Main Street Business

#550 Tax Lawyer Explains: How To BEAT Taxes As An Influencer...

• Mark J Kohler and Mat Sorensen

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In this episode of the Main Street Business Podcast, Mark J. Kohler and Mat Sorensen reveal the hidden tax traps influencers often overlook. From claiming the fair market value of gifted products to understanding which deductions won’t raise red flags, they provide practical, actionable insights to keep your business compliant and thriving.



Here are some of the highlights:


  • Mark Kohler discusses the IRS's perspective on expenses and how companies that send free products to influencers can claim them as business expenses.


  • Mat underlines the importance of influencers claiming the fair market value of products they receive, even if they are not sent a 1099 form.


  • Mark and Mat explain how gifts can be a write-off for businesses but emphasize that influencers must claim the fair market value of products they promote.


  • The IRS has a task force specifically targeting influencers and has been given additional funding to audit them more effectively.


  • Explanation of the importance of understanding the value of promotional posts and ensuring that influencers are compensated appropriately.


  • How influencers should focus on optimizing their tax situation to keep as much money as possible.


  • Debunk the myth that luxury items like Rolex watches or Lamborghinis can be written off as business expenses simply because they appear in videos.


  • Encouragement for influencers to embrace their role as business owners and take advantage of available tax strategies.
Speaker 1:

Welcome to the Main Street Business Podcast with your distinguished hosts, mark J Kohler and Matt Sorenson. Both are best-selling authors and have over 25 years of industry experience with 10,000 client consultations, making them the leading tax and legal experts in the nation. Together, they'll unpack the most complex tax, legal and financial strategies, crucial for saving more, stressing less and building generational wealth.

Speaker 2:

Today, they're your personal advisors. I think, realizing you're a business owner now your whole mindset needs to change, and so you got to treat what you're doing as a business. From Elon Musk to Warren Buffett to Jeff Bezos. What also are they good at? Besides making money, doing it in a tax efficient way and knowing the tax gain? You're optimizing and paying as little tax as possible, because the only thing that matters is the money you get to keep.

Speaker 3:

You're not going to be an influencer forever. This is the athlete issue. Do you know? The average NFL player is six years. You have six years to make money and set aside as much as you can. Welcome everybody to the Main Street Business Podcast. My name is Mark Kohler. I'm here with Matt Sorenson. This is your holiday special.

Speaker 2:

This is your holiday special and we've got some good news and bad news, I guess.

Speaker 3:

Yeah, I know If you're making money online as an influencer, or any revenue from your videos or just kind of that unique revenue that can happen. That didn't even exist.

Speaker 1:

10 or 20 years ago.

Speaker 3:

It's the new frontier and a lot of people think, oh well, I don't have to claim that or well, I get to write this off. Well, think twice. And today I think we've got to hit some of these issues that people are not. Well, think twice. And today I think we've got to hit some of these issues that people are not talking about.

Speaker 2:

Yeah, and this is reality check time. The good news is, we love that if you're making money online. You're on YouTube, you're on a social channel, you've got some products, maybe you're doing some affiliates. You've got revenue. You've got expenses. Guys, we love this. You've got a freaking business Sky's the limit. You're in control of your own destiny and you got some awesome tax strategies. But people are going way too far with this and they're getting into tax fraud or tax evasion and not good tax strategy. There's a big difference there in between a tax strategy and what the IRS will start saying that sounds like a tax scam.

Speaker 3:

Yes, okay. Now let's talk about issue number one. What is income? Let's just talk about that. And if you heard my I did a little prop while you were talking, did you hear that crack of my Rockstar I did? That was nice. That is the Rockstar Recovery no carbs, no sugar, lemonade flavor, just a little bit of juice in there called caffeine. It's nice. Yeah, this mid-morning boost. Well, I am trying to, you know, build a relationship with rockstar and I send them some vids and I tag this tag that on their channels. Well, about two months ago they sent me a case of rockstars. They said Mark Kohler, thank you for talking about our product on your show.

Speaker 1:

I was like well.

Speaker 3:

Thank you for recognizing my passion and love for the Rockstar product.

Speaker 2:

Yeah, they're like. We've got skydivers, snowboarders, motocross riders and the coolest CPA on the planet. Take them straight as an ambassador for our brand.

Speaker 3:

That was a badge of honor for me. I got Rockstar sending me product. I mean center for our brand, that was a badge of honor for me.

Speaker 2:

I got rockstar sending me product.

Speaker 3:

I mean steve pastrano, suck it, you know. All right, okay, travis, yeah, travis, yeah, there we go. So I'm I'm like traffic, travis pastrano okay, travis pastrano, you can suck it.

Speaker 2:

You know, steve pastrano's the accountant in new jersey. That's a different guy, right? I don't know if we're gonna edit that that was, you know, good riffing going on.

Speaker 3:

Okay, sorry, sorry, travis, all right Now. With that said, when I received that case of Rockstar, I have to claim that as income. People did you hear that? That is what I'm talking about. What is income? When a company sends you product, you have to claim the fair market value of that product. Now, that could be well. I'm just going to do a box opening, I'm just testing their product, I'm just whatever, okay, soon, as you're done, unpacking it, unpacking it and you repack it and send it back to them. I'm okay with that. Yeah, but no, mark Kohler drank all of his rock stars?

Speaker 2:

Yeah, Because you like him and you find value in him. Now, if Monster would have sent you some drinks, you would have been like eh, garbage I'm not using these. Return to sender. Okay, but but Mark Rockstar didn't send you a 1099. Ooh. I love this so you don't have to claim it, oh yeah, isn't that nice.

Speaker 3:

Yeah, wrong I wrong. I thought if you didn't receive a 1099, it's not income, or if they didn't send it in my PayPal report or my Venmo report? Or that's why I take cash, that's why I do farmer's markets on the weekends, cause if I take cash it's not taxable. No, that's called tax fraud, that's called tax evasion, jerk.

Speaker 2:

Okay. So the first issue of what is income? Obviously I'm making revenue. People are paying me for services or I'm getting commissions or affiliate income. But if I'm getting free product cause I'm promoting something in my business that is now income to me and I need to claim what. Do I claim it as fair market value? Retail value yes.

Speaker 3:

Retail value retail value fair market value of what I would have to pay to go out and buy that. Now let's stay with the. I'd like your Monster example. So let's say, Monster sends me a case of UltraZero. Now I do like the feel of their can. I will point that out. It's kind of got that embossed feeling Now.

Speaker 2:

Rockstar is watching. Yes, that's right. Your ambassadorship is on the line here.

Speaker 3:

No, I've got a fork in the road here. Now, if I go post and say, thank you, monster. Whether I drink it or not, I entered into an exchange with them. They sent me a product and, in return value, they were hoping I would post about it. I did. Therefore, whether I use the product or not, I have to claim that as revenue. They paid me to do something. Now if I say, eh, monster, you suck, I'm not going to post on it and I didn't.

Speaker 3:

Rockstar, did you hear that I did not post on my Monster case of Monsters that I received, so now I have to send it back. Or Monster may go, what the hell? And they sue me and go send back our case of Monster. Or I'm going to say, was that just a gift? And if they go, yeah, that's just a gift, you go ahead and keep it. Okay, I can keep a gift because I never posted on it and I could, but whether I used it or not is irrelevant. Did I post? Did they send me? Was there an expectation there? And I fulfilled that expectation.

Speaker 2:

Yeah, and here's, if you know, if you think from the IRS's perspective and I know that's not where most of us like to live- in our brain, you know but if you think of the IRS perspective is they're like, hey, when rockstar sent you that package, they expense that as a business expense, that's right.

Speaker 2:

Okay, and they wrote that off. So you better be claiming it as income, because they got you to do something and you know for for that expense, whereas if they gift it, and it is gifted, it's not an expense to them, right, and so so am I. I'm not claiming that as income. On the other side, I mean, I you can kind of like, I think, to balance those things out.

Speaker 3:

Yeah, I would do want this. Gifts can be a write-off for a business Like, say, monster is trying to get my attention.

Speaker 1:

Yeah.

Speaker 3:

So Monster sends me a gift, they get to write it off of a gift if it's under a certain value, under a certain dollar amount.

Speaker 2:

Yeah, but if their intention was to get you to post about it and for marketing promotion, I don't know. They can call that a gift. That's right.

Speaker 3:

There's a little quid pro quo there is Now what Monster does on their tax return. That's up to them, but everybody I want you to know this the IRS has a task force for this. By the way, they got $80 billion given to them by the Biden administration to up their game on audits. They built a tax force for influencers and guess how they do this? It's not rocket science. There was a recent influencer audited who went on a trip given to them by a travel agency and the influencer posted about it the whole time. Oh, we're here in Tahiti. La, la, la, la la Got audited, had to claim the fair market value of that trip and the influencer was like what, how did you know? You posted about it. So anybody out?

Speaker 3:

there the beast or whoever is doing product openings. All the IRS has to do is sit there and put some guy in a cubicle. Go watch the beast. How many products did he open? Write them down. Go out and find out what the fair market value price is. Build me a spreadsheet. The end, Call up the beast. He's being audited. All I have to do yeah, Did you claim that income or not?

Speaker 2:

Yeah, and I think it's interesting even on the trip, because if you look in, like you know just even my wife's company, you know they'll do like a trip, for, like you win a trip, you're going to go to President's Club, let's say, or whatever. Do you know that they have to put that on their W-2, the value of that trip, and they will actually then gross up additional compensation to cover the tax on it on top of it. So if you're an influencer and you're getting like product for free, you better be getting paid for that on top of it to go promote it, because you just took in taxable income Like what's in it. For me, if I just got free product, I better get payment and affiliate revenue on top of it to cover the tax that I'm going to have to pay on it and also to try and freaking, make some money.

Speaker 3:

Yes. Now let's get into this whole question of what's revenue? Matt opened the can on affiliate. Now, if you're an influencer, you don't want just free product. You know that. So when someone sends you a box opening and then they promote it on their post like Tucker Carlson just did this with the steak company that he promotes they sent him a box of steaks and he's there oh, I love my steaks and if you go buy it today and use the promo code Tucker, you get 10% off. Well, guess why he does that? Because now he is tagged as an affiliate for that code that he shared with you. He makes money on that. So he's getting two things he's getting free product, which he needs to claim. Then he's going to get a 1099 from the stake company that says here's all the people that bought, here's your cut of that through an affiliate relationship. So he's got two sources of revenue there. So I'm glad you brought that up, because that affiliate thing is a big deal.

Speaker 2:

Yeah, but that's like, don't just take the free product right.

Speaker 3:

You're just accepting like a tax problem without any revenue or income.

Speaker 2:

Now Matt's playing lawyer agent here I love this.

Speaker 3:

He's like so when you, so I like this. So when someone sends you that box of free product to open maybe it's new Google glasses, maybe you're in the tech industry and you're trying out a new keyboard my son got a free keyboard sent to him to test out and post on it because he's got an okay YouTube presence. So they sent him this keyboard and so he was like okay, I need to test it out, rate it and post about it, and they would go go ahead and keep the keyboard. So now he has to claim the cost, the value of that keyboard. Now what Matt's saying here is influencer from a legal perspective. This is his Jerry Maguire moment. You say, hey, before I post on this, I'd like an affiliate tag, cause when I post on it and I tell people to go buy it, I want to. I want him to get a link from me and I get a piece of that action. If not, I'm going to send back the keyboard. And I like what you're saying because you're going to get taxed on that value.

Speaker 2:

Yeah, absolutely. And so, like again, like what's in it for you? I mean, maybe you're like well, this is a cool company, I'm trying to make myself look bigger than I am and I get this opportunity, maybe. But you just got to weigh these things. So, and I think, if you have, if you're an influencer that's going to have a lot of these tax issues, right, you should be able to have that weight to be like all right, you got to give me something for this I'm making. You're either paying me per post, or you're paying me performance, or I'm getting affiliate fees on it. We're going to. There's got to be some something coming.

Speaker 3:

Yeah, no, we got a lot to talk about here still, but I just want to back up and say this too I loved how you started with Matt. This isn't a bad thing we are. We are happy for you. This is good. How cool is that you get on Instagram and post about something and free crap shows up at your doorstep. That's awesome.

Speaker 3:

Just know that you're in business. See people now here we're going to come to what's an expense here in a minute, because you're going to get a lot of write-offs, cameras and a little spoiler alert. We're going to come to that Because, see, you're spending money to create that post. Your posting is a business. So you don't just don't be thinking about all these great write-offs you get without thinking about okay, I got to claim some income. When that crap shows up.

Speaker 2:

Yeah, I think the think of it like this, like you're in the freaking game, all right. Now you're in the game, you got to know the rules and the strategies here, otherwise the IRS is just going to be scoring on you all day long with this income issue, but you've got a lot of things you can be writing off. So, like, focus on this, realize I've got a taxable income coming in and. But I got a business here, a lot of write offs and opportunity here that the typical W2 person doesn't have. And I know a lot of influencers. They never even freaking, had a real job. I remember I was interviewing one Just alienated three influencers.

Speaker 2:

No I just I remember I interviewed this lady who was an influencer. She's going to work, do marketing here, and I really liked her. But she's like, she's like, yeah, I guess I 've never really had a real job, and I was like, oh, I don't know, but, or they've worked W2. This is my point here. And you just haven't learned this game yet. So the IRS knows this game, but you should know it too, because there's some easy ways for you to score points.

Speaker 3:

Now let's back up to another major point. I know some of you that are new to tax planning. One of my children you literally met two days ago texted me and he goes I got a letter in the mail from the IRS with a penalty. I in the mail from the IRS with a penalty. I'm like, oh, shoot a picture of it and send it over. And it was a penalty because this child of mine had not paid their taxes by April 15th. He had paid them later in the year and they were like well, I thought I'd file an extension. We have extensions to file, not to pay. And now this is a child of mine that grew up with Mark Kohler at 95 seminars and 10 book signings, you know a month, and he didn't hear me when I talked about this to Agnosium, to other clients. But it was his reality check of oh, the IRS wants their money by April 15th, whether I file an extension or not.

Speaker 3:

So many of you that are new to the tax system may be thinking well, if someone gives me something, that's different than money. If someone gives me something and not a 1099, it must not be taxable. So what we're saying here very definitively, point number one is when someone gives you a product, that is income that's equivalent to dollars. If someone gives you crypto, any form of payment. Can I give a quick example?

Speaker 2:

I'm a big fan of Outlander have you watched Outlander, yet I have not, oh do you it's good and a couple of my kids have read the books.

Speaker 3:

Oh, okay, apparently they're really good. I like the movie.

Speaker 2:

I've heard you talk about it before.

Speaker 3:

Yeah, yeah, outlander, pretty sexy, by the way, I will. Was back in scotland, ireland, united kingdom, way back, you know, in the british isles the lord of the land would go tax their people in the you know out the lands, yeah, to help, and then they would provide protection.

Speaker 3:

so I'm going to protect you back at the castle if needs be, and I'll send out my little knights or whatever, but you, you pay a fee and they would go out and collect taxes. Okay, Now, this is in the Bible. This would be Matthew no offense Matthew the tax collector, but anyway they would go out and collect. Do you think these little serfdoms, these little serfs that were there working in the fields, would pay with money? No, they would pay with here's a pig, here's a chicken, here's some product. You know, here's some grain, here's some whatever. They would pay with product.

Speaker 3:

And so this people have paid their taxes for centuries with not money, and so it's kind of funny. We've gone full circle, now that people are giving things now, and it's called the barter system circle. Now that people are giving things now and it's called the barter system. This is in the tax code, Whether you receive cash, crypto, a note, a stock or even product that is equivalent to cash. So don't think this is the world crashing down on you. This is nothing new and even an outlander. People pay their taxes with a pig.

Speaker 2:

Yeah, and I think you know. By the way, the other example would be the Sheriff of Nottingham.

Speaker 1:

Oh, there you go, robin Hood.

Speaker 2:

Also not a very well-liked tax collector, but would come and take your cattle or your pigs or your land, and then it puts Robin Hood in a whole different light.

Speaker 3:

Robin Hood was a bad guy.

Speaker 2:

Basically a tax strategist. It's like let me figure out how to keep you know more money in your pocket people.

Speaker 3:

We got a comment here in the studio on this too.

Speaker 1:

Yeah, question. So if there are beginning, or maybe they've already started their influencer journey?

Speaker 3:

should they start an LLC or separate entity? Ooh, okay. So our question in the studio for those that hear this, is well, I, guys, give me some strategy here. Should this influencer start an LLC or whatever? Yes, we're coming to that. See. Point number one is, I think, the wake-up call, and I love that question. Point number one was what's income? And I think that's the wake-up call here, that people, you're receiving money. The IRS sees it, it's on the freaking web, you posted about it and you will get audited, because all of an influencer's dream is is to make more money, to make more posts. Well, they're not going away and the IRS is going to see that. So that's point number one. Then we want to come to expenses, and then I like this let's start hitting some strategy and what you do to win the game. So maybe we beat income enough. Yeah, we beat expenses.

Speaker 2:

All right, let's talk about the first thing here, which was you need to start separating your business income and business expenses from all of your personal stuff. Okay, so you're going to need a very. The first principle we need is we want a business bank account, okay, and I want you to start depositing any income you're getting from your business into that business bank account, and then I also want you to start paying expenses out of that bank account. We're going to get to bookkeeping here and accounting in a second, but the very first thing you need to start doing to save yourself and your accountant any headaches is let's start separating this. There's some asset protection reasons. Later we're going to talk about why that makes sense, but for now, let's separate business income and business expenses. Whether it's a separate credit card you're using for business expenses, it can be in your personal name, it doesn't have to be in the business's name, but let's just start separating that. Point.

Speaker 3:

Number one I love it. Great initial point. And I'll say the word get organized. And I know some of you are like well, my PayPal comes from here, my Amazon comes from here, my meta comes from here, goes, here goes. It's going all over the place, I get it. So now it's cleanup time, and I like that. And this is where the LLC does come into play, cause if you're going to open a business bank account, one of our strategies we'll mention here at the end is get that LLC set up a new EIN electronic identification number.

Speaker 3:

Go down to the bank. Our law firms gives you a bank packet, super clean. Boom with your BOI report done for you. So the feds are off your back. You go open that bank account, then start reaching out to all of the different platforms that are sending you affiliate fees or companies that are sending you affiliate fees and paying you this revenue ad revenue, this, that and another. Point them all at that one bank account and start having it. And it's not going to be pretty for a while. Yeah, I get that. Yeah, but it doesn't mean you don't not claim the income. You still got to put the top dollar down of what you got, maybe nine different bank accounts, including your mom's, but let's claim that income, yeah.

Speaker 2:

And the other thing I would say is on this LLC topic, because a lot of people just think well, I'm just going to go set up an LLC, okay, that didn't save you taxes. You have to implement the tax strategies in the LLC to save you taxes. The LLC in and of itself is basically just a business. That makes you legitimate. You get some asset protection for the LLC, but let's just say you didn't open an LLC, you just opened a bank account. You're like I'm Matt Sorensen, sole proprietorship, cool, that's going on schedule C of your tax return. If you have business expenses, you get to write them off. I go set up an LLC, matt Sorensen, to industries LLC. The tax is the same, it's all going on schedule. See how my tax return is the same thing. The tax strategies are the exact same thing. So the LLC has been pitched as this solution that saves you taxes. It is not. The strategies you implement is where the tax savings are.

Speaker 3:

Okay, now let's do an example here. Now, by the way, I want to give a shout out to Kate a, a cousin of mine. She lives down in florida. She's a surfer. She's pretty good, by the way, I want to point that out I'm like what size board do you serve? She's like five, six, five. This.

Speaker 3:

I'm like wow, I'm like nine, six ten you know I'm a long boarder anyway, so it was fun. We were talking at a little family get together and one of her friends down in florida was given a wetsuit by a local. Um, this is coming around to expenses, but they gave her a wetsuit because she was going to be in a local tournament, a surfing contest, yeah, and here's a wetsuit where you wear it in the contest and you can keep it. And the girl was like, okay, cool, she was in kate's surfing club, yeah, and she was bragging to kate. I got this wetsuit because I'm good, you know, whatever, and so it was her first experience. Now, it wasn't online. See again, this is not just online.

Speaker 3:

So she, she'd go go surf in this contest, wear the wetsuit, and, and, and Kate was saying, does she have to claim that wetsuit as income? And I said yeah, but I said but, kate, now she can expense her surfboard. She was like what? And yeah, she's now a quote, unquote, semi-pro surfer. She is now getting product and if she wins she's got to claim that income, any money that she receives in the contest. But she also can now take expenses for auto deductions and mileage, parking at the beach, the surfboard, any other product, sex wax, the whole nine yards that is. She is now in the business of surfing and so anybody listening here is a regular follower. You may go well, I have a friend that's doing this but they may not consider themselves even an influencer. The the beginning of the influencer was an athlete.

Speaker 2:

Yeah, you had to throw in sex wax, didn't you? I win today. Guys, this is a surfing product, not to be mistaken. Oh yeah, it's used on the surfboard. Okay, I just want to make sure that this doesn't open up all expenses, all right.

Speaker 3:

Okay, yeah, yeah, yeah. You're shopping at fascinations. No, sex wax is a product for your surfboard.

Speaker 2:

Okay, but let me say this because I think this is a critical point for any business owners is we always say, well, you can't write anything off until you have your first sale. You have to have income to be in business. Well, the wetsuit was income. That's now taxable income. But now this is opening up all these other things in your business, and so let's take that to the influencer, because now we're talking about oh, what about the camera you use for your posts and the stuff that you're doing?

Speaker 2:

What about your home office? Are you using a home office and a space dedicated in your home? You better be taking a home office deduction. What about the travel to go meet people or go to a place where you're going to shoot or film? That's now deductible. Are you taking auto expenses for when you're using your auto? I mean, all of these things now become deductions that you're taking that are going to offset this income that you're receiving. So that's really what we're talking about here in this first principle is we have income, but now we're going to have a ton of expenses that are going to offset that income, and being organized about it with a separate bank account this could be in the LLC's name is a great way to start.

Speaker 3:

Yep. Now another sister to this conversation is NIL income and name, image and likeness income for the college athletes.

Speaker 2:

Yeah.

Speaker 3:

And they are becoming influencers at the college level, getting paid NIL they call it NIL income, but it could come from the Alumni Association. It could come directly from the college now. It could come directly from the college now. It could come from Nike. And now they go out and what are they asking them to do? Create a social media presence and go out and post, because they want to get their money back If you either do well on the field, if you're the Alumni Association or the college, but then all these other companies are saying, hey, we want to see people wearing you, wearing our product, because we want to pay you for your name, image and likeness.

Speaker 3:

So this is another influencer conversation. So, whether you're online or an athlete or a performer, or you could this could be in music, it could be an orchestra, it could be. We have a friend of ours that is at Juilliard down in New York and out in New York and they're doing a lot of different things to get paid to show up at places. So this is so important. So these expenses, anything you incur to do what you do and that could be tripods, cameras, website costs, software costs, laptops, phones, cords, chargers, travel, dining anything you spend to help your name, individual likeness and, by the way, I'm going to get to a really controversial one here in a moment those are a write-off.

Speaker 2:

Yeah.

Speaker 3:

Very important.

Speaker 2:

Okay, let me talk about where these write-offs have gone overboard, because that's the other piece of the coin here. One side of it is are you claiming the income properly? The other side of the coin is are you taking some BS expenses? Because one thing we've seen with a lot of the influencers is and these are, I don't care what area of influencer you are, maybe you're a real estate influencer or you're whatever is they're like all of a sudden. Now they're like the tax professor telling you all these tax strategies and they're getting freaking overboard. Here's the number one.

Speaker 2:

I saw a post about this. Hey, you influencers, you can write off your Rolex. I bought myself a Rolex and as long as I wear it in my videos, it's now a write-off in my business. No, it's not, no, it's not no. Okay, that's the dumbest advice ever. But they're saying and they're thinking but that was in my video. You know, I rolled up in this Lambo and I look cool and that helps me and my videos performance.

Speaker 2:

No, good luck, okay Now. Now let's say you have a channel about watches and you critique watches and you make you know you, you go over that. Okay, now you're in the ball game on the Rolex. I could maybe see you being able to write that off, because you critique that Now if you got that watch for free from Rolex, which is probably hard to do, but, but, but, but. So now we're maybe in the ballgame, but I think, like some of these like luxury items, the cars, which you can write off anyways if you're using it in your business, but that just placing something in your video does not make it taxed.

Speaker 3:

I love it. Now I'm we're going to throw you a bone here in a minute, cause we're going to talk about clothing here in a moment, which is which is on the bubble for me.

Speaker 2:

Okay, yeah, I might go the other way on. Yeah, we'll see. I'm going to give you my argument.

Speaker 3:

Let's stick with this those luxury items and I'm so glad you started there because I just saw another influencer the other fricking day standing in front of their Lambo. You know I make millions, la, la, la. And in their mind, absolutely, they think that Lambo's a write-off. No, the only way the Lambo is a write-off if they jumped in it and drove over to Staples to buy a new printer to deliver to their office right after. It's only where you drive the Lambo that matters. Well, I wrapped it Doesn't matter. You can pay for the vinyl wrapping with your dumb logo, but that doesn't make it a write-. Well, no then it's not a write-off. Did you race it in a semi-pro race on the track out in Mesquite, nevada? No, well then it's not a write-off. You're not using it to compete and it's not an advertising write-off. It just isn't going to cut it. The IRS has case after case on this.

Speaker 2:

Yeah.

Speaker 3:

Now I? I wanted to be an influencer on this point, so I didn't go buy a Lambo, I went out and bought a golf cart.

Speaker 2:

Oh, okay, and.

Speaker 3:

I wrapped it, it's pretty cool and I will say it's the Lowe's version candy. It's a $9,999, top speed 25 miles an hour. Okay, I will be shooting some influencer posts in front of it. Okay, to mock all you lambo owners. Okay. But remember, is my? Is my golf cart a write-off? No, not, unless I'd load it with crap and drive it somewhere for business. So I am taking it to the 360 event next week and I will be parking it in the valet area, I like it.

Speaker 3:

Trying to show it off, I like it, and as we drive material around like cameras, lighting speakers, it will be a write-off for that brief moment, and so I will have to proportionally decide how much of this Can you do?

Speaker 2:

mileage on a golf cart, or do you have to do your prior to have to actual and fractionalize the days of use?

Speaker 3:

Well, you know, it's interesting, Some golf carts are based on hours. They have a little hour meter, Some are miles I was going to do. If you kept a logbook, you'd say I took it golfing 10 times, but I took it to two events. I would say two-tenths of it is a write-off. So a logbook of events maybe. Okay, All right events maybe. So I don't know, We'll see. I have not written it off yet. I purchased it in 2024. So it will be on my tax return. My friend this year, Some proportion of it.

Speaker 2:

Okay and that, by the way, that's a great other principle for many of you that do like you're an influencer. You're like, well, I bought this thing, that's a luxury item that I or maybe auto is probably the easiest because that does. Actually, you can drive it places for business purpose, but that is where you can have a proportional thing. It's like, well, I do use it personally. I'm going to the club or whatever you know 60% of the time, but 40% of the time I am driving it around meeting, going to meetings, conferences, go and do a shoot somewhere and like that is business use and it could be a Lambo. It could be a Lambo, it could be a a geo Metro, If. Do you remember those? Oh yeah, those were hot.

Speaker 3:

Yeah, whatever Either one I I Matt used to mock me I when first electric vehicles came out, they weren't Teslas.

Speaker 2:

Mark had a Nissan Leaf. I bought a Nissan Leaf. That is like the like worst electric car ever.

Speaker 3:

It's like like, can we make the like lamest looking car ever? And then someone will buy this. I got the carpool lane when it was first came. That's true.

Speaker 2:

This is when you're in california, you got carpool lane if, no matter what electric was, even if it was like the dorky nissan leaf they're like, we'll still let you be I got beat up a few truck stops, but I took a beating because I wanted that carpooling.

Speaker 3:

You know, know, it was important. Okay, now let's talk clothing. All right, so this is called currently. There is an exception. Right, let me give you my argument. Okay, clothing is one where I'm going to be talking influencers about.

Speaker 3:

By the way, if some of you are like, my accountant is nowhere near this conversation, get over to markjkohlercom and look at our TaxPro network. We train tax pros. We have a TaxPro certification program with hundreds of tax advisors that speak Mark Kohler and Matt Sorensen. They're there. You can interview them, hire them on your own due diligence. We do not get a piece of that, we just train them. We meet with them weekly and they have to meet with us weekly to be on the network. They are up to speed on this topic. So if you're looking for that perfect accountant, we got them for you. Or call your accountant and go, go, get certified. These guys know what the hell they're talking about and we'll send them clients. We'd love that. All right, so the current exception is called the entertainer exception.

Speaker 3:

Now, this was back in the day. Elton John is in the mix on this. There was also Barbra Streisand, liberace, lady Gaga, because a lot of these entertainers that would go sing would wear ornate costumes. It'd kind of be part of the show. Think of Kiss. Kiss was part of this mix. So back in the 60s and 70s it actually became a thing to wear over-the-top costumes when you're on stage. Okay, so they started to write these off. I'm going to write this off. Yeah, and IRS was like uh-uh, you can't write off clothing. You can write off your steel-toed boots if you're a contractor, your scrubs if you're a doctor, but you can't write off an outfit. No way, forget it. Well, they took him to court and won, and there's been several cases that have substantiated what is now known as the entertainer exception. This is where you can write off clothing if you're on stage. You can write off hair and makeup if you're a model and, yes, if you're an adult performer, you can write off your boob job.

Speaker 2:

I thought you were going to say stilettos, but we went into this. I cover six walks of boob jobs, I mean this is a very important conversation.

Speaker 3:

No, it's truly a case I could pull it up here in two minutes.

Speaker 2:

So there's you on only fans. You know, yeah, that's the.

Speaker 3:

You know that's an influence, oh seriously if you're on only fans, you're writing off all of your cosmetic surgery. Absolutely, there's a case on this. All right, so now let's fast forward. So we've got it. You got someone that's a real estate influencer. They've got a site, they're on YouTube. They're doing their thing. Mark Kohler, matt Sorensen We've got to look good on film. We're performing to some degree. Some might call it acting, some might call this a show dinner and a show Go order lunch. We haven't won any awards yet. No, no, but Maybe we'll get nominated someday. But anyway, the point, being all kidding aside, is could we write off our suits on camera Because we're influencers? Now, I think it is a form of entertainment. I think you do have to look good on camera. You have thousands of people watching you, maybe even more so than in a stadium or on a YouTube video. I mean, on a MTV video. Now I'm on YouTube. It's just a different platform. Same concept I'm going to write some clothing out.

Speaker 2:

Yeah, Now how much? Now I think here's one thing you got to do with that, I think and this is in some of the cases too, and the the tax law is you have to show that that is not appropriate for regular daily use. So if I have that thing that I'm wearing on set or I'm Lady Gaga on stage, I better not be wearing that tomorrow or next week when I'm not, because now I'm getting into this quasi. Well, is it really personal use or is this really business use only? And I think you got a strong argument for, like, I never wear that except on camera or on stage or whatever it is. I think you got a solid argument but if you wear that every weekend out.

Speaker 2:

That's just the personal thing you also happen to wear on camera.

Speaker 3:

Okay, your honor, may I have a rebuttal? The floor is yours, I yield the balance of my time to the gentleman from the great state of Arizona. Thank you, sir. My rebuttal to that would be and there are case law that I wouldn't. Yes, there might be some personal benefit, but I wouldn't have bought it otherwise. Now let's get back to some that's hard to prove. Okay, let's get to some plastic surgery. I'm on, only fans I'm.

Speaker 1:

This is this was in the case. This is in the case.

Speaker 3:

That so okay, I'm on only fans. Okay, I've only got 10 000 followers. Maybe 500 more cc. Might you know, push me over another 20 000 followers? You know a little larger presence okay. I say okay, all right right, and so I go get some additional plastic surgery. I increase my presence on camera.

Speaker 3:

Okay, I get more followers. Now, yes, is there some personal benefit? Yeah, I'm going to go out Friday night. I'm going to go out Saturday night, sure, okay, now, by the way, okay, fine, I'll give you another argument. This is the cell phone case from 10 years ago. People said, well, I bought a cell phone for my business. And the IRS is like, uh-uh, you got to do it proportionally, fought it, fought it, fought it. Finally, there was a case in 2006 that said all right, because the case was I wouldn't have bought this cell phone, otherwise I had to have the cell phone for my business. And, yes, there's a personal benefit, but I had to buy it for my business anyway. And the irs said, fine, we're sick of arguing this. As long as you can show you have a separate line for personal use, yes, and so they got away with that yeah because they had to have it for personal use.

Speaker 3:

And let's think of the car. You know I gotta buy a car. Yeah, I use it for business, but I also have it for. So I don't think just because clothing has some personal benefit. If it's primary purpose and why I bought it was for the camera, your honor, I would argue that it could be right on yeah, I think um your counter, my sir, my fine sir I think that's a fair argument.

Speaker 2:

Okay, I just um would want something a little stronger. Okay, I think the strongest argument is I never wear that and that's, you know, the boob job you can't take on or off. Okay, that one's a little more complicated. The car, I can say that was personal use, that was business use, the costume or the suit or the thing you might wear on camera, that was primarily bought for business. And you can say but I did use it one third of the time personally. Maybe I write off two thirds of it.

Speaker 3:

I can maybe get a little more there, but I like just the open and shut case of I don't wear it except on stage or on camera. Okay, this is so fun. One last one Okay, I went and did a photo shoot, all right, about three months ago. My team was like, dude, we got to, we got to up your game on your side a little bit. Those pictures with your you know flip phone from you know flip phone from you know 2004, we can't use those anymore. Yeah, it's like all right. So they're like you're gonna go get your hair done, uh, and we're gonna go get a. You're gonna buy a couple new clothes, sets of clothes, and we're gonna have makeup there and we're gonna go do a photo shoot. Can I write off my hair? Absolutely well, okay cool.

Speaker 2:

Thank you, because for that time, oh, oh, but not not next week I had to rush to the studio today to look good on camera with the fine Matt Sorensen.

Speaker 3:

I'm going to get thousands of views for this show. I got to look good on camera. I can't write off my haircut from last week. I'm on camera today. Yeah, sure, I had some personal benefit this week, but I got to look good for our followers and I do this for you people. Look good for our, our followers and I do this for you people. It really is a sacrifice. It's a little thing.

Speaker 2:

Do I get that right off? Uh, debatable. Okay, are you taking that one?

Speaker 3:

Well, this is a public client privilege. This is public and being recorded. I'm I may or may not, so, uh, I cannot recall yourself into the example here, not?

Speaker 2:

me. I cannot recall your Honor.

Speaker 3:

You threw yourself into the example here, not me. My tax return is private information, sir. But no, you know what I very well made this year.

Speaker 2:

You know I've I get the photo shoot. You did an exact photo shoot Now, right now, before coming on camera. I can see that too. I mean, I could you know, and I've thought about getting more regular haircuts myself.

Speaker 3:

And Do you know what really hurts you didn't say anything about my hair. You know I, it is looking great. It is looking great. I brought this up with my counselor and I just want to say I've been trying and it's I'd like you to recognize my efforts more often. Could you recognize those verbally more often?

Speaker 2:

You know I will say you have upped your game tremendously. I'm starting to look bad, you know. Well, it used to be, I didn't have to try that hard.

Speaker 3:

You don't have to go that far.

Speaker 2:

You said you didn't have to try that hard, but sit next to you on camera. Man, you're having to make me work a lot harder. Let me just say that Well, thank you.

Speaker 3:

You know I, I, this relationship is important to me. It's give and take and I'm going to write off my haircut because I did it for Matt Sorenson, at the least you know, to make you look good on camera.

Speaker 2:

And as business partners. That is a, that is a qualifying expense. You did it for me.

Speaker 3:

Well, no, maybe. In summary here, I think this does not have to be painful. I think you need to be aware of these things. I think tax planning can be interesting and people, it's easier to save money than make money by having some strategy, starting with an LLC and a bank account, separating your income and expenses as best you can, tracking, having conversations, listening to podcasts like this, hiring a proper tax advisor boy there was four or five things there. What else would be some takeaways or strategy?

Speaker 2:

I think, realizing you're a business owner Now, your whole mindset needs to change. You are a business owner Now that people think, well, I'm an influencer. No, you're a business owner, okay. And so you got to treat what you're doing as a business, not just about how can I grow and get income, but the end of the game, and this is what every smart business person knows I don't care. You go down the list from Elon Musk to Warren Buffett to Jeff Bezos, so we've shot videos on all those Donald Trump. What also are they good at? Besides making money, doing it in a tax-efficient way and knowing the tax game. And so the other side of this is, you're in that world, is making sure you're being, you're optimizing and paying as little tax as possible, because the only thing that matters is the money you get to keep.

Speaker 3:

Oh, and that's right where I was going to finish with. My last recommendation is after you take in all that revenue and write off and pay your tax, and what do you get to keep at the end of the day, where are you then deploying it? Please be careful. It's so tempting as an influencer, to go out and buy those luxury items because you think it's going to increase your followers and maybe your target market or viewer is impressed by that and you will. I get it. So there are purchases you might need to make.

Speaker 3:

But I've had a number of phone calls from influencers are like okay, I paid way more in tax than I thought to I had to. Okay, where do I deploy my money now? Should I be buying rental property? Should I be opening up an IRA or a 401k? And I am like yes, let's make sure that you're saving your money for the future, cause you're not going to be an influencer forever. You know this is the athlete issue. Do you know? Their average NFL player is six years average NFL player, and so you have six years to make money and set aside as much as you can not live like a rock star. That's not the idea here. Um, so really be careful with where you put your money after you earn it.

Speaker 2:

Yeah, you have a shelf life in this, you know. That's the thing with Hollywood too, you know. I mean, that's the same thing with Hollywood is a lot of actors, actors. They have a shelf life where they're hot and they make money and the rest of the time they're just not and they're barely scraping by. But when you're, when you are making money, we want to talk about deploying that into assets that produce income. That's really that's how the wealthy do. It is, you have to make money, but I got to set it aside and deploy it into assets that appreciate over time and that make me money when I'm sleeping. That's how you do it. And I Vince Vaughn I don't know if you saw I clipped this and had a great social post on it.

Speaker 2:

I thought it was good Is. He talked about making money as an actor and he was terrified. He was never going to make money the next year. And so what did he do? He bought. He bought rental real estate. He bought commercial real estate. He's like I. He's like I first tried gold, but then gold didn't produce income. She's like then I decided I'm going to go buy rental real estate and now he has a pretty significant real estate empire that makes him money. Whether he's hot or not in Hollywood, it doesn't matter, I love it and also taking care of your initial expenses with this revenue.

Speaker 3:

I love him. Once Upon a Hollywood. Once Upon a Time in Hollywood with Brad Pitt and Leonardo DiCaprio Crazy movie on the story of the Helter Skelter and I loved in that movie because he said the first thing all my friends in Hollywood told me to do. This is Leonardo and this is his character in the show, but a lot of loosely based characters in real life.

Speaker 3:

But he said the first thing all my friends in Hollywood said to do was buy your home. As soon as you make enough money, at least buy your home. So there, you have a place to live, a place to stay, you've got some of these basic costs taken care of, and so as you start building retirement, getting out of debt, owning a home, then it's like next level Now I need to buy income producing property so that if I can't make money next year, I've got at least something coming in. I think there's so many and there's multiple ways to go at it.

Speaker 2:

Yeah, Multiple ways to go at it. Well, hopefully you learned something here today. I thought we hit a topic.

Speaker 1:

This is this was a hot topic, mark is like.

Speaker 2:

I'm like let's debunk LLC myths, cause I'm sick and tired of all these people talking about LLCs as being like a solution to world peace. You know, it's like good Lord, if they just had an LLC in the Middle East, we'd solve everything. So we're like I got a hot topic on influencers, so we went with this one. But I just want to say the last thing here and I know we've been trying to wrap this up is I'm like super excited for you. I don't want you to feel discouraged by all this. I'm actually super excited for you because you're in control of your own destiny and you do have a lot of strategies that you can implement on your tax return that you've never thought of. If you had a W-2 job before, never had a real significant amount of income, you've got a lot of strategies here you can implement.

Speaker 3:

So yeah, that's good news, it is. It's funny. I might even send this podcast immediately out to a client. An influencer that's 21 years old reached out to me about four months ago and I was like I got to have a call. I'm making more money in a month than my dad made in a year and his parents are like freaking out for him too.

Speaker 1:

And.

Speaker 3:

I was so proud of him because he was like I know this is weird and I know I've got to be careful. What do I do? And so we get it. It can be scary and in getting knowledge and education is the first antidote to fear, because the more you know, the less there's unknowns and the unknown can generate a lot of fear. So let's get you educated and freaking, controlling your destiny. So thanks so much, everybody.

Speaker 2:

Fun stuff. Yeah, Make sure you're subscribed. Give us a five-star review wherever you're at Kudos. I don't know all the things you can do on these things anymore, but you know we want to help spread the good word on this. Thanks for being with us. We'll see you next time.

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Mark J. Kohler

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