June 1, 2019

Maximizing The Benefits Of IDC Deductions

SMR 32 | IDC Deductions

 

Investing in oil and gas is always a smart way to create passive income. Timothy shares his thoughts on the amazing tax advantages of putting money in oil and gas and goes on to discuss the specifics of the depletion allowance and the intangible drilling costs which are a benefit unique to the oil and gas industry. Encouraging you to invest your money in the right avenues, he talks about another striking tax-related benefit of oil and gas investments relating to active and passive income and the difference in how those incomes are taxed. Join the conversation and learn how you can take advantage of the tax benefits of investing in oil and gas wells.

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Maximizing The Benefits Of IDC Deductions

I hope you’re enjoying the hot weather. I know it’s hard. I know it’s humid, but it’s better than rain. The Lord knows we don’t need any more rain right now as these river banks upon the Mississippi River are being stressed out with all the water. If you haven’t gone up and walked on the levee, I encourage you to do so. It’s a powerful river and it’s hard to describe. I’m having trouble describing it. It’s hard to describe that. Go downtown to Baton Rouge. Go walk on the levee. Go out to Nicholson out there by the casino. I used to park the truck and walk on the levee on the river road right there where that casino, whatever road that is, I guess that’s Bluebonnet when it crosses over Nicholson and hits the levee. Park, walk up there. It’s amazing to see the river. I really encourage you to take your kids, grandkids up there. I grew up on the Mississippi River as a kid in Port Allen and 5613 North River Road. We were a mile-and-a-half north of the old bridge because my mother would walk to the old bridge and back and it was a three-mile round trip. My dad had a tire shop over there in Port Allen next to the Candlelight Inn. Let me tell you something, if you know where the Candlelight Inn is, I can probably guess close to your age.

I saw a guy from Port Allen that I hadn’t seen in many years. Tony Joe Maranto, probably one of the best football players to ever come out of Port Allen High. Tony Joe went and he was an All-American at Northwestern and played for the Saints and the Browns and played some NFL Europe, played professionally for a few years. I saw him and he was like, “Didn’t your dad own a tire shop by the Candlelight?” I was like, “Tony Joe, what were you doing there?” The Candlelight Inn was a mainstay back in the days of the Gold Coast. Anyway, my dad bought some property from Mr. Bob Loreo, a great man who’s with the Lord now. Built a house and that’s where I grew up. I was on the levee all the time. When the river wasn’t up, we had some trails back there. We rode bikes, rode four-wheelers, motorcycles. When the river’s up, you can’t do anything. We used to go pitch a tent out there in the river, collect some driftwood, build a fire and we would catch fish. We would actually tie the weight at the very end of the line and tie about three hooks up and just throw that thing as far as you could out there. We’d catch some catfish.

When the river was really down, we go out in the river in 20, 25 yards. It was crazy. I don’t know if my parents knew what I was doing, but we were out in the river in fifteen, twenty yards. I can’t believe we did that like knee-deep water. Looking back now, I can’t believe my parents let me do that, but they didn’t know. The river is powerful, so I have so much respect. I used to go up there and kill my four-wheeler and sit on it and watch the barges go by. I love the Mississippi River. I’m telling you if you haven’t been around it lately, it doesn’t do you justice to go over the bridge and look at it. You need to get a walk on the levee and see that it’s seven feet from coming over the top. It’s crazy. In my mind, I started thinking, “These are some smart guys who built this levee on two sides many years ago.” It’s amazing.

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I geek out over nature stuff like that. As always, say to me, when I go in the woods and hunt or anything like that in nature, I think it’s the thumbprint of God. I don’t see how I don’t think planets collided and we came here. I’m a firm believer that I’m here because of the Almighty God. The river is amazing. I encourage you to go downtown Baton Rouge, find a place to go walk on it. Make a little trip to Natchez up there and go out there and see what’s going. It’s doing some flooding in Vidalia because the levee is lower there, but they have a backup levee. Lots of things going on. It’s hot but I’m glad it’s not raining. I got in here just in time to do this. My son had a baseball game here in Baton Rouge. We’re leaving here to go to Lake Charles for two baseball games. I’m in the process of putting a lot of things together. The more I get into oil and gas, the more I love it. I have a lot of my money in oil and gas in more than one way and I don’t think oil and gas are going anywhere anytime soon.

Intangible Drilling Costs

There are some amazing tax advantages for putting your money in oil and gas, in wells. I’m referring to Internal Revenue Section 263(c) 59(e), Intangible Drilling Costs and Internal Revenue Code section 611, 613, 613(c)(6), the depletion allowance. The Passive Activity Loss Rule, Internal Revenue Code Section 469(c)(3). All of this has been around for a while. This is stuff you’re not going to hear from the main street media. The upfront costs for an oil well are substantial. Millions of dollars are invested before each well produces oil if it produces any at all. Energy is a capital-intensive sector to reward investors for taking the risk to get projects off the ground. The government allows 100% of these initial costs to be expensed. This tax benefit referred to in the IRS oil and gas handbook.

It’s out there that this tax benefit referred to in the IRS oil and gas handbook as “Intangible drilling and development costs. It is unique to the oil and gas industry.” To claim these benefits, an investor must have what is known as a working interest in an oil and gas property. Simply put, it means that the investor’s risk exposure is not limited or projected in any way. Under these circumstances, an investor may offset this investment against other forms of income such as wages, interest, and capital gains. In the US Tax Code, startup costs known as Intangible Drilling Costs include wages, fuel, repairs, hauling and supplies. IDCs, Intangible Drilling Costs, also includes many other items necessary for the preparation and drilling of wells to produce oil and gas.

SMR 32 | IDC Deductions

IDC Deductions: Intangible drilling and development costs is unique to the oil and gas industry.

 

Importantly, under the 2017 tax reform, investors are permitted to deduct these capital expenditures as a current business expense in the year period. The soft cost offers no salvage value regardless of whether the well produces or is declared dry. Basically, when you put your money in, there’s risk involved. Anytime you put a drill bit in the ground 4,000 to 5,000 feet deep, there’s a risk. You could not make any money but you get to write off, so it’s not like you were just flushing it down the toilet. There’s risk involved. We have a very good track record, but you have to know there’s risk involved. Our company, we’re a small group. You can’t compare us to like ConocoPhillips. It’s incomparable. We’re a small company out there but we’re very good at reducing costs. That’s why I love talking about people having money in the market. I can show you a lower rate of return and get you out of all the fees you’re in, so you can live with the lower rate of return because of the fewer fees. It’s the same thing with this company. We were very good at controlling costs. However, costs incurred in one year will not be able to offset 100% of the taxable income in the next year due to the elimination of carrybacks as part of the new tax law. An investor can run off 100% of Intangible Drilling Costs, which typically represent 60% to 80% of the overall well cost. This longstanding tax benefit was put in place in a century ago and remains intact under President Trump’s tax reform.

A helpful fact, say you invest in all property in June of 2019 but exploration is slow and drilling is not due to start until December 2019. The tax code says you still have a three-month cushion to start drilling by the end of March 2020, while still claiming the benefits in the year they were incurred. I am very aware, not because I was born this way, I don’t think of myself as a very smart guy, but I’ve been blessed just to have enough common sense to ask questions. I’m trying to teach my four kids. Ask questions. That’s how you learn things. Swallow your pride. I have aligned myself with some very smart people who are smarter than me and I’m totally fine with that because they teach me stuff.

The tax advantages/tax benefits for putting money in oil and gas wells, there’s nothing else out there like this that I’m aware of. If there is, call me. I know there are some tax credits. This is not a tax credit. This is a tax deduction. Plus, the first 15% of income every year into perpetuity of the well is tax-free. Call me 202-SAGE. That’s 202-7243. The website is SageMoneyRadio.com. You can send me an email from there. You are not going to read about this from traditional Wall Street. If you want to invest money in the energy sector, you’re going to have to maybe get in some energy-heavy mutual funds or maybe some master limited partnerships and those are great. I’m not in those but I know people that are and they seem appealing.

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Active Vs Passive Income

Let’s talk about active versus passive income. Another striking tax-related benefit of oil and gas investments has to do with the difference between active and passive income and how that income is taxed. I think the greatest impediment to building wealth taxes, the government. In this situation, the government’s helping us. In this situation, we’re still taking advantage of tax laws that were put on the books years ago to encourage American independence to foreign oil. People, we are there. We’re still importing and exporting oil but if something happened, we don’t need to import any more oil. We have it in this country. Some amazing things are going on a little bit north of us in East and West Louisiana, Pointe Coupee Parish, the northern part of East Baton Rouge Parish in Wilkinson County. Some amazing things with ConocoPhillips, EOG, Marathon. I expect some other smaller companies that come in in the very near future. Fourteen wells were just permitted to be drilled in East Louisiana Parish.

There are some things going on in oil and gas. It’s a great time to be in it. The tax benefits, I don’t know of anything else out there that has tax benefits like this. We don’t drill wells for tax benefits. We drill oil wells to make money. The tax benefits come along for the ride. As we say in Louisiana, “It’s a little lagniappe.” Lagniappe, it’s a little something extra. Louisiana Lagniappe is probably the best restaurant in Baton Rouge. It’s phenomenal food in Louisiana Lagniappe. I encourage you to go there. They have this yellowfin tuna with a pineapple glaze sauce. It’s the best dish in Baton Rouge, I’m telling you.

Another striking tax-related benefit of oil and gas investments has to do with the difference between active and passive income and how that income is taxed. Unlike a royalty interest, a working interest in an oil and gas property is not considered a passive activity under the current Tax Code. As such, which means all net losses from oil and gas investments may be all set against other forms of income such as wages and capital gains. You have the alternative minimum tax liability. Even with the efforts to encourage oil and gas investment, the government has set a few deduction limits, hence the Alternative Minimum Tax, AMT. As its name implies, the Alternative Minimum Tax puts limits on how much you can deduct in a year to ensure the government receives a minimum amount of tax revenue. When the AMT is triggered, an investor no longer gets the full benefit of all the possible deductions. Although the corporate AMT has been repealed with the new tax law, taxpayers other than corporations must still pay it.

SMR 32 | IDC Deductions

IDC Deductions: Alternative Minimum Tax often affects oil and gas companies which have lower IDC deductions.

 

According to a KPMG report, this means oil and gas investors may need to make adjustments for the following. Mine exploration and development costs, mine depletion and the oil and gas, and geothermal intent with drilling and development cost preference. However, oil and gas companies can still ensure that their investors maximize the benefit of their IDC deductions, Intangible Drilling Cost. Specifically, an oil and gas company may incur costs in 2018 but hold off paying the invoice until 2019 as to extend the deduction benefits over a couple of years, and hence maximize deductions in the years 2018 and 2019 without triggering the AMT. According to the IRS, an investor may deduct IDC cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it.

What Triggers The AMT?

What triggers the AMT? According to the IRS, there is no set income which causes the AMT to kick in. Whether or not you are subject to it depends on factors that include income and potentially certain deductions claimed on your tax return. Importantly, AMT often affects oil and gas companies which have lower IDC deductions, especially in years with little taxable income due to IDC deductions, loss carryforwards or low commodity prices. That’s a lot of legal talk jargon. I have a CPA here in town that is very familiar with the oil and gas tax laws. All of this stuff is written in the Internal Revenue Code, in sections that we are very familiar with. Who doesn’t want a tax deduction? Everybody loves tax deductions. Everybody’s trying to find ways to decrease their taxable income. This is a way right here. I don’t know of a better way than this where you still can be a partner and own interest in producing oil and well to get monthly income.

I am very aware. I am no tax lawyer. I am no CPA. If I could go back and do things over again, I would definitely be a tax lawyer. It’s weird. I like to study. I like to read the Internal Revenue Code, all 86,000 pages. I like to read parts that deal with deductions and there are ways to minimize your income. Does that interest you? When you put your money in an oil and gas well, there’s risk involved. The income is not going to be consistent every month. It’s going to depend on the price of oil. Number one, are we going to hit oil? Number two, the price of oil per barrel. Number three, BOPD, Barrels of Oil Per Day. You get paid once a month. If you’re looking for consistent income, that’s something different. We have something for that too. Before you go drill oil wells, what happens? ConocoPhillips, Marathon, EOG, they are leasing land. There was a meeting here at the Marriot around the corner right here next to me, about all the oil and gas activity going on in East and West Louisiana, Point Coupee and North and East Baton Rouge Parish.

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I have a friend of mine that his mother-in-law and wife went. I didn’t get the details of what was going on, but there are a lot of cool articles out there about oil and gas. One of the main guys, a guy named Kurt Barrow, is one of the main guys producing this stuff. I read it. Before these oil companies go to drill wells, what happens first? They’ve got to lease the land. How are ConocoPhillips and Marathon paying people in the Felicianas? They’re publicly traded companies. They have capital. They’re always raising capital. If you’re going to put money in ConocoPhillips now, you can go to TD Ameritrade, open account and buy ConocoPhillips stock directly. The way we do it, we take the money from lenders and we pay a fixed rate of return to go lease land to private equity deal and we pay people.

How You Get Paid

You have six choices. You have two choices for each year. You have a one-year, two-year, three-year so you can invest simple interest, which means you receive monthly income off your principal. $50,000 is the minimum amount to put in. It is a great place for 401(k) money, IRA money. If you have money sitting in a 401(k), lazy money somewhere, you can transfer that to a self-directed IRA and put your money in this and start earning monthly interest. If you use IRA money, the monthly interest is just going to go back to your IRA or you could put in cash and get cash sent to you every month. If you have money in an IRA and you have no intentions on touching in the next couple of years, you can do the compounding yield. If you want monthly income and you put your money up for one year, you’ve got to lock your money up for several months. It’s an 8% rate of return. For two years is 8.5%. For three years is 9% a year. Show another place we can go put money up for three years and are 9% a year for three years and receive a monthly income. That’s a solid deal.

The compounding, if you want to put your money away for one year, and it works like a CD, you don’t get any income. At the end of the one year, you receive your principal back plus the interest, which is 0.3%, so it’s 0.3% higher than the simple interest. The compounding yield for two years is 9.23%. The compounding yield for three years is 10.28%. Put your money away for three years, no monthly income, nothing but at the end of three years, you’ve earned 10.28% per year for three years. That’s solid and that’s real and there are a lot of investors doing it. I’m doing it. The 25th of every month is revenue day and that’s when the money’s sent out. If it’s a cash investment, it goes back to your checking account, savings account, whatever account you set up this IRA money and it’s the monthly income. It goes back to the IRA. Years ago, it used to be where it was monthly, but then people started asking, “I don’t need the money.” They actually were telling our CFO that, “I don’t need the money, I just want to re-invest it.”

SMR 32 | IDC Deductions

IDC Deductions: The tax code offers attractive benefits for offsetting the tangible cost of operating oil and gas properties.

 

They came up with this compounding yield. One year 8.32%, two-year 9.23%, three-year 10.28%. I realized that it is not a home run. That is what I call a solid double. I have friends who go buy real estate, they flip houses and making 40% and 50% in six months. I’ve never done that. That’s really not my lane, not my skillset. I have friends who have a knack for it and they do that. They go buy a property, put some money into it, rent it out for six months to a year, then flip it and sell it to some other company because it has a tenant in it. There are ways to make way more money than that, but you’ve got to be active. The money’s coming in, you’re not doing anything. The simple interest was scheduled monthly payments and compounding interest. The proceeds go to pursue our oil and gas interest. This is collateralized. I encourage you to learn more about this.

I am spitting out truths and facts of the Internal Revenue Code. Ways to put money in oil and gas. Let me clear something up. When you put your money in an oil and gas project, I am a salaried employee for this company. You put in $100,000, I don’t make a commission on that. We actually had an investor from Baton Rouge a couple of years ago. We had to limit the amount of money he wanted to put in. He wanted to fund by himself some of these oil and gas projects, direct participation and he wanted to put a substantial amount of money in the land bank. We only let him put $1 million. Quite frankly, he was a little upset. This is after his accountant, tax lawyer made trips to our office. It was six-month due diligence and once he pulled the trigger. I work for them. I have a lot of my own cash invested with them. I believe in what they do. I believe in the oil and gas sector. The energy sector is not going anywhere and all we’re doing is following the Internal Revenue Code of ways to decrease your taxable income, which I think is awesome. Any time we can keep bad Uncle Sam out of your pockets, it’s a great day. It’s a way to decrease your taxable income to be part owner and investor in a project is going to spit off monthly income. Once you understand the risk and have this calculated, this could be for you.

Getting back to the intangible drilling costs. In addition to all setting intangible cost, the Tax Code offers attractive benefits for offsetting the tangible cost of operating oil and gas properties. Specifically, through equipment which includes things like tanks, tubed casings, and pumps. Historically, an investor has been able to write off 100% of these expenses through depreciation deductions over a seven-year time period. That is because unlike the intangible cost, the equipment maintains salvage value over time. The new tax law retains this century-old tax treatment too. While this has been a valuable benefit for many investors, it pales in comparison to the IDC deductions. However, under the new tax laws, investors are granted an additional provision. I’ve been saying for years and years that oil and gas investing is phenomenal because of the tax laws. Do you know what the current president did in his administration? They threw us another bone. They made it sweeter.

Any time we can keep bad Uncle Sam out of your pockets is a great day. Click To Tweet

However, under the new tax laws, investors are granted an additional provision, a depreciation deduction equal to 100% of the cost of the qualifying property in the year the property is placed into service. As a result, oil and gas investors in coming years may deduct 100% of their intangible drilling costs in the year the equipment is put to use. What I’m saying is it is possible to put in $100,000 and have a deduction on $100,000. Put in $50,000 as a minimum. Put in $50,000, get a deduction for $50,000, $75,000, whatever. It’s possible. It’s not going to be for every project. It depends on when you invest and when the wells are drilled. It just depends on where that lines up, to have that possibility. Show me anything else out there like this. It doesn’t exist. This is where it exists, in the oil and gas industry, in the energy sector.

The Depletion Allowance

Let’s talk about the depletion allowance. Oil and gas are not renewable resources. Every time you drill, you are depleting the reserves because you are forever reducing the oil you have access to. The Tax Code grants certain oil and gas producers a depletion allowance of 15% on the gross income earned on the average daily production of up to 1,000 barrels of oil or six million cubic feet of gas. I just read from the Internal Revenue Code Section C13 AC. This allowance does not apply to all producers who refine more than 50,000 barrels of oil per day, that’s us, or oil producers whose average daily refinery runs exceed 75,000 barrels, it’s not us or retail producers of oil, not us. For instance, if an all producer generates 800 barrels of oil each day at $100 a barrel, it will not be taxed at $100 a barrel, but rather $85. Large companies with extensive holdings like Exxon Mobil do not receive this benefit. Small producers producing less than 100 barrels a day can exclude from taxation 15% of their gross income from oil and gas wells. I’m reading Internal Revenue Code verbatim, word for word. That’s what you get with a company who knows what they’re doing and look at their track record. You call me, I’ll make the introduction and get educated. It’s an education process.

I wish we could buy a stock of Chick-fil-A because we would own a lot. My wife is a teacher. She loves to cook. My wife is an amazing cook. We have four kids and we were on the road, and I’m not complaining. I love it. I love where I’m at the stage of my life. I wish it’d freeze. Kids are very active. They keep us on our toes. That’s a lot of fun. We’re blessed to live in this country. How awesome is it to live in a country where we can pretty much come and go as we choose to eat at a restaurant, go buy a big, fat, juicy rib eye, go back to your house and cook it. Grill it. We have so many conveniences and luxuries in this country, so thankful for every soldier that has ever served in this country. If they were so blessed to live and serve 20, 25, 30 years and retire, or unfortunately if they passed away serving this country, it’s just an honor. I truly think those are the true heroes of this country. I tear up when I watch these videos on social media of the dad who’s been away fifteen months or nine months from his family and he shows up at the school gym and the kids go run into him. That’s powerful and that’s a sacrifice. I’ve never done that kind of sacrifice. That’s why I’m very thankful for the men and women who do sacrifice.

SMR 32 | IDC Deductions

IDC Deductions: The tax benefits of investing in US oil and gas have long been attractive. With the new tax laws, they have the potential to be even more appealing.

 

I encourage you to be very aware, to be very cautious of anything you put your money in. You need to be cautious of this. You should be cautious of me. I encourage you to ask every person that is talking about a place to put money, do they have their own money in there? I despise annuities. I don’t believe in locking your money up for so long, “They’re so safe.” Let me tell you something. I had to do training on an annuity for some life insurance. It was on one specific company and one specific annuity. I called my buddy of mine who offers annuities and I said, “There’s no way a person can sit down at this and truly grasp, understand, comprehend all these moving parts.” There’s no way to do it. I don’t believe they can. I’m not the smartest guy in the room, but I feel like I’m fairly savvy on some financial things and maybe I’m just not familiar with them. I think there are too many bells and whistles, moving parts, a fake fan of money, bonus money. It’s all fake. All the bonus money is fake. Be very cautious of that. Be very cautious of locking your money up for several years. I like to be liquid.

The Recapture Rules

Be cautious with these oil and gas investments. People could lose money on this. Look at the track record of what’s going on. Ask questions for sure, but be very cautious of tying your money up for that long and always be cautious when you hear bonus money. Will they just give me money? They’re so nice. They’re going to give me money. There are strings attached to that, so be very aware. There are tax consequences of sales of oil and gas assets. When oil and gas interests are sold, complex recapture rules apply. These rules dictate whether the government treat all or a portion of the gains as ordinary income. The gains from an oil and gas sale are generally categorized as a capital gain, which is taxed as peripheral preferential tax rates, except for recapture of prior depletion or depreciation deductions. These are taxed at ordinary income rates. Even depletion is only taxed at a maximum rate of 25%. This means that for high-income individuals, oil and gas remains a very attractive investment. I’m not a high-income individual. It’s attractive to me. It is very attractive for high-income individuals. Actual tax savings may vary as they depend upon your tax rate limits on deductions, application or alternative minimum tax and the actual drilling cost of the project. Does that interest you? You should learn more about it. I encourage you to.

Creating A Schedule K-1

Creating a schedule K1. It is natural to want to avail yourself of these tax benefits as quickly as possible. Unfortunately, due to the volume of information that goes into aggregating all expenses, it takes time to prepare a schedule K1, which reports your share of the income, deductions, and credits relative to your oil and gas investment. It’s because of the time required to receive invoices, create billing statements, generate reports, and complete the required financial statements, it is not uncommon for K1s to be generated after April 15th. In return for the substantial tax benefits of their oil and gas investment, investors should expect to apply for an extension and file their tax returns late. In certain instances, you may need to pay an estimated tax liability to avoid being hit with a penalty. I wasn’t comfortable with that at first, but when I saw the big deductions, I love it. I’m very retentive, obsessive-compulsive disorder whatever it is about bills and paying money. This was a little bit different for me, but now it’s not a big deal. I just file an extension every year. Does that interest you?

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Let me conclude with this. You all can look to this. In my opinion, the tax benefits of investing in US oil and gas, they’ve long been attractive. With the new tax laws, they have the potential to be even more appealing even when you take into account balancing factors. The tax advantages of IDC deductions, equipment depreciation, depletion allowances, and timing options are highly favorable. Investors should consult with tax professionals regarding the details of the particular opportunity. Suffice to say it, as a nation, we are looking at an unprecedented opportunity that is worth exploring. It’s worth the look at everything. I was quoting a lot of tax laws, IRS.gov, publications. I quoted some things from Cornell Law, Energy.gov. All the stuff is on the books. It’s real but you’re not going to hear about it from your main street financial guy. They just don’t have access to this. They go directly with a company.

The Market

Let’s talk about the market. If the market didn’t display volatility, I don’t know what did. I was having a conversation with a friend of mine about all these indexed annuities. The market’s been up and you don’t lose money, you get a zero year, but you don’t get to participate in all the gains. Like oil and gas, it should be a very small portion of what you do. You think there are a lot of bells and whistles to understand what the market was so volatile. It’s a good time to possibly capture, maintain and keep some of those gains. I deal with some very tax-advantaged strategies. One is oil and gas. There’s a risk involved in that. I also deal with another strategy that is very similar to the Roth IRA and you can contribute as much as you want into it. If you’re a business owner or you receive income from an S corp, C corp LLC, there’s a way to contribute money and get a tax deduction and receive that money tax-free as well. There’s a trust involved and it has to be for the right person. There’s a way. If you’re a business owner, it’s very highly attractive.

I’m a business owner. It’s very highly attractive. I encourage you to call me. You’re not going to hear about this from any financial guy. I’m telling you this area, they don’t know about this. I am so very conscious, very aware of taxes and I tried to do everything I can to mitigate my taxes. I have an awesome CPA. I’m going to have him here pretty soon. I hope to talk about some things. He’s very familiar with the oil and gas. He’s very familiar with ways to legally deduct your taxable income. That’s what I’m all about. In fact, I’m into optimizing the Internal Revenue Code, optimizing the tax laws. That’s been my word of the day. I’m in the beginning stages of possibly writing a book where I’m going to put all this stuff together.

There’s no book like it, I don’t think I’ve read a ton of books on strategies, but I’m going to combine some of these together that talk about all the time and put on here. If you want a commercial building, and I make no money from this, but I can send you to somebody. If you’re in a commercial building, there’s something called cost segregation. It’s absolutely amazing and it costs you nothing to look at it to see if it’s a good fit for you. It’s a way to accelerate depreciation. The way I look at it, I would love to pay less tax now. Like there are some idiots, truly the epitome of idiots complaining about their tax refunds being lower, but their paychecks went up. The last time I checked, the government doesn’t pay you interest when they give you your refund. That’s a whole other conversation. If you don’t agree with me on this, don’t ever call me because we’re not going to get along.

When you look up the word refund, when you define the word refund, and I don’t get it but maybe someone can explain to me how does someone get a refund when they never put money in? How do you get a refund for more money than you put in? I’m talking about taxes. That’s why the country’s going broke. The word refund right here on my Webster dictionary app, “To give back or restore especially money. To repay, to make repayment to.” If you don’t pay, how do you get a refund? Can somebody with common sense explain that to me? You can’t. We spend more money than we take in because we have losers that receive refunds and never put in. It’s a freaking joke and it makes me mad. I don’t know what I was saying before that. I get so mad at these corrupt politicians who go up there to DC and they leave us and they get elected. They’d tell us how we should live and do the exact opposite.

Like Al Gore and this whole deal about saving energy. Al, if you’re going to talk the talk, you should be walking the walk. He lives in a 14,000-foot mansion and it’s a higher energy building than any person in Louisiana. I’m so sick and tired of these guys just making promises. We do have some good politicians. We have a few good ones. I really like Garret Graves. I met him one time. I think he’s done an outstanding job fighting for or being a voice for the flood victims of 2016. Talk about bureaucracy. I hate bureaucracy. I want the government in my life as little as possible. I do believe that we need a government. We need the rule of law. We need roads, we need infrastructure. I do believe in paying taxes, but we’re overtaxed. There are certain parts of the Tax Code where you can decrease your taxable income. I’m no tax attorney, I’m no CPA. I’m thankful to have met some very smart people. I am friends with tax lawyers who stay on top of this stuff. I read this stuff. I am friends with CPAs who obviously are informed of the tax law changes.

Our company, oil, and gas are very informed of what President Trump did to make oil and gas laws deductions even sweeter. I think I was talking about the volatility of the market. The market is very volatile. There are some articles out there that talk about losing 60%. I don’t want to be a doomsday, but one article is from BroadFinancial.com, Avoid the Losing Side of the US-China Trade War. What does it matter about the market if it’s a rollercoaster ride? What if you need money when the market’s down? It is catastrophic for you to take money out of your account and the market’s down. There are ways to avoid that. There are ways to place money in places that don’t lock your money up for several years, like a fake fan on bonus annuity. There are ways for you to earn money with minimal risks. Everything has a risk. The annuities are not FDIC insured, which is fake. If I were in college again, I would probably make a thesis statement on the FDIC inserts because it’s not real.

I encourage you to challenge and look at what others are doing. Your money is not going to make a lot of money doing what everybody else is doing. Learn, capture some of those gains and put it someplace that is different. Have you ever heard of oil and gas leases? People do this all the time. Have you ever heard of the great tax deductions in oil and gas? Have you ever heard of the unlimited Roth strategy, it’s very similar to a Roth. You put as much money as you want into it and the income is tax-free. Have you ever heard of the strategy if you’re putting your money into a strategy, getting a deduction and the money’s tax-free? Have you ever heard of that? I encourage you to get educated. It was a chocolate block full of tax law, kind of boring, but it’s ways for you to keep some of your own money in your own pocket that you earned what we call your stored labor. Keep more of it. I hope you have a blessed day. God bless you. God bless the USA.

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