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Welcome to Financially Fluent with Ray Godleski from Southeast Wealth Partners, LLC. Whether you're already retired or planning for the future, navigating financial advice can be overwhelming. This podcast cuts through the noise, bringing real insights from experts who specialize in every aspect of a successful financial plan—including how to adapt when things don’t go as expected. Join us as Ray Godleski answers audience questions and shares actionable strategies—not just empty clichés.
Josh (26:10.158)
and I'm ready maybe to get into something bigger and I don't want to necessarily sell the property, then I can do what's called a 1031 exchange. And the great thing about 1031 exchanges is it used to be an asset for asset exchange, but they've expanded it. And now you have a bunch of different options. You can go into an escrow exchange fund, kind of like an investment, almost like a mutual fund for 1031s.
So you can do a bunch of different things, but in theory, what you do is you say, okay, I'm going to go and take this property with a large amount of appreciation. I'm going to first get engaged an attorney and an intermediary, and then I'm going to go through the process of exchanging the property. so basically you sell your property, roll the proceeds into the new property, and that gain is deferred until you sell.
the new property. There's some caveats, right? So you want to make sure that you're always going up. If I've got a million dollar property, I don't want to do a 1031 for a half a million dollar property. I want to go to a million dollars or $1.5 million. And then that helps that gain deferral. Does that make sense?
Ray Godleski (27:23.799)
Yeah, it does. I think one of the things for folks to definitely keep in mind is that prior to the sale or at the sale, they got that qualified intermediary already in place so that it's not going into them first.
Josh (27:37.293)
Yes.
Josh (27:42.062)
First thing you want to do, I want you to decide you want to do a 1031. You may be browsing properties, but the second thing you want to do is go get that intermediary and attorney lined up.
Ray Godleski (27:46.22)
Mm-hmm.
Ray Godleski (27:52.375)
Mm-hmm, and then let's say someone does it so they're not paying the tax yet They're deferring it kicking it to later and from an estate planning perspective if they kept 1031 in properties and eventually they pass on and It could go to their kids and with current tax law they would get a step up in basis. Is that pretty true?
Josh (28:15.874)
Yeah, it's 754 and that's on the chopping block or at least it has been. So assuming that sticks around.
Ray Godleski (28:23.564)
I don't think with the current administration they're going to do anything with real estate tax law, but you were correct previously it was on the chopping block. And I think the other thing I am kind of curious about, let's say someone, 1031s and they rent out the property and then eventually they sell their primary home and they collect their profits from it and then they want to move into the property they've been renting out for the last
five years and could they then make that be their primary home?
Josh (28:56.392)
I so. I'm not specific on the details, but I believe there's a five year holding period once you complete the exchange. And then it modifies whatever the gain is after that. I don't know the specifics off the top of my head.
Ray Godleski (29:07.763)
Okay, no, that's cool. All right. The other thing is people hear the word CPA, tax preparer, financial planner. Let's kind of just, and I know it's different depending on the CPA, it's different depending on, for example, some CPAs may mostly be in the tax return business, just like financial advisors, they may just manage an account, right? But where do you kind of see those lines and...
Kind of give some examples of where you've seen some collaboration be helpful and maybe even when should somebody even hire a CPA? I I feel like if they're W-2 employee, do they need a CPA?
Josh (29:48.664)
No.
Unfortunately, you know, our tax laws are overly complex, right? And so it does put a burden on the taxpayer to comply. you know, you have a tax preparer who may or may not have a credential. You have one that could be an EA, which is an enrolled agent, which is credentialed through the IRS directly and then a CPA, right? So those are basically your three choices. I would probably never go with one that's not credentialed unless they could just show an extreme amount of experience.
Ray Godleski (30:18.668)
Mm-hmm.
Josh (30:18.894)
But then an EA is pretty good, right? I wouldn't go to the big box shops, right? So if you're a small business owner, I think, you you've got a simple business return and you've got a simple individual return. There's a lot of great EAs that are highly qualified that'll do it at a very good price. You know, if you have a growing business and you know, it's multi-state, know, multi-product line,
Ray Godleski (30:39.031)
Mm-hmm.
Josh (30:48.29)
and then you need other support from a tax planning and then maybe some financial and a test reporting support, then I would probably go with a CPA. So if I have a lot of small businesses that I don't think that I can help, then I either refer them out or send them to my partner who does much smaller returns. But if it's a growing business and they want advice on how to grow that business and what the steps are to
grow the business, hire the right people, get a line of credit in place, you know, and all of the, the, the, the fundamentals that go with, know, building a good business, then, you know, CPAs are good for that sometimes, but you know, like, you know, like, you know, there, but the, know, they all may have their specialty, right? You know, I specialize in construction. I couldn't give anybody any advice on healthcare banking, right? But, you know, but I could on construction. but then we have a financial planners, who you brought up as well.
Ray Godleski (31:29.75)
Right.
Josh (31:46.37)
And a lot of financial planning firms will also prepare tax returns. And there's nothing wrong with that. Generally they hire someone in-house or outsource it. But I kind of like to let people stay in their lane, right? A free tax return doesn't mean anything to me if you're my investment advisor. You know what I mean? I want you to focus on my investments and my strategy and our long-term plan and I can get the tax return taken off.
Ray Godleski (31:50.007)
Hmm.
Ray Godleski (32:04.555)
Mm-hmm. Mm-hmm.
Josh (32:11.502)
somewhere, taking care of somewhere else, but I'm a big believer in staying in their lane. You know, you do financial planning, you focus on financial planning. I focus on business taxes. I'll focus on business taxes. You know what I mean? And then when it comes to do the individual taxes, I hope that we can work together to do what's in the best interest of the client, you know? And so for my larger clients who do have portfolios reaching out to the financial planners is part of the financial or part of the tax planning process because they could have huge gains or losses, et cetera, that could affect.
Ray Godleski (32:16.631)
Right.
Ray Godleski (32:21.079)
Mm-hmm.
Josh (32:39.84)
other situations in their tax plan or even their overall income. And so we work together with them to understand that knowledge. Makes sense.
Ray Godleski (32:47.747)
Yeah, that's what I like to do is kind of do some projections on what's going to happen in the future, but I love it when people have a CPA that's responsive because oftentimes the tactical answer for that year really, I feel better when there's a CPA involved versus, you know, they did it themselves on the back of a napkin or a quicken or whatever. I would much rather have a CPA say, no, no, no, you forgot about this, this and this, you know, so.
I'm a big fan of collaboration.
Josh (33:16.974)
Well, we try to do it differently. You know, I like the thing. So, you know, a lot of the tax for tax preparation and for tax repairs, you know, the tax process starts in January. Our tax process for small business owner starts in August. And when we look and we say, OK, what has happened for the past eight months, what transactions have transpired that would affect your tax situation? Then we try to look to the future.
Ray Godleski (33:33.559)
Mm-hmm.
Josh (33:44.672)
And then we put together a picture and then run that forecast of the business down to the individual owner's income tax projection. And then we can say in October, okay, this is what your tax liability is going to be in April. What decisions do we want to make in October to minimize that liability? Do we want to make a profit sharing contribution, HSA contribution? Do we want to go buy more equipment, bonus out our employees more, right? So we make all those soft planning decisions in the third and fourth quarter.
So the first quarter really does become, you know, compliance. And what I think the value on that is, is it allows us time to reach out to other service providers like their financial planners and, you know, see what the activity is or what, you know, the intentions are for the rest of the year. If they bought a commercial building, we can go ahead and engage a third party specialist to start doing the cost segregation study before the end of the year instead of after the end of the year. You see what I'm saying? So we really try to drive that process in the third and the fourth quarter.
So we can get that collaborative effort in for the client to get them their best results.
Ray Godleski (34:49.815)
And I know you specialize and you mentioned it with lot of commercial contractors. I know that's something you do real well in. for those, and I know some people like that, what are some of the, again, we're not talking about just a tax return, some of the report functions that you do that these folks really need to know about and whether they...
have someone or don't have someone, they probably need to make sure whoever they're using is running some of these critical reports so that they're excelling in their business for those commercial contractors that are out there.
Josh (35:28.578)
Yeah, you know what a lot of people don't understand, and this is an epiphany for a lot of small business owners, is you run two sets of books. Okay. And I know that, well, wait a minute, that sounds shady. Well, it's not because there's two sets of rules, right? So we have our gap or our financial rules, and then we have our tax rules and we're allowed to have separate books of separate books based off of the rules. So what we do with the small business owners is we maximize their financial statement presentation.
Ray Godleski (35:38.13)
Mm-hmm.
Mm-hmm.
Josh (35:57.794)
We make the balance sheet and the income statement look as strong as possible. And for construction companies, for example, that helps them with licensing issues, that helps them with bonding issues, and it helps them with lending issues. And then on the flip side of that, we say, okay, now that we got the balance sheet and the financial statements looking great, now let's see how poor we can make it to the IRS. And then we kind of just do the flip and say, we cry poverty, you know, to the IRS and, you know, try to minimize that taxes. So it's really, you know, a lot of people will say,
Ray Godleski (36:07.071)
Mmm.
Ray Godleski (36:19.179)
Okay.
Josh (36:27.17)
How do I run the books of my business, right? You run the books on your business on how you wanna manage the business, on how you'll know what you're owed and what you owe and what you'll collect and all your cash forecast, right? Your profitability. And then there's a whole different situation on the tax side. So what I try to tell people is manage your business on with your books, how you need to do it to maximize your profits and then we'll flip it and plan it on the tax side. Does that make sense? So depreciation is a great example.
If I'm a construction contractor and I've got equipment, I want to depreciate that truck over six years or seven years because it's a lower hit to my income statement. It makes my equity look bigger, right? But on the tax side, we want to write it all off in the same year. So we get those tax savings and reinvest that money back in the company. So I just say we run two sets of books, one to manage the business, one to the report to the IRS. Make sense?
Ray Godleski (36:58.007)
Mm.
Ray Godleski (37:09.334)
Mm-hmm.
Ray Godleski (37:18.997)
It does, it does. So think we've probably got one more topic area, and that's going to be new tax code stuff. But before we get into that, let's just kind of remind people about deadlines, meaning what are the key deadlines on their quarterlies and filing and extension.
Josh (37:41.998)
Sure. So the extended deadline, well, let's the next quarterly payment is 6.15. So if you have an estimate, it'll be due then. Then another one at 9.15, we have an I'm sorry, a business deadline of 9.15 as well. And then a individual deadline of 10.15. So you have plenty of time to get all the taxes in, or get your information in for the taxes, but you know,
I always say don't wait till the last minute, right? If you've got all your stuff in, get it in now because then you can move on to planning for the next year. And a lot of people, and you know, I'll take this and give some CPA woe is me, right? If everybody waits till the last minute to give in their tax stuff, then the quality of everything diminishes, right? Because it's all a mad rush to the deadline, right? So the sooner you get your stuff into your CPA, the better quality products you're going to get, the better responsiveness you're going to get and the better relationship you'll have.
Ray Godleski (38:27.499)
Mm-hmm.
Josh (38:38.926)
But if you're always waiting till the last minute, you're really putting your CPA in a situation where there's not much they can do.
Ray Godleski (38:45.671)
Mm-hmm. Yeah, and I know you saw an article and that's or you probably know a little bit more than than I do I just kind of looked at an article recently about the proposed tax cut that's coming up so I know this is not this is not law is not legislation nobody needs to take any action based upon what you and I are about to say but what are some of the things you think might change with the with the new tax cut and
What are some of the that might stay the same?
Josh (39:18.274)
Well, like I said, I read an article based off our discussion earlier, I read an article last night and everything looks to be an extension of current tax law, right? So there's not gonna be some big overhaul that's gonna come in. They're gonna take the current foundation and they're gonna increase the limits and make a few tweaks. Some of the biggest areas that I'm looking forward to for some of my clients is the original TCJA.
Ray Godleski (39:27.927)
Mm-hmm.
Josh (39:44.835)
took away in section 174, it disallowed R &D expenditures to be deductible in the year incurred. had to amortize them over five years with half your convention. So if I had a million dollars in R &D expenditures, I had to amortize them over five plus years. And so obviously my tax burden went up even though I got a nominal credit, right? So they've already voted to do away with the amortization of R &D expenditures. And now we're just waiting to see if they're gonna be retroactive.
Ray Godleski (39:55.799)
Hmm.
Ray Godleski (39:59.895)
Mmm.
Josh (40:13.964)
So this could be the year of amendments for any businesses with R &D. So I'm looking forward to that because, you know, companies shouldn't be penalized for trying to, you know, advance knowledge. The estate tax will be fixed, right? Everybody was worried about the limit dropping down at the end of 2025. I believe that'll go back and give everyone some comfort.
Ray Godleski (40:18.347)
Hmm. Yeah.
Josh (40:37.102)
the estate tax attorneys won't get the bill as many hours next year, but that's what it is. other than that, from what I've read so far, it's gonna be more of the same of the TCGA just with some higher limits.
Ray Godleski (40:40.139)
Yeah.
Ray Godleski (40:48.983)
Yeah, I think I saw where 199A, which I believe has to do with, we love acronyms, right, QVI, which is Qualified Business Income. They may move that from 20 to 23%, so that'd be kind of cool.
Josh (40:55.469)
Here we go.
Josh (41:03.118)
Oh, that would be very nice. So just so you know, the reason they lowered the reason why we have QBI is because they took the C Corp from 35 to 21%. Right. And then so if they now the QBI is going to go to 23%. And I think that's because they're talking about lowering the corporate rate even to more, I believe. But once you get up to, I believe it's about five or $600,000 between a C Corp and an S Corp, there's nominal difference.
Ray Godleski (41:08.075)
Mm-hmm.
Mm-hmm. Mm-hmm.
Ray Godleski (41:19.383)
Hmm.
Ray Godleski (41:23.191)
Mm-hmm.
Ray Godleski (41:26.911)
Hmm, okay. And I don't know if they'll change any of the 162 rules or not. I guess we'll just wait and see.
Josh (41:34.164)
It's you know, I like to it's kind of like, know, I take these tax season packages like preseason, you know, you put them on in the background and, know, watching me, you don't really care about the outcome until the game starts, you know, so I don't really pay much attention until they issue the final.
Ray Godleski (41:41.943)
Hmm.
Yeah.
Ray Godleski (41:48.598)
Right.
Ray Godleski (41:52.415)
Yeah, yeah. And one other thing I know you may not have heard on this is they may not tax tips or overtime, which I think would thrill a lot of people. I don't know how that helps the deficit necessarily, but I mean, that would be an interesting, and not taxing social security, that would also be, to me, a little surprising, but I know I've heard people talk about it.
Josh (42:14.646)
I don't think social security should be taxed anyway. That's just personal opinion. Yeah. When the tax on tips and all that would be great. But I think what they'll do is they'll segment that into industry specific like they did for QBI. So a lot of people don't know what QBI is, you know, specific for industries, right? And so for example, accountants and financial planners, you know, get hit hard by QBI where architects and engineers who
Ray Godleski (42:18.039)
That's how it first came out, yep.
Yeah.
Ray Godleski (42:29.514)
Mmm.
Ray Godleski (42:35.072)
Mm-hmm.
Josh (42:42.766)
do almost the same thing, get the benefit from it. You see what I'm saying? I think that's the way that the no tax on tips will be targeted.
Ray Godleski (42:44.577)
Yeah.
Ray Godleski (42:52.055)
Yeah. All right. Well, this has been really good to spend some time with you. We're getting towards the end and you're not going to be able to escape without a trivia question. today, sometimes I get people's choices, different topics. I'm so sorry we haven't had sports yet. So you get all untold for a sports trivia question. But I will let you pick. We have an 80s baseball trivia question or a 90s
NBA one. So what's it going to be? 90s NBA. OK, here we go. Josh, which NBA team won back to back titles in 1994 and 1995?
Josh (43:23.138)
90s NBA, 90s NBA.
Josh (43:35.119)
Houston Rapids.
Ray Godleski (43:36.649)
Nice! Yeah, you didn't go with the bulls, so how did you know this?
Josh (43:41.134)
Michael Jordan is probably my he's my guy, right? So saw every game. So those were the two years he was out.
Ray Godleski (43:46.528)
Yeah, yeah.
Ray Godleski (43:51.974)
That's exactly right. Yeah, I know that's crazy. It is three Pete take two years off another three Pete Absolutely amazing. So good good. All right. Well if we're gonna do some team trivia locally, I'll get you on my team
Josh (44:06.456)
Wait, what was the 80s baseball question? I just want to see if I could have gotten that.
Ray Godleski (44:09.303)
Yeah, yeah, let's do it. Bonus time. Here we go. This one's tough. Which team won the 1985 World Series making a dramatic comeback after being down 3-1 in a series?
Josh (44:23.65)
Cheers.
Ray Godleski (44:25.801)
No, I'll give you a hint. The one that was up three to one and blew it was the St. Louis Cardinals.
Josh (44:27.886)
Okay.
Josh (44:33.688)
than the other guys. That's 80s, that's maybe before that. I was just a kid, so.
Ray Godleski (44:41.783)
Yeah, yeah. Well, the team that won had a lefty that was a pretty badass baseball player. Always had a real, uh, had something in his cheek. The Kansas City Royals.
Josh (44:53.154)
Diamondbacks?
the royals. Who's the pitcher?
Ray Godleski (44:59.275)
I don't know. honestly don't... I know they had Quisenberry, I think is like a reliever maybe. But yeah, the Cardinals usually win, but they actually blew that one. So...
Josh (45:03.864)
That's fine.
Josh (45:08.438)
Wow, I didn't even know the Royals ever won one.
Ray Godleski (45:11.029)
Yeah, yeah, pretty cool. So, okay, well Josh, thank you for being here with Altria's CPAs. And for our audience, this concludes our next, or this episode of Financially Fluent. If you have questions about retirement or business owner questions, please send them in. Those are good contents for our show.
Cindy and I like to do some Q &As as well for these podcasts. Send it to Ray@southeastwealthpartners.com and feel free to subscribe and share this episode. Thank you so much. See you, Josh. Bye.
Josh (45:50.35)
All right. Thank you so much, Thanks for having me.
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