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20
Dec

Sandy Botkin 12-20-06 - End of Year Tax Advice

 
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Below are the Show Highlights, click the more button to continue reading. You may also download the PDF of the highlights at the bottom of the page.

Host: Patrick Allman, President, Strategic Equity
Guest: Sandy Botkin , Founder, Tax Reduction Institute

December is year-end tax season.

With that in mind, we are giving you some ips that will help you and your clients all year long.

For individuals

• Since you can deduct capital losses against capital gains, you might want to sell whatever stocks, mutual funds or real estate where you have experienced a loss to offset your gains
• If you have investment interest, that is deductible against investment earnings and can offset dividends if you make an election (check the box) on your tax return
• If you make a more than usual this year, you might want to defer some of your income – bonuses, royalty checks, etc. – to January
• Consider converting interest-bearing investments to dividend-receiving investments, which are taxed at a maximum 15 percent tax rate
• If you sell real estate at a loss, you can take those losses against any income instead of carrying them over.

For IRAs and Retirement Plan Contributions

• You can directly contribute up to $100,000 through your IRA custodian to a charity and not be taxed on that money
• In a 401K, the maximum contribution is $15,000; In a ROTH IRA, the maximum is $4,000; with a simple IRA you save up to $10,000. In addition, you can match your contribution up to 3 percent from your business. The new part is that if you are over 50, the Catch Up Contribution allows you to put away an extra $5,000 in a 401K or $1,000 in a simple IRA. The contribution only has to be made before you file your tax return in April, but the plan has to be set up by Dec. 31, 2006. Changes in 2006
• Your business can pay up to $5,150 to your children in your business tax free. If they are under 18 and independent contractors, no social security or federal unemployment tax is paid either
• Capital gains are 15 percent unless you are in that tax bracket anyway, then it is reduced to 5 percent. Therefore, you might want to give stock or real estate that has appreciated significantly to your children over 18 who make less than $31,000 a year and have them sell it. You just have to stay within gift tax limits.
• You can deduct equipment used more than 50 percent for the business as long as you elect it (check the box). That includes computers, software, desks and sport utility vehicles
• Losses for S-Corporations require sufficient basis or contribution for you to be able to deduct on your individual tax return
• If you forgot to pay your children throughout the year and you can reconstruct those hours, you can pay them in December
• If you owner-finance a real estate sale, you pay tax over the time the payments are made so you stretch out the taxes and you earn interest
• Household items given away to charity have to be in good condition
• You must either use a check or get a receipt rather than using cash to write off monetary charity contributions.
And we will end the year with some of the exceptions for the rule that interest incurred to pay life insurance policies is not tax-deductible. Exceptions to this double-dipping rule include:
• If interest is under $100 a year
• If an unforeseen event occurs that forces you to borrow to pay an insurance policy, including a casualty loss, job loss or medical emergency
• Interest incurred in conjunction with a trade or business – if you use life insurance as capital for a loan to expand inventory, key employee insurance
• If you make four years of payments out of seven years of equal insurance payments, you can borrow to make the rest of the payments and deduct that interest.

End of Year Tax Planning

16
Nov

Sandy Botkin 11-16-06 - The Audit Process

 
 Sandy Botkin 11-16-06 - The Audit Process: Play Now | Play in Popup | Download (306)

Below are the Show Highlights, click the more button to continue reading. You may also download the PDF of the highlights at the bottom of the page.

The Audit Process

Host: Steven Marshall, CEO Strategic Equity
Guest: Sandy Botkin , Founder, Tax Reduction Institute

Everyone cringes at the idea of an audit. But it is more an intimidation factor than a reality for most people. You have about
a 3 percent chance of being audited in any given year. And if you are audited, 90 percent of the time you will get a refund,
no change or split the difference. With those odds, you should be aggressive in your filings or you are wasting as much
as a million dollars over your lifetime. How do you find a tax consultant who shares that philosophy?

Ask:
• What designations or credentials do you have? (Tip: look for ex-IRS agents and attorneys or at the least certified tax preparers)
• Are you a full-time tax accountant?
• How many years have you been in the business?
• Can you provide references from other industries?
• Do you use a checklist to maximize deductions?
• Are you conservative, aggressive or in between?
Of course, you don’t have to hire an accountant, but it is good insurance to have your return prepared using a major accounting firm because the IRS has found that people who do their own returns using packaged software have an 11 times higher chance
of error. That means they are more likely to do an audit.

You could also call the IRS for answers to your questions, but they won’t stand behind the answer unless you have then following:

• Name of the person you talked to
• Badge number
• Date of the call
• Question asked
• Answer.

Only if you have these items will they will waive penalties incurred if you received bad advice from an IRS agent. Other ways to reduce your chance of audit include:

• Send your return certified, return receipt, electronic filing or Federal Express to ensure it doesn’t get lost
• Sign your return
• Report all income under the correct entity
• Always keep your paperwork as if you will be audited.

If you are audited:

• Don’t panic
• Bring only the records related to the item the IRS requested– don’t bring everything
• The burden of proof is on you so have good documentation
• Dress normally — don’t dress up or down
• Send your accountant in your place if possible
• If you go, say only four things -yes, no, I don’t know or its my accountant’s fault
• Be on time or early
• Be organized
• Don’t tamper with evidence
• Don’t die
If they send a special agent, don’t talk to him. Get an attorney. That would mean they could be investigating you for fraud, which is very unlikely, considering there are basically three things that would result in criminal charges:
• Failing to file a tax return
• Not reporting income knowing it was wrong
• Taking a deduction knowing it was illegal

If they try to file criminal charges, then the burden of proof is on the IRS. Usually, if they disallow a deduction, you pay a fine

Steven Marshall is the CEO of Strategic Equity, a company dedicated to helping loan officers make the transition to certified mortgage planners. Steven coaches and mentors loan officers how to differentiate themselves using strategic mortgage planning through his Strategic Equity programs.

Sandy Botkin is a CPA and attorney. He is a former IRS trainer and founder of the Tax Reduction Institute. He is the author of “Lower Your Taxes Big Time” and “Real Estate Tax Secrets of Rich.” This is general tax advice. Everyone’s situation is different, so take this information and ask your accountant.

13
Nov

Ronnie Matthews Part 1of 3

 
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Houston’s population is approximately 3 million people. The market has 18,000 licensed Realtors. The average sales price for the area is $150,000, and Ronnie and Cathy’s is $200,000. Over the past 5 years, the average appreciation has been only 3% and

Houston had zero appreciation for 2004.

ASSISTANTS/TEAM

Ronnie has taken the entire real estate transaction, torn it apart and created an “assembly line” where each phase of the transaction is done by someone and that is generally all they do.

Ronnie and Cathy are the rainmakers of the team and everyone else moves the business down the “assembly line.”

In 2004, Ronnie had 18 team members. Rather than independent contractors, the three Buyer Agents and two Listing Agents on his team are employees.

The employee agents earn more than the vast majority of real estate agents in his market.

Ronnie has phenomenal retention, with Rene being with him for 14 years and the rest of the team over 5 years.

There are 3 people in the pending department.

Listing coordinators follow up with other agents, send out Seller’s Disclosures and talk to Sellers weekly. (They carry 200 listings currently.)

The Contract Negotiator negotiates 90% of the contracts for the listings.

SYSTEMS

Ronnie uses Online Agent/Agent 2000 as his database. All conversations are data entered by every team member so that there is a continuous, real-time record of all interactions.

MARKETING

Ronnie’s database contains 7,000 past clients.

Past clients receive a postcard every three months. A minor point, but one with a significant impact, is the fact that the postcard features their photograph on the front and the back. Knowing that it will be thrown away, they increase the odds that they “Buy brain cells on the way to the trash.”

The team’s listings are advertised in a number of different real estate magazines, and always in color.

There are 5 billboards in the area where they do most of their business, and just like their postcards, magazine ads and website, the same picture of Ronnie and Cathy is featured. The key here is consistency and continuity.

KEY ELEMENTS OF SUCCESS

Advertising - Ronnie points out that even in the early days of building their business, they still invested what they could into advertising.

Repeat/Referral Business - 70% of their business is from repeat and referral business.

12
Nov

Ronnie Matthews Part 2 of 3

 
 Standard Podcast: Play Now | Play in Popup | Download (301)

Houston’s population is approximately 3 million people. The market has 18,000 licensed Realtors. The average sales price for the area is $150,000, and Ronnie and Cathy’s is $200,000. Over the past 5 years, the average appreciation has been only 3% and

Houston had zero appreciation for 2004.

ASSISTANTS/TEAM

Ronnie has taken the entire real estate transaction, torn it apart and created an “assembly line” where each phase of the transaction is done by someone and that is generally all they do.

Ronnie and Cathy are the rainmakers of the team and everyone else moves the business down the “assembly line.”

In 2004, Ronnie had 18 team members. Rather than independent contractors, the three Buyer Agents and two Listing Agents on his team are employees.

The employee agents earn more than the vast majority of real estate agents in his market.

Ronnie has phenomenal retention, with Rene being with him for 14 years and the rest of the team over 5 years.

There are 3 people in the pending department.

Listing coordinators follow up with other agents, send out Seller’s Disclosures and talk to Sellers weekly. (They carry 200 listings currently.)

The Contract Negotiator negotiates 90% of the contracts for the listings.

SYSTEMS

Ronnie uses Online Agent/Agent 2000 as his database. All conversations are data entered by every team member so that there is a continuous, real-time record of all interactions.

MARKETING

Ronnie’s database contains 7,000 past clients.

Past clients receive a postcard every three months. A minor point, but one with a significant impact, is the fact that the postcard features their photograph on the front and the back. Knowing that it will be thrown away, they increase the odds that they “Buy brain cells on the way to the trash.”

The team’s listings are advertised in a number of different real estate magazines, and always in color.

There are 5 billboards in the area where they do most of their business, and just like their postcards, magazine ads and website, the same picture of Ronnie and Cathy is featured. The key here is consistency and continuity.

KEY ELEMENTS OF SUCCESS

Advertising - Ronnie points out that even in the early days of building their business, they still invested what they could into advertising.

Repeat/Referral Business - 70% of their business is from repeat and referral business.

11
Nov

Ronnie Matthews Part 3 of 3

 
 Standard Podcast: Play Now | Play in Popup | Download (303)

Houston’s population is approximately 3 million people. The market has 18,000 licensed Realtors. The average sales price for the area is $150,000, and Ronnie and Cathy’s is $200,000. Over the past 5 years, the average appreciation has been only 3% and

Houston had zero appreciation for 2004.

ASSISTANTS/TEAM

Ronnie has taken the entire real estate transaction, torn it apart and created an “assembly line” where each phase of the transaction is done by someone and that is generally all they do.

Ronnie and Cathy are the rainmakers of the team and everyone else moves the business down the “assembly line.”

In 2004, Ronnie had 18 team members. Rather than independent contractors, the three Buyer Agents and two Listing Agents on his team are employees.

The employee agents earn more than the vast majority of real estate agents in his market.

Ronnie has phenomenal retention, with Rene being with him for 14 years and the rest of the team over 5 years.

There are 3 people in the pending department.

Listing coordinators follow up with other agents, send out Seller’s Disclosures and talk to Sellers weekly. (They carry 200 listings currently.)

The Contract Negotiator negotiates 90% of the contracts for the listings.

SYSTEMS

Ronnie uses Online Agent/Agent 2000 as his database. All conversations are data entered by every team member so that there is a continuous, real-time record of all interactions.

MARKETING

Ronnie’s database contains 7,000 past clients.

Past clients receive a postcard every three months. A minor point, but one with a significant impact, is the fact that the postcard features their photograph on the front and the back. Knowing that it will be thrown away, they increase the odds that they “Buy brain cells on the way to the trash.”

The team’s listings are advertised in a number of different real estate magazines, and always in color.

There are 5 billboards in the area where they do most of their business, and just like their postcards, magazine ads and website, the same picture of Ronnie and Cathy is featured. The key here is consistency and continuity.

KEY ELEMENTS OF SUCCESS

Advertising - Ronnie points out that even in the early days of building their business, they still invested what they could into advertising.

Repeat/Referral Business - 70% of their business is from repeat and referral business.

01
Nov

Tom Rumble

 
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The state of Michigan is in a challenging economic situation at present, but Tom is doing well in spite of the economic conditions. He has been in the real estate business for 7 years and was in corporate sales prior to that.

Tom’s average sales price is $225,000 and he carries fifty to sixty listings at any given time. He estimates that 25% of his business is repeat and referral.

ASSISTANTS

There are two assistants on the team and a buyer’s agent currently in training.

The mortgage lender partnership is important for Tom. He observes that knowledge and communication are the primary factors for him. He looks for a true connection with someone that can “dazzle” him with new and useful information.

SYSTEMS

Tom uses a Buyer’s Package when meeting with a buyer. He brings comps and makes it clear that it is not just one of his listings that he wants to sell.

Tom uses Top Producer as his Customer Relationship Manager (CRM), and has 8 websites that account for 20% of his business.

Tom is a prospecting machine, and focuses nearly all of his energy on generating leads. To illustrate the point, he has had new office space for the last 6 months yet he states that he hasn’t spent more than two hours there in that period. His observation is that “When

I’m there, nothing is happening.” Tom is looking for prospecting opportunities everywhere. .. from the FSBO to the corporation.

MARKETING

Tom takes advantage of his name recognition and works significantly on branding. A specific focus is on the importance of signs. Tom likes to get as many signs around a listing as possible. He also makes it a point to always ask permission to put signs on other corner lots. He has never been turned down.

Even in this current “down market” Tom always runs a 2/3 -page newspaper ad.

KEY ELEMENTS OF SUCCESS

Focus - Tom contends that much of his success is based on the mindset: focus on the units. “One Hundred Transactions Per Year ” is his current focus. Tom observes that while he focuses on units he also remembers that each one includes a family with specific needs. From those perspectives come the referrals.

Accountability - Doing what you say and following through as well as calling a client right back are Tom’s basic tenets for success. He guarantees what he does, meaning that if he makes a mistake, he pays for it. Period.

Service - “Whatever it takes” is essentially Tom’s approach to great service. As an example, he cites a current client that is on hospitalized maternity bed rest, but she wants to be at the closing. Tom’s solution is that all players will meet at the hospital to facilitate a timely closing and satisfy the client’s wishes.

Attitude - Tom’s positive attitude is another big key to his success. In a market where most discussions center around the negativity of current economic conditions Tom is positive, optimistic and pleasant.

18
Oct

Sandy Botkin 10-18-06 - Entertaining Tax Tips

 
 Sandy Botkin 10-18-06 - Entertaining Tax Tips: Play Now | Play in Popup | Download (298)

Below are the Show Highlights, click the more button to continue reading. You may also download the PDF of the highlights at the bottom of the page.

Entertaining Tax Tips

Host: Patrick Allman, President, Strategic Equity
Guest: Sandy Botkin , Founder, Tax Reduction Institute

Knowing the IRS entertainment tax write-off rules can put between $500 and $6,000 in your pocket each year. Although after 1987 congress limited write offs to 50 percent of expenses with some limited exceptions, entertainment deductions can add
up quickly. For instance, 50 percent of all planned meals that include a substantial, clear and specific business discussion are deductible. This is true if you and your spouse go to dinner with another couple or if you and your family go to dinner with another family. The rest of the family is considered keeping your business contact’s family busy. Don’t forget home entertainment for another couple or large groups are both deductible. There is no time limit on the portion of the discussion dedicated to business conversation. You don’t even need a receipt if it is under $75. You just need to write down the details of the business
purpose. Please note, however, dinner with your spouse alone is never deductible, even if you work together and discuss business the entire time.

Other deductible entertainment expenses include:

• Associated entertainment – golf, baseball, football games, concerts– as long as you talk business within the same 24-hour period
• Season tickets for the number of games where you talk business
• Gifts of entertainment – plays, dinner theater, etc.

100 percent deductible items include:

• Business gifts – housewarming, birthday, wedding, Christmas and Hanukah presents with a limit of $25 per-person, per-year
(a husband and wife are considered one person)
• Gifts of any amount to a company without mentioning the name of a person

Not deductible:

• Impromptu conversations with strangers/waiters during a meal
• Dinner gifts where you are not present. The key to making entertainment deductions bulletproof in an audit is to document them in a tax diary. Always write down who, where, why (be specific), when and how much was spent. Accompany that log with
the receipts when the expense is over $75. Just think like a prosecuting attorney marshaling evidence and your life will be less taxing.

Patrick Allman is the President of Strategic Equity, a company dedicated to helping loan officers make the transition to certified
mortgage planners.

Sandy Botkin is a CPA and attorney. He is a former IRS trainer and founder of the Tax Reduction Institute. He is the author of “Lower Your Taxes Big Time” and “Real Estate Tax Secrets of Rich.” This is general tax advice.
Everyone’s situation is different, so take this
information and ask your accountant.

01
Oct

Phil Gerisilo

 
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Phil Gerisilo is a 19-year real estate veteran in Kent, Washington, just south of Seattle. Kent’s population is approximately 85,000, and the average sales price is $370,000. Eighty percent of Phil’s business is repeat and referral.

Phil is also the co-author of “How to Succeed in Real Estate Without Cold Calling”.

ASSISTANTS/TEAM

Phil is the visionary leader and handles all listing presentations. Phil’s wife, two daughters, son, sister and brother-in-law make up the team. Everyone on the team is cross-trained.

SYSTEMS

One of the pillars of the team’s success is a farm of 2500. This area was selected based on turnover and the highest percentage of homes sold annually.

Call capture and free reports are primary methods of new lead generation.

MARKETING

Phil mails 2500 postcards to his farm and clients twice per month. The cards are large and full color so that they stand out. The cards feature a property that they have just sold. On the back is information on the market as well as a number of informational reports that can be requested via an 800 number. The 800 number is a Call Capture line that provides an opportunity for Phil’s team to follow up with the people that have the most interest.

Phil’s database is segmented as follows: Geographic Farm: 2500; Sphere of Influence/Other Agents: 700; Preferred Clients: 250; and AAA Clients: 100.

The “AAA Clients” are those that have multiple transactions with them and are most likely to refer business. Client appreciation events are held for the AAA Clients as well as gifts and incentive programs. One of the most popular activities that the team does for the AAA Clients is a ballgame - in this case, the Seattle Mariners. ·

KEY ELEMENTS OF SUCCESS

Focus - Phil and his team have refocused on connecting with people as their primary focus in their business - as opposed to deals, numbers and income. This focus has really turned around for them in terms of their enjoyment of the business as well as the results. This focus is based on finding out how to help their clients and genuinely determine how to give back to them. Phi1’s experience is that this attracts, rather than repels people. The end result is trust and comfort. Phil’s goal is to call 3 of his past clients per day - not to ask for business but just to connect and find out how they are doing and what has changed in their life. Additionally, Phil schedules one lunch per week with a client.

Resources -The Gerisilo team has a team of professionals (CPAs, Attorneys, Contractors, Landscapers, Lenders etc.) that they can also recommend when the need arises with a client. Phil says, “The more resources I have, the more I can bring to the table.”

16
Sep

Sandy Botkin 9-16-06 Points & Basis Basics

 
 Sandy Botkin 9-16-06 Points & Basis Basics: Play Now | Play in Popup | Download (334)

13
Sep

Peter Hewitt

 
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Peter is a 17-year real estate veteran in the market of Bethlehem, Pennsylvania. His average sales price is approximately $270,000 and he carries an average of 15 to 25 listings at any given time. Prior to real estate Peter was in the construction business.

ASSISTANTS/TEAM

The team consists of three professionals:

  • Transaction coordinator
  • Buyer agent
  • New listing assistant ‘

Peter does not handle files at all. Once a transaction goes “pending” he hands it off to his transaction coordinator.

Expectations are set for the seller and include assurance that much of their ongoing contact will be with the listing assistant. The clients love the availability and access.

This team structure allows Peter to work 5 days a week and protect two days a week for family.

SYSTEMS

Prospecting calls begin early in the day with the objective of being their first call. On the day listings expire prospects receive a package from him and then Peter calls again in the

evening. The system continues with Peter calling every day thereafter until they list or ask him to stop. Peter uses a planned listing presentation that consists of 10 to l2 different elements that explain his record, approach, and what to expect, step-by-step.

MARKETING

The best return-on-investment marketing technique used is direct mail to people he knows. Additionally, he sends birthday cards and special seasonal cards… Thanksgiving and Valentine’s Day as examples.

Peter is a prospector and calls FSBO’s and expired listings every day. He points out that one of the keys to his success starts with a phone call matching and pacing style, speed and tone with that of the prospect.

A pre-listing package is delivered in advance of his arrival to the listing appointment where he runs through a thorough l0 question pre-listing questionnaire.

The team’s database is over 1,000 people and it is segmented A, B, C. They are called every 90 days and direct mail is sent every month. Peter maintains a goal to call at least 10 past clients per day.

KEY ELEMENTS OF SUCCESS

Presentation - Peter clearly lays out to prospects why he has the best program there is and assumes he’ll get the listing - then he executes an aggressive follow-up program.

Prospecting - Peter prospects every day for new business in an organized and systematic fashion. Sixty calls per day will result in 8 closings per month. This produces an income for Peter of $500,000 to $800,000 per year. FSBOs comprise 30%, expired listings 40% and referrals 30% of his clients.

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