to interview someone and talk about what is going on in this situation. And so in many cases, like, here’s a really good typical example. If someone calls and says, he has a particular risk, let’s say, to a creditor. He’s been, he’s being sued for personal debt and it turns out he’s a business owner.
and he has an S corp. A lot of times those are LLCs and that individualist 100% owner or maybe he and his wife are the individual owner.
But a husband and wife are considered a single owner.
So there’s no protection from personal liability attaching to the company, cash or assets.
So, my solution is, change the articles so that it’s more the articles demonstrate the interests, are the owners or the members.
That include not just that individual who has the debt problem, but someone else who’s not a spouse, who can be on the articles, who doesn’t have control, which doesn’t give a person control. It doesn’t give him a tax liability of any kind, or any other liability, even if that other person has liability.
So, for example, if my wife and I own LLC and we’re in a situation where, no, we’re going to, we’re going to try this method, I would be, I would call it my brother and say, hey, can I add your name to, to my articles, OK? And it’s of no consequence to him. He doesn’t get any control over my company, I don’t have to pay him anything.
Even if he has its own debt problems, it’s not going to attach to my company.
All it is is a name that allows me to divest my exclusive rights in the property and that is where the risk is it. So I eliminate that risk by changing the property rights, that’s when I add the person.
And then I amend the articles sometimes. Usually I can just go to the Secretary of State’s website. Download the articles of Amendment, right? My little language in there.
Update it. New Mexico takes like a week and it’s done by snail mail. So it’s not that big of a deal.
And then once that happens now there’s no, there’s no liability, or I should say the liability that would attached to the individual is severed from the company income and assets.
That’s the core of it.
The other purpose of the LLC is to interact with third parties and banks exchanges, like, in our case, crypto exchanges.
With the least disclosure.
And I know, it doesn’t feel like it’s the least disclosure because there’s this KYC thing where you have to give up your driver’s license and your SSN, and then another government ID and all this stuff.
But, just like the other day, I mean, I really hate using my driver’s license for anything, but a traffic stop, and I, the other day, I used it for whatsapp.
I think it was two to move my bitcoin out of there, and I actually had to take a photo of my driver’s license next to my face.
I hate that, so now, that’s forever in somebody’s database, but I really don’t care because it doesn’t create a liability for me.
I try to minimize that, but, still. And I also want to address something with crack, and I just saw a news article about that.
But, anyways, the purpose of the LLC is to show the property rights in a way that protects your interests. It actually does conceal, the way you’re going to use the property.
No one can, no one can see what you’re thinking, but they can see public records and public records are what you want them to be.
Uh, then I can interact with the banks and exchanges in a way where the banks recognize an LLC that courts recognize an LLC, and in my all, almost 30 years of doing this, my the LLC’s that we’re setting up here are not really going to be in a situation where there’s a court involved.
They’re not going to get sued.
I mean, especially a new LLC is not likely going to be sued and even if it is, it’s one of those tools where it can be dissolved and recreated under some other name.
I mean, the purpose of it can can be shifted out so quickly, in most cases.
And so, yeah, I want to divest exclusive property rights and that’s how we do it published in the articles, let the whole world know, hey, look, I’m not the exclusive owner here, there are several ways of doing that now.
This is how we manage property rights now, I show the world in the articles, and then I establish the property rights in a contract. Now, I give an example?
This video, I’m gonna show you here.
I’m gonna copy and paste this into the chat window in a second, and I titled that example Residency now appears a little bit differently on my channel.
But I’m showing you how you want to Well, it doesn’t exactly demonstrate exactly, but what I want, what I want to show you is that the way I write the operating agreement in a way where, let’s say, like, if you had an issue where your operating agreement has to be disclosed. Let’s say it’s under a subpoena, you’d probably call me up and say, hey, what do I do?
And I would just, I know I wrote the operating agreement, but I would want to review what you have now, like maybe if you made some changes and what I want to see something there.
So, what I want to find out is I want to look at it, like a creditor would look at it, and the creditor is going to look at the Operating Agreement and see if there’s any exclusivity or exclusive rights for the individual debtor, maybe the debtor you that’s describing, the operating Agreement. For example, an example of this would be a divided interest.
So, if there’s a divided interest in the Operating agreement, any disbursement schedule like it says, the Managing Member Bill Smith is going to get paid every two weeks.
Well, then, if I’m a creditor, I can then take a copy of this operating agreement that I got under. Subpoena, you had to give it to me and I can go to the court and apply for a writ of attachment. And the judge is going to say Fine. And the reason why I would do that is because I know I’m gonna get paid. I can look at the bank statement. I can see how much money goes through there and you’re not going to stop that.
Once that happens, you can’t get it. You can’t really easily get out of it. You could probably get out of it, but it’s not that easy.
And what’s going to happen is I’ll be able to attach that cash flow because it’s already established.
I can’t stop it pretty much.
The alternative is you want to put the creditor situation where he’s going to gamble.
There’s no exclusive rights over some aspect of the property in the yellow sampling, my cash in the bank would say.
Or there’s no divided interest or no scheduled disbursement if that exists.
And the attorney for the creditor is foolish enough to ask for a rid of attachment, some, we call it a charging order. And he’s risking the fact that the possibility that he may not be able to collect the money in the rid of attachment. So let’s say the judge says, yeah. He owes you $25,000 and I’m gonna issue a rid of attachment, go give go for it. You’re rid of attachments for $25,000. And so the attorney applies for a levy.
And but the bank can’t offer alevi because there’s no disbursement yet.
So he’s risking that chance that there’s no disbursement.
And if he is not able to collect a portion or all of the rid of attachment like the 25,000 by the end of the year, his client will owe taxes on the amount of money he did not collect.
That’s why I rarely say, I don’t think I’ve ever, I ever remember seeing an LLC where the attorney tried to attach property when they’re, when an LLC is involved. I mean, almost never, unless the person doesn’t really know what he’s doing, and he’s a truly a single member, and he doesn’t take any any measures to avoid that stuff.
So, that you see these different aspects, here, I’m using public records to establish property rights. I’m using an operating agreement to establish property rights, or to establish no property rights.
Shared property rights are no property rights, but it still gives me the ability to act. And basically, that the way to describe it is you’re acting like a trustee, OK?
If you’re acting on behalf of a group, then you’re basically a trustee, OK? Not always.
So, that’s why you see unusual things in the Operating Agreement.
I’m not going to go into so much detail.
But anyways, these strategies allow you to ignore all this drama about the exchanges, and the SEC and the collecting user data and mailing lists and account holder names, and all this. And you know.
People are scared because they have $1,000,000.5 worth of cryptographic currency, and so what, the government’s watching it, they’ve been watching us forever. So it’s just a way to scare people.
What you should be concerned about is the Disposition of Assets, And this is, this leads me into this other video that I’m gonna post here momentarily. I’m going to actually do it after I finished that, these topics, but I wanted to it’s talking about the Disposition of Assets.
And then, of course, the other one is talking about residency and how we can use the structure too, uh, effectively, manage property in a foreign jurisdiction from a foreign jurisdiction.
Now, if you look at my operating agreement, it wasn’t until the last couple of years or a few years that I just started I started describing the trust relationship that already exist. Now this you guys will probably understand, because you’re investing in cryptographic currency. And people who are not wouldn’t have a clue about this. Nobody really understands unless you’re, you know, have a lot of money in there. You’re not going to understand about private keys and public keys, and things like that. Well, an exchange is going to be the owner. The private key, even though you have access to the account. There’s going to be a trustee relationship there, OK? And the account holder could be the beneficiary. I believe it is the beneficiary, in fact.
So in a section of the operating agreement, there is no formation of a trust. It’s simply the description of a trust that already exist, just so you guys know.
And I get this question a lot because there’s all this mention of trust and beneficiary and all these definitions and things like that.
But what I’m really doing is identifying the relationship that we’re creating here with the exchanges, the third party exchanges. And we could probably talk about that in terms with the bank.
But I don’t really care about that I’m talking about the way the exchanges operate because of the nature of cryptographic currency because the private keys, establishing ownership, OK?
So there are different strategies here.
A lot of times I will use two members, because I want charging order protection.
It just is recommendation I make based upon reviewing what’s going on in this situation from, from the beginning.
Charter charging order protection is given when two, parties are members, at least two parties are members of a limited liability company, and the two parties cannot have cannot be married, they cannot be spouses, OK?
While you may have charging order protection with two members, keep in mind if the two members are guarantors on a debt, like, say, for example, a commercial lease agreement even though the company or the Each member has charging or protection regarding gnat particular obligation, it doesn’t exist.
It passes right through the LLC to the two members of the LLC, so in order to mitigate the risk from the two members signing a commercial Lease Agreement, don’t do that.
First of all, have one member sign and you can usually negotiate that.
Or add a third member later on who’s not a guarantor on that contract, and that will then create a shared ownership of the property in The LLC.
The other one a single member, OK, So that that gives you the lease protection, but it’s still pretty good. It’s, it’s the it’s it’s sufficient, OK. It’s good when you when you need it.
I’ve done it many, many times and I’ve done it in the face of a take down OK, where there’s been levies on let’s call them till takes where the incoming cash flow from the merchant accounts being levied on a regular basis And it’s pretty nasty so we can do a quick company set up, re-organize the way the money’s flowing and then cut off the creditor.
They can see everything we’re doing, and but the, there’s a legal separation now and then it gives my client a chance to work with that creditor in some way and not get run over OK and get shut down out of business.
I do also like to use unincorporated associations or Trust. So, some of you already have pretty good trust, understanding, you understand how to use them. I’m not saying that layering companies is always that way to go.
I know you everyone likes a lot of people like to use fancy ideas in terms and things like that.
And it sounds cool, and that’s fine, but I always just recommend choosing a vehicle, or method, or strategy based upon solving a purpose or fulfilling a purpose. Or solving a problem. OK, not because it sounds cool, like Massachusetts business trust or something like that used to be a trendy thing years ago.
But yeah, and you can use an unincorporated association.
An example would be like an association would include where a group of people have something in common. one example of that would be a family.
Another example would be a fan club. Another example, as a fan, as a neighborhood, OK?
So, an association can be, Um, it can be described, because it has something in common and it can also be named.
And, therefore, because it already exists, it can just be named and then that association can be named for as the owner of property. So, I can use it as an owner of shares or the sole member of a limited liability company.
Just because you do that, though, It’s not a silver bullet. You just have to understand what you’re doing, and how it, what kind of risks you’re managing. So, yeah, And, again, I just, you know, avoid layering.
Um, but you’re not going to, you’re not going to have a charging order protection with a single member, and you’re not gonna have charging order protection if you’re single member is a trust or an unincorporated association. Or some people want to use a private membership association, or club, or something like that.
You don’t have charging or protection, but what you do have is an innocent party that still gives you the separation, and that’s why I say, you can get a lot of these benefits without regard to the statute. That’s why I can go do this in the UK, and Ireland, and Japan probably, and Canada and all this stuff, I can use a partnership, I can use a contract.
Um, I would avoid off shore.
I know that’s a it’s trendy thing a lot of people call me with that situation.
And I just to, I’m just going to tell you, for many years, at least 15 years, the Financial Crimes Network has created a situation where anything you’re doing off shore, if you’re a signer on a foreign corporation, or a bank account for a corporation or yourself as a US citizen. If you identify yourself as a US citizen, usually there’s going to be a reporting back, OK?
Now there are some exceptions to that like with Caleb and Brown. That’s a really nice exception. I don’t see that changing anytime soon. I don’t believe that they qualify for that.
And I don’t believe there’s some sort of reciprocal arrangement, like we have with Canada in the states or the UK.
I don’t think we have that with Australia, and we especially don’t have that with, um, the way Caleb Brown is structured, It’s a private company. It’s not a bank banking institution.
I don’t, I don’t recommend an offshore company unless I have a real business interests like I’m making a product, or I have employees over that in that company, and I’m making the money over there.
The only other thing I would recommend, if you guys wanna, really if you have to have to do this, is consider nominee directors, and I’m just gonna give you a reference here.
I have never used this company.
I don’t make any money on this reference, this referral, but it’s worth checking out, because there are other services that are similar, and this company has lots of services.
You’d be amazed, it’s called OCR, a dot com, Okra, O C R a dot com. I don’t remember what OCR stands for, but that is a service that may help you set up a nominee directorship in a foreign company.
Again, it’s it’s not really necessary unless you actually have a need for it.
I like to do my accounting using bookkeepers.
In my mind, a bookkeeper, who is some professional who doesn’t identify himself as a CPA, or who is literally not a CPA. Why? Because I just think bookkeepers.
I value my privacy, I look at privacy as money, and if I go to a CPA, he wants to ask me all kinds of stupid questions and I don’t want to argue with them.
Bookkeepers usually don’t, and lots of times. I can work with the bookkeeper, and I don’t need to give my ID, OK?
Malware or I’m not going to be asked to do that. That’s just in my experience. But I would just recommend it. A lot of you are asked me right now. You’re asking me right now, based upon your current network?
and you’re asking me, in the sense that, What if your net worth, you know, goes up 10 times or 100 times?
My recommendation is still is bookkeepers.
That’s what I use, now my net worth, it has never exceeded $5 million. So, that’s been sufficient for me. I mean, if I had, if I had a mid-level business in a big stake in it, I don’t know. I might use a CPA. It depends. I don’t know if I had an interest in a C corp or something. I don’t know.
Another thing that consider, once we set this up, I know, we always talk about tax benefits, and, yeah, that’s the most interesting.
But, I do like to avoid making financial decisions solely for tax benefits, because what I’m finding is, people have a tendency to make mistakes or missed opportunities.
If they’re just doing that, you’re missing the focus, OK, Of having capital to work with, or a plan.
What you want to do is this is the same information, I get my data, you know how the dentist asks you, you know, what you do for profession after he steps your mouth with a bunch of cotton. So I had one of those conversations with my dentist.
And, and then he goes, Well, what do I do that, if I’m not going to be looking for tax benefits, because his tax guy was telling them all this kinda silly stuff to do?
And he didn’t know any better, but he knew it was not good use of his money, he just didn’t know what else to do.
And I said, Well, once you make decisions instead of based upon tax benefits, why don’t you make your decision based upon what you, we may receive on return, on the capital, When do you get your principal back? OK, you guys can look this up, Rule of 72, real simple stuff.
OK, I did a video on this. It’s in the members area.
I explain about capitalization rate, gross rance, net present value, internal rate of return, OK, These are very important concepts.
Net present value, internal rate of return are really important, And when you start looking at things like paying off your mortgage in a lump sum, it’ll make you sick to realize how much money the bank, how much more money the bank makes. on a long term debt with a face value of, let’s say, 4% that you worked really hard to get a low interest rate. I don’t know if that’s low enough, 4%, maybe 3.5%. You worked really hard to get that rate, and you think it’s smart to pay your mortgage up 20 years earlier. And now that 4% is really more like 77%.
OK, I just made up a number, But that’s probably close, so check into those concepts, OK, because that’s how that’s how you get rich and stay rich is by making decisions on how it’s going to end in? Increase Your net present value of your cash?
When it’s time to take profits now, remember This is I’m not a mid-level person. I’m a small business entrepreneur my biggest client has never exceeded five million just like me, so we’re all in that area.
Um, I Recommend that you go into your stable coin, and a lot of you guys are going to be coming from crypto, so use stable coin. That’s what it’s intended for.
There’s no tax consequence there whatsoever. If you sell from stable coin or another coin into dollars on the exchange, that is still going to be included in your gross income. So just be aware of that.
If that, that transaction is done in your name and your personal account, that’s why I recommend having a trust account or a limited liability account, and using it that certain way. You’re gonna avoid that liability.
So you go into stable coin, and then some aspect of what you’re moving. Maybe a lot of it, because if it’s temporary, you can move a lot of it and precious metals.
But it’s temporary. That’s a good idea.
If you’re old, I tell people if you’re old, meaning you’re a low risk taker, that means you’re old financially speaking, because you don’t want to take much risk, or you are really old. Let’s say you don’t want to. You don’t want to take much risk. then I say buy gold.
So if you’re old buy gold, otherwise, take it up for spin, right? Put your money out there, where it’s going to do some work and see what happens. Take some risk.
You don’t have to take a lot of risk at once, But when you take some profits, use precious metals. Use coins, stable coins. I haven’t done this yet, but I have a description, I think it’s in one of my videos.
I’m describing how you can use lead a loose diamonds as part of your means to take profits.
So that may be something you wanna look into. There’s, there’s a certain way I recommend doing. that. What? I look for in addition to taking profits in, that first stage, where I’m gonna come out of my initial asset and I’m gonna go into something in the middle of. I don’t want to, If I’m not ready to go into something, my permanent asset will actually have a return that I’m looking for.
Um, I’m going to I’m going to use the precious medicine everything, but once I go into something that’s going to be private equity, it’s going to be a share of somebody’s business, and maybe it’s a maybe it’s a corporation that’s not publicly traded.
Now, sometimes, you can’t resist the opportunity of a publicly traded company. There may be that opportunity, I’m not I’m not excluding that. But I’m just saying, I think you’re gonna find some pretty good opportunities if you look for private equity.
If you don’t know what I’m talking about, or it’s, you lack the experience, which is completely, I don’t have enough experience, I would definitely use a broker, OK? And you have to get the right type of broker, you want a broker, and I’m going to do some interviews coming up pretty soon.
And we’re going to talk to some people that actually place capital, up $10 million and more.
And you want a broker that’s going to bring you deals that involve private equity, here’s how this works.
He brings you a deal, he or she brings you a deal. Your broker gives you an opportunity, says, Look, there’s a business over here that wants to take on an equity partner, or wants to sell or sell out, or something. And so, you want to take an equity position. Maybe you want to put a quarter million dollars, or maybe you want to put 12 million, whatever it is something you want to buy into it, so what the broker will do.
It’s going to have knowledge and experience on mergers and acquisitions. This is what you’re doing. So you’re going to create a limited partnership. And this is the broker can set all this up.
You can use your limited liability company, or you can set up a new one. To be the limited partner with this private equity that you’re getting involved in. It could be buying.
It could be buying a big private company, the senior neighborhood. Maybe there’s a five restaurant franchise in your town. It’s not a national franchise, It’s just there, and maybe it’s worth three point eight million dollars, OK.
And maybe you’re gonna buy into it, you know, for a chunk of chunk of interest, right, And what’s the benefit for the owners.
Why would someone sell you, a part of the company, where he’s already done, all the hard work and he’s making a return on capital and then you come along and say, hey, can I, can I join the party? Can I make that 12% stable, stable return without doing any work? And just let my money work for me? Why would he let me do that? Well, maybe he wants your cash in there so he can have some liquidity and go into something else.
So, there’s always a quid pro quo in there.
Um, another thing, another topic that we come across in conversations is about using financial planners and wealth managers or people with those titles. That’s fine. A lot of them are smart, but just always realize who you’re talking to, what kind of experience that person has. And I just wonder what kind of benefit it would be for a person, even if he’s 40 years old, who still making wages?
I don’t care if he’s making $250,000 a year if his title is a wealth manager and he’s an employee somewhere, and that’s it. And I don’t know, I might, I might want to ask him what his net worth is. And I just wonder what kind of experience that person would have. Like, I’ll give an example.
Someone called me a couple of years ago when she was, uh, she was talking about, she was an MBA student, and they were studying Starbucks.
And I asked her, what kind of structure, Starbucks was that. She didn’t know. I said, well, how long you’ve been studying Starbucks. And she goes, well, this whole semester, I said, well, you don’t know how Starbucks operates.
It’s not a franchise, and she didn’t know that, and it’s actually a licensing logo type serve business. They don’t franchise.
What they do is, they license the use of their name to prestigious real estate locations.
It’s a, it’s a real estate investment company like McDonald’s is, And, so, I suggested that, instead of, you know, reading books all day and not understanding what’s going on. I said, why don’t you just go, get the license?
Go do it, and raise the capital to go acquire the license, and set up a Starbucks yourself, and then go pour some coffee for some customers and see what it’s like. And work all day long and, you know, get that experience. You’re never going to replace that.
So, there’s a difference and experience and, and just know who you’re talking to. OK.
I people ask me, OK, Well, then if I can’t talk to a, we’re a wealth manager. Yeah, you can talk to a wealth manager.
I’m just saying, I think there are better people to talk to and who would that be? It would be people that you that are doing what you may want to do.
If I want to, if I want a net worth of $25 million or more, I’m going to start working around people that have a net worth of $25 million more, and I’m going to find out how they did it. And maybe they’ll tell me a couple of things.
I’ve worked with people before, I’ve had partners that have high net worth, and That’s how I learned a lot of things.
They, you know, they shared their secrets with me and that service both at the time and, you know, things like that.
So that’s what you want to do is work with other people who have risked their money, who’ve made a lot of money who’ve lost some money, hopefully not lost everything too much.
I can’t tell you that I’ve lost a lot of money, but I’ve also made a lot of money, And it’s kind of fun Once you get going.
Don’t be afraid to lose money. Just do the best you can and be diligent.
Um, another thing I run into and topics is about paying off. consumer debt. People are so excited to pay off their mortgage, I guess, because and I’m not saying it’s just women.
It’s the husband who says, my wife had really feel better if I paid off the mortgage or you know, something like that. Maybe the man feels that way, too, but the husband feels that way. But, in any case, yeah, sure. It’s good to not have personal debt, Everybody feels better with that. But think about, like this, every dollar you put towards the liability because your house is a liability, OK?
It’s somebody else’s asset the county’s asset at the state. It’s the banks.
It’s, it’s somebody else’s code enforcement, it’s the h.o.a.s asset, OK, ’cause you’re paying all that stuff, OK?
It’s, um, It’s not a good idea, OK, in my opinion, to pay off a personal debt in a lump sum because you, you, give, the lender huge windfall.
And then for every dollar you’re putting into a liability, it’s, that’s not a dollar that you can put into an asset.
You’re just, you put that dollar into the liability and you’re going to have to keep chasing it with more money.
That’s the way I look at it.
I say you should do it, but not for 80%.
Or 90% of the value of the property because it’s a liability. Maybe 25%, maybe 50%. Maybe the level of debt you have on a liability, like a house or a car, or a boat.
That level of liability should be offset by an asset where the income from the asset is paying off or setting off the liability month to month.
So that’s how I would look at it.
I would look at it as a balance sheet, where I have my mortgage payment over here, and I maybe I own something, right? Do almost no work to maintain this asset, and on the, on the same balance sheet, this asset is covering the liability. So it balances too close to zero.
That’s the way I would look at it.
I think that’s how you should look look at things like that, especially when you start getting into large amounts of money. I mean, it’s more noticeable when you have cumulated also work with.
So, OK, so a lot of people ask me this, so, if you’re buying a house or a car again. These are all liabilities. And yeah, you want to come from.
You’re re-allocating, OK. And I know, you’re gonna, I know, you’re going to take some of that money that you’re going to re-invest.
I know you’re gonna, you’re gonna get an exciting car, or new house, or whatever. Certainly. Do that. you can simply sell your asset. Whatever that is, you can use the company to do that LLC.
You can pull the money there and then spend the money on the asset, Just take the title to another company or the same company, or when you take the title, make sure it’s through a loan.
Make sure the loan is real, You know, make sure all the numbers are correct, and you keep good records of everything.
And then, you know, you could do it with car house.
Other liabilities at boat, use debt, or use funding another company, that’s how you do it.
And let’s see.
Yeah. And, I don’t focus, I know I say this all the time, but you’re still going to do it.
Don’t put too much effort into not paying taxes on the income that you need for personal living expenses. This is not even worth talking about, but, I still talk about it.
I mean, you guys asked me, but I’m going to tell you, Focus on managing an asset. So, what about your income that you need to live on, pay tax on that.
But when it comes to an asset, you can defer everything and manage it properly, then use a whole life policy, which isn’t another subject unto itself, but you can use a whole life policy for managing the risk of that asset. For example, I can take, I can bind to an asset which has operating costs.
I can, I can offset my risk with a loan.
And then, I can offset my operating costs with a life insurance policy from, which I’m borrowing, before I pay off Pay, My Operating Costs, on a quarterly basis, or something like that. So, I can use loan money, which, I’m making interest on, to, pay off to reduce my operating costs. So, now my margin, my my margin, is wider.
I can, I’m actually making more money, and my competitor is not, if he’s not using that same strategy and so I can compete with other businesses, that’s the way I look at it.
Um, Yeah, and so you want to put You want to put your effort instead into offsetting risk, with loan money.
So, I think you can pay cash for an asset, but, at the same time, by default, you become your own lender. If it’s, I always give the example of a $10 million hotel, which is probably a pretty small hotel. But, if you get a hotel and you pay cash for it, yeah, that’s fine probably as good cash flow.
But you want to offset the rescue took as acting as if you’re You’re the lender there because you have no lender. So, by default, you’re your own lender, You’re taking on risk, for which you’re probably not suited, like, if you’re not a lender, you’re a real estate investor.
You don’t have partners that you can call up in the lending industry, that will give you their trade secrets and work with you and offset some of the risks, so you need a lender that does that. That’s what, that’s what it suited for. That lender is designed to take on that kind of risk. Maybe you are, I don’t know, but mostly, it’s probably not.
Most real real estate investors are not.
So, this is one of the last things I’ll leave you with here.
No matter how you originally hold your investments, OK, how we ever do that, how we ever do this.
You can always create a plan that’s gonna suit your family and people you care about so that the treasure that you’re creating can benefit them. And I’d like to say like this when you’re not involved. So if people say, what happens if something happens to me and said, well, what does that mean? And they go, well, what am I, OK. So so what if you die, and you want to make sure the credentials that are used to access your treasure are available to those that you left behind. So that means your you died, you you fall into a coma. You were abducted by aliens. You’re lost at sea, OK, All these things.
You went up, make it to where people in your family, or your friends, or close people that you care about that you want to benefit from, have access to these assets and this treasure in a way that not only do they have access to it. But they have some proficiency about using it.
So that’s why I like, I have five children, so, my oldest, I already have them doing entrepreneurial things, and I’m already matching funds with them, so I’m having them go do things.
And when they come up with, they figure out how, like, I’ll tell them, hey, go, figure out how to make X number of dollars this month. And if you do, I’ll match it.
And so they’re like, well, yeah, you know, so they go out and that’s, you know, making 100% on your money, so they’re doing that. And that’s the kind of thing you want it.
You want to have pass on financial intelligence along with your credentials to the thing you created in the, that, you built up into a bass treasure, so in any case, let me just post this.
I’m not gonna, I’m not going to go into too much more here. But let me just post here.
I’m going to put that in the chat and I’m also going to put it on the Ace of coins forum there.
Oh, here we go. Chat window. All right. So.
All right. So this first one has to do with disposition of assets. I’m sorry if you’ve already seen this one, But I just think it underscores some of what I’m talking about here.
I will give you one last little analogy.
I know taxes are so interesting. So I’m just gonna give you an analogy here.
Because somebody wanted me to talk to his account yesterday, and we didn’t quite connect, but what I was going to explain, and I really don’t like to argue with accounts. I mean, these are smart people and who am I? I’m not a CPA or anything like that, so, but I do.
I think my My methods are fine or sound. I’ve never had a problem of solve our problems this way.
So The issue of all this news you’re hearing on surveillance, on your crypto accounts and data collection. I’m not so concerned about that, the misinformation about trading between coins being taxable.
It would be true if you reported those transactions in that way.
The rules have never changed. You don’t do that for gold and silver. You don’t do that for stocks unless you get a dividend. You don’t do that for other things.
Until there’s a game, and there is no gain when you’re going between coin’s, here’s why.
There is no change in beneficial interest, And for all the people that I’ve worked with, and now I’m gonna say, it’s not hundreds. It’s like 15 people in the last few years that did receive 1099 from the exchanges.
And the 1099 said they sold like whatever their value, whatever portfolio they had in coins was expressed in dollars on the 1099.
Now, some of them had some dollars, but for the most part, they had no dollars, they didn’t receive dollars. They didn’t sell the coins for dollars. So the 1099, it was erroneous.
Well, you can’t write a letter, you can’t have the exchange who reported that, Fix it, you have to actually go to the IRS.
So, what I was able to do is, I asked the IRS four, a form letter called a Request for Determination Letter, it’s like a two page checkbox form and then there’s another set of instructions, and the IRS wants you to, you know, explain certain things, and then there’s a place where you can make a legal argument in, which is what I did. And so, I told the IRS like this this 10 99 is erroneous, and it’s going to be excluded from the 1040, and I would attach a copy the 10 40 with my request to the IRS. And now, I send this to the Secretary of the Treasury. There’s to address, you have to send it to Secretary of the Treasury in DC. And I attach a copy of the 10, 40, now, sometimes the person hasn’t filed 1040 yet, but that’s OK, We just fill out the 10 40 and we put a copy and then make sure things accurate.
And then we send a copy with the request and a copy the 1099 and we explain that there was no change in beneficial interests, OK, and, and there was no disposition of assets I mean, but really, there’s no, there’s no change in beneficial interests.
This is why we’re able to do a lot of these things. It’s a very key element in this whole thing, OK?
Now, the analogy I’m gonna give you is if I go from litecoin and bitcoin, and I keep doing that, or other coins.
Then I started. Let’s say I start with one thousand dollars and now it’s worth a lot more. Like 10000 or $15,000?
That’s a huge gain. And let’s say I did that in a short-term, like a few months or a year or something like that short-term gain. Right?
Let’s say my accountant tells me let’s use the software at the Exchange and then run the software and see what my taxes would be.
I mean, irrespective of the fact that the accounting would probably show $100,000, 10, 99, OK, let’s just forget about that part.
It would come up with a dollar amount of tax that I would presumably. Oh.
And so I would ask the, my account, OK, so so that’s the amount of money I owe, because of all the trades I made, and the gain, I had and making all these traits, and he would say, Yeah, and I’d say, OK, well then.
Then, how do I pay it?
Then he would say, Well, you have to just, you know, fill out your tax return and send the check in. I would say, Well, what if I don’t have any dollars to pay it?
Am I required to go get some dollars to do that?
And that’s a really silly question, but the point is, it illustrates the fact that the liability is on the dollars. It’s not, It’s not that the coins are being taxed just like gold is not being taxed.
If golder being taxed, then you would send a portion of the gold coin to the IRS. That’s not happening.
It’s when you dispose of it, OK, for dollars. So it’s only when you dispose of the property in this case. It’s cryptographic currency. Nothing new, nothing’s changed, there are no new laws.
So anyways, I hope that give some information that’s helpful. And I’m, I’m gonna end it for now, but I appreciate everyone joining in.
I’m gonna post this pretty quick. Should be ready, maybe, hopefully tonight, And I’ll put these links up here, and hopefully that benefits everyone and I, maybe we’ll do a Q and A session. Hopefully, that’s going to benefit everyone.
You guys, you guys will have a chance to watch this video again.
I know sometimes I talk kinda fast, so, all right, I appreciate it. You all have a good night.