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Going Long Podcast Episode 248: Precision Business Strategies to Develop Accurate Financial Insights
In the conversation with today’s guest, Larry D West III, you’ll learn the following:
Here’s what Larry shared with us during today’s conversation:
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Billy Keels 00:00
Today's conversation is sponsored by first generation Capital Partners. If you're an accredited investor, and you want to know about how we're helping other accredited investors keep more of their income, go to first gen cpe.com forward slash going long.
While it doesn't absolutely offset their W two income or their business income directly, and we'll probably get into other ways where that can happen, the thing that they should realise is now they're earning more money, but their tax bill is not necessarily increasing, which is the same as saving on taxes.
You're listening to the going long podcast with Billy keels, the number one podcast for long distance real asset investing.
Billy Keels 00:39
Welcome to the go long podcast, we're back once again to continue to help to educate you so you feel much more comfortable as well as competent investing beyond your backyard. And yes, I am your host, Billy keels, and I am really looking forward to welcome you back to today's conversation. Because it's another one of these absolutely amazing, awesome conversations that I know that you are going to take away lots of actionable insights from so really quickly, I've been seeing like a lot of people starting to post on your Instagram stories and on your LinkedIn like and even some on Facebook, the podcast, and you're sharing that across social media. And that's really, really cool, because you're actually helping other people to know about the podcast. So if you're doing that, or if you're not doing that, and you feel like hey, look, I want to share this across social media, take a screenshot share, it will be absolutely awesome. And also to the thing about helping with leaving your honest written reviews, let us know what you like what you don't like in so you can get more of what you want. That would be absolutely appreciate it. And that's one of the main reasons we continue to move up the charts. Also, if you want to check out any of the previous episodes, go to first ncp.com forward slash podcasts. And you can check them all out there. And so let's jump into today's conversation because you're gonna get a lot out of this, especially if you're thinking about the financial aspects of running your business. If you're already in the business and you feel like you need to get more precision insights on the business actual strategy that you're doing. Today's conversation is going to be absolutely awesome. We have a gentleman who has his own firm, he is a CFO, CPA, and he is really about giving you precise insights, especially as it relates to your hard assets business. So today's conversation with Larry de West and third is going to be absolutely awesome, we're gonna get to that just after this. Are you a busy high paid professional, someone that in the previous two years has earned $200,000 and is expected to earn $200,000 this year. Or maybe if you file jointly, previously, you've earned $300,000 In previous two years, and you're also expected to do that this year. Or maybe if not, either individually or jointly, you have a million dollars in net worth not including your primary residence. If you meet any of these criteria, then you're someone that the IRS considers to be an accredited investor, that probably means you're someone like an enterprise software sales executive, you may be an executive in a major corporation, you may be a doctor, you may be a lawyer may be a high paid consultant, you may be worked for a major sports franchise, the thing I know you have in common is that you continue to do the hard work like you're doing 100% of the work. And you're only bringing home 50% of the reward because you continue to get crushed by your income taxes. If you are tired of this situation and you're looking for a new solution, then go to first gen cp.com forward slash going long. When you get there, that's going to help you to start the journey so that you can begin to take back control of your taxes take control of your time. And then also that means you're going to be able to spend more of the time that you want with the people that you love the most. And that is the way that you're going to get the personal freedom that you're looking for. So if you're looking to take back control, go ahead and go to first ncp.com forward slash going long, and see how we can help you today. If you've wanted to know how to create precision business strategies, so that you can develop timely and accurate financial insights for your long distance investing journey. Then guess what? Today's the conversation that you're going to want to listen to, until the very last word, I promise. You know why? Listen to this because today's guest not only has an undergraduate degree in English language, and literature, I want to find out more about that. He also has a master's in education, as well as an MBA, get early roles in education, as well as business and financial consulting. That sounds awesome. He's also the co founder of West Learning Academy, as well as fractional CFO, tax strategist, as well as the founder of precision business strategies. It gives me great pleasure to welcome to today's conversation, Mr. Larry D. West, the third, Larry, welcome to show man. Hey, hey,
thanks for having me. Certainly appreciate it.
Billy Keels 04:33
Yeah, man, I'm looking forward to this. I know that the entire going long family is gonna get so much out of this. Everybody gets your pins, get your paper out, get ready to put your thinking cap on. Because this is going to be one of those conversations that's just going to help take things to the next level for you. So no pressure, by the way, Larry. He's thinking himself in the world. Now. So this is a listener. So as you know, we're gonna kind of get into a couple of things, but everybody really, really wants So no, because the first question that everybody wants to know is, can you help us understand? Where are you in the US?
Yes, indeed, I am in Frisco, Texas, which is just north of Dallas. It's a suburb of Dallas. And it's a place where everything is happening. And everything is growing. We've got the Cowboys headquarters, Toyota, and a few other larger companies in the area.
Billy Keels 05:21
Wow, that sounds pretty exciting. That's fantastic. Which leads us to question number two, which is help us understand what is the most positive thing that has happened to you in the last 24 hours?
Yeah, great question. As I think about that, it'll go back to my kiddos. And so normally, our regular routine is before bed. They, they always say, Hey, Dad, can you stay with us. And so that's time where, of course out of the busy day where it's just calm, serene, no, no distractions, and they're winding down, getting ready for bed, and some that I just spend with them. And so recently, we were travelling, this is just yesterday, we were travelling, and we're in a hotel room, and they're in a bed literally right next to mine, and they still ask the same question of debt. Can you stay with us and to me, that was a, it was one of those heartwarming moments of you know, this is not just the home routine, this is something that they really value. And that that's just amazing. It was it was an amazing feeling as a debt.
Billy Keels 06:17
Fantastic, man, if
I ask how old your kids are, yeah, my kiddos are five and seven. Okay,
Billy Keels 06:22
fantastic. five and seven. Enjoy it, man, enjoy it, because it's fantastic. Before you know it, they're gonna be 13 and 15. And yeah, they, they're there are going to be on to other things. So absolutely appreciate you sharing that. It is a precious moment in time. And we're going to continue the conversation, you know what, but before we do that, Larry, I kind of have to admit something to you. I know we've had conversations before. But I didn't really tell you this in advance, because I don't tell anybody in this in events. But I'm a guy who tends to kind of I'm a recovering perfectionist, first of all, so that means I tend to kind of hold the bar, like at a really, really, really high standard. Sometimes there, it gets me to the point that I do things that are absolutely absurd. absurd to the point, it's kind of like trying to tell your entire backstory in two and a half seconds, right? That's absolutely absurd. Because you've impacted way too many lives, you've helped way too many people to be able to tell your whole backstory in two and a half seconds, so forgive me, but it is kind of one of these character flaws that I have. And I'm very open and honest with the go along family. And so I'm letting you know now. But more importantly, I really am going to ask you for two things. And I know you're the guest. So I'm asking you for two things right up front. First and foremost, I would love for you to tell your own backstory, in your own words. And don't be as absurd as I wasn't trying to do it in two and a half seconds, take the time that you need, so that we get a chance to get to know you number one. And number two, if you could also helped me help the going on family, which is can you talk to us about some of the major decisions that you've made to get to this point in your journey, Larry, and then we'll see where you and I take the conversation from there.
Yeah, actually, that that's, that's really good. And I think just the journey itself is littered with, with major decisions. So you know, I think the best place to start is really undergrad, as you alluded to in the intro, I started my career really as a English literature major. And my intent was to go on get a PhD in English and teach at the at the college level. And as as I went through undergrad, got that done, check the box, I went and got a master's and education right after that. It was probably two and a half, three weeks before graduation, we had just turned in our thesis, we had passed that defence, and we were getting ready to graduate and I say we I'm speaking of my cohort that I started the programme with. And it was one of those things that just hit me and said, Look, I don't really want to do this. Two weeks before graduation, we all have been accepted into UW Madison's Ph. D programme. And so we all had the the plan laid out for exactly where we were going. But it just didn't feel right. To me. There were certain parts of education, there were certain parts of higher education, that when I looked down the line, I just didn't like where that was going from a career perspective. And so I made a very quick and hard pivot. I went to talk to the business school, I enrolled over there. And I went ahead and finished the master's degree but I enrolled right away in business school and started working on the MBA in finance and accounting. Now, how did I end up in finance and accounting is because throughout the programme, I've always had a keen interest in numbers in terms of understanding school budgets, in terms of understanding higher ed budgets, school, business, finance, all of those things. And so that just felt right. And also the other side of that is quite selfishly, I thought I was going to jump into some high profile investment banking job as soon as I finished that MBA. And of course, that did not happen. Once I got close to graduation. We moved down to Abilene, Texas, which is like the middle of West Texas, and there are no investment banking jobs there. Right and if there is it's someone who's in that position and is not leaving for quite some time. And that was a Rude Awakening of doing this hard pivot from education where I had my entire life, somewhat planned out to this new area of business. And I had no idea what to do or how to do it. I had a very humbling experience too, because all of the jobs that I search for, they wanted multiple years of experience starting salaries were kind of 25 35k, you'd be lucky to tap into 45 or 50k, depending on where you were. And so the first job I had was entering, literally, it was a bank entering mortgage applications, the handwritten mortgage applications into the computer, just data entry, back and forth. And I kept saying to myself, like, I need to figure something out, there has to be something better than this. And I kept searching, and luckily, a one of my wife's professors, her husband ran a financial planning firm. And so through a couple of conversations, he gave me an opportunity to work with him. And one of the things that I was tasked with was figuring out, Hey, what are the tax implications for the things that we're telling our clients to engage in? So I became the research researcher, and all things tax. And that opened the door right there of the strategy behind tax planning within itself. So whatever strategies we were working on, I'm inside the IRS codes, talking to CPAs, calling tax attorneys figuring out what the what the true strategy is. And that's where I really started to cut my teeth, and, and build out my career went on to work for some traditional CPA firms after that. And then I decided, hey, it's time for me to step out and do my own thing and start to build what is now precision business strategies.
Billy Keels 11:36
You know, and so when you get that moment, Larry to step out, to go out, do your own thing, you build your own business, where you're serving others today, you take a step back, and you look and say, Hey, listen, I was gaining this experience, because you put yourself in a position to do that. People could say it's luck. People could say it's not luck, I believe we create our own luck. But when that luck makes preparation, you create the opportunity from it right? There's a couple of things that you mentioned that I really want to go back, because you kind of say that, you know, you were in education, and then you pivoted, you knew that you wanted to go to business school. But those things for me are always pretty interesting, because you could have selected to go to science. And I know, you mentioned that you enjoyed coming up with the budgets. But I think that's kind of like the end. Like that's where you ended up going. But maybe you could just talk us through because sometimes people think there's always this master plan. But talk to us about why it was business versus biology versus something else. I mean, beyond just the the part that you did share with us, which is, you know, you enjoyed the budget part. But you could have selected anything, and you went that route.
Yeah, so there are really two sides to that one. Coming up in the in the education side of things. Our focus was really on policy and analysis. And while folks have these grand ideas of different educational policies to change, learning, outcomes change, change the dynamics, teacher prep programmes, and all those things. It all leads back to money and where the dollars are flowing. And if you follow the dollars, you essentially see the priorities, whether it's a district, that higher ed institution or what have you. And so that ingrained in my mind, quite frankly, follow the dollars. And that tells you everything money is kind of controlling a lot of the policy and analysis that's happening here. And so when you juxtapose that with what were the opportunities, a lot of what happens in the education space is highly politicised. And that speaking in terms of political party, I mean politicised in terms of its structure, right, there's, there's a set way to do things. And if you step outside of that dynamic, it's curtains, right, it's all over. And so I wanted to take the skills and talents that I have started to develop, really on the analysis side and providing insight and take that and do what I wanted to do with it. And I saw business really as that kind of free flowing freeform way of, of executing and doing so. And then the other part, I'll be honest, and my perspective on this has changed over the years. But at that time, I'm 2122 Excuse me, just graduating there. I need money, right? And so I look at what's happening with some of my friends that were over on the business side of things. And I like those starting salaries a lot more than I liked the other ones.
Billy Keels 14:22
Yeah, in I appreciate that transparency, because a lot of times people are like, yeah, just go after whatever and stuff like that. And so yes, there's the there's the part of the the analysis, the insight that you enjoy doing anyway, based on an educational foundation that not only is something that you enjoyed, but you also received the insight, the training yourself. But then also at the end of the day, you know, you need to kind of be able to not just pay the bills, but take it to the next level. And so that's fantastic. Listen, because today's conversation, I really would like for us to be able to jump into a couple of things. Now we Tim typically like to keep things at a very high level here. Maybe today we're Gonna go into a little bit more detail, it will feel like detail, but we're not really going into detail. It's just the area of expertise that Larry has. I just want to make an overarching statement today. And I'm sure and this is probably going along family, we're going to talk to Larry and I are going to have some conversations, he's going to share with us some of his insights, he's gonna give us examples, by absolutely no way, shape or form, is he giving anyone any tax advice during this conversation? I'm sure he will say it at other points in the conversation. But I want to make it very clear, he's talking about different principles, examples, just to help you have things that you can talk to your own tax team about, right. And if you don't have a tech team to talk to, I'm sure that Larry may be able to help you with that, as well. And we'll talk about that during the conversation at the end of the conversation, et cetera, et cetera. So Larry, you know, with that, as a background, I do want to talk just very quickly, I kind of want to put the like there's an elephant in the room. It's one that I used to live with for a long time, I think you and I talked about this, that I was someone who worked in the corporate world for 26 years, the last 10 years, I was also building my own business on the side, that ended up being really started with real estate. And now I call it real assets. And one of the things that quite frequently comes up for someone who is a, I'm gonna say an accredited investor. So you know what that means that going long family understands what that means. We talked about it a lot. Because when we just talked about a lot, that person who is like I was busy software, sales professional, maybe their spouse is working, they have their own business like you. And so they are both not in the real estate business. They're very busy professionals, probably working 80 to 100 hours a week. And they hear us talking quite frequently about hey, listen, you know, what, if you invest in real estate, it's going to bring your taxes down? And, and all that kind of stuff? Well, and I only asked you this question, because it happened to me for about the first five of the 10 years as I kept investing in real estate, and I thought it was going to bring down my in the income tax that I was going to pay at the federal and state level. So maybe if you could help to just educate us on when we hear that question of investing in real estate is going to bring your taxes down. What could that mean? Number one? And then if I don't really hear the answer, then I'll maybe ask you the question maybe a little bit more directly, but just from a high level, if you can help us understand by what that could mean, or what that probably means when we're saying that investing in real estate, will lower your taxes if you're someone who has a very busy, busy professional and your spouse is also a very busy professional.
Yeah, you know, I love that question, because it's one that gets one is not talked about enough. But it's one that gets misconstrued, especially as people talk about the abundance of investing in real estate. And here's what it comes down to for the type of professional that you describe. Essentially, they're likely going to be hit with what's called a passive loss limitation, meaning their income is too high to take advantage of the passive losses that come from real estate. The IRS inherently considers rental income, and its losses as passive, which means it cannot directly offset active income, ie their full time job, as you mentioned, and or their business. And so what tends to happen for those folks is they start earning more money, right, because they've got the passive proceeds coming from real estate, but they don't necessarily pay taxes, or they pay very little taxes on the money that they're earning. And so while it doesn't absolutely offset their W two income, or their business income directly, and what we'll probably get into other ways where that can happen, the thing that they should realise is now they're earning more money, but their tax bill is not necessarily increasing, which is the same as saving on taxes.
Billy Keels 18:37
Fantastic. So I love that you number one just broke that down for us. Because a lot of times they are what i've what I believe helps everyone become a much more informed decision maker. And whether that be an investor, whether that be a purchaser, whatever the case may be, when you are more informed, then you feel much more comfortable, you feel much more confident about the decision that you're making. The thing that we want to help people avoid is any type of surprises that can happen, right? And so if you think one way, and you don't maybe know how to ask the questions, or you don't know what questions to ask them, you know, then sometimes that information can ultimately work against you. But so you've just talked about maybe the next step, Larry, and so I would love for you to maybe take us a little bit further down the down the path and help us understand what you meant by the second part of your phrase when you said well, you know, what they could be doing is one is it's more tax efficient, but also maybe open eyes to how can this real estate game work? Or more importantly, the passive income streams? Work for someone who's a busy professional?
Yeah, so let's start with what's called a real estate professional status. And that's one that the listeners have probably heard, thrown around quite a bit. And it's not as simple as some may, may make it out to be essentially what most people know about real estate professional status. It's an IRS designation that allows you to take the passive losses Some real estate and offset your active income, that being your W two, your business or your business income. But to qualify, you gotta meet certain standards. The first is 750 hours and real property, trade or business in which you win, which you materially participate. The second standard is more than half of your time has to be in real property, trade or business. And so when you're a busy full time professional, and perhaps your spouse is a busy full time, prospective, professional as well. And neither of those are primarily in the real estate space, you've kind of taken yourself out of the running to qualify for real estate professional status. But I'll still talk about that third point in case they do check those first couple of boxes. The third point is you then have to materially participate in your rental related activity, when you can check the box on those three things, it opens the door for you to potentially qualify as a real estate professional can use the losses from real estate to offset active income. But again, when we're talking business professionals, especially if it's a to dual income, household, and both, or perhaps full time in different areas that aren't related to real estate, the doors kind of closed on that. So then we start to look at the second layer of their strategy. Well, we know the IRS treats rental income and its losses as passive. How about we start to look at investing in other areas that produce passive income, now we've created an opportunity to marry the losses that come from real estate, with the passive income from other activities. And again, we're earning more money, but our tax bills, our tax brackets are not necessarily increasing.
Billy Keels 21:37
So fantastic. We're gonna get into that right away. But the thing is, and this is where it's important to have a professional like Larry, on your team, right? Because when you're a busy professional, that's what I did. I was doing this for 26 years, right. And it wasn't till the last probably five or six years that I really had the team around me that I could start to have these types of questions with Larry. And once again, he's helping you to think about different principles, thought concepts that you could dive into deeper. But you mentioned one of the concepts, and you've kind of talked about it twice. But when you say material participation, I think you gave part of the definition. But I just want to make sure that the going long family understands when you say material participation, what exactly does that mean?
So there's a there's a very specific seven part what they call a seven part test for how the IRS determines material participation. And we can pull those up and Google them and you can read through the seven, but the way they really understand it is you have to participate in a managerial role or decision making role for the business in a consistent and ongoing basis. Meaning you have to be in the heart of it making decisions and not just investor related decisions, right? You have to actually be making decisions that impact the direction and dynamic of the business. That's what we consider material participation. Think about it like this, if if we were to pull you out of the business in all the activities that you do, could it still function? And if the answer to that is yes, then you're probably you're probably not materially participating in the if the answer to that is yes, you probably are materially participating. So it's hands on engagement, and running the business and making decisions.
Billy Keels 23:19
All right, fantastic. appreciate you helping to break that down once again. And as you said, Before, you can go to the US tax code, and there are literally seven points you can go. But once again, as Larry sharing with you, different principles to think about different examples, these are things that once again, you can talk to your tax professional about just so that you can become much more informed. Trusting that you're enjoying today's conversation. And you know, if you're tired of getting crushed by taxes, and you're looking for greater freedom, to be able to choose what you want to do when you want to do it, make sure that you go to first ncp.com forward slash going long, and see how we can help you today. Let's get back to the conversation. Now, Larry, I'm going to just mention that maybe we can take a step back because you were leading us into that area becoming more tax efficient. So one of the things that I understood you to say, and I'm going to extrapolate here, you were talking about different passive losses. So you have different passive activity losses, and you have things that are passive income generators, I believe you would call that if I've spoken to my tax team enough? If not, please correct me. But maybe you could talk to us a little bit about that, because I think you're taking us down a path or you're definitely taking us down a path that's going to help people to open our eyes to new things that we're probably not thinking about because you're a busy professional. And maybe you haven't asked these questions yet, but maybe you could break that down for us a little bit more than the passive losses as well as the income generators.
Yeah, that's a great point. And I love going in this direction, because to me, it's the heart of tax planning. If it's not part one, it's definitely one a or one B. Essentially, as you're earning income again actively and perhaps w two or business or different things like that. The thought process, especially from a wealth building and tax planning perspective becomes what do I now do with that money to create passive income? And passive income has different connotations depending on if we're on social media versus looking directly at the IRC, right?
Billy Keels 25:16
I'm only laughing, Larry, and thank you so much for saying that. Because I yeah, I agree with you. It is sometimes you see passive income on on social media, you're like, well, that's not passive income. Hang on a second, actually, the Internal Revenue Code, there is a definition of IRC, but sorry about that. And it was, it was interesting. Thank you.
Yeah, no, that I mean, that's a really good point. And the idea is to, you know, you want to make your dollars work for you, and always keep them in circulation. And so as you're thinking about where to strategically place your money, you want to look for tax efficient places, well, real estate happens to be a really great example, right? Because you can buy a property or perhaps even get involved in a syndication, you have the cash flow that comes from the rental income, and then you got this huge power of depreciation that gives you a major tax advantage, that essentially wipes out or effectively reduces the taxable income. And it usually leads to losses, well, if you've got passive losses that are over here, and now you've got another place to place your money that produces passive income, again, an area where you don't materially participate, someone else is making the decisions, you are simply getting mailbox money, I think is a great way to think about it. Well, now you've created a situation to where income is coming in, that you don't have to work for truly passive in nature and pass it by way of the IRS definition. And you've got these real estate losses, that's also producing income. But now you've got these depreciable losses, you marry those two strategies together, that could be really powerful. Because you got rental income, you got passive income from this other investment over here. And again, your tax bill is not necessarily going up. And that's how you get really efficient and build some wealth.
Billy Keels 26:54
It's so efficient wealth building is fantastic when you can accelerate it, and you're talking about some of the ways that you can do that is even better, right in terms of principles and theories. So I'm not busy professional, Larry, and, you know, I understand real estate, because this is something that, you know, we've talked to, and we've heard lots of people here on the podcast, specifically talk about real estate and being able to generate that passive income. We've now talked about the losses. But where else could someone go who's a really busy professional to find out where they can maybe fill up some of this big hole that these passive losses are creating, so that they can take advantage of that today? Maybe they're just so busy, they don't even know where they can think of other things that are maybe not real estate related?
Yeah, you know, part of this is going to be talking to some of your associates that may be in the spaces. And always, always temper that by saying be careful of the watercooler conversations, right, because oftentimes, people will paint a very huge picture without the minut details. So you can get some insight there. But then the other part, connecting with your team of professionals, your financial adviser, your tax planner, as well as your attorney, all three of them should be on the same page, because they can identify these different opportunities, your advisor, perhaps could identify different investment opportunities, that's been vetted by your your tax professional to make sure that lines up efficiently, and then it's blessed by your attorney to make sure there are no liability implications there. But I think having access to a really good team of planners is going to be the best place to start. And you don't think of those folks as an expense, right? You think of those folks as an investment. And the better they are at planning and getting more efficient for you, the better your return on investment is because they're planning should basically either decrease your tax liability, which, again, that might that's money well spent.
Billy Keels 28:44
Can you just say that one last time? Can you repeat that, please? Because it just it felt positive? And I just want to make sure people understood that.
Yeah, absolutely. Absolutely. You look at your team of professionals as a return on investment, whatever that fee is that you're paying them, essentially, their job is to help you tax planet and lower your tax liability. So if you pay them x, but your tax bill dives by why that delta creates a really good return on investment for you. You think about it the same way you would any other investment, whether it's stock or real estate, you're putting money in and you expect a return and that return is efficient tax planning.
Billy Keels 29:20
Thank you very much for reiterating that. And so if you were running on the treadmill, or you were cooking dinner or something like that, hopefully you heard it the second time. But there's also a bit of there is a language that Larry used that I really want to help drive home to the going on family because this is important. This is one of the issues that I had early on. I didn't realise it until later. And Larry's just like shared it with you twice. So the first part is that he talked about making sure that you have your advisors, right, that you have your advisors with you and also he used a key word, your planners, he did not say your filers. He did not say The person who's going to do your taxes, he talked about your advisors and your planners. And he's helping you to understand there is a difference in language, right. And this is a gentleman who studied English language. And so he knows a little bit about that. And so you should expect to have your team members on board. And if the first the first invoice that you receive shocks, you just make sure that if that shocks you, if what you received in terms of not having to pay legally is greater than the invoice that you paid, then that's a positive investment of your time, your energy, and you just have a new person on your team, as a planner, as an advisor. Don't do what I used to do, which is how do I get my taxes done as inexpensively as possible? Because you can typically lose a lot leave a lot of money on the table, legally. And so maybe so. So hopefully that makes sense for everybody going along for him, because what he just shared his absolute golden nuggets. Larry, I do want to ask you one question as well. Because a lot of times when you are a busy professional, you are around the watercooler and you don't know what you don't know. Not adding a lot of pressure here. But if there's like the type of question that someone could ask to maybe PSAs out if the person that they're talking to really understands what they're talking about, or maybe they're just repeating what they heard someone else say. So that that person who asked the question knows if they need to go back to their team or not, or it's a relevant question to ask, what it maybe would be a nice broad, open question that that person could ask to really suss out if what they're hearing at the watercooler is real or it's just kind of watercooler talk?
Yeah, great question. You know, the first place and I just did a video on something similar to this. I'm getting into the tic tac and iG real side of things. And there's tonnes you have a water cooler conversations over there. I think the first question that they should ask is, Well, where did you get that insight. And it's for even if it's from a friend of mine, a buddy of mine and associate of mine, take it with a huge grain of salt. If it's from my CPA, my tax professional my EA, then I think it's one that's worth considering, and at least bring it back to your tax person to see how that fits in your world. But we too often, especially in the social media space, there are folks that are just spewing poor advice out there, that could really get people in a lot of trouble. And so if it's not coming directly from someone that can defend you in the face of an audit that is willing to support the tax plan or tax strategy that they're putting in place. It's not one that I would advise you engage in. And certainly again, take it to your tax professional to see if their situation mirrors yours, where you can use it and it's applicable to you.
Billy Keels 32:44
Absolutely fantastic. So that's a great question to get insight in. Larry. Also, I'd like to know just if you can help and share with us now I mean, because this is the type of question where you can find out hey, listen to the come from your your advisor do to come from your plan, or did it come from the other person that was also in the same situation? Where can people find more about how you're helping other people, whether it's IG or its Tik Tok, or just your normal website? I know we're gonna get into that later. But I'd like for people to know now.
Yep, Yep, absolutely. So we're putting out more content on social media. All of my social channels are fairly the same. It's Larry D. West, the third. And the third is really three eyes. Right? And so that's same on Instagram, LinkedIn, and Facebook. And we're sharing these different ideas and insights on how folks can do effective wealth. Tax Planning.
Billy Keels 33:29
Okay, fantastic. So that's Larry D, West one, and then the capital I capital I capital. Is that correct? Yes. Yes, that's it. All right, perfect. So we'll make sure that you can check them out on the different social media channels on what's near your website. Again,
it is PB dash strategies.com.
Billy Keels 33:46
Okay, perfect PB dash strategies.com. I appreciate that. I do want to maybe pivot just a little bit, Larry, because I know one of the things that we'd mentioned in the beginning, we talked about the tech strategy. We also talked about this role of fractional CFO. Now, I work for a very large enterprise software company market leading, it's got three letters in its name from Germany. And I typically spoke to lots of CFOs. So this world is something that is I'm pretty familiar with her feel very familiar with. help someone understand today. They may think, the CFO, fractional CFO, is that like accounting? Is that bookkeeping? What exactly does a fractional CFO do? And how can that help someone who is an investor and or business owner?
Could? That's a really, really good question. And that's another one that has been changing over time as the role of the CFO starts to evolve. But essentially, they are your advisor. They're your partner inside of your business as you're making business decisions. They're not the people that do the hands on bookkeeping and accounting, but they provide the analysis they provide the insight, and they help with the decision making on the direction of the business where That's making an investment in a certain area, pulling back on certain things. They are the right hand or left hand to the CEO in many respects.
Billy Keels 35:09
All right, fantastic. So I appreciate you. Sharing that insight, definitely, usually is not the bookkeeper. They are not actually doing the tech stuff, but they're more would you say that it's fair to say that they're typically in the cockpit with you looking forward versus looking backwards as a primary kind of responsibility?
Yeah, that that, to me is a perfect way to describe it. And there's value in historical data. But that kind of tells you what, what happened already. Your CFO is right there, as you mentioned in the cockpit right next to you, giving you insight on what's about to happen down the line. What does our forecast look like? What happens if, you know we have another pandemic? What happens if we have a 30% Dip in revenue? What happens if there's a another rent moratorium? How does the business pivot and shift so that it does not fail and run out of money? So their insight is always, you know, four weeks, eight weeks, four years, eight years down the line, as opposed to memorialising things that happened last month or last year?
Billy Keels 36:10
Yeah. I love that. And would you say it's also fair to say that they're also helping you to make sure that the right hands are on the money that should be on the money in the hands that should not be on the money or not on the money? Ie kind of internal audits, compliance, things like that?
Absolutely, absolutely. They had, they should have complete oversight over every cash that every dollar that's flowing in and every dollar that's flowing out. Again, you don't want them to be in the minut details of actually doing your bookkeeping and accounting. Otherwise, it takes away from the time of doing really good insights. But they should be reviewing everything and have a good idea on what's happening.
Billy Keels 36:44
Fantastic. Absolutely. Love that breakdown. Fantastic. And so each of these roles are bringing different value to the business. And it's absolutely fantastic. You know, one other thing that I want to just kind of, and I know I'm gonna go back here a little bit. And so forgive me, everybody. I do this every once in a while. Before we get into the going long, final three, one of the things that we were talking about before, Larry, is this whole concept of a real estate professional. And so sometimes we talked about, and once again, this is just we're talking about principles here. But I you know, you'll speak to people and say, Hey, listen, you know, I am, I'm a busy executive and a multinational enterprise software sales, but my spouse is not actually in my spouse is doing the real estate professional status stuff. Can you maybe talk to us are there if one person is doing it, the other person is not just a general guideline? Are there certain limitations that are placed on the person who is? is doing the real estate professional, but maybe not doing that full time? Or is that maybe not the right type of question to ask him? If I'm not asking the right question? Is there something that you'd like to add there?
No, I think I think that's a great question to ask. And this strategy can work out perfectly for a spouse that does work full time, and the other spouse perhaps doesn't work full time or works less than full time, this could be a great scenario for them to consider. And that as long as they meet those guidelines that we talked about 750 hours, more than 50% of their time, and materially participating in the rental related activity, it does open the door for them to now use that real estate professional status. Now, again, there are other boxes that need to be checked documentation that needs to happen. But if the strategy works out perfectly, well, we have a high earning spouse that has an active w two. And that's going to be a multi six figure, perhaps even approaching seven figure range. And now you have another spouse that is actively in the real estate side producing those passive losses, but still cashflow positive, we might add, that can now marry together assuming they file a married filing jointly tax return. And those losses now can offset spouse A's higher earnings from their business or w two. So it could be a really powerful strategy, if it works out that way.
Billy Keels 39:02
Okay, fantastic. And so once again, we're we're here we're sharing ideas, principles, concepts. If this is something that is new to you, or sounds interesting, in if you have not talked to your tax team, or your tax teams not comfortable or looking for a tax team, I would suggest you probably reach out to Larry, he seems pretty comfortable with this kind of stuff. So I guess with that, Larry, I do want to get into the going long, final three. But just before that, before we do get in there, can you talk to us a little bit more about, you know, who is the client that you are typically helping today at precision business strategies, just so people that are listening to you today are watching the video. And I'm gonna suggest everybody go check out the video version, of course, because I really want you should be watching the video version. But who is the client that you're helping today, Larry, and so people could understand a little bit more about if it would make sense to reach out to you or your team?
Yep, absolutely. So many of our clients fall into real estate one way or another. So they have that common theme and background but it's you Are we going to be folks like you just describe higher earning higher net worth individuals that are either just getting into this space, or that have been in the binary space? I'm a real estate, indoor other assets and are really trying to understand how does this really work from a tax perspective? Because I've heard all the fun stuff, right? I pay no taxes, I can write off everything with real estate, but how can I truly make it work? So those folks we sit down and do some very in depth dynamic tax planning? And of course, we work with real estate businesses fund syndications and help with them on the accounting and the CFO side of things. All right,
Billy Keels 40:33
fantastic. So if that sounds like some direction that you're looking to go, and or you're looking to make some changes, well, that sounds like Larry and his team have a lot of experience in that area can at least have an initial conversation with you. So listen, with that, Larry, I think it's time for us to get into going long, final three men, but that is Yeah, well, okay. All right. So you're already answered the question. My question was, are you ready? So you said, Let's do it. Let's do it. Man, I want to make it let's jump into it. So we started with you over in Frisco, Texas, just outside of Dallas there, I'd like to bring things back to my new adopted home side of the pond. And that is over here in Europe. So help us understand, Larry, what is your favourite European city that you've either visited or still on your bucket list to visit?
Yeah, so my favourite European city that I've had a chance to visit is Paris, Paris, France. And we spent geez, just over two weeks there some years ago. And it's actually the place where I got engaged. So it certainly has a special meaning in that front of things. So Paris is one of those places where there's there's hustle and bustle, right? There's a heavy flow. But there's also this underlying, calm, serene, kind of a thing that's happening too. And so if you imagine Chicago, New York City style vibes with a lot less noise, or a lot less talking, that's kind of the thing that I got when when we were in Paris. And so people were fairly friendly, and there's a lot of people watching. So we had a really good time over there. But that's definitely been my favourite place. And not to mention, the braid is good.
Billy Keels 42:05
It's a pretty nice place. My one year sabbatical that started 21 years ago, started in Paris, France. And so if that gives you any hint of how engaging in enchanting, or short did that period, Paris can be? Oh, that's it. So cool. So we got another vote for Paris. Surprise, surprise. And now I'd like to get to question number two, Larry, in question number two really has a lot to do with, let's say, it's the, it's the good fortune that I've had to be really exposed to and interact with lots of successful people. And, and Larry, I would consider you to be someone who's very successful. You talked about the different ways that you've interacted with people the impact that you're having on others. And, and because of that, like, hopefully, one of the things that you would agree with me, Larry, is that, you know, people that are really successful, they don't like most people, when they put a plan together, they tend to execute that plan. They get the things right from the very first time, which allows them to go much faster than everybody. Don't worry, Larry, is just a surprise, man. It's, it's Larry's like, super stoked. Everybody is super chill, like, wow, hang on a second, you gotta check out his face. It was great. Now, it's a joke. Of course, of course. I mean, it could happen, Larry, you know that. But the reality is, people that are really successful, they tend to make like 20 to 50 times more mistakes than everybody else, because they're always trying new stuff. And so because of that, I kind of mentioned that before. And it was, it was definitely a joke, it was definitely a joke. But I do want to recognise something that people that are very successful do very differently than everybody else. And this is no joke. Because every time I've noticed someone who is successful, whenever they've had a relevant this decision to make, they are they've made a relevant decision. And they've made a mistake with that decision or learning opportunity, or whatever you want to call it. Whenever that's happened, every single time number one they've stopped in, they've learned from that mistake or learning opportunity, or whatever you want to call it, but right after they put different strategies, tactics and actions in place to minimise the probability of that exact same thing happening again. Now, I want you to think about the mistake that you made or the learning opportunity or however you want to call it when things didn't work out, like you plan them to work out. What I'd really like for you to focus on and share with the going love family today is what is the lesson that you learned that you know, we need to hear today to minimise the probability of that same thing happening to to the go along family.
You know, I think the greatest lesson there is taking a step back and really adapting this idea and this strategy of being you. And what I mean by that is, we kind of have this world of inauthenticity and right and not to beat down so much on social media. But that pressure of doing things right executing at a high level making no mistakes, you know, grind and grind until the end really impacts people's ability to be resilient, right? Because they essentially start to turn into something that they're not. We're all flawed in our own ways. We all make mistakes, and we should learn from it. But at the core of it, if you could be you, right, in a world full of filters, and impersonators, just think about how awesome and how dope it is to just be you and execute at a level that is appropriate for where you're trying to take things. I think that changes your entire perspective and trajectory, and you stop executing for the pleasure of pleasing others, and start doing so simply for the pleasure of self fulfilment, in where you're trying to go. And that'll also curb this idea that we beat ourselves down for making mistakes, because those are the foundational blocks to to success.
Billy Keels 45:54
All right, fantastic. So we want to get to those foundational blocks help you to feel and be you. Because at the end of the day, that's what's going to help you ultimately move forward faster. When you're comfortable in your own skin and doing the things and recognising the context of your life, where you are is where you are. And you can do the things to accelerate getting to the next step. But be be comfortable with being you I appreciate you sharing that with us, Larry, and this brings it to question the last one of going long, final three man, this is really about helping us to fill our minds with knowledge, and would love for you to share with us, what is one book that you would recommend to the go along family today?
You know, that's, that's a tough one. If I had to put one book in front of the the podcast today, it would be the book called growth gears. And this is a book by a fractional cmo company out of I think they're out of Atlanta, Georgia. But essentially, what they do is walk you through a thought process of defining the growth for your company. And sure there's a marketing undertone to it. But what it does is it helps you compartmentalise things in certain areas. And there are certain gears that are turned to actually grow the business. And it has implications not just for business, but also for life. And so as you turn those gears, you know what the outcomes are going to be. And it gives you a foundation to always go back and know how to how to pivot in a case in the face of change. And so growth gears has been a really foundational book just for us in terms of marketing strategy, but also business strategy in general.
Billy Keels 47:23
All right, fantastic. So growth gears, don't worry, everybody, we're gonna make it really easy. All you have to do is click the link. Don't worry, don't get stressed out. Don't feel like you got to stop your workout to write it down. You're gonna forget it. It'll be in the show notes. Everybody, don't worry. Wow, Larry, man, these conversations just fly by and today faster than ever, man, this is just like been absolutely fantastic. I'm thinking about the beginning of the conversation. You're telling us about the wonderful insights that you had from your kids? And hey, listen, Daddy, will you come over here and spend some more time with us and recognising from there, you took us along your journey, right? And you helped us understand through the education space and what you're doing there. And then you recognise that, hey, listen, although you were enjoying this, you were bold enough and brave enough, two weeks after or two weeks before to pivot and make a change and say, Hey, listen, this is this is great. This has been foundational, but actually can also like what some of them are buddies are talking about over in the business side of things. And so you want it to go there, you were 25 35k, that was pretty good. But guess what you wanted to be able to make an even bigger impact. And so as you continue to find your path, create your path, and begin to make impact, not just for yourself, but also more importantly, for others. And you continue to do that today. And you're continuing to do that through precision business strategies. I know that there are so many people that are like, Billy, would you just ask him the question and stop talking so much. Okay. All right, everybody, don't worry, I'm getting to the point. He's already shared it with us once before, but I would love for you to share with me in the going long family, Larry, what is the best way for us to find out more about you and find out more about what you're doing at that precision business strategies.
You know, I think the best way is to visit our website, which again, is www.pb, like peanut butter, PB dash strategies.com. There's a few insights that we post on that page there. So you get some some ideas on the kind of work that we do. But there's also a huge button that says become a client. And we can schedule a discovery call to learn more about you share more about our firm and see if it makes sense for us to work together. And then, as always, follow us on all of our social channels, which is precision business strategies on LinkedIn, Instagram, as well as Facebook, and then you can follow me personally on Larry de us to 30 As I mentioned earlier, I post a lot of information on effective tax and wealth planning strategies.
Billy Keels 49:41
All right, fantastic. And listen, go along for me when you reach out to him specifically on the LinkedIn platform, make sure that you leave him a personalised invitation so that he knows that you've already invested time getting to know him his philosophy, his more about his business, and how he could potentially help you. It's going to make the two of you have a Much easier next step in terms of conversation, so please do that. And then also he'll know when he's engaging with the with the going long family that he knows he's engaging with the a player. So listen with that. Larry, I just want to say thank you very much, man from the bottom of my heart. I really appreciate you deciding to invest your time with me. And the entire going long family today. Thank you so much.
Thank you. I certainly appreciate the opportunity. And thank you all for tuning in and listening to us talk tax nerd stuff.
Billy Keels 50:26
All right. Fantastic. They're used to me, they're used to me as well. So it's all good. Now listen, just really probably, like 15 seconds later, I just want to wrap things up with the go along family, and then we'll get we'll get you out of here. So listen, everybody. I don't know what else to tell you. I mean, Larry left it all he talked about the strategy took you down into the weeds, he gave you the tactics, and he gave you ideas that you can think about that you can talk about, you can reach out to him, he's made himself and his tax team available. If you want to talk to your team about it, you can do that as well. Make sure you check him and his team out on social media reach out to him he got his website there, we're gonna include in the show notes. And while you're doing that, and sharing today's episode, downloading it, sharing it with your family and friends. We'll be I'll be here. I'll be here preparing for the next conversation. So until then go out and make it a great day. And thank you very much. Trust that you enjoy today's conversation. And once again, today's conversation was sponsored by first-generation Capital Partners. If you're an accredited investor and want to find out more about how we're helping accredited investors to gain their personal freedom even faster, go to firstgencp.com forward slash going long.