Ep. 26 | From TikTok to Tax Filing: Influencer Clients
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John Tripolsky:Hey, everybody, and welcome back to the Mr. R show here produced, edited, everything else you can think under the sun by the MRR Institute. So if you don't know what that is, we might tell you, or you can just read about it. Look in the show notes. Check it out.
John Tripolsky:Check out the website. We'll put that in the show notes as well. I like to say in all of our other shows, you can't be lazy around us because it's right in front of you. So don't be lazy. Click on links.
John Tripolsky:Follow them as well as we're gonna put some stuff in there with the guest that we're going to introduce here to you shortly as we tap tackle this topic, which, again, read it in the title, read it in the show notes. We brought this guest on in a little little bit of a side note, and then I'll let my co host give the true introduction. Because I'm sure you guys are tired of listening to me and my cohost, Chris Bakero, go back and forth. So we bring people on this show that are way more interesting than me and him. So isn't that right, Chris?
John Tripolsky:Is that the the whole purpose of this thing? Right?
Chris Picciurro, CPA:Other than getting your free CPE, I think the entertainment value is there. And, no. I think this is a great way for us. I mean, honestly, it's a blessing to be able to, attend conferences, to meet other tax professionals, to learn from them, to collaborate. And with with our podcast here, I love having guests on, because we're all you know, many of us as tax professionals and accounting professionals, we're we feel like we're on an island sometimes.
Chris Picciurro, CPA:And we live in either a certain community where we have a very community focused practice maybe in a in a in a certain town or segment of a city, or we're in a community as far as a niche, maybe a segment, it could and so whenever we find someone that's an expert in a segment, especially if it's interesting, I don't think we're gonna have the the best tax pro for underwater basket waving people on if there is Although
John Tripolsky:we might. I'm sure they exit. I'm sure there's a magazine for that. There's a magazine for
Chris Picciurro, CPA:and guard John John, I think that magazine's probably the the phone. I don't know. Who knows? I'm at a grocery store forever. I'm I'd be lying that thing.
Chris Picciurro, CPA:But, anyway, but I'm so excited, as, you know, we've had the honor of presenting, and when I say we, an MR Institute and at the last three NATP, National Association of Tax Professionals Taxposium conferences. This last one was in steamy Las Vegas, Nevada. Yeah. You know, nice and warm. And I attended a a session that walked through tax strategies, which, of course, that's what I do.
Chris Picciurro, CPA:I do tax strategies and plannings, but for influencers, and we were able to get our show sponsors to increase our budget and bring in a special guest. So, Marit Burmood, thank you so much for joining us today. I know the people that listen are going to get a lot from you. Thanks for joining the MRR or mister R show rather.
Marit Burmood, CPA, EA:Thank you for having me. I have to say, you might have called Vegas steamy. I called it freezing. I was freezing the whole entire time. So I wore a dress with a cape.
Marit Burmood, CPA, EA:I had a lot of cardigans, steamy for the man but cold for the female. Very cold.
Chris Picciurro, CPA:It was steaming out yes. It it was steaming outside.
Marit Burmood, CPA, EA:Outside much. Yeah. I wasn't outside very much.
Chris Picciurro, CPA:I didn't go too much. We we made it that that Wednesday. My wife flew into town and then was able to stay Wednesday to Friday. We made it to the the the pool bar, the doll only pool bar. She fired up one margarita, and it was literally $45.
Chris Picciurro, CPA:And now, you know, there's I'm like, holy guacamole. So, you know, I know us accountants could be thrifty, but that was just highway robbery.
Marit Burmood, CPA, EA:So your credit card was steaming too.
Chris Picciurro, CPA:Oh, the credit card
Marit Burmood, CPA, EA:was It
Chris Picciurro, CPA:blew up. And I was thinking to myself, man, maybe we're some we're on a bunch of influencers because there was a lot of young people at the pool renting out cabanas and probably $2 a pop and drink you know, going through drinks like like water. But we digress. We digress to, to excited having you on the show. Before we jump in to tax strategies and for influencers and some funny tales and tips, because a lot of people that listen have a tax practice that is very general in nature, and they might have that one client that all of a sudden gets into becoming an influencer, and they don't know how to handle them.
Chris Picciurro, CPA:And that's where someone like you could be very helpful. But how did you get into this field? You're you're both a CPA and an enrolled agent, so huge overachiever in a positive way. I we hold both of those designations in very high high regard here. But how did you find your way into this profession and then into this niche?
Marit Burmood, CPA, EA:So I found my way into the profession of accounting. It's so funny because I have an entrepreneurial spirit. And so I went to college to learn accounting in my late twenties. I was 29. So I've done, I've gotten all these credentials over the past, oh, I'm gonna you guys how old I am.
Marit Burmood, CPA, EA:Like, know, 14, I'm in my forties now. But I started in my late twenties because I really wanted to start a business. And I knew that if I didn't have at least a decent grip on accounting, then I could maybe not even get loans or funding or whatever. And so I went back to get my account, my bachelor's in accounting, and then that was where I got into tax. I started working for a CPA preparing and quickly realized that taxes and payroll and all of that is what will take the business down.
Marit Burmood, CPA, EA:Started helping other business owners. And one day I was having babies, was getting my CPA, I was getting my enrolled agent. I looked around and I said, I have my business. I hadn't even been taking it seriously, but for years I'd been doing it on the side when the kids are in nap time, all tax season, all the weekends, and my business became helping other entrepreneurs. So I really have this combined love where I have so much, it's like an obsession for tax if you can't tell.
Marit Burmood, CPA, EA:I also have my master's in taxation. And so I've found myself teaching tax pros. I teach a lot of different groups. You and I met at taxposium. I love to educate.
Marit Burmood, CPA, EA:So I have this soft spot for the tax pros because you said we're on an island. We feel like we're on an island. That was me for so many years. And then I also have my passion for business owners. So I kind of try to teach everybody.
Marit Burmood, CPA, EA:I guess I'm just like a little teaching mama out there. So that was kind of how I got into my business. And then with the influencers, it was just kind of a thing that happened. I had one client that was young, making a few million dollars a year. He had been looking for accountants and couldn't find anyone that he was he could relate to.
Marit Burmood, CPA, EA:And we just had a really good rapport. And after I looked at his tax return from the prior year and I found one box that was checked wrong and I saved him $20,000 and that was it. He's like my And he'll be a lifer because he's like 22 now, think I got him when he was 20. So we have a long way to go, but he's been referring me all of his friends. And before I knew it, my client list was actually full and they haven't all stayed on.
Marit Burmood, CPA, EA:We kinda I have some funny stories like you said, where they they aren't always a great fit. I've had highs, I've had lows, but that was kinda I've just the word has gotten around that I'm a CPA that they can talk to that knows their industry and can help them as long as they're just not wanting to commit tax fraud, which some of them are, but then those are the ones that that don't stay. So
Chris Picciurro, CPA:Right. No. They're in every industry. We we niche in real estate, and, you know, it's it's interesting because you mentioned something that's so important, and we've talked about this. We have peer to peer mastermind group that we're involved with, and and we talk about there's as a tax professional, we have to understand there's two different skill sets.
Chris Picciurro, CPA:There's there's the the technical, I prepare tax returns. I advise clients on taxes. I might even do tax planning and advisory, which we know is very high value activity. And but I'm also a firm owner. And there those are completely different skill sets.
Chris Picciurro, CPA:And I my same with me. I got into this business because I'm more of an entrepreneur. I started my entrepreneurial journey when I was in middle school as a paper boy. And I'm gonna share my age because I was flinging papers back in the day, like that that video game. But I had to take care of accounts receivable, accounts payable.
Chris Picciurro, CPA:I had to pay the Detroit News. I grew up right outside of Detroit. I had to pay the newspaper. My for the papers had to go like think about this. I would go door to door and collect cash from people.
Chris Picciurro, CPA:Randoms. It was just but that taught me, like, I love entrepreneurship, and and I just felt like accounting was gonna give me that avenue to be an entrepreneur. So it's great to hear that, and you're doing some what we talk about all the time. Let your best client pick your next client. So you've got this person that's an advocate of yours, and we talk about, you know, that who's your fan and, and just keep bringing bringing, great leads to you.
Chris Picciurro, CPA:So can you tell us a little bit about your practice, and and are you, you know, are you a 100% in working with influencers or is there
Marit Burmood, CPA, EA:No, I think I would go crazy if all my clients were influencers. And I actually, I have been talking with other influencer or other tax accountants and kind of, you know, we're in the industry, we chat and just like everybody wants to niche and pick their ideal client, I also try to do that. I go through my client list, I kinda see who I don't love, who I do love. But really my practice is based a lot on personality, a lot. Because I have one client who's amazing and he does a lot of construction and he's in the one of the worst states to do taxes, which is Ohio.
Marit Burmood, CPA, EA:And I would never let him go in a minute because he's the best. I have another client who's, a licensed clinical social worker. She's wonderful. I've got some real estate clients, and so they're all over the board. I just keep them to the people that I really work well with.
Marit Burmood, CPA, EA:And so it's the same with the influencers. They don't all stay, but I have a decent amount because it's really, really hard for them to find professionals that they, as they say that they vibe with. And so, you know, I the one of the big reasons why I really wanted to start teaching about this particular avenue is because there are so many practitioners that feel instantly stressed out if they come across an influencer because everything is so gray or they are completely shut down. So there's these kind of two pockets. There's the tax professionals that will get an influencer client, and I'm talking about ones that make a lot of money.
Marit Burmood, CPA, EA:Right? Like if you just get one and let's say they have 400,000 followers. I have clients with 1,700,000. Right? And I remember one of my first clients, she had three fifty on Instagram and I was like, woah, she must be just like huge, right?
Marit Burmood, CPA, EA:And so they either are completely intimidated and then that's when you can get walked all over as every taxpayer will walk all over you if you're not strong and firm in your convictions and your ethics as a professional. Or there's the old school hardcore accountants that are just like, nope, nope, nope, nope. And then that turns them off completely. And so just I kind of wanted to get out there and create a just spread more information that can empower them to make better decisions if they decide they wanna work with this clientele, which to each their own if they don't want to.
Chris Picciurro, CPA:Mhmm. Oh, no. I I understand that. I you know, it's just thinking about, you know, personality. And and we, in our practice, we developed and with MRR Institute, what we call the ideal client formula.
Chris Picciurro, CPA:And one there's three parts of it, but one of them is that you enjoy working with them. So as I was just thinking about the personality portion of that relationship, and that's that's really important. You know, we we are very fortunate to have these our practices, and we want to we've gotta design them the way we want them to be run, and that includes our client acquisition process. So influencers, they have some unique nuances. Yeah.
Chris Picciurro, CPA:In in understanding the correlation between maybe how many followers they have versus the revenue, what type what are the typical revenue streams you're seeing these influencers, bring in?
Marit Burmood, CPA, EA:You know, that's a really good question because I think that when I do my discovery calls with these clients, a lot of time, their very first beef is that their old accountant doesn't understand them or their old accountant messes up or they don't. They can't talk to them and they they don't know what to write off and they don't know what they're allowed to have and they're very frustrated, which it's funny because you can have a 20 year old influencer or a 46 year old, you know, insurance salesman and they both don't know what to write off. So that's no shade to the influencers, but I think, accountants have a harder time kind of deciphering to tell that to to guide them in the first place because they don't know how they're getting their money. So I have a client for example, she just threw it in the other day that she's starting to get Snapchat crystals and I know how the platforms pay so this is called platform income. I heard Snapchat crystals and she's an advisory client.
Marit Burmood, CPA, EA:You were talking earlier, I just have to make a plug for influencers who are making a good amount of money, not all of them, but the ones who can afford advisory, they are great advisory clients because they are some of the most creative people out there and they are hustling. If they're making a lot of money, they are hustling for it. They're doing brand deals, they're getting platform income, they're doing TikTok shops. So these are some of them. So they can enter into a brand deal with another company, which is kind of your most traditional form.
Marit Burmood, CPA, EA:It's almost like the old school marketing where the marketing agency would contact the talent agency and they'd come together and they'd come up with some sort of deal, you know, for the talent to promote the product. But the influencers these days, they're not represented by necessarily. A lot of them are lone wolves. And so when they're getting these, you know, opportunities and maybe not a brand deal, maybe it's just a sponsorship opportunity, like you create a post, post this many times and we'll give you this product for it or well it's generally product for posting. They're like, okay, and they just sign, they're like, yay, I'm getting paid to do this, this is great, and they can be taken advantage of.
Marit Burmood, CPA, EA:Or you don't know anything about it and as a tax professional it's a little harder when they come to you and you have no idea how much free stuff they've gotten. It's very hard to figure out the fair market value of everything which we can talk about further but when you have the advisory clients that's where you can really come in and help them shine because now you can help them keep track of it, you can help them understand the implications of the things that they're doing because they might not understand but the company sure does understand. They're gonna write it off as a marketing expense and they're gonna say who they paid and you know, if if they're not handing out a w nine then the influencer isn't getting a ten ninety nine because they never or they're filling out the w nine to their social so it can be messy. I digress. This is why we first wanna learn about how they make their money because it can just get so crazy.
Marit Burmood, CPA, EA:They can get into a deal or a partnership and my tax pros out there know what it means to enter into a partnership with someone else. They don't know. They're like, I have another friend who's really awesome and popular, and we created this little side project together, we're doing it. And you're like, what? Alarm bells, they're ringing everywhere, back up what's going on.
Marit Burmood, CPA, EA:And so they can do partnerships, sponsorship deals like per post, brand ambassadorships, things like the Snapchat crystals where Snapchat, they get paid for how many views they have on their stories. And so they're just taking stories all day long. And then they're taking stories all day long. So is every single thing that they do a write off? Because they're doing it all for the stories for Snapchat crystals.
Marit Burmood, CPA, EA:So it gets very confusing, which is why I'm so passionate about just kinda trying to give some guidance to the tax pros on how to deal with everything. It comes at you really fast.
Chris Picciurro, CPA:Oh, absolutely. I've got some and and I've been thinking about some interesting situations on your end. So you've got some you've gotten first of all, is before I get into income, this sounds like it's a bunch of crotchety the the deposit, like, I can't stand when you've got a bunch of crotchety people on a golf course, and then you get that call like, my buddy said I got to write off this this. You know? It's like, luckily, our client we lead with tax planning and strategy, so we really don't run into that very often.
Chris Picciurro, CPA:But the my, you know, my buddy did this or, oh, you know, so and so said she wrote off her trip to Italy. Like
Marit Burmood, CPA, EA:Mhmm.
Chris Picciurro, CPA:Okay. And and so I'm sure in the influencer world.
Marit Burmood, CPA, EA:There were just a minute. Last night, I got sent two to two posts from a tax influencer, a big one on Instagram. One was about the QBI deduction. What does what qualifies for this? And one was about, paying off something, but they're a shareholder like for themselves through their business.
Marit Burmood, CPA, EA:Right? So, yeah, it's not no longer the golf course. Now it's social media posts that they send you saying, well, can I do, you know, all these ridiculous posts? So same thing, different different form of delivery.
Chris Picciurro, CPA:Well, I'm kinda glad our clients don't listen to this particular podcast because I can't tell you how much it annoys me. But you know what feels great? When a client sends you or something that they saw on TikTok, and we say, that's interesting. Do you did you look at our YouTube channel and see that video in our podcast, our other teaching tax tool podcast? Guess what?
Chris Picciurro, CPA:We put that in the newsletter in May. Oh. Yeah. And usually after that, they're like, okay. Yeah.
Chris Picciurro, CPA:There's not the FOMO is real from some of these people. But income. So they've got a lot of different revenue streams. I've got what about how how are those conversations about getting in kind payments? Like tickets to sporting events and and good good services.
Marit Burmood, CPA, EA:Yeah. So those those can get complicated quickly. And I actually had something I wanted to throw back at you, which I'll bring up in just a minute. But yeah, those get hard. So especially my female influencer clients, they'll get the med spa treatments, right?
Marit Burmood, CPA, EA:Oh, come fill me yourself at the med spa and we'll give you all of these treatments. And they don't realize, well, this is a benefit for benefit transaction. They're not paying you cash, but you just got a free med spa treatment in exchange for posting, the company is definitely expecting some sort of financial gain from this. And so now you have a taxable transaction, those are super, super hard, especially they don't understand it. And so it starts to get hard.
Marit Burmood, CPA, EA:It's hard for the client. And so I actually was talking about this to another tax group on Monday and another tax professional came on and said, well, I have a client who she gets so much free stuff free, it's not free. She gets so much product in exchange and I've been helping her track it and I've been helping her report the fair market value because that is what the IRS if you go buy the book, they want you to report the fair market value. It's just like the old school bartering transactions. Got to stop and say nothing is different with these influencers.
Marit Burmood, CPA, EA:Everything you know as a tax professional in terms of foundational knowledge still applies. So there's bartering transactions of, Oh, well I traded this for this. And then the IRS says, Well, that's income to you. So what's the fair market value? It's the same thing for them, right?
Marit Burmood, CPA, EA:So there's court cases on this, you've got Bogartas versus commissioner, commissioner versus Duberstein, they're kind of discussing gifts versus compensation and what is the difference. And it always comes down to reporting that fair market value. So he says at the end when we go to file her taxes she has no money. And so maybe she might sell this dress that she paid $300 for that's the fair market value. When she sells the dress for a $100 then can she take it as a business loss?
Marit Burmood, CPA, EA:And I was just kind of I mean, mind I should have stopped and I should have written it down because my mind went to inventory because he said, she has all of these products and then she's And selling I'm thinking, okay, well it could be an inventory situation, but then you might have a sales tax issue, right? Right. And so you got your cost of goods that you paid for. And then when you sell it, I guess you just paid more. And so it would create a lower net income.
Marit Burmood, CPA, EA:And then someone else jumped on and said, could you look at it as a capital asset and actually take a business loss for selling the items? And then someone else went on and says, was their personal use because that would change it if it's a business asset So or what do you think? I wanted to ask you, would you put it more in the inventory category or would you put it? And then he said, well, can we can I depreciate the dress? And every all of us was a way that we wouldn't depreciate a dress.
Chris Picciurro, CPA:Why would Oh, so fact plan is taxpayer gets a dress.
Marit Burmood, CPA, EA:Yeah, we're gonna use the dress as an example. She gets the dress, she takes it as compensation because she's got a good tax advisor that says, Hey, this dress, the fair market value is $300 And then she needs money, so she sells it for a 100.
Chris Picciurro, CPA:I and is this a one off situation?
Marit Burmood, CPA, EA:He was saying shit. That's a good yeah. See, that's why my mind went to inventory. He said she does it with a lot of her things.
Chris Picciurro, CPA:Okay. So if she's doing with a lot of her things, I would, so the $300 of compensation is income because that's a fair market value of a draft. The $100 she received, so she's gonna have a $200 deduction somewhere. I don't I I I you could if it was a one off thing, I would probably gosh. This is a tough one.
Marit Burmood, CPA, EA:It's a tough one. It is a tough one. You would then it would be it would reduce the basis, the $100. Right? If you did it as a capital asset?
Marit Burmood, CPA, EA:Yeah. And there might not be an answer. This is, and we didn't come to a set conclusion. I don't think you can figure this out in a, you know, an hour long call.
Chris Picciurro, CPA:If it was if it okay. And if it you if it was a situation where this happened within a short period of time, like, she got the draft. She wore it. She posted. She sold it.
Chris Picciurro, CPA:Or, you know, for a $100. I would probably just record $200 of income.
Marit Burmood, CPA, EA:Yeah. That's just my thought. Because it was worth 300, people.
Chris Picciurro, CPA:It was worth 300, and she sold it for 100. Yeah. Here's the problem. She's got phantom income. You know?
Chris Picciurro, CPA:Yes. The other argument would be, well, what what's once they give her address and it's she puts it on, it's used, and takes the tags off, does it really only worth a $100 at that point? Is it now a wholesale value? Did she get any you know, is her personal use from posting it $200 of compensation? It is a very fascinating situation.
Marit Burmood, CPA, EA:Yeah, and this is one of, you know, you want this was kind of what I wanted to illustrate with the in kind or the fair market value of items instead of this cold hard cash. If we community can kind of come up with a standardization about these concepts, I think it would help so many people because you and I could sit here and rap for another hour and write it all down and map it all out. And you see this all the time.
Chris Picciurro, CPA:Did she so can I ask this question? In exchange Sure. Dress, was it did she generate revenue from wearing the dress or posting about
Marit Burmood, CPA, EA:don't think so because she did it for the company. So the company generated the revenue.
Chris Picciurro, CPA:Okay. Oh, man. Well
Marit Burmood, CPA, EA:Until she sold it and and generated that $100.
Chris Picciurro, CPA:So the argument would be her only real compensation is the value of the dress for the time she used it.
Marit Burmood, CPA, EA:Mhmm.
Chris Picciurro, CPA:Which is very limited. It's really fascinating. I guess IRS would look at it and say, well, it's three you you pay tax on two hundred. Hours.
Marit Burmood, CPA, EA:Yeah. Probably. I think so too. And I think if she was doing it a lot, we'd kind of treat it as almost like she keeps a sort of inventory of used items that she buys and and she uses it in the business and then she kinda sells it in and out. But the capital asset argument was good, and I I was like, I could see that.
Marit Burmood, CPA, EA:Okay.
Chris Picciurro, CPA:But you know what? I would say if if we take the argument, which I think would be beneficial for her, you say when she received the dress, it's $300 of revenue and you and it's inventory of $300. Like, I knew what you're saying. When she sells a dress, it you credit inventory 300 or, you know Yes. So you'd reduce the inventory.
Marit Burmood, CPA, EA:And you're gonna debit the cost of goods sold, which is $300.
Chris Picciurro, CPA:And then should ultimately just save a $100 worth of income. Right. Because that would be
Marit Burmood, CPA, EA:So it's a 200.
Chris Picciurro, CPA:Instead of 200. I'm just thinking out loud. This is fascinating.
Marit Burmood, CPA, EA:I don't know. I got him John, I got him stuck in the rabbit hole where the this episode's gonna be twice as long.
John Tripolsky:No. I am loving this because it's very rare that I could find anything to put him on a spot with a, like, a valid question.
Marit Burmood, CPA, EA:I was trying to put him on the spot, but it is something that we are there are so many options. Right? There's so many ways you can go depending on the fact pattern that it's like, I wanted I thought, oh, I'm going on this. Let's let's ask Chris what he thinks, you know, let's get another opinion.
Chris Picciurro, CPA:I personally feel like it would be a she should pay tax on a $100. I know that's a might be very pro taxpayer because here's my thought. If if she received the dress for $300 and she gets to keep it and use it indefinitely as personal use, then that's $300 of the value. She didn't. She wore it.
Chris Picciurro, CPA:She did the she wouldn't have bought the dress if she wasn't doing that shoot. She part of her compensation was the dress that she turned around and sold for a $100. So I would I would look at it as a $100 of income. And that might be pro taxpayer, but I can make the argument. That's just because I'm thinking, yeah, it's not like because part of the $300 value is that you own the dress indefinitely and you can wear it over and over and over again.
Marit Burmood, CPA, EA:Mhmm. Yeah. And that personal benefit definitely plays a part in that. So the more she can treat it as if it's inventory that she is getting an exchange with then she's putting it in a separate space, she's storing it, she's selling it, then that would also strengthen that argument for her. And this is the basis of everything we're talking about when it comes to, I guess maybe not services in kind, that one's that one's just you're just out of luck on that.
Marit Burmood, CPA, EA:But if it's products, unboxing products, boxes of I have another client, who is pretty famous. He goes to a lot of shows where a lot of people are and let's say he got a box of sunglasses from his sponsor. He's sponsored by someone huge box, cool sunglasses, really nice. And he was handing them out. And so that was another one where I'm like, well, yeah, he's got to take that compensation.
Marit Burmood, CPA, EA:That was a lot of money in sunglasses. And this is the thing, I've talked to other people in resolution about this. And the IRS will do these brand audits. I've talked to two people who have confirmed it where they'll go to the big brand and they'll review advertising and their marketing category. I'll say, who did you give all of these products to because you're writing them off and then they can find the people and then they can cross check and your client could actually get an audit just for being on the advertising list.
Marit Burmood, CPA, EA:So it's kind of something where the IRS is getting smarter and they're starting to figure it out. So if your client's getting $1,500 in sunglasses, but then guess what he did? He turned around and he gave them all out at the shows to everybody because he doesn't need 500 pairs of sunglasses, right? I got a pair. It was a big win for me.
Marit Burmood, CPA, EA:They're really cool sunglasses. But so then it's like, is that now a marketing expense because he took the 1,500 compensation but then for his brand and for his company, was like, have one. Have one. Have one.
Chris Picciurro, CPA:That is because I'm I'm still thinking about him and then the brain the dress girl. Because I'm just the dress girl, what would I practically do? I'd probably record $300 of income and put $200 of returns and allowances just because
Marit Burmood, CPA, EA:I like that. Returns and allowances.
Chris Picciurro, CPA:It's because that's really what happened. She ended up flipping this dress and my I don't know. I I don't know what I would do. Because if you just that way you're recording the gross income, the value of the dress when she got it, but she salvaged it. She she, you know, sold it.
Chris Picciurro, CPA:That's fact.
Marit Burmood, CPA, EA:Yeah. If we could figure that out as tax pros because a lot of these influencers, they don't need all this stuff. Right? Like they don't need a million dresses. So if we could figure that out and say, hey, let's turn this crappy because the tax fraud song to me is like, it just sucks.
Marit Burmood, CPA, EA:It sucks for them. And I'm like, it does suck for them. So that's a value we can bring as an advisor is to help them think of creative ways now to first expand their income. I said, get her doing other things, right? If she's getting an, if she's all she's getting is in kind payments, let's start urging her to do other forms streams of income like we just talked about.
Marit Burmood, CPA, EA:Let's get her some actual cash instead of the phantom income. But if we can also provide that additional value to say, hey, if they are getting in kind payments, we can tell them if you go ahead and you put it aside and you keep it as a business use because you're really not gonna use it, it might just sit in their closet instead of them wearing it, let's turn it around and let's get it back out there and get some of that income back off your books.
Chris Picciurro, CPA:Yeah. If there was a safe harbor that said if you sold it within thirty days, then ultimately, this the cash you received is the value that you know, then it would be a tax planning tool for people to sell the stuff they don't want.
Marit Burmood, CPA, EA:Exactly. Exactly. And you look like a superhero instead of just this stuffy accountant that doesn't understand them.
Chris Picciurro, CPA:Well, I was thinking about too. Like, imagine someone that is a travel influencer and they get a free hotel room. Ultimately, they got the you know, that you've got just so many issues with that.
Marit Burmood, CPA, EA:One's hard that one is harder. Yeah. You're taking that then that's where you start to become really intentional with your trip. Right?
Chris Picciurro, CPA:Exactly. Do you want to even gosh. There's just a lot. There's a lot there. You know?
Marit Burmood, CPA, EA:And Yeah. Yeah. Because now you're getting income. So then that's the tax planning mindset is okay, I'm getting a $12,000 hotel stay because I'm gonna go do this for the company, this is work, so what else now can we generate in form of expenses to ensure that it's not just sitting there as a growth in gross income without anything attached to it.
Chris Picciurro, CPA:Well, one of our three laws of tax planning is this concept to tax flow and cash flow. And people they understand cash flow, but people don't understand tax flow. Tax flows of tax burden or benefit of all your decisions. And in your case, you have influencers with a ton of potential phantom income and no cash. They might not even have the cash.
Chris Picciurro, CPA:It's it's similar to depreciation recapture of you know, People say, well, say, I don't they don't have cash, but they have they they well, because, you know, they went on and they bought an $80,000 SUV, wrote it all off two years ago. They go trade it in. Of course, they owed $60 on it still. So they they walk away from the dealership with no cash and say, yeah. You realize you got depreciation recapture?
Chris Picciurro, CPA:Oh, no.
Marit Burmood, CPA, EA:I mean, come on. They'll say I don't have any money. I don't have any money in my bank account. Why do I owe taxes? Because the IRS doesn't care what's in your bank account.
Chris Picciurro, CPA:Mhmm.
Marit Burmood, CPA, EA:They don't care.
Chris Picciurro, CPA:Or I you know, I I'm this is gonna segue into some entity selection, or well, I kept the money in my business. Okay. Are you a c corp or something? You know? Yeah.
Chris Picciurro, CPA:So when do when do influencers when does it start making sense to to form an entity or to potentially, you know, incorporate, I would say?
Marit Burmood, CPA, EA:That is such a fabulous question because here's the thing that I learned through trial and error. I love that. Really when I was first helping them, because I went straight into high net worth influencers. So I'm not talking about little people with side hustles, even a $100,000 a year, that's very, very small in terms of the influencers I work with. But you have to keep in mind that generally most of them are very young.
Marit Burmood, CPA, EA:And so you see them and this even goes beyond entity selection. I I talked about this at taxposium when it comes to these high level strategies. I'm talking high level like, well, let's get you an Airbnb and maybe do the short term rental loophole or let's start getting you set up for reps or let's talk about all of these high level tax planning strategies cause those don't change. Those tax strategies are the same high level strategies you'll use for your influencer making a million dollars, but you have to be aware that they might not be emotionally and mentally capable of implementing it or working with you to implement it. So in terms of easy entity selection, the s corp, you're gonna wanna help them with the s corp.
Marit Burmood, CPA, EA:If they're making a lot of money, you know, they're making over $50,000, net, you're kinda like, okay, now the benefit would be in it would be in your best benefit to be the s corp, but we know as tax professionals, the reason why we have that threshold is because once they become an s corp, they're gonna have to be on payroll and they're gonna have to have actually good books with good balance sheets and everything. They're gonna need to do an accountable plan and they're gonna need to fill in their accountable plan every month and they're gonna need to stay, you know, within if they wanna play the big kid game of tax, they have to follow the big kid rules. And so we can look at it, but then, you know, they might fall off the face of the planet. They might decide they don't wanna influence anymore. They might, you know and then all of a sudden now you have an s corp set up, you have payroll accounts open, you have all kinds of balls up in the air, And they're like, no.
Marit Burmood, CPA, EA:I don't wanna do it. So I think it's not so much about it. Of course, we keep our same net income threshold that we have for every client, but we also have to do an additional analysis with these types of clients to figure out what their long term goals are. And then to really sit down and educate them about the part that they are gonna need to play. Because if you just throw them into an S corp, trust me, I've done it.
Marit Burmood, CPA, EA:I'm not I'm not saying this is like, I don't and you do. I've done this. I've thrown them into s corps and they're making a lot of money. So I'm like, we should probably zero out their payroll, know, like get ahead of the estimated taxes. Let's zero it out.
Marit Burmood, CPA, EA:It's monthly. And then they look and they go, where's my money? I'm on and they don't understand anything. And so it's really, really important that you sit them down and you actually have a consultation with them and you say, hey, if you wanna save this money, this is what's gonna happen. I get influencer clients, I just got one just two days ago that came to me super frustrated with her old CPA, all the same complaints.
Marit Burmood, CPA, EA:And she has an S corp and I actually checked the transcripts, we did the transcript monitoring. This CPA set it up right which isn't always the case that you can check their transcripts and there's all kinds of problems with the IRS that they didn't know they had and you check their transcripts and it's a mess, but she was set up correctly, but there was no payroll ran for all of '24, She's done nothing for '25. She has no idea, there's no accountable plan. She's still got one big bank account that we're trying to go through right now. And currently I'm just trying to get a handle on her.
Marit Burmood, CPA, EA:I've learned my lesson of taking on every influencer because they all kind of tell you the same sob story of no one understands me. And so while that's often true that their CPA might not understand them, they also tend to fail to mention that they're also not willing to do the work required, right? So that side of the perspective we often miss. It's another thing that's very important when we're evaluating entity structure, as I was talking about before. So we kinda take all of those things together into account when we're deciding where to go from here in terms of helping them with the, you know, the best structure for them.
Chris Picciurro, CPA:Absolutely. Sometimes you have a client that the s corp might make sense, but you just know in your heart that they they're just not gonna do what they need to do. They're not going to sup create a you know, keep their yeah. Yeah. Sometimes you gotta commingling a bank account's distributions, etcetera, but they're not going to contact everyone if they formed an LLC and have their LLC be paid.
Chris Picciurro, CPA:And you just don't have the confidence they're gonna walk like a duck and act like a duck and quack like a duck. We have to factor that in, you know, it takes our cooperation too. Like, we we wanted to get a reasonable compensation study on the books for and someone that's gonna be an s corp. They also so they've been gonna need to fill out a survey. Yeah.
Chris Picciurro, CPA:And, you know, you just some clients are so hands off that and and guess what? We all are. Right? Some of us are willing to pay a premium for convenience, and sometimes that's a tax, like.
Marit Burmood, CPA, EA:Yeah, or it's an advisory fee because I have those clients. I mean, I never have them fill out the survey alone. We'll zoom and we'll walk through the survey together. It's that special advisory fee, that special hand holding. So it's a good way to upsell your services.
Marit Burmood, CPA, EA:But at the same time, there's certain people that even if you hold their hand the whole way through, they're still just not gonna cooperate. And I always say, I'm not in the business of fighting with you. So if you wanna fight and I feel like I'm in a relationship where we're fighting, that's not it doesn't matter to me how many followers you have or how much you pay me a month. I don't I don't wanna do that.
Chris Picciurro, CPA:Right. Right. I agree. We want we don't want adversarial client relationship. So, I mean, you could you want you want respect.
Chris Picciurro, CPA:You you might see things differently once in a while, but you're you're ultimately on the same team, in which sometimes you get you talk about sometimes when as a tax professionals, we have, I don't wanna say disagreements or maybe some interpretational issues with our clients, and sometimes that's healthy. But in the influencer space, one of the things that's very confusing to practitioners that don't work in that space a lot are mixed use expenses. Can you give us some examples of you know? Because, obviously, let's say you're a tax professional. You prepare 500 returns.
Chris Picciurro, CPA:You have that one influencer that said, I just baked a cake in my kitchen. I'm I'm and I know my kitchen's about full 100% home office deduction. What's your best advice there?
Marit Burmood, CPA, EA:Yeah. I actually just got sent by a client, a reel of a girl saying that she said, you know, her accountant told her she can write off her whole house because she films in her house and her pool. So make sure that you guys get a pool and it's just funny. And that's kind of a perfect transition when we're talking about fighting with the clients and being on the same team. I am on the same team, I do not wanna see them overpaying in taxes.
Marit Burmood, CPA, EA:I love the tax plan, I love to strategize, but we have to work within the confines of the regulations and the code that the IRS gives us and the tax court cases, right? We've kind of it gets blanket and we search and we research to get it more detailed. What I've have done is I've kind of looked at a lot of different tax court cases and notice that there's four general frameworks that the courts are using when it comes to these mixed use expenses because you've got section 162 A that talks about everything's ordinary and necessary. And so you see the big tax influencers, I won't name names, but we know who they are, walking around saying, well, it's ordinary and necessary for my business, so I'm writing it off and you should too. But no one talks about that little black sheep code section, section two sixty two that talks about how inherently personal expenses are not deductible.
Marit Burmood, CPA, EA:And I don't know if I have the case in front of me, I don't, but I loved, the one, maybe we can put it in the show notes, where they were arguing about how I need the medical, I need the medical treatment so I can go out and run my business. I need clothes to wear so that I can work. I need food. I need shelter. And they say these are all great arguments, but they're also the exact illustration of what inherently personal expenses are that are expressly denied by code section two sixty two.
Marit Burmood, CPA, EA:So no one wants to talk about two sixty two, they always wanna talk about 162 A and it starts to get really, really muddy when your life is your business because you're an influencer. So back to the frameworks. So we've got the inherently personal, which I just talked about. We have the excess cost framework where you can deduct only the extra cost incurred for business. Of course, there's that allocation.
Marit Burmood, CPA, EA:Now this is one we as practitioners deal with all the time. We've got the, you know, the cell phone that's mixed use. We've got the home office. We have stuff like that. And then the primary purpose, which if it is dominantly for business, is allowed.
Marit Burmood, CPA, EA:Of course, that one is the one that gets abused. And so we have to lean on these court cases and these frameworks when we're making the decisions. We can't you know, we have to go back to that foundational stuff that we know.
Chris Picciurro, CPA:Exactly. And sometimes people clients are gonna take it to an extreme. Everyone wants to be the person that said, got to write off my Lamborghini and I've got to do this. Like, it's just because that's what they're doing. Right?
Chris Picciurro, CPA:That's what they're in the business of doing is getting clicks, getting attention. And and then sometimes there's certain cases that, I hate to use the term stick out like a sore thumb when we talk about the chesty love case and people are just applying it to every cosmetic surgery, every every procedure saying, well, that one situation, you know, it doesn't really apply everybody, does it?
Marit Burmood, CPA, EA:It's No. Then let's actually talk about that because with the influencer space specifically, cosmetic surgery is a big thing, a big thing. We've got BBLs, we have augmentation, Botox. I mean, I see it on the client's charges all the time and I've had to have these conversations. They don't believe me, they don't care.
Marit Burmood, CPA, EA:You know, they just wanna argue till the cows come home. But the Chesty Love case is a rare exception where this was actually allowed as a business expense. So if you back it up to medical deductions in general, just a general qualifying medical deduction on schedule A, you see that there are already AGI limitations. There's a huge long list of qualified medical expenses in the first place. And that's generally where your medical expenses would go if they were even qualified and if you could pass all the other tests.
Marit Burmood, CPA, EA:So moving it from there to now being an ordinary and necessary business expense, it's even more rare. I read a case about a professional singer that went to a throat doctor, a specialized throat doctor to keep his voice in good shape and deducted it as an ordinary necessary business expense under 162 A. The IRS denied it, they took it to court. And the tax court also said, well, there's too much inherently personal benefit from this and it is a qualified medical expense. So you may deduct it on schedule A but you may not deduct it as an ordinary and necessary business expense.
Marit Burmood, CPA, EA:So, and that was literally his throat for singing. I mean, if he would have come to me, I might've been like, well, I can see it. You know, and even something like that was like hard no.
Chris Picciurro, CPA:I mean, I could see I could see that too. And we're not you you kind of we talked about this before is we're not in the business of telling our clients no. We're trying to find them a yes. We're trying to get them legally and ethically reduce the tax they pay in their lifetime. But we also have to be be cognizant of things.
Chris Picciurro, CPA:I mean, I look think about, like, a gym membership comes up a lot. Now let's say you are a you can make it like, well, I gotta stay in shape if I'm an influencer. It's still inherently personal. However, what if you're a fitness instructor? You know, and you are modeling and you do have a whole library of online exercises, routines, workouts, and and you pay, you know, you pay for a film crew to get in, then then you could then you could there's it's a different situation.
Chris Picciurro, CPA:Right? The facts and circumstances are different.
Marit Burmood, CPA, EA:I think so. Yeah. And you have to take into account the influencers' unique profession because that's a goes back to understanding what they do and who they serve in their business. For sure, we have the hamper case that was the newscaster. I wanna say it was 2011 and she was on TV.
Marit Burmood, CPA, EA:She deducted her wardrobe because she had to wear, you know, certain colors and patterns, her hair, her nails. She actually did deduct her gym, which is why I thought of this when you were talking about that. She needs to stay on shape in shape. She needs to look good. I thought this was a very, applicable court case due to the fact that she's a well known figure.
Marit Burmood, CPA, EA:She has even more limitations around being on camera than a regular influencer does. And she every single thing got denied. Right? They said it was all inherently personal. Everybody needs to wear a certain type of clothing to work.
Marit Burmood, CPA, EA:You can't get your gym and all of that. It's too personal. And so while we're not in the business of telling our clients no, we're fighting with them, I also don't wanna put them in a position where they are in a lot of trouble if they ever get audited because 95% of them, all of these deductions would get denied just like they did with hamper. But you know, you look at the stunt man case, he was in the gym and they allowed it because that's his life. So there are exceptions and I think you're right about having a full person who's working in the fitness industry.
Marit Burmood, CPA, EA:But you know, a lot of them at this point, then they get their own gym when they're serious and they're training people and they're filming. They have a gym in their home. And as you know, the home office and all of that's a completely separate animal that we can work with. So with they ever wanna write off the gym, we kinda start having talks about, okay, but how can you bring the gym to you? I kinda tell them it's like stepping over dollars to pick up pennies.
Marit Burmood, CPA, EA:You can write off a $20 gym membership, you wanna fight me on this membership? Let's talk about maybe making a gym in your home that's exclusively used for business and you're training your clients there and you're creating your courses there, we can get creative and we can think about better and bigger ways to strategize that fit for the client and will save them a lot more.
Chris Picciurro, CPA:You you nailed it. I agree that that that's a whole different animal and and same I mean, same with maybe someone that has extra space in their home and wants to create more of a commercial kitchen instead of having stuff spread all over their their their regular kitchen. I mean, there's a lot of interesting things. Can you talk to us about as as tax professionals, you know, when do we have to think about influencers establishing nexus somewhere? For for instance, let's say you live in Nevada like many of these, you know, non tax state, but you happen to go to California to well, California is a bad example.
Chris Picciurro, CPA:There's sharks over there. Oh my gosh. I've got some bad stuff.
Marit Burmood, CPA, EA:I I be If your client looks at California, they're gonna pay taxes. There you go.
Chris Picciurro, CPA:Yeah. Exactly. If they step foot, I'd be
Marit Burmood, CPA, EA:in that direction.
Chris Picciurro, CPA:Oh my gosh. They went to a trade show there as a vendor, and they just set up a booth. And and and California got them, and they get went after them. I said, let me ask you Did you sell anything in California? Did you have inventory at?
Chris Picciurro, CPA:And they're like, no. We I'm not even gonna say what industry it was. It's like a piece of machinery. No. We're just there.
Chris Picciurro, CPA:Okay. And we were able but they still had the they still had the they tried to ding them for a nonresident LLC filing at $8,800 fee. It was ridiculous. So stay away from John and I make fun of California all the time on our on our other podcast. But
John Tripolsky:It's definitely the butt of some of our jokes. We're just like, just don't go there. It's okay.
Chris Picciurro, CPA:You can do it with a far. Because he heard about that the trusty love case. He's back back back
John Tripolsky:attention. Yeah.
Chris Picciurro, CPA:Oh, yeah. But yes. What what should we what should we be aware of when a client is maybe going to other states? You know, typically, you know, we've had clients that are actors, but a lot of them are in the the union, the the guild, and they so they're on a w two. They're actually on w two from whatever motion picture they're in, and they will have that non that non resident withholding.
Chris Picciurro, CPA:But for someone that's a freelancer, or maybe they started an s corp, what what are your thoughts on that?
Marit Burmood, CPA, EA:Yeah. That's definitely something to be aware of. I was talking to another group about this and someone said, oh, like an NFL player. And I said exactly what you're talking about. I said, we love an NFL player because we're gonna get a w two and we don't care if it's 50 pages long, we've got the withholding, they have the payroll account set up, you know, everything's nice and pretty and in a bow.
Marit Burmood, CPA, EA:But when you have clients that are traveling, it's different. And then you also have to think about are they sell like, if they're selling products and traveling, you were talking about someone who went to a trade show. So I have a client here in Utah and she does a lot of trade shows and fairs. And every time she travels out of state, not only do we have to worry about any just barely she went to Nevada, so she might not have an income tax liability, but she's gonna have a sales tax liability because she's gonna have physical presence there. And so if you have a client who's an influencer who's actually traveling and selling products, then you have to think about sales tax on top of it.
Marit Burmood, CPA, EA:But let's just use my client, for example, he's a professional athlete, but he's a freelancer. So he's a ten ninety nine and he travels all over the nation, doing he is so cool. He's the best. He does really cool like freestyle motocross shows. And so I'll pay him, you know, per show in different cities.
Marit Burmood, CPA, EA:So when I got him, I quickly learned I'm gonna have to get his tour schedule. I'm gonna have to get his compensation schedule. I'm gonna have to figure out, you know, what the responsibilities, the reporting requirements for each state are because some are different and some have limitations. Okay, well, you've only been here for so many days or if you've earned under a certain amount of income. So these are things that we could never figure out even if we spent the whole podcast.
Marit Burmood, CPA, EA:I've taught classes on sales or state income tax nexus and state sales tax nexus before, e commerce, and I will have an hour class and I cannot even dent it, right? Like it's so overwhelming because as we know as practitioners, every state is different. So this is where I really try to just get the awareness out there that it's something that you could find yourself in a bad, bad position of scope creep if you are not asking these questions in the beginning. So my client, I didn't ask him these things. I didn't know he also competes globally.
Marit Burmood, CPA, EA:Right now, he just called me, I needed something from him. He called me, I think he was in New Zealand. And he's like, I'll be back for a day and then I'm leaving again. And so a b c x, whatever the letter is also keep in mind, they can be super hard to get ahold of. So it can be frustrating to get your work done.
Marit Burmood, CPA, EA:Like I have one day when he comes back where he can sign stuff for me and he has access to a computer and then he's gone again. But besides that fact, you know, just understanding that it's gonna require more work and getting your fee schedule prepared based on what they have beforehand. And then if they tell you no because you're too expensive, they can find someone else. They can find someone who maybe has more resources to do these multi state and international filings, you know, that isn't you. But I've had models, calls with models and, you know, they're like, oh, well, I shoot here and I go here and I'm here and I'm here and I live six months here and I'm three months here and I'm like, I don't think we're a good fit.
Marit Burmood, CPA, EA:So just really having that, you know, grip on what you're willing to do as a practitioner and knowing your pricing about it so that you don't get these unpleasant surprises when you're already in an advisory agreement, especially.
Chris Picciurro, CPA:Yeah. I mean, and and this could be a whole and maybe we'll we'll maybe we will coerce you. We'll have to increase that big paycheck to, you know. Well, we won't film this in California to get you back because you've got other things like your your athlete could be competing internationally. He could or, you know, so there's a lot of different things.
Chris Picciurro, CPA:And and I wanna touch on the the practice management part of that, the scope creep. Do you, you know, obviously, we don't want new rates and everything, but do you set up a client do you do you charge a client setup fee, but or in your engagement, do you have kind of some loose language that says, hey. If we identify a state or locality that we feel you have to pay tax on, we are gonna charge you a a certain amount per state to explore. Like, how do you manage that scope creep? We have our own way of doing it, but I wanna really wanna hear about yours.
Marit Burmood, CPA, EA:Yeah. So I definitely have an onboarding fee. Right? And we, it used to not be as much now I've increased it in general because the client will constantly, it doesn't matter. This could be an influencer, this could be anybody.
Marit Burmood, CPA, EA:Oh, it's easy, there isn't that much going on, I'm fine. And then you run their transcripts and you're like, we have a mess and this is gonna be a long time coming. So I have the onboarding fee, but I have learned really that beyond what's in the engagement letter, of course, there's language in there to say we're gonna increase and for every state we have an additional filing fee, Like I have that in the engagement letter, but I have really, really learned that it comes to communication from at the beginning. Like you, you know, cut what I was I was gonna say cut the head off the serpent. I don't even know where that came from.
Marit Burmood, CPA, EA:That was so weird in my mind. But you basically face the problem before it becomes a problem, especially with influencers because they just have no idea the ramifications. But again, I don't think most people do. I think you could be a 45 year old traveling, you know, salesman and you wouldn't know about, you know, income taxes, state nexus. So you just you wanna ask the questions because I think you get so they have such a they paint such a pretty picture, picture and they they don't really talk about the details.
Marit Burmood, CPA, EA:And so I want everybody listening to this. And when I'm teaching other tax pros, all I want them to do is to know so they can ask the right questions. And then right there during the call say, that's a very complicated situation. This is, you know, this is gonna be something we're gonna have to talk about with pricing.
Chris Picciurro, CPA:Yeah. Nexus is is big and it's a tough one for us practitioners because there's there's no there's no value seen by the by the client. Hey. You might get caught and do this, so you're gonna have to pay this and file or or they could ultimately, communication is the key. Like, if you're let's say you're you're you're you're you're gonna spend one day in Connecticut, and they're probably they're pretty strict, and you're a freelancer, and you don't sell product, you're probably not gonna allocate a $150.
Chris Picciurro, CPA:I mean, I know and I know every state's different. We've had all the Wayfair case and then different people implementing it, but there you just gotta also be reasonable. Right?
Marit Burmood, CPA, EA:For sure.
Chris Picciurro, CPA:Yeah. For
Marit Burmood, CPA, EA:sure. A 100%.
Chris Picciurro, CPA:Yeah. Yeah. So I I imagine and we actually had a client that was in the professional services field. They grew exponentially, ended up they were a s corp and actually taking salary, which is nice. Two owners, but they grew in that and and and team members in in about 20 states.
Chris Picciurro, CPA:So they ended up having to file in, like, 25 states. And they ended up revoking the s corp just so they didn't have to file personally in all these states, and said, you know, we're gonna pay a little more in in payroll tax here, but the compliance cost for them to do nonresin withholdings in 25 states in the tax it was just nuts. It could be because ultimately, from the c corp perspective, they didn't have a lot of profit in these states. There there wasn't much tax rate, which is I'm I'm just saying I I could see that in your case if someone was who knows? They might have an operating company that's a c corp.
Chris Picciurro, CPA:I see some strategies as far as shifting income and stuff like that.
Marit Burmood, CPA, EA:Yeah. And I actually have a client who just came to me and he went to a lawyer and they set him up with an s corp and did the s election and everything. And I've been helping him and he's in Ohio. And so he has Rita. He has all of the different yeah.
Marit Burmood, CPA, EA:John Fu, thumbs down.
John Tripolsky:My my thumbs down. But you're a Michiganders saying that.
Marit Burmood, CPA, EA:He's in Ohio. He came to me. Oh, you know what? As I was do as I was looking at everything that he has, filing as an S corp versus filing as a schedule C, I have really, really been wondering if the additional compliance costs here are worth it to make the change. And the fact he takes so much in draws, he has basis issues.
Marit Burmood, CPA, EA:There are all of these things with the conversion that I'm looking at now going, I don't know if this was the best idea. Even though it seems like it on paper, you just need to be able to communicate that so that you don't go to an so if they go to another practitioner, they say, I can't believe they weren't filing you as an s corp. What are they doing? Thinking that the s corp is this magic fix all when there could be a lot of detailed reasons underneath like what you were talking about where it is not it's not worth it.
Chris Picciurro, CPA:It's similar to booking flights. If you just focus on the cheapest flight possible from from, you know, Boise, Idaho to Miami, Florida, You can accomplish that but you might have three connections which it takes up time. You might be on an airplane that charge airline that charges you to select your seat. You might you might like, you what if you're a mature age person, you have mobility issues, and you simply can't get from point a to point b to the airport in the Manicka time? And and then there's all these landmines, like, three connecting flights, one's late, and you're and you're in trouble, and now you're causing yourself more money because you gotta maybe spend the night somewhere and, I don't know.
Chris Picciurro, CPA:And so you nailed it. Like, there's a there's a lot of factors involved. It doesn't sound always
Marit Burmood, CPA, EA:That's a good one. Yes. If you don't if you don't do something from it, I'm gonna steal it. So you're gonna make that content quick.
Chris Picciurro, CPA:I know. Well, we'll send you the pizza buffet one, but I'll I'll I'll do a
Marit Burmood, CPA, EA:That's just like the video I did how chat GPT is like contour. We get these ideas. I'm like doing my face. I'm like, got blend your words. Blend your contour.
Marit Burmood, CPA, EA:You gotta pick the little bit more of an expensive flight so that you're not stuck in a foreign city for forty eight extra hours.
Chris Picciurro, CPA:Exactly. It's it's it's the it's the old price first cost. So, well, I've learned a lot here on I mean, again, I truly enjoyed your, presentation at Taxposium, and I really enjoyed your content. And, you know, you're officially a friend of the Mr. R show, so that's that's a that's always an honor, I'm sure.
Marit Burmood, CPA, EA:Thank you. I'm honored too. Thank you.
John Tripolsky:Absolutely. Well, yeah, I mean, this was a good topic too because we dove into something that I'm sure there's a lot of interest around too, but then I'm gonna make the assumption that a lot of people don't realize all you know, the grass is not always greener on the other side. You know? Sometimes they get over there, it might be astroturf. Right?
Marit Burmood, CPA, EA:It's
John Tripolsky:it's a total facade. But and you you brought up some good points. Right? Just this just the little but huge complexities of working with specific types of clients. And there I wish I don't know if complexity is really the best word, just things that they need to be aware of.
John Tripolsky:Right? You brought up some really good ones. Kinda like Chris. Like, Chris knows how difficult it is to work with me, but he just deals with it and vice versa.
Marit Burmood, CPA, EA:Nuances of the nuances of John.
Chris Picciurro, CPA:There you
John Tripolsky:go. I should write a whole book of those. Yeah. That's it. Although my book of bad dad jokes will be way longer than that.
John Tripolsky:So we'll leave that's a whole another
Chris Picciurro, CPA:Oh, they're they're terrible. I gotta admit to you. They're they're they're bad. Well, think about the if, yeah, if you do advise clients, sometimes it's easier to get out of a marriage than an s corp. So before you jump into that, you gotta think about it.
Chris Picciurro, CPA:You gotta think
Marit Burmood, CPA, EA:about that. Love that.
John Tripolsky:On that note, I think we should part ways, at least for now. Oh. So we'll let's definitely we'll be diving into this more in in specifics. You know, as things change, obviously, as new new tax law kinda rolls out, obviously, some things will tweak throughout that. So, yeah, we'll we'll have to have you back.
John Tripolsky:We'll revisit some of these. And for anybody that's listening to this too, definitely check out the show notes, connect with us through that, reach out with any questions. And the little bit of advice that I could probably give, not being a tax pro, right, is if you have any questions, maybe talk to somebody about these things before you take on one of those clients, right, if you have certain stuff. So we'll put contacts in there. They're there for you, not us.
John Tripolsky:So take advantage
Chris Picciurro, CPA:of it. We really appreciate you, and we'll put this all this information in the show notes. If you're a tax professional listening if you're not if you're listening to this and you're not a tax professional, first of all, thank you because my wife and parents don't even listen to this, unless you're a tax professional. But second of all, if you if you are a tax professional, definitely, don't be afraid to work with influencers, but make sure you connect and make sure that you have the right people around you to help you out. Definitely.
John Tripolsky:And that note will definitely part ways. But we'll see everybody soon back here again on the Mr. R Show.
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