There's 10 essentials, though, when it comes to the Augusta. I have yet to meet one single business owner who is doing this correctly. Do you rent a house? Can you do this? You can do as many homes as you live in for 14 days a year. And not only that, but if you have a direct family member who lives there, it's also qualified as a residence for you. Hold on, hold on. This is, I've never heard of this. Nathaniel, welcome to the Better Wealth Show. Hey, thanks for having me, Caleb. Really appreciate it. So what we're going to talk about is what I believe is going to be one of the most thorough, if not the most thorough masterclass on what is the Augusta rule, how does it work, and more importantly, how ordinary people that are watching this, that are doing maybe extraordinary things can take advantage of one of the coolest and unique tax strategies out there. I would also encourage you to buckle up, take good notes, because there's a pretty good chance you're doing it wrong. And so with that, Nathaniel, welcome to the show. And I'm excited to be taking notes, even though I know that I'm already in good hands. Thank you. Well, you teed it up really well for me, Caleb. So really appreciate it. That's exactly the pinch point that most of us have felt. If we've known about the Augusta rule, you know, attempted the Augusta rule or doing the Augusta rule. There's so, so much misinformation out there. And I'll get to my own story and how that intersects with our conversation, how it can help other people. But, you know, let's let's just dive in right away. So if you're a business owner. And you've never heard of the Augusta rule. You should stay on just to learn about it. If you are a business owner who's heard of the Augusta rule, then chances are you're not doing it right and you're not optimizing it. And when I say chances are, I have yet to meet a single, one single business owner who is doing this correctly. So please, please take our information. We give it all away. You know, we've got some QR codes at the end. You can literally just take our program and run with it. So we give it to you for free. So stick around. At the very beginning, you should know that what's possible is you can save thousands of on taxes every year. So annually recurring every year, thousands of dollars by renting to yourself, which sounds nutty, but is actually true. It's actually written in the tax code and we'll get to that. But first let's start with all the problems. There is so, there are so many problems with the Augusta rule implementation. Number one, it's incredibly hard to get right. Historically, what has taken to apply is you actually need to become a quasi expert. in the tax law yourself. Well, that takes a ton of time and it distracts you as a business owner from what you're doing. And if you're a tax filer, a tax professional, you're trying to explain this to your clients who are not tax professionals. There's all kinds of specific documentation, all kinds of eligibility requirements, not to mention actually nailing down your rental comparables. And for those who don't know the rule, this will all sound like, what are you talking about? But for those who do, You're going to understand there's a lot of complexity here, and it's really hard. And why a lot of tax professionals, you know, don't either don't do this, they just won't. Or if they do, they get it wrong. And it's not necessarily their fault. They're not required to be an expert in this area. You know, tax preparation, from what I understand, as a non-tax expert, is a team sport, just like a lot of other industries. And so we want to bring different expertises to the table for people to have these strategies, you know, actually rolled out properly. So it's hard to get right. It also takes too much time. Right. This particular this particular strategy takes a ton of time. You know, you have to become the expert. You have to get the right contracts. You have to research rental valuations. You have to record notes. You have to hope you didn't screw up anywhere because there's all kinds of like really particular edge cases. You have to make actual payments in a timely manner. You have to have stuff actually contemporaneously recorded, meaning at the same time as you do the action. And it's just way too much for most people to remember. And it's basically impossible for most tax preparers. to capture this information in a compliant manner. And so it's a huge hurdle. Then let's go on another one. It also, is the risk really worth the reward? Like at the end of the day is, you know, a few thousand dollars worth it? Well, one, is this only a few thousand dollars or is this many thousands, like tens, if not a hundred thousand, depending on your case, we'll get to that. Is it still worth the risk? Like one critical mistake, you lose the whole thing. You're going to pay penalties. And then also you have to have meetings in your home. Like, are we inviting strangers into our home? Like, what are we doing here? So the answer is no, you're not inviting strangers into your home unless you choose to. But let's dive into it a little bit further. When you're learning about the Augusta rule, a lot of times you're left to, you know, YouTube, TikTok. There are some softwares out there, but they're typically just a glorified spreadsheet where you'll enter some information, you'll put in some notes. There might even be like an AI assistant to help you kind of, you know, capture the meeting notes, that type of thing. But at the end of the day, you're still left to do the entire compliance yourself. and to be the expert. Or if you have a tax professional advising you, that tax professional has to be there to answer questions for every single one of the meetings that you're having in the Augusta rule. So you could also hire a specialty tax professional. I did that, cost me many thousands of dollars. I'll get to that as well. So again, a lot, a lot, a lot of hurdles here, hurdles that I had to go through, hurdles that your audience have to go through, both as a preparer or as a business owner. So Nathaniel, I know that you're going to get into this, but for those of you watching that don't even fully understand what the Augusta rule is, it's the ability for you to rent your residence, your house out to your business for 14 days or less. And obviously you need to do that properly. And there's an art to how much you can charge. And so the two areas I believe that get messed up the most is the comps. of what you can actually charge. And then the actual documentation, making sure it's done well. And there's probably more, but those are like the two main ones that I know that majority of people are not doing properly. And so that's when we're saying like, yeah, you could go to TikTok and YouTube and books and like, and get the concept. The concept is not rocket science, even though it's kind of blows your mind when you think about it. It's the doing it properly. Nathaniel, is there any other things that I missed in there? Just giving like an overview. Yeah, well, I mean, you nailed the ones that are probably the most missed. You know, it's the comps for sure. I mean, most of us are not experts on getting comps. And, you know, maybe I could address this in a different order by presentation here. But let's just jump right into it, you know, and we'll ignore the slides and come back to that. The comps. So when it comes to comps, you know, you actually have to go out into the marketplace and find basically data that aligns with your use case. So we should back up from there. Like, what is the Augusta rule on the most basic level? Well, you can rent your home 14 days a year tax-free. It's been in the tax code since 1976. So if you can rent your home for 14 days and you pay no taxes on that, why does that matter to us? Well, if you're a business owner, when you rent your home for 14 days, you can actually rent it to your business. So if you're renting it to your business, your business is a separate. person in the eyes of the IRS unless it's a sole proprietorship or a single member LLC. Those are ineligible. So now we're getting a little bit into the weeds, a little more technical for some of our audience. But if you have other entities, LLCs, C-Corps, S-Corps, then they're eligible for this because they're a separate person in the eyes of the IRS. So now you can rent your home to your business. And when you do that, it's tax-free. Okay. So now it's a left-hand, right-hand dealing, right? It's one of the very few left-hand, right-hand deals that the IRS actually allows. But because that's the case, who's to say that you couldn't just be like, well, I'm going to rent my home for 50 grand a day. Yep. I like 50 grand. It's a friendly number to me. You know what I always say, Caleb? Every 50 grand counts. Yeah, that's right. Yeah. I can get behind that. I'm just going to choose 50 grand and it's 50 grand a day. But the IRS says, no, you actually have to substantiate that. There has to be a market rate. So then the next mistake people make once they realize that is they go and they look at Airbnbs. So this was a mistake I made. I did this because it's easy data. You can go out, you can search, you can find them easily. And you think, well, it's a home and these are homes. So isn't that a comparable? Well, yes. But we have to remember that with the Augusta, when you're renting to your business, an actual comparable is a legitimate business venue. And one of the questions we always ask is what would a real business do? So a real business, if it's renting a separate space. would go out, it would find a space that's appropriate, it would find amenities that align with its business purpose, and it would pay whatever market rate there is. So let's say you're having a, you know, like a client appreciation dinner, and you're having a dozen people over. Well, you might go rent, say, like a winery or something like that, have a legitimate business dinner, you know, talk about business, maybe even make a sale or strengthen a relationship. That's a legitimate expense. And that winery might charge you, I don't know. two, three thousand dollars for the venue that day. Well, that's an actual legitimate comparable for your home for the right purpose. So we can get into that specifically a little bit later as well. But the mistake people make is misaligning the purpose with the comparables that they're researching on the marketplace. So that's something that we address very specifically when we do the Augusta. I love it. I love it. Appreciate you doing that. And then let's let's continue. And then almost nobody actually does the the meeting notes. Like that's, that's something that like, uh, it's you're, you're doing a great job. You're doing an Airbnb comparison. You're, uh, almost nobody's actually writing the meeting notes, which you also have to do, but, uh, yeah, let's, let's continue. So we, we just went over. Yeah. We talk about the notes here now, too. Before we jump in, the notes are critical. And what I'm told from my partner in this, John Heyer, who's been a tax attorney for 30 years, he's taken cases before the IRS. To my knowledge, he's won every one of them that's gone that far and usually negotiated them out far before that and is arguably the country's leading expert on the Augusta rule. He's the only guy I know that's actually gotten the entire... Sinopoli case, which is a case that directly addressed the Augusta rule came out, I believe, in 2023. He actually got the entire shopping cart full of records and has read through the entire transcript, not once, not twice, but three times in entirety. He knows this cold. And what he said, and that's an aside, that's just saying, look, he's legit. But when it comes to actually meeting notes, he said, basically nine out of 10 times, if you actually have substantiation, If you actually have written notes. The audit pretty much disappears. So if you take nothing away from this recording other than the fact that you need to have legitimate meeting notes, you're so much farther ahead than anybody else. Yeah, that's well said. That's a takeaway for sure. Just take that away. So yes, well said. So we already touched on this, but why is it called the Augusta rule and what's the history? So it's named after the Augusta golf tournament. or Augusta, Georgia, where the Masters Tournament takes place, I should say. And what happened is the residents of the golf course back in the 70s successfully petitioned Congress to change the tax code so that this carve-out existed. They were renting their homes for the national tournament every year, getting a ton of money. I mean, we've heard of like 10 to 20 grand a day for these homes on the golf course. And they didn't want to pay taxes on it. They didn't want to have a separate business entity to... you know, contain the rental income. They didn't want the hassle. And I don't know this for a fact, Caleb, but I'm guessing that there were several congressmen or legislators or judges that may have lived on the course during that time period and may still continue to live there today, some of them. So, you know, people sometimes ask, well, maybe this will go away. And I think, maybe, but who does it benefit? And is it in their interest to keep it? And the answer there is yes. So, you know, do we know? No, but is it still there? Yes. Has it been unchanged since 1976? Yes. And so what it is, is Section 280A, Subsection G, and we already said what it is, but it allows you to rent your home for two weeks a year. And if you do it for two weeks or less, it's tax-free. If you go over that by even a day, 15 days or more, you pay taxes on all of it. So this only applies when a residence is rented for 14 days a year or less. And it was created in Augusta, Georgia. People heard about it. They got outraged because of the tax savings and there was a big kerfuffle. So it got popularized and was known as the Augusta rule. But the outrage subsided and the rule persists. For me, as I learned about this, I had paid six figures in taxes that I didn't need to pay. Six figures of my money that I did not need to pay, I paid to the IRS because I did not know this rule. Every time I say that, it still makes me a little bit ill. this this this rule is, does not need to be as complicated as it is now. And we've made it less complicated, but I had a successful small business. I still have a successful small business. And at the time I got a tax bill that was larger than my salary. And I had a couple of little girls and another one coming on the way. I happened to be another boy. And I was like, how do I pay my bills with a tax bill like this? This is disgusting, frankly. And I went to my tax professional. And he told me there was nothing else I could do to reduce my taxes. You know, he was trying his best. He had saved me money before. He was a great guy. He just wasn't equipped when it came to the August rule and other strategies. I talked to another tax professional. He told me the same thing. So I just kind of sat there for a couple of years until I met John. I met John at a real estate investing conference because that's another activity I'm involved in and paid him thousands of dollars. This was the very first strategy he told me about. And then I spent the next two years researching it in an uncertainty because even though he told me about the strategy, I was then left to then execute it on my own still. And that's where I bogged down. Some people don't bog down there. But typically, if they don't bog down there, it's because they're actually doing something wrong in the rule. They're actually leaving a gaping hole that if it was challenged, they're probably going to get smoked in an audit. So John is like the guy on this. He is a total expert. So I'm very grateful to work with him on this. When it comes to the Augusta rule, there's really basically four steps. Planning meetings in the home that are legitimate business meetings. We'll get into this more next. hosting those meetings, getting paid for those meetings, then deducting and saving. Very, very simple on its face. So there's 10 essentials, though, when it comes to the Augusta Rule. 10 things that are like, they're like the 10 commandments, basically, like thou shalt, thou shalt not. Like, don't do this, do this. And number one is that you have to have a rental agreement that you've signed on or before the date of the event. And people get this wrong all the time. Yeah, all the time. All the time. Like, I got this wrong also. After I carefully researched everything, I was like, oh, I got this. I'll go do this. This one slips everybody. Right? We're in a hurry. We're doing our work. Well, let's be honest. Most people at the end of the year are going to their CPA if they're going to do this strategy, picking 14 days throughout the year and then making something up after the fact. Almost nobody has a an agreement before this actually happened. So, yeah, that's that's great. Yep. It's great. And it's also kind of like, oh, man, you know, all the people who are listening now are like, oh, really? Everyone's everyone's like, yeah, everyone's having that. That's exactly right. And I laugh because I'm right there with you. This is this is me. You know, this is this is the problem I had and still have apart from our done for you system. So number two. You have to find comparables and good comparable properties for your event and have them properly documented. So what do we mean by that? Well, I explained a little bit earlier. You can go to Airbnbs, but if you do that, you're leaving a ton of money on the table. And if you're doing this strategy, why would you want to leave money on the table? We want people to have the best comparables. Now, John tells me we can't say we want to maximize the benefit. Maximize is like a curse word to the tax lawyer. But we want to optimize it. We can say that we want to optimize it. We want it to be market and we want it to reflect, you know, a valuation that is comparable. We want to get as much as we can with staying in the guidelines and not putting ourselves at risk of it getting disallowed. That is exactly right. That's exactly right. Which feels like maximize, but we'll go with optimize. Optimize makes you feel more smart when you say it out loud. So we'll make John happy. Make John happy. So he is in our corner. So there's an art and a science to this. And most of us are not trained on doing this. And our team does this. Like we do this daily. Yeah. Yeah. And you have great documentation on the flip side. So yeah, the whole Airbnb thing, that's what I did just an FYI. So like just IRS, if you're listening to this, I may have not done all the steps properly, but I'm pretty sure I under did my deductions because all I did was I just looked at. Airbnb stuff and and just took the average. So that's that's what that's what I did. There's some people that are like on something, something that I haven't had the pleasure of having. And they're just they just think their house is worth 20, 20, 30 grand a day kind of deal. And so on the flip side, there could be in really hot water if they actually got it challenged. Whereas like if you did the whole Airbnb thing, you're just missing out. But you're I don't think the IRS would come after you if they're like, hey, you you charge yourself. You gave your business a discount. Like, I don't think you're necessarily getting in trouble for that. But you can get in trouble if you overdo it. Is that correct? That is correct. And you're right, Caleb. I mean, which way would you rather which ditch would you rather be in on this? Right. The one that's going to get you roasted to a nut brown crisp or the one that they're going to be like, yeah, you can keep all that. Yeah, I mean, I would err on the side, but again, if we had... If we had someone in our corner, like actual proof, and I didn't have to worry, I would obviously want to go right up to that line if I knew I had the receipts. Yeah, that's exactly right. So that's what we want to do. And not only that, but properly documented. So one of the things that we found in our process of doing this over and over and over again for business owners and for tax professionals is that you can find a comparable and then next week it's gone. Because guess what? The Internet is not static. So. We actually screenshot ours as well as catch the URL. So just heads up, if you're doing this on your own, you're going to want to do that because things move. So, okay. Another one. And this one is interesting because this is not in Section 288 subsection G. Okay. This is our take on it. So we want to differentiate that for everybody. So we know out the gate that this is our take. We think that you need to have at least three plus attendees in person for the rule to be legitimate. Okay. Well, why is that and why three specifically? Well, one, this is a business meeting. It's a legitimate business purpose. And if you have just two people. What we found in our experience is often that tends to be like a husband and wife, you know, say they've got an LLC and it's a husband and wife partnership. Well, one thing we count a husband and wife as one attendee. A lot of common property states out there, a lot of businesses owned with a husband and wife. Well, husband and wife, for our purposes, is one attendee. We want two additional. And the reason we want this is because narrative matters, right? The story matters. And we want a strong story. We want to be able to say, look, there were multiple people meeting together. They needed a space to meet together because there were multiple people. And they're meeting together for a legitimate business purpose. So is this in the actual code when it comes to the Augusta proper? No. Does this strengthen the narrative? Absolutely. And so we're requiring it in our program. And we do advise that others consider this as well strongly, that you have multiple attendees. We love meetings where there's a lot more than this. This is our minimum. What else? Number four. This one also catches a lot of people. This is also not in Section 288. This is that meetings must last 4.5 hours or longer. Well, why is that? Like, why 4.5? Why not, you know, three or five? We picked 4.5 because we want to get a full business day deduction when we do this, right? We want the full business day. Now, you could do the August rule and get an hour. But what's the limiting factor on the August rule deduction, Caleb? I would say half a day then. Yep. Half a day. Yep. But the limiting factor on the August rule is your 14 days, right? You get 14 rounds in the chamber, to put it one way, or you get 14 shots, right? So if you spent one hour on one day, you just shot one of your bullets. That's right. So, you know, you could get a hundred bucks for a day, but you only use one. Let's get that full business day, right? And you're saying if you go four and a half, every, the IRS will. say four and a half versus 12 hours. We don't care. That's, that's a day. That is correct. Then you need four and a half hours justifies you being able to write off the full date rate. That's exactly right. They, in another section of the code, they define a business day as four hours and one minute. Okay. So 4.5 is rounding up, but you just thought you want to be safer than sorry. Because what if the IRS asks you if you got up and went to the bathroom, man? You know, you go to the snack during that meeting, disallowed. I'm locked in. I don't even think about anything but work. Exactly. You know, we want to have this. So let's not get cute. Right. So 4.5 hours is our minimum. We want it longer than. OK, so right away as a business owner, I hope you're thinking that's ridiculous. I never have a four and a half hour meetings. I hope you're thinking that because that's a really long meeting in my world. I don't know about yours, but that's really long. So, yeah, it's like, is this even worth it? OK, well, we we've thought through this and. And one of the giveaways, you can just grab this from us at the end, is 72 ways to really make this optimized for you. So we cover all this in that giveaway. But what we love to do is we love to have stack purposes. So let's say you're doing an annual review. Well, you can have your marketing meeting, your ops meeting, right? Your financial meeting. You can start stacking these together, and those combined purposes can fill out that timeframe. Another one is it's very common to have a legitimate meal around a business purpose. So, again, if you're having a prospective client or let's say you're doing a Christmas party with your whole team or whatever, there's a meal. Well, you have set up, right? You have the meal. You have the cleanup. Pretty soon it easily exceeds four and a half hours. Yeah. I actually look at the four and a half hours. And if you can't hit four and a half hours, you need to take an art class and get more creative because there's. there's so many different ways. I mean, and that's the other tough thing is like we, we host our leadership. So they, they're here. So we actually legitimately are working for more than eight hours. I'm sure, I'm sure our team would love the definition of a full workday, four and a half, but, um, but I mean, there's so much, so like, it's hard to even quantify, like we do team building. Um, and that doesn't necessarily look like a boring old meeting, but we're like pouring into each other and, you know, give it. And, and so the lot, I mean, yeah. Four and a half hours should be very easy to do. But I think the key thing is documenting it, which is very few people are doing. But if you document it, I don't think there's an issue. I think going back and trying to verbalize or articulate it after the fact is where people can get themselves in trouble. A hundred percent. Yep. A hundred percent. That's exactly right. Number five, credibly document your agenda and take meeting notes. So that you already said it, and we've said this before, you have to document things. You have to take meeting notes, right? You got to nail this. If it's not documented, it doesn't exist. It's that simple. Again, 9 out of 10. Do you recommend taking pictures as well? We do. That's an optional thing for our program. And that definitely strengthens the narrative, right? Like whatever strengthens the narrative, we want it. This is not required, but the notes, you have to actually write out. This is exactly what we did now. Now, to what extent? Well, the more the better. Right. A lot of our clients now are taking an AI recorder, recording the meeting and then just uploading the summary into our software. Yeah, I love it. Perfect. Right. Like, why not? So and if you can't record it and have it be legitimate, then what are you doing anyway? Like stop. Yeah. How cool would that be? You get audited and then you send the IRS these just long files and being like, here's here's not just our notes. Here's the transcription. You could be like Donald Trump, have that perfect phone call, you know, have that perfect full day meeting. You could send it to the IRS and have them. I love it. Absolutely. And that's the way we should be thinking. Right. Don't try to get cute with this. Do it right. Yeah. Right. So number six, have a strong business purpose for the events. And again. And a lot of this is basic stuff now, right? Like if you're not having an actual business purpose, then don't do it, right? The Augusta rule works when you're renting your home for business purposes. So this should be stuff that actually forwards the mission of the business. It actually lends itself towards building profitability, towards strengthening relationships, the things that an actual business would do. So we constantly tell people to ask themselves, what would a real business do? You know, we get asked these technical questions and we can go in a technical answer, but it's usually answered by what would a real business do? And then the people kind of think through and like, OK, yeah, I know what to do. Right. Yeah. So have to have that purpose. Number seven, mind the entertainment is usually not deductible rules. Right. Some people go into this and they're like, well, great. I'll just, you know, throw a kegger and I'll call it business because I had one or two people over for business. That does not work right now. So what about food? Yep. Can you have food? Can you even have a beer or a drink with your meal and during business? Absolutely. You can. That is that's a normal thing in the course of business. okay you just can't go so and that can be deducted i would imagine like that can be a part so you could if you're doing comps you can say well what would a venue charge if they're feeding us twice you know lunch and dinner and all i would imagine that that could go into the comps but what you're saying is um you're you can't go overboard and, you know, spend a ton of money that then the IRS will be able to say, yeah, this is unreasonable for a business thing, though. There's some really crazy things that businesses do just an FYI. But but you're just saying like you just have to you just have to go back to if this is challenged, how to justify it, that this is a ordinary and necessary expense that the business would do. If you're an accredited investor and want to find a place where you can look at all the advanced tax strategies that I know or have I've been pitched or I've heard, I've created a place for you. It's called taxandassets.com. It's a free community for accredited investors that want to go deeper on potential tax strategies for you to do research on, for your tax team to do research on. You can go to taxandassets.com or check out the link in the description. Yeah, actually, let me back that up. So you cannot include any food in the Augusta rule. Those are separate deductions. So now we know we can expense meals, right? And you can expense this just like you would if you went to a restaurant with your- But that can't go into the comps. It cannot go into the comps. Because remember, fundamentally what the Augusta rule is, is you're renting your home to your business, right? And if you're renting, and it's actually a residence that you're renting, right? So, well, what is a residence by the code? Well, a residence is a place that you can eat, sleep, and go to the bathroom. You've got to have those three facilities, okay? So if you have those three facilities, now it can be a residence. Now, is it a personal residence? Is it a residence for you? To make it a personal residence, you have to have resided there, overnighted there for two weeks a year, 14 days a year. So we often say two weeks just to have people not confuse the 14 days in the Augusta rule with the 14 days here. These are two different 14s and two different sections of the tax code. But in order for it to qualify for a residence, you have to have lived there for two weeks, and it has to have a bedroom, bathroom, and kitchen. So when we're trying to get the comps, we're doing it just on the residence, no personal property, no audiovisual equipment if we're using a comp from a hotel or something like that. In fact, what we do when we're doing the comps, we actually look for that stuff and we back it out. We subtract it from the valuation because it's pure real estate. So I just want to clarify that. Another question would be like I have a studio in my home and let's say our team comes and we film and all. I wouldn't be able to then say, I wouldn't be able to necessarily add that in and say that I shouldn't have a higher valuation because I have a full. $30,000 studio in my home. Is that correct? Yeah. You can actually consider what do the amenities lie to produce? Okay. There are amenities. So like, let's say, so some of our clients have like a huge patio or a pool or more parking than others have, or yes, a studio or something like that. Okay. Well, what are other comparables that give you those amenities? We're really looking at the real estate around those amenities and the use case. what we can't do in this day. Oh, there's a price tag on all this equipment that's not actually part of the real estate. Does that make sense? Okay. Heard. I think we can move on, but that's really helpful, and I appreciate you sharing that. Okay. Sounds good. So, again, this one we're just trying to say don't throw a huge party. Another thing that gets audited is, like, you know, hunting cabins, you know, equestrian centers. We're not trying to do that type of stuff. That's commonly abused, so avoid that. Number eight. Have an actual movement of money, not just a bookkeeping entry. We see this messed up all the time. But people at the end of the year will be going through like, I need to save more money. I'll do the Augusta rule, go back retroactively, and they'll cut just one giant check for all these rental events that they made up. Well, what would a real business do? Like what a real business. They pay 30 days after or immediately. Yeah, that's right. Usually before the event, if not on the event. Worst case scenario, not 30. Yeah. So we mirror the same thing. Right. And we look for it to be, again, since the agreement has to be contemporaneous, we make the payments contemporaneous at the same time. Now, if someone comes to us and they say, look, I'm just onboarding and I had an event two weeks ago. Can we scoop that in? Yeah, we'll do that. It's that, you know, a real business would do that. Okay. But what would a real business do? They would not have an IOU sitting there for months, much less a year or years. Yeah, for sure. We move money. Number nine. properly report and file the forms. You can do all this work. And if you don't actually report it, it does nothing for you. So how do you actually do this? And this is probably more for the tax professionals, anybody. Well, you're receiving income. So there should be a 1099. Some people say, whoa, don't 1099. Like you're actually then telling them that there's money moving. Well, that's what you're supposed to do. You 1099, there's money coming in. But then you also need to put a note on the 1040 that says, you know. Money was received, but then this is not taxable income. And we put these instructions in our filing forms. We just have a one page where it's just like, put this line on this line, put this line on this line. We tell them exactly what to do. It's copy paste. But you have to do that properly. What happens then is they see the income. They're like, hey, wait, where's that? Then they see the note. Oh, there's a reason for this note. We're not going to follow this up any further. Good to go. So it has to be done properly. Has to be, have to use the proper forms. And number 10, this one, you know, you could say, well, that's not really a technical thing. No, it isn't. But get started now. Just like I talked about, I literally lost six figures of income I could have had by not starting now. So, you know, it's like the classic, when's the best time to grow a tree? Well, 50 years ago. Well, when's the second best time? Right now. Like, don't wait. If this is a fit for you, do it now. Okay. And we just told you a ton of problems and a ton of issues. So why the heck should you start this? Yeah. and I just I have a couple of questions that may come up later, but if you rent a house, can you do this? So if you're renting a house, how many days is it rented, right? It's rented a lot more than 14. A lot more than 14 days disqualified. Yep. So if you're doing it on an apartment and you're doing the Augusta Roll, you're straight up going to get crushed if you get audited on that. Yeah. If you are renting it out. And also doing the August rule, correct? You've absolutely destroyed the August rule. No, I'm not saying renting it out. I'm saying you're renting. You're personally renting. Okay. So again, let's go back to our residence definition. An apartment qualifies as a residence. If you're residing there for more than two weeks, it is now seasoned for this use case. It absolutely does qualify. So if you're renting your residence, you may absolutely apply the August rule to this. Okay. So if you're renting a studio in Miami. Yep. on if you're renting a house just in general, it's available. And you can do that if that's your... Okay. That was one of the questions that I had. I know you have a slide that I believe is going to be addressing this, but you can do more than one home. So if you own two homes or you rent a home and you own another and it's both your residence, you could use... Can you do 14 on both? Correct. The limitation is wild. And that's one of the things that I learned, too, in this. Never knew that before. Never had TikTok tell me that or any of the other sources. You can do as many homes as you live in for 14 days a year. And not only that, but in order for a home to be considered your residence, if you have a direct family member who lives there, it's also qualified as a residence for you. So if your mother, brother, sister, you know, daughter, son. has a place that they reside, you know, bedroom, bathroom, kitchen that they're in for 14 days or more, you can now use that home and rent it as well. So yeah, this is where it gets really, really. Hold on. Hold on. This is, I've never heard of this. So my family, my family has both, both my wife's parents and my parents have lovely properties and we spend time back in that state. We go back home. And you're telling me that I potentially could create a legitimate way to have my business pay myself, even though I don't own the home, but I have a direct family member that is in that residence? That is correct. Yeah. But what if my parents wanted to do the Augusta rule themselves? Could we both do it separate times on the same property? Or is it? Or is one property only get 14? Every 14 per property. It's 14 per property. That's the limitation. Really where we see this is not so much business owners then renting other residences that are seasoned by their relations. It's more of a way to conveniently pass on a few bucks to your son when you stay overnight in his the house you bought for him at college. You know, that type of thing. So let's say you're in a college town and you bought a house. Your kid could live there through college. and you're in town and you're there for business. Well, you can pay your son whatever you would have paid to go to the hotel, and they get some tax-free income. So it's just a nice way to kind of transfer and disseminate some of that wealth tax-free to your direct descendants. That's where we see this employed. So I want to emphasize that. But you can do it to yourself if you want. That is my understanding. Yep. Okay. This one we're going to get. John's going to shoot me an email. We need to get John to weigh in on this. Well, we might take this out if it's not true. So if this is, if this makes recording this has been verified and i uh that is something that i feel like that's breaking news because i've never heard that before yeah um i feel like your life just got a lot busier after letting me know that that's right thank you we are going to verify this one very specifically i know 100 the transfer to the to all the the family members but we're going to verify if you can pocket yourself but no but that's but you're even saying like because i i thought because i'm I'm going off of like the being. estate residence, but you're just saying like, if I lived in a home for 15 days, technically, let's say it was like my fifth home, right? I only stay there 20 days a year. You're saying because I've lived there 14 days out of the year, that technically registers as qualifying residence qualifies. And then if I only stay there 20 days, I really have to create of really strong justification and how, you know. 14 of those days, if I want to maximize that was actually work related, couldn't just be my wife and I, you know, you know, having a business meeting, you know, so I think it's not again, but there's it is interesting where you could have, you could do some really interesting things. So we're going to continue with that is that is something that helped expand my brain because I thought this was just a limited to one home. And if you're have multiple homes or your mind's racing as well, again. this is why you want to do this properly because it feels overwhelming. But I'm starting to see a lot of money could be saved if you do this properly. Yeah. Now, a lot of our clients have two to four homes. And they're really, really able to use this well. And a lot of these homes they purchase so they have a place to stay as they're traveling around the country on business. So they'll go to one home and they're Like, look, I'm just staying here to kind of like. assess this region. So I'm bringing people into the home. We're having these meetings. I'm going to go to the next one. And our clients are routinely doing that sort of activity and benefiting from the Augusta Rule in multiple residences. And not only that, but we'll jump ahead to it does not have to be located in North America for the Augusta Rule, the home that is. That is another like, never knew that. We'll get to that a little bit later. Let's go to another case study though. So... This one, I changed his name because I wasn't able to reach out and ask to get permission and time for our presentation here. But this is a current client of ours. and he's a serial entrepreneur in New Jersey. He heard about us on a podcast, and he had two qualifying residences. I can't even remember if he had heard about the Augusta rule prior to hearing about us, but he certainly didn't know what it actually did or how it could be applied. But as soon as he heard about it and we walked him through the program, he signed on immediately, and he was eligible for film production. And we absolutely love film production because use case matters, like what you're using. the house actually for, for your business purpose, matters in terms of the amount you can deduct. He had two nice homes, but what he also had was the purpose of actual film production. And what we do at theagustral.com is we've partnered with a national film scouting organization based over in LA, near Hollywood. And what they do is they go anywhere in the country and they will provide valuations for properties specific to film usage. And so we're not talking about filming yourself with your iPhone. or even like a call like this, you know, over Zoom or whatnot. We're talking about you have a cameraman, you have a lighting guy, you might have like a gaffer, you have, you know, there's multiple people involved, like you're filming a real film. So if you're doing that level of production, which he is, then you can get a film valuation, which we provided for him. And he is currently tracking, even though he only signed up, I want to say like less than 60 days ago to get. 14 days at both residences producing content for this next year. $140,000 deduction. Wow. Yeah. Killing it. And he is in the, again, high bracket, high tax state. He is going to pocket a huge chunk of that. Yeah. I'm sure. Yeah. Crit. Hopefully he takes care of you guys at Christmas. I feel like you're going to get a lot of Christmas gifts. That's kind of what I'm thinking. But yeah. Once you run through the cool thing about. Joe here is that after he ran through his training, he was like, wait, that's it? We're like, yeah, that's it. He's like, are you kidding me? That was so easy. Like, Joe, we love hearing that because we've only spent two years making this easy. Yeah, yeah. Yeah, to put this together and package it so that the business owner didn't have to become a tax expert. So let's talk about how do we optimize it, right? How do we get the most benefit, the most bang for our buck if we're going to do this? We mentioned a lot of these things. Let's summarize them. Well, your residence size and amenities matter, right? Like what market are you in? What sort of place do you have? We take that all into account and you should too. Do you have more than one residence, right? You can literally multiply the effect with more than one residence. We are not limited to residences in the U.S. What we're limited to is a place that actually is seasoned as a residence by you staying there for two weeks a year that has a better bathroom and kitchen. So we have clients who have homes in Mexico, homes in Canada. You know, you can have homes in any number of countries who have treaties with us in the North American area. I'm not going to get into which specific countries here on this call. We go through all those specifics with clients when we onboard them. And we have clients that you can have a home in Mexico. You could have a home here. You could have a home, you know, in Guatemala. And as long as you have a U.S.-based business and you reside in those residences, you know, more than 14 days. you can actually have a meeting in those homes that qualifies for the Augusta rule. You're even telling me, but you're even telling me like I could in Guatemala rent a place for a month, go down there and two weeks, let's say, let's say 10 days of that whole month, I'm doing legitimate business there. You're telling me that that qualifies, even though. I am. That's 100% correct. John has walked me through all this. It's wild. Yeah. I mean, there's so many. Because that's what people I mean, this doesn't work if you're just doing a seven-day off-site because you didn't hit the 14-day minimum. But there's so many use cases. I mean, there's people I know that I don't know if Europe counts, but I know people that go to Europe for one to two months. Europe is tougher. And the reason is there's actually another section of the code that talks about the locus of business. So if you have everybody traveling from the U.S. like way out of the North American area for business, you have to have the the average attendees traveling from an equidistant distance around the area you picked. There's some funky stuff in here and I can't even get into it specifically, John. I hear you. I hear you. To summarize it, it is North American area. OK, heard. Yeah. But yes, let's say you're you're an influencer and part of your job is filming. Well, you could go rent an amazing place on some island, stay there for a month, film a ton of content, and you could have 14 of those days, you know, be for the Augusta rule. Yeah, that's awesome. Yeah, totally. So again, another one, event size. Okay. Are we having those minimum meetings where there's like three people or are we having, you know, 50 people or 500 people? Well, we get into different comps. When you, when you talk about hundreds of people, you've got these wedding venues that are massively expensive to rent out or these, these mansions. And, you know, if you've got a large gathering, you can justify a much, much different copper pool. So that matters. And then the specific use case of film production is probably our all-time favorite use. If you're producing actual, you know, like production level film, it gets us into a whole other tier of valuations. So we love, yep. And clients should look for that. So FAQs, we can, I mean, there's a whole page here. We don't have to talk about one or any of these, but I put this here in terms of like. Well, let's run through them. Yeah, exactly. Yeah. So how many residents may the Augusta rule apply to? Yep. As many as you can stay in for 14 days a year and season. That for me was a, that's a, that's a big right away takeaway. That's awesome. What qualifies as a dwelling 14 days or more? Yep. Better than bathroom kitchen. Does the rental value of my home change depending on the purpose of the meeting? Yes. So if it's an hour versus four and a half hours, and then if we're using, what else could change other than time? You know, we talked about, you know, depending on the day, season or year. So we have one potential client, I should say. He's told us he wants to onboard in the new year because he's changing the structure of his company. And he happens to live near the Kentucky Derby. So for at least three days a year, if not a week, his valuation goes up into that 10, 20 grand a day. And we can capture that. You know, part of what we do is we collaborate with our clients to identify those outliers. Like, let's say they live next to an NFL stadium or something like that. Yeah. Right. And Super Bowl comes. Well, we want to capture that. Right. And we can. So, yes, it definitely changes. Okay. How do you calculate the suggested rental value? You mentioned this earlier where you'll look at comps and you'll try to think like the business. Like, we're not just looking at Airbnb. We're looking at what would be comparable to a business renting out for an actual business. meeting. That's correct. And what we do when we do that is not just like either hop on AI and tell it to do something for us. Trust me, we've tried. We have tried left and right to AI this process. And still currently at the time of this recording, it is not even close to doing this for us well. And so this is still a manual process. Our people actually email, actually call and talk to owners, talk to venue managers, you know, and dig this up. And we don't just get one. We typically have. uh, like five of these comps and Slack and like detailed notes. So we, we want to make this chewy. If somebody comes and wants to challenge it, you know, and, and, and, and non will be done. We want to have a lot of gristle and bones in our presentation. So they just spit it out and go, you're going to be so excited. The first time you guys get challenged with one of your clients, you're going to be like, a hundred percent. It's going to be, it's going to be a fun day. Um, we, we, we built this knowing that we would at some point get audited and we built it to the point where we look forward to that. Yes. John literally talked about this early, early in our planning. I'm just like, oh, yeah, we want this to get audited because they'll start looking at this like a comparable product. There's another product out there, our RC comps, you know, and they're like the gold standard. The IRSCs are not RC reports. I'm sorry. RC reports, you know, for reasonable compensation. They're like audit over. We're done. You're good. Yeah. And we want this to be the same thing for the Augusta rule. Who can use the Augusta rule? I'm imagining. anybody that owns a home. It's just if you don't have a business, then you don't necessarily get the business to be able to get that deduction. But anyone can rent out their house 14 days or less and not have to claim that. Correct. I have a buddy who's a ultra high W-2 owner, and he's got a vacation home on a nearby lake. And he wasn't eligible for the actual rule to pay his business because he has no business himself. But he doesn't rent out his nice cabin, but he decided, you know what, I'll rent it out for two weeks and just got to pocket that tax free. So, yeah, I love that. I'm a sole proprietor, single member LLC. Can I use the Augusta rule? No. The answer is no. Yep. OK. Break down with that, because I feel like a lot of people just got sad because they have they set up their LLC and. Talk to me about the difference between that. Sure. So some other people will say you can do a single member LLC. We're not comfortable with it. You know, what John likes to say is, you know, when it's gray, we play. And this, but there's shades of gray. And this one, we don't have a definitive interpretation from the IRS that says that a single member LLC is treated as a separate person. And so if it's treated as the same person, well, who are you renting to? Right. You're just and I'm not I'm not trying to argue with you. I just. Oh, yeah. The purpose of the LLC is to limit your liability. And so the idea would be someone would set set up a single member LLC to shield from. I mean, because there's no tax benefit of Senate setting up a single member LLC, but you do it for liability purposes. So you're just saying that you guys are not comfortable with with that because it's a little too gray. That's correct. Okay. It's still treated as, like you said, it's basically treated as if it's a sole prop almost, you know, in certain circumstances. But filing as an S-Corp, a partnership, and C-Corp, all thumbs up. Multimillionaire LLC. Yeah, there's a number of different things. We even have trusts that can be used in this. Okay. Both revocable and non-revocable. Yeah, irrevocable. Can I have more than one business on the same account using the free money plan? Yes, that's specific to our software. We call it the free money plan. It's the done for you plan. And yes, you can actually have multiple businesses. So let's say you have one business and you've only got a two hour justified business meeting, but you want to have another couple, three hours with a different business. Well, you can do that. And you can do that on our platform and stack that. So then you've still had a legitimate business meeting or meetings that justify the Augusta rule, but now you split it between a couple of businesses and also split the. the payments that are paying to you personally. Do I need to have three attendees every time? I think the answer is no. You could have more, but you're just saying three is the minimum. That's correct. In our platform, yeah. Can I use this rule if I'm just getting started with my business? I would assume yes. Yeah, it really depends on, you know, do you have income? I mean, if you don't have income, you can still do it, and it could be a pass-forward deduction. But really, should you be focusing on it then? I mean, we're trying to coach people, you know, what's best for them. Again, let's not have the tail wag the dog. Like, go make money, man. Right. Go be productive. And then when your tax bill gets really big, I typically use the measuring stick. But when it gets bigger than your first professional salary, then start strategizing. You know, and you might. I think that I endorse that. I think what you focus on grows. And and so you could be. business owner that is trying to focus on saving a few bucks and you could be walking over $100 bills in the process and so I think that's I think that's wise but I think I think it's if you can have people in your corner to do both and that's where you guys come in because I do think you know it's all the math it's like you obviously it wouldn't make sense to work with you guys if you're helping someone save a couple hundred bucks like it's just not gonna be worth the time energy what they pay you guys to help but I'm sure there's a breakdown of when it just becomes, as you're saying, free money, which is not a compliant word, but, you know, it's a great marketing word. So and then the last question is, if what if my company has multiple partners, can I still use the Augusta rule? I would I would assume you you can. It just absolutely probably probably creates a couple more complexities, I would imagine. It does. You'd have to then agree as partners at the partner level that you want to do this. That probably involves some meeting minutes that you're going to record and keep. But there's no limit to what the business, the business could rent out a venue every day and deduct that. So you could, let's say you have three partners in a business. Could you do 14 days at each house if it's legitimate? 100%. You could just do rotating. Loving door and take turns. And just hypothetically, like if you had three business owners, then doing the Augusta rules a lot easier because all three business owners could be together and there you have three or more. Is that, am I reading that right? That's correct. Okay. Whereas like, yeah, whereas like a lot of people that they would, they really have to be extra intentional and get. get more more people there yeah yeah what if you had a weekly meeting with a partnership and you decided to rotate it between the partner's homes yeah i love it yeah I love it. A weekly meeting over dinner, right? Sure. Absolutely. You can have a weekly meeting and break bread during the process. Nathaniel, what else? Yeah, I feel like this is kind of sort of thorough. Yeah. The thing is, I wanted to say, Caleb, is as business owners, you're already doing this, right? Exactly. You're already having that dinner. Yes. So it's just about capturing it. That's right. Yeah. Well, we give away all these free bonuses, so we want people to at least take this away. You know, we had a potential client come up to us the other week at an event we were at and, you know, their their home and we did the comps on them on the home was only like 400 bucks a day. It was super low. And so we just said, hey, I'll tell you what, take all of our free stuff, do everything on your own. You can we just give it all away. But you're really not justifying enough with your particular residence in your remote living situation for this. But you can still do this. And we want everybody who's watching this. You know, even if they don't qualify to work for us or work with us, at least take all this information, do it on their own. What we're looking for a minimum is that we we charge a minimum of a thousand dollars. And so that typically means that we want to have a minimum of a thousand dollars a day and 14 events valuation. That's kind of like the lowest level. You know, most of our clients are several thousand dollars a day. If you know, even up to ten thousand dollars a day per residence and having multiple residences. and If they're wondering, well, what do you guys even charge? It's very simple. We charge 8% of deductions. So whatever deductions we can justify on behalf of the client, we charge 8% of those. That allows us to keep it super simple. If the client feasts, we get a snack. If the client doesn't get a meal, we starve. It just aligns itself with results. And we have to justify those results. And by the way, and we didn't even mention this, Caleb, I really pushed John. to provide some sort of guarantee for our clients. And if you know tax attorneys or attorneys of any sort, generally speaking, they hate the word guarantee. And we got John to say guarantee. We give an audit protection guarantee. So when people follow our program, and again, we're doing it for them, and they're walking with us in a compliant way, then not only if they're challenged, will we defend them? We will provide that defense, but we will pay for it. Wow. Wow. OK, so this is like we put our money where our mouths are on this and and and I've aligned everything to it be, you know, again, free money, you know, done for you, you know, peace of mind. And so really what we're bringing to the table is, you know, you could do this on a spreadsheet. You can you can distract yourself from your business and run with this. But what we're bringing is is unlimited coaching. because we do that for all of our clients. We literally review every single event for compliance. And we bring, so the coaching, the accountability, because even me on my own, when I knew this rule and was up and running, I looked back and I was like, oh man, I only captured eight events. I left like half the money on the table, right? We're trying to get as close to 14 as we can or 14. And so you've got the, again, the coaching, the accountability, and then you've got the peace of mind because we're going to back it up. Well, and again, I don't want to speak out of turn because you might, I don't know if I'm getting special treatment, but it's like very white glove as well. It's like, as we have meetings, we hit up our team and get everything taken care of. And it's one of those, you guys are standby and it's been nothing but fun working with you. And I just want to also give you flowers. We met as you were developing this. And when we first had our first conversation, you weren't even ready to show me anything. It was the concept. It was the... you know, this is the thing that we're doing. You had the domain, which I was like, that's a great domain that you got. And, uh, you were, you were building and, uh, you have delayed launching until you got it to a place where you can stand by. And I find that that's, um, that's honorable because there's, uh, you know, we are both quick starts and I think we're always fighting against ourselves of launching yesterday, but, uh, doing your, you guys are doing it right. And, um, I don't. There's no doubt in my mind that this is going to take off. I feel very grateful for it to be one of the first podcasts because I'm sure this is going to be one of many. And I'm just excited to see you guys grow. And I can't encourage my audience to take advantage of this. So if you have clients that need to know about this, there's a way that you guys can work with Nathaniel and their team. If you're someone that wants to take advantage of this directly or if you're a tax strategist or CPA, there's a lot of opportunities. And I would just encourage you to look into it. And I believe this bonus is something that will be... again, just a no brainer. So again, I'm grateful. I'm encouraging more of our guests to come on and like give giveaway generously because I want people that subscribe to the show that watch that listen to have big advantages. So if you're listening on the podcast, we'll make sure that wherever this QR code takes you, we'll have the link for you to click in the show notes. Nathaniel, is there anything else you want to say? I really appreciate you coming and giving a ton of value. Yeah, no, I'm really grateful for the opportunity, Caleb. And you've been nothing but encouraging and generous as we've developed this product. And so I appreciate you being in our corner as we've developed this. And really, again, it comes down to that mission. Let's put a billion dollars back in the pockets of business owners, you know, whether they have a tax practice or they're out, you know, pouring roads for us. We want people in this country who are producing value to have more oxygen in their tank. Well said. All right. Subscribe for more content. Thank you.
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