Josh: Welcome everyone to episode two of Well, actually, I'm Josh Youngblood, joined by Shannon Hall.

Shannon: Hello, welcome. We're excited to be back.

Josh: So what's been going on, Shannon?

Shannon: man, what is going on? Well, a lot, I think. it's almost extension time, right? We've got the corporate pass-through deadline coming up and then the individual deadline. I just got back into town. I'm here for four whole weeks, which is very exciting. but I just finished teaching our Brass Tax Enrolled Agent Bootcamp class for the last couple weeks. Weach weeks, which was very fun. we brought along a new instructor this year. We had Jeff Thompson join us, who is a hoot and a half. I hate to say it, I think he's funnier than I am. Don't tell him I said that though.

Josh: So what exactly is the boot camp? Because there's constantly people asking questions in Facebook groups, they they want to become an enrolled agent and they need to know where they go to get ready for the exam.

Shannon: Yeah, so what our class is, it's really just it is a boot camp. It's an intensive part one is two days, part two is three days, and then part three is an on-demand. And what we do is we sit you down, we cram as much information as possible into your brain over those two or three days, and then teach a bunch of like test taking techniques because ultimately exams are hackable kind of like if you know. The techniques, you can fake your way through almost any test. And you'll see this with people who are just good test takers. They seem to inherently understand that stuff. And so we teach you those things, how to approach the questions, read the question, as Josh likes to say, how to find the call of the question, read it, how to eliminate answers, and how to make educated guesses if you have zero idea what to do. So we go through all of that and cover all of the material that's most likely to show up on the exam. And we tell people like, you're not gonna learn all of this stuff, right? Because you're gonna spend the next 20, 30, 40, 50 years of your career learning all that stuff. We're just gonna help you get over that first hurdle of getting through the exams.

Josh: Ver very cool. So what if you're if you're not local, can you do it online?

Shannon: Yeah, we have a fully on-demand version that's available now. So if you're thinking about taking the tests this year, highly recommend. I think, you know, we've got really positive feedback from people. And this year the tests are kind of crazy because it's the first time they've offered it online. And the rollout, I mean, I'm gonna be honest, the rollout for all of this new testing center has been interesting. I will say, not without hiccups. I guess is a nice way to say it. But I mean, we've heard crazy stories from people who've gone in person and online to take the exam. But it's it's nice that it's an option. I don't love it, but it's nice that it's there.

Josh: Yeah, bac back in my day you had to go in person and take it. But, you know.

Shannon: Mm-hmm. And you still can, but they're because it's a brand new proctor, I think they're like figuring it out. And some of them are more strict than others. But I mean, we've heard horror stories about people who had to take their bras off because the underwire set off the metal detector. We had somebody tell us that they he had been chewing gum and he spit the gum out. And so they checked inside his mouth before they would let him into the testing. I mean, just crazy stuff.

Josh: And and we thought USDCP was

Shannon: It was so much easier. The testing that doing the the virtual exam for the EA was, I wanna say fifty-eight percent more stressful than the virtual exam for US TCP.

Josh: Now the content though, on the other hand, little different. Contrary

Shannon: Yeah. Little different.

Josh: to what there are people that say it is like the EA exam, but that is a total lie, that is false.

Shannon: Yeah, it's nothing like the EA exam. I mean, there's federal tax on it, so I guess it has that in common.

Josh: That's right. There is no federal rules of evidence on the EA exam, right? Yeah.

Shannon: That's true. That's true.

Josh: So you got that. Fun. So yeah, everybody check out Brass Tax if you're wanting to become an EA, which it's always a good time to become an EA. We need more EAs.

Shannon: Yeah, well, especially now. I mean, I don't know what you think, Josh, but with so much AI coming into all of the systems and like more into tax prep and more in the IRS review side, I feel like it's a great time to be able to do representation stuff.

Josh: Yes, contrary to what I've read in certain Facebook groups, you do need to have a license to represent people before the IRS. You either need to be an EA, a CPA, or an attorney. Because I see you don't have to. This could be the well, actually. You do need a license.

Shannon: I feel like we had a different well actually planned, but this is not a bad one.

Josh: And that is kind of a thing that irritates me.

Shannon: Yeah. Well, because you do a lot of representation work. I don't really I don't I dabble, but that's not my bread and butter, but you spend a lot of time in that world.

Josh: I I live for that and I and I get, you know, sometimes I get people who have been other places and they've been basically abused and used by people who don't know what they're doing or were not qualified. And it's just a bad situation. And then I, you know, pull up Facebook and I see somebody talking about how, you know, they made, you know, a million dollars last year and you don't need to be licensed, and anybody can do this. And I'm just like Come on, just stop. It's like those service bureaus.

Shannon: I still don't totally understand what those are, but I I gather that they're not great.

Josh: I mean, I you know, you have to sign up. It's almost like an MLM. You sign up, you give somebody this money, they, you know, claim to give you mentorship, your software, your EFIN, and tell you that they're gonna, you know, help you make all this money in tax. And it's like, you know, they could reach out to any good EA out there and say, Hey, how do I get started? I get emails from people, I'm happy to tell you, here's what I did. You know, find some good education. Doesn't happen overnight. Don't, you know, give somebody thousands of dollars because they promise that, you know, you're gonna become rich. It's like getting the email from the prince in a foreign land that wants to give you money. I mean, you know, if it sounds

Shannon: Yeah.

Josh: too good to be true, it probably is.

Shannon: Well, and I think there's two things here that I wanna kind of point out. First of all, we're gonna talk all about the different prepare orgs in another episode. So something to look forward to. But I do think that one of the things if you're looking for mentorship, that's where you go. Because you you find those connections with people and there are when I first got started when I was in CSTC, which is the California-based one, I had a situation I'd never come across and I didn't know what to do. So I found somebody who was in the Central Valley and I called them randomly during tax season. And I said, I'm from CSTC. Can you help me? And they were like, yeah, of course. And spent an hour on the phone just like talking me through stuff. And that is invaluable. And that I think is the what you get from these organizations. And education's great. All that stuff is great. But those are the things I think that you really get.

Josh: yeah. I I mean I agree because you get to you get to know people, you meet people. but yeah, that upcoming episode where we're gonna break down all the orgs and have a special guest, it's gonna be that's gonna be a fun episode.

Shannon: Now you mean breakdown like talk about, right, Josh?

Josh: We'll see what happens. I mean, you know, there may be some espresso martinis involved. I I don't know.

Shannon: Whoa.

Josh: Or the tiki bar, which I I know is Shannon's favorite.

Shannon: Yes, I actually have a little Don Draper style wet bar over in the other corner of the office here.

Josh: All I have is a coffee bar behind me that doesn't get used to

Shannon: It's probably more responsible in a tax office, but only after hours for the wet bar.

Josh: The thing I always tell people about education or continuing education is find a speaker you like, because we all learn differently. And hopefully

Shannon: Mm-hmm.

Josh: it's a speaker who actually gives good information and accurate information. And that's kinda how I have always done my CE. I find a few people that I enjoy listening to that know what they're doing and wherever they happen to be or whatever website, that's that's where I go.

Shannon: So how would somebody know? Because there are people who present really well, right? They they seem like they know what they're talking about, they come across really, you know, they they're well spoken, they seem like they've got all this great information. How do you know whether what somebody's telling you is accurate or not? Like what do you look for in a presenter to say, okay, this person knows their stuff. Like I know I can rely on what they're saying.

Josh: Well, after you know enough people then it just becomes known who's good and which I am not gonna go through the list of people because full disclosure, I think getting up in front of people talking is, you know, you get props for that. It is better if you're actually accurate and know what you're talking about, but talking in front of people is difficult. I think that, you know, look at their materials. I mean, if their slides have, you know, wrong citations or no citations, that might be a clue that you're not getting the best education.

Shannon: I think citations is a big one because you know it's it is it's not I was I was gonna say it's easy to get up there, but it's difficult to get up there. But it's easy to get up there and say, This is the rule, just believe me. But if I want the people who come to our classes to be able to go back later and say, I have a citation for this, because ultimately if we tell you something and you take what we told you and take a position on a tax return based on it. and it gets challenged, you know, Josh told me or Shannon told me, is not gonna fly with an auditor. You have to have actual support for it. And that's why we put, you know, hundreds of citations in our books usually.

Josh: That that's you know, and to your point. You know, if I told him or you told it's not gonna fly, the same applies if AI told you it's still not gonna work.

Shannon: Exactly.

Josh: And I and I think, you know, I've heard people over the years say that sometimes they they don't go to certain classes because they don't want to hear all these citations. And, you know, I gotta say, if you want to be in tax, learn how to read the citations and what they mean. I'm not saying you have to be one of these social media influencers who, you know, post on Saturday night that they're reading the tax code. Spoiler alert, none of us are doing that on a Saturday night.

Shannon: say none of us are doing that because we definitely have friends who do that and I I have on occasion done it. Not as often. But

Josh: Not it's not a regular occurrence, I don't

Shannon: No no.

Josh: think. but you wanna be I mean, you gotta be comfortable with you know what it means because I mean that's it's like if one time I was teaching a class a couple of years ago and quoted a court case and somebody said, Well, why why are you talking about court cases? We don't need to know this. We're not attorneys. And it's like that's the basis of the law. That's how, you know, we see it actually play out.

Shannon: Well, and it's so funny because people are always when they find out what I do, they're like, you must be so good at math. And I'm like, I am not good at math. I've never been good at math.

Josh: Same. I suck at math.

Shannon: Like money makes sense to me, but math, I'm like, but like the laws and the puzzles and like figuring the stuff out. That's what I'm good at. And that's what I think tax is, is knowing how to read the law and interpret it. Not interpret it, the courts interpret it, but figure it out and get enough support. And I know Like research is such an important part of it. We just had a class at BrasTax. Tom Groszinski and Ryan Rikert taught an amazing research class. And so much of it was like, here's how you find the things, here's how you analyze them, here's how you skim, so you're not spending your entire life reading this stuff. And I know you and Tom also have a very, very cool research tool.

Josh: That's right. Ask Tom G dotai. It will not give you a yes or no answer. You it will force you to actually read it and make your own determination.

Shannon: Which is funny because I think some people have been like, That's a a bad thing about it that it won't give you the answer. People are like, I just want

Josh: Right.

Shannon: an answer It's like

Josh: I get it. I mean, it's not maybe it's not for everybody. That's okay. I mean, there's 32 other products out there that will say yes or no and you can, you know, engage in blind faith and be willfully blind and believe them. I mean, But speaking of court cases,

Shannon: Exactly. Yes.

Josh: we had a fun one that was a social media influencer. I think it was Suleiman's. Sammy was a petitioner.

Shannon: Yeah, that one was a right. There have been some amazing court cases just the last couple of weeks. But this one was this one was just full of personal expenses thrown in there.

Josh: Lots of concerts, good time. I mean, you know, the thing I like about cases like this is when when these types of you know attempted deductions get denied and we have clients that want to do this, we can point to this and say, look, here's what happens.

Shannon: Yeah, so what was this guy's deal? He was an influencer, right?

Josh: Right, which you know how much we all love influence.

Shannon: Not quite clear what he was influencing, but he did have I'm no shade. He had a fair amount of followers. He had more than I do.

Josh: He did, same, absolutely. And he was an IT manager.

Shannon: I mean, you've got a lot of followers now, but

Josh: So mean he had a lot of stuff going on.

Shannon: Mm.

Josh: And I think his his record keeping was not great from from

Shannon: Yeah.

Josh: what I read. and then he unfortunately had some accuracy related penalties.

Shannon: He was like the definition of hustle culture, right? Because he had his full time job

Josh: Absolutely.

Shannon: doing IT. And then he was also driving people around, but not officially. He didn't have a cab driver's license. He wasn't driving for Uber or Lyft, he was just driving for whoever.

Josh: But he had two accounting degrees.

Shannon: That's all you need. I mean, really one is all you need, right?

Josh: So the the the big moral of the story is you're not gonna get a lot of sympathy if you have an accounting degree and especially if you're a licensed tax professional and you take deductions that you shouldn't take.

Shannon: Well, because he was taking huge deductions for entertainment stuff, right? He was going to the Grammys, he was going to the Emmys, he was paying for celebrity meet and greets and deducting all of that. It started off as charity, right? And then he was like, This isn't charity, this is advertising, obviously. This is marketing.

Josh: I had no idea a person could would spend so much money to meet somebody. I mean, granted, I've I've spent money going to some concerts and I've paid for a meet and greet before, but not to the extent of of the amounts in this case.

Shannon: No, it's well, we just paid $150 to have John Carpenter sign something, but still not even as crazy as these things. But yeah, he was spending lots and lots of money. I did enjoy that you know, when you read court cases, don't you feel like the judges kind of I don't know if editorialize is the right word, but you can tell how they feel sometimes, right?

Josh: yeah. yeah.

Shannon: And it felt like this judge took particular glee in describing a clip that he had posted of Tom Brady throwing like passing a football to him, but he misses and he can't catch it. That felt like it was in there for fun.

Josh: yeah, yeah, totally. I mean I some some tax court judges are are more entertaining than others, but it's always always fun to see.

Shannon: Yeah. So the takeaway from this, Josh, right, is that all of those expenses, those are all deductible, right? As long as I have a business.

Josh: No, no.

Shannon: Well actually So this is where we bump into the 162, 262 problem, right? Sorry for anybody out there who doesn't like code sections, but

Josh: If you don't like code sections, learn to like them. Or I can recommend some other podcasts that you won't get good information on.

Shannon: One day we'll give Josh a couple of martinis and he'll

Josh: Yeah.

Shannon: maybe we'll set up a Patreon or something and that's how you get all the all the tea. but yeah, so 162 is business related deductions, right? And then 262 is personal.

Josh: Personal.

Shannon: Yeah. And there are things that fall into both, right? Like the feel like they could be business, but that really are personal.

Josh: Right, for example, if I'm getting ready to speak at at an event and I I need my hair, you know, bleached and I need some Botox, I mean that's business, right? No?

Shannon: Yeah, you gotta look good.

Josh: Exactly. I mean, can't have gray showing, can't have more wrinkles than I have.

Shannon: As that I'm like, how bad is it? I need to do my roots. I do it myself because it's not deductible. I'm not gonna pay that much money if I can't write it off. but there are a lot of really fun cases in 162, 262 kind of world. One of the ones I really like is Dinah Shore. Do you remember her? She was a very famous,

Josh: Faguely.

Shannon: like I mean, she's a little before our time, but I, you know, a little retro in spirit. but she was like a pinup lady. And she wrote off a bunch of these gowns and the IRS said clothes, not deductible, right? Like you can't do that. And she said, no, these are not personal clothes because I can't sit down in them. They were so tight that she couldn't sit down. She had to stand up the whole time. So the story goes that she was allowed to keep the deduction, but that they sent an IRS auditor to verify that in fact she could not sit down in them, which probably was a coveted job, I would guess.

Josh: I yeah, I I would I would think so. But I mean

Shannon: Mm-hmm.

Josh: how many clients over the years and I can think of one meeting a few years ago where I'm meeting with these two business partners and it was in December and they they could use some you know deductible expenses and they had the perfect idea. They were gonna go purchase a Rolex for each of them. This is a true story. I know Shannon, I know you love you love Rolexes.

Shannon: It's too soon. I still it's too soon.

Josh: But this was, you know, true story. And they were like, yeah, we're we're each gonna get a Rolex. You know, we've worked really hard this year, and the business is gonna buy it for us. And I said, hey, that's awesome. you know that's gonna be income to you though, right? No, no, no, no. This is this is deductible, this is a business expense because you know, we want to look good for our clients. No, that's not how that not how that works.

Shannon: So wait, Josh, are you telling me that if I get a Rolex, I need to know what time it is. I mean, we're CE instructors. We need to know that we're hitting those fifty minutes. Is that not that doesn't count?

Josh: No, the only way you know what time it is when you do CE is when you finish really early and feel awful,

Shannon: Yeah.

Josh: which is what I did on my first class. And then you learn.

Shannon: I think everybody did that on their first class.

Josh: Then you learn, by God, you want to know what time it is because you don't want to be that person.

Shannon: Yeah. I'll tell you the the very first class I taught, this is another another pitch for prepare groups, is that the first class I ever taught was at a local chapter of my California society and everybody liked me. And so even though I finished in like 25 minutes, everybody like asked questions and told stories and jumped in so we were able to hobble over the finish line. But if you're in a unfamiliar environment with people who don't already like you, that's a it's harder to get through.

Josh: No, yeah, my first class was on digital assets, which yeah,

Shannon: Ha ha.

Josh: I know about, but I'm not Matt I'm not, you know, our friend Matt, who is the digital asset guy. And

Shannon: yeah.

Josh: I finished early. Thankfully Natalie was in the audience. She asked me some questions. Otherwise, it would not have been great.

Shannon: Yeah. So always bring a plant with you is the the more sorry, always. Yeah.

Josh: Always, always. But make sure they ask you something you know because last year I was doing a class on electric vehicle credits and

Shannon: Mm-hmm.

Josh: had a little extra time. So Tom was in the audience, so he starts asking me about commercial vehicle credits, and I was not prepared to answer that. And I'm like, I don't know exactly. Come on up here, you know all of this.

Shannon: You're like, Well Tom, it wanna

Josh: But you know, that's how you learn what time it is, right?

Shannon: Exactly. So no Rolex then I guess.

Josh: No, you know, I I'm sure they still bought them, but it was not it was not deductible. But you know, wh what else have people tried to deduct? Isn't there a f in there a case you you like?

Shannon: Well, okay, so this is one of my all-time favorite cases. And I love this one for so many reasons. First of all, I like to think that this case sort of brought all of us together because we were all out at a CSEA conference in Arizona a couple years ago. It was the first time I met you. I don't even remember how it came up, but There's a certain case, and everybody sort of knows about chesty love, right? They've heard this chesty love case. She was an adult entertainer who had very augmented parts, right? Aggressive. I think they were like 58 double F or something. I mean, they were absurdly sized. And she depreciated them, didn't just deduct them, depreciated them, which is amazing.

Josh: Right.

Shannon: And the IRS said, whoa, hey, hey, what what? And so she went away to court and she actually won. But the reason that she won is not because strippers can deduct their breast implants. The reason why she won is because they were so outrageously large that they were they impacted her life negatively. She was able to show a direct increase in her income when she got them. She was able to show that she had them taken out as soon as she got out of the business. She showed the back problems that she had. She showed how it impacted her family relationships, her social relationships, because it they were ridiculous. and so she got to keep her deduction. And we all became friends because it all of a sudden became clear that we all not only knew that case, but knew what her real name was, which was Cynthia Hess.

Josh: Right.

Shannon: Yep.

Josh: And I think we learned that we all have a very warped sense of humor. cool.

Shannon: Yes. Also that.

Josh: Yes. but yeah, you know, cases are very entertaining. I mean, the live streams, I mean, those are very entertaining, especially when you get the pro se taxpayers and the innocent spouse cases.

Shannon: yeah. yeah. There was a yeah, it's really fun to listen to them. And I know people are like, you have a weird idea of fun, but it really is legitimately fun sometimes. I mean, the things that you

Josh: It is, yeah.

Shannon: hear and just the hearing the snark in some of the judges and some of the things that people try to get away with when they're trying to pull fast ones on the judges, but it they can tell it's always very fun.

Josh: The thing that struck me though about tax court judges is, you know, if you've ever been to court before, typically I've been I've been to small claims like traffic court for a ticket. you know, they're not very they're not exactly friendly. But the thing I've noticed about tax court judges is that they really do try to be very fair and, you know, are to the point of being really kind to pro se taxpayers. And they

Shannon: Mm-hmm.

Josh: they tend to be you know, pro taxpayer. They're they really, you know, listen to what's what's going on.

Shannon: They really do. And, you know, I this is a little bit of a veer, but I don't know what your perspective on this is, Josh. I think once you get to court, there is an there's an adversarial nature to it because you're in court. But I think like a lot of people view the IRS as like the enemy or like we're at odds with each other. And I always kind of think of it like we're all on the same team. Like ultimately we all want the taxpayer to pay the right amount of tax. Like that's it. Sometimes our idea of the right amount is different than their idea of the right amount, but I like to think that we're all kind of part of the same team working toward the same goal versus like we're fighting each other all the time.

Josh: Well, and that you know, and I see this with like some Facebook groups or or people will say in general that do representation work. They're like, you know, we don't bend ever for the IRS. We tell them how it's gonna go. And I'm like, Really? Because I had a client of a couple months ago, it was an audit. Revenue agent was super nice. We had some things we disagreed on. We went back and forth, came to an agreement. I mean, my thing has always been, you know You're dealing with a person. If you're going to be a jerk to them, they're not going to be nice back to you. And at the end of the day, you know, in my case, I'm one enrolled agent and this is the IRS. This is the United States government.

Shannon: Mm-hmm.

Josh: Really? Who's going to tell who what's up? I mean, you know, that does not mean that I will not vigorously, you know, make sure that my clients, you know, rights are maintained and they're able to, you know. push on and and and fight as much as we can. But I think you still have to be professional. And when I see some of the, you know, tax pros out there that are just like the you know, the way they talk about the IRS, I'm like, let's be professional.

Shannon: Yeah, they're just trying to do their jobs too, you know.

Josh: yeah. I mean I've I've heard I've gotten them on the phone before, like when they had all the layoffs and you know, I've listened to people on the phone really concerned about their job because you know, as we know, the IRS has been decimated under the current administration. which maybe we could have the former IRS Commissioner Billy Long join us. would be that would be fun.

Shannon: Ooh, well you guys are tight, right?

Josh: We we exchanged some Twitter DMs, Ma maybe he could join us and tell us about his experience as as commissioner. He wasn't commissioner a very long time, but he had some good things to say when when we had an exchange. I mean, he really wanted to make the IRS a a nice place to work. But

Shannon: Yeah, and I mean he did he did seem like he had the best of intentions kind of going into it. And, you know, would have liked to have seen where that went, but yeah, see if you can get him on.

Josh: be fun. So I guess our next episode we're going to get to record in person in San

Shannon: Yes.

Josh: Diego.

Shannon: Yes, cause you're gonna be down there for exciting.

Josh: am. The IRS forums. So if you're at the forums, come out. I will be there with Tom Gruzinski. We're gonna be promoting the ask Tom G dot AI tax tool, as well as he's gonna be promoting Tom Talks taxes and some of his other other things. but yeah, we'll be there.

Shannon: That's awesome. Yeah, I'm coming down just to hang out, really. And then

Josh: Fun.

Shannon: I'm off on the road with Ryan. We're headed up to up and down the coast of California teaching our tax toolbox seminar, which is very exciting. So if you're in California and you're looking for, or even if you're not in California, we have people who fly out from New York. So if you're anywhere and you want some in-person education, you want to come learn about a bunch of fun stuff, come check it out. We're gonna have a blast.

Josh: All right. Well, until next time, thanks for tuning in.

Shannon: Thanks.