Wake up, Buy Here, Pay Here people. It's a beautiful day. Go grab yourself another cup of Joe and say hello to Jim and Michelle Rhodes on the Buy Here, Pay Here morning show. Take it away, you two. morning everybody um uh where am I and what day is this I right we're just merry christmas post christmas recovery mode here yeah we really are we were just talking with hugo before we started and it's just like there is a level of sugar coma yeah yeah and um which I'm better acclimated to that. I can handle it better at the holidays because I'm sugar all day every day. But I've got to quit. That's one of the things that we've got going. We were telling Hugo too that this weekend we do New Year's resolution whatever vision boards for solstice instead of the New Year because based on I don't know. The oldest calendars that there are, solstice is the mark of the darkest day of the year. And then you start in the next cycle. So it's kind of like the moon cycle. So there's a new moon and a full moon. So we've already created kind of our goals. And so this weekend, I think that we're going to be doing a sugar detox. Yeah. No, I'm not starting this weekend. I thought we said Wednesday. Would you put change in the game on me? Well, okay. I did say Wednesday. That actual is the day, but we're prepping. So anyone who needs anything sugary and lives in the area, swing by. Because we will be like filling your cupboards with all of the things. Here's what you won't see out of me. Jim will be cranky. Oh, yeah. Sure. All next week. Oh, yeah. Be ready. Be ready, everybody. No, what you won't see out of me in January is you won't see me waiting in line for a treadmill at the gym. I will not be amongst the people at the gym who are doing the New Year's resolution thing and everybody flooding in there with their new memberships. I think we all know what that looks like. And it's pretty... ridiculous you would have to wait till about mid-february you know people will be dropping off of their new year's resolutions and then you could maybe have a better chance so hi george spat good morning I saw some pictures of george george spent his holidays up north with family and I saw that that's one of the nice things about facebook even if you don't talk to people you get some idea what's going on in their world so yeah chicago's got to be cold and wintry right now unlike tampa so it's uh That's nice to say. Yeah, for sure. So do we have any announcements or anything? We do. I think next Wednesday we plan to do kind of a kickoff to the year. I think we'll do a recap of last year and talk about our White Hat Ways podcast. Yeah, it's going to be we're going to talk about it. Wednesdays is shifting away from the Buy Here, Pay Here Morning show. and shifting into White Hat Ways. And so just on Wednesdays, it will be... However, White Hat Ways won't only be on Wednesdays. Well, yeah, it won't. But it will be... Wednesdays have been White Hat Wednesdays. So we're going to be shifting into a new... a new frame, a new whatever. And then next Friday, we've got Brent Carmichael who will be, I think he actually officially steps into the chair of director of education on the sixth of January. I think they said it's a Monday. Just before probably his little break between. Yeah. Between here and there. And then during the month, too, we've got a few of our Fridays locked up. We're going to have Jeff Martin in January come and talk about what's happening in NIEDA. We're also going to have... Attorney Allison Harrison will be with us in January. And we might change the dates on that. Those of you guys who know, Allison has... just graciously donated time for White Hat Way as legal counsel for a lot of that. So we're really grateful for that. And then, Jim, we're going to be recording a podcast that we'll be playing. I haven't quite set the time where this recording will be between Jeff Martin at NIADA And Paul Folletti. And Paul Folletti from NCM. And we're going to talk about this transition and some of the factors that went into making this transition. Because NCM is moving away from some things and it's moving to NIADA. So we're going to have a conversation about how that all kind of came about. Absolutely. I look forward to that. And so, yeah, to me, it's a really big deal. And I've said as much in my correspondence with them. I think it's an important conversation. I think NCM has done a really beautiful thing for the buy here, pay here segment here. And obviously Brent Carmichael's at the center of all that. But we will talk. It'll be a recorded conversation and we'll bring the recordings. Yeah, and we've got like a handful of other people that we're just trying to nail down dates. So it'll be through January and into February that we have some of them, just different conversations, some dealers and others that we're looking at having. So just before we get started, I... What you'll see this next year is I've pretty much only been active on the podcast. It's been just a wild ride this last year with family stuff and a lot of different things. Jim was at the helm and also co-pilot. for the last year. So, so this next year, um, I, uh, uh, there are some things that have wrapped up and, and so I'm really, I've been antsy for the last couple of weeks. It's like, oh gosh, I'm, I'm ready. Cause I'm, you know, when Jim met me, I was like this big shot career lady. And, and, uh, or at least I thought I was a big shot. I thought you were too. I mean, you had eye heal. I had high heels and wore a dress really well. And so, yeah. So this next year, you're going to see a lot more of things being driven by me and stepping in and doing an awful lot more. So thank you for everyone who has kind of been patient in all things. And yeah, so. That's it. That's it. Oh, we have, we have, we have a guest. We have a great guest. We love the Sanchez. We love the Sanchez's Hugo and Amanda Sanchez. And they're from Butler and Sanchez. Because Amanda was Butler before she became Sanchez. So their firm is Butler Sanchez. For those who were been living under a rock and didn't know that story, then we're happy to bring in Hugo Sanchez. Good morning, Hugo. How are you? Morning. I'm great. How are you guys? Fantastic. I'm so glad that you could join us and, you know, We were discussing before. Good morning, Amanda. And thank you. Thank you. You've just boosted Amanda, my ego, a bazillion times. You are a big shot, Michelle. Thank you. I could use an ego boost over there. Jim's awesome. Well, yeah, I mean, Jim gets from me just like, good morning, Karen, too. Gets from me all the time about, you know, just because he's been at the helm and all the wonderful things that have happened and it's just like I am so damn proud of you I can't think I think I tell him that probably but I do um I you needed one um uh so uh amanda and hugo uh butler sancho butler and sanchez um they are accounting firm And those of you who tap in to all things with NIADA and with us and with others and the high-track educational stream, their firm is always represented because they just really, really, really deeply understand the space. And I would say that's the focus of the practice, right, Hugo? You guys are primarily... buy here, pay here focused firm. And so, you know, you're more than an accounting firm. You're very specialized and have a high, deep understanding of the buy here, pay here space. And at least your pay here too, of course. But I know that buy here, pay here is primarily where you live day in and day out. And we saw your article back in October, publication of BHPH Magazine. And I've got the link posted for... Yeah, it was a couple of months ago that you wrote this article. And I ran across it and I was like, we need to have Hugo on because this is a topic that warrants having more of a conversation because... You know, I was raised in a family where people were business owners. My dad owned his own business. And so this was a topic. I mean, it's buy here, pay here, but this is kind of, we'll be talking buyer pair specific, but as a business owner, These are conversations that that are important to have. And so, yeah. Yeah. And I found it, Hugo, and I don't have it because it's on my other device. But if we can get the link, maybe Amanda can help us find it. But the link to the article, I want to be able to share that across our comments and we'll do it after the broadcast if we don't find it quickly. But I want people to see the actual article in your article. You talked a lot about. the structure, you went through the different kind of structure like sole proprietorship or single member LLC versus multi member and then versus S corporation, et cetera. And I think, you know, most, most of the dealers that we see out there are typically running an LLC or an S corp, right? I mean, that's probably what you see most of. And so I thought for our conversation today, I'd like to first find out the first I'll preface this by saying that, you know, it was better than most that, As a former dealer and business owner myself, I know that what's good for the IRS is not always what's good for the stuff that goes to the bank, right? We want to show less income for the IRS from a tax strategy standpoint, but the banks are looking for profitability. And so we strike that balance. So I think as we think through this, like if I'm a dealer and I'm a multi-member LLC, like how would you be advising that people pay themselves? Yep. So we got to worry about two different things here, right? There's the legal structure and then there's the tax structure that any tax elections that your entity may have made. So just because you're an LLC, an LLC can be taxed as a sole proprietor. It can be taxed as a partnership, as an S corporation, as a C corporation. So just knowing that you're an LLC doesn't actually mean a whole lot for tax purposes, right? And one of the reasons for that, just a tiny background or whatever, is the code was overhauled before LLCs came into existence. And instead of the IRS and the government trying to come up with all these new rules for LLCs, they basically said, hey, if you open up an LLC and you're the only owner, you're a single member LLC, you're just going to fall under the sole proprietor rules that we already have, right? Or, hey, if you open up an LLC with multiple members, right, multi-member LLC, two or more people, individuals, then you're automatically going to fall under our partnership rules and it is what it is, right? You can elect to be other things, but this is kind of what it's going to default to and this is the rules you're going to follow, right? And I might stop quickly to point out that part of the reason that would be is that if Michelle and I own a two member LLC, then what I pay myself affects Michelle. So this is why it's a different set of rules, right? I mean, because she's a member of that that entity, then these things apply to more than just one person. Right, right. Exactly. So, you know, you have to worry about both your legal structure and that's obviously you talk to your attorney about all that, you know, and how it protect you in case of a lawsuit all that good stuff and then you have to worry about the tax structure which is any elections you may have made or if it defaulted again to a partnership or or a single member llc sole proprietor or whatever um and then that tax election that that tax um is is how it's you're you're gonna have to decide how to pay yourself via that set of rules right And so typically, if you are a sole proprietor or in a partnership, right, again, for tax purposes, you cannot be on payroll, right? If you're the owner of that entity or a partner in a partnership, you cannot give yourself a W-II in most instances. Okay. Okay. That's news to me. Yeah. As a sole proprietor, you just take draws. You just take money out. but you're taxed on all the profits of the entity, right? It all just goes on the Schedule C of your personal return. You report everything, whether you take the money out of the business or not, that's your taxable income and it is what it is. No W-tos needed. On a partnership, you can't, you, you kind of give some it's it's like giving yourself a ten ninety nine it's called a guaranteed payment and it shows up on your k-one from the partnership tax return um but again partners of a partnership cannot be employees of the partnership cannot correct okay you would still not you would not put yourself on payroll give yourself a w-two you would just get a k-one that reports your share of the income your guaranteed payments All that good stuff. So what if your partners, and as a partner, you're not getting paid, but you also fill in the role as the CFO? Does that change at all? No, it does not. So again, you would just, it would just be good because you have a ownership because you get a K one from that partnership. You, your, your share of the income would still be reported to you on that K one. Okay. Very interesting. Yeah. All that. So I see that mistake a lot. It's, it's relatively common, right? Because people want to, you know, they want to have a salary and so on and so forth. Um, in reality, you know, Those are the rules of the IRS. In reality, I've never seen them enforce that, right? If a partner takes a W-II, I've never seen them kind of reverse that. They just basically tell them to stop doing that because it's not technically allowed. But in reality, the end result is very similar, right? Because you're going to get a deduction on the partnership for those W-II wages. So that reduces that K-I income. And then you get a W-II where you report that income just somewhere else on your return. So even if you're just a partner and you're not getting a salary, can you still file your Social Security and FICA and all of that? So if you're active in the partnership, yes, it's still going to be subject to those self-employment taxes. So when you're self-employed, it's self-employment. When you're an employee somewhere, it's payroll taxes. It's essentially the same set of taxes, same laws, all that good stuff. So yes, if you're active in the partnership and you're getting those draws or those guaranteed payments, those are subject to those payroll taxes and you're getting those social security credits for that. Got it. Got it. So let's make sure I'm clear because if I'm a dealer listening, I'm thinking ahead to my twenty twenty five business plan and I'm trying to understand if I'm if I've got a passive partner and I'm an active partner, how do we differentiate so what the heck yeah well that's a whole different conversation for a future podcast so no the uh the thing I'm thinking about is with dealers like if if I'm an active partner and I have an investor who owns let's just make it simple and say I have a fifty percent partner yeah we have a lot of dealers that have that as their scenario yeah So so what would you be advising? Like, how can I is there a way for me to appropriately get compensated for the time that I put into the business that the other partner does not? Absolutely. Yeah. So so again, with a partnership, right, you file a partnership tax return form ten sixty five. And the way that's going to work is is the individual doing the work that's getting paid for their services rendered to the partnership. They're going to get guaranteed payments. And that's kind of like getting a ten ninety nine. It's kind of like a partnership. Right. So that K-one will show their share of the guaranteed payments. On top of that, it will show their fifty percent share of the profits of the entity. Did you say it is a ten ninety nine or it's like a ten ninety nine? It's like a ten ninety nine. It's it's reported as a guaranteed payment on the K-one. But it's kind of like if you weren't a partner, you would give that person a ten ninety nine when you are a partner. It's called a guaranteed payment. I'm glad we talked about this because I have to believe there's a ton of dealers that aren't doing it that way. And so I think this is a perfectly appropriate way to make that shift. Obviously, because of our surprise, it's not something that we've, you know, we. We're just like average Joe Schmoes. And it's like, well, we have taxes. All right, let's figure out the best way for us to do this. I see that error all the time too, right? What I typically tell them is, look, we're not going to go back and amend these tax returns and report it all correctly. Because ultimately, for the most part, the income flows through the same way, gets taxed the same way, all that good stuff. So it's really somewhat just a matter of presentation. But the IRS wants it a particular way. So we're going to fix it and do it right moving forward. But I typically don't recommend going back and amending all the payroll returns and all the partnership returns and all that to reflect that. OK. And is that because, like you said, the IRS is not really enforced? certain things like that. So if you have the privilege of being audited, there's a good chance that they're just going to kind of like, yeah, you're doing it right now. So don't worry. Right. Ultimately, the tax due is going to be pretty much the same. Right. It gets paid a different way. OK. Gotcha. Gotcha. Gotcha. So this all stirs other questions. We'll have you back. What it means is we're going to have to find another time to bring you back to talk further about. And everybody runs their business a little bit different, right? Buyer, payer. I'm sorry. Yes. And so everybody's situation is slightly different. It's hard to get into the weeds and get into the detail of every different scenario manageable. Yeah. So I think this also comes up, you know, we touched on the thing about the bank, you know, what the P&Ls look like at the bank versus, you know, the IRS. Of course, they're the same. But as far as, you know, we want to look good in one place. Right. But we have to report it the same. But it also raises for me to think about when I was a first. I'm a member of a twenty group. I think it was back in the forties or fifties. Anyway, I, I remember that one of the things that we were asked to do in reporting was to report that they basically reported without owner salaries. Why? Because they want to know when they're looking at the profitability of the operation and they want to know, they kind of want to have a baseline, like how's the business perform before you factor in the owner salaries. And I think this begs the question, Hugo, it's like, And we don't have to dig too deep here, but it's like some dealers may pay themselves more as a tax strategy, right? And so those guaranteed payments that you're talking about have to be reflected on the profit and loss report, right? So they're coming out of my profitability. But I think then when we strip that away and if it's a twenty group environment or wherever we might look at those things, we want those things to be comparable. So we would probably look at the profitability of the business. you know, before owner salary. Certainly that's what money groups have done. And it's just a thing to think about, you know, what you pay yourself from the... Sometimes there's profits. People are paying themselves from cash flow. And sometimes, you know, they may or may not be profitable in these scenarios that we're talking about. I know in your article, I would urge people to read that because Hugo does speak in the article to the thing about profitability and paying yourself relative to... to profitability, but obviously in our business, if we take a salary, which we do encourage dealers to take now, I'm going to say guaranteed payments, take guaranteed payments because they are performing a function in the business that if they weren't there, they would need to hire somebody else to sit in that chair and fulfill that role. And so from a pure operational standpoint, not a CPA accounting perspective, I'm just saying, look, we really should probably budget for that in the business. If the business can't support that, then you're kind of stuck running it for the rest of your life in a way and so I think from a from a scale standpoint an operational standpoint I'm simply saying let's let's budget for that and and we're going to be in there managing the business and one day when we step out of that management role we've already kind of got that built into the budget and and we can direct that to another you know manager at some point so this is part of the the thought process for me but the other thing I want to have you come back and talk about one day is this whole thing about ebita So that's a whole different thing. Yeah, it's kind of a high level thing. It's EBITDA, right? Earning Before Interest. Interest, depreciation, amortization, and taxes. Well, I said that backwards, but yeah. That just flowed, right? All of those things, yes. So amortization must be different than interest. So we'll cover that another day. But I think it's important because a lot of the lenders are looking at that. So why? So in this context of what we pay ourselves, And what can we justify paying ourselves? Because based on the performance of the business and certainly fulfilling a role. But I think we just have to recognize if I say I'm fulfilling a role of a general manager in my dealership and I'm worth one hundred fifty thousand dollars a year. So I'm going to take X amount of monthly and guaranteed payments. well that's okay that may be perfectly rational thinking but the business can't support that doesn't have the profit for that then that means we're drawing perhaps more on the line of credit in the interest of supporting that salary and all those kind of things are for business owners to make a decision about how they want to structure that sort of thing so how do you solve that well you pick up the phone you call a guy named hugo sanchez and he will walk you through all those pieces so you can because everybody's situation can be a little different Right. And their business or the stage of their business is going to vary. And so I think these these answers we're given aren't one size fits all by any stretch. But there are some rules that we we're going to operate within. Certainly when it comes to the IRS guidelines, we've got to make sure we stay within those bumpers. questions follow up no I I I'm yeah I taxes okay so I I I'm a I'm a smart person but I don't even want to dip my brain into how taxes work it's just like that for me it's like that's something that I'm a professional for after lunch yeah after I've like detoxed all the sugar in my system I might be able to wrap my brain around it, but it is complex. And when you add the tax side, when you add the layer of complexity that buy here, pay here is, then it becomes even more mind numbing for those that don't want to wrap their heads around taxes. And we deal frequently with dealers who have had their family CPA for generations. And and they you know, they know their stuff around tax things, but they do not understand for the most part how to apply the buy here, pay here business to their taxes. So I'm just I love being able to have. you as a friend and as someone we can draw on because it's questions I think that most dealers don't even stop to think about because their CPA is saying, okay, well, this is how you do it, but it may not be accurate. Like I said, there's different ways to do things. One of the things that we do for our dealer clients is we run reasonable compensation studies. So one thing we haven't touched on yet is corporations, right, on the payroll side of things. So how to pay yourself. With corporations, whether it's an S corporation or a C corporation, if you make that election to be taxed that way, you do have to put yourself on payroll if you are involved in the business. So LLC, no. No. If you're like a partner or but if you're an S or a corporation. Yes. Correct. Yeah, exactly. So there's two ways you can take money out of your S corporation when you're the owner. You either take it as payroll. Right. And you pay payroll taxes on all that money or on that income. Or you can take distributions from the company, which is profits from the company, right? Those distributions are not subject to payroll taxes. Okay. So that sounds nice, right? Why don't we who just take distributions while the IRS is not that dumb, right? um they're not good at their jobs if they're not that bad at it they understand that hey this is a loophole people can get away with never paying payroll taxes if we do this so they have that gray area called you know you've got to pay yourself that reasonable compensation um so we run those reasonable compensation studies for our dealer clients and and we use what they call the many hats approach and it's you know you guys the small business owners we're small business You guys do a lot. You're handling the administrative side of things. Sometimes we're doing the bookkeeping ourselves on our own business, so on and so forth. You take all that into consideration to calculate what the owner of the company should be paying themselves based on all the different roles, all the different hats that they wear along the business. That reasonable compensation report that we give our clients, that gives them a solid idea that, hey, this is what you should be paying yourself via payroll. This is what you should be paying payroll taxes on. any profits after that, then you can take as distributions. So this study is done after you dove into their specific business. And so based on all of the moving pieces and all of that, this is what you should be doing. Is there is there like from the IRS standpoint, is there like a guide, you know, like here's the bumper or like a minimum bumper or is there anything? No, there really isn't. And that's very much a big gray area. And a lot of tax planning can happen there, right? All they tell us is reasonable compensation, but they've never defined reasonable compensation. Okay. So one of the things that our study does is it takes, you know, where they live, obviously different parts of the country have different costs of living, different salary requirements, so on and so forth. So it takes their county into consideration. Again, it takes the different hats that they wear in the business, how good they are at those hats, right? You could say, hey, I spend five hours a week doing bookkeeping for my business, but I'm a terrible bookkeeper, right? So what would you pay a terrible bookkeeper in Harris County, Texas? And they're gonna multiply that times five hours. And that's exactly how it works. And so again, that that reasonable study report, what I tell my dealers is they should absolutely never be paying themselves less via their W-to, you know, less than that number, because this is what that our report is saying, hey, this is what your reasonable compensation is. If you take distributions, you need to run this much through payroll. They can absolutely pay themselves more if they think they're, you know, if they want or need to, you know, you have to take in Social Security credits into, you know, and Social Security benefits if you're counting on that at retirement age. All that has to be taken into consideration with what you're paying yourself. But an absolute minimum, you know, we do based on our reasonable compensation study, we do set the floor of what you should be paying yourself. But the IRS doesn't have anything like that. Sure. So one of the quick things I want to do, and when Michelle talked about, you know, that our industry has kind of some special, you know, elements to it, right? I there's probably others who go, I, I personally have not been introduced to another industry or, or segment that has as much disparity between cashflow and profit, right? I can be highly profitable early, and be highly negative in cash and then jump forward two years and it's a whole different situation. And so I think that, that adds a layer of complexity to our business that others don't face. And then you throw a line of credit into the mix and throw a reinsurance company into the mix. It's just, you know, there's a lot of complexities here and, and, and rightfully so those are a lot of those things I just mentioned are tax strategies, right? It's all part of kind of, because we get, We get hit so hard in the buy here, pay here segment for our quote front end taxes on a buy here, pay here deal that we have to have those strategies. But I just think that irrespective of strategies, the cash flow and capital requirement that is buy here, pay here makes us have a special set of conditions that I think this is why folks we recommend get a specialist. You just heard Hugo talk about that report that they do. It's like this is an example of why you want to be with a knowledgeable firm so that that audit you know does come knocking that you've got people who really understand the stuff and it prepared you you know for that scenario and like I say then you add lenders I got a total aside I promise you softball question soft toss a little bit of a curveball here and if you don't know you can say Jim I don't I don't see Or that's it. We'll be coming back and discussing this later. So these reinsurance companies, are you seeing most of them set up as S Corp, C Corp? So there's something. Are they required to be a certain structure? So reinsurance companies, ninety nine point nine percent of the time are C corporations because again, and depending on what third party administrator you're using, they're setting them up not in a U.S. state. Right. They're usually setting them up under Turks and Caicos law, Delaware, tribes of Indians, somewhere else. And that's just really for insurance requirements, right? It's easier to get a license through them than it is the Texas Department of Insurance, so on and so forth. But they make an election to be taxed as a U.S. corporation. And that's typically going to be a C corporation. So follow up. Imaginary situation. I'm setting up a new reinsurance company starting twenty twenty five. I have people that I pay for administration. Would that C Corp, would you be advising that I pay myself or somebody else to manage the reinsurance company? Because, you know, I basically just heard, I don't know how dealers take money out of their C Corp, you know, as a reinsurance. So go ahead. No, typically not. You're already paying an administrative fee for somebody to handle the claims and the actuarial work that needs to happen and all that good stuff. There's no need to pay yourself from your reinsurance company. One of the big benefits for the reinsurance, and again, everybody's situation is different. This is I'm a CPA, not your CPA. This is tax advice, not necessarily all that blah, blah, blah blurbs that I have to say. But with one of the big benefits of a reinsurance company is that you're getting an ordinary income deduction, right? You're getting a deduction from your dealership or your finance company. That money is going into the the reinsurance company, and it does not have to be picked up as income because of that. It won't be election. It won't be election. The the way you are able to take money out of that C corporation is through dividends, and those are taxed at better tax rates than your W two income. Okay. Okay. So why would you want to take wages out when you can take it out as dividends and get, you know, better tax rates out of it? And the only reason I ask the question is because you told me the IRS was looking for reasonable compensation or whatever. So I just naturally went to a place where, well, is somebody running the company or not? Should I be paying in this case? You've already got the administration. You've already got the tax benefit. And as long as the IRS is not looking for somebody to be salaried to be running this company, then I think that answers that part. Because reinsurance is obviously a big part of strategy for a lot of our dealers, and rightfully so. We see the advantages and certainly advantages. recommend that for people but I think you know we're recording this or we're live on december twenty seventh of twenty twenty four so just a few business days left they're probably not a whole lot that people can do to rework uh you know any taxes for twenty seven at this stage but or for twenty four rather but as we step into twenty five I think it's time for people to to recognize you know this may be a year of growth for you and if you're looking for growth I think you you want to try to find a uh a reputable firm to handle your taxes and help you really develop a strategy so that you optimize in this complex segment that we're in with buy here, pay here. I have a question around that reinsurance thing. So, you know, Hugo, that was not part of the... article. But Megan piped in and said, but you can just do a loan against your reinsurance, right? Then pay the interest or the loan payment back and not worry about dividends. Is that still the case? You can absolutely. You have to have some you have to have a way to pay that loan back. Right. We can't just take loans from our reinsurance company and never pay them back. That's a mistake I do see quite often, right? We've taken all these loans out, millions of dollars worth of loans, And it's like, OK, are you ever going to put that money back? Well, no. Well, you know, that's a problem. There are threshold about how long. I mean, if you're like on a payment structure to pay a loan back and you're paying ten. I mean, can you say I pay ten dollars a month towards this loan? And as long as you have a structure of paying it back, does that make it OK? Right. As long as it's reasonable. Right. The IRS is just looking for reasonableness. You know, does it have a business purpose on why you took that loan? So on and so forth. Now, the taking money out as dividend as a reinsurance company. And again, this is a better question for those third party administrators because I don't handle those tax returns themselves. But at some point, if that reinsurance company stops writing new premiums or accepting premiums, at some point it's going to that extra cash in there. does have to come out as dividends at some point, right? So, yes, can you take loans temporarily and not have to pay, you know, the capital gains tax on it? Absolutely. Yep. Make yourself a loan, but have a plan to repay it, document it. And then you can take out another loan later. And that way I'm realizing Michelle is a lot like the IRS because she's always asking me to be reasonable too. And I think that's a big ask. That's a big ask. Yeah. No, I think we probably covered it, Hugo. I appreciate you making time. And I think, again, just one more illustration of why I think folks, we always can advise that people, you know, invest in a capable accounting firm. Obviously, Butler and Sanchez in Houston area is certainly among the best. And they know they're their business well. They're highly reputable. Their clients speak very highly of them. And they're friends of high quality. I mean, they're quality people. Absolutely. Plug, plug, plug. Thank you. Appreciate it. You're welcome. We covered it well, Hugo. I look forward to having a really dry conversation one day around EBITDA, but I know our dealers need to know. They need to know. They need to understand it. I think that conversation needs to be at a You know, bankers speak a different language. And, you know, we we sometimes have to be the middleman in those conversations and explaining and all that good stuff. I get it. Yeah. Yeah. I'm kind of thinking that needs to be over a smoked old fashioned in a setting where it's just like, you know, a little bit of jazz playing in the background. Let's let's talk. Maybe not the morning show. Well, we could record it. Yeah. Okay. All right. We'll, we'll figure it out. Thank you so much. We really just really, really appreciate you guys and how much you add to the conversation and helping dealers, um, do things in a way that's going to help mitigate a lot of headache in the future. So we really, really appreciate, um, know that your heart is like, um, We just want to help. I just want to say to our dealers, please don't wait to call Hugo and Amanda when you're in trouble. You can, but they would much better help you. It helps when you call away before. Yeah. Before we let you go, Keith Thacker, Butler Sanchez is a great company to partner with for your buyer pair operations. Great service and super knowledgeable and easy to communicate with. So, you know, I love it when you get like a customer that wants to say yes. So thank you, Keith, for that plug as well. Do you want to stick around for just a second so we can wrap up privately after we've wrapped up the morning show? Absolutely. All right. Thanks again so much. Okay. So many layers. Great, great conversation. I, you know, we look forward to having Hugo and, and or Amanda back and talk about more accounting stuff. They're, they're really colorful people, which makes the conversation more fun because accounting is not a really sexy topic. I mean, you know, everybody's got their thing. I know. I know. But, you know, it's. No, I do want to say quickly that Hugo touched on it. Like, everybody's situation is going to be different. And I do have to mention, and I have to lean into the microphone and say, just remember, Jim and Michelle Rose are not accountants. We don't offer legal advice. We don't offer accounting advice on the Buy Here, Pay Here Morning Show. Please seek counsel. disclaimer um yeah we but we love to talk about all different topics so um speaking of if you've got anything uh on your mind something you would like us to to talk about uh you'd like to bring to the show please let us know and then we can take a look at getting you on um or getting that topic on our calendar All right, everybody. Wow. We will see you in twenty twenty five. That's right. Help you guys have a rest. Great rest of your your twenty twenty four. And we will see you soon. See you on Wednesday. All right. Thanks so much for joining.
