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Tax News Now Ep. 3 - Tax Topics with Randy Crabtree
215 Plays21 days ago
Mark Gallegos, Tax Partner at Porte Brown, and his guest delve into the leading tax topics each month. Gain insights from their expertise on the current tax landscape, with 2025 looking like a pivotal year for expiring tax provisions and potentially a new tax policy landscape. Recognizing the many uncertainties tax professionals face this year, Mark and his guests emphasize the opportunities to strengthen client relationships and drive future revenue for tax practitioners.
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Transcript
Introduction to Randy Crabtree
00:00:09
Speaker
Welcome back to Tax News Now. I'm your host, Mark Galagos. And today we have an incredible guest joining us. Someone who has dedicated his career to helping business and CPAs maximize tax opportunities while shaping the future of the accounting profession.
00:00:22
Speaker
Our guest today is none other than Randy Crabtree, a widely recognized leader in the specialty tax services and a champion for the accounting community.
Randy's Work and Podcast
00:00:31
Speaker
Randy is the co-founder and partner of Tri-Merit Specialty Tax Professionals, where he helps firms and businesses navigate the complex R&D tax credits, cost segregation studies, and other powerful tax incentives.
00:00:45
Speaker
Beyond that, he is the host of the Unique CPA podcast, where he brings thought-provoking conversation to the profession and is the creator of the Bridging the Gap Conference, an event designed to connect and inspire accountants beyond their traditional roles.
00:00:59
Speaker
But there's more to Randy than just tax credits and conferences. Do you know that he's also a passionate advocate for mental well-being in the profession and is a strong believer in work-life balance?
00:01:10
Speaker
Plus, he's a guy who genuinely enjoys helping CPAs thrive in their careers, which is exactly why we're so lucky to have him here today. So without further ado, let's dive into an engaging conversation with the one and only Randy Crabtree.
Career Transition to Accounting
00:01:23
Speaker
Randy, welcome to the show. Mark, thank you so much for making me blush with that intro, but I really appreciate you having me here. i'm looking forward to a lot of fun today. Awesome. Awesome. So, you know, let's just start in the beginning, Randy, to kind of talk about the journey, you know, where you start off in accounting and public accounting. And so let's talk about what led you to into the industry and what led you to specialize in tax and accounting.
00:01:49
Speaker
So we have four hours, right, today? Is that how this goes um i'll i'll take I'll do the short version of my story, and then you can expand on things if you want, or if you want me to.
00:02:02
Speaker
Accounting is technically my third career. i was ah very short, a one-year stint in ah computer programming, which was my undergrad degree.
00:02:13
Speaker
And then a stint in sales because I thought, whoa, that's where the money is. I'm going into sales. I was really bad at it. how But I always had in the back of my mind, ah so not that math and the accounting aren't necessarily something that you you have to be great at math for accounting, but I i was always really good at math and it was I was passionate about It was almost like, ah you know for fun, i would do my multiplication tables when I was, you know,
00:02:43
Speaker
five years old or something like that.
Passion for Tax Advisory
00:02:45
Speaker
and then after two years of not really knowing what I wanted to do as a career, it just dawned on me, actually, because I did my own tax return for the first time after my wife and I got married and I really enjoyed it I just had this light bulb moment where I should have been a CPA, even though I had one undergrad class in accounting, it just went off. And so decided to make a change, went back to school full time, got enough hours, including the Becker CPA Review course. Those hours counted towards the hours I needed to sit for the exam and took the exam. And you the rest is ah the beginning of my accounting history.
00:03:27
Speaker
That's great. um So was there, a besides you know filing your first income tax return as a married couple, was there defining moment in your career that pushed you towards specializing more in tax and and getting your brain around how the tax code works and all that?
00:03:44
Speaker
Yeah, for me, when I went into this, it was all about tax because I did that tax return and I enjoyed tax and and nothing against auditing because I love auditors and accounting and bookkeeping. It just was never something that was that into personally.
00:04:00
Speaker
and and I think it was, for me, it was just that whole, you know, with tax, doing this research, trying to figure out ways where you could reduce, you know, somebody's liability, where you could save money. ah I mean, i honestly, I probably, honestly, ah probably thought as be an advisor from the start.
Influential Mentors
00:04:21
Speaker
And that part really excited me seeing ways. and And so that that first tax return really,
00:04:29
Speaker
showed me that. And then when I started in accounting, I actually enjoyed the accounting end of things, but tax was always what I gravitated to. and And that was still my passion to these days. I love accounting in general. I love accountants and bookkeepers and auditors, but I'm a tax person at heart.
00:04:49
Speaker
Yeah, me too. I mean, I've been taxed since day one of my career and I, that's where I lean, but I obviously I still love all the other accountants and auditors and all of what else they do.
Challenges in Starting a Firm
00:05:01
Speaker
um So when I think about your career, you know, and you go back to the beginning or even early on, was there like a mentor or someone who played a pivotal role in your career to kind of help give you advice or help, you know, set you on the right path?
00:05:15
Speaker
So for me, so this is ah a long story. And the short version is when I started an account in my my, when this light bulb moment went off that I want to be in a CPA,
00:05:26
Speaker
It also is at the same time was I wanna have my own firm. So I've been an entrepreneur my whole life. I started my first business at age 16 or technically even 12, I guess, as a paper a deliverer, um even though you were working for someone else, it was your own business. And so 16, started my own business.
00:05:47
Speaker
those first two years when I was going into other careers or doing other careers, I kept looking at what could I do on my own? you know, can I start a deli? Can I, is there a franchise I should do? And, and so for me, it was that whole, i want to be an entrepreneur. I want to run my own practice. And so the, my, to get to your question, my first mentors were the first two partners that I worked for.
00:06:09
Speaker
They were unbelievably, um good people, they, i think, were living work-life balance before there was a term for it, but they enjoyed it. They just had fun with what they were doing in the accounting profession.
00:06:25
Speaker
And so I learned so much from those two that um two years into my career, I decided I needed to go somewhere else to learn more because I'm going to start my own firm. And what I learned was you don't have to do that because if you have a good place, if you enjoy the people you work with, if they're passionate what they're doing and their passion goes through and their kindness goes through,
00:06:46
Speaker
um the change was not something I had to make. And that that's a long story, but it taught me a lot when I made this change. But ultimately, I actually went back to work for them about three months later because I realized that that's where I wanted to be. And that those are the people I wanted to work with. So those two, Les and Alan,
00:07:08
Speaker
ah were my mentors. They are still friends of mine to this day, 37 years later. but um i not to brag but I guess I am going to brag for a second. Two years ago, and it's happened two years in row now, I was named one of the top 100 most influential people in accounting and by Accounting Today.
00:07:29
Speaker
And the first people I reached out to was those two and say, so look what you did. Look what you created. you you Your examples have been such had such an impact on me. So yeah, two small firm. There was six of us probably in the firm, but those two were just unbelievably strong mentors for me.
00:07:48
Speaker
That's great. Thank you for sharing that. I think and think everybody's got those people, but it's always great to reminisce and think about you know how that shaped you know who you were at a young age and kind of set on the right path.
00:08:00
Speaker
But you know getting into public accounting, getting into tax the tax world, what were some of the biggest challenges you faced in the industry and how did that lead you to specialize kind of like down the road into tax credits and incentives?
Founding TriMerit
00:08:13
Speaker
Yeah, so when I started my firm, which actually was three and a half years after I started public account, and it might when i when I had that light bulb moment, I gave myself four years before I started my own firm, so I actually made that. I don't set goals too much. It's just not thing I do, ah but I did that. But when I started that firm, I wasn't prepared.
00:08:34
Speaker
But ego-wise, you're like, I can do this, I've got this. um And so i ended up building the firm probably wrong. I didn't know what to do. i I ended up being very, I love tax, so i ended up being very, very, very tax heavy.
00:08:51
Speaker
And so tax ah tech seasons were crazy for me. because I also, and I'm not this way anymore, but I probably was a little bit of a control freak from a standpoint that I had to touch everything. I had to i had to look at every return. And we were at a point where we were doing over a thousand tax returns.
00:09:10
Speaker
And I can't look at a thousand tax returns, but I was. So I was working crazy hours. And this is one of the reasons you mentioned earlier about my my passion for the profession, but my passion for work-life balance, because I've made a lot of mistakes.
00:09:23
Speaker
And If I can help other people not make those mistakes, um that would be a... yeah um mean a lot to me to see somebody not go through what I did because I was working nonstop. I was working seven days a week. I would never miss any family things. So I would go home and coach a basketball game, but I would go straight back to the office. And, you know, I was, there was times I was there at you know, one in the morning, two in the morning, which I'm sure people know these stories, people live these stories.
00:09:54
Speaker
ah There's ways not to, but for me, it just got to a point where It was too much. And I'm not saying that ah to say, hey, you know if you feel that it's too much. No, there's so many things we can do better. We can be smarter. We can be more efficient. We can work less while making more.
00:10:12
Speaker
We don't have to help everybody. There's all these things that I didn't realize at the time. So when I st started Trimerit, realizing that there was a niche, and like I said, like and I didn't realize that niche practices existed.
00:10:29
Speaker
I was helping everybody, no matter what their industry was. I was not an expert at every one of these industries and didn't realize it at the time, didn't realize I should try to become you know, a specialist at something because then my knowledge shows through.
00:10:44
Speaker
But for me, the outcome of that whole burnout was I actually sold my firm. And I don't say that because telling people you should do that because that was not what I had to do. That's what my brain thought I had to do because I was working so hard. and But for me, it worked out because I started TriMerit, which is a specialty tax firm.
00:11:03
Speaker
It's a niche practice. All we deal with is tax credits and incentives. And that was another light bulb moment for me. It was like, wow, I can just concentrate on a small portion of the tax code and I can go out and help this.
00:11:19
Speaker
And our niche is a is a service. You can have a niche industry. Our niche is a service, tax credits and incentives. And from day one, it just was like, this is so much fun.
00:11:32
Speaker
I get to dig so deep into R&D tax credits was all we did at the time. and like And that's where I learned my passion for education too, because then I can go out, I can educate firms on R&D tax credits and the importance of them and how they can help their clients, how they can save money and how they can be the hero in their client's eyes.
00:11:53
Speaker
And so learning through the ah mistakes I made that you can go out and you can build a practice that energizes you rather than deplete you like I was doing during tech season was such a huge, huge ah moment in my career. And I have had so much fun for the last 18 years with that.
00:12:17
Speaker
That's great. and And I know TriMerit is a fantastic firm and full of fantastic people. But did you, when you were starting this um back in 2007, did you anticipate how much demand there would be for tax credit and Senate advisory out there um based on leaving what you were managing in your old firm and going into this?
Growth and Success of TriMerit
00:12:37
Speaker
Yeah, like I said, I don't make a lot of plans or goals really, yeah but when we started Trimerit, we knew there was an opportunity. R&D tax credits had, over the last few years prior to us starting, gone through some major changes, really opened it up to a lot more businesses. and And you know there was there was misconceptions out there that, well, you know you can't take advantage of this unless you're you know building a time machine or something brand new to the world, and that wasn't the case.
00:13:06
Speaker
ah But for us, it was like, okay, there's so much opportunity. you know We don't need to grow large. Let's just help a few firms, a few clients out there. we have a good thing going.
00:13:19
Speaker
But like you said, when we started, it's just like the floodgates open. and And one, if you do things the right way, if you do things with integrity, you know your reputation is going to show through. And that happened for us.
00:13:33
Speaker
but But it was the the bottom line. was that we just all of a sudden started seeing all these opportunities and all these clients you could help. And every time you help the client, every time you brought put money back into their business, and I don't look at it like we did that.
00:13:48
Speaker
I look it like we educated the CPA firm and then they were able to put money back in their clients. But when you saw that and saw how happy they were, it's like, okay, let's expand. Let's let's hire another engineer so we could do some more work.
00:14:01
Speaker
And then it was, well, we should probably hire a business development person because we have another engineer and we need to make sure we can support everybody. And then it just kept going. and And if you do, like I said, if you do things the right ways, if if you're passionate about what you're doing, and passion's a huge ah huge part of what how I look at this profession, build your passion to what you're doing.
00:14:24
Speaker
And when you do that, it it'll just organically happen. And for us, ah We're very fortunate that has happened. We're at about 80 people now and 18 years in business. And every day is still fun for me.
Educating on R&D Tax Credits
00:14:39
Speaker
So good. And let me ask on this, you know so obviously working you know with other firms then, you know and it could be, we we all know other firms and you know they all have they're all working crazy hours or or whatever else is going on.
00:14:54
Speaker
you know What were the biggest obstacles in getting these firms or these CPAs to understand the value of tax credits and why they should engage Trimerit to get involved versus them trying to learn behind the scenes and figure it out? Like,
00:15:08
Speaker
who were What were those obstacles and how did you overcome that? Yeah, there's a couple of things there. First was because we started a solely R&D tax credit and because there was some significant and changes had recently happened.
00:15:19
Speaker
It was almost, even even at the CPA level, it was almost, a well, this is too good to be true. you know that There's something wrong here. This is this is a, ah you're somehow, you know,
00:15:32
Speaker
using a tax code to do something that it wasn't meant to do because these were significant savings. So education was a big part of it. So from that standpoint, it was a matter of just going out and educating. And I was educating from day one, you know doing in-person you know educations on what R&D was, what clients you should be thinking about, yeah what the benefits were.
00:15:55
Speaker
But then in addition to that for us, because I'm a CPA, yeah we're we're skeptical about things, obviously, but we also want to make sure that that we're doing things right.
00:16:06
Speaker
And we want to make sure we're working with the right people when we're doing, if we're going to outsource something. And so for us, it was a matter of just building that reputation. And that I knew was going to take a long time because I know the CPA mindset.
00:16:20
Speaker
And so that took a few years to really get that going. But then once we did that, it it made a huge difference out there. And there was the ah it was a game changer for us.
00:16:33
Speaker
And from us too, personally, part of it what we did is we built a reputation and then CPA Association started to see that we were doing things the right way. And then they would come to us and say, hey, would you be a preferred provider for us? And that's where things really took off. And your firm is ah is one of those. and And I don't know if I'm supposed to say this, but your firm is the very first firm we ever worked with on an R&D tax credit ah client. And I think that client, at last I looked, we're still working with that client 18 years later, although they may have sold. I'll have to see on that.
00:17:08
Speaker
Yeah, no, that's great. And it's been great working with you guys. And really, you know i I think from my shoes, you know when you bring in outside um experts, you know it sometimes professionals be like, well, I don't want my client to think that we don't know everything. And I think it's the complete opposite. When you bring in yeah people...
00:17:26
Speaker
Everybody wins because you know I'm saying, hey, client, i I know you can get an R&D tax credit. I may not be the expert in that area and we may not have those people on staff. But when I bring in TriMerit, when I bring in Randy and and you guys go in and find you know whatever the number is in tax credits and and literally is putting money back in the owner's pockets.
00:17:47
Speaker
They're happy. The client's happy because I introduced them to someone that can build a relationship, but also save them that money. And it's been, that's been huge for us. And and again, I love seeing that in the industry, you know, where people can then share resources and everything of that nature.
00:18:02
Speaker
Yeah, we are extremely collaborative. ah industry. we We are not, for the most part, it's not, I want to hoard everything I have and not share it. And we aren't that as an industry. And that's what I i love seeing.
00:18:17
Speaker
But there is, and there was at the time that, yes, what you just said, well, yeah how am I going to tell my client that I don't know how to do this? Well, you cannot.
00:18:28
Speaker
There's nobody in public accounting that can be an expert at everything. And even your firm, can't be an expert at everything. Honestly, probably even the big four can't be an expert at everything.
00:18:40
Speaker
And so building relationships with people that you trust and you you value and you know they have knowledge that's going to help your clients, that's our responsibility as CPAs. Our responsibility as CPAs is to the bring the best possible outcome when we're talking taxes to their tax return. and And if that means I'm going to collaborate with somebody else,
00:19:00
Speaker
great, collaborate with somebody else. and And that's why when I said it took us a few years to build that reputation because we are we do want to do what's right for our clients as CPAs.
00:19:12
Speaker
And so we want to make sure that we we are working with the correct individuals on that, whether it was us or somebody else, just find that somebody, that firm, that expert in a certain area, know, LIFO, let's say, or or whatever it is, it's, you know, or i I have a new restaurant client, but I don't know anything about restaurants, um you know, maybe inventory management, somebody else that's an expert in something, find that and then build that relationship.
00:19:37
Speaker
I think that helps our profession so much. it's great.
Advice on Pursuing Niche Areas
00:19:41
Speaker
And so for CPAs or accountants out there who are listening to this that want to explore a niche area like R&D tax credits or cost segregation or any of these other great incentives out there, what advice would you give them if they were back in your shoes, you know, and now they're starting to figure out what this means for them?
00:19:57
Speaker
Yeah, what what I, but because I talk about this a lot. And when I talk about, so this is a term that I've coined and and it's living at the intersection of your passion and your skills.
00:20:10
Speaker
And that took me a long time to get there, to realize i could live at that intersection. And my goal is to get everybody to live at that intersection. so one of the things I talk about is look at your current client base.
00:20:21
Speaker
And when you when the phone rings and you smile, that's a client you like working with. When the phone rings and they cringe, that's a client you don't like working with. And often it's tied to the industry they're part of.
00:20:33
Speaker
you know when i When my construction clients called, I'm like, oh, because I didn't, i did construction's very intricate from accounting and tax standpoint, and I didn't know everything.
00:20:44
Speaker
So look at that and start looking at your client base and see which is the which of the industries you love. You don't have to be a niche practice overnight because it's never going to happen. And everybody starting a firm is going to take everybody on. you know are You're going to take a client that's gonna pay you. And I have no problem with that.
00:21:01
Speaker
You should do it. But as you start to grow or if you're already a mature firm too, just start analyzing your client base. And which ones do you feel you have the greatest expertise at?
00:21:13
Speaker
but where does that expertise also intersect with the ones you enjoy working with, the passion part of it? And make incremental changes. i think we as a profession, I think it's not just our profession, but I think it's pretty much human nature.
00:21:27
Speaker
We look at this giant big picture overall and get bogged down and like, well, I can't make this change. It's just, I can't go from helping barbershops to helping fast food restaurants because it's just going to be such a big change.
00:21:46
Speaker
No, don't look at that way. Look at it. Hey, I'm going to go. My next client I'm going to try to go for is going to be a McDonald's franchise. And when I do that, you know, I have some of these C&D clients or maybe they're even really good clients, but they just don't fit my passion or my niche.
00:22:03
Speaker
And those are the ones that you're going to have to then, you know, very nicely. And a friend of mine says this. Invite them to be successful elsewhere. But also you can help them along the way because if you already have built these relationships within the profession, like you and your firm have done through the association you're part of, um you can then maybe give them to someone else or have someone else who has that expertise help that client and not just abandon them. And and I think that's one of the scary things that we go through is like, I can't abandon my clients. They need me.
00:22:40
Speaker
I'm the only one out there that can help them. And that's not always the case. you Someone else can help them. So yes, look at what you're doing. Where do you smile? Where do you have joy? Where does the fun factor come in and where do you use your knowledge intersect with that?
00:22:54
Speaker
And then just make small incremental changes. and And eventually all of a sudden you'll have this niche expertise and practice. Yeah, that's some great advice there from you, Randy. i appreciate it.
Addressing Burnout and Work-Life Balance
00:23:04
Speaker
um So kind of shifting gears a little bit from the niche trimere world, you know, in the last few years, you kind of had this vision, created this, this,
00:23:15
Speaker
conference, we'll call it the Bridge in the Gap conference. And this Bridge in the Gap conference has gained a lot of traction in the profession. I talk to people all the time that are like, wow, this is completely different than what I'm used to.
00:23:27
Speaker
So what inspired you to create it and what gaps were you trying to address when you were trying to create it? There's lots of gaps and the the inspiration actually comes out of a personal story. Um,
00:23:39
Speaker
We are, as we're sitting right now, 11 years and 10 days ago, 20 days ago, I had a stroke. And after that stroke, I physically recovered very fast. I am super fortunate.
00:23:53
Speaker
But I mentally struggled for about four and a half. Less than five years. So we'll go four and a half years. I mentally struggled. Like it's going to happen again. I'm going to die. I'm going to, you know, my brain just started playing all these tricks on me.
00:24:07
Speaker
and it wasn't chemical. I'm very fortunate. It was just mindset where I was sure, you know, what's the point? i'm i'm i'm I'm going to have another stroke. going to be disabled. that what's the And so my mindset, my mind just was playing all these tricks on me.
00:24:22
Speaker
And like I said, it took me about four and a half years to get past that. And when I did, there was another, i have a lot of aha moments. um And there was another aha moment.
00:24:35
Speaker
Well, I went through this when I sold my firm. My mind was playing tricks on me then. thinking this was the only option I had. And my only option while I ran that practice was to work 100 hours a week and be nonstop and be seven days.
00:24:52
Speaker
And we I would see that we put a lot of pressure on ourselves, a lot of pressure that doesn't have to be there. There's things... We can do different. we have We have this Sally mindset, same as last year, we have and which is fine.
00:25:06
Speaker
Consistency is important with what we do, but I think we take it to the extreme. And then when I saw all this self-induced burnout that was going on our profession, I thought, we got to do something about this.
00:25:17
Speaker
um And it took a few years. My podcast started first where I got to start interviewing people and find out all these really cool things that they're doing different than other other firms in the profession or other individuals in the profession.
00:25:32
Speaker
And when I saw all this stuff happening, was like, we need to share these stories that more than just the podcast, let's create a conference where we're going to bridge the gap between you know burnout balance.
00:25:44
Speaker
and work-life balance um But then it went even further. We're going to bridge the gap between small firms and large firms because there's really cool things they each are doing, but it's different.
00:25:56
Speaker
and And small firms can learn a lot from large firms, all the years of process and procedures and KPIs and everything in place. And large firms can learn a lot from small firms from nimbleness and even that niche aspect of thing and not being as afraid of trying new technologies. is Sometimes I say, this is me generalizing, sometimes I think large firms are set in their ways more than smaller firms.
00:26:23
Speaker
And so now the large firms can learn from the small firms. But if we can share that knowledge, I kind of mentioned this earlier, collaboration, let's work together. If we can share that knowledge, I think we can make a better profession overall.
00:26:35
Speaker
And so that's that's really the brainchild of bridging the gap. I'm very fortunate that we have a great marketing team that you know when I come up with these ideas, they ah ah they can run with it and put the information out there.
00:26:55
Speaker
And I just pinch myself like, wow how did this happen but this is such such a passion project go to back to passion passion project for me and oh boy and i can go even go further on this because the other part of this is Where I used to be the person that wanted to do everything, I am now the person that delegates. And so I mentioned marketing does so much work for this.
00:27:23
Speaker
um That is something I like to talk about in this conference as well, that we don't have to do everything. And we do have experts in their areas and we couldn't delegate. I don't even read my own email anymore. My assistant does that. I i got to the point where I, that's how I live at the intersection of my passion and my skills, because I just concentrate on the stuff that I really love, which is talking to you.
00:27:44
Speaker
It's great.
Innovative Stories in Accounting
00:27:45
Speaker
Well, thank you for sharing about you know your history and also about you know having a stroke and then obviously struggling post-stroke for four one and a half years. And i think I think that is real because I think as professionals, you know sometimes we think we've always got to be strong and got to be on. And what you're showing everyone is that, you know hey, life life hits us at different times when we don't expect it and we just got to deal with it.
00:28:09
Speaker
And we got to work through that. And hopefully people can learn from some of that along the way. and and And you also mentioned that you had started a podcast. It was the Unique CPA Podcast. um And what motivated you to start the show before the conference? And what topics or guests have resonated the most with listeners for you?
00:28:29
Speaker
Yeah, so, and honestly, wasn't even my idea. We had recently hired a head of marketing, first time we had done that. Our marketing team's now like six people, but this was the first hire. And she and Andy, who I started Trimerit with, I think it was Andy, maybe it was Nick, who's our CFO, they came to me and said, hey,
00:28:48
Speaker
we're ah I was managing partner at the time. I gave that roll up and but the you know eight years ago now. um Boy, almost eight years to the day, actually. But um they came to me and said, oh, we're going to start a podcast.
00:29:02
Speaker
like, oh, that's great. And you're going to host it What? not hosting a podcast. What are you talking about? And then my mindset was, nobody's going to want to listen to me talking about R&D tax credits every week. and And because that's the first thing I thought when I thought podcast is, well, we're going talk about what we do.
00:29:23
Speaker
And we've always been a you know, let's give back. I honestly believe we've always been a let's give back mindset with ah with our our our company. and i And I thought about this in a I would think it wasn't even an hour. I thought about this and I thought, okay, yes, I'll do it, but I'm not talking tax credits and incentives. you know Maybe we'll here and there we will.
00:29:45
Speaker
But I had started to see things in the, this was you know six months post you know PTSD and depression and panic attacks that I had gone through ah after the stroke. this was I was past that at this point.
00:30:00
Speaker
And I started thinking, okay, I'm seeing some really cool things happen in this profession. and let's just have people give an opportunity for people to tell their story and what they're doing. And I get to learn along the way.
00:30:16
Speaker
So you asked about like biggest impacts. One of the most impactful conversation I ever had on the podcast was, I think it was episode six. It might even be the episode three.
00:30:29
Speaker
And it was Josh Lance. and And Josh is a, ah you're in Illinois. i yeah usually, well, I'm probably in Illinois less than half the time because I'm on the road a lot and I spend my winter in California right now.
00:30:41
Speaker
But Josh was an Illinois a person as well. Unfortunately, Josh passed away a little over a year ago at age 40. age forty But what he taught me was the niche aspect. Even though I was doing it, I was like, wow, other people are doing it. He built a firm that was solely based on helping craft breweries, which is another passion of mine, craft breweries, ah but helping craft breweries and digital agencies.
00:31:06
Speaker
But above that, and he started his firm 15 years ago now, and this was, I talked to him five years ago. Beyond that, He didn't bill by the hour. They never time tracked at all.
00:31:20
Speaker
And I'm like, oh, this, and we didn't either as Trimerick, but he was doing things that we were doing, but I was like, I didn't know other people were doing this too. He was a remote office from day one.
00:31:31
Speaker
He was able to hire people all over the country because it didn't matter geography. And then he could help clients all over the country. And he was a small firm. He was, when I talked to him, it was 18 people maybe.
00:31:43
Speaker
And so all these things that he was doing were very innovative. It was honestly the same path Trimerit was on, but in my mind, I just didn't see that other firms could do this.
00:31:56
Speaker
And that was another aha light bulb moment, like, wow. wow, this is so cool. And so I talked to Josh, I learned a lot, had him on a couple more times, and then really start gravitating to more stories like that as well.
00:32:11
Speaker
ah Somebody doing something different, something unique. um I am, and no offense to it because I know it's hard to get past this, but I am so anti-hourly billing. And he was doing that and that that one showed me that, yes, you can do it. And based in billing on You know, the outcome that we're delivering to our clients, the value we're delivering rather than the hours I spend on it was such a eye opener to me, even though we were doing it. I had to see someone else doing it before it really started to make sense. So, yeah, that was that was and there's been many significant ones ah since, but that was really set me on a different path with the podcast.
Inspiration from Josh Lance
00:32:52
Speaker
It's so good. And yeah, and Josh was an incredible person. Man and family guy and business leader and just a great guy and what he did. And, you know, and I think that's the important takeaway sometimes is learning about when you think, hey, am I the only one thinking about this crazy idea? and You realize other people are doing it. Man, it it really changes things, right?
00:33:12
Speaker
Yeah. And if I can span ah expand on Josh for a second, because I always talk about Josh, but and you know this, ah but we started last year at the conference awarding the Josh Lance Lifetime Achievement Award, even though he's 40 years old.
00:33:25
Speaker
And it doesn't mean you've been in the business while, but that was like showing that you're looking at the practice, the the industry different and and actually enacting these different activities. And so we will always award, and we may change the name. It may not always be called the Josh Lentz Lifetime Achievement Award. That was just my knee jerk reaction to the name, but I love the what it stands for. So that'll always be something we will we will award at every conference.
00:33:53
Speaker
Good. and so the Bridge in the Gap conference, it differs it differs from traditional ah accounting conferences. um But what makes it unique and what makes it different? Yeah, we actually market it as you know not your average accounting conference or not your normal accounting conference. it is We are not very technical in the conference. We are telling stories of work-life balance. We are we actually have a wellness room that is has a person, um a yogi in the room for two and a half days of the conference. And she is, man, she is great. And and I always ask her, do you want a break? You want someone else to man this room for a session or two?
00:34:31
Speaker
But she just keeps going. So, so hey, you need a break. You need a break and in normal day-to-day activities. You need a break during the conference, too. So go hang out and do some yoga. Go out and do some mindfulness.
00:34:45
Speaker
Go out to this wellness room and just meditate. And so we have that available. But it it is the stories of a friend of mine, the first year of the conference,
00:34:57
Speaker
talked about how she takes vacations during tax season and how you can do that mindset. It's a lot about mindset change. There's stories of of people that have gone through mental health struggles and how they got past that and how that's equated to the profession.
00:35:18
Speaker
There is, we actually added last year a tax track because we had a lot of EAs at the conference and they only get continuing education if we were talking about tax. So we did add tax. So it's that from that standpoint, there is some technical, but it also may just be, you know, how to build ah more efficient tax practice.
00:35:38
Speaker
you know So not necessarily how you you know fill out an 1120S or how you take advantage of R&D tax credits, but it is it is the efficiency part of things.
00:35:50
Speaker
Work smarter, make more, work less, be more efficient, have work-life balance. You're a person, not just a billable hour. That's kind of how it's different. That's great.
00:36:02
Speaker
So with the conference, with the podcast and everything you've seen, you know where do you see with all the changes in an accounting profession, AI coming in evolving business models, where do you see the CPA profession headed in the next five to 10 years and you're in your yeah so i'm a very optimistic person uh after that four and a half years of not being optimistic i am extremely different now and i actually there was a stat that just came out and i didn't dig deep into it but enrollment in accounting and the universities has gone up i'm like okay this is this is a positive we're seeing this we're getting the message out that we are not just you
00:36:44
Speaker
the derogatory bean counter. We're not just reporting. We are affecting what's happening in people's businesses. We're having impact and people want to have an impact. They want to know they're having an impact. So I think if we keep getting that message out that we have impacts on people's lives by what we're doing in accounting,
00:37:03
Speaker
It's going to go forward. I think there's going lot more technology. Technology has to be part of it. I love the fact that we're going to get more technology. We have to get rid of our fear of the short-term pain of integrating technology in our firms because the long-term gain is so great.
00:37:18
Speaker
And our brains are just wired to see short-term pain rather than long-term gain. so So I like the fact that we're talking more and more, especially with AI, and about technology. AI is not going to replace us. This is my opinion.
00:37:33
Speaker
ah AI is going to augment what we're doing. It's going to allow us to do those things that really we enjoy doing. that advisory impactful work. And there's nothing wrong with compliance. That is a super important part of it. But compliance could get a little more automated, which I have no problem with that, because it frees us up to do the high brain powered, high value activities that we probably most of us want to do.
00:38:00
Speaker
And so from a standpoint, I really think that we're going to have You know, it's not going to be a flood of new people coming into the profession, but I think we're going to build efficiencies in with more people coming in and with technology being integrated into what we're doing.
00:38:14
Speaker
And i think the message that we're going to start getting out there more is that this is a fun profession, that this is a profession where you have so many options of of places to go. there is There's combination a there's a combination of a messaging that is incorrect.
00:38:37
Speaker
There's a reality ah problem in accounting, but there's a perception problem. And I think the perception problem of what we do is even higher than the reality. I think there's reality has to change and we have to be more efficient. We have to realize that we can do things different.
00:38:51
Speaker
But i think the I think that's happening while the perception of what we do has not kept up with that. I think that'll change over the next five years. That's my optimistic look at things. I like it. i like
Future of the Profession
00:39:02
Speaker
it. And I know our firm, you know we're very process and procedure driven. So we have no problem hiring people and finding ways to, you know I would say, streamline the the minutiae of the everyday compliance aspect and give them the skills and expertise to learn these topics.
00:39:19
Speaker
And really, and I think you use an important word, impact. the industry impact clients, you know, not just advise, not just be some sort of, hey, I fill out tax returns, but have an impact on what you're actually doing. And I i love how you said that.
00:39:32
Speaker
So good. um And in another area, I think, you know, you know, talking more specifically about the R&D tax credits, which obviously kind of what spurred you into the niche side of the tax world as it is.
00:39:45
Speaker
When you talk about the R&D tax credit, what industries typically qualify for this? And, and, you know, when you're talking to a client and they're thinking, you know, I think my client only qualifies if they're designing a rocket for SpaceX, or maybe they're making a drug that's going to cure some, you know, cancer or something like that.
00:40:04
Speaker
Tell me more about what you could tell somebody in that to enlighten them. Yeah, it is. a And that's the misconception out there is that, hey, we're not, you know, our technology is not that innovative. we're We're not doing something that's brand new to the world.
00:40:19
Speaker
And so how am I going to get an R&D tax credit? And that's not the, yeah when I mentioned earlier, the changes that happened before we started Trimerit. those changes really opened it up to a lot more companies. And so to qualify, I just need to be doing something that's innovative to us, even if the company next door is already doing that same thing. If I have to spend my time and effort researching, know, I'm manufacturing a widget.
00:40:43
Speaker
Okay. Yeah, sure. Next door, they're manufacturing a widget too. But if I want to try to be more efficient in manufacturing that widget, If I want to reduce the operations, you know, operations mean I'm manufacturing three parts, then I'm then I'm putting those assembling those parts together to create this widget.
00:41:03
Speaker
And I don't know even what a widget is, but we're going to use widget. ah hu Now I want to see if I can manufacture that in three operations. So I reduce my manufacturing time. I reduce my assembly time.
00:41:14
Speaker
I'm making the exact same widget. I'm just more efficient, like we should be as accountants, more efficient. and And that's enough to qualify. So you asked who? Manufacturers are the are the most common.
00:41:27
Speaker
Manufacturers can just look at what I just did. Better, faster, cheaper, more efficient. Those two activities can qualify. Now there has to be technology involved. There has to be uncertainty. There has to be experimentation.
00:41:41
Speaker
But manufacturers in general do R&D across the board. I mean, there's not many manufacturers that don't have some aspect of R&D. Doesn't mean they have a credit, but they have ah activities that should be analyzed for the credit.
00:41:54
Speaker
Software developers are the same way. Software, actually they, If we're going to get technical, IRS code section 41 defines the R&D tax credit. And in there, it says you need to have a new or improved product, process, technique, formula, invention, or software.
00:42:14
Speaker
And so software is actually called out in the code. So when we're software developing, that that's an activity. And that can actually be yeah company that's developing a software package and selling it.
00:42:26
Speaker
or it could be a company that's developing software internally to help them do some aspect of their business. And so either of those ends can qualify. Those two are probably number one and number two for users of the R&D tax credit.
00:42:42
Speaker
But any company, architects, engineers, are users of the credit, they can qualify. Every single one of your architect and engineering clients should be talked to about it.
00:42:54
Speaker
IRS has looked at them a little bit tougher than other industries. So you just have to make sure you do the documentation right and like and the projects have to qualify.
00:43:05
Speaker
But then he any taxpayer that has the four part test, new improved product process technique, what I said before, has technology in that project, has some level of uncertainty on that project, and then experiments to eliminate that that whatever it is to to come up with the answer to that uncertainty can qualify.
00:43:27
Speaker
But I would start with manufacturing the software development as the ones that are no brainers that you need to talk to about it. And the R&D tax credit is a credit. So it's not a deduction where you're saving cents on the dollar. you're You're actually getting a credit that is dollar for dollar tax savings. Am I right?
00:43:44
Speaker
You are correct. um Yeah, that's a common thing. And I think guessing most people know, but you have $100,000 credit, you know, there could be some caveats here, but $100,000 credit is worth $100,000 in someone's hands. $100,000 deduction at corporate level of 21% worth $21,000 in someone's hands.
00:43:58
Speaker
hundred thousand dollars deduction yeah the corporate level of twenty one percent is worth twenty one thousand in someone's hands so credit's a lot more valuable. that's correct Now, we have a new administration in Washington, D.C. We know where there's potential tax legislation on the horizon.
00:44:16
Speaker
What should people that are working in the industry or even advising their clients you know regarding the R&D tax credit? Is there something that we should be talking about or paying attention to as this unfolds?
R&D Tax Credits and Legislative Changes
00:44:27
Speaker
The biggest thing right now not even based on the new you know Congress that's sitting right now, is stricter documentation requirements that have been developed or designed over the last couple of years, which really kick in for the form, which is form 6765 25 tax returns. so So we just have to make sure we're following the rules on how we're documenting this credit. And then we have to actually disclose that documentation with the form, which we never had to do before.
00:44:58
Speaker
So that's one of the key things. The other key thing that could happen right now with the new tax code is this is something that kicked in a few years ago, 174, which is R&D expense capitalization.
00:45:13
Speaker
And that's actually mutually exclusive of an R&D tax credit. For the most part, they don't, you know, they're the same kind of words in it, but they're there. You don't have to ah have a credit to have R&D expenses or you don't have to um ah only capitalize R&D expenses if you have an R&D credit.
00:45:36
Speaker
This could change this year. This capitalization rule kicked in in 2022. It never should have. Everybody knew it was never gonna kick in. it was defined in the Tax, Cut, and Jobs Act, and it did kick in.
00:45:49
Speaker
it was ah and so it's something we've had to deal with. That could change in 25 when we have whatever we're gonna have, Tax, Cut, and Jobs Act 2.0, whatever the, you're the expert on this, ah but ah whatever's gonna happen this year,
00:46:03
Speaker
That very well could change, but I'm skeptical that it will change. so So we're going with status quo. and Not that it really affects the R&D tax credit, like I said, but that's something to look at. And will it be retroactive? Will it change at all? Will it just kick in the current year?
00:46:22
Speaker
There's a lot of unknowns there, but those are one things that you as an advisor, as a tax professional, Just need to make sure you're keeping your eye out for those and follow you know the news, follow Mark Gallagos and see what he's doing, or Becker, and they'll ah get information out there for you.
00:46:41
Speaker
But those are things I'd be aware of. But overall, the R&D tax credit, I don't see anything changing on the credit itself. It's just the documentation has gotten a little stricter.
00:46:52
Speaker
Yeah, I think some great takeaways there. One, um you know, no matter what happens, you have code section 41 that represents the tax code. So that's the credit you can get. And then code section 174, separate code section that deals with the capitalization of the qualified R&D costs.
00:47:08
Speaker
And I think, you know, two separate things. So I know when people are advising, it's always good to understand that. But secondly, I think, you know, with the form changing, especially for 2025, you know, you're going to need to be, especially if youre this is something that you do kind of on the back of the envelope calculations, you're going to want to have either provide the right reports for this to get the form filled out properly or bring in a tri-merit or an expert that really knows what they're doing. Cause I think that is where, you know, compliance is going to really make sure that we're doing things the on the up and up.
00:47:41
Speaker
So. Yeah. Oh, definitely. It's a, you, you go in with a lack of documentation and you have an audit, you're immediately disallowed. So Randy shifting gears to cost segregation studies, can you break down and give us, um,
00:47:56
Speaker
Our listeners what they don't understand what a cost segregation study is and let them know when do they qualify and, hey, I bought a piece of property and when should I consider doing one?
Cost Segregation Explained
00:48:07
Speaker
Yeah, cost segregation is an interesting thing. It's been around a while. This is one area where I was trying to be a generalist that I did ever never looked at and really look back now and think, wow, I probably should have been looking at this for my clients.
00:48:21
Speaker
So cost segregation, simply put, it's accelerated depreciation. We are looking at a, you know we're gonna talk commercial buildings. You actually could do it with residential rental as well, but let's talk commercial buildings.
00:48:35
Speaker
I have a commercial building that typically I'm gonna depreciate over 39 years. What cost segregation, will do, which it kind of is in the name. I'm going to segregate out the components within this building and see which components I can depreciate at a quicker rate.
00:48:53
Speaker
You know five years, seven years, 15 years. And by doing that, Obviously, 1 39th of a deduction for this $1 million dollars property each year a decent number, but you know not gonna be a significant impact.
00:49:10
Speaker
If I can accelerate a lot of this to five, seven or 15 year property, I could potentially even then have a bonus eligible, which bonuses become less el or less valuable over the years. We're not at 100% now. I think in 25, we're at 40% bonus.
00:49:26
Speaker
And bonus depreciation means that it qualifies for bonus. I can depreciate it all today. um But with cost segregation, I'm going to look at, I'm going to identify components that can depreciate ah depreciate it at a quicker rate.
00:49:41
Speaker
And obviously, ah deduction today is a lot more valuable than a deduction 39 years from now. So simply put, that's what cost segregation is. Now, when do you do it?
00:49:53
Speaker
i mean, you can do it. there's It's very flexible, honestly, from a cost segregation standpoint. yeah If I buy a building today, yeah i maybe I want to look at that. If I buy a building today and and I'm not profitable in that, well, cost segregation is just going to increase your NOL. So do I want to do that? Well, yeah, maybe if in two years I know I'm going be very profitable in there.
00:50:18
Speaker
um But let's assume I bought a building and I'm just saying buy, there's improvements too, but buy a building, I bought a building five years ago and I never did a cost segregation study.
00:50:31
Speaker
Statute did limitations on the tax return itself, what, three years? So if I look at it and say, hey, I've missed this? No, with cost segregation, you didn't. You can actually go back to that building that you bought five years ago, analyze it,
00:50:46
Speaker
and take that depreciation catch up on the current year by doing a Form 315, which is a change of accounting method. so So this can really be As the advisor, as the tax advisor for your clients, this is something that you can make a decision. Does it make sense to do cost seg today? Does it make sense to do it tomorrow? Do I want to wait a few years? Because I can look as far back as I want and then take it today. Now, it gets less likely that you're going to want to do cost seg if the building was bought 20 years ago because I've depreciated a big chunk of that building already.
00:51:26
Speaker
But there's always a chance that it could make sense in some situations. But we're more so, we want a fairly recent, but even the last 10 years is is doable on a cost segregation.
00:51:36
Speaker
And I was just saying purchase. Obviously, improvements are something we want to look at for cost seg, especially with qualified improvement property, which is ah everybody may know this story, but in the Tax Cut and Jobs Act, there was a mistake where they misdefined qualified improvement property. I'm not going to go deep into that, but if you have a client that's making the improvements to the interior of a commercial property,
00:52:02
Speaker
that most of that improvement may be considered qualified improvement property, which means it would qualify for bonus depreciation, which means I can write off a big chunk of it all at once.
00:52:14
Speaker
And if bonus gets affected in a new tax bill this year, which that one, I feel it will. I got a feeling that we'll get back to 100% bonus depreciation.
00:52:26
Speaker
These improvements could be significant write-off for taxpayers. that's That's so good. So good. And I agree. I mean, depending on where the tax bill on I think this is why want to pay attention to where legislation is going because cost seg is a great opportunity to you know get a deduction today that saves you on the time value of money. And I think i think this is an incredible aspect, especially if you have people you know buying property or building property and doing things of that nature.
00:52:53
Speaker
um So, you know, for CPAs advising their clients on tax credits and deductions, what are some of the best practices to ensure that they maximize the benefits while staying compliant, Randy?
Collaboration with Specialists
00:53:05
Speaker
Well, this is kind of goes back to what we were saying and earlier. You're not going to be an expert in these things. I mean, like I just mentioned, I was not an ant expert on COSIC and I probably could have saved some of my clients some money and didn't.
00:53:18
Speaker
So what i what I say is just understand who Who should I think about as a client for cost seg? Who should I think about as a client for R&D?
00:53:29
Speaker
And if you know the who, then you can build your relationship with some outsource partner, collaborate, educate yourself and then go forward because your clients I'm a CPA. i was I had my firm that was a generalist firm in the past.
00:53:45
Speaker
I know how it works. Your clients want you ah to be the proactive thinking about them all the time and bringing them these these tax saving opportunities, and which is great.
00:53:57
Speaker
And that's something you should do, but it's not something you can do with every single thing that you're working on. So, Just educate yourself for to the standpoint of making sure you understand who I should be thinking about.
00:54:09
Speaker
And then you can bring it up to them. You never, and this is my personal opinion, you never promise anybody anything because there's so many intricate parts of the tax code that yeah Maybe they're in NOL and you weren't even thinking about that. And now a tax credit means nothing to them or additional deduction means nothing.
00:54:26
Speaker
Maybe they're in AMT and maybe some of these things can't work. So so analyzing it is what makes sense. But first part is just building a relationship with with somebody you feel comfortable asking questions if you have any, and then understanding the clients that could potentially benefit from different credits and incentives.
00:54:45
Speaker
Yeah, I think that's a great message for the listeners to remember about tax credits and deductions is, you know, yeah like you said, to to educate yourself. I mean, you can't can't jump into the water and start swimming if you don't actually know how to swim, right? So you could try, but it it may not turn out well for you. Yes.
Invitation to Bridging the Gap Conference
00:55:04
Speaker
Now, where can list listeners learn more about you, TriMerit, and the Bridging the Gap Conference? What's the best way to find you out there? So most everything is at our website, which trimerit.com. It's T-R-I-M-E-R.com.
00:55:21
Speaker
It.com. I almost forgot how to spell that for a second. um um There's also a BTG conference.com bridging the gap BTG conference.com where that information's out there.
00:55:33
Speaker
i mentioned earlier, we have a really, really good marketing team. So they have me all over ah LinkedIn and and other social media. So you can look there, but really best part starting spot is probably our website.
00:55:48
Speaker
So if I'm ah running a CPA firm or I'm an accountant or whatever part of the industry I'm part of, right? And i I'm listening to this and i you know I want some final words from you. and And maybe, heck, I'm thinking about attending this Bridging the Gap conference.
00:56:04
Speaker
gi me Give me your final words on why I should attend and what I could get from that. So I do a lot of speaking out, not even the conference, but I just speak in general. One of the most common things people ask me about to speak about is mental health awareness.
00:56:20
Speaker
And when I go out there, I don't do this all the time, but if it's a more informal setting, I'll say, hey, how many people feel they're dealing with burnout at some level right now?
00:56:31
Speaker
And the statistics will tell you it's about half. I'll tell you, when I ask that, 80% of the hands go up in the room. So if you're thinking that there's a better way to do this, if you're thinking that there's things that you need to figure out because you're just feeling overwhelmed with what you're doing in your firm, i would highly recommend at least looking at what's going on. And I have no problem if people reach out to me. Now, I'm pretty busy, so I i i i may not get back immediately.
00:57:00
Speaker
But if somebody's struggling with something, I want to make sure that that if they want an ear to listen, i would love to be there for them. Randy, thank you so much for joining me today. i know your insight on tax credits, cost seg, and even the broader accounting profession have been incredibly valuable.
00:57:18
Speaker
um I appreciate your work. I appreciate your friendship, but also more importantly, I mean, I think the fact that you share your experience, the ups, the downs, the highs, the lows with everyone. And I think there's something to be taken from that. So thank you so much. And I really got a lot out of this conversation.
00:57:36
Speaker
Thank you. And one last thing, i think vulnerability is one of the key things you can have as a leader. That's great, great to hear. so And to our listeners, do you know you can earn CPE credit for listening to this episode?
00:57:50
Speaker
Yeah. Just visit the link in the show notes to claim your credit. If you're already a Prime CPE subscriber, you can log in and finalize your credits at no extra cost. With Becker's Prime CPE subscription, you get unlimited access to hundreds of courses, including weekly podcast episodes, so you can keep learning while staying ahead of the tax world.
00:58:09
Speaker
We've added a link in the show notes to learn more. Thanks for tuning in and be sure to subscribe, leave a review and join us next month as we dive into the topic of last minute tax filing strategies and common mistakes.
00:58:21
Speaker
We'll discuss how to handle these last minute filing extensions and most common errors to avoid before the April 15th deadline. So you don't want to miss that. Until then, stay informed, stay proactive and keep making an impact.