Brett:

What can the investor who's maybe dabbled in some cryptocurrency and or maybe it is new to cryptocurrency, maybe they're more like a real estate time investor, it's a lot of our clients are real estate or traditional securities, if you had a couple of minutes to spend with them, and they sat down with? Jimmy, could you make the case for investing in bitcoin? What would be your suggestions or thoughts on any wisdom you could offer them?

Jimmy:

The reason why real estate is so valuable is that they're not really making any more right. Like, you don't really make more land and that absolute scarcity is why real estate has traditionally been an excellent store of value. But that said, real estate tends to be, limited by the fact that there are enormous transaction costs and that the locks are not really fungible any real estate person knows that, two houses next to each other may have very drastically different values due to one being a corner lot one being at the end of a cul de sac, the other having like, being over some easement or something like that. There are all sorts of little things that go into property value. It takes a lot of research to invest in real estate, a Bitcoin is fungible, any unit of Bitcoin is as good as any other it has that absolute scarcity that land has it has 21 million.it ends up being an excellent store of value much like real estate and similar things with stocks. Unless the company that is issuing the stocks keeps issuing them or does badly because they embezzle it has a lot have similar properties without all of the research that is involved with, investigating a particular stock, or something like that. You get a lot of the benefits of an investment in real estate or stocks without the transaction costs or the research time needed in order to get into those. I would make that the case for Bitcoin, it's a superior suit store value to either one.

Brett:

It's so fascinating. I love the way you put that it says, not making any more real estate or you can, but it's very expensive to do that. Especially right now in the housing crisis. That's part of what these values are so high because this implies being limited and limited imminent for a number of people who want to buy and live in places. I mean, my house, for example, in Sacramento, it's crazy. Jimmy, I bought it for about 380 units is about five years ago, and one down the street that's, maybe a little bit smaller, just has a pool to sell for like $750,000. It's almost doubled, and you go and people no the amount of offers, and so I like the way you put that limited amount of supply. In fact, it's an absolute scarcity. It's 21 million Bitcoin. That's it, and yet, you don't have all of the big transactions or the research or the energy or time it takes to move things and enormous cost. Is that a fair summary of what you just said?

Jimmy:

It's liquid, it's fungible, and it requires a lot less time and research.

Brett:

Excellent. Moving to this a little bit part of our presentation here or on this podcast is the Capital Gains Tax side of things. What's been the biggest frustration maybe for yourself or friends or family or your students that you're teaching, when it comes to selling and having a big Capital Gains Tax with cryptocurrency?

Jimmy:

The most annoying thing is that the IRS treats it as a commodity. Whenever you use it for anything, so you could, for example, go and pay for coffee using Bitcoin, there are lots of apps that do that, and if you go to a Bitcoin conference, typically they will take Bitcoin for it. But you have to report capital gains on every single transaction. A lot of people are disincentivized to do it. In addition, if you have held it for something like over five years, you almost get like in the 12-year history of Bitcoin, if you've held for five years, no one has ever lost money. You end up with often a very large capital gains bill, if you end up, selling or liquidating it in any way. That tends to be a big frustration for a lot of people that have made a lot of money using it. Because it's hard to sort of like cash out if you will.

What a lot of people end up doing is they end up taking loans against their Bitcoin as a way to defer the capital gains, taxes that are on their way. That way, even if it costs like 910 11%, that it does add like unchained capital in many other places. But in a sense, it ends up being okay, because the Bitcoin appreciation tends to beat that bias by a significant amount. Even if you are paying like 11% interest, if Bitcoin goes up like 70%, then you're still up by not selling the Bitcoin incurring the capital gains tax. Instead, you get the upside of Bitcoin and you just pay that interest, of course, you have to have some downside protection in case there's a sudden drop or something like that, and make sure that your loan to value ratios is proper and that they won't liquidate you and so on. But it is a device that a lot of my friends have used in order to overcome the capital gains taxes that are inherent to it.

Brett:

Thanks for sharing that. I think that's that is wise. Because when you do a loan against something, it's not it's a non-taxable event. You're borrowing against it, but you got to be careful of the margins. A margin call if the value is to drop, and then then they might even just sell your asset in order to cover that margin, and or ask you to put more money in to cover that so it's interesting. Real Estate, this thing called a 1031 exchange, and people do the same thing with real estate. They say in some of my clients they never sell, they only ever borrow against, but the over-leverage, they can lose, they could lose, multiple assets in foreclosure. You got to be careful with that. Now, we do have an alternative to that. For our listeners who are wondering, it's called a Deferred Sales Trust, which you can actually sell high, defer all the tax, and then from there diversify into multiple asset assets, such as stocks, bonds, mutual funds, investment, real estate, or a business venture. In fact, we just closed a deal, Jimmy, I'm curious what you think about this, they bought Ethereum. Over time, a client of mine out of Silicon Valley, they've been in the industry for a long time. Over time, they purchased about $100,000 or Ethereum, over about a five to seven-year period.

I think that's interesting to say, if any five-year period of time, you haven't lost a Bitcoin, and they did very well. In fact, the cerium went to about 6 million in 2017, and then in 2021 and jumped up to 9 million and then even a few months later to 13 million, it dropped all the way back down to about seven, and then it jumped up to about nine or 10. It's kind of this was a wave, and they were able to sell about 5 million of it defer all the tax using the Deferred Sales Trust, and their goal is to diversify that. Now for them, the outcome was, how do I sleep well at night, and be able to get some cash flow coming in print some real estate, diversify some of my some of that money, and they still are long term believer in that full amount, but they want to take some chips off the table, and so for listeners who are wondering about that they can go to capitalgainstaxsolutions.com and learn more about that. But any thoughts on just that timing of sales, and being able to get out and diversify your investments versus taking alone?

Jimmy:

My personal belief on Ethereum is that I really don't see prospects for it, like the main reason people use Ethereum is to launch new tokens, and that is only going to be done a finite number of times. That's like, anytime there's a bunch of new people, there's a lot of new tokens that get issued. They tend to benefit from that because they have the largest user base for that sort of thing. But those weren't out quickly, 2017 was a huge ICO (Initial Coin Offering) bubble in 2018, they had a bunch of IEO’s (Initial Exchange Offering), and so on. This year, it's been much more defy tokens and NF T's and so on. But, at some point, those things all crash, and against Bitcoin, they tend to do very badly. But with respect to the sort of like taking chips off the table, or diversifying and so on, I'm actually of the opinion that, that you don't really need to diversify if you have a good store of value, and the whole thing about diversification came as a result of the Fed, continuing to the base the money, so you needed to keep up with inflation, if you will, and not like inflation, as in CPI (Consumer Price Index) inflation as in monetary expansion. The money supply in 1959 was $289 billion, then two money supply is roughly around 20 to $20 trillion.

Now, if you annualize that over the last 62 years or so, it ends up being about 7% a year, that's the actual monetary expansion rate, which is a classical definition of inflation.in order to keep up with that, you've more or less been forced, as an investor, to put in all this time and research into making sure that you're at least getting about 7%.you can keep up with the monetary expansion. You can, keep the wealth that you've already earned. But that, than that of course, and you know, if you look at like the average return of stocks or real estate, it ends up being like 567 percent, which is not coincidental. That's the expansion. I would say that diversification, it, I mean, I get it, like, a lot of people don't trust Bitcoin, because they haven't been in it, and they don't really understand it yet. But for me, I understand it, and I have conviction about it. I don't mind putting a significant part of my portfolio in Bitcoin. But that said, like, if you are more nervous about it, I would say, like, it's okay to diversify. If you want to support a particular startup or something like that, that's also reasonable to go do so. Like to take some off the table to invest.

Brett:

That's exactly what he wants to do to Parliament. He's like, he wanted to retire from the corporate web to Silicon Valley, tech position, and he wants to start his own business, and part of any part, you may be able to fund that with Bitcoin as well, all those things, but some banks may or may not allow that part of it is selling, getting into a cash position, that's nontaxable, right? It's tax-deferred. Kind of like a self-directed IRA is kind of like a 401K, and then using that to go start that new startup, to go build that property to go do that. Next thing. We have another Bitcoin client, Oregon right now, and that's exactly what they did. They're going to start an online educational business, and their goal and they've never sold anything very well. They've never sold a Bitcoin they've only ever held for all of these years and, but now they have a good outcome for where they want to go, which is a startup online educational platform, which is part of their passion, and so they're going to sell a portion of it and use that all tax-deferred to fund that. I always like to say it's good to start with the vision for what you're doing with your wealth, and how are you going to get there?

There are always financial, math reasons to do things or not to do things. Then there are the lifestyle reasons, and the last thing I'll leave with you to Jim I'm curious is I think sometimes we look at the Capital Gains Tax part of it and it's like the tiger by the tail and it's important right? 30 to 50% of your gain depending on depreciation, recapture which state you're living, you cannot depreciate cryptocurrency. It's just going to be probably closer to 30%, depending on where you're at. But the point part of that is the estate tax, which is a lot of the challenges with some folks write, especially ultra-high net worth clients we're working with, which is 40%, of anything worth more than 12 million singles and 22 million married of your net worth, we're seeing clients come to us now and that's set to expire in 2025, or those are going to be cut in half.it's gonna be bumped, maybe 12 million married, and then about 6 million single, and looking at ways to move funds outside the taxable estate, because I like to say Jimmy is no longer about cash flow. It's about tax, well. Now, it's always gonna be about cash flow, but it's really taxable, how, and when are you going to get taxed on where you're at, and do any thoughts on that?

Jimmy:

I think, having a good tax strategy is, unfortunately, a big part of being a Bitcoin er, these days and, and making sure that you do that. But I find it most interesting sort of like, your client’s use case, because Bitcoin is designed exactly for that use case where you save up money so that you can go do something, and this is something that we're not used to in society today. Because where everything is that so you can go and get that for almost anything. Like whatever you want. Now, you can just go and get, instead of saving up and getting it later, which is what Bitcoin sort of enables, and it does it way more efficiently than if you sort of like, go into debt now and you're enslaved for however long that that that is to pay off, and it's a lot better, I think, for people's character, and for people sanity, and stress and lifestyle, and all these, all these other things, to instead save up, and then go do what you want to do. Rather than try to get loans and borrow, beg, borrow and steal or whatever, in order to fund whatever it is you want to do it. It's way more stressful, less rewarding, and so on to do it that way, and I think your solution makes a lot more sense. Especially if you can somehow defer the taxes and maybe offset it against some of the capital losses that you might have in your business.

Brett:

You nailed it right. Even when you buy an investment, real estate, you can do what's called cost segregation, and you can depreciate assets and use that cash flow to offset the cash flow coming off of the property or the business, and you can walk away with a lower AGI Adjusted Gross Income. These are all really cool things, and I appreciate you diving into the weeds with me on some of that, Jimmy, that being said, Are you ready for the lightning round?

Jimmy:

Let's do it.

Brett:

All right. Now, as you know, now if you go back to your 20 or 25-year-old self, what's the one Golden Nugget Make sure to tell yourself to do?

Jimmy:

Buy bitcoin early and don't hesitate?

Brett:

Perfect. Number one book you recommended or gift it and by the way, please plug your three books as well want to make sure we get the titles correct.

Jimmy:

Programming Bitcoin, that's for programmers, and it's published by O'Reilly. The Little Bitcoin Book that's on Amazon and betsoft published as is Thank God for Bitcoin, which is also self-published the moral argument for Bitcoin from a Christian perspective. The book that I've recommended the most, I guess, practically speaking, would probably be Getting Things Done by David Allen, and but as a Christian, it would be like Mere Christianity.

Brett:

I'm a Christian. I love that book too. A coin that you're most curious about right now. Besides Bitcoin?

Jimmy:

I don't have curiosity about altcoins. I think they're mostly scams and their fiat money. It's Be your own central bank. I guess it would just be Bitcoin. Sorry.

Brett:

Next question. After all your success, and after everything you've achieved and what your story, your journey, what's the one thing that helps you to stay centered in your values and stay encouraged to charge forward to reach new heights?

Jimmy:

I think part of it is being free from the shackles of fiat money. That's a major one for me and like not having a normal job. I didn't realize until I started my own business, just how beholden to the company I was working for was and I didn't really know how to really like to express my own opinion or whatever. I just kind of instinctively did what was said. I would say that would be

Brett:

Jimmy, I want to thank you for being on the show sharing so much wisdom diving into the weeds with me on some of the numbers there and some of the strategies. I love your mathematical brain in mind. I want to encourage you to keep using that strength to help more people get freedom with cryptocurrency and investing in Bitcoin, and with that being said, For our listeners who want to get in touch it would you remind them one last time what's the best place for them to find you

Jimmy:

Well I'm on Twitter @JimmySong I'm also on medium JimmySong.medium.com and I have a new weekly newsletter JimmySong.substack.com where it's a tech news and some economics and all the podcasts I do like this one and conferences I'm going to and things like that.

Brett:

Thank you Jimmy Song for being on the show. I also want to thank our listeners for listening to another episode or watching this on YouTube of Capital Gains Tax Solutions or and our eXpert CRE Secrets want to remind you guys that we really want you to have a plan and have a vision for your wealth when it comes to selling highly appreciated real estate business cryptocurrency all tax to first you can create and preserve more wealth or go to that next thing you're trying to do start that next business, build that next commercial real estate property. Get some diversification. Whatever it might be, we'd love to give you clarity on your options by going to CapitalGainsTaxSolutions.com that's capitalgainstaxsolutions.com, please rate review, subscribe. Please share this with someone who could help and so appreciate everyone out there.