Can you kind of tell us a little bit about those and how they work?

Well, so y- think about what you're buying when you b- uh, invest in an oil well, and you're really buying just a few things.

Um, as we've discussed before, Mike, um, the first thing you're buying is the actual drilling of the well, right? Those are the intangible drilling costs.

The second thing you're buying is the equipment that you use to drill the well.

That we get bonus depreciation, which is effectively the same as intangible drilling costs because it's 100% write-off.

Then of course there's the typically non-deductible expenses, syndication costs, and, uh, then there, there's the leasehold costs, right? Which, um, they're...

They kinda sit there for a while.

-and the limited?

Okay.

Okay, so think of an asset.

What's the purpose of an asset? And that purpose of an asset is to put money in your pocket, right? Over and over and over again.

The purpose of debt is to buy an asset.

So if you're afraid of debt, it's because you don't trust the asset.

Okay, Dan Gramsley goes, don't use debt in real estate.

I'm going, if you don't use debt in real estate, not only have you cut your returns in half, but you've cut your tax benefits by 80% by not using debt.

They're adding things, they're taking things out.

Yeah.

Right.

So, so you have to start with the premise, of course, as we've said on the other, um, episodes, that the tax law is a series of incentives to do what the government wants done.

And one of the things the government wants done is they want housing built, okay? And they want commercial property built.

So what they do is they say, "Well, we'll give you a tax benefit so that you're willing to go and risk your money, put in the effort and the time to go get..." And, and, and actually, and to borrow money as well because the government of course wants you to borrow money because that increases the amount of cash in the economy.

And so it's all good for the economy.

So what happens is the, the, the benefit that they give is what's called, the primary benefit's what's called depreciation.

Is that correct, Tom?

Tom, it's not tax-free money.

Well, it, it is tax-free money, and [laughs] what I s- what I'm thinking about when Ken's talking about all the washers and dryers and all that kind of stuff, that's all tax deductions as well.

It is 20%

... not only is the purchase price deductible through depreciation, but all of those improvements that Ken makes, those are deductible and, and they're just additional tax benefits to his investor.

Yeah.

I, I quadrant's easiest, okay, but let's say, I mean, like, take me.

My, my wife and I both own CPA firms, we're both full-time.

We're not gonna go be real estate professionals.

That's not an option for us, okay? Um, now, can we reduce our time? Yeah.

But what if we can't? Well, what if I just had my kids own, that don't work in my company, own my, my company and own my real estate? Well, then I've got passive income and passive loss, because there's no attribution.

What's really interesting, so there's a r- a, there's a term in tax, and if you talk to a, a real tax professional they'll th- say, "Well, what about the attribution rules?" It, so like if, um, for example, if you and your wife both work in a business, okay, your wife's, um, hours are attributed to you, and your hours are attributed to your wife.

So, you know, I'm asking you, like what? What, what would you tell me, um, for someone who's doing all the bread and butter things? What are some of those things that maybe we haven't discussed yet that might potentially fit? I know you don't know my tax situation, but you might be able to, like, give me some ideas like, "Oh, are you doing this, this, or this?" Maybe that would be worth you looking into.