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In the Hidden Money podcast, you'll learn how you can legally use the tax code to your financial advantage. There’s wealth inside the tax code. Taxes aren’t the enemy.
Most people hate taxes (and pay more than they should). But when you view taxes only as an evil expense, you miss out on legal ways to grow your wealth. Unlock the secrets to saving tax and building wealth with the Hidden Money Podcast! 🎧💰 Hosted by Mike Pine and Kevin Schneider.
Mike Pine: I got to work with an
amazing client of ours on one of
the coolest tax things we've done.
Solving a lot of problems.
Problems for our clients, problems for
the seller, problems for their investors.
That was fun.
That was exciting.
That's revolutionizing the tax code,
the tax law, all the tax court case
precedents for the benefit of real people.
This was definitely in the top ten most
exciting things I got to work on in tax
in my entire twenty-six year career.
It might even be in the top five.
Kevin Schneider: Before you do any big
deals, big changes in your life, a phone
call like this is life-changing because
just saying, "Hey, we're doing this deal.
What could I do differently?
Or what do you see in this deal?"
Mike Pine: If he would've
called me three days later
after they put in their offerâ¦
it would have been too late.
Way too late.
And we're talking tens of millions
of dollars of tax deduction.
[Mic bleed]
Welcome to this episode of
the Hidden Money Podcast.
especially excited for
this episode, Thisâ¦
We're gonna talk about an
experience I had, and we've,
we've actually teased it before in
some of our, our top wins, right?
Or wins in process.
Um, I got to work with an amazing client
of ours on one of the coolest tax things
we've done, solving a lot of problems.
Problems for our clients, problems for
the seller, problems for their investors.
I mean, this wasâ¦
You saw how much time I spent
on it, but I wasn't tired, dude.
That was fun.
That was exciting.
That's using, that's revolutionizing
the tax code, the tax law, all
the tax court case precedents
for the benefit of real people.
Kevin Schneider: Yeah, and we've, we've
kind of gone through this strategy on a
prior episode, but we really wanna dig
down deeper into it because it's so cool.
And I could tell the excitement,
especially when you were
going through it with him.
Mike Pine: Dude, it
Kevin Schneider: awesome.
It was fun.
You were calling me, you're like,
"Dude, we might be able to do this."
And I'm like, if-- That would be the
biggest deal I've seen in my career.
It's one of the biggest deals you've
done in your entire career, that you
actually bringing these parties together
and work out such a tax benefit.
So- give us the very high level.
What was theâ¦
When, when, when Josh came to you,
what was the initial conversation,
and how did you bring in this other,
the purchase price allocation into
Mike Pine: Well, I hadn't actually
spoken to um, or his team about
was very, it, it God brought because
suddenly one of Josh's team calls me
and said, "Hey, we're, we're, we're,
um, buying these two golf courses.
We might wrap in a hotel to it.
We're gonna make this a resort."
he's got a really cool record.
You'll see later in this episode as we
interview Josh, he does, what his company
does, and the cool resorts he makes, and
the money they he called me up and said,
"Hey, we're about to, to make this offer.
Is there anything we should put
in the offer as far as allocating
Kevin Schneider: like, "Oh, yes."
Mike Pine: my, I almost
jumped out of my chair.
Um, but it was on his, uh, a
Teams meeting, and I, I triedâ¦
I mean, the guy I was talking to you okay?
You just jumped a little bit."
I was so excited.
Yeah.
Kevin Schneider: it came to you
with just a generic, you knowâ¦
That's a very good lesson, too,
for anyone out there, and you
have a CPA and, or we're your CPA.
Before you do any big deals, big
changes in your life, a phone call
like this is life-changing because just
saying, "Hey, we're doing this deal.
W- uh, what could I do differently,
or what do you see in this deal?"
We're able to take that information
and actually advise you on
the front end of these things.
Mike Pine: If he would've called me three
days later after they put in their offer
it would have been too late Way too late.
And we're talking tens
of millions of dollars
of tax deduction
Kevin Schneider: Yeah.
So tell me a little bit about
these courses and how you got to
bridge this deal with the resort
Mike Pine: So there were these two
golf courses owned by the same owners.
Um, our client, who's a syndicator, builds
these incredible resorts, mainly wedding
we'll interview Josh.
But they buy these resorts, and then
they add the value of incredible wedding
World deal.
But, turn a normal golf course or a
normal hotel resort into a money-printing
um, which is always good, but when
they generate profit, they generate
Now, I don't know anything about golf
'cause I hate I tried playing golf.
As a matter of fact, the last real
job I had at a Big Ten firm in the
nation, they made me play golf, and
they saw how bad I was, and they
Kevin Schneider: got
me a golf pro.
Mike Pine: a golf pro.
Like, I can't make deals out here.
They they literally got me a
golf pro twice a week and gave
me a Topgolf membership, that one
that included everything and I
could go, and they assigned me to
go to Topgolf five days a week.
Kevin Schneider: That was your job?
Mike Pine: No, that was after my job.
Oh.
Um, and I'd do that every evening.
They did pay for the drinks 'cause it
took a lot to, to try to keep hitting
that little ball with that little club.
I'm all aboutâ¦
If there was a game where you just throw
the ball up in the air, someone hits
it, and I can shoot it with a shotgun-
Skeet shooting ⦠that would beâ¦
Not skeet shooting, golf ball shooting.
Oh.
'Cause golf balls suck.
I hate golf balls more than I hate skeet.
Well, I love skeet, golf balls should all
be But anyways, I know nothing about golf.
They tell me, "We're buying
these two golf courses.
They're these beautiful courses.
They're high-end.
They're very, umâ¦
Have new, higher tech."
Kevin Schneider: that Oh, yeah.
Yeah, yeah.
Well, 'cause you- Like Augusta National,
the, one of the, the Masters Tournament,
they have an underground tunnel
system going between, so you never
see any of their crew walking above
Mike Pine: Like
Kevin Schneider: like Disney World.
They go under downâ¦
And then there's heaters under the greens.
They keep everything heat the greens?
There's all that.
So it doesn'tâ¦
So they can just keep it in
the winter, and they can keep
it alive and keep it clean.
so ridiculous.
There's so much tech in golf, it's crazy.
waste of- Unless you go to the
municipal courses ⦠a perfect life.
If you go to a municipal course in
the city, there's some teenagers
out there raking and mowing, right?
But-
Mike Pine: I, was reading this article,
sorry to, to digress for a second, but
there's a municipal Washington, D.C.
course that our President Trump is
trying to take over, and he's getting
fought because he wants to make it nicer.
Um, now I understand why they're
fighting him, because he wants
to put heaters under the grass?
That right.
Anyways.
All right.
So it's like a really high-tech
golf course, and they have
these high-tech greens, bunkers.
So I didn't know anything about it.
I had to figure out, okay, wait a second.
Thanks for calling me.
I bet you we can get a heck
of a lot more depreciation
You're an operating business.
You're buying an operating business.
Um, IRC 1060 applies.
Let's talk about purchase
price allocations.
And they're like: "I
don't know what that is."
I was like: Okay.
let's say a cost seg gets
you twenty, thirty percent
assets, That'd be good, right?
He's like: "Heck yeah, that's
what we're shooting for.
We're telling our investors we're shooting
for twenty-five to thirty percent."
I said, "Okay, need to go do some
research and find out what goes into golf
be something."
I'm thinking the sidewalks
are land improvements, right?
They have sidewalks.
Apparently, they're not
Kevin Schneider: concrete.
Cart paths.
They're called cart paths.
Mike Pine: Okay.
Well, there, there are roads
for the dumb golf carts that
people drive around to play this-
Yeah ⦠dumb game on heated grass.
Yes.
Um, so anyways, I get down and, and, and
I reach out to you, I reach out to one
of our senior managers who also loves
golf, and I'm asking him, "Is there
anything, like high-tech, anything in
these golf courses that aren't land?"
land, right?
And they're buying a ton of acres,
Kevin Schneider: It's what a golf course
Mike Pine: course is ⦠there, there's a
whole lot of land in a golf it's wasted.
in shooting ranges, you
should put in houses.
Um, that.
I
Kevin Schneider: hate
Mike Pine: How do you like it
Kevin Schneider: love it after this.
Okay.
'Cause we need to go to
this resort now and play.
Mike Pine: If I can shoot golf balls.
And now, he might let me
after what we accomplish.
So anyways, it turns out, like
this high-tech golf course has all
these There's like these incredible
drainage even, even on the fairways.
And I learned a fairway is not the
green part where you putt the ball
in, but it's that big long grass thing
Kevin Schneider: That's
right ⦠you try to
Mike Pine: drive a golf ball
Kevin Schneider: And there's
different kinds of grass.
Mike Pine: there's
different kinds of grass.
There, th- there is.
Kevin Schneider: Yeah.
Mike Pine: But you can't depreciate
the grass you can depreciate is any
land that has a drainage system or a
heating system or some kind of that's
not gonna last for more than 20 years,
that you're gonna have to tear up that
land to get to it to do maintenance
or replace it, I was out how much of
that crud exists under that ground.
It's not just dirt.
So I have a new
Kevin Schneider: for golf
If you don't have those drainage
system from a business standpoint,
your course floods, your course gets
backed up, you can't bring in revenue.
You can't bring in green fees
if your course is flooded
and not draining properly.
It's very ordinary necessary
to have extravagant drainage
systems in your fairways and
greens and everything Yeah, yeah.
Mike Pine: I'm learning.
Kevin Schneider: Keep
your vacancy down in a
Mike Pine: I get it.
Kevin Schneider: Okay.
See?
I
Mike Pine: One quick question, side note.
The reason they have people driving around
golf carts offering drinks to people
playing sucks that bad and that's the
Kevin Schneider: enjoy it?
No, 'cause usually it's a day off, and
there's nothing better to bring you
back to a golf course as if you drink.
'Cause typically if, if you're
not drinking, you're just mad.
I'd rather be mad and
then have a couple beers.
It's a lot better for me.
Mike Pine: mad a lot.
those clubs that I had to
because they wouldn't, my last-
Kevin Schneider: All the tech on them too.
Mike Pine: them are too.
They were very expensive.
Oh, yeah.
And then when you happen to accidentally
get angry and break one or two or three
over your knee, suddenly it's $1,000
Kevin Schneider: day.
It's a lot better to watch golf, but
because they, they hit it so clean,
and then you get out there and you're
like, "I could do this," and then no,
you're just shanking left and right.
You're in the woods.
It takes you eight hours
to complete a round.
I'm not the best golfer, but I love it.
Mike Pine: I used to play at these things
where, like, you had a team, and there was
Kevin Schneider: of you,
and- Yes
Mike Pine: you could take the best
shot out of any of the four of you.
Yeah.
Is thatâ¦
It's
Kevin Schneider: scramble?
Yeah.
We should do that.
Mike Pine: I did a bunch of I
did two or three dozen of those
it felt awesome.
But then that, that's the worst part
because you think you can do that again.
of your life.
And you can't do it again, ever.
But- Yeah ⦠okay, back to the tax
So then turns out the bunkers,
they have crazy drainage systems
because I guess when it's raining,
it causes the sand to fall.
If you don't have the special, like,
retainage and drains, the entire bunker
is eligible for bonus depreciation.
sand.
It looks like a hole in the
sand, but no, I had no idea.
Then the greens, they have, like,
these raised greens, and it's not
dirt that's raised, and they have all
this plastic or composite stuff up
underneath it, and it has a short life.
You have to replace All that green,
even though it looks like grass and
land, the fairways, the bunkers, the
green, much of that was depreciable.
I got really nerdy into the details.
It's like you have to take common
maintenance person would have to dig
up to replace a certain drainage line.
So, like, if you have a six-inch
drainage line, you're allowed
to take eighteen inches times
the linear feet of that drain.
no idea how many drains run through
turns out it's like three-quarters of the
darn course- Yeah ⦠in a good course.
Kevin Schneider: 6,000 yards.
Mike Pine: It's probably 6,000 yards.
Oh my gosh.
For, for, for, for eighteen
holes, and this one had a
lot more than eighteen holes.
Kevin Schneider: Has two courses, right?
Is it 36 holes or no?
Mike Pine: It's two courses.
Um, I think they have more.
They, one course has 36 holes,
uhâ¦
Yeah.
Anyways, um, Josh can tell you more
about these have him on here in
Kevin Schneider: some screenshots of
them- Oh, yeah ⦠up on there too.
Mike Pine: We will.
And they had a whole
kind of Topgolf thing.
I forget what they
Kevin Schneider: it.
It wasn't
Mike Pine: Topgolf.
Forgive me.
Kevin Schneider: I won't-
Think of all that tech in that.
I mean-
Mike Pine: that, that was obvious, right?
Um, but it wasn't as much as the drainage.
Iâ¦
Anyways, so I get done looking at this.
I'm like, "Guys, you're buying
an asset with the buildings,
with all this drainage.
grass and stuff on top.
I thought it was just dirt, but
this is like super depreciable.
30% cost?
Heck no.
No.
We gotta do a purchase price allocation.
Like okay, well, what do we need to do?
speak with the seller's tax Cool.
The seller's a big company.
They have a tax director.
Yeah, let's put you on line I say,
"I want to allocate substantial
portion of our to all that stuff
you got underneath the grass and
Um, okay.
Why?"
And I tell her and she's
like, "Wait a second.
Wouldn't that cause us to
recognize depreciation recapture?"
Kevin Schneider: Very
good tax director, huh?
Mike Pine: She's an tax director, no.
She, she was g- I, I actually
And here's the funny thing, her husband
is a CPA, her kids They're all in tax.
I've offered that, but, um, we had to
close this deal, otherwise it would be
I do have a call with her Anyhow, she's
like, "Well, could cause us a lot of
depreciation turns out because of the
way their finances were working, they did
not take a lot of bonus depreciation on
the most Turns out when I ask our client,
"Hey, what makes this a good buy for you?
Why do you think this is gonna draw
your guests um, after you buy this?"
literally, and, and this is, this is true.
It's objective.
It's true.
They say, "Well, these different greens,
that fairway, this layout, those bunkers,
the most recent bunker additions,
those are unheard of in the area.
Those will draw people."
Go to them, "Did you take
bonus depreciation on those?"
The seller says, "Uh, we
didn't because X, Y, Z.
I mean, we did take some accelerated
depreciation, but we didn't take bonus."
So we start working out
and realize not onlyâ¦
I mean, they're gonna pay a little
extraordinary income tax, but we were
able to get a ridiculous percentage
of allocation of the purchase.
I mean, ridiculous.
You've seen the numbers.
I don't think we can share them.
I've never seen anything like this.
So y- if, if you invested
Well, it depends, 'cause we're
gonna have different classes, right?
So here's the other side of it, and this
is ⦠So we solved depreciation, right?
Investors get a bunch of depreciation.
It all goes to the investors.
It does.
Yeah.
But some investors, it's ⦠Right
now is a hard time for
syndicators to raise money.
It's just hard.
People are freaked out about the economy.
There's something called a war going on,
although the war's off apparently, but-
It'll be on tomorrow after this ⦠I
guess as long as they stop it every 60
days, the president would have to get
authority from Congress, but whatever.
People are freaked out about the economy,
so they're freaked out about raising
or, or investing in these syndications.
Well, some syn- some investors,
they care more about, like, a
guaranteed preferred return.
Like, they don't care
about getting depreciation.
They just want 8% a year
preferred return guaranteed.
Um, or as guaranteed as you can
guarantee it with an option.
Others are like, "I don't really
need a big return right now.
What I need is depreciation to offset
all my other passive income," if
they're not real estate professionals,
active income if they are.
Um, and there, it runs a whole gamut.
Some people want 150% depreciation
for every dollar they put in.
Some people want no depreciation
but a high preferred return.
Some people want somewhere in between.
So Josh and I and, and his team
are working together to figure
out different classes that works.
I mean, you have to have substantial
economic effect in the allocations and,
and we- we're obviously doing that.
You got different risk levels,
different priorities, different,
different economic agreements.
Um, but now suddenly, it's people
want to invest in this a lot more
than they want to invest in someone
else's golf course that they didn't
even know it had depreciation.
Like,
you're covering a bigger investor base.
Yeah.
You know, like, what's important to you?
Do you need the depreciation?
Do you want the guaranteed
preferred return?
I mean, they can kind of choose their
own adventure, and it just ⦠All that
depreciation just leaves so much options.
Yes.
There's no other syndicator that we're
working with that can say, "We're
giving this amount of depreciation
on your investment, period."
Right.
It has to be done in the way you did it.
And so it's a really cool story,
and I love how it came together
and- It's not over yet.
Oh.
But- I don't want to cut you off.
I know we want to interview
Josh here, but- We will.
Um- But it turns out this golf course
and this other course, they're right at
there on, on the water in, in a big state,
and Josh can tell you all the details.
I don't know what he's gonna allow
me to say, but I'll let him say it.
In between the two, there's
this hotel and a marina.
And Josh, who's the amazing businessman,
he and his guys are underwriting
saying, "Man, if we could get that
wrapped into this deal, we could offer
an experience that would speak to
so many different potential clients.
We'll cashflow so much better.
It's more value for our investors."
But underwriting's hard these days.
Banks are worried about lending,
as you and I are figuring out as
we're trying to buy our, our own
commercial building and anyways.
It's, it's ⦠And if he borrows too
much to buy that, he can't give that
huge pref to his, his investors.
So I said, "Well, well, Josh, we've
got a lot of depreciation here
Those people who want to sell, they
wanna get their gain out of it.
If they realize, and, and Josh has
been talking to them and, and some
of the investors are like: "Man, I
know we can make more money in this
hotel, in our marina, if we're part
of your resort than if we stand alone.
I'm not sure I wanna sell it, but
how do we get together with you, um,
and amplify our investment here?"
And I said, "We, we've
got something to offer.
Some of these investors, if they
contribute, they can, uh, do
this tax-free, but they basically
contribute their ownership of the
hotel into this bigger investment.
Now they have a more depreciable base
they can have depreciation on, again,
as long as we can give them at-risk
basis and substantial economic effect.
And they might rather, instead of
paying a bunch of tax right now for
selling it, roll this investment
to a more valuable investment and
get some tax benefits out of it."
And he's like, "Let's talk to them."
So we talked to them, and, uh, now
I think, it, it's not finalized yet.
It probably will be by the time this
is aired, um, but it's so close.
We're gonna be able to wrap the hotel
into these two courses, makingâ¦
It's w- how's that saying go?
The sum of the parts are-
Greater than the whole?
Yeah.
Like, you take-- you, you add
each of these parts individually,
and they can make so much money.
You put all three of them together in
the business plan that they have at
Accountable Equity, it is incredible.
Um, and the investors in the hotel got it.
So they're not gonna have
to borrow as much money.
They're gonna be able to wrap it in.
People are gonna be able to avoid
having to recognize tax in that hotel
and get a better performing investment.
So we did not just purchase price
allocation, we did very fancy partnership
accounting where you get toâ¦
and tax treatment, where you get to
contribute partnership interest tax-free
and receive a partnership interest,
IRC seven twenty one, seven thirty one.
Uh, Kevin, this was definitely in
the top ten most exciting things
I got to work on in tax in my
entire twenty-six year career.
Um, it might even be in the top five.
I mean, this was cool.
That's why it was
point for you
And they're a client
Kevin Schneider: Yeah, absolutely.
Everyone's a winner.
Yes.
So it's, it's a great investment
on top of the tax benefits
Passive losses to limited partners
and all that, and we can walk 'em
through that of 'em, but yeah But,
um, yeah, if you're a syndicator out
there, these types of deals can be done,
and just think of how, how, how much of
a benefit it is to your investors, and
that's makes your deal stand out compared
to your competition in this tight market.
And so reach out to us, reach out to Mike,
um, if you have any kind of deals working.
Thank you for listening to this episode.
Revo Taxpayer Advocacy LLC is not licensed
or registered as a CPA firm with the
Texas State Board of Public Accountancy.
I'm a CPA, Kevin's a CPA.
We have a lot of CPAs on staff that are
licensed and held to the same standards.
However, when we decided to be
revolutionary and change our
name to Revell Taxpayer Advocacy,
the state board would not allow
that and let us remain licensed.
They say we have to have one
of our names in the firm for
us to be licensed as a firm.
And guess what?
It's not us that's important.
It's revolutionizing the way you feel
about taxes and saving you money.
We are advocates for you, so we were
willing to drop our firm license even
though we're still individually licensed.