Tax Returns – Are They Really All Created Equal?

As we approach Tax Season, I wonder how many people understand the potentially vast differences in the quality of tax return preparation? Are tax returns really the commodity that they seem to be? Is a tax return prepared by the tax service in the mall of the same quality as that prepared by a major CPA firm? What does it mean to have a “quality” tax return? In fact, can a tax return be prepared in such a way as to reduce income taxes?

As someone who has been involved in the tax return preparation process for almost 30 years, let me share some thoughts on this subject.

Accuracy in a tax return simply means that the information provided by the client was reflected on the tax return. It does not mean that the tax return was prepared in the BEST way it could have been prepared. In fact, I RARELY see a tax return from a new client that was prepared the way I would prepare it.

Let me give you some examples. Suppose you have some expenses that could either qualify as investment expenses or business expenses. Either classification would be “deductible” on the tax return. BUT, a business expense is MORE DEDUCTIBLE than an investment expense. How is that possible? An investment expense is deducted on Schedule A and is classified as a “Miscellaneous Itemized Deduction.” There are several limitations on a miscellaneous itemized deduction. First, you only get to deduct these type of expenses to the extent they exceed 2% of your income. So, if you have $300,000 of income and $7,000 of investment expenses, you only get to deduct $1,000. What’s worse is that if you are in the Alternative Minimum Tax like millions of taxpayers, you don’t get any benefit for your investment expenses.

On the other hand, if you were able to deduct these same expense on your Schedule C or your Schedule E, you would be able to deduct 100% of the expenses. In addition, the expenses would reduce your self-employment income from your business. That’s another 15.3% tax benefit on top of the income tax benefit.

Another example of less than stellar tax return preparation relates to depreciation. Depreciation is the government’s gift back to investors, especially real estate investors, for investing in long-term assets such as equipment and buildings. What most tax preparers don’t understand is the idea of a cost segregation or chattel appraisal. The whole goal with depreciation is to get more of it sooner. This provides the investor with a terrific tax benefit in the early years of property ownership. And under the important wealth creation principles of leverage and velocity, the sooner we have cash, the sooner we can invest it and obtain major returns from our investment. The problem appears to be a lack of knowledge from many tax preparers and CPAs about the rules surrounding cost segregation.

The one area where I do see mistakes relates to those taxpayers who file returns in multiple states. This is a specialty area of mine, which I teach at Arizona State University. Even in the major firms, there is a lack of understanding by the Federal tax departments of the many opportunities for tax savings when preparing multistate tax returns.

What it comes down to is whether your tax preparer/CPA has the knowledge and creativity necessary to prepare the BEST return possible. And is it worth it to you to pay a little more to get the better result? Are you focused on the amount you pay your advisors or are you focused on the return they provide you on your investment? Let me give you an example.

Suppose you have a choice of paying $750 for your tax return to a small CPA firm or $2,000 to an innovative, knowledgeable firm. All things being equal, anyone would choose to pay the lesser amount. But what if all things are not equal? What if the $750 gets you an adequate, accurate return but the $2,000 would get you a return where you pay $5,000 less in tax? Which is the better deal? In one, you are out $750 with no return on your investment. In the other, you are net ahead $3,000. Clearly, the $2,000 fee returns a greater value.

This tax season, review your own tax situation and the advice you are receiving from your tax preparer/CPA. Are you getting the return on investment you want? Are you getting the planning ideas you need? Are your taxes going down or do they continue to increase? Taxes are such a major part of your wealth creation that you cannot afford to ignore one of the most important part of the tax planning process – tax return preparation.

Warmest regards,


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Making 2009 Your Year – How to Become THAT Successful Real Estate Investor in Seven Steps

Successful real estate investors take action immediately. Consider incorporating the following seven action steps into your investment strategy for maximum success.

Action Step #1: Make More Offers. Probably the greatest of all action steps. The one comment I hear the most from new investors is, I am not getting or finding any deals. I usually respond with, How many offers are you making? Oftentimes the answer is in the single or low double digits.

Increase the number of offers you are making. Is the real estate agent(s) on your team forwarding you MLS listings based on profiles you have established? Are you checking the newspaper or internet for FSBOs? Are you driving through neighborhoods looking for potential properties? These actions should be done daily with offers following. You never profit from offers you do not make. Shoot for a goal or 20-30 offers a week. Make them and make them regularly. If your agent is unwilling to submit that number of offers, find another agent.

Action Step #2: Hone Your Craft. Every day you should be taking time out to hone your craft. In other words, learn more about what you are doing in the real estate investment world. There is always someone out there doing it differently, more efficiently and/or more effectively. For whatever investment area you are choosing to pursue (e.g. wholesaling, foreclosure consulting, or rehab), take the time to learn more and more about what you are doing, how to do it, and the different ways to do it.

One of the areas that I am looking at on a very regular business as it relates to my areas of real estate investing is how I can best use technology in order to hone my craft: How can I get my offers out faster using technology? How can I keep in contact with more people with technology? How can I reach more people using technology? How can I better plan my projects using technology? You do not want your business systems to become stale or antiquated. Instead, become the subject matter expert in your investment arena. The best investors always continue their education. Continual education is paramount to continual success.

Action Step #3: Maintain A Balance. This applies to us workaholics, be we novice or veteran investors. It is very easy to begin to focus all of your efforts on building your business. Your mission becomes working on your business, building it up, chasing leads, marketing, etc; much to the detriment of your home life; or even to the detriment of your work life (if you’re still employed full time).

I strongly believe that you have to maintain a balance if you are going to remain successful for the long term. A balance must be struck between your work life, home life, investment life, family life, spiritual life and your own personal life (i.e. you need time for you and your individual needs: exercise, proper nutrition, etc.). There is no sense in making a whole lot of money in real estate if you are not going to be around long enough to enjoy it. Plan your days and weeks keeping balance in mind.

Eliminate time wasting activities from your life and utilize that time to meet your key objectives. For example, I can attribute my current level of business success to my decision to severely limit the amount of time I spent in front of the television. Balance is extremely important. If you really would like to know how well you are doing at maintaining balance, ask your spouse, family and children. LISTEN and make the necessary adjustments. Real estate success reached to the detriment of your family is no success at all.

Action Step #4: Join Your Local Real Estate Investment Club or Association. You want to surround yourself with like-minded people. Trying to do this business in a vacuum is going to almost be fruitless. You will end up working harder, having more hurdles to overcome, and attempting to become a jack-of-all-trades and master of none. Surround yourself with other investors; in particular those with more experience and knowledge then yourself. They have the skill sets, contacts and networks for which you want to be a part. Assembling a team is one of the fastest ways to grow and move very quickly in this business. Most of your team will come from your local real estate investment associations (REIAs).

If you are not familiar with REIAs or know where one is located, I recommend that you go to and look for REIAs in your state. Hopefully there is one close to you. If not, resolve to set aside time to travel to the nearest one (mileage is a tax write-off) or explore starting your own. It is an effort well worth it.

Action Step #5: Stay in Your Lane. This is definitely a big issue with new investors. There are over 10 ways to invest in real estate (e.g. wholesaling, rehabbing, foreclosure consulting, etc.). Oftentimes as new investors, we will jump out and try whatever happened to be discussed at the local REIA meeting that particular month. If the topic this month is wholesaling, we want to be wholesalers. Next month we want to be rehabbers. What I would recommend is that you find a lane that works best for you. Get some general information on various investment areas, make a decision and stick with it. Better yet, first find out what investment techniques may NOT be working well in your location (some techniques work better in certain economic environments than others) and avoid those for now. This is the kind of information you can get from knowledgeable people at your local REIA.

Action Step #6: Establish a Website and a Business Email Address. If you are going to get into the real estate investment world, treat it like a business. One thing that personally makes me question the seriousness of an investor is when he or she gives me a business card with an email address that ends in,, or other common addresses of that ilk. There is a place and purpose for the aforementioned type of addresses, but not for the purpose of representing your business. If I were to receive a business card from two investors at my local REIA and both provided the same service; one said [email protected] and the other said [email protected], I am going to lean initially toward dealing with Jane because her email address is a reflection of her taking her business seriously.

I understand that many investors use addresses because they do not have the knowledge or skill-set to establish a website, but these days there are very many tools available for investors who possess absolutely no website or HTML knowledge (myself being counted in that number) to establish a web presence. However, in the span of a weekend (with no TV), I was able to create the first few pages of my website. To start creating your own website, go to your favorite search engine do a search on “website design” and “domain name registration” (to register your domain name).

Action Step #7: Increase Your Marketing. Marketing is the life blood of any real estate investor. I constantly tell my investor colleagues that if you want to separate yourself from the rest of the pack, you have to market yourself and your business. You want to establish a marketing presence. Begin marketing with your local REIA. Start with a good solid business card. Wear a name tag. Network–let people see and know what you do. Consider creating a logo for your business.

If you really were to look at the marketing models of most investors in your local REIA, few have anything beyond their business card and perhaps a magnetic car sign. You want to get your name out. Start a newsletter or an email special report campaign. There are very many inexpensive ways to get your marketing campaign functional. Explore technology as an avenue for more efficient marketing. Establish a presence. It is what makes people pick up the phone and call you instead of someone else. It is what causes an investor to consult with you versus someone else.

Always, always, always market. Carry flyers in your car and briefcase. Your business card should always be available. You never want to miss the opportunity to put up a flyer at the grocery store or laundry; put a business card on someone’s window or drop off a flyer at a local FSBO home you pass on the way to work in the morning. Every step you take in marketing is going to create ripples across fields of opportunity.

Incorporate the following seven real estate action steps into your investment strategy to ensure maximum success:

  • Make More Offers
  • Hone Your Craft
  • Maintain a Balance
  • Establish a Website and Business Email Address
  • Stay in Your Lane
  • Increase Your Marketing

Here’s to your real estate investing success!

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Naked Web Marketing – Part 1

Less means more

It’s possible to do too much and it happens with SEO where sites get penalized by search engines for stuffing keywords. It happens with web design where the graphics compete too much by complicating the navigation and minimizing the marketing content. It happens in web marketing when the sales hype or the boastful language gets too repetitive and turns customers away.

The thing to remember about bragging is that when you really are that good other people do the bragging for you.

Is naked web marketing a frightening thought?

Marketing without pretense should be a welcome idea. You cannot get close to your market when you are not yourself. When you look and sound like something you are not how can your web market relate? And why is it so important to relate to your web market?

If you can’t relate to the person you are talking to then how can you create a customer relationship? But even before we build relationships we have to understand how different the web is from all other marketing mediums.

The web is not like anything we have known before, so we can toss out the idea that we can market like newspapers. We can toss out the idea that our web site can market like television with a bit of video. Nor is our web confined to marketing like print advertising. All of the above are too limiting.

There is no time or space on the web

The reality is that the web swallowed all those marketing mediums and then altered how they would be used on the web. It was not the web that adapted to earlier media, but rather the other way around.

In a medium that has eliminated time and distance the rules for marketing are going to change. The only limitations about time or distance for the web is that of hardware issues and the speed of light. For all intent when a web site gets published it is available to all people everywhere in the world – at once.

And then consider the volume of space that any web site can make use of. For small business web sites we can say the space is limitless because the hosted space is megabytes more than we need.

Our small business web site can pack enormous amounts of info and be accessible everywhere at once. We can work toward turning the accessibility into more visibility as we shuck off those pretentious robes and get real.

We can’t run out of time

Suppose your web site just went live today. In a year it will still be there. In 4 years it will still be there. Just keep paying your hosting fee and the site will always be there.

Newspapers come and go, TV channels come and go, Best sellers come and go, but your web is isn’t going anywhere. This is important to know.

Your web site is not going anywhere because it is actually a destination – not a vehicle. We are conditioned to think that our business web site is going somewhere, like up the ranks with search engines or maybe Oprah will feature our site and it will really get going.

The truth is that our web site is stationary and the only thing that moves is our market if, and when, we attract them.

The web has a huge marketing potential

So why is our business web site not reaching anywhere near its potential? The main reason, in my mind, is because we are not letting our web sites live up to the web’s potential. Our marketing is too limiting as it is based on old offline marketing concepts. The world has changed and we are still using 20th century marketing concepts.

The 20th century marketing methods were always based on our business, our products, our location and our services. This focus is no longer appropriate for web marketing.

Small business web sites will need to look away from their own self interests and use their web site to cater to the needs of their market. No business web sites are doing this, other than just paying lip service. Do you see your market as the boss and do you take the time to know them and to give them what they want?

Imagine your market as millions of tiny kings and queens which require your attention, and your web site as the servant giving them that attention. How would you like to serve a million kings and queens and take their gold?

What does the web do better than any other marketing medium?

I keep asking this question because the answer is going to put wind beneath your wings. The answer is simple and in hindsight it stands out as a no-brainer, and yet it seemed like a revelation at the time.

Do you want to try and answer that question on your own?

Naked web marketing (part 2) will start off answering this question and tie it into other naked marketing methods. The goal is to see how a shift in awareness can be an experience where you have both a change of mind – and a change of heart.

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Five Easy Tips to Get a $10,000 Bad Credit Loan

The prospects of getting a loan seem nonexistent for people with poor credit ratings — do not even mention trying to get $10,000 loan. This view is mistaken, there are plenty of non-traditional lenders who can help a bad credit loan seeker.

Tip One: Search for a Friendly Loan

This type of loan is called a Friendly Loan because that is exactly what it is. You need to set aside your ego and approach a friend or family member who is on sound financial footing and ask them for the loan. In all honesty, getting a friendly loan is going to be easier than borrowing from other lenders. You do not have to undergo a background or credit check or supply any form of documentation as you would for any other $10,000 bad credit loan. Even if you are presently unemployed, family members understand the challenges you are facing. Just be sure that everything regarding terms and interest rates are put in writing and signed by all the parties to avoid any future conflict.

Tip Two: Search for an Employee Loan

If you cannot bring yourself to ask a friend or family member for a $10,000 loan, your next best bet is to approach your employer. Or, there may be a credit union that serves your company. Usually there is no credit check and little documentation is required to prove who you are. Also, loans can be deducted directly from your paycheck. This may be your second best route to getting a $10,000 bad credit loan.

Tip Three: Search for a Collateral Loan

If you own a home, getting an unsecured $10,000 bad credit loan is even more possible. You put your house up as collateral and negotiate with the lender for the best possible interest rate. This is possible even if your credit report is not the best it could be.

Tip Four: Search for a Personal Loan

If you do not have any fixed assets, do not despair. Look for licensed lenders who specialize in offering bad credit loans. Even though you may need the cast badly, understand that these type of lenders charge very high interest rates. Think hard before you sign on the dotted line. Do you really need the money? Are you willing to absorb the interests costs as part of the burden to get a $10,000 bad credit loan?

Tip Five: Search for a Payday Loan

Another option you may want to consider when buying a $10,000 bad credit loan is the payday loan. This sort of loan requires no credit check and is rather easy to get if you are gainfully employed. You will need to give the lender your social security number and other documentation to prove your identity. You can usually land this type of loan within one business day.

Not Funny Money

Getting a $10,000 bad credit personal loan is not really difficult if you take the positive approach. Just be sure you have the financial wherewithal pay if off in a timely manner. Loans of this type should be considered thoroughly before you obligate yourself. Do not get a loan of this type for fun. Be responsible.

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