Tax Planning and Strategy for PM Company Owners | Chris Picciurro

A Podcast | Chris Picciurro

Pete Neubig: Welcome, everybody, to the NARPM radio podcast. My name is Pete Neubig, and we have an incredible guest today, Chris Picciurro, or I like to call him my boy, Pic. He has several professional accreditations, including the CPA, the MBA, the PFS, and the ARA. So, look, he's like right into NARPM with all of our acronyms. He's got them all. Chris is a speaker and now an author of the book called Defeating Taxes, Unlocking Success Through Tax Planning. And Pic has been my dedicated tax planner and CPA. His firm does all of our taxes for Empire, VPM, and me personally. So welcome, Pic. Thanks for being here.

Chris Picciurro: It is a pleasure. I love that you're calling me my nickname because that nickname was on my letter jacket in high school, right? Because no one could say my last name anyway, and I'm 51. So every other kid was named Chris in the Detroit area, you know, is Chris or some other, you know, Italian name. And not that Chris is necessarily an Italian name, but, you know, we had Vito's, we had Rocco's, we had anyone that grew up right out of just a couple miles outside Detroit. So anyway, it's a pleasure to be back on this podcast video, and I love working with NARPM its members.

Pete Neubig: Yeah. It's been a minute since we had you on here. But the reason why we're going to have you on here this time is I wanted to talk a little bit about the difference between tax planning and tax preparation. Because before you and I really connected, I always had a CPA. They always would do my taxes at the, you know, usually after April 15th, right? I'm doing the extension. And then it's like, here, by the way, this is how much you're either you pay back or how much you owe. And then it's like, there's nothing I can do, because we're doing it for the year previous that taxes already happened. So talk a little bit about what the difference is between planning preparation.

Chris Picciurro: I'm glad you asked that. This is something I'm very passionate about, and I've spent the majority of the last decade personally working in tax planning and strategy with over 25 years as a CPA. Yes, I know if you're watching, I probably got the CPA license when I was 10. That would be nice. Although I already outed myself in age. So here's what I want you to guys think about. Tax planning and strategy is everything related to your taxes and finances looking forward. Tax preparation is compliance. That's everything looking backward. They're separate tasks. You might have separate CPAs or tax professionals, enrolled agents that are performing those tasks and they are very complimentary. And why tax planning and strategy is so important is I'm going to, I've got two examples for you that really hit home. One of those real estate related, one of them's not. The first one we think, thanks for mentioning the defeating taxes book I wrote about in that book is saying this, looking forward, what's bigger when you drive a vehicle, right? Your windshield or your rear view mirror? Your windshield. But we, so if you're driving around all the time, just looking in your rear view mirror, you're going to, you're going to hit potholes. You're going to make mistakes. You're going to have unintended consequences. You're still looking at the road, but you're just looking at the road behind you, not in front of you. So that's tax planning and strategy and the, what we do with tax planning and strategy is legally and ethically reducing the tax you pay in your lifetime. So I want you to think about this. A lot of people are, you know, are pretty much everyone's a NARPM member or you just love Pete and think he's handsome and want to listen and watch the show, right? If you want to rent your home, if you want to sell your home, what, what do you do? You stage it. You put it in the best light possible. That doesn't mean we're taking pictures of someone, the home from a different home and just to get people in the home, but we are putting it in the best light possible to get you the best result possible. It might cost you a little bit of money up front. However, it's going to give you a huge ROI on the backend. That's what tax planning and strategy is. We're staging your tax return legally and ethically to get you the best result possible.

Pete Neubig: So like, um, I know when, when you have a company and you're making some good money, people start doing, you know, things that they can do to kind of reduce taxes without planning right there. Well, let me go ahead and start putting my, you know, my car payment on there. Or let me go buy one of, one of the best things, one of the things I see that I'm not a big fan of, but Hey, let's go buy a vehicle that's over 6,000 pounds, right? So I'm buying something and I'm, I'm, I'm getting a, like a little bit of, of discount for that as far as taxes. Um, so, and, and, but, but no one's really, that's, no one's really doing any strategy. So when, when should we start the strategy? How often are we looking at our books? And then what are some of the strategies that you've seen people use or that you've helped people use to reduce taxes?

Chris Picciurro: I love that. And I had, we have a bunch of content on our YouTube channel. One of the videos that gets people a little wrangled is I walk through how buying a vehicle, even if it's over 6,000 pounds is not a tax strategy. That's it's just not right. So you get a deduction, but you would have to recapture that deduction if you trade it in or sell it anyway. Um, so when it comes to tax planning and strategy in our, how we operate and in our proprietary process, we look at three different buckets of tax planning implementations. Now I'm going to warn you, I want to tell you this, implement, uh, ideas are cheap. Implementation's valuable. I'm not here to whiz bang everyone with, Oh, I should do this. I shouldn't do that. It comes down to is, does that make sense? Just like in the, you know, in the housing market, or you're not going to go buy a super expensive custom cabinets on a $110,000 home. It just, you're not, yeah, they're great cabinets, but it doesn't fit your situation.

Pete Neubig: Got it. Um, there are, there are some tax planning, uh, strategies that may not fit our situation, your situation or her situation. Got it. Okay.

Chris Picciurro: So the first bucket of tax planning and strategy is going to be what we call behavioral tax planning implementations. What is that? A behavioral means you're shifting monies from one bucket to another bucket, somewhere within your household to reduce your tax. Because one of the big misconceptions, one of the myths we write about wrote about is that not all income is taxed the same. It's just one of those crazy things, but you know, long-term capital gains are taxed different than self-employment income versus court earnings. So not all income is taxed the same. So an example of a behavioral tax strategy would be shifting income from one entity to the other. Like if you're in the real estate field, let's say you own a commercial building and let's say you operate your, your, your, your, uh, property management company or your brokerage out of that building, shifting income from the operating company to the holding company. You're still Picing up the income here and getting the deduction there, but rental income is taxed differently than self-employment income. Right? So there's, there's a, or let's say you're an escort business owner and you work out of the home and you have a legitimate home office. One of the things you might want to consider is something called an accountable plan. Have the home office. This is a real, we have, we're working with a real estate professional in the Chicago area. Um, that person's in a higher rent area there. They work out of the home, they have an S corp and it's their primary place that they work, excuse me, because of that, that home office is evaluated about $950 a month. We went, we looked at, you know, similar space. That person out, the S corp reimburses under an accountable plan, the S corp owner, $950 a month for office rent. That business owner does not Pic that up on their personal return. That S corp is getting a deduction. That S corp is now getting over $11,000 deduction per year. That behavioral strategy alone saves three to $4,000, especially in Illinois. Uh, Pete, you and I love those no tax States. Like I'm in Tennessee and you're in Texas, but some of those States have a significant tax. That's a behavioral tax. Did it cost the person any money? No. They're taking distributions out of the S corp anyway. Can that save them a few grand? Absolutely. So that's a really low hanging fruit behavioral strategy. Um, you know, yeah, don't go and pay your kids just to pay your kids if they didn't do any work. But the strategy is income shifting between family members. At times it might make sense to pay your spouse. It might make sense to pay your kids. It makes sense to pay your parents if they are working in the business, especially kids, you know, two of my kids have legitimately worked in our business and we pay, we don't pay them a lot, but we pay them a fair wage for what they get. They do. And now, um, I can, I can deduct that their tax rate zero, my tax rates a lot higher. And then if I want, which I do, I contribute to a Roth IRA for them. So one of the things we have to understand too, is tax strategies or tax implementations. They don't like to be single. I always say they like to mingle. They like to jingle back like Pete and I back in the day, right? When we had heritage, they like to be stacked and blended together. So, so they don't live in these little silos. We have to, and it comes down to like, you have, you know, you're a big process person.

Pete Neubig: Just real quick. Most business owners aren't thinking this way. And most of their CPAs are not thinking this way either, right? Like most CPAs you said are kind of the rear view of the defense, so to speak. They're not coming up like, cause I've had so many people that I've had quite a few folks who are going to be like, and they complain about their CPA, man, my CPA never does X, Y, and Z. I'm like, well, because they are just getting the numbers from you and then preparing taxes. They're not looking forward. They're not building these strategies. So they don't even know. A lot of these CPAs don't even know to ask these questions. Is that correct?

Chris Picciurro: Oh, that's correct. Because here's the thing, the whole tax ecosystem is screwed up, right? I mean, we're all kind of, I don't like the victim mentality, but many CPAs and enrolled agents and tax professionals, we're kind of stuck in a bad cycle. We are preparing tax returns and everything's retroactive. You could be a CPA and know nothing about tax planning. Tax planning is not on the CPA exam. It's not on the enrolled agent exam. It's not on a, I can get my MBA, I can get my accounting degree and never talk about tax planning at all. It's all compliance work. That's how we're trained. That's how our brains are trained. So it's hard.

Pete Neubig: It's kind of like going to high school and never learning about how interest works, right? They're like literally keeping us down, right? Because tax planning, I think, is the biggest bang for the buck as far as reducing your tax burden.

Chris Picciurro: Oh, absolutely. The way you have to think about this is this, we've invented three laws of tax planning. One of them is tax agencies are your involuntary business partner. So even if you're a single shingle person, even if you're a W-2 wage earner, let's say you're the COO of a really great NARPM member firm and you get paid on a W-2, you have business partners. They are the IRS and they are, maybe you live in New York City and maybe you have a city and a state tax to pay. Those are your business partners. If you do nothing, they determine how much of their income they get to keep. So as a W-2 wage earner, you've got options. Do you contribute to a health savings account? Do you contribute to retirement? Do you take advantage of section 125 plans? Do you do anything else?

Pete Neubig: As a W-2, you have a few levers, but very few. As a business owner, you have a lot more levers.

Chris Picciurro: Correct. The business owner has the full playbook. A W-2 person, if you're a W-2 person, you start getting over about $730,000 of wages. Now the playbook opens. Now it's second down and two, not fourth and 17 as a football analogy. Business owners, it's always third down and one. Business owners have to understand there's no pixie dust, even though that's my nickname. There's no magic wand. You typically have to deploy capital to get a big splash on tax reduction. So like I said, that first bucket is going to be those behaviorals.

Pete Neubig: The first bucket is behavior. You gave a couple of examples. What's that second bucket?

Chris Picciurro: The second bucket is going to be tax advantaged investments. So tax advantaged investments are implementations there. You're deploying capital. You're going to get typically two thirds to 90% immediate tax deduction year one. But that capital is going to be deployed into something that produces income for you. And that income hopefully is going to be tax advantaged down the road. So that could be, especially if you're, let's say you're a real estate professional status with IRS. Typically if you own a property management company, you're going to be in that category. Let's say you go buy a rental property, right? You might put out $100,000. Let's say you get a loan for 400,000 and let's say you do a cost segregation study on the property and that lends you a $90,000 tax deduction, right? You put out a hundred thousand, you get a $90,000 deduction year one. And then that produces tax advantaged income for you in the future. That's an example of a tax advantaged investment. There are other ones, but for real estate people, that's a good potential option.

Pete Neubig: So talk a little bit about like, that's a great one. I know Opportunity Zone would fall into that. Yes?

Chris Picciurro: Absolutely. So one of the main, main changes with the One Big Beautiful Bill Act is that Opportunity Zone funds, so our back, right? So the Qualified Opportunity Zone funds were born in the Tax Cuts and Jobs Act of 2017. We call those QOZ OG. Those are the old ones. Then 2026, we have a gap year. So we don't have Opportunity Zone funds available to us in 2026. And then in 2027, OZ Funds 2.0 is alive and well. What a Qualified Opportunity Zone fund allows you to do, it allows you to take capital gains of any type, put just the capital gains into the Qualified Opportunity Zone fund and tax defer for many, many years and get a step up in basis. So it doesn't have to be real estate to real estate. You could have NVIDIA stock, sell it at a huge gain, like you can't 1031 exchange NVIDIA stock, right? Right. But you could. And the cool thing about the Capital OZ Fund that's different than the 1031 exchange is that it could be all or part of your capital gain. Maybe you want to keep some money on the table. Maybe you invested $50,000 in NVIDIA and now it's worth $300,000. Okay, I want my $50,000 back. That's fine. That's just a return year basis. I want to invest my $250,000.

Pete Neubig: So if I sold a house and I made $300,000 on the house that I sold, I can take a portion of that as well? Some of it, all of it, or a portion of it and invest it in the Opportunity Zone?

Chris Picciurro: You can. In 27. So in 26, we have this gap year because all the old Qualified Opportunity Zone funds that existed between 2017, September, and now, or in 2025, all become taxable in 2026. Because if Opportunity Zone 2.0 was available in 26, you know what we'd all do? Take our Deferred Opportunity Zone funds from the previous year and just slap it into another one and the government would never get their money. But Opportunity Zone funds are very powerful. The good thing about Opportunity Zone funds is this. You have 180 days from, again, this doesn't apply to 2027, but you have 180 days from after the capital gain. Because a lot of times, people say, why haven't I heard of that? A lot of times, taxpayers go to their tax professional after they've already done something. So it is a two-way street. I'm going to put a little burden on the taxpayer. Just like if I owned a property and my NARPM property manager is emailing me like, hey, you got a blight note. Hey, we have a repair.You know, we have rental properties. Okay, if I just ignore all those emails and never approve repairs, never approve an eviction, I'm being a bad customer and the property manager might be amazing, but I need to participate. So they need something from me. So the earlier, and you asked, when do we talk about this? The earlier, the better. When you're thinking about a major transaction, plant the seed with your accountant and say, hey, look, I'm thinking about doing this. Now you also have to be open to deploy some of the capital. So let's say, like Pete, let's say you said, I've got a $300,000 capital gain. Okay. Well, man, my wife has been begging me to go to Europe. We're going to take $25,000 and go do this European, you know, I'm going to pay tax on the 25. I'm willing to do that. But the rest, I'm willing to put it in the Qualified Opportunity Zone Fund.

Pete Neubig: Got it. And of course, if you are making money from your property management firm, that is not capital gains unless you are selling the firm, right? You have to sell an asset to get the capital gains. Now, Chris, before we go into bucket number three, you said cost segregation. We hear that word thrown around a lot. Can you just talk a little bit more about what actually is cost segregation?

Chris Picciurro: Absolutely. So let's take a step back. We know that real estate comes in residential and commercial as far as the IRS. The IRS puts out different asset classes and how long we have to deduct the asset purchase price. It's called depreciation. It's really hard for real estate investors to think depreciation because, well, we buy things to appreciate. So depreciation is just another term for the technical term is maker's modified accelerated cost recovery system. So for instance, Pete, if you buy a vehicle, it's deducted over five years. Real estate, so residential property is deducted over 27 and a half years. Commercial real estate is deducted over 39 years. So those are long periods of time to deduct the cost of the real estate. So let's look at a commercial property. Let's say you buy a commercial property and you're a real estate professional. Easy math. You buy it for $450,000. $60,000 is allocated to land based on let's pretend that we're just making things up. $390,000 is allocated to the building. For the next 39 years, you're going to get a $10,000 deduction for that building. Now you might never recover all the costs from that building in your lifetime. Well, under the One Big Beautiful Bill Act, the concept of bonus depreciation was made permanent. What bonus depreciation does is it says, well, guess what? If you buy an asset that's five, seven or 15 year life, you get to deduct it all year one. Oh, dang. Wait, commercial property is 39. Yes. So if we go into that commercial property and we got to do this the right way, legally and ethically, we can strip out the personal property portion. That's a mouthful. Good thing I didn't go to happy hour today. Personal property portion, that's eligible for bonus depreciation. So what does that mean? Windows, landscaping, heating and cooling, electrical systems. So we have to have an engineer come in and again, this sounds like really expensive. It's usually a $2,000, $3,000 to get this done. We have to have someone come in to, in an IRS compliant fashion, say out of that building, out of that, let's say $390,000, you're probably going to get about a 25%, 24% of the average and we see about 150 of these a year. Let's just say 25% of that 390 is going to be allocated to personal property, not real property. So that could be, you know, again, especially in a commercial building, you're going to have a lot of maybe different, you know, usually that number is a little higher. So in that case, I shouldn't have made the math easier, right? 25% of 390 is- Let's just call it 25% of 400. Oh, sure. Thanks. I'm not that good with numbers. Is a $100,000 deduction. You get an immediate deduction for the personal property portion of that, so you walk away with a $100,000 deduction year one. It doesn't matter if, and this is one of the second rule of tax planning, cashflow and tax flow are different. So if you paid cash for the property or you only put 20% down, the deduction- Is the same. Is the same. Yes.

Pete Neubig: And now what happens on year two, year three, year four though, because like I've always been taught like, Hey, take straight line depreciation over 27 and a half years and you get this amount of depreciation. Do you still get like on year two or year three, do you still get depreciation benefits or do you lose it or you get it all in year one, you lose it after that?

Chris Picciurro: Right. No, great question. So in our example, let's say $100,000 of the 400,000, the $100,000 is deducted year one on a cost segregation study. The remaining $300,000 is still spread out over the 39 years. Got it. Got it. Here's something really, really cool guys. I love Monopoly. I used to have Monopoly stuff all over my office. No one will play Monopoly with me. I'm a pretty nice guy, but if I play Monopoly, I'm a big jerk. Like I will soak every dollar out of you. And when you, when you're out of the game, I'm going to take that little cute dog that you're running around with and I'm going to put it next to the hotel you landed on like a grave. But anyway, we'll go ahead and so, but here's the cool thing about it. Why am I talking about Monopoly? You get a get out of jail free card. So one of the cool things is this, if you're listening or watching and saying, why didn't I know about this? I bought a commercial property in 2022. You can use your get out of jail free card. We can go back and do a cost segregation study for a property that was purchased in a prior year and take the deduction this year. Technically it's called a 481A adjustment and we have to file a form 3115. So we are going to the IRS and saying, Joe taxpayer, we use straight line depreciation on this commercial property. We're changing that. The IRS, if it filled up properly, the IRS will automatically allow us to change it. And we'll say, we had a hundred thousand dollars of personal property in this building. We want a deduction for that. And let's say they bought it in 22. We'll just calculate the difference of what they could have gotten and what they took. So we might get $90,000 immediate deduction. This is great because what we call it, we call that in our, in our practice, scrubbing the depreciation schedule. We have a new client come in, we're onboarding them, or it might be strategic. Like let's say, you know, your income is going to be three times more in 27 than this year. I'm going to hold off on those cost sags until I pair that with the higher income year.

Pete Neubig: So in layman's terms, if I'm going to have a great year, if I'm going to have a great year in my property management firm, and I'm going to make more money than I ever have, and I own some real estate, I can say, Ooh, let's do a cost seg on one or two of these properties to offset some of my other income, even though that's not capital income, right? Even though it's not a capital distribution, it's just a, it's just a, what is it? I guess it's a earned income, right?

Chris Picciurro: Right. Absolutely. Absolutely. So as long as you're, excuse me, as long as a rental activity is considered non-passive, so I don't want to get too crazy and technical, but rental activity is considered passive under 469A of the tax original revenue code. However, if you are real estate professional status, meaning you are in the real estate trades or business, it makes up more than, and you work over 750 hours a year, and it makes up more than 50% of your time. As long as you, I mean, if you own a property management company and you own rental properties, I sure hope you're managing your own properties. You have that. So you're, you have material participation, then you can take those losses and offset your active income. Now, if you're an engineer, Oh gosh, engineers, let's get rid of, let's say you're in a, Oh, attorneys are worse. Doctors. Oh gosh. So let's just say you're a school teacher and you own a rental property. You're probably, you won't be able to offset your active income with a cost seg because it's a passive activity, but yes. So definitely if you own rental property.

Pete Neubig: So one of the benefits of being in the industry is we can take advantage of the cost seg.

Chris Picciurro: Yeah, absolutely.

Pete Neubig: All right. Third, third bucket. So behavioral tax advantage investments, and then you said there was a third bucket.

Chris Picciurro: Yes. The third bucket is called tax mitigation strategies. So a tax mitigation strategy is going to be something that you participate in where it allow it gets in general, it's going to allocate you a deduction and the value of that deduction. So the tax reduction, I know it's from the deduction is much more than the cash you outlaid that now it's, it's very, those, those situations are going to be for people that are paying at a minimum, a hundred thousand dollars worth of tax. It really starts hitting when you're hitting 250, 300, $400,000 worth of tax. If you're in that situation, that's where the tax mitigation strategies make sense. Before that situation, I'd focus on the behavioral and the tax advantage investments.

Pete Neubig: Got it. Now in your book, you talk about the describe, no, diagnose, prescribe, and then the IQ test. And I mean, I can, I, we've had numerous meetings when you're like, okay, we need to diagnose and prescribe. So like, I've, I've kind of lived this. So talk a little about, you kind of built this formula for teaching tax flow. So can you talk a little bit about that, those three steps and how that helps someone?

Chris Picciurro: Yes. And you know what, Pete, when I come to Houston next, I'm going to steal your process King thing behind you. Cause I feel proud that we've created some process. No, I won't steal yours. I'll get my own. So, so process is super important and that's why many tax professionals haven't, you know, they want to do tax planning, but they don't have the process to do it. Our process proprietary process is four steps. Like I said, diagnose, prescribe IQ test, implement. We use color-coded diagnoses to prescribe, to, to, to diagnose taxpayers. So for instance, high, high marginal tax rate, red diagnosis, low marginal tax rate, green diagnosis, purple is kind of in the middle gold, our tax-free income and growth. And then we prescribe different tax strategies. So I might come to you or we might work with someone and say, Hey, these are six, seven things that you might want to consider. Then we go to the IQ test. The IQ test is your financial fitting room. So think about it when you're showing houses, you know, you've got, well, I would really like a pool. Okay. Well, here's the houses with that. And I don't like those. That may be, maybe a pool isn't important. So we've got to look at someone's time horizon, their liquidity. So what we, what would be appropriate for you might not be appropriate for someone that are, is our parents' age or someone that's younger. So time horizon is important. And if it passes what we call the IQ test, and I developed the IQ test because I've been doing this 20 years, I'm sure everyone listening to this has given their customer, their client, their, their owner advice that they didn't take. And you just shake your head saying, well, why are you paying us all this money to do what the heck we're trying to help you? Because there's a reason it didn't. And so I broke that down into that IQ test saying, okay, this is like, I'll give an example, real quick example. Someone comes to us and says, all right, I want to maximize my retirement account. I'm self-employed and I made $300,000. Great. How much do you want? You know, what's, what can you afford to put in retirement? How about the max? Well, the max depends. Well, I, I got to know, like, if you say 25,000, I'm going to recommend a SEP IRA. If you say a hundred thousand, we're going to have to do a cash balance plan or a defined benefit plan. If you say 10,000, cause my wife wants a new kitchen, then we're just going to do something different. So we have to, liquidity is so important in the, in, in figuring out that. And then the fourth step, the most important step, implement, working, and you've worked with some of them, but working with the implementation partners is so important. A cost segregation study in theory sounds great, but you've got to make sure we work with the people that could produce the results that we can put on a tax turn and feel confident that the IRS and it's done by the right person. So just like any, you know, the big difference between having a licensed contractor over and having your, your uncle over that's a, that just started a handyman business on the side.

Pete Neubig: Yeah. I'll equate it to like, so the tax planner is like the quarterback, right? And he works with the client. In this case, it might be us that he diagnoses. And then he says, Hey, these are the things that I think would be good. And then I'm going to hand you over to my, you know, my specialist, just like we're as a property management firm. When we come in, we have a client comes in and it's like, Oh, you need an AC guy. I'm going to send you over to my AC guy. Chris and his team send me over to their guys all the time, whether it's antelopes that they want me to invest in or some crazy crap like that, or, or an OZ opportunity zone or some other, some other deal. Chris, isn't the guy that knows all about that stuff. He knows what it can do from a tax perspective, but as far as the investment itself, because most of the vehicles that you're putting me in Chris, not only do they give me tax benefits, but they actually are also making me money. So it's, it's actually an investment strategy as well.

Chris Picciurro: Absolutely. That's a great analogy. So for instance, let's say you, you know, you're, you own a home and you say, and you say, Hey, I'm, if I, if I, you know, if I make this in from a two bedroom to a three bedroom home, or if I, if I build an ADU, tell me what that could do. And as far as rental income, a property manager could tell you that, Hey, ADUs right here are doing this property manager, go build it. No, they're going to say, listen, I work with these contractors. You guys go, you know, once it's done, we'll list it for you. We'll make sure it's tenanted. But the property manager has that important knowledge of is, does it pass the IQ test? Like, am I going to build a $200,000 ADU? If it doesn't add a lot of value to the property and I'm only running it for 500 a month? No, that's terrible. But if you're in a college town and you can, you order it out short term and it produces, you know, 70 grand a year and it costs you 200 grand. Yeah, that sounds great.

Pete Neubig: It can be simpler, right? Do I do a rehab on a property that rents 600 bucks a month? No, I'm just going to do a make ready. Like we're not going to rehab the whole thing and put in, you know, the fine China and the fine cabinets and the fine, you know, the countertops and things of that nature. So, all right, Chris, we're running up against it, but I have one last question. What are some of the biggest mistakes you've seen people do when it regards to tax planning and taxes?

Chris Picciurro: First is not understanding that tax planning is different than tax prep, like I said, and going to their CPA or enrolled agent or tax attorney. Those are the three people that could actually represent you in front of the IRS too late. So, hey, you know, I just sold this property. Um, I closed last week. I want to do a 1031 exchange. Oh, can't do that anymore. Right? So, you've got to be more proactive and knowing your numbers, a tax projection starts with, or tax plan starts with a tax projection. It doesn't have to be perfect, but no, am I going to make between three and 400 this year? Yeah. Okay, good. Do I have any cash available at the end of the year? No, because I'll tell you what, probably the biggest mistake, and we do work with a lot of residential property managers. We work with a lot of insurance agency owners. When you, one of the laws, cash flow versus tax flow, the third one that I had to sneak in here is understanding that cash going out doesn't mean a deduction. So, the biggest misinterpretation is probably the cash in your bank account isn't your profit. Let's say I buy a property management company. Let's say I buy a book of business, right? Excuse me. I'm probably going to pay, let's say I pay that off over a five-year period. I deduct that book over 15 years. So, more cash is going out than I'm getting a deduction for, right? But then you're six to 15, I'm getting a deduction for that book of business and no cash is going out to service the debt. So, understanding there's a difference between what's in your bank and what your profit is, is probably the number one misconception.

Pete Neubig: Yeah. And I've learned this the hard way, especially when you have partnerships and you have a K-1 statement. And even though I only took X dollars, let's say I took $100,000 in pay, but we were profitable 400,000 and I own 50% of the business. Well, I had to pay tax on 200,000, not the 100,000. So, I learned a big lesson myself on that.

Chris Picciurro: That's called cashflow. Cashflow is different than tax flow. Yes.

Pete Neubig: So, you need a good CPA to run the numbers in the rear view. You need a good tax planner to plan for it. And then you need to have a good CFO or fractional CFO. All three have to do with your accounting and all three have to do with financials, but they're all three are wearing a different hat for you.

Chris Picciurro: Absolutely. And if you're working with a CPA firm that you really like, ask them if they do tax planning. Remember, CPAs by nature, and I think I mentioned this but 75% of CPAs are leaving the profession in the next 15 years. Us by nature are really not good entrepreneurs. So, the first step would be is if you're interested in tax planning and strategy, talk to the firm you're working with right now, see if they offer it. And if you're paying 25, 30, 40, $50,000 of tax every year, it might be time to look at a more comprehensive solution.

Pete Neubig: Yep. Well, Pic, thanks for being here. If somebody is interested, I know, are you taking new clients now? Because for a while there, you were super busy and I would send people over to you and they'd come back and be like, Pic's not taking anybody. You taking clients these days?

Chris Picciurro: Yes, we are. So, one of the secrets to our success is capacity planning. So, we are working with up to 30 new clients a year. At the time of this recording, it's earlier in the year. So, we've got some capacity and happy to chat and see if we're a good fit.

Pete Neubig: All right. So, if somebody's interested to learn more, how do they get in touch with you?

Chris Picciurro: Really easy. You just go to realestatecpa.guru. That's realestatecpa.guru. It's going to take you about a minute to 90 seconds to fill out the inquiry. Those come right to us and then we'll reach out.

Pete Neubig: Awesome. Thanks, Pic. And if you are not a member, shame on you. You should be a NARPM member. You get cool content like this, but you also get to go to conferences and you get all the perks that go along with being a member. narpm.org, 800-782-3452. And if you are looking for remote team members or want to move your team over so that we can pay them for you instead of direct pay, you can give us a call. Well, email me, pete@vpmsolutions.com or go to vpmsolutions.com. Pic, thanks for being here. See you, everybody.