La Rusa

24,000 non-functional Redbox machines are sitting in front of stores across the country.

A typical machine holds 500 movies and games.

I just read an article about a kid getting paid $200-500 to remove the machines. He’s getting another $150-200 for the scrap metal.

He has 20K movies and games that he sells for $1.99 each.

Look around. Opportunities surround us.

Tariffs for Dummies

An American company imports shirts for $20 each.

The company sells the shirt in stores for $40 each.

The president imposes a 50% tariff because it’s imported from China.

The American store now pays $30 each to import the same shirt.

The store now sells the same shirt in-store for $50 each.

That’s how tariffs work.

The consumer pays in the end.

(Not China, as some of you have been led to believe.)

Millionaire: Makes $20m in 2024

Millionaire: Hires “artist” to make “art” for $25k

Artist: Puts one streak on canvas

Millionaire: Thanks artist and has art appraised by an appraiser in his same circle of friends

Appraiser: Values artwork at $20m

Millionaire: Donates $20m artwork to museum to get $20m tax write off

Millionaire: Pays no taxes in 2020

Me at museum: This is stupid, it’s just a line on a canvas

Hipster next to me: No, you just don’t understand it because you’re uncultured.”

Many people have been asking me: “What’s next after the hurricane? Will prices go down?”

Personally, I believe that prices will not go down. Despite all the natural disasters, people still love living by the water, and you can’t create more beach! (Although if we listen to Trump, we should all be happy about global warming, since one direct effect of this phenomenon is more beaches, according to him.)

Let’s take a look at a new house that just hit the market:

AS IS — This 120x60 lot includes a small 3/2 home built in 1946 that needs some repairs after the hurricane. Its size is less than 1000 sq ft (less than 93 square meters). The property was damaged by water during the storm, but the owners have a “Habitable Repair Approval” from the county for the new buyer to get permits and repair it. The property is zoned Multi-Family, allowing for up to four units! This is an investor’s dream opportunity to get your hands on a large lot just steps from 26th Avenue Beach Access with huge rental potential! The asking price is $1,250,000.

Pictures are attached. So, did I convince you?

Good morning, friends.

Outside our window today is a new world, born after the hurricane. And, thank God, we are all safe and sound. That’s the most important thing. But the reality is that right now, we have no internet, no electricity, and no water — neither at the office nor at home. The lines of communication are down, and like many others, we find ourselves in silence, surrounded only by the sounds of nature that survived the storm.

Everywhere on the streets, broken trees lie scattered, torn power lines hang over the roads, and the air is still filled with the damp anxiety of what’s passed. In moments like these, you realize just how quickly the world around us can change, and that safety isn’t just a word—it’s something we must cherish.

Work doesn’t stop, and we will continue to do everything we can, despite the challenges. But please understand, it will take longer than usual. We’re doing our best to stay connected, but we’re dependent on the restoration of basic infrastructure.

I want to thank each and every one of you for your kindness, support, and your incredible offers to take us in, help with evacuation. It’s deeply touching and reminds us how strong human connections are in such difficult times. We are not alone—and that gives us strength.

Thank you for your understanding and patience. We believe that things will return to normal soon, but for now—please take care of yourselves and your loved ones.

Hello everyone from the welcoming state of Georgia, where part of our team has evacuated. The road wasn’t easy: there were lots of traffic jams even at night, and our families evacuated along with us.

We are working remotely right now, but of course, this brings its own challenges. For example, working with VPN takes longer to prepare tax returns, and we really miss having our extra monitors.

We want to say a huge thank you to each of you for your support and kind words. It truly touches us deeply and means so much during these difficult times.

At the moment, we don’t know when we’ll be able to return home: whether we’ll have electricity, water, or internet, and most importantly—whether we’ll have homes to return to. But despite this, we remain optimistic and continue working on your tax returns, payrolls, and bookkeeping.

We will do everything necessary to ensure all reports are filed on time. Thank you for your understanding and support!

A hurricane is coming our way, and I want to thank everyone for the kind words of support. It really matters in moments like this. But I ask you to be considerate. Please don’t say that we’re to blame for choosing to live in a place like this. There’s also no need to give advice on what exactly I should pack. And please don’t ask about my mental state — it’s tough right now.

I especially ask you to avoid conspiracy theories. Don’t say this was orchestrated by the Democrats before the election. I’ve lived in Florida for 30 years, and we have hurricanes every year — under both Republican and Democratic administrations. There’s no need to mention labs in North Carolina or theories about lithium deposits. That’s not what we need to talk about right now.

The best thing you can do is simply wish us strength, health, and patience.

Yesterday, I kept catching myself thinking I’m Scarlett O’Hara. “I’ll think about it tomorrow,” I told myself while sorting through the mess left by the hurricane. This past week has been absolutely crazy: consultations, tax returns, drywall, branches, heat, shower, another shower, body aching, another consultation, and the cycle repeats.

But today I woke up and realized I can’t keep playing “Gone with the Wind” because another hurricane is coming our way. It’s heading straight for us, and it’s a Category 3 out of 5.

There are various forecasts on how it will hit, but it will definitely hit. Tampa and its suburb are one of the most vulnerable cities in the U.S. to hurricanes due to its extensive waterfront properties and the huge bay that funnels storm surge. A worst-case scenario is if the hurricane makes landfall north of the mouth of the bay. The circulation forces water into every nook and cranny. If that happens with a Category 3 storm, we could see 10-15 feet of storm surge in the bay, with the highest water levels at the top of the bay as the surge gets trapped there. Here you can let your imagination go wild.

Our streets are still littered with debris from Hurricane Helen, and now imagine all of that floating and flying around the city.

We’re hanging in there, we’re strong, but we’re tired, and this isn’t easy. Once again, I ask for your patience and understanding in this situation.

Attention! Our office will be closed on Thursday and possibly Friday due to the approaching hurricane. We will try to continue working from home, but there is a chance we may lose power — and working by candlelight is not the best adventure.

Additionally, a mandatory evacuation has been declared in our state for everyone living in evacuation zone A, which affects about half of our office. Of course, the safety of our employees is always our priority.

We thank everyone for their understanding and wish all Floridians strength and minimal losses!

It’s Official!

The Fed has kicked off an interest rate cut cycle with a 50 basis point reduction. 📉

This is only the **third time** in recent history that rate cuts have started with such an aggressive move. The last two times? The economy crashed.

Flashback to 2001 and 2007: both times, the S&P 500 had negative returns over 1 and 2 years. In 2001, the market dropped 31% after 2 years; in 2007, it fell 26%. These weren’t just downturns—they were major crises.

The 2001 cut sparked one of the worst bear markets for tech stocks, with the Nasdaq plunging 76% from top to bottom over three years. Then, in 2007, another 50 bps cut led to a 56% fall in the Nasdaq.

Fast forward to 2024: tech stocks are at all-time highs, and the Nasdaq is soaring. So, why is the Fed cutting rates so aggressively now? If they’ve only done this during crises before, why start with 50 bps this time?

The Fed insists the economy is strong and aims for a “soft landing,” but their actions suggest otherwise. Historically, rate cuts starting at 50 bps have led to average S&P 500 losses of -15% in the following 12 months. Yet, both previous instances were during recessions—something the Fed claims they can avoid this time.

Meanwhile, interest rate futures are signaling a recession, pricing in 8 Fed rate cuts over the next 12 months—the most since 2008. 📉📈

Will history repeat itself, or is this time truly “different”? If the Fed pulls this off without a recession, it’ll be the first time in history. That’s a big “if.”

Can the Fed make history this time?

Amazon just announced complete death of remote work. Everyone must sit at a desk in a physical office where their team is located.

But why?

Amazon execs will say it’s because of “innovation” and “customer obsession” and “being earth’s best employer”, but really, it comes down to economics and taxes.

Ultimately, this plan is an effort to reduce their headcount, avoid a massive tax liability, and increase profit margins now that spending and books across the economy are very tight.

Amazon, much like the rest of the tech sector, dramatically over hired during the pandemic. With interest rates at near zero and tech spending at an all time high in 2020 and 2021, they ramped up a huge global, remote workforce. When the economy flipped, interest rates rose, layoffs began, and tech spending plummeted, they were forced to keep profit up by reducing headcount.

Ok, but what about taxes?

Amazon gets MASSIVE tax breaks from cities and states where they have offices. In theory, how this should work is: Amazon gets tax breaks, people get jobs, locations become booming tech towns (like Seattle), home owners profit, local officials profit, local business owners profit, everyone enriches themselves.

But if offices remain empty and downtown areas continue to become desolate abandoned places, cities and states have no incentive to continue to let Amazon get off tax free. If Amazon continued to enable a remote workforce, the tax man would come knocking and they’d be liable for hundreds of millions of dollars.

In the end, Amazon’s strict return-to-office policy isn’t just about fostering innovation or collaboration - it’s a strategic move driven by macro and micro economics. By consolidating their workforce in physical offices, they’re aiming to maximize tax incentives and reduce operational costs.

The Internal Revenue Service today reminded taxpayers the deadline to submit their third quarter estimated tax payment is Sept. 16, 2024.

The IRS also reminded taxpayers affected by disasters in 17 states, Puerto Rico and the Virgin Islands that they may automatically qualify for a delayed tax-payment deadline. Deadlines vary depending upon the disaster and locality.

Taxes must be paid as income is earned or received during the year, either through withholding or estimated tax payments. Taxpayers such as gig workers, sole proprietors, retirees, partners and S corporation shareholders generally should make estimated tax payments if they expect to have a tax liability of $1,000 or more when they file their return.

A general rule of thumb is that taxpayers should make estimated tax payments if they expect:

To owe at least $1,000 in taxes for 2024 after subtracting their withholding and tax credits.
Their withholding and tax credits to be less than the smaller of:
90% of the tax to be shown on their 2024 tax return or
100% of the tax shown on their complete 12-month 2023 tax return.

A small business owner claimed tax write-offs of:

• $1,800 for haircuts and manicures
• $2,569 for gym memberships
• $830 for cell phones
• $4,615 for clothing
• $278 for laundry

But the IRS audited them and claimed these are not business expenses.

Who was right?

Many things were covered in the case but I’m going to focus squarely on the above deductions.

Here’s what the court had to say about each expense:

→ $1,800 for haircuts and manicures.

“Haircuts are nondeductible personal expenses even when required as a condition of employment.

The same is true for manicures, because such expenses are inherently personal in nature and suitable for general occasions.”

→ $2,569 for gym memberships

“Participation in a weight loss program can be a deductible expense when it is done for medical reasons, however, taxpayer’s membership to a weight loss club is not a deductible expense.»

→ $830 for cell phones

“Taxpayers are not entitled to deduct expenses for cellular phone usage, since they failed to provide sufficient evidence to corroborate their assertion that the cell phone was used for business purposes.”

→ $4,615 for clothing

“For clothes to be deductible, they ‘must be of a type specifically required as a condition of employment, and they must not be adaptable to general usage as ordinary clothing.’

Taxpayer’s own description of the outfits she buys suggests that they do not qualify for a deduction. Beautiful gowns and cocktail dresses are a staple in many women’s closets, as are earrings, necklaces, bracelets, brooches, rings, and watches. Her belief that she can only wear these items when she attends concerts and not in any other setting is irrelevant.

As long as other people would wear such clothing in a variety of settings, the clothes are not deductible.”

→ $278 for laundry

“These expenses are not deductible for the same reasons the outfits themselves are not deductible.”

The next time you see TikTok tax advice saying any of these are deductible, point them back to this post!

My friend’s car got towed at 3:21am last night. Which meant he spent 2 hours at the tow yard alongside 80+ other people trying to get their cars back.

Let’s look at their business model.

He was charged a $300 tow fee + $25/day for «car storage». They processed about 25 people an hour with 4 «receptionists».

$300 x 25 = $7,500/hour of revenue.

They are open 10 hours a day.

There were about 500+ cars on the lot.

500 x $25/day = $12,500/day of storage revenue.

This place could easily be processing $50,000 - $100,000 of top line revenue DAILY.

And all the «customers» paid in cash 😅

And the whole thing operates out of mobile office trailers on a couple acres on the outskirts.

They have contracts with apartment complexes, private parking lots, office buildings, retail centers, etc

People talk about storage being one of the best «revenue per square foot» operations on the planet, but I have a feeling this impound lot could be up there on the list.

Not bad for a company that has a 1 ⭐️ average rating on Yelp.

S-Corps can help small business owners save money in taxes, however, if you invest in Real Estate, you almost never want to put your rentals in an S-Corp

Here’s a few reasons why:

1. F**A taxes: one of the biggest benefits of S-Corps is business profit is not subject to these F**A taxes. Rental income is not subject to F**A taxes anyway. Result: extra fees and work for no extra reward in tax savings.

2. Officer’s Compensation: officers of S-Corps are required to take a reasonable salary, which is subject to F**A tax.
This effectively takes income not subject to F**A and turns it into income subject to F**A tax. Result: extra fees and work only to pay extra tax!

3. Restructuring issues: want to move a property from one LLC into another LLC?
If done in a partnership there wouldn’t be a tax, but if done in an S-Corp then this could be considered a sale of the property and capital gains tax would be triggered.

4. Qualified Non recourse debt: a huge benefit of real estate is using depreciation to generate losses and offset income.
To take a loss though you must have basis which can be achieved through qualified non recourse debt…. unless you are in an S-Corp

5. Complexities of S-Corps: it’s easy to mess up compliance for S-Corps. If the IRS takes away your S-Corp treatment then you default to a C-Corp. Now you have all the problems of real estate in an S-Corp along with the double taxation of a C-Corp.

6. Taxable contributions: own an S-Corp 50/50 with your friend? Contributions of appreciated property to an S-Corp triggers a taxable event to anyone that owns less than 80% of the company’s stock.

7. No Step up in basis for S-Corps: want to pass down your real estate to your heirs?
Assets inside an S-Corp do not receive a step up in basis, which can be problematic.

Tax planning is extremely important. Let’s break it down with a relatable example.

Imagine you’re a self-employed lawyer making $240,000 in net income. That’s a fantastic income, but there’s a catch: it’s too high to claim the Qualified Business Income (QBI) deduction. QBI is a valuable tax break that can save business owners a lot of money, but it has income limits. Specifically, it allows eligible self-employed individuals and owners of pass-through entities to deduct up to 20% of their qualified business income, significantly lowering taxable income.

Now, here’s where smart tax planning comes in. If you contribute $60,000 to a Solo 401(k), you lower your taxable income to $180,000. With this reduced income, you become eligible for the QBI deduction. A Solo 401(k) is a retirement savings plan designed specifically for self-employed individuals and small business owners with no employees, allowing for significant contributions. This savvy move could save you over $10,000 in taxes!

Isn’t that amazing? Just by strategically investing in your retirement, you can unlock significant tax savings. This kind of tax planning can make a big difference in your financial health and future.

I am a Democrat, I am pro labor rights, I am pro employees right. At my firm, we have always paid overtime to all hourly employees at the rate of time and a half, if an employee worked over 40 hours in a week.

However, rules for salaried employees are different, they don’t have to be paid overtime. I have always competed my salaried employees with nice bonuses during and after tax season. However, not every employer is so pro employees as I am.

In the attempt to make sure that salaried employees are properly compensated, the U.S. Department of Labor has implemented policies to ensure that overtime is paid if employees earned less than $35,568 a year.

The U.S. Department of Labor announced that starting July 1st, 2024, the threshold will increase from $35,568 to $43,888 per year. It will then increase to $58,656 on Jan. 1, 2025.

I would have preferred the implementation to $58,656 be phased in on 1/1/26; however, I am tired of certain employers claiming people are managers and supervisors and paying them like crap.

This is currently happening because certain employers claim that salaried employees qualify to be classified as exempt from overtime rules because they are in management positions. Never mind, that even McDonald’s doesn’t pay the managers so little. I hope that new rules will solve the problem.

Going forward, the threshold will automatically update every three years using current wage data — which would next occur on July 1, 2027. I hope this is changed so that the change is made on 1/1 instead of 7/1 because mid year changes like this are moronic and only a Federal bureaucrat would think this is a good idea.

I very much support this change. Again I wish the $58,656 was phased in 1/1/26 instead.

Tax planning for people who live paycheck to paycheck. Note the numbers vary survey to survey; however, roughly 60% of Americans live paycheck to paycheck.

Living paycheck to paycheck is not sustainable. If you are living this way; I am sorry! This post is for you.

First, do not worry about tax planning. You have bigger problems. Ignore tax planning.

Second, create a budget. Do not skip this step. Make a written budget and track where every dollar is spent. This is critical.

Third, increase income. Get a side gig. Work any overtime you are offered. Look into changing jobs if you will earn more money once benefits and opportunities are considered. Deliver Pizza. Babysit. Mow grass. Work!

Fourth, cut expenses. Be brutal about this. Cancel streaming services. Get a cheaper cell phone plan. Stop eating out entirely. Pack a lunch. No more Starbucks. Plan your grocery shopping in a way to cut costs. Look for coupons. Cut your entertainment budget. Stop buying unnecessary clothes. Be brutal. Very brutal.

Fifth, save at least $1,000. This is an emergency fund. You need this when things go wrong. You get a flat tire. Your car breaks down. You get sick. Your child gets sick.

Sixth, once you have an emergency fund add back one of the expenses you cut. Do this! Give yourself a reward.

Seventh, pay off high interest rate debt. Start with the highest interest rate debt first.

Eight, reward yourself. Add back one of the expenses you cut.

Ninth, pay off the next highest interest rate debt.

Tenth, congrats, you made it this far! Don’t give up and continue this new way of money management.