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What if I told you there’s a way to pull $10,000–$50,000 of tax-free money out of your business every year—without working harder, changing your business model, or hiring a single new person?
Sounds crazy, right? But it’s been hiding in plain sight inside the IRS code for over 50 years.
In this week’s episode of Capability Amplifier, I sit down with my friend Nathaniel Ely (co-founder of TheAugustaRule.com) to break down how the Augusta Rule works, why most business owners are leaving serious money on the table, and how to make sure you don’t miss out.
I’ll also share how I personally got a $40,000 tax-free check this year—and why I kicked myself when I realized I had missed out on hundreds of thousands of dollars in past years.
KEY INSIGHTS & TAKEAWAYS:
The Augusta Rule, Explained Simply
A 14-day tax loophole that allows business owners to rent their residence(s) to their business, tax-free.
A 14-day tax loophole that allows business owners to rent their residence(s) to their business, tax-free.
Why Most CPAs Get It Wrong
80–90% of deductions fail because of sloppy documentation. If it’s not written down, it doesn’t exist.
80–90% of deductions fail because of sloppy documentation. If it’s not written down, it doesn’t exist.
Multiple Homes = Multiple Opportunities
Your vacation home, second home, or even your RV may qualify. The IRS defines “residence” more broadly than you think.
Your vacation home, second home, or even your RV may qualify. The IRS defines “residence” more broadly than you think.
Real Case Studies
From a modest ranch in Ohio ($6,700 in savings) to multi-home entrepreneurs pulling in over $100K tax-free every year.
From a modest ranch in Ohio ($6,700 in savings) to multi-home entrepreneurs pulling in over $100K tax-free every year.
The 10 Conditions for Compliance
We cover the step-by-step checklist to keep everything bulletproof—and why this strategy only works if you follow the rules.
We cover the step-by-step checklist to keep everything bulletproof—and why this strategy only works if you follow the rules.
Done-For-You Solutions
Nathaniel’s team built software + services to make compliance effortless. They’re on a mission to put $1B back into entrepreneurs’ pockets by 2030.
Nathaniel’s team built software + services to make compliance effortless. They’re on a mission to put $1B back into entrepreneurs’ pockets by 2030.
TIME STAMPS:
[00:00:00] What Is the Augusta Rule?
Nathaniel explains how business owners can rent their home to their own company—14 days tax-free.
Nathaniel explains how business owners can rent their home to their own company—14 days tax-free.
[00:01:56] My $40K Check (and $360K Mistake)
Mike shares his personal experience of saving—and losing—hundreds of thousands by not applying the rule earlier.
Mike shares his personal experience of saving—and losing—hundreds of thousands by not applying the rule earlier.
[00:04:14] Why It’s Called the Augusta Rule
The Masters golf tournament origins and how wealthy homeowners lobbied Congress to add this provision to the code.
The Masters golf tournament origins and how wealthy homeowners lobbied Congress to add this provision to the code.
[00:06:42] From Tax Bills to Tax Breakthroughs
Nathaniel’s personal journey of learning, failing, and finally systemizing the Augusta Rule.
Nathaniel’s personal journey of learning, failing, and finally systemizing the Augusta Rule.
[00:12:40] Case Study: The “Normie Home” in Ohio
How an average homeowner saves ~$6,700 annually with zero behavior change.
How an average homeowner saves ~$6,700 annually with zero behavior change.
[00:16:21] Multiple Homes, Big Returns
How vacation homes, rentals, and even RVs qualify under the IRS definition of “residence.”
How vacation homes, rentals, and even RVs qualify under the IRS definition of “residence.”
[00:18:37] Case Study: $126K in Tax-Free Rent
Three beach houses in Mexico equal $46K in real tax savings.
Three beach houses in Mexico equal $46K in real tax savings.
[00:20:00] Case Study: $224K Rent = $118K Cash Back
A California entrepreneur uses three properties to generate six-figure tax-free income.
A California entrepreneur uses three properties to generate six-figure tax-free income.
[00:22:46] The 10 Conditions for Compliance
From rental agreements to meeting length, the checklist that makes it all audit-proof.
From rental agreements to meeting length, the checklist that makes it all audit-proof.
[00:32:11] How Easy Is It Really?
Why Nathaniel’s platform + EA support can make this a 5-minute-per-meeting task.
Why Nathaniel’s platform + EA support can make this a 5-minute-per-meeting task.
[00:38:28] Free Tools & Resources
The Augusta Rule calculator, deduction guide, and masterclass—all available at TheAugustaRule.com/save.
The Augusta Rule calculator, deduction guide, and masterclass—all available at TheAugustaRule.com/save.
If you hate writing checks to the IRS, this is one of the biggest “money on the sidewalk” opportunities I’ve ever covered on this show.
If you want to see how much money you’re leaving on the table, head over to TheAugustaRule.com/save – you’ll get the free calculator, deduction guide, and tools to estimate your tax-free savings – and you can even book a free consultation with an Augusta Rule specialist.
If you want to see how much money you’re leaving on the table, head over to TheAugustaRule.com/save – you’ll get the free calculator, deduction guide, and tools to estimate your tax-free savings – and you can even book a free consultation with an Augusta Rule specialist.
Creators and Guests
What is Capability Amplifier?
Join the eternally curious, interested, and interesting hosts, Mike Koenigs of the SuperPower Accelerator and Dan Sullivan of Strategic Coach®, to amplify your capabilities, value, status, and authority on the Capability Amplifier podcast. Ever episode focuses on a new mindset, shortcut or deep thinking exercise that will improve your performance and lifespan. Learn more at: https://www.CapabilityAmplifier.com
Nathaniel Ely [00:00:00]:
The Augusta rule allows you to rent your residence for 14 days a year, tax free. Why? It applies to business owners as you as a business owner can actually rent your residence to your business. Sounds crazy, but you can do this. It's been in the tax code for over 50 years and it allows you to reduce your income in the business and then to receive the income 100% tax free. 80 or 90% of. The reason why business owners cannot actually get the deductions they try for with some of these creative strategies is because they don't get their paperwork right.
Mike Koenigs [00:00:30]:
Right.
Nathaniel Ely [00:00:30]:
You have to get that right.
Mike Koenigs [00:00:31]:
If it's not documented, it doesn't exist.
Nathaniel Ely [00:00:33]:
Bingo.
Mike Koenigs [00:00:34]:
Right?
Nathaniel Ely [00:00:34]:
Bingo. Yeah. Not documented. Never happened. Really. The goal was is how can we cut through all the red tape, how can we take care of all the compliance, how can we provide valuations that we can stand behind? How can we remove risk from the entrepreneur? And how can we just put $1 billion back in the pockets of business owners by 2030? And that's what gets us excited.
Mike Koenigs [00:00:52]:
The question to ask yourself is what am I going to do with the money? You know, I can hire another key employee, improve your home, which you're doing in so things look good. There's so much value here. Plus it can be, you literally could use it to fund your kids college education, which looking back, I wish that's how I would have done it because I could have done it with tax free money. Hey, welcome back to Capability Amplifier. This is my friend Nathaniel Ely and you're going to have a blast today, I promise because today we're going to show you how you can find an extra 10,000 to $50,000 in your business right now in tax free income. And you may have heard of this before, but I can virtually guarantee you are not taking advantage of it the right way. And I've got good news and some embarrassing news for you. The great news is this year I got a $40,000 check back from the government by taking advantage of the strategy that today's guest is going to share with you.
Mike Koenigs [00:01:56]:
Now the bad news is I found out that my accounting team wasn't doing it for a couple of years. And if I look back at all the years I missed out and I actually did do the research, so I missed out on 30 to $50,000 a year for the last 10 years. So I'm going to just round it down, but to $38,000. So let's say I lost $36,000. $36,000 a year. That's $360,000, probably more. I did a little research with ChatGPT, and if I would have just taken that money that I would have gotten back and put it into the Nasdaq, I would have gotten an average rate of return of 10.8% back, which equates to more than half a million dollars. So if you like money, especially money you literally don't have to work for anymore, you're going to love this episode.
Mike Koenigs [00:02:41]:
So I'm going to introduce to you my friend, Nathaniel ely from the augustarolle.com thank you for being here, my friend.
Nathaniel Ely [00:02:47]:
Yeah, thanks for having me, Mike. Appreciate it.
Mike Koenigs [00:02:48]:
All right, so let's just begin with the question everyone's asking, even if they know what it is. What is the Augusta Rule? And I'll ask you some more questions about why you got into this business.
Nathaniel Ely [00:02:59]:
In the first place. Sure. Yeah. Just starting with what the rule is. The Augusta Rule allows you to rent your residence for 14 days a year, tax free, and why it applies to business owners, as you, as a business owner, can actually rent your residence to your business. And that sounds crazy. We'll get into the details. But you can do this.
Nathaniel Ely [00:03:18]:
It's been in the tax code for over 50 years, and it allows you to reduce your income in the business and then to receive the income 100% tax free.
Mike Koenigs [00:03:27]:
Yeah, it's crazy. And when I found out about this, which was years ago, and then found out we basically weren't doing it right, and then when we met, you told me about some ways that we can take advantage of this from multiple homes, including our places in Mexico. So there are so many really cool strategies and techniques here that most CPAs either don't know about or they don't want to do the paperwork on. This has been a great education process for me over the past few days. So the backstory about where the name came from, that's kind of interesting. And I did do a little research, because Texas A and M University, there was a good chunk of information about the stability of this. But what's the story? Why do they call it the Augusta Rule in the first place?
Nathaniel Ely [00:04:14]:
Yeah, it's named after the Masters golf course in Augusta, Georgia. And so really what it is, is, is section 280A, subsection G of the IRS tax code. But that's not what most normies know it by. They know it by the Augusta Rule. So it was nicknamed sometime back in the 70s when the. When this law came into existence and came into IRS code. And it's nicknamed that because the residents of the golf course, the master's course in Georgia, successfully petitioned Congress to include this provision in the tax code because they were renting their homes for the golf course. So just people actually coming into their homes, you know, renting them out to third party people.
Nathaniel Ely [00:04:54]:
And they said, you know what? We don't want to have a different entity for this. We don't want to have, you know, a separate tax return. We don't want to treat this as a business. Can we please just. Just not record this? And for some reason, they were highly persuasive to both Congress and the irs. I'm guessing. I don't know this. I'm guessing there were probably a couple senators, congressmen, judges, et cetera, around the course, and they pulled it off.
Nathaniel Ely [00:05:17]:
And so the downstream consequences are that you can rent your home to somebody else. But guess what? Somebody else also includes a business, because in the eyes of the irs, a business is a separate person.
Mike Koenigs [00:05:28]:
Yeah.
Nathaniel Ely [00:05:29]:
So that's why we're at this table. You're talking about it.
Mike Koenigs [00:05:31]:
All right. And one of the things that we did today when we got prepared is we came up with the 10 conditions that must be met for this to work. So we're going to go through that. We've got some great case studies. Some of them, again, have blown my mind. But why don't you tell me a little bit about John Hyer, your business partner and your first experience with getting a big return because of the Augusta Rule.
Nathaniel Ely [00:05:57]:
Yeah. So I met John in 2017 at a real estate mastermind. And at the time, I had already spent a couple years trying to figure out how to reduce my taxes. I had gotten a tax bill a couple years prior to that that was larger than my salary, and that just. I hated it. And I felt so upset. I felt helpless because I felt like there's nothing I could do. And my current CPA was telling me there really was nothing I could do.
Nathaniel Ely [00:06:28]:
And so I ran into John. He was saying, no, there's all kinds of things you can do. I engaged him to do a deep dive in my situation and provide some strategies. And the Augusta was the very first strategy he taught me. And so, you know. Do you want me to tell the rest of the story now? Yeah.
Mike Koenigs [00:06:42]:
Yeah.
Nathaniel Ely [00:06:42]:
Okay. So basically, fast forward first. It took me a long time to implement the rule, because even though the Augusta Rule is simple as far as tax strategies go, it still requires a lot of paperwork. You know, the tax code is not just like, oh, here's the code. You follow it. There's like, here's the code. And this section intersects here, and this section intersects here. And then, by the way, this one over here overlaps this way.
Nathaniel Ely [00:07:05]:
And so you have to have somebody like John that knows the thing top to bottom, inside and out. So then he's explaining it to me. I can get it, basically. But I'm still thinking, this is complicated. This is complex. It's a bunch of compliance. I'm not a tax attorney. It took me at least a year or more to actually feel comfortable applying it.
Nathaniel Ely [00:07:22]:
I hired another tax professional, paid someone else thousands of dollars, got even less information from John, and then finally went back to John, just said, john, can you just really break this down at the dummy level for me so I can really implement? And then started having traction in it. Fast forward from there. I'm at another mastermind, and I'm having a conversation, and we share tips at masterminds with our business buddies. What's working for you? How do you make money? How do you save money? So this came up, and I'm discussing it with some financial advisors, and they said, yeah, of course we know the Augusta rule. We apply it for our clients. And I'm like, oh, great, that's fairly rare. So tell me the ways that you guys are having compliance in the Augusta Rule for your clients. And they looked at each other and kind of chuckled sheepishly and said, yeah, we really don't have any paperwork behind it.
Nathaniel Ely [00:08:14]:
We kind of just fill out a thousand dollars a day and call it good.
Mike Koenigs [00:08:17]:
Are you kidding me?
Nathaniel Ely [00:08:18]:
This is a highly complicated thing, and if you're not actually backing it up with the paperwork, you're smoked. Yeah. In fact, John, you know, tells me that 80 or 90% of the reason why business owners cannot actually get the deductions they try for with some of these creative strategies is because they don't get their paperwork right.
Mike Koenigs [00:08:37]:
Right.
Nathaniel Ely [00:08:38]:
You have to get that right.
Mike Koenigs [00:08:39]:
Yeah.
Nathaniel Ely [00:08:39]:
And so if.
Mike Koenigs [00:08:40]:
If it doesn't exist and it's not document, or if. If it's not documented, it doesn't exist.
Nathaniel Ely [00:08:44]:
Bingo.
Mike Koenigs [00:08:45]:
Right?
Nathaniel Ely [00:08:45]:
Bingo. Yeah. Not documented. Never happened.
Mike Koenigs [00:08:47]:
Right on.
Nathaniel Ely [00:08:48]:
So. So that gave me an idea. I just thought, well. And I even asked them on the spot. I said, well, would it be helpful if there was a service or product that. That really took care of this for you? And they said, absolutely. And so I'm thinking in my mind, okay, you know, I. I have a, you know, 10 ideas a day of a businesses I can start.
Nathaniel Ely [00:09:05]:
Here's another one. Think about that. But sounds like a lot of work. I'll Set that aside. Fast forward some more time. I'm sitting across from a guy who is a premier app builder, and he says, hey, I could build an app for that. And I said, really? Because we started getting a conversation, this came up. And so we ended up building a product around the Augusta Rule done for you.
Nathaniel Ely [00:09:30]:
So we have a software element to that, and we have a service element to that. And really, the goal was, is how can we cut through all the red tape? How can we take care of all the compliance? How can we provide valuations that we can stand behind? How can we remove risk from the entrepreneur? And how can we just put $1 billion back in the pockets of business owners by 2030? Like, that became kind of our North Star. We're headed for this $1 billion in the pockets of business owners by 2030. And that's what gets us excited in the Augusta Rule.
Mike Koenigs [00:09:59]:
Yeah, it's a great story. And what I love is how you've broken it down and made it so easy, which is there's a calculator.
Nathaniel Ely [00:10:08]:
And.
Mike Koenigs [00:10:08]:
And we'll share that with everyone listening or watching, which is. It's at the augustarolle.com just so you know this, but there's a calculator that'll help you calculate how much money you can get, tools to actually get you there. And ultimately, what you guys do is provide a service where it doesn't cost the business owner anything until you figured out how much money they're gonna get. And you just take a small percentage of the rebate. That's correct. But if you're already doing it, you guys can do better, usually by a multiple.
Nathaniel Ely [00:10:38]:
Yeah. I think there's a temptation for some entrepreneurs to have their brains turn off when they hear the Augusta Rule because it has made the rounds on TikTok. You know, some CPAs have heard of it, and the ones that have heard of it are honestly kind of jaded towards it because they think, oh, great, here comes another guy that wants me to do the Augusta Rule. I'm not going to take the time to do the paperwork. They're thinking, yeah, you know, and I know that what you give me is going to be garbage, and you're going to try to make up some number. It's going to add complexity and liability. Brain turns off. They're like, please go away.
Nathaniel Ely [00:11:07]:
And I think the message that we have is that that doesn't need to be the case. It is a legitimate rule. It just has to be applied legitimately. And as a business owner, you don't need the brain damage of doing that yourself.
Mike Koenigs [00:11:18]:
Yeah, totally. And I think through the lens of a business owner, I generated enough just this past year effortlessly because I'm already doing business meetings. Right. And I meet all the requirements. And we'll go through the requirements in a moment and some of the biggest gotchas. But you know, the question to ask yourself is what am I going to do with the money? You know, I can hire another key employee, improve your home, which you're doing meetings in, so things look good. There's, there's so much value here. Plus it can be, you literally could use it to fund your, your kids college education, which looking back, I wish that's how I would have done it because I could have done it with tax free money.
Nathaniel Ely [00:12:02]:
Yeah, I mean everybody can think of ideas of where to put their money.
Mike Koenigs [00:12:07]:
So let's go through a couple of case studies. I know one of them is when we were meeting earlier, you had some real life clients. Jenny and Rod were one of them that we gathered. But you've also got, when John and you and I met, we put together some real life examples and there's the, the normie home in Ohio. And then let's go up the, the value chain but then go through the 10 steps and the 10 conditions that might be met. So you want to do a couple case studies?
Nathaniel Ely [00:12:40]:
Yeah, we can do some case studies. So the normie home and you know, flyover country could be Ohio, could be somewhere else. Let's just say it's a basic rancher, 1800 square feet, three bed, two bath, that type of thing. You know that, that describes a lot of our country, a lot of business owners and you know, at some level, you know, the done for you plan may not be a fit for them, but we have a software that might be a fit that's going to be, you know, accessible in that certain situation. You're probably going to rent your home for anywhere between 1000 and 2000 a day. Let's just call it 1600. That's a number that we've been able to see kind of nationally as an average for that type of home. And so that's going to be $22,400 a year.
Nathaniel Ely [00:13:22]:
If you do all 14 events. Because in the Augusta rule you can rent for 14 days a year tax free, not more. If you rent a day more than that, the whole thing's disallowed. So 14 times, so 22, four. And if they're in a lower tax bracket, say a 30% bracket, that's going to result in a $6,700 cash in pocket returned to them. So for, for that individual, that may be worth picking up off the sidewalk. And we want to make a product that is available to them. You know, for a lot of our clients, that's not going to be super exciting.
Nathaniel Ely [00:13:55]:
But for another segment of our clients, they would be thrilled to have another $6,700 in their pocket. So that's one example, broad example on a low level. Did you want to go into the next example up from that?
Mike Koenigs [00:14:06]:
Yeah, I think, you know, in my case, what I didn't know until we met was you can have multiple homes, in fact, multiple rental properties. So explain that, because this is something that I know my CPA didn't know and we hadn't taken advantage of it. And again, I look back and there's tens of thousands of dollars lost every year. And this is a 50 year old rule. So I could have been doing it a long, long time ago. Cause I've hosted business meetings, lots of them, at my home. And like we're at my home right now doing this video. And that doesn't technically qualify.
Mike Koenigs [00:14:45]:
But yeah, let's, let's tear apart another example.
Nathaniel Ely [00:14:47]:
Yeah, so another example would be, like you mentioned, you know, home, second homes. And a lot of people don't realize what the IRS defines a residence as. So I think that we should go back to that and let people know. So a residence is very simple when it comes to this code. It's three things. It is a place that you are eating, sleeping, and using the facilities in 14 days a year. So two weeks a year. So if you're, if you live in a place for two weeks a year, and there's a kitchen, a bathroom and a bedroom, it is a residence.
Mike Koenigs [00:15:19]:
And that includes an RV or a vacation home.
Nathaniel Ely [00:15:22]:
That is correct.
Mike Koenigs [00:15:23]:
Okay.
Nathaniel Ely [00:15:23]:
So you could have a second, third, fourth, I mean, as many homes as you could possibly live in for two weeks a year. It can be an RV as long as those facilities are there. And then there's an even another much lesser known provision that allows your descendants to be qualified or your parents. So we can get to that a little bit later. But this ends up being a lot farther reaching than most people realize. And it can be a great way. Again, we're using the tax code to unlock our own money. Right? We're using the tax code like judo.
Nathaniel Ely [00:15:52]:
It's a code, but if you crack the code, it can be on your side. So that's the macro thing here. So in the case of, so we defined what a residence is. And now let's say you have our vacation home in Vail. Okay. Now that all of a sudden becomes eligible for you to conduct business at and receive, you know, another whole home's worth of tax deductions and tax free income. Let's say you have one in Mexico or the Caribbean. Well, guess what? Again, not very well known.
Nathaniel Ely [00:16:21]:
But we, you know, we educate people on this. Most of North America, Central America, the Caribbean all qualifies through some various treaties to be treated for the Augusta Rule as well. So now you have a home in Mexico, you've got a home, you know, in Florida you got a home. I mean you can name the locations and they all qualify or rentals or.
Mike Koenigs [00:16:41]:
It doesn't have to be a home that you own. And that, that is a great unlock, it is residence.
Nathaniel Ely [00:16:46]:
Right. So it could be a penthouse you have on the 20th floor in New York, Manhattan. And if you're renting it, it's still your home. If you, as long as you're staying there two weeks a year.
Mike Koenigs [00:16:54]:
That's fantastic. So let's break down some of the numbers because that matters. I remember when we put together some of these examples, first of all, you could do up to 14 days that you can rent. So they have to be legitimate business meetings. And again we'll go through the specific qualification and the number we came up with is, well, and this is a real life example that we got from John, your partner.
Nathaniel Ely [00:17:22]:
Yeah, so in this example, this individual has three beach houses in Mexico. So it's in the North American area. So it's a write off for business meetings is justifiable. They are living in the residences for two weeks a year or more, which is what qualifies it as a residence. Because they're moving from place to place throughout the seasons and they're having honest to God business meetings, like legit business meetings. And that's key. A lot of times people are really trying to, you know, get cute and you know, tweak the code. It's like, no, this is supposed to be a legitimate business meeting.
Nathaniel Ely [00:17:59]:
Would the business actually rent a facility for what you're doing? If you can say yes to that, it qualifies. If you would not say that, then slowly roll, you know, try again. But in this case, this person actually had them. They're documented and there's lots of existing activity to justify it. And he actually has clients that are willing to travel to these homes for business. And so his rent in this case was, let's see, $3,000 for one, actually, all of them he comped at $3,000. So that's $126,000 that his business is then paying himself personally tax free. He's in a 37% bracket.
Nathaniel Ely [00:18:37]:
And this person resides in Texas, where there's no income tax on the state side. So his annual tax savings were $46,620.
Mike Koenigs [00:18:45]:
That's awesome.
Nathaniel Ely [00:18:46]:
Yeah. For doing nothing different than he already does normally.
Mike Koenigs [00:18:49]:
Yeah.
Nathaniel Ely [00:18:49]:
And I think that's the key. Our ideal clients are the people that are already having people in their homes. They're conducting business in their homes already, and they're literally just leaving this money on the sidewalk.
Mike Koenigs [00:19:00]:
Yeah. And one of the things that we put together because we couldn't help ourselves, is we put together an Augusta rule deduction guide that you can get@the augustarule.com save. So we've got the calculator there, the deduction guide, and some more tools and templates. So let's, let's keep going. I know we've got one more great case study before we get into the 10 conditions that have to be met.
Nathaniel Ely [00:19:24]:
Yep, absolutely. Do you want to dive into that?
Mike Koenigs [00:19:26]:
Yeah, let's do it.
Nathaniel Ely [00:19:27]:
Okay. This, this, this client is based in California, and they have a beach house that they're able to justify 7,000 a day during high season. They've got a personal home that is very well appointed, and that justifies 4,000 a day. And then they also have a farm that's set up kind of like a wedding venue, you know, like a barn to medium type setup. And they are, they're getting 5,000 a day for that. So they use their properties for training, for filming, for fundraisers, annual meetings, which we need to come back to that because usage does matter in the valuations.
Mike Koenigs [00:20:00]:
Yeah, I think we'll, that's the next thing we'll do is we'll tear into. So how do you value this? You don't get in trouble with the IRS tax code.
Nathaniel Ely [00:20:06]:
Yeah.
Mike Koenigs [00:20:06]:
Okay, keep going.
Nathaniel Ely [00:20:07]:
So his annual rents combined are 224,000. And because he's in California, he gets that extra special California tax. And so state and Federal combined is 50.3%. So over half the amount. So his annual cash in pocket just from employing the rule is $118,720 cash. So huge deduction, huge cash infusion. Again, not changing a single thing that he does in his business. And we're not even touching on all the productivity that's occurring in these legitimate business meetings that are catapulting his business yeah.
Nathaniel Ely [00:20:42]:
And that's the whole other side of the Augusta rule.
Mike Koenigs [00:20:44]:
Yeah. Well, it's also part of what you. You've done because you've systemized this so well and you've built the software platform to find the opportunities, which is, which is brilliant. So you also have the bolt on strategy, which is the traveling for business that's worth covering. And then we'll tear into the 10 essentials.
Nathaniel Ely [00:21:05]:
Yeah, this one's got, you know, it's a cute one, but it's real and it's a helpful little bonus, kind of. So if you're traveling for business and let's say you've got a family member nearby, a child or a parent, you can actually stay with them. And you don't have to stay there two weeks a year. You can just stay with them as a one off and you can pay them a legitimate amount per night, which again, our program can help with. And if you do that over the course of the year, you know, let's say you could do up to 14. And you did that, and you just do A modest like 250 bucks again, maybe it's a flyover country house, super basic. Or your son's apartment at college. Every single time you could pay him.
Nathaniel Ely [00:21:46]:
Let's make up a number. 250 bucks a night, you know, and we could, we would figure that number out, but let's just be modest. Well, that's still 30, $200 a year that you're transferring to your family member and you're getting a tax deduction. So you're getting a tax deduction out of your business, and you're transferring tax free wealth to that person and your family.
Mike Koenigs [00:22:05]:
That's really.
Nathaniel Ely [00:22:06]:
Yeah.
Mike Koenigs [00:22:07]:
Very, very, very smart. Yeah, it's super smart. Way to give your kids or, you know, your parents money.
Nathaniel Ely [00:22:12]:
Yeah.
Mike Koenigs [00:22:13]:
Oh, I wish I would have been doing this. This is like, oh, my God, 30, 40 years.
Nathaniel Ely [00:22:17]:
Well, again, there's a lot of brand damage if you're trying to track this yourself.
Mike Koenigs [00:22:20]:
Right, right.
Nathaniel Ely [00:22:20]:
And that's the thing. I mean, so everyone on TikTok and on the socials are like, like, oh, Augusta rule, yay. But then you get into the weeds and you're just like, it's not worth it. Yeah, it's not worth my time.
Mike Koenigs [00:22:30]:
Yeah. Too much paperwork, too many moving parts. I totally get it. So let's go through the 10 essentials and then let's talk a little bit about what the process is like that you guys have simplified dramatically.
Nathaniel Ely [00:22:46]:
Yeah. Yeah. I think that's part of the augusteral.com's magic, really. That's, that's John. So John is a 30 year experienced tax attorney. He's a rental owner himself, he's a business owner himself. He's extremely unique even inside of tax attorneys. And, and he's really helped us define, you know, what we need so that we're totally compliant and so the business owners don't have to be concerned.
Nathaniel Ely [00:23:12]:
And we, we've got 10, 10 items. So number one, we need a rental agreement on or before the event. And this gets screwed up all the time. People think, oh Gustral, great. Oh, I forgot, I'll just back and record everything from the past year. You know, that's not great as a narrative if it ever gets challenged. So we want it honor before the event. Secondly, we want comparables for the rental valuations.
Nathaniel Ely [00:23:34]:
We want to know that there is a basis for the amount charged. And again, our platform takes care of all that. But people make this stuff up. I mean like high level people, wealth advisors make this stuff up with their clients and they're just adding risk.
Mike Koenigs [00:23:49]:
And that basically means. I know one of the things that you told me is anyone for example, who's doing a mastermind at their event or let's say any kind of a production, talk a little bit about how production dramatically increases the value.
Nathaniel Ely [00:24:03]:
Sure, yeah. So yeah, if we're talking about usages and how they increase value. Film production is one of our favorite case studies. So if you are a business owner and you already have people in your home and you film that is just like tip of the mountain for people, Top of the mountain. Because we have already collaborated with somebody who provides national film scout valuations and we can come in and justify a valuation that's like 2x3x4x which you might otherwise get because it's a film industry valuation.
Mike Koenigs [00:24:36]:
Right, right.
Nathaniel Ely [00:24:37]:
And so those, those turn into some real numbers people.
Mike Koenigs [00:24:40]:
So it's basically the equivalent of charging yourself a location fee.
Nathaniel Ely [00:24:43]:
That's exactly right.
Mike Koenigs [00:24:43]:
And that is, that is a, I mean you think about it, you could actually produce your company documentary with the tax savings and you could probably pay.
Nathaniel Ely [00:24:53]:
For it in some situations.
Mike Koenigs [00:24:54]:
Right? Yeah, yeah. So there's so many ways to, you know, effectively double dip here. And again, I look back at all the things I've done over the years, I've actually produced documentaries and I found creative ways to finance them. But this would have been a triple dip. Yeah, exactly. It's amazing. Yeah.
Nathaniel Ely [00:25:13]:
This really is a bolt on thing. I think that's the thing to emphasize. We're not looking for people to change their behavior. And I think that's a mistake that some practitioners have. They're trying to, you know, alter business owners behavior. For this rule, I would not, I would not advocate that, you know, this is for people who already do these things. So if we talk about the 10 things, again, you had a little excursus there on value and that's so we.
Mike Koenigs [00:25:34]:
Got the rental agreement on or before. So it's really, these are planned but you've got a system for that, the comps which again historically big risk. If you're making stuff up this way. If you've got something to show the irs, it's right there. You know, again, it's documented. And then they'd have to challenge it. They're not going to go through the work to challenge it. Not really.
Mike Koenigs [00:25:55]:
And I mean I better not say that. But yeah, but it's going to make.
Nathaniel Ely [00:25:59]:
It a lot more difficult, realistically. It's going to make it a lot more difficult for them. And that's what we want. We really do. We have to tell the narrative and we have to tell it in writing. And so for our comps we've come up with a process, reviewed it with John and he said yes, that's what you need to do. So then the third thing is we want at least three or more attendees. And I think this is another area people go off the rails.
Nathaniel Ely [00:26:22]:
They say, well actually here's one example. I know of one case, at least one, I'm sure there's others where somebody invented a system where you have a meeting with yourself and then they charge their clients many thousands of dollars to run a program where you have a meeting with yourself. And they say, hey look, you can adjust, you can justify it. And John says absolutely no way you're going to get nuked if that ever got challenged. And so you've got these high level clients who are getting bad advice and adding risk to themselves in the name of saving money. We say three attendees or more. Where you have to be careful with this is you can't think, oh, oh, I have a husband and wife partnership and I'll add our assistant in. That's three people.
Nathaniel Ely [00:26:59]:
No, no, the husband and wife are one owner of the business. And then you need a legitimate business purpose always. So three or more people, the more people the better. That's number three.
Mike Koenigs [00:27:10]:
So for years I've been doing masterminds and I'm in a few masterminds and I've hosted them at the house. So again and we shoot content while we're here, so we could justifiably call it a location. And I know so many other business owners doing that, and I know for a fact they're not getting all the deductions.
Nathaniel Ely [00:27:32]:
All right, number four. Number four, the meetings have to last four and a half hours or longer. So this is something we've specifically included in our program because we want to justify a full day's rent every time we're having an event. Because, again, you only get 14 of these. So let's maximize them by going over four hours, because the IRS defines a business day as four hours and one minute. So if you get four hours in one minute, it is a business day. So then why do we say four and a half? Well, because we want to make this incontrovertible. Let's say the IRS challenges it and they say, hey, Mike, did you go to the bathroom during that four hours? Disallowed.
Nathaniel Ely [00:28:08]:
Like, we just want that little buffer zone where we know that there's a business day justified. So that's number four. Number five, credibly documented agenda and meeting notes. So not only do we want to have a true business purpose, we want to have notes that actually backs this up and says, here was the meeting agenda.
Mike Koenigs [00:28:29]:
Okay. Again, you've got the notes and the templates for those.
Nathaniel Ely [00:28:32]:
We do notes and templates. You know, in the. In the free money plan, we actually pre populate them for people, and we just ask that they update the details afterwards. Even better, your employee, your EA does it for you. That's really where you get the magic from this. So no, work for the business owner. Number six, a strong business purpose for the events. I think I kind of mentioned this already.
Nathaniel Ely [00:28:55]:
You have to have a true business purpose for the events. No playing around with that. Number seven, really watch out for any semblance of entertainment. Meaning don't just throw a big kegger and call it a business event. Now, could you have, you know, a drink with your meal? Could you smoke a cigar? Yeah, you could. Should you take a bunch of photos of it and include it? Probably not. You know, like it's a business event.
Mike Koenigs [00:29:23]:
Yeah.
Nathaniel Ely [00:29:23]:
Yes, you do sometimes have a cigar or a drink at a business event. And bear in mind, what's the narrative, Right. Don't make this an entertainment facility.
Mike Koenigs [00:29:32]:
Make it defendable. And make sure you got a whiteboard there. You're drawing some stuff, and you got people crowded around.
Nathaniel Ely [00:29:37]:
Yeah, sure. Maybe put up your. One of your sign that has your business business name or this event sponsored by Right? Oh, absolutely. Number eight, you actually have to transfer money from your business to yourself. Some people get cute with this or they miss it and they. And at the end of the year, they're like, oh, man, I didn't transfer any money. And they just do a bunch of like, you know, IOUs, or, you know, to be paid from the business and personal. No, no, no.
Nathaniel Ely [00:30:02]:
Like cut a check, you know, when the event is booked, you know, shortly thereafter or. Or ahead of time. Right. Because if you rent a facility, you pay ahead of time or on the day of rental or you have like a net 30 billing or something. Well, do that as well. You know, our software is going to automatically generate the invoice. It's going to send it to your business. Your business would pay it just like a normal invoice.
Nathaniel Ely [00:30:23]:
Right, right. You get a check, deposit the check, that type of thing. Whether you're using our software or not, transfer the money. Number nine, properly reporting and filling out forms. There are a bunch of different documents, forms, rental agreements that need to be filled out and that need to be filled out properly and they need to be compliant. Again, we provide all those things. Ours is you fill out information one time, it auto populates everything type of thing. Otherwise you got to get stacks of forms.
Nathaniel Ely [00:30:52]:
You got to, you know, type them out, sign them, store them, don't lose them. All that type of stuff, it's got to be documented. And then lastly, number 10 is just get started now. Right. Don't wait.
Mike Koenigs [00:31:03]:
Yeah. When's the best time to plant a tree? Yeah, right on. Okay, those are really good. I'm glad we went through and prepped these because if I were listening to this or watching it right now, I'd be like, okay, how's this work? And you can see where the rub is. Why CPAs are like, ugh, I don't want to talk about this. Because the paperwork and the tracking, they're not set up to do this stuff. They're not specialists. And even just today we were talking to someone who says, yeah, we did the Augusta rule.
Mike Koenigs [00:31:34]:
And he was rolling his eyes because he's like. And we don't have a system. So let's talk a little bit about how long it takes to do this. So let's say I said today, yes, I want to do this. And even if I've been doing it, but I know I haven't been maximizing it because I haven't been taking advantage of everything because it's just like. Seems like such an overwhelming pile of doo doo to get through. But how much time does it take for a business owner to get onboarded, go through this process and get it installed? Assuming they've got an EA who can do like the check in stuff.
Nathaniel Ely [00:32:10]:
Yes.
Mike Koenigs [00:32:11]:
As simple.
Nathaniel Ely [00:32:11]:
Yeah. So really the EA could do everything. So the business owner, this could be as simple as sign up for this. You know, you've got authority to handle this for me and that's it. And then the EA can jump on. We have about a 45 minute onboarding depending on how, you know, organized the particular EA is or business owner. And on that we're going to really examine, you know, their goals and what they want to achieve, you know, what, what their dangers, opportunities and strengths are with the rule specifically. And then we're going to schedule those 14 events right on that onboarding call, you know, and I think that's, that's also one of the things that I think is a huge, huge value add with what we're doing here is I did the Augusta rule without our system.
Nathaniel Ely [00:32:57]:
I did not book 14 days. Like they always slip through the cracks. You don't get the maximization of the 14 day deduction unless you have reminders in a system and basically somebody running that for you. So that's one of the biggest things. And so 45 minute onboarding call. And then after that the extent of their work is to log into the platform on or after the event. So same day of your event or the day after or something and just update the pre populated notes. Just make sure they're accurate.
Nathaniel Ely [00:33:27]:
Right. And that's it. We do everything else. Yeah.
Mike Koenigs [00:33:31]:
Sounds like five or ten minutes worth.
Nathaniel Ely [00:33:32]:
Of work per meeting.
Mike Koenigs [00:33:33]:
Ish.
Nathaniel Ely [00:33:34]:
Absolutely. Yep.
Mike Koenigs [00:33:35]:
All right, so who is this? We've kind of, we've gone through the who it's for, but what are the specific businesses where you can basically say yes, yep, you don't qualify. And who's it Absolutely not for.
Nathaniel Ely [00:33:47]:
Who does it just not. I love, I love that question. Yeah. Who is this not for? This is not for people who want to get cute, you know, and like mess around with the rules and stuff like that. This is not for people who have never hosted anybody in their home. Right. This is not for people who, you know, are gonna get hung up on the, the, the details and the weeds themselves and like really want to get into this. I mean, people are welcome to do that.
Nathaniel Ely [00:34:16]:
We're not saying don't study it if you want to, but is that what you really ought to be doing as a business owner? Like everybody's got their own unique way of creating value. And our goal with the Augusta rule is to unleash them to do more of that, not to distract them. So it's not for those people. It's not for people who are probably earning less than, I don't know, 200k a year, because, I mean, it can be, but frankly, you ought to be just figuring out how to make more money in your business at that stage. So we want to be really careful to not talk about this as a kind of like a, you know, one size fits all, this is for everybody type of thing. It is not for W2 employees. Right. It's for business owners.
Nathaniel Ely [00:34:56]:
It's not for sole proprietors, because that's not a separate person in the IRS's eyes. And really, if you've got a number of partners in the business, so multi owner businesses, this can be very difficult because then, you know, this owner and that owner and this owner and that owner have got to all equally take advantage of the rule. Otherwise you're unevenly distributing capital out of the business. So. And it's also not for, let's say your investment rental property. So you have a property that you're renting full time out. Well, that doesn't qualify. It's already being rented more than 14 days a year.
Nathaniel Ely [00:35:30]:
So that's who it's not for.
Mike Koenigs [00:35:31]:
Okay. So the who it's for are business owners like llc, s Corp, C Corps, partnerships. You've got. If you have multiple businesses, multiple houses, you're putting the 200k marker.
Nathaniel Ely [00:35:45]:
Although that's a random number.
Mike Koenigs [00:35:47]:
Okay.
Nathaniel Ely [00:35:47]:
Yeah.
Mike Koenigs [00:35:48]:
All right. All right. And I think you know anyone who's like, I hate writing out a check to the government for sure. And I do love this notion. What we got into is if you're already doing masterminds and events, this is such a no brainer because you're, you don't have to adjust any behaviors.
Nathaniel Ely [00:36:08]:
That's right. So if you're regularly filming content with a crew like this, it wouldn't count if it's a zoom thing, because we go and we want people there. Why would you rent a facility? But if you've got a bunch of people there and you're filming, and let's say you're quarterly doing this and you're making all your content for the quarter, like three days a quarter. This is like a layup.
Mike Koenigs [00:36:27]:
Yeah, yeah. Super smart. Especially if you can bring clients in. So what I would do if I were doing a mastermind is I would bring in a bunch of clients and interview them and make them Part of the content, you know, so an experiential event.
Nathaniel Ely [00:36:42]:
Yes.
Mike Koenigs [00:36:42]:
And I think that is the word here. Is it? It really does need to look like an event.
Nathaniel Ely [00:36:47]:
Yeah.
Mike Koenigs [00:36:47]:
Yeah. So, okay. Are there any questions that I should have asked you that I didn't or any nuances? If you think about your partner, John's point of view, a tax attorney. Right. What would he have wished you would have said or told me that I didn't ask you?
Nathaniel Ely [00:37:07]:
Yeah. Well, John wants us to say that there's no guarantees. The way there's certain things. If we say anything with like absolute certainty in his words, that makes him poop his lawyer diaper. Yeah. So we have to put that in the notes.
Mike Koenigs [00:37:22]:
That was really funny.
Nathaniel Ely [00:37:25]:
So got to say that. But another thing that I would add, and this kind of backs away from John, but. But it popped into my mind is that this is for people who keep a calendar. If. If you don't have a calendar, if you're not organized enough to have that in your business, you ought to be working on that first because how can we schedule 14 events on your calendar if you have no calendar? So I'd say really what we're looking for is, you know, single owner owned businesses. So one person who are high income and, you know, obviously don't like how much taxes they're paying and who keep a calendar.
Mike Koenigs [00:38:03]:
Got it.
Nathaniel Ely [00:38:03]:
That's it.
Mike Koenigs [00:38:04]:
Got it.
Nathaniel Ely [00:38:04]:
So going back to. You want to talk about anything else with John or did you want to move on from there?
Mike Koenigs [00:38:08]:
No, I think that that sets us up. So let's talk about some of the goodies because we've been working hard for the past few days on all the tools that people can get. Just if they're interested in learning more at the website, which again is the augustarule.com save. But let's go through each one of those and why folks need it and what the value is.
Nathaniel Ely [00:38:28]:
Sure. First off, we've built a calculator that estimates people's savings so they can go on, they can plug in some numbers and get at least an idea of what they might.
Mike Koenigs [00:38:38]:
Yeah. 5, 10, 20, 30,000, 50,000 bucks.
Nathaniel Ely [00:38:41]:
Now, the trick with that is guessing accurately what comparables you'd have for your home. And that's kind of a black hole for most people. So these guesses are. They're wags, but it gives you something.
Mike Koenigs [00:38:51]:
Yep.
Nathaniel Ely [00:38:51]:
You know, if you want to get an actual estimate, you got to jump on with us. We'll provide that to you for free, you know, so that's no Problem. But another thing that we've done is provided the Augusta rule deduction guide. So we give a guide. Look, here are, you know, here's the railings on this. You know, it's going to give you a real good overview for people who are interested in digging into that. You know, we provide 100 things that you can, you know, actually do with the rule.
Mike Koenigs [00:39:15]:
Yeah.
Nathaniel Ely [00:39:15]:
So very helpful for people. And then we have a masterclass where we really dig into that. We, we have content developed on the rule. This, that this portion of the rule. Here's what to do, here's what not to do.
Mike Koenigs [00:39:27]:
Yeah. Deeper into the case.
Nathaniel Ely [00:39:28]:
Deeper into the case studies. Yep. We've got, we also, John threw in, you know, kindly some entity maintenance courses and templates which for some people sounds like major, you know.
Mike Koenigs [00:39:40]:
Yeah. What is, what are those words?
Nathaniel Ely [00:39:43]:
If.
Mike Koenigs [00:39:43]:
I don't know if my eyes just rolled.
Nathaniel Ely [00:39:45]:
Exactly. Basically, businesses universally for the most part do a terrible job of maintaining their entities. And what that means is you ought to be actually having annual minutes for your entities. Otherwise if you do, God forbid, get into a lawsuit, the veil, the corporate veil will be pierced is the language they use, meaning your entity goes away and you have no protection. Well, if you actually have notes on your entity, you actually have quarterly or annual meetings and you have written notes, then you strengthen your entity. So we provide those templates and courses on that.
Mike Koenigs [00:40:20]:
That is awesome. I can't stress the importance of that enough. That's one thing I'm really pleased with. We've always had with our team all that in place, but I'd rather have it here because this money we've been missing for so long, I know it's totaling hundreds of thousands of dollars. And again, the compounding of this is the mindset that I want folks to really hear is it's not just the money this year, it's what you can do with it over five or ten years. And I mean there's a full on retirement account either behind you or in front of you.
Nathaniel Ely [00:40:53]:
Yeah, that's a great way to put it. And that's the way to think of this because this is an annual recurring benefit. Annual recurring. So let's see, you were asking what we also were including for people. So we also offer a free consultation with an Augusta rule specialist. And you know, in case you're thinking that's, you know, an untrained person, you know, I'm, I'm going to be on these calls. So you know, I won't say that I'll be on all of them. But I'm on these calls, you know, and I'm.
Nathaniel Ely [00:41:20]:
I'm asking business owners specific questions to their specific situation. And again, we're on a mission to put a billion dollars back in the pockets of business owners by 2030. So I'm there to help.
Mike Koenigs [00:41:30]:
Yeah. Well, I think within 10 minutes of us talking, you told me about things I'd never thought, I've never heard of before. And I've had people looking at this, even though we missed. Right. And our strategy moving forward is going to be completely different than it's ever been in all the years I've been in business, so. Awesome.
Nathaniel Ely [00:41:49]:
Yeah, I think. What else? We also include a bunch of forms and templates that people need. Again, these are not more work for you to do, but they're things that could benefit, you know, some clients.
Mike Koenigs [00:42:00]:
Yeah. Well, it's a matter of getting clarity and knowing if you can make a good decision. So the bottom line is, at a minimum, go to the augustarule.com save, get all the goodies that are free, do the calculator, see how much you're leaving on the table. And you might as well schedule a conversation with you or one of your specialists and find out how much really you'll save. And what you guys do is it's a done for you service. And you get paid by making or getting me maximizing my rebate.
Nathaniel Ely [00:42:33]:
That's correct. Yeah. We only get paid when our clients get paid and we get paid in proportion to it. So interests are aligned. And again, it's a product, but it's also a mission. We care about business owners and entrepreneurs because that's who we are and that's who we want to be a hero to.
Mike Koenigs [00:42:50]:
Fantastic. Well, I think from my point of view, for you listening or watching, if this is a big enlightening experience for you, make sure you leave some comments and of course, rate this episode and share it with another business owner or friend that you know who could take advantage of this. Because out of all the no brainers I've seen in years of doing this podcast, this is in the top three for sure. I think it's in the top two. So my recommendation is head on over, go to the augustarule.com save, get the goodies, get the tools, get the downloads, get to know Nathaniel. His partner is hilarious. So if you see any of his social media posts, they're fantastic. He's really got a great sense of humor even though.
Mike Koenigs [00:43:38]:
Even though he's an attorney. I'm just doing that for you. John. I mean, this guy's like a professional comedian. So the two of them, they're amazing human beings, really ethical. They aren't going to tell you anything that isn't true or they can't do. So this is one of those situations where if you're going to put your trust into someone, make sure you're spending some time getting to feel them and getting to know them. And I've spent days with Nathaniel.
Mike Koenigs [00:44:04]:
I've spent time with his wife. He's got an amazing family. He's just a good guy. So I can't recommend this highly enough. So with that, anything else, I should have said that I didn't.
Nathaniel Ely [00:44:14]:
It's very, very kind. I appreciate it.
Mike Koenigs [00:44:16]:
Thanks for having my friend. Yeah, no, I can't wait to be saving with you and also sending more people your way because I think every business owner needs this.
Nathaniel Ely [00:44:24]:
Yeah. Thank you.
Mike Koenigs [00:44:25]:
All right, well, let's rock and roll. This has been capability amplifier. Hope you enjoyed yourself as much as I did. We did. We'll see you in the next episode.
Nathaniel Ely [00:44:33]:
Bye.
Mike Koenigs [00:44:33]:
Bye.
Nathaniel Ely [00:44:39]:
Sam.