It's common for us to look at a new year and think about what we would like to change and what we would like to accomplish in the New Year. Those things we want to change we call resolutions and those we want to accomplish we call goals.

It wasnt' many years ago that I was adamant against setting goals and making resolutions. My reasoning was that I had an idea of what I wanted to do and that was enough. Writing things down just made my life more restrictive and set me up to fail. Does anybody else out there think this way?

These days I have done an about face. My wife kind of chuckles at this, remembering just how strongly I felt against making goals. What changed? I learned the Hawthorne effect from my friend, Robert Kiyosaki. The Hawthorne Effect states that what we measure improves and what we measure and report improves exponentially. So, writing down our goals and resolutions and then reporting on them goes a long way to helping us accomplish those goals and make the changes we need in our life.

So, if you don't mind, I'm going to share 3 of my goals for 2009 with you and each month I will report my progress. I apologize for getting a little personal here, but it helps me and hopefully will help you in your goals. I encourage you to do the same, i.e., to write down your goals and then measure and report to someone on a regular basis.

Goal #1: Build my house in Park City, Utah. As some of you know, this has been an ongoing project for several years now. The holdup for the past six months has been the Deer Mountain HOA. The Board rejected my plans because they thought the house was too big based on an arbitrary change to the rules that they made last year. So, the first step in achieving this goal is to get my plans approved, either by changing the Board's mind (working on this through a petition) or changing the plans to fit within the new guidelines.

Goal #2: Size 32 pants. I'm not that far off - I'm in a size 34, but that extra 2 inches would make a big difference in how I look and feel. First step goes to one of my resolutions - work out 5 days a week. I have been working out 3-4 but I have let my travel interfere with this.

Goal #3: Complete an Olympic triathlon in less that 2 hours and 45 minutes. My previous best is just under 3 hours. Next step is to work with my naturopath to strengthen my ankle muscles to I can start running again. This will help a lot with my travel as well, so I can run when I am away from home. (I have found it extremely difficult to find a pool to swim in when I travel.)

Now that I have measured and reported my current status of these goals, I will ask you to hold me accountable. And feel free to share any of your goals with the rest of us. We would be happy to be a part of your measurement and reporting process.

You may wonder why I share health and vacation home goals in a blog about wealth. But isn't wealth just a way to improve our life and obtain financial freedom? Health produces it's own freedoms. Even a smaller pant size increases your freedom as you are free to shop for nicer clothes that look and feel better.

And the ProVision Team is all about freedom; especially your financial freedom. Join us at http://ProVisionWealth.com and sign up for WealthStrategyU to start on your path to Financial Freedom. And let us know how we can help. We have a full team of Tax and Wealth Strategists at your disposal. You can contact us at cs@provisionwealth.com or call us at 866.467.5809.

Remember that your financial freedom is closer than you think.

Happy New Year!

Tom

Once you have your goals in place, it's time to form a strategy. Begin by determining where you are today in relation to your goals. Now you know the gap that has to be filled. But how to close that gap?

With a plan (strategy). Formulate a plan for achieving each goal. Let's take mine, for instance. I need a plan for each goal. So, with my three goals, I need three plans; one to build my house, one to get to a size 32 pant and one to reduce my triathlon time.

Tomorrow I will show you how to build that plan.

Warmest regards,

Tom

Once you have your goals in place, it's time to form a strategy. Begin by determining where you are today in relation to your goals. Now you know the gap that has to be filled. But how to close that gap?

With a plan (strategy). Formulate a plan for achieving each goal. Let's take mine, for instance. I need a plan for each goal. So, with my three goals, I need three plans; one to build my house, one to get to a size 32 pant and one to reduce my triathlon time.

Tomorrow I will show you how to build that plan.

Warmest regards,

Tom

So let's discuss how to build a strategy. Once you know what you want to accomplish and your current situation, you are ready to create your plan. The next step is to figure out what has to happen right before you succeed. That's right, don't think about the next thing you have to do. Think backwards from the result you want to achieve.

So let's take my goal of building my house in Park City. What has to happen right before I have my first housewarming party to celebrate the completion of the house. Every time we set a goal, we should set up a celebration for accomplishing the goal. In this case, it will be a grand housewarming party. For my goal of a size 32 waist, the celebration will be, of course, shopping for new clothes. For my goal of a 2:45 triathlon, my celebration will be a nice dinner at my favorite restaurant, Ruth's Chris.

Planning on celebrating brings a lot of joy to the plan. Let's say you want to lose weight. That's a very difficult challenge and not one that most of us look forward to. So the celebration is critical to keep us motivated. My housewarming party will include my family and my close friends and what could be better than a house full of the people you love?

Tomorrow we will talk about how to look at the step before the celebration and the step before that until we get to where we are now. In the meantime, if you would like more information on tax or wealth strategies, visit our website at http://www.provisionwealth.com/wealthstrategyu.

We will talk again tomorrow. Until then, remember that your financial freedom is closer than you think.

Warmest regards,

Tom

Saturday we discussed the celebration that you are planning for the completion of your goal. Today, as promised, we will discuss how to go about creating the strategy to accomplish your goal. Remember, we talked about starting at the end and then working backwards? The reason for this is simply because for most of us it's easier than starting at the beginning. After all, we pretty well know the end result and working backwards is just one step at a time examining what has to happen immediately before the accomplishment of the next step.

Let's take my house, for example. What has to happen immediately before we are ready for our celebration? We need to decorate the house. This includes hanging or placing any art work or any other decorations that we want in the house. Just before that comes the furnishing of the house, including beds, sofa's, and the pillows or bedding that go along with it. Are you starting to get the picture?

The great thing about this approach is that you can be as detailed or as general as you like. Some of you will want to go into great detail about each step right from the beginning, such as what the decorations are going to be and who will hang the pictures. Others will want to get a broad picture first and then get into more detail as the project progresses. Just remember for those of you in the latter category, that you will eventually need to get into the detail, including the budget for your decorations, furnishings, etc., so you may want to think about it earlier than just before you do it.

Another benefit of this approach is that it allows you to visualize the process based on the successful completion of each step. Any time we can visualize the results of a portion of the process, we are more motivated to complete that portion of the process.

You can do this with any goal and you can start general and then go back and do the details for each part of the process. Once you have this done, you have a great map for completing your goals. You can then add a timeline for each step and add the people and the budget for each step. You Quick Starts (see www.Kolbe.com) may initially resist this process. Just remember that you can do the general part of it, which you will enjoy doing, and then have your assistant or someone else who is more of a follow through create and carry out the details. This gives you a map, allows you to still visualize the success, and provides guidance for those who will carry out the details.

For more on creating a wealth strategy, subscribe to our free WealthStrategyU at http://www.provisionwealth.com/wealthstrategyu or sign up for our monthly coaching at http://www.provisionwealth.com/products.

Have fun creating the strategies to reach your 2009 goals. We will talk more about specific wealth strategies another time.

Warmest regards,

Tom

My friend, Maria, asks the following questions:

Hi Tom, we are exploring 1031''s. How long should our current primary residence be a rental property before it can qualify for an exchange? Is it possible to leverage the equity in this property to a property with more cash flow without a cash outlay? If so, how?

A: Let's start with the second question. Suppose you had a building that was worth $2,000,000 and your loan was $1,200,000. What are the restrictions on what you can buy in a 1031 (i.e., like-kind) exchange. The general rule is that when you sell a property, you recognize taxable gain for the difference between the sales price and your adjusted (i.e., net of depreciation) cost. Under IRC Section 1031, if you follow the rules, you can defer any gain if you exchange your property for another "like kind" property.

The rules for Section 1031 are complex and detailed. But there are a couple of simple rules of thumb you can rely on to answer some of the general questions before going to your CPA for more detailed answers. First, so long as the new property costs more than the property you sell, you should not have to recognize gain (again, as long as you follow all of the other rules). So, in the example, so long as the new property costs at least $2,000,000, you should not have to recognize gain on the sale of the old property.

Your old property has a loan equal to 60% of the value of the property. Let's say that you find a bank that is willing to loan 80% of the value of the new property. That means that with your $800,000 of equity in the old property, you should be able to purchase a new property costing 5 times this amount or $4,000,000. There is no maximum value of the new property from a tax standpoint. The only real restriction is the bank's lending requirements.

Now let's look at question number 2. Suppose you turn your personal residence into a rental property. How long do you have to rent it out before you can do a 1031 exchange? The IRS guidelines say that you need to hold the property as a rental property for one year and a day. If you do that, they will not challenge you. Even if you hold it as a rental property for less than a year and a day, however, you may be able to do a 1031 exchange. See your CPA for the detailed rules about this and the related risks. If your CPA does not specialize in real estate, call the ProVision office at 866.467.5809 and schedule an appointment to speak to one of our real estate tax experts (all of whom own investment real estate).

One other question that comes to my mind is how you changed the property from a personal residence to a rental property? Did you know that you could have excluded as much as $500,000 of gain permanently if this was done the way we would recommend at ProVision? This could have eliminated entirely the need for a 1031 exchange and created a permanent tax benefit. For more on this and other tax saving strategies, call us or enroll in our School of Tax Strategy at http://www.provisionwealth.com/products.

Warmest regards,

Tom

Here is another question from one of my Aussie friends, Anita:

Q: Dear Tom, I need to be financially self-sufficient in 2 years so that I can retire and live a fulfilling life style. My husband and I currently have Real Estate to the value of approx. AUS$1,700,000. $650,000 of that is our family home. $920,000 is owed to the bank, monthly interest is $6,000 and rental income is $3,500/m. Credit card debt is $60,000 some of which is at 20%(Yeah I can hear you gasping) I have now been pre-approved for a further loan of $460,000 @ 7.14%. Question: How best can I use this money on the 30% strategy you talked about when you came to Australia? This loan must repay itself and more.(My preference is for Real Estate.) Extra Question: How can I get a goal plan worked out such as the example of the woman which you demonstrated. P.S. Will your tax tutorials be relevant to Australia, what is an IRA?

A: First thing you do with the $460,000 is pay down that $60,000 of credit card debt that is at 20%. Next thing you do is to get your spending under control so you are not racking up additional credit card debt. After that, you need to create your wealth strategy that builds so much wealth you can spend whatever you want without worrying about credit card or other debt.

Begin by going through the 17 Secrets course you acquired at the Chris Howard seminar in Sydney. This is the same material that others can acquire (though without all of the bonuses) through our School of Wealth Strategy at http://www.provisionwealth.com/products. Once you have been through the materials, consider hiring a ProVision Strategic Wealth Coach. A ProVision wealth coach will give you advice that is relevant to your specific situation, will hold you accountable, and will help you build the team and the systems that will allow you to achieve your 30% investment returns.

Remember, that the key is not the investment, but rather the method of investing. This is what we teach in our School of Wealth Strategy at http//www.provisionwealth.com/products. Be sure to ask any questions you have either through the AskTom link or in our monthly coaching calls. I would suggest waiting to borrow the $460,000 until after you have developed your wealth strategy, unless you can borrow it as a line of credit that allows you to draw down only the amount you need at any one time, in which case I would suggest you obtain the line as soon as possible to pay down your expensive credit card debt.

Again, please feel free to ask these and any other questions on our monthly coaching calls. The next call is tomorrow at 7:00p.m. MST, 6:00p.m. PST. I believe this is in the middle of your day in Australia.

Warmest regards,

Tom

P.S. - See tomorrow's blog for the answer to your question about the tax planning bonus course you are getting with the 17 Secrets course.

I am so glad to be getting questions from my new friends in Australia. Let's start with a question from Maya.

Q: How different is your U.S taxation system to Australias,and will these differences be taken into account during the coaching programme when it commences? Eg How does your IRA differ to our Australian Superannuation?

A: Australia and most other countries, including the U.S., have net income tax systems. This means that you are taxed on your income, less any income that is specifically nontaxable (excluded) and less deductions. While the exclusions and deductions will be different from country to country, many of the basic principals remain the same. These are the principals we talk about in our bonus course on tax planning that comes with our course on Wealth Strategy.

For example, in the U.S., we have individual retirement accounts (IRAs), profit sharing plans, SEP's and pension plans. All of these are ways to defer income from today until some later year. In Australia, you have your Super and in Canada they have their RSSSP. All of these plans effectively function the same, in that the government controls how much and who can contribute to the plan, how the plan can invest its assets, when you can take money out of the plan and how the money you take out is taxed.

As we discuss in our bonus course on tax planning, most individuals rely heavily on these plans for retirement planning and tax planning. At ProVision, we believe there is a better way. That way is to create a Tax Strategy that produces permanent tax savings. Again, all countries have tax credits, income exclusions and deductions. While they may be different from country to country, the principals are the same in all countries. These are the principals we discuss in our bonus session on tax planning.

Of course, we recommend you find an experienced, creative tax strategist local to your country to be on your wealth team. Our course on Building Your Wealth Team that comes as part of our School of Wealth Strategy (http://www.provisionwealth.com/products and that was included in the course you purchased at the Chris Howard seminar teaches you how to find the right people for your team. When it comes to a tax professional, however, one thing you need to be sure of is that your tax strategist looks at taxes from a big picture, strategic point of view and focues on permanent, rather than temporary tax savings.

The value of such a tax professional in incalculable. You can save thousands of dollars in taxes that you will never have to repay that can be used to create millions of dollars in wealth and passive income.

I look forward to having you on our monthly coaching calls. Please be sure to ask lots of questions during those calls as well. I'm sure you are not the only person with your specific questions, so your questions help everyone.

Warmest regards,

Tom

We had a great call last night. Thanks to all who were on the phone last night. We had great questions and input from several people. It really helps everyone when you ask your questions, as others will have the same questions.

One of the questions that came up was how to decide on what type of investing to do. How do you choose the category that is right for you? In our course materials, I say repeatedly that you can make money in any type of asset and that what works for one person will not work for another.

The choice of investment is a very important decision. After all, you will be spending years devoting yourself to this specific type of investing, whether it be the stock market, real estate or a business. There are three ways to choose.

First, you can choose the way most people do it. We call this the DWEED process or "Do What Everybody Else Does." Most people choose there investments based on a random recommendation from a friend, advisor, or cab driver. This is why most people are scared to death of the current global economy. They have no strategy and no idea of what they are doing with their money. And they probably lost a lot of money when the markets went down.

Better is to evaluate what you enjoy doing. In our course called, "Massive Passive Income," we go through this decision-making process. We focus on a list of personal investment preferences in the workbook. By going through this evaluation process, you can get a pretty good idea of what type of investment will be right for you. Remember, that you will be most successful doing something you enjoy doing.

The best way to choose your investment category is to consult with a qualified Strategic Wealth Coach. A qualified coach, like those at ProVision, will start by listening to your concerns and your goals. Then, they will ask you probing questions to find out what you enjoy. Because of their vast experience with hundreds of other investors, they can quickly help you identify which type of investing will be most enjoyable for you. Our ProVision coaches also use an online tool that helps identify your natural instincts. Knowing your natural instincts quickly narrows the role you should take in your investing and the type of investing that will be most comfortable for you.

Feel free to call us anytime at 866.467.5809 or visit our website at http://www.provisionwealth.com to learn more about ProVision Strategic Wealth Coaching. We are here for you and your family, so be sure to call.

Remember that when you are investing the right way (the ProVision way) and in the type of assets that you enjoy, you will be wildly successful and you will always be able to sleep at night because you know that "your financial freedom is closer than you think."

Warmest regards,

Tom

I have been asked to speak to several church groups over the next two months on the topic of financial preparedness (ward conferences for you LDS folks out there). So I have been preparing my talk these past couple of weeks. I have 10 minutes to speak, so I have to make it count. So I'm wondering would could provide the greatest benefit to these people in that short of a time?

When I have heard similar talks about financial preparedness in the past, the focus has always been on budgeting your expenses and making sure you live within your means and save money. Not only is this boring, it is extremely negative and pretty much worthless. I want to inspire people and I don't think anyone is inspired by the thought of depriving themselves of what they want and need through the idea of a budget. Both "budget" and "save" are negative terms that are all about scarcity.

Instead, I have decided to talk about creating a wealth plan, or strategy. See, if we focus on a plan, we have something positive to look forward to. As I mentioned the other day, the first step of a plan is to determine your goal. And the first step of forming a goal is to decide how you are going to celebrate when you reach the goal. So, by focusing on a strategy, we are now talking about the most positive topic possible - celebrating!!!

I would encourage all of our readers to get rid of your budget, stop saving, and start planning for a great celebration when you reach your goals. Instead of saving, begin by investing but go the next step, as we discuss in our School of Wealth Strategy (http://www.provisionwealth.com/products, i.e., creating a wealth business. Doesn't having your own wealth business sound a whole lot better than saving money and budgeting? Not only is it more positive, it is the ONLY WAY TO BUILD PERMANENT WEALTH. All great wealth has been created through business.

And it's really not very difficult once you have a system or recipe to do it and especially not if you have a great Strategic Wealth Coach to guide you through. For more information on ProVision Strategic Wealth Coaching, go to our website at http://provisionwealth.com or sign up for our School of Wealth Strategy at http://www.provisionwealth.com/products.

And wish me luck in my presentation this Sunday. I can use your good vibes. I will be speaking at 11:00a.m. MST on Sunday.

Thanks for all of your positive energy.

Your financial freedom is closer than you think.

Warmest regards,

Tom

I blew it and I'm sorry. My resolution was to blog every week day and I missed yesterday. But here's the thing about resolutions. The tendency is to drop them if we goof. Instead, I prefer to admit I made a mistake and keep going. So, I'm going to keep blogging every day even though I'm already not perfect this year.

Today's question comes from one of our School of Wealth Strategy members. Jerry has a tax question. This is totally appropriate since taxes have such a huge impact on wealth building.

Q: Do the S-Corp minutes need to declare a per-share dividend in order to take quarterly distributions? If so, do I need to hold quarterly meetings to declare them or can I make a blanket declaration for the year? Thanks for your help and the great courses and workbooks. I’ve learned a lot and am applying it as I go.

A: You do need to declare quarterly distributions in an S corporation. The key is to act as if you are a regular corporation, like IBM. Each quarter you hold a meeting to declare the dividend and then you pay the dividend. Of course, you may want to hold your meeting with your spouse at a nice restaurant and make the meal deductible. But you do need to maintain minutes of your meeting and keep them in your corporate book. For more about how to handle S corporations, meals & entertainment and corporate formalities, I suggest you subscribe to our School of Tax Strategy (http://www.provisionwealth.com/products)where, just like the School of Wealth Strategy, each month you will receive a new course on a different tax strategy topic. All three of these topics are complex enough that we have created a separate course for each of them.

Thanks for being patient with my goof yesterday. Keep reading and feel free to send the link to my blog to your friends.

Warmest regards,

Tom

I had fun this morning doing two radio interviews - one in Gainesville, Florida on WOCA and one in Atlanta on WDUN. The hosts in Florida were Larry and Robin. Very nice, genuine people. The hosts in Atlanta were Joel and Bill - funny guys. What stood out the most for me was how basic I had to be in explaining what I believe to be basic financial concepts. Don't get me wrong - it was not that the hosts weren't intelligent people - to the contrary. Rather, it became more apparent than ever that the financial landscape is full of weeds (i.e., bad advice) and a desert of good information.

For example, a caller on WOCA who is retired called and asked what he should do to make more money on his investments. When I asked him what he currently did with his money, he said that he had it in cd's making 3-4% interest. How sad! Think about how much better he could live if he was making even 5-10% on his money. And what if he learned the rules of wealth that we teach in our FREE cd (that you can get at http://www.provisionwealth.com/wealthcd) and made 20-30% on his money? He could be traveling first class all over the world.

Another example was talking about taxes. The focus was on how much to withhold. While this is important, how much more important to actually reduce your tax bill permanently like we teach in our School of Tax Strategy at http://www.provisionwealth.com/products.

My point is that the keys to great wealth are:

1. Dream big
2. Learn the Rules
3. Take control of your wealth with a wealth strategy (plan)
4. Learn the ProVision Investment Process
5. Build your wealth team so you don't spend hours and hours managing your investments

I am passionate about getting this information out to the world. Would you please help me? We have tons of free education online at http://www.provisionwealth.com. Pass this link on to your friends, your family and anyone else you know. Let's get the world educated. If we do, this recession will be over in a hurry.

A special thanks today to WCOA and WDUN for helping to get this message out. I really appreciate you taking time to talk to me to get more of this information out to your audience.

Warmest regards,

Tom

I know it's late, but I promised Jerry in our School of Tax Strategy call last night that I would answer his question today regarding the election to deduct/amortize start up costs. His question was whether you can make the election on an amended return. The answer? It depends.

Like most tax questions, the answer depends on the facts of the situation. In this case, it depends on when you amend your return. If you amend your return prior to the original due date, plus extensions, you can file an amended return (or a substitute return) and make the election. Otherwise, you are out of luck because you have to make the election by the extended due date of the original return.

However, all may not be lost. As I suggested last night to Jerry, just because you didn't make the election doesn't mean there might not be another way to get the deduction. In Jerry's case, those of you on the call will remember that we decided we could make the argument that the costs in question might really be costs of a continuing business, rather than of a new business. If the expenses are attributable to an existing business, they are deductible under the regular tax rules for business expenses and no election is necessary.

The moral of this story is twofold. First, get good tax help as early as possible from a qualified tax strategist. Go to http://www.ProVisionWealth.com for more information about how ProVision can provide the strategies you need to permanently reduce your taxes. Second, even if you make a mistake, sometimes, with good advice, you can correct it just by taking look at it another way.

As always, let me know how ProVision can help. It's our mission to show you how to take back the taxes that you are overpaying.

Warmest regards,

Tom

Debbie from our School of Wealth Strategy asks the following question:

Q: Tom, what do you mean when you say we should build a business around our investing?

A: This is the question of all questions and gets to the core of ProVision and what we are all about. Let's start with a little background.

Historically, all great fortunes have been built in business. Whether it was Andrew Carnegie, John D. Rockefeller, Bill Gates or Warren Buffett, all great fortunes have business as their foundation. You really don't hear about great fortunes being made by investors. Ever wonder why? It's because business done right provides the most leverage, greatest velocity, and least amount of risk of any money-making activity.

I come from a long line of entrepreneurs. My father owned a printing company, his father owned an insurance agency. I learned early on in my life what it was like to run a business. But my father, while a great printer and a wonderful person, was not a great businessman. So I have spent my life learning what makes the difference between a great business and an average business. Why do some businesses grow and grow while others seem to hit a ceiling past which they can't grow?

The answer to this question lies in the foundation of the business. Small businesses stay small when the owner spends his or her time running the business. Effectively, these people own their job. They have no time to work on the business because they are always working in the business. The key is how to get the owner out of the business operations and focused on the business growth. The answer is for the business to create a strategy and a set of systems that implement that strategy. Then, and only then, will the business owner have time to grow the business. When the strategy and systems are in place, the owner only has to manage the systems, not the people. The owner isn't doing the work, the employees and other team members are doing the work.

In case you think this is a fantasy, let me explain that I have done this with my accounting firm. My partner, Ann, is a systems genius. My expertise is in strategy. So once I created the strategy for the firm, Ann created the systems. The result is that Ann doesn't spend any time at all on the accounting firm and I spend about 3 hours a week. If it can be done with a professional services firm, it can be done with any business.

So, back to Debbie's question. What does this have to do with investing? I have discovered that the business principles of strategy and systems can be applied to investing. Investors who create a business of investing, by developing a strategy and implementing systems, can enjoy the same results enjoyed by a successful business owner, i.e., higher profits, more growth, less time spent on investing, total control over their investing and less risk.

These are the principles I teach on T. Harv Eker's stage, Chris Howard's stage and Robert Kiyosaki's stage. These are the principles I have followed to create an accounting firm where I only spend 3 hours a week managing the firm. And these are the principles I follow in my real estate investing.

The good news is that Ann and I have decided to share all of our strategies and systems with you. And we have made it as inexpensive as possible. How? Through our School of Wealth Strategy and our School of Tax Strategy; two inexpensive subscriptions that each include hours of training materials and a monthly coaching call with me. To sign up, simply go to http://www.provisionwealth.com/products. It's fast and it's easy.

We want to share more of our strategies and systems, so we are continually adding more sessions to our Schools. The response from our current members has been fantastic.

Thanks to Debbie for asking this question.

Warmest regards,

Tom

The other evening, my wife, Rosie, and I were at the house of one of our friends. The current economy came up (of course) and the topic of investing was raised. We have played Cash Flow 101 with these friends and, of course, they know that financial education is my profession. They asked me the following question:

How can you tell which advice to follow? Who is right and who is wrong?

I've been thinking about this question a lot since then. How do you know who to listen to when it comes to financial issues? Do you listen to the talking heads on CNN, Fox or CNBC? What about the newspaper columnists? Or what about the financial advisors?

After considerable reflection, I came up with my answer to this question. THE WAY TO EVALUATE FINANCIAL ADVICE IS TO LOOK AT HOW THE PERSON GIVING THE ADVICE GETS PAID. How they are paid will tell you a lot about their incentive to provide certain types of information or advice. Let me explain by going through some examples.

Start with the financial advisors. How do they get paid? Most of them get paid from commissions for specific products they sell. Do you want advice from someone whose payday comes from selling a specific product? I don't. Their incentive is to advise you to buy their product. The same goes equally for real estate agents, insurance agents and investment advisors. They all get paid only if you invest in their "product." So getting financial education from them can be a bit risky.

What about the talking heads or so-called experts on television and radio? They get paid for viewers. So their incentive is to say what will get them most noticed. That means fear and controversy. And who buys the advertising on their stations? Primarily the real estate agents, insurance agents and investment advisors, so of course, they will tend to promote their customers.

Is there anyone we have left out? Oh yes - the advisors who get paid simply for providing good financial education by the people they are educating. Their incentive (and yes, this includes ProVision, so of course, I am biased) is to provide the best education so you will buy more of it. Wouldn't you rather take advice from someone you are paying specifically to give you good advice rather that someone with another motive?

By the way, I include in this latter group of wrongly incented advisors those of my CPA colleagues who provide investment advice, sell mutual funds and other products such as annuities and insurance. Shame on you! You give up your independence by doing this. I know the temptation is great. I can't tell you how many times I have been approached by stock brokerage houses and others to promote their products to my clients and get paid for it.

So look to those financial educators whose interest is solely to provide sound financial education. At ProVision, we provide pages and pages of financial education for free (go to http://www.provisionwealth.com/wealthstrategyu) and tons of financial education for a minimal price in our School of Wealth Strategy and our School of Tax Strategy at http://www.provisionwealth.com/products.

Now, I'm not saying that there aren't good people to listen to who get paid through both products and education. I love Rich Dad, T. Harv Eker, Marshall Sylver and Chris Howard seminars, among others. And there are some great insurance agents, such as my friend, Kim Butler, who get paid through selling their products who are excellent resources in this field. What I am saying is that you have to be more careful when their are motivations other than simply providing good education.

So, as we say in the accounting industry, "follow the money." When you do that, you can get a pretty good idea of whose information to trust.

Remember that your financial freedom is closer than you think.

Warmest regards,

Tom

One of my fellow adjunct professors asks the following question as a follow up to my recent email:

Q: "Excellent article! I admit, however, I was hoping to see whether in your opinion an adjunct professor is able to deduct his/her mileage traveling to school.
Samantha

A: Well, Samantha, like most tax questions, the answer is that this depends on your facts and circumstances. The general rule is that if you are an employee, then your travel to and from your work location is considered commuting and is not deductible. However, that doesn't mean we couldn't change your facts to make it deductible.

Let's say, for example, that you don't have an office at the university. But you do have an office at home that meets all of the tests for home office. And you work in your home office each day you teach preparing your lesson prior to traveling to school. Then, I think you have a good argument that your commute is to your office and school is the second location of the day.

Remember, that the travel still is treated as unreimbursed business expense and will only be deductible on Schedule A if you meet the 2% floor for total miscellaneous itemized deductions.

For more about how to maximize your auto expense deduction and how to make sure your home office is allowable, join us in our School of Tax Strategy where we have courses specifically on these two subjects. Go to http://www.provisionwealth.com/products.

Warmest regards,

Tom

Many clients of ProVision and our School of Tax Strategy have chosen as their preferred growth asset category stock and option trading. When done properly and with the right set of systems, this category and be very lucrative. We have clients who are doing as well as 7-10% per month on their trading activity. Of course, there are many people who lose money because they don't have the training or don't strictly follow their criteria.

In either case, the question comes up as to how to treat the expenses of trading and how to treat the gains and losses from trading.

The IRS has consistently asserted (and won) the argument that gains and losses on strock trading by a noncorporate taxpayer are capital gains and losses. This is true whether the taxpayer is considered an investor or a trader. The effect of this is that losses can only be used to offset capital gains except for $3,000 per year that can offset other income.

But what about the other expenses of trading? Whether they are deductible or whether they are also capital losses depends on whether the taxpayer is considered a trader or investor. If the taxpayer is an investor, the expenses are simply additional costs of the stock and will be capital losses. If the taxpayer is an investor, the expenses will be deductible as incurred in the production of income.

There are three tests the IRS and courts use to determine trading status:

1. The taxpayer's investment intent
2. The nature of the taxpayer's income to be derived from the securities (interest and dividends for an investor versus gains for a trader) and
3. The frequency, extent and regularity of the taxpayer's trading activities

In general, it takes a lot of trading activity (multiple trades each day) to show that you are a trader. Because the test is based solely on your specific facts and circumstances, I recommend that you sit down with your Tax Coach to figure out whether you are a trader or investor and how you should carry on your trading activities (i.e., individually or through a corporation). Call us at 866.467.5809 to set up your appointment to speak to one of our experienced Tax Coaches or join our School of Tax Strategy at http://www.provisionwealth.com/products.

Best of luck in your trading activities. Remember to stay focused and stick to your criteria.

Warmest regards,

Tom

Last night, I had the great privilege of being a guest on Kim Kiyosaki's webinar that she does each quarter for PBS. The topic centered around our current economy and whether this is an adversity or an opportunity. Kim asked me a very important question:

Q: What are you recommending to clients in this current economy about how to deal with financial challenges?

A: Education, education, education. I explained that as our knowledge about finance and investing increases, two things happen. First, our risk goes down. The more we know about any investment, the lower the risk because we know how to invest. Second, investment returns go up. We are able to take advantage of better investments when we know how to deal with them and how to find them.

I went on to say that after knowledge, the next key is FOCUS. It's critical that you focus on a single type of investing activity. I was very clear that the idea of multiple streams of income from multiple types of investing as recommended by several of the "gurus" is garbage. It simply doesn't work. In fact, it cannot possibly work. How can you possibly master multiple investment strategies?

We teach our clients how to determine the right investment category for them and how to create a strategy that will be successful for them in our School of Wealth Strategy. If you haven't had a chance to review this wonderful educational product, please go to http://www.provisionwealth.com/products and check it out.

In reality, the only way to solve your current economic situation is to get educated in a new way to look at wealth. The old ways simply don't work anymore. Come visit us and let me know what you think.

Warmest regards,

Tom

We all know that a home business is one of the best ways to reduce taxes. The Internal Revenue Code is full of tax deductions, exclusions and credits for businesses. Of course, because of all of these benefits, the IRS is always on the lookout for abuse. One of the abuses they look for is hobbies that people "mistakently" report as businesses.

Q: When is a business a business and not a hobby?

A: The IRS recently provided additional guidance on this, citing several factors that make a business a business and not a hobby:

1. Does the time and effort put into the activity indicate an intention to make a profit?
2. Does the taxpayer depend on income from the activity?
3. If there are losses, are they due to circumstances beyond the taxpayer's control or did they occur in the start-up phase of the business?
4. Has the taxpayer changed methods of operation to improve profitability?
5. Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
6. Has the taxpayer made a profit in similar activities in the past?
7. Does the activity make a profit in some years?
8. Can the taxpayer expect to make a profit in the future from the apprication of asets used in the activity?

An activity is presumed to be for profit (and not a hobby) if it makes a profit in 3 out of the last 5 years. This may become a problem for many businesses in the current depression (yes, I said depression, not recession). So keep these other factors in mind. The more you meet, the more likely your losses will be allowed. Of course, if you have a profit, you don't really need to worry. So, the ultimate solution is to develop the Strategies and Systems you need, such as those we teach at http://www.provisionwealth.com/wealthstrategyu in order to make outstanding profits.

Remember that with the right Systems and Strategies, "Your Financial Freedom is Closer Than You Think."

Warmest regards,

Tom

Early this morning I arrived in Calgary, Alberta, Canada to teach at Greg Hasbritt's Master Wealth real estate seminar. My topic? U.S. tax strategies. So why would Greg ask me to teach U.S. tax strategies at his Canadian real estate seminar? For two reasons.

First, there are a lot of investors from the U.S. here. So, obviously, it makes sense to have a tax strategist explain the extraordinary opportunities to save taxes that are available to real estate investors.

But Greg also wants me here for the Canadian investors? Why? Because U.S. real estate is on sale; not just to Americans but also to everyone else in the world who can learn how to invest in the U.S. Of course, tax strategies for non-U.S. residents investing in the U.S. are quite different from those for U.S. residents. It's very easy to make mistakes if you are investing in the U.S. fo the first time.

At ProVision, we have created tax strategies specifically for the non-U.S. resident investor and the business owner. We now have in-house expertise in setting up tax strategies for the nonresident U.S. investor. And let me tell you - already I have had a number of Canadians express interest in setting up the right entity structure for investing in U.S. real estate.

So if you are a nonresident of the U.S. and have been wondering how to get started investing in the U.S. or you want to set up a business in the U.S. give us a call at 480.467.4400 or contact us through our website at http://www.ProVisionWealth.com.

Stay warm and continue your financial education. Your financial freedom is closer than you think.

Warmest regards,

Tom

Every time I turn on the news or pick up a newspaper, there is article after article about the sorry state of our economy and how much people are hurting. It's so depressing I hate to even look. And it's just going to get worse over the next few years.

Yet, this is the Great Opportunity! Never again will we see real estate, stock and business prices so low. But with all of the negative reinforcements, it's easy to sink into our own depression about the economy and worry about our own financial situation. These thoughts can easily prevent us from going out and doing something positive to take advantage of the Great Opportunity.

So what do we do? How do we keep our thoughts and actions positive? Here are three keys to positive thoughts and actions during this period of Great Opportunity:

1. Get out of the house and out of the office. And I'm not just talking about going to the grocery store. Go to a seminar or some other place where there are people who are talking positively about the Great Opportunity. I'm in Canada right now at Greg Hasbritt's Master Wealth real estate conference. 150 investors looking for opportunities. Next month I will be at the Rich Dad Annual Forum in Orlando. 1200 investors looking for opportunities. These are positive environments where the focus is entirely on opportunity.

2. Associate with people who see opportunity in the Great Opportunity. This may require some serious changes in your life. A number of years ago, I had to make a change in a business partner. It was the most difficult choice I have ever made, since this partner was also my best friend. But while immensely painful (and, to be honest, still painful when I think about it), it was one of the best decisions I have ever made as it has made a huge improvement to my business and has greatly reduced the stress in my life. Think about your friends, your business partners and associates, and your advisors. Are your advisors constantly telling you to pull back and to protect what you have or are they advising you to take advantage of the Great Opportunity? If the former, it may be time for a change (your CPA, for example?).

3. Take time every day to thank God for all of your many blessings. And thank your family, your friends and everyone you meet who helps you in any way. Yesterday at the Master Wealth seminar, Greg invited the staff of the Hotel Arts where we are staying to come on stage so we could give them a round of applause. The energy in the room was amazing. I don't know who got more out of this show of appreciation, the staff or the seminar participants. I know it was very positive for my mental attitude.

4. Take time to serve others. (I know, I said 3 keys - just consider this a bonus). Serving gets us out of ourselves. We begin to see that our problems are not so big and we feel so good about the help we give others. This is my greatest reward when I teach, whether on stage in front of 1,000 people or with my Sunday School class of 5 eleven-year olds. It is such a privilege to serve others.

It's easy to get sucked into the great negative that is being perpetrated on us by the goverment and the media. So get out and do something positive and take advantage of the Great Opportunity! And be thankful. We have so much.

Warmest regards,

Tom