How the Rich Avoid Paying Millions in Taxes: Wealth Secrets You NEED to Know w/ Karlton Dennis

**Karlton Dennis** (0:00)
I got a letter in the mail from the IRS telling me that I owed them more money than I had. At that point in time, I had to humble myself. Finally, picked up the phone, called my mom. My mom had owned a tax and accounting firm, and I asked her what I did wrong, and she told me you could have done this, this, this, and that.

**SPEAKER_2** (0:12)
What's the net worth of the average client?

**Karlton Dennis** (0:14)
Tax planning makes sense right over 300K. That's when you have enough liquidity to be able to invest in tax reduction strategies.

**SPEAKER_2** (0:21)
What do you see that people get audited the most for?

**Karlton Dennis** (0:24)
I have seen some of the craziest things on some of these other expense items, massages for my team.

**SPEAKER_3** (0:29)
People see corporations pay 0% tax and they're like how?

**Karlton Dennis** (0:34)
You're shifting income from one entity to another entity that's filing tax returns on a completely different fiscal year end.

**SPEAKER_2** (0:39)
Who benefits the most from the tax code and why?

**Karlton Dennis** (0:42)
The government has created a bunch of incentives inside of the tax code because they know that they can't afford to provide affordable housing for everybody. They know that they can't get everyone a job and stimulus checks. So they're partnering with business owners. You can be an earner in this government, but they're going to penalize you for just being an earner. Debt is a good thing. It's a tool. It's something that I can use to my advantage. I understand that there are certain wealth teachers that teach you to be 100% debt free. However, the tax code is not written like that. IRC 181 allows for you to write off the cost of the production of a movie film. These taxpayers have to spend 100 hours watching other movie films in order to qualify as an active participant in the movie space.

**SPEAKER_2** (1:18)
All right, guys, welcome back. EYL, we are here with a special guest, Carlton Dennis. Yeah, came from California and specializes in tax strategies for high-end wealthy clients. Yeah, is that correct?

**Karlton Dennis** (1:34)
Yes, that's correct.

**SPEAKER_2** (1:35)
OK, so this is a conversation that we can never have enough of, especially around this time. It's tax time. And I feel like no matter how much we talk about the tax code, most people don't have any idea about it. People still make mistakes. We just talked about some entertainers that made some big mistakes when it comes to taxes. So learning about the tax code, learning about best ways to really shelter, really maximize deductions, really make the most out of the code, because it's very complex. I think it's something that is always educational to teach people on. So this episode, we're going to go over that. We're going to go over your journey and just get a lot of gems. But first and foremost, thank you for joining us.

**Karlton Dennis** (2:21)
Yeah, absolutely. I appreciate you guys having me on. Excited to talk tax today. I want to be able to help a lot of people kind of crack the code today, if you will.

**SPEAKER_3** (2:28)
Yeah, I think it's going to be an interesting conversation. One that obviously the audience is going to learn from, but we're going to learn from too. Because one thing about the tax code, especially when new administrations come in, it always changes.

**Karlton Dennis** (2:39)
Yes.

**SPEAKER_3** (2:39)
Right? Things get taken out, things get added, some things get put back.
So I got a bunch of stuff. Yeah. Yeah, because, you know, we're trying to make sure that we can keep as much as possible.

**Karlton Dennis** (2:50)
Without a doubt. I love that. I love that.

**SPEAKER_2** (2:52)
So let's get into it. How did you even get to this point? Let's start there. How did you get into the world of taxes?
How did you start working with clients? Explain your whole background from start to where you are now.

**Karlton Dennis** (3:05)
Yeah, so I actually don't have the traditional background that most CPAs or tax professionals have. I didn't go to school for accounting. I went to school for kinesiology. I thought I was going to go to the NFL. That whole story didn't end up happening. And right when I graduated college, I got a W-2 job working for this company called Gala Wine Company, where I was selling wine and liquor.
And I also started my personal training business. I did not realize that when you are a 1099 contractor, that you have to report all your 1099 income. And if you don't, the IRS will report it for you. And so I got a letter in the mail from the IRS telling me that I owed them more money than I had. And at that point in time, I had to humble myself, finally picked up the phone, called my mom. My mom had owned a tax and accounting firm for over 30 years. She was literally called America's Tax Lady. And I asked her what I did wrong. And she told me you could have done this, this, this, and that to have prevented it. I moved out of Hollywood, California, moved back home with the parents, joined the family business. And within six months, I realized making personal training programs was never going to equate to the revenue she was receiving on selling tax plans and helping people save money.