Speaker 1: Because four hours simply enough. This is armstrong and getty
Speaker 1: extra large. I was just thinking, is we're about to
Speaker 1: talk to a tax expert. How upsetting it must be
Speaker 1: to him these stories about tax payers all across America
Speaker 1: feeling like their taxes went up because their refund is smaller,
Speaker 1: even though their taxes actually went down. Yeah. We've known
Speaker 1: Stephen Moskowitz for years in a variety of capacities, uh,
Speaker 1: personal and professional and the rest of it. And I'll
Speaker 1: tell you something about Stephen is he feels about taxes
Speaker 1: like shirtless guy in the stands feels about football. He
Speaker 1: is so into it. Uh, that makes it fun to
Speaker 1: talk about the changes in tax going a lot more.
Speaker 1: Steve Moskowitz joins the Steve, how are you, sir? I'm great,
Speaker 1: really happy to be a guest on your show. And
Speaker 1: you know how excited I get when we talk about taxes. Absolutely,
Speaker 1: I really do. We could start there people who feel
Speaker 1: like their taxes have gone up because the refunds have
Speaker 1: gone down under the new law. Are you frustrated reading
Speaker 1: those news stories? Yeah, you have to take a look
Speaker 1: at the totality. Now, some people's taxes really did go
Speaker 1: up because with this new tax law. There really were
Speaker 1: winners and losers, but an awful lot of people don't
Speaker 1: realize when they get something in every paycheck that at
Speaker 1: some point you pay for it. And theoretically, with the
Speaker 1: time value of money, you're better to get the money
Speaker 1: as soon as you can invest it. But what happens
Speaker 1: in real life. A lot of people just spend it
Speaker 1: and when they got the refund, it's like the old
Speaker 1: Christmas clubs that had a chunk of money and they
Speaker 1: could do something with, you know, buy something or go
Speaker 1: on a trip. That's that's what they're missing right right.
Speaker 1: So let's talk about the changes in the tax code recently. Well,
Speaker 1: what's the headline, do you what has had the most
Speaker 1: effect positive and negative on people? Oh? By far they
Speaker 1: through where if you qualify, you only pay tax on
Speaker 1: of your business profit. That's the biggest one out of
Speaker 1: all this. This really really helped business people. Doesn't do
Speaker 1: a thing for employees. But if you're in business and
Speaker 1: you qualify, who wouldn't want to pay tax on of
Speaker 1: the profit instead of and qualifying real estate? What do
Speaker 1: you mean qualifying? Can you pay tax and only of
Speaker 1: your real estate profit? Yes, if the real estate is
Speaker 1: a business, know if it's an investment. So what's the
Speaker 1: difference between a real estate business and investment is a
Speaker 1: laundry list of rules and essentially how much time you
Speaker 1: spend with it, what you're doing with it, how many
Speaker 1: properties you're managing. And then the government came along with
Speaker 1: something called the aggregation of rules, and without going into
Speaker 1: all the technicalities, you know these things have limitations on it.
Speaker 1: One of the ways to get around the limitations is
Speaker 1: you have the choice of putting property together. Where properties,
Speaker 1: say would qualify with businesses some belt but if you
Speaker 1: put them together and you qualify for that, you get
Speaker 1: the benefit of on the profit for all of them.
Speaker 1: So there's so much here, Oh my god, And it's
Speaker 1: mind bogglingly complex and honestly, and I don't mean to
Speaker 1: put you out of work, but the fact that it's
Speaker 1: this confusing and complicated, it's just it's a sin to me.
Speaker 1: It's un American, it really is. And I mean, you know,
Speaker 1: there's there's the big joke. Every time there's a tax
Speaker 1: simplification acts, and they've been tax simplification acts since I've
Speaker 1: been in practice for over thirty years. The big joke
Speaker 1: is it's the tax People's Full Employment Act, where it
Speaker 1: just gets more and more complicated and mis exception and that,
Speaker 1: and most people really do need to rely on somebody
Speaker 1: because if not, you can leave so much on the table.
Speaker 1: And there's all kinds of changes, like the college plans.
Speaker 1: Now you can use them for kindergarten through high school.
Speaker 1: You just be able to do that, so you can
Speaker 1: put an extra ten grand in that. And you know
Speaker 1: a lot of people were putting money away for their
Speaker 1: kids for college and under the old rules of plans,
Speaker 1: you have to use them for that. Now, I mean,
Speaker 1: you know you have an extra ten grand from kindergarten
Speaker 1: through high school. That's nice. There's all kinds of things.
Speaker 1: They're interesting. I asked you this every time we have
Speaker 1: you on, just to make a point. When you started
Speaker 1: doing taxes, how many pages were there in the tax
Speaker 1: code with all the regulations and what is it now?
Speaker 1: It was so much simpler. And it's it's funny that
Speaker 1: very question was posed to us. When I was a student,
Speaker 1: we had the professor came in and he said, when
Speaker 1: he started in taccess, he put his hands up in
Speaker 1: the air and said this was the rules. He said,
Speaker 1: now I can't spread my hands wide enough, and it's
Speaker 1: becomes infinite, because not only do you have the converse
Speaker 1: people in their infinite wisdom making rules, you also have
Speaker 1: the courts interpreting them. So you have a really good
Speaker 1: one where you know that the mortgage interest dropped from
Speaker 1: interest on a million dollars to three cores a million
Speaker 1: for any houses that were purchased after the law became effective.
Speaker 1: So you have to watch out. There's a lot of people.
Speaker 1: If you already had the house, you can still go
Speaker 1: ahead and the duck the mortgage on the million the
Speaker 1: new ones three cors of a million. But then a
Speaker 1: case came out, and this applies to a lot of people.
Speaker 1: The vast case where boyfriend and girlfriend bought a house together,
Speaker 1: they each took the deduction. Here says no, no, no,
Speaker 1: the limitation is per house. The task would said, no,
Speaker 1: it's per person. And that's a very common situation, especially
Speaker 1: here in the Bay Area, where say a gentleman and
Speaker 1: his girlfriend or or any people buy the house together,
Speaker 1: they each get the mortgage of seven fifties. So that
Speaker 1: would mean that if a boyfriend and girlfriend bought the house,
Speaker 1: they could duck the interest on a million and a
Speaker 1: half mortgage instead of just better off not being married
Speaker 1: and just living together in that situation. Absolutely, And also
Speaker 1: there's other areas tax law where that's the check case
Speaker 1: as well. Wow, you shouldn't need a tax expert to
Speaker 1: buy a house. Stephen moscow Witz is with us, and
Speaker 1: we shouldn't discourage people getting married. No, I wouldn't think so.
Speaker 1: So Stephen, what's going to get me audited? These days?
Speaker 1: You know, anything can get you audited, But you should
Speaker 1: take everything to which you're legally entitled, no more, no
Speaker 1: lesson if you get audited. So what it's like if
Speaker 1: a police officer stopped you when you're driving, if you
Speaker 1: wouldn't stop driving. But there's a lot of things. For example,
Speaker 1: as your income goes up, if you make more than
Speaker 1: a million dollars, you're chances of being audited are one
Speaker 1: in eleven. If you go to the other end of
Speaker 1: the scale, your chances of being audited or one in
Speaker 1: two seventy six. Yeah, we're making here in our job,
Speaker 1: so let's see that's eleven years. Calculate that pretty much. Volunteer,
Speaker 1: congratulations on the raises, Thank you? Is that just because
Speaker 1: they think are people making more money, are more likely
Speaker 1: to cheat, or just because the taxes get more complicated
Speaker 1: and there's there's more likelihood that you may stay cheating.
Speaker 1: But it gets more complicated, and then you have the
Speaker 1: opportunities to do all types of things. You know, for example,
Speaker 1: there's all kinds of fancy things you can do. Suppose,
Speaker 1: for example, you say, you know somebody say living alone,
Speaker 1: and they say, when I go to my reward, I
Speaker 1: would like the charity of my choice to have my house. Well,
Speaker 1: that's nice, but there's no tax benefit to that. But
Speaker 1: if you set it up while you're alive and you
Speaker 1: live in the house the rest of your life, but
Speaker 1: when you do die, the house goes to the charity,
Speaker 1: you get a tax deduction now, and that can be
Speaker 1: a big tax deduction, and all kinds of fancy things
Speaker 1: you can do. Same way with selling property. Suppose you're
Speaker 1: gonna sell the property and you said, well, right, I'm
Speaker 1: going to sell the property and then I'm going to
Speaker 1: take the money and invest it in stock market, get tax,
Speaker 1: the capital gains tax. But if you say, well, I'll
Speaker 1: give the property to the charity and then you take
Speaker 1: a stream of income back from them because they sell
Speaker 1: the property and there's no tax on them. Your lifetime
Speaker 1: stream of income is gonna be greater than if you
Speaker 1: saw that. There's there's a of things like that. Why
Speaker 1: can I can give it to a charity, but they'll
Speaker 1: give me a stream of income in return. Yes, and
Speaker 1: those are commonly done. And what happened is that charity
Speaker 1: gets a little something. But the big deal here is
Speaker 1: when charity sells the property, there's no capital games tax.
Speaker 1: If you sell the capital games tax, there's more to
Speaker 1: invest in the stock market. And the bottom line, the
Speaker 1: charity gets more, you get more, the I R S
Speaker 1: gets less, and that's a good thing. Another thing, I
Speaker 1: know it drives you crazy, just because we've talked to
Speaker 1: you for years, this idea that in kind of you know,
Speaker 1: pop culture that you know the week of April fifteenth
Speaker 1: is tax season, and there's all these stories about taxes
Speaker 1: and everything. The tax seasons year round. It sure is
Speaker 1: because an awful lot of people go on extension, so
Speaker 1: that means we have until October fifteenth. But it's the
Speaker 1: planning because so many things, so many things you need
Speaker 1: to do before the year end. Not everything like some
Speaker 1: of the pensions, you can still do in the next year,
Speaker 1: but there's so many things that you have to sit up.
Speaker 1: So tax is really a year round idea. Not it's
Speaker 1: like going to the doctor. You don't just care about
Speaker 1: your health the day you go for your annual physically,
Speaker 1: that's a good one. Would be like if I eat
Speaker 1: an apple and go run and go jog before I
Speaker 1: go to the doctor's cigarettes a day, right, exactly. H
Speaker 1: Steven Moscowitz as a tax attorney's the senior partner at Moscow.
Speaker 1: It's l l p uh Steven Will. We got to
Speaker 1: do it again soon. Uh. It's you know, just to
Speaker 1: remind ourselves as voters how insane the tax code is.
Speaker 1: But then as taxpayers, you point out there are some
Speaker 1: things a lot of people aren't doing that we probably
Speaker 1: should be. So it's always great to talk. Thanks the
Speaker 1: pleasures mind, Thanks for inviting me, right, thanks, Yeah, I
Speaker 1: tell you that's the funniest thing about Steve. He will
Speaker 1: stand there and talk about tax with fire in his eyes. Yeah,
Speaker 1: for as long as you want to talk about and
Speaker 1: and he's also you know, I hate to characterize him,
Speaker 1: but he's a real lover of liberty and American principles.
Speaker 1: And he's no great fan of the tax code and
Speaker 1: how complicated isn't what it does to people. So he's
Speaker 1: got this enthusiasm for making sure that people don't give
Speaker 1: the money grubbers of the government more than a dime
Speaker 1: more than they should. And it's so damn interesting, frustrating
Speaker 1: and scary to find out that a lot of cases
Speaker 1: that he's fought, where you know, he's represented people in
Speaker 1: a in a in a court of law, this judge
Speaker 1: will go this way, this judge will go that way. Right,
Speaker 1: I mean, you just you need to know the judge.
Speaker 1: You literally have tax laws where there have been twenty
Speaker 1: one decisions on whether this is legal or not yes
Speaker 1: and ten no. You would think on something like tax
Speaker 1: should be completely black and white and it's not just
Speaker 1: like everything else, right, And so you go into an
Speaker 1: audit and the auditor will say to you, the government
Speaker 1: auditor will say, oh no, no, no, Jones versus Mississippi
Speaker 1: says is completely illegal. They don't tell you that there
Speaker 1: are a dozen cases that say it's fine. Right, you
Speaker 1: talk about un American. To me, the most non American
Speaker 1: thing is that my own government, who I'm paying for,
Speaker 1: if they audit me and they and I make a mistake,
Speaker 1: They could point it out, but they won't know. It's
Speaker 1: a prosecutor prosecutor to get as much as they can,
Speaker 1: not to be fair, not to come up with the
Speaker 1: fair amount they're trying. If they can screw me, they will.
Speaker 1: It's like, which is amazing To sum it up, baby
Speaker 1: through that's a way to cut through the clutter. Now
Speaker 1: I'm fired up. You are listening to the arms Strong
Speaker 1: and Getty Show.