6/24/25 Taxman Tuesday with John Duffield CPA/MST

The Moneywise Radio Show and Podcast Tuesday, June 24th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management Guest: John Duffield CPA/MST website: www.bakersfieldaccountants.com/

• 0:00Speaker 00

  From the Garo Ellis padded radio room off Stockdale Highway, here is Money Wise. Call or text into the show 24/7 at 396-1000.

• 0:39Speaker 00

  Here is Money Wise. Money, money, money, money.

• 0:43Speaker 01

  Welcome to the Money Wise Show. We are live from the Garo Ellis padded radio room off Stockdale Highway on ESPN Bakersfield, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, we're your hosts. I'm Sharad Wade and Sammy Abiyawie. And also, we have joining us John Duffield. Yeah, Johnny D, CPA. There he is, John, Stump the Duff. Stump the Duff. I love when you say that, by the way. I know. You've yet to be stumped. Well, I don't know. Yeah, yet. You've got a good record going. We were just talking, John, about AI. Yeah.

• 1:24Speaker 01

  And this was just kind of came out as hidden headlines today. The CEO of Amazon, who's not Jeff Bezos, by the way, little-known fact, he's no longer the CEO. Jassy. Jassy, that's right. Andy Jassy. Yep. He came out and he said, basically, that the Amazon is going to shrink its workforce pretty substantially due to AI. And of course, like, no kidding, right? Like, this isn't... AI and robotics, right? Yeah. Yeah. Which they kind of go hand in hand. Just like, you know, the brain of the robot is AI. But, you know, in, you know, we've talked about this a lot, about the displacement

• 2:03Speaker 01

  of jobs in the United States due to AI. Economists are actually expecting there to be an increase, so a net gain in jobs. Which is, I think.

• 2:15Speaker 02

  I disagree.

• 2:16Speaker 01

  Well, why is that?

• 2:18Speaker 02

  I just feel like between robotics and AI, that there's gonna be, you know, just gonna have some really very significant impact in in some different industries. For, you know, I mean, like logistics, for example, we were just talking about Amazon and its warehouse. And why are they laying people off? And so those people are gonna, do they have to retrain to go do something else? That's what we would say. Um, but but can they and will they?

• 2:43Speaker 01

  So here's what's interesting. If you if you look at what experts are saying, now, experts can be wrong. And they're they're going off of whatever, you know, information we currently have today. But World Economic Forum in this year, 2025, their report about future jobs, they say that, and this is the most, one of the considered one of the most comprehensive analysis that we analysis that we have today. They predict that 170 million new jobs will be created and 92 million will be displaced. So that that's a net increase of 78 million over the next five years.

• 3:21Speaker 02

  Be awesome.

• 3:22Speaker 01

  Uh, this is, you know, a significant job disruption affecting about a quarter of all jobs. So I think what it it, I think that the fact that it's such a strong displacement of jobs or a strong just disruption in general, it can, our our feeble human minds can feel like, oh, we're we're gonna lose out on this, which certainly people are gonna lose out.

• 3:47Speaker 03

  Yeah, I think also it's when you say displacement, is that a retraining and doing something else?

• 3:53Speaker 01

  Yeah.

• 3:54Speaker 03

  Okay.

• 3:54Speaker 01

  Yeah.

• 3:54Speaker 03

  That's what I think, you know, we're we're creatures of habit. So when you ask somebody that's done something for a long period of time, and now they have to go and recreate themselves and do something different, that's the challenge. We're we we create comfort zones, we create a lifestyle based on a paycheck and a job. And all of a sudden, now we have to go and redo our training and do something else.

• 4:16Speaker 02

  That's, I think, the challenging part for us humans.

• 4:18Speaker 01

  Yeah.

• 4:18Speaker 02

  And I can understand that.

• 4:19Speaker 01

  You have, you have to think about, here's some of the jobs that would be created. For example, you'd have data scientists, AI production managers, AI machine learning engineers, AI prompt engineers. So, I mean, that's, right there, you can see that somebody's full-time job is literally just because they know how, what prompts to put into the, into the, the AI model. AI ethics officers, and AI specialty, uh, safety specialist, trainers, AI behavior specialists, uh, big data, obviously, lots of different jobs related to big data and integration. So, I mean, some of these jobs aren't going to be filled by, you know, the person that

• 5:01Speaker 01

  was working in the warehouse, you know, packing a box. You know, those jobs might be lost, might be gone forever, but, you know, there's gonna be some creation. Obviously, a net positive is what people are saying.

• 5:13Speaker 02

  Well, uh, listen, I absolutely hope that's true, right? And, you know, what I tell people all the time, I'm, I'm on the older end of the curve, and so I'm not necessarily worried, completely worried about me. But I, I have young kids, right? I mean, I got three sons that are 25 to 30 years old, and, and so what's the rest of their career look like?

• 5:31Speaker 01

  Yeah.

• 5:31Speaker 02

  And, uh, you know, it looks like there's just some phenomenal disruption that we're about to experience, and it, it, things like the, the latest thing, V E O three, right? V O three, you've seen the video creation tools that, that?

• 5:44Speaker 01

  Yes.

• 5:44Speaker 02

  Yes.

• 5:45Speaker 01

  Insane.

• 5:46Speaker 02

  Yeah, right, insane. And so, so you, you're gonna sit and tell me that somebody from the marketing department or from the film creation department's not gonna get displaced because of something like that?

• 5:57Speaker 01

  Right.

• 5:58Speaker 02

  Yeah. And so, we don't even, we, sitting here today, we really, we have a hard time contemplating exactly what that's gonna look like because of, you know, we know, th- these tools are, are, are just kinda coming. You know, it, what's interesting to me is I have a, I have a conversation with clients about AI all the time. I'll tell you how many people are not using it.

• 6:17Speaker 01

  Uh, it's interesting you say that, because in, in part of this article that I read about, uh, about, uh, uh, Amazon CEO, Gallup report this week, they found an increase in the daily use of AI by US workers from 4% to 8% in the past year. But, so that means, it's double, but we're only at AI.

• 6:38Speaker 02

  Yeah, one out of 12.

• 6:39Speaker 01

  One out of 12. And, and white collar workers. That use AI at least a few times a week over the past years increased from 15% to 27%. So it's getting up there, but it's still, I'm always surprised when I run into somebody who hasn't had any experience with it. Cause it's, it's kinda hard to explain to them how impressive. Yeah.

• 7:02Speaker 02

  You know, my, my job, my industry, I get questions or scenarios posed to me like all day, every day.

• 7:11Speaker 01

  Yeah.

• 7:12Speaker 02

  Right? And, and I've been doing this a long time. And so I've learned to have decent perspective and you know, I, I, I generally know how to transact business, right? And so I can just rely on experience and gut and all those different things. But now that that tool has been made available, um, you know, I find myself very frequently go, oh, I know that answer. But then I'm going to go check myself, right? And go get a different perspective. I actually do something kind of on the weird side. I open up a word document and, and I put in very comprehensive prompts. My, my prompts usually are going to be a half a page to maybe a page of, of, of text. And I open up three or four different L L Ms at the same time. And I just copy paste, right?

• 7:56Speaker 01

  Oh, yeah.

• 7:57Speaker 02

  Because the, the, the output style is different from each one of them.

• 8:01Speaker 01

  Yep.

• 8:01Speaker 02

  And so you get a little bit of a different result. And then I usually, you know, then I'll print them out or whatever. And I'll sit down and kinda go look at the different, you know, I'll compare the different information that I get to.

• 8:11Speaker 01

  Well, you, you probably also take the results from those L L Ms or from those, those chatbots. And you put them into other chatbots and, and have them check it, right?

• 8:20Speaker 02

  Absolutely. Or I find the part that's kind of the consistent part and go, okay, this is, this is right on target. Now I need to expand upon that. How, how might we do that, right? And, and find out if it fits a specific scenario. I told you I was, I'm working on a pretty comprehensive tax case right now.

• 8:39Speaker 02

  You know, multi-six-figure, you know, tax to the state of California. And, um, the, the, um, working with a local tax attorney and he and I have had some, some, some degree of a difference of opinion. And, uh, It's amazing that, you know, the chatbots are citing, you know, California revenue and taxation codes and some very specific code sections, very applicable to kind of the issue at hand.

• 9:04Speaker 01

  Yeah.

• 9:04Speaker 02

  And, you know, he, who also is experienced like I am, is kind of going off of gut and his memory and some of these different things, which I think is, I think is great. But he's like, "Oh, I don't know. I don't know. I don't know." And I'm like, "Hey, who we working for here?" You know what I mean? We don't work for the franchise tax board. We work for the client. And so, it's interesting, but...

• 9:26Speaker 01

  Oh, it's so, it's such a fascinating time that we, that we find ourselves in.

• 9:29Speaker 02

  Absolutely.

• 9:30Speaker 01

  With all of this. Uh, want to thank our listeners for sending in questions and comments. Keep them coming our way, 661-396-1000. Sam, we've got a question here.

• 9:39Speaker 03

  Yeah, we do. "Hello, gentlemen. Love the show and enjoyed the show with the Californian, but can you explain how gas companies justify profit margins that are always higher here in California? Never really made any sense."

• 9:51Speaker 01

  Yeah, so California is the, one of the most expensive states to buy gasoline.

• 9:59Speaker 03

  On average, you're always about a dollar to a dollar fifty higher than the national average in the state of California.

• 10:05Speaker 01

  And why is that, Sammy?

• 10:06Speaker 03

  It's because of the taxes we have. So we have multiple taxes we pay, we pay at the pump. We pay the federal tax, like every other state, like every other gas user in the nation. State of California exercises an additional tax, that's approximately sixty cents per gallon.

• 10:21Speaker 01

  Right.

• 10:21Speaker 03

  Then we have the sales tax that's applicable, and it varies by locality, state, county, whatever. And then you have the underground storage tank, uh, uh, fee, which is about two cents per gallon. The under storage tank fee is, is something that, um, is, we pay as the consumer. The operator of the gas station does not, and it goes into a state fund. In case there is a leak in that tank, there's contamination, that's, that fund basically does the cleanup on behalf of the owner.

• 10:54Speaker 01

  Right. But the owner just passes that cost on to the consumer.

• 10:57Speaker 03

  On, on, on to us. But we have high taxes, the highest taxes. Within the the the union is here in California and that's the reason why we're paying more. Now, the question is regarding profitability or profit margins of gas companies. I don't think they have higher profit margins in the state of California. Otherwise, we will not be seeing two refineries potentially closing in 2026.

• 11:27Speaker 01

  Yeah, the the the profit margin is probably one of the most elusive, I think, parts of the cost for me to at least understand. Because the, you know, we talked about all of these other costs. You have the taxes, but you have what what they call California oil refiners call the crack spread, which I think that meant something totally different when I was in high school, by the way.

• 11:59Speaker 03

  Chances are.

• 12:00Speaker 01

  Chances are, but the crack spread, which it which is essentially the the profit margin that that oil refiners, you know, bake into their costs. It was a dollar per gallon in 2023, but it does vary and it varies by region. For example, in Los Angeles, that spread is about 50 cents a gallon. So, you know, that doesn't seem outrageous to me. You know, 50 cents a gallon and it's, you know, $4.50 a gallon. Like, you have profit baked into every product you buy, every retail product that's out there. You've got some profit margin that's baked into it, like that's you got to have that in there.

• 12:45Speaker 01

  But it, you know, that's not, that doesn't seem too outrageous to me.

• 12:50Speaker 03

  No, I don't think so. I think the fact that we're paying much higher taxes at the pump. Other than that is that's what affects us as consumers at the pump. I mean, we're talking about a dollar to a dollar 50.

• 13:05Speaker 01

  Above the national average, all in taxes.

• 13:09Speaker 02

  Yeah, you're just saying it's not profit margin, it's taxation, right? And so, the one thing that I could see happening, depending on, you know, how the oil companies, producers might act, and how things might get marked up, right? By the time it gets passed to some retailer, Arco Gas Station, or some other, you know, some other gas station, Fast Tripper, whoever, that might already include some taxes that were passed along from the state of California, right? And then gets marked up from there. It's not really, it's not really more dollars necessarily coming to the oil producers. It's just, it's just more, it's just a higher price because of a higher starting cost to begin with, right?

• 13:53Speaker 03

  And also, here in Kern County, and Central Valley, Bakersfield specifically, we pay a little bit higher prices than down south. They're closer to the refineries, so the transportation cost is a lot less for LA Basin versus coming all the way up here to Bakersfield. Regardless of our production, yes, our county produces oil, right?

• 14:16Speaker 01

  Right, but it doesn't refine it.

• 14:17Speaker 03

  No.

• 14:18Speaker 01

  And it doesn't produce the kind of light crude that refiners like.

• 14:22Speaker 03

  That we use in our cars, trucks, whatever.

• 14:25Speaker 01

  Yeah, the cost of the crude oil only accounts for about half of the cost of a gallon of gasoline, which is another, you know, misnomer, was when people look at the price of, you know, oil, which is in the news a lot right now because of Iran and Israel.

• 14:42Speaker 03

  Yeah.

• 14:42Speaker 01

  And it's like, that's like half of the cost. The other half is what you said, which is taxes and fees. And then you have environmental and regulatory costs, which in the state of California are really high.

• 14:54Speaker 03

  Very high.

• 14:55Speaker 01

  That accounts for over 50 cents per gallon. That's because we've got these special blends that California requires, these cleaner burning blends. And then we have a low carbon fuel standard, which currently adds 11 cents per gallon, but that's going to go up to 47 cents a gallon very quickly. That's baked into the California regulators.

• 15:15Speaker 03

  So prices are going higher.

• 15:16Speaker 01

  Yeah, and then you have cap and trade programs, which, you know, add additional costs to the gas. And the biggest issue, the thing that keeps me... Up at night the most is the lack of refineries that we have.

• 15:30Speaker 03

  And, and, and that's reality. Now that we have a date, a closing date for these two refineries unless something big happens.

• 15:38Speaker 01

  Right.

• 15:38Speaker 03

  Or the state changes its course on how they handle oil, the oil industry in the state.

• 15:42Speaker 01

  Right.

• 15:43Speaker 03

  I mean, we're looking at 50 to a dollar 50 increase. And we're, we're looking at eight dollars to 10 dollars, according to some of the friends I have in this industry. We're looking at eight dollars to 10 dollars.

• 15:54Speaker 01

  Well, just one of those refineries, the one, the Valero and Benicia.

• 15:57Speaker 03

  Mm hmm.

• 15:58Speaker 01

  It's set to close in April of next year, and it produces currently 20% of all of California's gasoline supply. And then you have the Phillips 66, which is down in LA. It's going to end at the end of this year. So, you know, it doesn't leave us with a whole lot of refiners. And then if you have one of those refiners that catches on fire, needs maintenance, or whatever, now you have even shorter supply.

• 16:20Speaker 02

  Didn't one of the local refiners close or file bankruptcy recently?

• 16:24Speaker 01

  Uh, I haven't, I didn't hear that.

• 16:28Speaker 03

  I don't know.

• 16:28Speaker 02

  I think, I think that's a fact. And, and, but, you know, point is, is that if that in fact is the case, it's, it's not because margins are too high.

• 16:36Speaker 01

  Right.

• 16:37Speaker 02

  I mean, if margins were too high, then they would be profitable, right? And you wouldn't have operational.

• 16:41Speaker 01

  No question.

• 16:42Speaker 02

  Financial problems.

• 16:43Speaker 01

  Same thing with these two refiners that are closing. Like, if they were making money, I guarantee there'd be private equity, there, somebody in Wall Street would come in.

• 16:50Speaker 03

  We, we had, we had Congressman, uh, last, last week on the show, and he said that, I think, one of these refineries that are closing next year got fined like 86 million dollars.

• 17:03Speaker 01

  Right.

• 17:04Speaker 03

  Last year.

• 17:05Speaker 01

  Right.

• 17:06Speaker 03

  I mean.

• 17:07Speaker 01

  It's just hard to do business.

• 17:08Speaker 03

  That's right.

• 17:08Speaker 01

  It's just really hard to do that business in California.

• 17:11Speaker 03

  Friendly environment for the, for this industry, unfortunately, because it's, to me, it's a, a high paying industry, job creation. We're talking about just those two refineries I looked last week. 900 direct jobs.

• 17:24Speaker 01

  Yeah.

• 17:25Speaker 03

  900 and it's

• 17:27Speaker 01

  How many jobs are gonna, the economic impact on rising fuel costs is devastating because it's it's it's a it's like a regressive tax basically, right? So those who can afford it, a big deal, you're paying an extra 20 bucks to fill up your car may not be a big deal for you, but for that family of five that can barely pay their PG and E bill, it's devastating and it's just on top of all the other increased costs that everybody's dealing with. And so you and I were saying Sammy off the air that if any politician in California would would not survive

• 18:07Speaker 01

  you know, eight, nine dollars a gallon, $10 a gallon of gas, like you're gonna have riots.

• 18:13Speaker 03

  No, we, we, yeah, we pride ourselves in not being a political show, but you look at the economics of the prices. It's just not conducive of people able to live or afford just minimum things.

• 18:26Speaker 01

  Yeah.

• 18:27Speaker 03

  Now we're talking about just, you know, what made this this state great is the ability to get on the freeway and go anywhere you want.

• 18:34Speaker 01

  Yep.

• 18:34Speaker 03

  That's freedom is now going to be almost taken away and Californians, we love that freedom. The fact that you get into your own car and drive around, that's one of the freedoms we have in this state.

• 18:45Speaker 01

  Well, so some would say get buses, get bus passes freedom.

• 18:52Speaker 03

  It is.

• 18:53Speaker 01

  It is.

• 18:53Speaker 03

  No, it is.

• 18:54Speaker 01

  Sure, just take it a little, little bit longer, little bit longer.

• 18:57Speaker 03

  Yeah, it takes about an hour to get from Cal State to B C on a bus.

• 19:01Speaker 01

  Oh, man, we're in for it. We're in for it for sure. Let's take our first break of the day, guys. We come back, a lot more to talk about. We're gonna talk taxes, what's new with that with John Duffield. That's Sammy Abiawi. I'm Sharad Waite. We'll be right back.

• 19:13Speaker 00

  If you're a business owner who provides a retirement plan for your employees, contact Money Wise Wealth Management to see if you're maximizing your options and minimizing your liabilities. Money Wise 401k plans are customized to you and your company's needs. 661-847-1000.

• 19:35Speaker 01

  Welcome back. We're Money Wise. Thanks for tuning in. We're joined by John Duffield right now. He's our regular guest. He is a tax expert, CPA, master's in tax, and been a business self-employed for many, many years.

• 19:52Speaker 02

  Couple days.

• 19:53Speaker 01

  Couple days.

• 19:53Speaker 02

  Just a couple of days.

• 19:55Speaker 01

  I love this stuff that you brought today. So, the 99-year-old tax filer, we were just laughing about this. You get this question regularly from people that say something to the effect of, "Yeah, Grandma's 99 over here. She's, you know, she's got one foot in the grave. Do we really need to file our tax return?"

• 20:17Speaker 02

  Yeah. Yeah, I get that. I get that comment or question to me, you know, not every day, every week, every month necessarily, but during tax season, I get it every year.

• 20:27Speaker 01

  Well, my logic would be, if Grandma doesn't pay her taxes and she's not here, there's nothing here for the government to come and try to collect from her for, right? She's gone.

• 20:37Speaker 02

  Well, but Grandma's still here. And I have one response to that kind of question or comment. I always go, Warren Buffett.

• 20:44Speaker 01

  Yeah.

• 20:44Speaker 02

  Right? I mean, the guy's in his 90s and, you know, one of the richest people in the world. You think that they're not going to want to tax his income?

• 20:52Speaker 01

  Although he's in a lower tax bracket than his secretary.

• 20:55Speaker 02

  I think, I think his marginal bracket is lower. I don't think his tax-

• 21:00Speaker 01

  His effective rate.

• 21:01Speaker 02

  Yeah. I don't think his, I don't think his tax is less than his secretary.

• 21:05Speaker 01

  Yeah, that's true.

• 21:06Speaker 02

  It's, it's all, all his, all his income is being taxed at capital gain tax rates because he's got qualified dividends that's coming from, you know, his stock investments, right?

• 21:16Speaker 01

  Right, right.

• 21:17Speaker 02

  And so, those are being taxed at a lower effective tax rate. But the amount of tax that he's paying, and I don't know what it is, but it's probably pretty substantial just because of his net worth and his various investments, right?

• 21:29Speaker 01

  Yeah.

• 21:29Speaker 02

  So, probably a lower marginal rate than his secretary, but paying a lot more tax-

• 21:33Speaker 01

  More in dollars, but a smaller percentage of his overall income.

• 21:36Speaker 02

  Yeah, correct.

• 21:37Speaker 01

  Which still doesn't make any sense.

• 21:38Speaker 02

  Or net worth for that matter, right?

• 21:40Speaker 01

  Yeah.

• 21:40Speaker 02

  I mean, tax paid relative to net worth, and so-

• 21:43Speaker 01

  Which is still bizarre. Like, that, there's something screwball-y there. The big example, we were just talking about this at lunch the other day, Mitt Romney, he's got 200 million in his Roth IRA.

• 21:57Speaker 02

  Yeah.

• 21:58Speaker 01

  It's like, he's not paying any taxes on-

• 22:00Speaker 02

  Have you ever, have you ever spent the time to go understand what he did?

• 22:04Speaker 01

  Yeah.

• 22:05Speaker 02

  So you've got Peter Thiel, same thing.

• 22:07Speaker 01

  Yeah.

• 22:07Speaker 02

  Peter Thiel's got more money than that. You've got, you know, Mitt Romney, obviously.

• 22:13Speaker 01

  Yep.

• 22:13Speaker 02

  Right?

• 22:14Speaker 01

  It's essentially their startup. They own their, their startup company's shares within their Roth, right?

• 22:20Speaker 02

  Yeah, with some of them, it was stock options.

• 22:22Speaker 01

  Or stock options.

• 22:23Speaker 02

  Yeah, Peter Thiel's with stock options that he was able to get into, inside a Roth IRA for very, very little money because he had, I want to say it was PayPal was, was the big one that kind of got him started and, and, but had stock options inside the Roth IRA that he was labeled, you know, later able to exercise. That's a wonderful, that's a wonderful approach if you can, if a listener could figure out how to go do that, right?

• 22:47Speaker 01

  Right.

• 22:47Speaker 02

  Roth IRA and then get some assets in there that are going to be highly appreciated at some point.

• 22:53Speaker 01

  There are ways to do that, is my understanding. I mean, obviously it's legal what Mitt Romney did and Peter Thiel, but I think it's just, I think it's kind of out of reach for the average Joe. Unless you've got, you know, you're involved in private equity, maybe, or.

• 23:10Speaker 02

  Well, yeah.

• 23:10Speaker 01

  Start or startup.

• 23:11Speaker 02

  Startups. From, from that substantial of a position, I will agree, but you know, you can, you know, that was a self-directed, for Peter Thiel, that was a self-directed Roth IRA, right? Which I think, you know, a very, very small percentage of our population understands what that is, right? Most people don't understand what that is. But, you know, with that vehicle, I think if somebody is really opening their mind as to possibilities, I think there's a lot more ways that somebody could make money in a self-directed IRA than, than we typically think about, right? We're just not afforded the opportunity to typically. And then, and then we don't push our luck. We know we're not out there being aggressive with tax strategies, whatever, but I, I think

• 23:56Speaker 02

  there's definitely opportunities with that.

• 23:58Speaker 01

  Yeah. So I've actually seen a more, I've seen an increase in these self-directed IRAs, not so much Roth IRAs, that are usually traditional IRAs, and it's usually somebody who's wanting to invest in a investment property, you know, a rental or something like that, which, you know, okay.

• 24:17Speaker 02

  So, so, so, I guess getting old does not, you know, preclude you from paying taxes?

• 24:23Speaker 01

  Yeah, yeah, get back to 99 year old.

• 24:25Speaker 02

  It's not age, it's income level, right? If you have, if your income level is so low that you don't meet the reporting thresholds and you don't have to file a tax return, right? And so, we typically think about somebody that's, you know, of an older age. Maybe they're only on social security or social security and some, you know, very, very small pension amount, maybe they never get to those thresholds. But it's not age-based, it's based on the amount of annual income you have or taxable income that you might have.

• 24:50Speaker 01

  So, what's the, what's the problem if somebody is, passes away and they didn't file their tax return that year?

• 25:00Speaker 02

  So, that falls, that obligation typically falls upon, you know, that, that estate to, to go file that tax return and, and pay any taxes that might be due.

• 25:12Speaker 01

  What recourse, I guess, does the IRS have?

• 25:14Speaker 02

  Well, the IRS has the ability, if they were to find that there was, there was an actual estate that had assets in it and that there was some amount of tax due, the IRS has the ability to go after those assets to pay that income tax that might have been due with that tax return.

• 25:30Speaker 01

  And do they do that?

• 25:31Speaker 02

  Um, I don't, I haven't seen that typically, but, well, but I haven't seen it in a situation where somebody has had enough income to, to need to file it. What I, what I always get is I always get their heirs, their beneficiaries, that go, okay, I've got to go file a trust tax return and their final tax returns, we just take care of it.

• 25:49Speaker 01

  Yeah.

• 25:49Speaker 02

  Right? We get it done, so it's not as though, oh, I'm not gonna, I'm not gonna do that. I have had some clients over, you know, my, in my lifetime that have said, oh, you know, mom, mom has, you know, $75,000 of credit card debt and no assets and now she owes a thousand bucks on her income tax return, we're going to ignore it. I have seen that.

• 26:09Speaker 01

  Yeah, credit card debt.

• 26:11Speaker 02

  Yeah, well, yeah, or, or a tax bill.

• 26:12Speaker 01

  Or even, even a tax bill.

• 26:13Speaker 02

  Yeah, a tax bill, because nobody's getting any assets out of that estate, right?

• 26:17Speaker 01

  Right.

• 26:17Speaker 02

  I mean, that, that client is effectively bankrupt at that point in time, right?

• 26:21Speaker 01

  Correct.

• 26:21Speaker 02

  So, they, they don't have any assets to go after.

• 26:24Speaker 01

  Uh, that's a way to go out. That's one way to go out, right?

• 26:28Speaker 02

  Yeah, yeah, depending on how you feel about your kids.

• 26:32Speaker 01

  Well, your kids wouldn't have to do anything. Oh, I mean, they wouldn't get anything, but they wouldn't have to pay it.

• 26:38Speaker 02

  Well, yeah, no, I'm saying if you but, you know, I don't know the way I want to go out is to be $75,000 in the whole on credit card.

• 26:45Speaker 01

  Maybe it just happened the last year, you know, the last year of your life, you know, you just did all your bucket lists and just blew everything and ran up your credit card. I'm not endorsing this, by the way.

• 26:55Speaker 02

  Sounds like a financial strategy.

• 26:59Speaker 01

  This reminded me.

• 27:01Speaker 02

  You know, I gotta stop, I gotta interject. We've had a client or two file bankruptcy in the last five years, COVID effects of business or whatever, right? Some, some negative effects of COVID. And, you know, we've, you've seen some circumstances where they've had debt that wasn't necessarily all business related. It might've been, you know, entertainment related, let's say. But yet they file bankruptcy and it ends up creating this relatively clean slate. And, and so, you know, you start going, hey, is that a strategy? And so, you know, and it's not, certainly it's not, but some people, I think they, in their mind, they look at it as though that is a, is certainly a viable option.

• 27:44Speaker 01

  We had a bankruptcy attorney on the show not too long, was it Leonard Welch? Is that right?

• 27:50Speaker 02

  Oh, you had Leonard on the show?

• 27:51Speaker 01

  We had Leonard on the show. He's retiring or just retired.

• 27:54Speaker 02

  He's really good.

• 27:55Speaker 01

  Oh, he's so good.

• 27:56Speaker 02

  Yeah.

• 27:57Speaker 01

  He was, he was fantastic. He's great on the radio, too. We talked a lot about just like the, like the, you know, the, the, the biblical history of debt and bankruptcy. And it's really, really good.

• 28:11Speaker 02

  Interesting.

• 28:11Speaker 01

  But I asked him, you know, how many people, are there, are there repeat offenders? Are there people that are just serial bankrupt, bankruptors? And he said, I'm sure there are, but in his experience, it wasn't.

• 28:24Speaker 03

  That's because they don't go back to him the second time. They go somewhere else. They go to a different place.

• 28:28Speaker 01

  Uh, this is out today. I mean, it's not, I don't think it's new news, but about 5.8 million federal student loan borrowers are 90 days or more past their payments as of last month. And that, that is roughly 31% of all student loan borrowers are, are about ready to face uh, some sort of problem where they're going to have wages garnished.

• 28:55Speaker 03

  Wow.

• 28:55Speaker 01

  Or something else garnished.

• 28:57Speaker 03

  Yeah, because that, that debt is not expunged.

• 28:59Speaker 01

  Doesn't go away.

• 29:00Speaker 03

  In a bankruptcy ruling, it does not go away.

• 29:03Speaker 01

  And, and I think what also our government created a nightmare here with, there was a period of time just a few years ago, under Biden, President Biden, where it was a forgiveness and we had COVID. And so there was this forgiveness and this deferral. And so I think it gave the false sense to all these students thinking, ah, this is gonna be.

• 29:25Speaker 03

  Expunged.

• 29:26Speaker 01

  Expunged, or they'll, they'll forgive it or whatever. And now they're going, wait, what, what? There's gonna be a lot of them. Um, there's 6 million of them.

• 29:34Speaker 03

  Yeah.

• 29:34Speaker 01

  Who are 90 days or more.

• 29:36Speaker 03

  Yeah, it's a lot of debt.

• 29:38Speaker 01

  Yeah, it's, uh, did I tell you the figure? Uh, the amount of money that it, that it equals is, uh, I don't know. I can't find the number.

• 29:50Speaker 03

  It just sounds like a big number.

• 29:51Speaker 01

  Yeah, it's gotta be.

• 29:52Speaker 03

  Six million people?

• 29:53Speaker 01

  Yeah, 6 million people.

• 29:54Speaker 03

  At an average of maybe at least $50,000, 30 to 50?

• 30:00Speaker 01

  It's in the hundreds of millions for sure. I don't know if we're getting into billions, but maybe.

• 30:04Speaker 03

  Yeah, it's just, it sounds like a big number, even though you cannot, you know, have access to it, but it sounds like a big number.

• 30:11Speaker 01

  Yeah, yeah, I wouldn't. I feel sorry for him.

• 30:13Speaker 03

  Probably in the billions. It really honestly is. Yeah, and it's, uh,

• 30:18Speaker 02

  I don't know. I have mixed emotions about that because how do you go borrow money with not, you know, this like in the back of your mind, like, oh, I don't have to pay that back. I mean, you know, you go, you signed on the line and you took out debt, right?

• 30:29Speaker 01

  Yeah.

• 30:30Speaker 02

  You're supposed to pay that back.

• 30:31Speaker 01

  Yeah.

• 30:32Speaker 02

  You know, I wouldn't blame anybody that feels like, oh goodness, I'm going to get where I don't have to pay that back.

• 30:38Speaker 01

  Right.

• 30:38Speaker 02

  And so, but I don't know that that means I go get that new Ferrari lease.

• 30:42Speaker 01

  Right.

• 30:42Speaker 02

  You know, because I'm hoping that I don't have to pay it back.

• 30:45Speaker 01

  That's right.

• 30:46Speaker 02

  Yeah.

• 30:46Speaker 01

  Yeah, it's, um, yeah, it's just, uh, when you start getting your wages garnished, that's not gonna be...

• 30:53Speaker 02

  That's gonna be a wake-up call.

• 30:54Speaker 01

  There's...

• 30:55Speaker 02

  For you.

• 30:55Speaker 01

  Yeah, it's already a wake-up call for many of them who don't qualify for mortgages because it's, it's so much a part of their income, the debt that they have, that they aren't qualifying for mortgages.

• 31:07Speaker 02

  I feel bad for the parents that co-signed for these. And now they are on, in their retirement, and then they have maybe a lien on the house or whatever, and the kid now, maybe does not even have the job to help pay for these things. So it's, it's, it's...

• 31:20Speaker 01

  Well, there's good news for the parents. My understanding is that these federal student loans were not, they were, they were not co-signed. They're not private loans. The private loans, the parents are on the hook there. But the federal loans, it's the government that's backing these up, which the government has created this by guaranteeing these loans. That's why everybody can get it. That's why anybody can get these federal loans, these student loans. And so, it creates a problem.

• 31:43Speaker 02

  Yeah, I had a client situation one time. I thought there was gonna be a murder. So, little Billy, um, you know, graduated from college and, and, uh, struggled to find a job. And, um, you know, dad had co-signed for it. And, and, uh, dad said, hey, this is yours. This isn't mine. This is yours. Kid took off. Like, like, no, no, you know, like,

• 32:05Speaker 01

  To split.

• 32:06Speaker 02

  Ghosted him. Skip town. Like, you know, and like, no forwarding address, no nothing.

• 32:12Speaker 01

  Oh, man.

• 32:12Speaker 02

  And, you know, and, and then dad was paying it. He's like, oh, just, I'm gonna kill him. I'm just...

• 32:16Speaker 01

  Yeah.

• 32:18Speaker 02

  I, when I was a banker, a lot of people come to me, it's like, hey, what's the best student loan program? People are, you know, happy about their kids graduating from high school, going to college, and going to a, a good school. And like, hey, I wanna co-sign. I wanna make sure that they achieve their dreams. My advice to them was, let them borrow the money on their own.

• 32:35Speaker 01

  Yeah.

• 32:36Speaker 03

  Yeah, you know, you're you're you're almost near in retirement.

• 32:39Speaker 01

  Yeah.

• 32:39Speaker 03

  Or pay cash. Yeah, yeah. Just you're nearing retirement. Don't do that.

• 32:44Speaker 01

  Yeah.

• 32:44Speaker 03

  Just let them figure it out.

• 32:45Speaker 01

  Yeah. Yeah, and then and then if they succeed, great, then you as a parent can help support them, you know, later because they did a good job, made it through college, you've got a good job or whatever it is.

• 32:57Speaker 02

  I I had a client, and I I love this. I don't know how you'd get away with it, but he told his kids, college is on you. I got you through. The kid, no, kids went to.

• 33:07Speaker 01

  Through high school.

• 33:08Speaker 02

  They went to a private high school.

• 33:09Speaker 01

  Yeah.

• 33:10Speaker 02

  And he said, so college is on you. I'll help you get finance, whatever, student loans, the whole thing, but it's on you. Make wise decisions. It's just what we do.

• 33:17Speaker 01

  Yeah.

• 33:18Speaker 02

  And he handed him a check for the full thing graduation day.

• 33:21Speaker 01

  That's right. That's awesome.

• 33:22Speaker 03

  That's what I was about to say. That's what I would do with my kid. Okay, you know what? Go figure it out. But when he graduates, I'm like, you don't have debt. I got you.

• 33:30Speaker 01

  How cool is that? Yeah. Or maybe they got through without debt. Maybe they did it with grants and scholarships.

• 33:35Speaker 02

  They did it on their own, but whatever cost of college was, whatever their cost was, he handed him a check.

• 33:40Speaker 01

  That's awesome.

• 33:41Speaker 02

  Yeah.

• 33:41Speaker 01

  I like that.

• 33:42Speaker 02

  He just gave him the money. He said, Merry Christmas. You know, you're in good shape.

• 33:45Speaker 01

  Have you ever had a client who's tried to claim a spaceship deduction?

• 33:49Speaker 02

  No, I've had some aggressive things over the years, but never, never.

• 33:52Speaker 01

  So I'm going off of this, what you what you sent in.

• 33:55Speaker 02

  Yeah.

• 33:55Speaker 01

  Uh, while the exact numbers are not public, IRS records from the past years have noted tax return claims, including deductions for extraterrestrial travel expenses. Uh, Elon Musk could get that.

• 34:12Speaker 02

  It's a business opportunity. Look at Elon Musk.

• 34:14Speaker 03

  I mean, I know, I know Morocco looks like Mars, but it's not. It's just another country. Don't be claiming that.

• 34:22Speaker 01

  The IRS flagged over 2,400 frivolous filings, some citing outlandish items like spaceships or alien business ventures. That's gotta be a joke.

• 34:32Speaker 01

  It's gotta be a joke.

• 34:33Speaker 02

  You know what? We run a pretty clean operation in my office.

• 34:36Speaker 01

  Uh huh.

• 34:37Speaker 02

  And I see some people try to push their luck from time to time.

• 34:39Speaker 01

  I see.

• 34:40Speaker 02

  I can imagine out there in the world, wide world, big wide world we live in.

• 34:43Speaker 01

  Yeah.

• 34:44Speaker 02

  There's probably some real junk that goes through there. Twenty-four hundred's not that many.

• 34:48Speaker 01

  Exactly. Out of the whatever, one hundred and fifty million returns.

• 34:52Speaker 02

  Millions of returns that are filed, right?

• 34:54Speaker 01

  Yeah.

• 34:56Speaker 03

  I want to ask John this question. This just popped in my head based on a conversation I had with my wife yesterday.

• 35:04Speaker 02

  Tell me.

• 35:04Speaker 03

  I have a friend who had a in-house bookkeeper, okay? Longtime friend and all that, and then it got discovered that she was embezzling. After it got, she discovered that, or he discovered that, and he said, hey, I'm gonna report you to the police. She killed herself.

• 35:23Speaker 01

  Holy cow, Sammy.

• 35:25Speaker 03

  I'm serious. This is true story. And then, this is not the first time. This has happened to me and a client before where this happened to him twice. Twenty years ago, the lady killed herself, and again about five years ago, another lady embezzled from him.

• 35:39Speaker 02

  Same client, same person?

• 35:40Speaker 03

  Same client, that same client.

• 35:41Speaker 02

  Wow.

• 35:41Speaker 01

  Dang.

• 35:42Speaker 02

  Maybe he's knocking them off.

• 35:43Speaker 01

  Yeah, no kidding.

• 35:44Speaker 03

  My question to you, John, is when you entrust people with your bookkeeping, what are some of the things that you could do as a business owner to just mitigate some of the risks?

• 35:54Speaker 01

  That's a great question.

• 35:55Speaker 02

  Yeah. So, so, you know, check signing authority, right? That is one thing, right? You know, was she, did she have check signing authority? And so?

• 36:04Speaker 03

  Well, he used to sign the checks and give her the, you know.

• 36:08Speaker 02

  Sign checks.

• 36:09Speaker 01

  A blank, a blank sign check.

• 36:10Speaker 03

  The other one, the other one, that local guy that the two ladies killed themselves, no, she just copied.

• 36:16Speaker 02

  Forged.

• 36:17Speaker 03

  Forged the signature.

• 36:18Speaker 02

  Yeah, for, for, case of forgery, right? And, you know, the idea would be to prosecute her, and then, you know, potentially go back to the bank for, you know, for fraud, if you will, and, and see if there's some ramification from that particular perspective. I, I've seen some unusual things. I, I was out on a new client business call one time, and for a client that I was proposing, didn't get the client, but what it turned Turns out their bookkeeper was receiving payments from customer accounts, okay? Going into the accounting software, deleting the invoice as though the invoice had never happened. Okay, as though the business had never happened. And then she was taking the check and depositing it via the ATM, okay, into her bank account.

• 37:02Speaker 01

  She's like endorsing it in the back to herself.

• 37:05Speaker 02

  Well, yes, but the check was made out to, I'm gonna make up a name, Acme, you know, Acme Manufacturing. But then she was depositing into her account four hundred thousand dollars.

• 37:15Speaker 01

  Holy smokes.

• 37:17Speaker 02

  Right, and so the business owner ends up catching it, of course, but, you know, six months later.

• 37:22Speaker 01

  Four hundred thousand dollars later.

• 37:24Speaker 02

  Yeah, four hundred thousand dollars later, and of course then lawsuit against, you know, the bank to try to get it back, but.

• 37:31Speaker 01

  Did they get anything back, do you know?

• 37:33Speaker 02

  It's pending. So, so one of the number one things that somebody would would recommend that they do is is review bank reconciliations and bank transactions, right? And so somebody would look at bank statements every month and then go through bank transactions. What I find is a lot of business owners want to be hands off to some degree on that accounting department, right?

• 37:52Speaker 03

  That's, that's, that's my thing, and that's what I saw in these instances. And this is not, those two instances I described, in 25 years, I've seen a lot of this. So, one of the main things I saw is people giving sign and authority to the bookkeeper. Or signing checks and giving them a stack of them.

• 38:09Speaker 02

  Yeah.

• 38:10Speaker 03

  Right? Now, with bill pay, online or given access without restrictions or without boundaries, you can do a lot, lot of damage with online access to an account.

• 38:22Speaker 02

  Yeah. Well, it's, it's just what I said, you need somebody that's gonna sit and go back and be willing to review records after the fact, right? Be willing to sit down with a bank statement, be willing to sit down with a bank reconciliation on a monthly basis. There's probably a, a financial, not probably, there is a financial package that a business owner could get from their accounting department every single month. If they would take 15 minutes or 30 minutes, they would be able to kind of go look and, and look for suspicious things that might be out of whack. I, how about this one? So, somebody in the accounting department would say, "Hey, um, sign these, sign these checks for utilities," for example, but, and the utilities might include five or six or eight

• 39:05Speaker 02

  accounts for various locations, yards. They would always include theirs in there, right? And so, so this, this check covers all of these various account numbers, including mine, right? And, and then hand it to the owner and the owner would sign it, you know, sign the check, but, but then not, not get enough detail to, to go through it to realize that, "Hey, I'm, I'm sitting there, I'm not signing the check, but, but I'm paying for things that are not attributable to this business."

• 39:32Speaker 03

  It was, it was always a red flag for me when I talked to a business owner as an ex-banker, and I tell him, "Hey, how many times do you look at your books? Do you have a monthly check-in?" And when they said, "No, I just give a shoebox to the accountant at year-end," guess what? That loan never makes it past the first review because those numbers I just cannot trust to make a loan decision.

• 39:52Speaker 02

  Right. Yeah, how about, how about this one? So, um, I happen to be in a client office and a, a multi-location business, and, um, the, the, the bookkeeper at one of the other locations calls in and said, "Um, hey, we're having a problem with one of the customers and their receivables and, and, uh, uh, they're really slow pay and their invoices are all gone." Okay, so the invoices, this, this customer was slow pay, and then all of a sudden the invoices are just out of the system and like, like there had been no work. And then, so,

• 40:32Speaker 02

  took a lot of work, but, you know, we're, we're able to go through audit trail records inside of QuickBooks and then audit trail records that were inside the software, and, and transactions had in fact been deleted, okay? I didn't know who deleted it because all the, all the logins for the audit trail were administrative logins, kind of, kind of owner-type logins. Um, and didn't, didn't really know what was going on, so started doing some research. What it ended up was, is there was a high-level employee that had access to all of financial records and created merchant accounts, okay?

• 41:10Speaker 02

  New merchant accounts that fed to their own bank account and so they were taking payments from customers over the phone in that same name. This was the interesting part. It wasn't like it was in his name.

• 41:23Speaker 01

  Right, it was in the business's name.

• 41:25Speaker 02

  It was in the business's name, but the account, bank account tied to that was going to that individual's bank account.

• 41:32Speaker 01

  Their own personal bank account.

• 41:33Speaker 02

  Their own personal bank account.

• 41:34Speaker 01

  That's nuts.

• 41:35Speaker 02

  That was interesting. So I handled most of this for that client and started with the white collar division at Bakersfield Police Department.

• 41:44Speaker 01

  Yeah.

• 41:44Speaker 02

  And opened a case there. And then they wanted me to see how much detail I could get from the merchant company, the credit card company that was processing these credit cards. And that was, that was really fascinating to watch because they were, they were very helpful initially until they realized that this was, there was fraud going on, right? And so I didn't volunteer everything like, hey, fraud. Like, I'm just like, hey, calling about an account, these types of things. And then they finally figured out that I was being suspicious and everything stopped, right? They wouldn't release any information and wouldn't, wouldn't help.

• 42:23Speaker 01

  Cause they'd be on the hook, potentially.

• 42:25Speaker 02

  Right. Yeah. And what I ended up doing, the client had me confront the employee and it was fascinating.

• 42:33Speaker 01

  To watch them squirm.

• 42:35Speaker 02

  Absolutely. Right. And what I did was I had, this was about $70,000. And, and so I had a stack of all these individual transactions. And so I said, hey, can I meet with you, you know, conference room, let's go over some things. And I had a big stack of documents that they hadn't seen yet.

• 42:55Speaker 01

  Yeah.

• 42:55Speaker 02

  And said, hey, I found some unusual transactions. Help me to understand this, right? Just handed them one transaction.

• 43:00Speaker 01

  Yeah.

• 43:01Speaker 02

  And.

• 43:03Speaker 01

  Must have been a mistake.

• 43:04Speaker 02

  Yeah, I had excuse and then I said, well.

• 43:06Speaker 01

  How about this one?

• 43:07Speaker 02

  How about this one and then this one and this one and he was, he was like, well, how many of those you got? And then I just took the whole stack and put it on the.

• 43:13Speaker 01

  Did he confess?

• 43:14Speaker 02

  Oh, yeah.

• 43:15Speaker 01

  He owned up to it?

• 43:15Speaker 02

  Yeah, he did. Well, so what happened was is that a situation where I said, when I said I'd opened up a white collar crime case at the BPD, um, did not like that idea at all.

• 43:27Speaker 01

  Oh.

• 43:27Speaker 02

  And started literally hyperventilating and, and, uh, I thought he was gonna have a heart attack and actually, uh, got all the money back within like three days.

• 43:36Speaker 01

  Cool.

• 43:37Speaker 02

  Yeah, borrowed it from somebody else and.

• 43:39Speaker 01

  Fixed it.

• 43:40Speaker 02

  Fixed it.

• 43:40Speaker 01

  Did the right thing.

• 43:41Speaker 02

  Uh, got, yeah.

• 43:42Speaker 01

  How about that?

• 43:43Speaker 02

  Fortunately for the client.

• 43:44Speaker 03

  And this, this does just not happen to just small businesses. It happens to mid-sized businesses as well. If you're not careful as an owner, you need to be looking at your books. You need to be looking, talking to your CPA.

• 43:54Speaker 01

  Yeah.

• 43:55Speaker 03

  Have a routine of looking at your books on a monthly basis, on a quarterly basis. Those check-ins are very, very important. Look at the profit margins. Look at where your invoices are. Your, the composition of your QuickBooks, if you're using QuickBooks. Don't just sleep on that.

• 44:10Speaker 01

  Uh, I'm curious if the people that you've caught that have been, you know, stealing from their employer, is it, has it been? Obviously that's like a dead end road. Eventually they're gonna get caught. That, so is it, is it just they're, they're just crooks? Or is it other things like they're in debt or they're going through a.

• 44:28Speaker 02

  Yeah. In that particular case, in that particular case, it was an employee, a high level employee who had been promised some bonus, you know, some incentive plan and they didn't get it.

• 44:42Speaker 01

  They felt like they were owed.

• 44:43Speaker 02

  They felt like they were owed money. Right. And so, you know, I feel like I'm owed money and I'm not gonna get it.

• 44:48Speaker 01

  I'm gonna get mine one way or another.

• 44:49Speaker 02

  I'm gonna get it.

• 44:50Speaker 03

  I was about to say that lady that got caught with my former client.

• 44:55Speaker 02

  She did not want to have student debt, I guess, because she paid for her daughter's tuition and staying at this IV school with the housing, the books and everything. About $200,000 worth of all education.

• 45:09Speaker 01

  So it's just financial stress and that's terrible.

• 45:12Speaker 02

  What I would say, I think most of it happens is, is it's just there's, the business owner's loose. They're not, they're not paying attention, they're not running it tight, and so they're loose and, and then something comes up and that, you know, that, somebody in that accounting department goes, hey, this thing's loose. And there's opportunity. I don't think they set out with criminal intent. I think they just see that something's being ran loose and then they get into a financial circumstance where they need money.

• 45:37Speaker 01

  All right, well, they're gonna take our final break of the day. When we come back, we have a couple of listener messages. We're gonna get these questions when we come back. Don't go anywhere.

• 45:46Speaker 00

  Money Wise Wealth Management is the only locally owned, independent firm that uses a comprehensive wealth, tax and estate approach, working closely with a highly trusted CPA and attorney. For information on how Money Wise can help you invest and plan for your future, call 661-847-1000. That's 661-847-1000.

• 46:11Speaker 01

  Thanks for tuning in. We're Money Wise. Appreciate the comments and questions, keep them coming our way, 661-396-1000. Sam, do you have that question there?

• 46:20Speaker 03

  Yes, brother, wait, I do. Why can't California import cheaper gas from other states during shortages?

• 46:26Speaker 01

  Okay, so that is because we are an energy island. There are no pipelines that connect us to Oklahoma, to Wyoming.

• 46:37Speaker 03

  In fact, there's two states that actually depend on us. I think what the congressman said last week is Nevada and Arizona both depend on us receiving the fuel and shipping it out, not shipping it in to California.

• 46:51Speaker 01

  Right, right, which is why we have to import, you know, most of our oil.

• 46:56Speaker 03

  Seventy percent of our consumption is coming from overseas.

• 46:59Speaker 01

  Yeah, it is, you know, John Cox has written about this in the California, and there have been efforts to try to get more oil, you know, across the Rockies and into California from Wyoming and Oklahoma and that. There were the trains for a while that they were bringing, these mile-long oil trains. And but there's no there's no pipeline. There's no really efficient way to do it because of the distances and the mountains and everything. But good question. We've got another one here,

• 47:27Speaker 02

  too. Status of changes to Secure Act. Would you expect changes could be retroactive to those who have started RMD?

• 47:35Speaker 01

  So that I don't know of any changes to the Secure Act. The Secure Act 2.0 has already been implemented and a lot of those key changes, especially those regarding required minimum distributions, have already been implemented. They will be changing again in 2033. So in eight more years, that required minimum distribution age is going to jump to 75, just in time for you, Johnny D. Just in time.

• 48:02Speaker 02

  Yeah.

• 48:03Speaker 01

  Another age jab. Sorry.

• 48:05Speaker 02

  Right.

• 48:07Speaker 01

  But right now, because of this-

• 48:09Speaker 02

  What year is that, Sharon?

• 48:10Speaker 01

  2033. RMD will be 78, 75. Right now, it's 73.

• 48:15Speaker 02

  I won't be 75, thank you.

• 48:15Speaker 01

  Dang it. I was just doing quick, quick math in my head.

• 48:18Speaker 02

  Just poking at me.

• 48:21Speaker 01

  Let's see, as of 2024, RMDs are no longer required from Roth accounts and employer retirement accounts like 401Ks or 403Bs. That was a nice another change. And then we have the catch-up provisions, which are really weird, right, John?

• 48:35Speaker 02

  Yeah.

• 48:35Speaker 01

  Where you can, if you're over the age of 50, you have your normal contribution catch-up that you can, you know, contribute to your 401K. But between the ages, just the ages of 60 and 63.

• 48:48Speaker 02

  I don't know what that's about, man.

• 48:50Speaker 01

  It's so weird. It's literally just you have to be those ages, 60 to 63, and you get 150% limit boost of your regular limits to, or $10,000, whichever is greater. It's weird.

• 49:04Speaker 02

  It's just an extra catch-up just from 60 to 63. To me, it should be from age potentially 60 to the time that you officially retire, right?

• 49:12Speaker 01

  Yeah.

• 49:12Speaker 02

  Yeah.

• 49:13Speaker 01

  Why not? And why not make all of those contributions limit a little bit higher and link them to inflation? So that you just, every year, you know, you know you're going to get a little bit more adjusted up. I guess the government, the IRS, is trying to, you know, dissuade really wealthy people to take advantage of these tax-efficient vehicles. But like, I mean, you could still increase it quite a bit, and it's not going to- Like, somebody who's really super rich isn't gonna care.

• 49:43Speaker 02

  It gets taxed, it's just a matter of when it gets taxed, right?

• 49:47Speaker 01

  Yeah, that's right.

• 49:49Speaker 02

  I mean, because RMDs kick in at some point, and the percentages of those obligated under those RMDs go through the roof as somebody gets older, and then a beneficiary then has to take it and has to pay taxes on it over some period of time.

• 50:03Speaker 01

  That's right, they're gonna get theirs, they're gonna get theirs at some point. John Duffield, thank you so much for coming back on the show.

• 50:09Speaker 02

  Thanks for having me, it's fun.

• 50:10Speaker 01

  Appreciate it, that's John Duffield, Tax Extraordinaire. I want to remind all of our listeners that you can catch Chris Pelster tomorrow morning on our sister station, KERN, the Scott Cox Show. That will be, Chris Pelster will be joining Scott Cox tomorrow morning, 96.1 from 2...

• 50:31Speaker 02

  No.

• 50:31Speaker 01

  Nope.

• 50:32Speaker 02

  7.

• 50:33Speaker 01

  7:30, 7 to...

• 50:35Speaker 02

  8.

• 50:36Speaker 01

  7:30 to 8.

• 50:39Speaker 01

  And if you miss any of these shows, you can find us wherever you stream your podcasts. In the meantime, remember these three things: be smart, be safe, and always be money wise.

• 50:49Speaker 04

  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and Money Wise Wealth Management are independently owned and operated.