Financial Tactics Preview Show




Kaaren Hall, CEO, uDirect IRA Services, LLC


At uDirect IRA Services, the investments in clients retirement accounts can be self-directed by the client directly. With a self-directed IRA from “uDirect”, you make the investment choices. The types of investments are almost limitless. With the self- directed IRA account, “uDirect” acts simply as an independent administrator handling the investment transactions which you dictate.



Matt MacFarland and Amanda Han, Managing Directors Keystone CPA


Keystone is a professional client services firm dedicated to providing comprehensive financial, tax, and accounting solutions to business owners and real estate investors. Their team of Certified Public Accountants deliver high-quality financial solutions through a High-Touch / High-Services approach to ensure that their clients maximize the profitability of their businesses and investments. Keystone’s financial and tax strategies result in increased profitability and wealth accumulation for all of their clients.



Episode Notes:


Narrator  This is The Norris Group’s real estate investor radio show, the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever-changing real estate market hosted by author, investor and hard money lender, Bruce Norris.

Bruce Norris  Hi thanks for joining us. My name is Bruce Norris and today we are joined by three special guests who have been with us many times. Kaaren Hall CEO of uDirect IRA services at uDirect IRA services, the investments and clients retirement accounts can be self directed by the client directly with a self directed IRA from uDirect you make the investment choices. The types of investments are almost limitless. With a self directed IRA account, uDirect acts simply as an independent administrator, handling the investment transactions, which you dictate. Occasionally she says you can’t do that, but that’s okay. We have Matt MacFarland and Amanda Han, Managing Directors of Keystone CPA. Keystone is a professional client service firm dedicated to providing comprehensive financial tax and accounting solutions to business owners and real estate investors. Their team of Certified Public Accountants deliver high quality financial solutions through a high touch high services approach to ensure that their clients maximize the profitability of their businesses and investments, Keystone financial and tax strategies result in increased profitability, and wealth accumulation for all of their clients. So, we welcome you both to or all of you back again. And certainly nothing is boring about what’s about to occur. And I almost don’t know where to start. And um, I think, but, ask, i’ll as both of you, the changes are being discussed, if any of those been actually implemented or is just, this is just still up to Congress to vote on all this stuff? Kaaren why don’t you take the first layer of anything to do with you know, the world that you deal with?

Kaaren Hall  Sure. On my hand, on my side, there are proposals on my side as the House Ways and Means Committee that on September 13, submitted proposals that the House and the Senate will look at.

Bruce Norris  Okay, September 13, is passed. I mean, that date. So, what did they do?

Kaaren Hall  They will, the House Ways and Means Committee released their proposal to the House and Senate, they released a bill.

Bruce Norris  Okay.

Kaaren Hall  For the House and Senate to consider.

Bruce Norris  And that is going to get, it’s being considered now?

Kaaren Hall  It is. And so it will I mean, I think we’re gonna have the whole thing wrapped up by the time that Congress adjourns on December 10.

Bruce Norris  December 10. Okay. All right.

Amanda Han  And I think they were supposed to, I mean, all of the tax, the tax changes that we’re looking on talking about as part of that same proposal that Kaaren is referring to was reading that there were supposed to be a vote, I guess, a preliminary vote this past Monday, on September 27. That didn’t occur. So, the the next goal is they were supposed to have some sort of preliminary voting on Thursday of this week, to see you know, where, to get a feel for where people are. But my understanding is they’re still even though the proposals out there still a lot that they’re working through. They’re not, there’s not a whole lot of agreement with what’s in the proposal. So, so to answer your question, though, nothing has been passed. These are the preliminary proposals, and any and all things can change between now and the time anything is finally signed.

Bruce Norris  Okay.

Amanda Han  To law.

Bruce Norris  For both of you that guess the first question is, is any of this retroactive to January 1? Which is a really scary thought.

Matt MacFarland  That’s, that’s such a good question. It’s, I mean, I think some of it actually, they specify that it’s going to be effective starting next year. Some of it, you know, like there’s potential changes in capital gains rates, they want to make it effective September 13. Because I guess…

Amanda Han  That was the date the house.

Matt MacFarland  Yeah, that was the date proposal came out. They’re trying to prevent people from dumping everything between September 13 and December 31, I guess, is the theory.

Amanda Han  Yeah, I think that’s the main one that had kind of a unique date of a retroactive change for capital gains increased to…

Bruce Norris  That’s a big deal.

Amanda Han  Yeah, September 13. And we were really hopeful that they’ll change that to be on a go forward basis. Because you can imagine sort of the nightmare of people who maybe sold stocks, real estate or crypto you know, be like between September 13 and the date that you can’t you know, they sign into law, they would kind of be stuck in pay that higher capital gains tax rate. So yeah, and initially in the previous It wasn’t the pre proposals when they were talking. It was supposed to be higher capital gains rates, effective April of 2021, or something like that. So, they’ve delayed that to September 13. But maybe it’ll be delayed even further.

Bruce Norris  You could have already closed escrow and then found out ‘Oh, I owe a whole bunch more.’ That’s unbelievable. Okay, Kaaren in your world, any of that retroactive?

Kaaren Hall  But no, not retroactive so much as I’m really being effective December 31. It’s like, for example, uhm, being effective December 31 2021, or being retroactive to that date. I mean, each one is different. But again, we’re talking about proposals here.

Bruce Norris  Right.

Kaaren Hall  Not, not finished product.

Matt MacFarland  Yeah, that’s the thing. Right? If it doesn’t, if it doesn’t come to agreement by the date Congress adjourns, right. You know, it couldn’t get pushed in the next year, theoretically right, and…

Amanda Han  And I think one thing, that Kaaren, you probably have more to say on this than I do with respect to proposed changes to self directed accounts, investing in syndication deals, although the changes are not technically retroactive, but it does impact investors who already have their money in syndicated deals that they might have had the money in there for years, you know, prior to today.

Kaaren Hall  That’s true.

Bruce Norris  Okay. Is all this coming about, because we have to, we have to chase a lot more money, because of the new types of programs is that, you know, like, climate change issues and all that, you know, that three and a half trillion dollars is that what a lot of this is for, is trying to raise money and revenue for the, for the government to pull all the all this off?

Kaaren Hall  Well, in my opinion, it certainly isn’t about taxing the rich, because everything I’m seeing is about taxing the middle class. I don’t see how this is going to impact the rich if that is, in fact, the goal of…

Matt MacFarland  I don’t think , I don’t think they’re calling the middle class anymore. They’re calling it the new definition of wealthy.

Bruce Norris  It’s changed. It’s gone down to zero.

Matt MacFarland  Right. But yeah, I mean, presumably, it’s, it’s, you know, I guess I’m not a politician, obviously. But uh, presumably, it’s being done to pay for a bunch of programs. I mean, maybe some of the pandemic stuff, you know, who knows? Right? It’s it’s, but they talk it’s supposed to raise trillions of dollars?

Bruce Norris  Yeah. Okay.

Amanda Han  2.1. 2.1 trillion in new lobbyist, so.

Bruce Norris  What, Kaaren, what are we talking about, what changes are they talking about for the, for the retirement fund world?

Kaaren Hall  Well, several, but I think the two biggest would be in sections 138312 and 138314 of the House Ways and Means Committee. proposal and so you know, you’ll you’ll find that proposal, you can just email me if you want it, I’ll put it here in the chat. And, you know, we’ll just share it with you, so that you can look at it because there, there are a couple things that affect IRAs. But most prominently, what’s going to affect self directed IRAs will be like Amanda, pointed out that it really does impact people who have, well, Roth conversions will be will be impact. So, the bill eliminates Roth conversions for IRAs and employer sponsored plans. And that’s for people with taxable income of $400,000, or married people filing jointly with taxable income over $450,000. So, most people will not, will no longer be able to do a Roth conversion that kind of closes the backdoor Roth, if you will, the one that was created by Congress, by the way, 10 or 11 years ago when they agreed to tempora. So also, it’s the section is going to prohibit employ after tax contributions in qualified plans for people that have, are have high incomes and Matt and Amanda can go and go deep on that. But what’s really at stake here is that you’ll no longer be able to invest in certain types of assets that you used to be able to invest in with your self directed IRA. Like any kind of asset where you have to prove your education or your income. So, that means no more private placement investing. And as Amanda alluded to, it’s not just that you’ll no longer be able to invest in this asset class, you know, private placements, which are also called Reg D offerings, right? ABCD offerings, private equity, lots of different names for the same asset class. But if you have that kind of equity presently in your IRA, you’ll have two years to remove it from your IRA and that just the flood of unintended consequences or intended consequences, I don’t know will be just tremendous and and really devastating. so devastating to the value of retirement accounts. So, this is why I’ve been on a real push with uDirect to get people to write to their congressional representatives, their house, house representatives, their senate representatives, and let them know what’s actually in this bill, some of them don’t even know, they kind of shoved it into at the last minute. So, that’s only one of the things at stake, you know, one of the asset classes at stake. The other one is the IRA owned LLC. Okay. So there is this, it talks about not where you where you’re not going to be able to invest in assets, where the IRA owns 10% or more of the company, well, if you have an IRA owned LLC, you own 100% of the asset. And so that would make the IRA owned LLC, just null and void. So, just like with private equity, what you’d have to do is get evaluated with at least with an LLC, you can move the assets back into the IRA, and you’re okay, you don’t get taxed.

Bruce Norris  Exactly.

Kaaren Hall  But for the private placements, if they can’t get those, you know, sold or liquidated in some way, it means that middle America will be left holding the bag paying the tax on the value of their private equity. It’s, It’s really scary.

Bruce Norris  Yeah, that, that is scary. Before I go to Matt and Amanda, is there, are there any changes where they break promises that are like, like Roth earnings as they, any intention to make that taxable?

Kaaren Hall  No, not at the, not this time, which I, what’s ironic is, is, I guess was like 2018, they were, Congress was talking about everything was about Rothification. And they were looking at this time to make everything a Roth. And but then at the last minute, they they pulled the reins back on that, and that never happened. So I’m not I’m not seeing that at this time.

Bruce Norris  Okay. You know, I guess part of what’s going on is there’s, when you, when you make an investment under current rules, there’s trust that that will continue.

Kaaren Hall  Oh I see what you’re saying.

Bruce Norris  Why…

Kaaren Hall  I see what you’re saying.

Bruce Norris  Right.

Kaaren Hall  Yeah.

Bruce Norris  …saying even stuff that you’ve talked about.

Kaaren Hall  

Yes.Bruce Norris  People are going to be forced to sell something they would never be thinking of selling. That’s, it’s, it just, it bothers me because it breaks down the trust in the system.

Kaaren Hall  It does. When people invested in private placements, they did so legally, you know, with with really the encouragement of the federal government with the JOBS Act, ‘hey, we want you to invest in private equity. We want you to invest in private companies.’ And we did and now they’re they’re looking to pull the reins back on it. So we really, everyone has to tell their story. Tell Congress how this would impact you. You know.

Bruce Norris  Yeah, it would. And one of the most important impacts is that, wow, I did everything that was legal and I got slammed for it. That’s a, I don’t think that’s a price tag that we want to America to pay. I just don’t. Uhm Matt and Amanda, I’m just going to go down through a series of questions, because I’m very interested to know, what is what’s being proposed in different types of tax. So, corporate tax rates are currently what percentage?

Matt MacFarland Are currently 21%.

Bruce Norris  And they’re talking about that going to what 29?

Matt MacFarland  They’re talking about changing a little bit. So they’re actually talking about bringing the lowest rate down to 18%. And I think that’s income up to 400 grand if I remember correctly, and then you’d have a rate of still have 21% drum for the grand…

Amanda Han  5 million.

Matt MacFarland  $5 million in net profit in the C Corp. And then above 5 million in net profit, you would I think of the taxes 26% is what they’re proposing.

Amanda Han  So, it’s actually can it  depends on for the larger corporations, that’ll be a bigger hit because they’re going from 21 to 26.5. Most of our clients in terms of real estate, you know, they have a C Corp for their active business, whether it’s flipping, property management, that kind of stuff. Typically, they’re under 5 million of net profit or taxable income. So, they’ll either stay at 21%, or they might, it might even be better because they might actually get the lower tax rate of 18%. So little, you know, that one is not as bad of a proposal in terms of our client profile, at least.

Bruce Norris  Okay. capital gain tax rate right now the max is?

Amanda Han  Right now the max is 20%. Previously, we’ve heard a lot of talk about having that go up to 39.6% of ordinary rates. So, there’s also a little bit of a good news it’s increasing from 20 to 25%. But, but not to the 39.6.

Bruce Norris  Okay, is that true for every level of earner?

Matt MacFarland  I think what’s gonna happen is they haven’t talked about taking away the 15% capital gains rate as far as everything I’ve read. So, that’s still going to be in play. So I think the 25% would kick in, going, you know, kind of in that four to $450,000 of taxable income range that they’re talking about throughout their entire proposal. So, I think people who, you know, if you have 200 grand of taxable income, then your capital gains will be taxed at 15%. But if it is hovering around a four to 450 range, and some or all of it might be taxed at 25% instead.

Bruce Norris  I thought there was a proposal for if it was over a million, that would anything above a million would be…

Matt MacFarland  That’s what they, that’s what they were talking about, you know, over the last year is kind of what they were wanting to do, like if it was over a million that’s taxed at 39.6. That was not on the table in the most recent proposal that came out on the 13th. So, you know, fingers crossed, that they’re going to keep that off the table.

Amanda Han  So yeah, for now, that, that one, that 1 million, you know, 39.6% right now, that seems to have been replaced by taxing you know, higher income people, the over 400,000 of total income, taxing them from 20% to 25%.

Bruce Norris  Okay. Does the earning threshold of over a million impact any, any taxes that we’re talking about? You know, that’s I just want to know if that’s off the table for all asset types?

Matt MacFarland  Yeah, I don’t, I don’t think I saw anything about a million bucks in terms of, you know, changing tax rates. I mean, you know, you know, you probably got over your list to ask, but they, you know, they’re talking about changing the highest marginal tax bracket for individuals.

Bruce Norris  Right.

Matt MacFarland  Right. Now, it’s a 37 they want to move it up to 39.6. Yeah, which is it’s a 2.6% increase, right? It’s not, it’s not large, but it’s not small, obviously. But the biggest thing there is that they’re going to right now the highest tax rate of 37% kicks in, you know, for a married couple, somewhere over $600,000 of taxable income.

Bruce Norris  Okay.

Matt MacFarland  They’re gonna start that 39.6 down at like, $450,000 of taxable income. So, that’s the actual biggest impact on that change is not necessarily 37 to 39.6. It’s when does it start?

Bruce Norris  That’s for sure. That’s a big, like Kaaren you pointed that out. That’s, I guess that’s not middle. America, though, you know, that 450 doesn’t represent that. But it certainly represents a lot of tax between 450 and 600.

Matt MacFarland  Oh, yeah.

Amanda Han  Yeah. And, you know, it’s interesting, too, there’s a huge marriage penalty, because, you know, the one of the promises, right was no one with a 400,000 or less of income will have higher tax rates. Although that’s true for single filers, for married couples, it’s not 800. Right, all the higher tax rates and the takeaway startup 450. And so you see that huge marriage penalty for a married individual is only a $50,000.

Bruce Norris  They get 50,000 for your spouse.

Amanda Han  Kind of marry someone with lower income.

Matt MacFarland  Life goals.

Bruce Norris  That’s funny. Okay, I want to get the picture of the worst case scenario, just, just so I understand. So, the top tax rate probably goes to 39.6. But there’s an adder of 3.8. Is that correct? After what amount?

Matt MacFarland  So…

Amanda Han  So, the 3.8 is the, there’s a net investment tax. That’s a tax that’s been around for a couple years.

Bruce Norris  Yes.

Amanda Han  And, but historically, are under today’s law that is assessed for high income earners on investment income. So examples of investment income are, you know, stock sales, you know, rental real estate, or interest in dividends, right, that type of income. Now, the proposal…

Bruce Norris  All of your clients.

Amanda Han  Now, the proposal is to kind of supersize that and make it not applicable just to investment income, but also to business income as well.

Bruce Norris  Right.

Amanda Han  So in the real estate world, in the real estate world I think commissions income, fix and flip, active syndication income, property management income, right, realtor commissions, so that’s the new, they’re the proposals trying, it’s not a new. I mean, it’s a tax that’s been existing, but they’re trying to expand the definition of what will be subject to this three, additional 3.8.

Matt MacFarland  In the real in the real world, it could be CPA firms, it could be self directed retirement, custodian, firms, that kind of thing.

Bruce Norris  We all own companies, and we all have employees. So, are there any the tax changes for let’s say, medicare and social security that we pay our share of, for people that work for us? Is, are those limits being raised?

Matt MacFarland  I haven’t, I didn’t see that. And, you know, that, again, was probably in what’s been talked about over the past year is one of the things that be on the table that was not, as far as I know, didn’t come out with a proposal to 13 but obviously 3.8% tax, you know, that was called a Medicare surcharge. It was for you know, Social Security, Medicare taxes of sometime in the past, you know, 10 years ago or so. So that’s going to, it’s all going to fall into that bucket is what I’m assuming right is that it’s going to help keep funding the Social Security deficit if for lack of a better term, I think.

Bruce Norris  Okay.

Amanda Han  And the income threshold to answer your question from earlier, the threshold for that is the same taxable income 400 single and 450 married.

Bruce Norris  Okay. And they are now taxing Social Security up to what dollar amount of earnings? Or is that Medicare that’s higher?

Matt MacFarland  Um, well, Medicare is higher. Social security caps out like, it’s around like, just I think it’s just under 140 grand is where you cap out of that.

Bruce Norris  Okay.

Matt MacFarland  And then Medicare is unlimited. So you could, you know, you could have a million dollar  and still be paying Medicare taxes.

Bruce Norris  Okay. Do the employee, employers, share in Medicare, or just the social security?

Matt MacFarland  Employer share both.

Bruce Norris  Yep.

Matt MacFarland  Yeah.

Bruce Norris  Okay.

Amanda Han  We should leave in the proposal. Good news is there’s something about a 50% tax credit for employers who pay for qualified childcare and services for employees, that there’s some sort of a 50% tax credit. So, that’s a little bit of good news to share on the proposal.

Bruce Norris  I’ll make another.

Matt MacFarland  Pay childcare for your employees.  He’s purposely, writing this down.

Bruce Norris  Is California raising taxes? I’m just curious.

Amanda Han  I haven’t really heard anything about it. But..

Matt MacFarland  I’m mean, to tell you know, the highest. The highest rate is like over 13% right now in the state of California.

Bruce Norris  Yeah. So, I was just wanting to make sure I can do math still.

Matt MacFarland  No, yeah. You know, you’ve got it down. You got it. You got…

Bruce Norris  I’m trying to add only three figures here. My hand is shaking. Because I I’m not, I’m not paying my share at about 55%.

Matt MacFarland  What is it? That our friend, our friend, Harry, Harry, the attorney calls, he calls it confiscation?

Bruce Norris  Yeah. Yeah. Well, it’s interesting that the narrative that we get where we get told, I was interesting, Aaron, and a couple of friends that he’s known forever. He I’ve known him forever, and they were spent half their weekends literally of their life during junior high in high school. So yeah, we got a good rapport and trust there and everything, but their opinion of how things work. And you know, what the, what the people that make substantial money, it’s just so different. And when we had a discussion, it was sort of like, we’ve never even heard of this stuff. You know, like me, explaining what it’s like to be an entrepreneur. And when you have employees, what it is that you pay, all those things, and they were just astonished you know, they can’t…

Matt MacFarland  Did you, did you show them some charts?

Bruce Norris  I didn’t but you know, that it’s very deceptive to use percentages.

Matt MacFarland  Right. Right. Right.

Bruce Norris  Because dollar amounts are actually what spendable so you got one really great, you know, go getter, the amount of their, that they’re paying in their lifetime is astonishing. Just for fun because I, I started this, that conversation started me thinking, Okay, the dreaded one percenters? How much do they have to be net? What’s their net worth? Do you have any idea?

Matt MacFarland  No.

Bruce Norris  It’s $11 million. How many, how many of your clients that are in that room a lot. When we have the I Survived Real Estate Event, there’s a ton of people in there. And all what did we do bad? Nothing. All we did is work our butts off, take risk, you know, and hire people. So..

Kaaren Hall  Make jobs for other people.

Bruce Norris  Yeah, you know, and that’s the thing when I realized, Oh, the one percenter includes almost everybody I know that’s successful borrowing our money or lending our money. Wow, you really want to go after that group? All the good they’ve done for all the people that you know, work for them. And oh, my gosh, it just kind of gave me a different take on who they are. Because I thought, Oh, well, maybe they are just the completely elite. And then you know, you think, no, that includes so many people I know that took the time to get 25 houses and pay them off gradually over a lifetime. You know that the end result doesn’t take five minutes. It takes about 40 years right. And you finally you hit paydirt, where your debts finally gone and your, don’t think you should be demonized for that one, that’s for sure. Kaaren on this on the changes that are being discussed, are they across the board and things that you can hold in, in an IRA and Roth in a 401k is that across the board?

Kaaren Hall  They’re not so they don’t know. They don’t apply to brick and mortar real estate. It doesn’t apply to your IRA lending money so long as you don’t have to be accredited to do that. It doesn’t apply to investing in precious metals or limited partnerships or you know, buying performing and non performing debt. You can still do all these things. And by the way, one of the things I wanted to add about the proposal for the private equity, you know, to remove private equity is that after December 31, 2023, if your IRA holds private equity, still it will cease to be an IRA.

Bruce Norris  Wow. So, that means it becomes immediately taxable.

Kaaren Hall  And if it ceases to be an IRA, that would imply that all the assets in your IRA would be impacted, not just the…

Bruce Norris  Right.

Matt MacFarland  Well, that might imply to you I’m not just taxable, right. But in a typical situation where they, they blow up some of these IRA, you’ve got taxes and penalties.

Kaaren Hall  Correct. And so there’s…

Matt MacFarland  …those those lines then…

Kaaren Hall  Right. I don’t think that the people that wrote this, I hope can because it seems like it, they really don’t know what they’re doing.

Bruce Norris  Yeah.

Kaaren Hall  Because this is, this is just, this is bad. And, and one of the things that we haven’t touched on, it’s, it’s not really my area of expertise, but I do understand the number $80 billion, and that is the number that’s in this proposal, that’s going to go to the IRS so that they can make sure that we’re complying that’s, that’s going to be so that they can…

Bruce Norris  I just wrote that down. Yeah.

Kaaren Hall  …after us so, so that they can help us voluntarily comply. I think that’s how they say it in the…

Matt MacFarland  Yeah, that you wrote that down, write it right below the child tax credit thing, right?

Kaaren Hall  Yeah, exactly. Yeah. I was thinking about having some more kids. So, that was really exciting.

Bruce Norris  No, I was I was thinking what your take is on all the extra money for audits, and then the $600 transaction? I don’t quite understand. I mean, I understand. Like, if you go to the bank and say, I’m going to take out 10 grand in cash. I understand you fill out a form, but what’s with the $600 transaction?

Kaaren Hall  Well, I’ll tell you what I know. And then Matt and Amanda can say what they know. But yeah, if you take out $10,000 from our bank, the bank has to file a SAR Suspicious Activity Report. I don’t know why it’s suspicious. But that’s what they have to do. And that’s a limit. So now that’s going to be $600. Can you imagine how that’s going to decimate some small banks? Who’s got the staff?

Bruce Norris  Right.

Kaaren Hall   To handle that kind of administrative nightmare?

Bruce Norris  Okay, now, you’re talking about just getting $600 in cash? Are you talking about a $600 check?

Kaaren Hall  $600 transactions, but they are looking to exempt automatic payroll contributions, you know, in automatic payroll transactions, which Okay, there’s that I mean, but that probably is like a drop in the ocean?

Bruce Norris  Oh.

Amanda Han  Yeah. I think it’s interesting. I think, you know, the the proposal to increase audit, or IRS enforcement, I think they’ve done studies that show, every dollar that’s dedicated to IRS reinforcement collects four to $5 in tax revenue, right. So, from that perspective, I guess it’s good from a revenue raising perspective, obviously bad from the, you know, CPA taxpayers perspective, because it’s a lot of time wasted in dealing with those kinds of inquiries. But, you know, nonetheless, I do think they need help, because a lot of our clients and just we’re hearing from other CPAs, too, is a lot of people are getting these bogus letters that are official from the IRS, but they’re just wrong, you know, sending out wrong assessments or claiming returns are filed late when they are not. And the issue becomes, we can’t contact the IRS because it’s taking them forever to process power of attorneys. When the client calls the IRS, they’re on hold for hours on end, you know, just looping back and forth with no real resolution. So it’s just kind of a, you know, compounding effect of, of not having resources and not doing a good job, you know, at the IRS.

Matt MacFarland  So hopefully, hopefully, some of that money would actually instead of going to doing audits would actually go into hiring people to process paperwork and you know, get through their backlog of things.

Bruce Norris  Yeah, and get some get some rebates back to people. You know, what was interesting, this kind of reminds me Kaaren of what you mentioned about people making decisions when they haven’t got a clue about what they’re talking about. When the lending world crashed out 2008 and you had TARP? The TARP document’s really long I read it word for word with a yellow marker. And at the end of it, I realized, okay, to be honest with you, they have no idea what they’re going to do with 800 billio, $800 billion. They and when you were discussing things, I would listen to Congress talk about it. And you realize, man, you had better get the best real estate people in the world to give you an idea what you’re about to do is going to be terrible, you know, because, you know, talking about doing it certain way. Well, that may sound good, but in practicality and it doesn’t play out like you think and that’s kind of what you’re talking about, you know, you’re talking about changing the rules in arrears.

Kaaren Hall  Right, right and, and one of the things that we’ll do is just imagine people who are maybe not 30 years old, but maybe they’re in retirement now. And they’ve invested in private placement and assets. And now they’re relying on that money in their retirement, to, to supplement their income, but now they’re faced with this huge tax bill, because they had to, you know, if they didn’t, if they weren’t able to liquidate it, then they’re gonna have to pay tax on it. So there goes their retirement savings, not just the asset that they had, but that they’re gonna have to pay, use their savings to pay the tax. And hopefully, hopefully, that private placement goes well, and doesn’t, you know, go belly up, where they end up with no assets at all. It’s it’s, yeah, yeah, it’ll be a fire sale on private equity. And then the asset sponsors where what are they going to do to replace that private equity? They can get it from non IRA money, but they’re gonna have to find investors. And so does that mean that private equity is going to be sold pennies on the dollar just so that people can liquidate? And that’s going to hurt, that’s going to hurt savers like you say people, good people who’ve saved all their lives worked hard, put dollars away, saved it invested, and then this is the end.

Matt MacFarland  Yeah, cuz I mean, think about it. Like, let’s say you have a syndication partnership with I don’t know, 60 investors got a real estate deal. I don’t know maybe five of those investors IRAs. How likely is that real estate syndication partnership going to have enough money to buy out those IRAs to your point Kaaren, or they go and say, Hey, other 55 investors? Would you like to put money into by all these investors? Um, you know, who’s gonna want to do that necessarily? Maybe some maybe, but not all, right. So it’s just a it’s one thing after the other of the dominoes of, you know, if things don’t go the right way.

Bruce Norris  About three months ago, I got a call from Doug Duncan. He said, Would you be willing to go to Washington, DC, and speak to the president of Fannie Mae? And I just thought, okay, of course, that’s, that’s unbelievable. So, I guess I was thinking, Kaaren somebody like yourself, is there, is there a go to person that there’s like, maybe we could have the sit down? Because he really, the conversation was from, you know, from me to the president of Fannie Mae was from somebody that has just some street knowledge and how investors work, that type of thing. It was more about that than anything else.

Kaaren Hall  Yes, I sit on the board of directors for the Retirement Industry Trust Association.

Bruce Norris  Right.

Kaaren Hall  And we are a trade organization. And we have a lobby, we have lobbyists, and these are attorneys whose jobs, you know, that’s their job. There are registered lobbyists. And they’ve been, they were talking to the House Ways and Means Committee before this proposal was announced. And like, just a week before, and then boom, here comes with these provisions affecting IRAs that that, that the committee said nothing about gave no indication that these things were going to happen. So, that that’s what happened on September 13. And fast forward to last week, we were talking to those lobbyists, you know, in a meeting. And those lobbyists say that they’ve, they’re going to they’re the congressmen and women, they’re going to be staff members, and and those people that are making the decisions don’t necessarily know that these provisions were stuffed into the bills. I mean, we’re making them aware. But yes, we’re getting in front of the decision makers, sitting down with them, but a lot of them are really, there’s a good MarketWatch article I’ll share with you, but a lot of them are really digging their heels in and saying, this is the way it’s going to be. But they just don’t think that they see what’s going to happen to people.

Bruce Norris  It’s important for them to even have the capacity to understand what you’re talking about. Because a lot of the people I’m trying to think back what was what was the company, this was in about 2009. And there was they had a new platform on how people were making payments. And I’m, we interviewed actually the president and he was, he had a great document that I read word for word. And then I watched Congress, interview him and I realized not one of them read it, a word of it. So, frustrating. And the first thing I asked him was, when I did the interview, I said, ‘Are you okay?’ Because I mean, it was such a grueling experiment, experience. And it was not, it was not a reasonable thing to do. In other words, he’s president of a company that has this is a product and it was just, it was kind of eye-opening, though about grandstanding for political purposes as opposed to actually getting to the bottom and trying to understand something.

Matt MacFarland  Right.

Bruce Norris  And I guess that’s part of it is that I don’t want people to lose faith in the system. You know, and the honesty of it. That’s just very frustrating. Remember when there was an $8,000 credit, if you bought at home in say 2000 and whatever it was ’09? So we had fixed a home and my daughter, was ready to buy our first home so we went into escrow with her and we we applied for her $8,000 rebate, and it was denied because I, my own the company that sold her the house. What I thought in my mind was you just taught my daughter not to trust the United States. It just made me sad. How are your clients? And you know, we we all deal with people that have worked hard and have done, done well? What’s their perspective on what’s going to go next for the country? You know, I’m just curious what the, what the mood is, from your perspective and who you talk to?

Amanda Han  Um, gosh, I don’t know, I think it’s different from client to client. We have clients that are really keeping an eye on these things, and just calling and emailing, you know, to get updates. And then we have clients who just kind of like, wait and see none of this is real yet until it gets signed. But I think a lot of people, I’ve heard from a couple of people, you know, when, because we did a really brief tax updates and just talking through the what are the proposed changes and how it relates to people who aren’t different types of real estate investments. And a lot of people were thinking, ‘Okay, well, this is kind of the worst of it in the proposal.’ It’s not, it’s only going to get better from these proposed languaging because of negotiation. And it’s kind of difficult to tell them know that there’s no indication that this is the worst of it, the proposed or just the proposed, there are people now who are thinking those are not enough, these are not enough tax increases, and there needs to be more levies more taxing. And then there are others who say, ‘Okay, this is more than we want to we need to cut back on these proposals, right?’ So, I think for some reason, there’s this this myth that people are thinking, ‘Okay, well, this will be the worst of it only gets better from here.’ I just want to say that’s not necessarily going to be the case. Um, certainly could be, you know, more strict or, or even more proposals in the end.

Bruce Norris  Well, certainly more visits from the IRS to people’s businesses and personal, you know, they’re not going to hire this many people and ignore anything that they think they could get four or five times return.

Amanda Han  Yeah, yeah. I mean, I do think that part of it’s gonna pass, I think that, you know, the audit, increase enforcement does get a lot of support in Congress from both parties. So, we do expect that to pass. But I don’t I mean, from our end, I don’t think that really changes anything because historically speaking, we’ve went, at least for our clients, we always tell them, you know, everything you do, every position you take, you take that with audit risk in mind. So anything you’re claiming, it’s based on the assumption you can support whatever it is, you’re claiming, whether it’s a receipt, whether it’s hours spent in real estate, because ultimately, you know, who knows who will get audited, right? Although the odds of you being audited are fairly small. Nonetheless, if it’s your turn, or if you happen to be selected, that is what’s needed to prove your deduction. If you can’t prove it, then odds are you’re going to owe the IRS, the taxes, plus interest and penalty, so that part doesn’t really change in terms of how you should be operating as an investor. Same as before.

Bruce Norris  Kaaren, what about you, as far as how your clients are feeling about you know, what’s what’s going on?

Kaaren Hall  You know, we’ve got a world where a lot of things are happening simultaneously and and with the IRA owned LLC, one of these asset classes at, you know, that they’re looking at really attacking and decimating is that people got into these assets. And they were it was perfectly okay to do that. And now suddenly, they’re, their asset is not illegal, but it’s, you know, practically they have to have to get rid of it. So okay, change the rules. You’re right, maybe somebody who wants private jets doesn’t need to have a retirement account or get tax that you know, get a tax break before they get that, but the middle class sure needs that. And so the people have played by the rules will definitely be hurt by these proposals.

Bruce Norris  I guess, come down to I feel like California actually respects occupancy more than ownership. And that, that’s a scary, scary sentence. I think I’m like most investors. ‘Okay, change the rules, fine. As long as I know the rules, I can say I’ll make intelligent decisions,’ it’s when they go backwards, already made decisions following the rules, that you get suspicious of making decisions going forward. And that’s, that is unhealthy. I mean, I sure hope that people that are gonna make these decisions, pay attention to people that know like yourself, I mean, that, that, to me is the best, best outcome.

Kaaren Hall  What can we do now we can take action, and we still have some power to do something about these proposals. And that’s what I’ve been pressing is to, you know, reach out to your congressional representatives, there’ll be another meeting or you know, where we all get together and talk to our lobbyists on Thursday. So whenever I learned then I’ll bring to the Tactics Brunch, we’re gonna I think, have weekly calls. So, I could have new information that’s, I tend to have new information between now and then.

Bruce Norris  Can you can you email me a way that we can have people correspond to the people that are, you know, perhaps voting on the legislation, whatever it is that you may be prepared something, you know, that’s…

Kaaren Hall  I have no and I’ll put it here, I will share it with you. And I’m going to put it into the, the notes right now, the chat so that you can share with people. But this gives you a way of, you know, being able to hang on a second, gives you a way of being able to, to reach out, like how to how to reach people. There’s a template letter, but you know, use the template letter as a base. And as of maybe, like a, like a structure, but tell your story, you know, these things, you know, what do you see…

Matt MacFarland  Maybe not on 20 pages, but you know.

Kaaren Hall  No, you can do it in a simple page. But hey, if these passed this is what I’m faced with, if this passes as written, this is what happens to my business. This is what happens to my investors this what, this is what happens to the project that I’m putting together and tell your story because that’s, that’s, that’s what we can do right now.

Bruce Norris Yeah. And I think in addition to that is the stuff I mentioned, is that, okay, I trusted the process and invested that thusly. And I just got burned for it. What, why do you think I’m gonna have faith in anything you tell me is okay, with going forward? That’s a bigger price than I think anybody wants to pay.

Matt MacFarland  Yeah, I mean, on our end, I think, you know, hoping by the Tactics Brunch that we have some more answers as to what these proposals are going to tell. You know, it gives them obviously, a few more weeks to do some negotiation. So, maybe we’ll have some more answers by then.

Amanda Han  Yeah, I think, yeah, that’s the goal. I mean, we have a presentation, a draft presentation. For the Tactics Brunch, I think it’ll be it’ll change. We don’t know if it’ll change slightly or significantly by the time the brunch occurs. But I think our plan is to focus on what the proposed changes are, but also what are some year end strategies to consider in light of those, I know, every year of the year, and when we talk about your strategies, I think this will just be a very important one, especially since most of the proposed changes for next year are tax increases. So yeah, I think for you know, for the listeners between now and then, if you haven’t, we’ll probably get on your CPAs calendar. I imagine all CPAs will be very busy for you in planning. So, even though you don’t know what the changes are, maybe at least pencil yourself on their calendar now. By then you can come to our brunch, and then right after you’ll be able to meet with your CPA.

Bruce Norris  Amanda. Can you make somebody give somebody a call on Washington, DC? And you know, we we have this brunch we’d like all the answers by then can we do that?

Amanda Han  Yeah, exactly.

Bruce Norris  That’s right.

Joey Romero  Brunch is October 30. It’s on a Saturday morning from 8:30 to 12:30. You can go to and sign up there. It’s $25. It’s a virtual ticket, and $25 to get the wealth of information and robust protection and everything that you’re going to get from this session is I don’t know how we do it for 25 bucks.

Bruce Norris  25 bucks, who’s in charge of this?

Matt MacFarland  Who’s this Joey guy that just got on.

Amanda Han  I do want to say because Harry Barth right estate planning attorney is going to be there. And we didn’t mention anything about the state taxes. But there are some good news and bad news on the estate planning side. So, I know he will have some great things to share that are very timely, that have to be done before the end of the year as well. So since he’s not here, I’ll speak for him.

Bruce Norris  What I’d be honest with you, what’s the best thing about this event is I learn every time everybody gets up and speaks. So it’s great. You know, I don’t sit there and go you already know this. I do not sit through that meeting with that attitude. Because I’m always taking notes going. ‘Oh, I didn’t know that.’

Amanda Han  Yeah, and then I get scared when Bruce takes notes in anticipating questions. So Bruce..

Kaaren Hall  You know about 1031s to Dino champagne is going to be talking to us about 1031 exchanges, which we were thinking we’re going to, we’re going to be just eliminated but it looks like that’s that’s not part of this proposal. Right? Right Amanda?

Amanda Han  Yeah, that’s the good news is uh, right now under the current proposal, we don’t see any changes or mentioning of 1031 exchange. So, hopefully it’s you know, stays off the radar between now and the end of the year.

Bruce Norris  Talk about unintended consequences. So play that out. You’ve got a six month window and then 1031 exchanges are over. What the heck happens in that six months, and then what happens to the brokerage world the day after the six months, just as an ever mind, I’ll keep everything I own till I die. Right? So the brokerage business is going, ‘Okay. We don’t have anything to sell.’ That’s kind of what we’re talking about Kaaren, is this, there’s real life impacts, that if you don’t have enough experience, you think it’s ‘Oh, let’s do that. But boy, it’s not.’

Kaaren Hall  There, we need to make Congress aware of how this is going to impact us.

Bruce Norris  Yes. And I’m glad glad you mentioned there’s just so many people in Middle America, that would really be impacted negatively, including people that already retired on the income they thought they could count on. I’m hoping that’s how we solve most of this stuff is reasonable people reach across the table and say, yeah, we have our differences. But we’ve got a, we’ve got a lot land on a square that’s best for America, you know, every time at the Nixon library, and I end the, end that was asking all the panel, what’s the one thing they’d like to, like to see happen? And every year for the last 10 or 12 years? I said I would like every elected official to not act like a democrat or republican but act like an American and man that’s it’s all a lot of stuff. That really would I thanks so much for joining us and look forward to our October meeting.

Matt MacFarland  Thanks, guys.

Amanda Han  Thank you Bruce, Kaaren.

Bruce Norris  Have a great day

Kaaren Hall  Great to see you.

Narrator  For more information on hard money, loans and upcoming events with The Norris Group, check out For information on passive investing with trust deeds, visit

Aaron Norris  The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669.  For more information on hard money lending, go and click the Hard Money tab.

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