Transcript

Steven Jarvis, CPA (00:51)
Hello, everyone, and welcome to the next episode of the Retirement Tax Services Podcast Financial Professionas Edition. I’m your host, Steven Jarvis, CPA, and I’m super excited for this week’s episode. Think I spent longer before the episode even started nerding out than I normally do because joining me this week is Steven Lee, who is an expert witness, educator, former financial services professional himself, just all around fascinating conversation we’re gonna have here that really centers around using terminology correctly, which might not sound as exciting as my tone is making it, but you’re gonna see why I’m excited. Steven, welcome to the show.

Steven Lee, Ph.D., D.C.J. (01:27)
Thanks for having me.

Steven Jarvis, CPA (01:28)
We’re gonna touch on all sorts of things here, for, let’s start with, us a little bit of your background and just tell us, just so we’re all operating from the same terminology, what is an expert witness?

Steven Lee, Ph.D., D.C.J. (01:37)
Sure. So my name is Steven Lee, as you said, I teach at Cal Poly Pomona in the finance, real estate and law department in the college of business. And I’ve been doing that since 2021. Before that, I was at UCR extension and I trained professional fiduciaries current and future. And so in California, unlike most other states, I think almost every other state, they actually make their fiduciaries be licensed. And by that, mean, uh, guardians conservators, they’re different in California, not the same thing. Attorneys in fact, executors, executrices, personal representatives of estates and so on. So that’s what I did before then. I did that from 2016 until the end of 2022, 2021. There was a time I was teaching at both. It was rough.

Steven Jarvis, CPA (02:19)
. And before we hit record, kind of part of what I was getting so excited about talking about, you, you spend a lot of time right now educating attorneys and getting ready for expert witness situations where really you’re coming in to help better define how terms maybe were used in a sales situation versus what they legally mean. And I think there are so many applications across tax planning, across tax preparation, financial planning, when it comes to this, because we see so much clever marketing that incorporates taxes, but that doesn’t mean those words are being used correctly. So talk a little bit about the types of situations you get pulled into.

Steven Lee, Ph.D., D.C.J. (02:52)
Sure. Yeah. So right now I’m still early in the expert witness career. Haven’t had a case yet, but I’ve given a ton now of, MCLE that’s a continuing education that attorneys must have. Ton of MCLE, presentations in person and usually on zoom, but in person as well. And, I have chosen to, because the subjects are normally the California. And again, I forget the acronym, the California court something it’s basically the jury instructions. We call it Casey and I’m just, I’m forgetting what the acronym stands for, but it’s basically, what the, the, a particular jury in a case will receive from the judge to determine liability, guilt and whatnot. And those instructions we then use to back into our, CLE presentations. And so the two that I am responsible for at the firm are negligent misrepresentation and fraudulent concealment. And so I’ve chosen life insurance, not really surprisingly, to as a sort of frame for explaining what those are. Even though they’re attorneys, I still go back through the elements. Explain what they are, the legal definition, what it means in lay terms. And yeah, and I just use the applications are the life insurance industry.

(04:07)
So what I’ll normally do is show two different scenarios for each one. And I’ll say, okay, scenario A, this is fraudulent concealment with this hypothetical. Then scenario B, it’s not. And it’ll be like a sample dialogue of what the agent says and just how, how they use their terminology. If they use it very sloppily or they say certain things or they do certain things, now it rises to fraudulent concealment or negligent misrepresentation. However, if they don’t, right, if they say other things, then in my hypothetical with those facts, then it does not.

Steven Jarvis, CPA (04:36)
Your focus is on life insurance and how it is presented to clients before they purchase it. Obviously, there’s a lot of things in there that could be misrepresented. But from talking before we hit record, the tax free aspects and how taxes get presented in that situation are certainly an element there. And I mean, for people listening to this podcast, I’m sure we can all think of examples where you see someone present, I think my favorite are like when I’m at conferences and there’s sessions that are, you know, the the Roth on steroids that your CPA doesn’t want you to know about. It’s like, okay, that’s a life insurance presentation. And it’s these types of things. And you and I were talking about this before we started as well. It’s not that this episode is not meant to be hey, life insurance is universally bad. It’s not. It’s situation dependent. It depends on the client specific situation and their goals. And there are overarching principles and what we’re to talk about here, that apply to other areas of financial planning and tax planning. Like, this isn’t meant to be a scare tactic of, everyone who’s sold life insurance is going to get sued. It’s, hey, were you being fraudulent, negligent? Were you trying to withhold facts and information from clients to get them to take action without them having a full understanding of what the outcome is going to be?

Steven Lee, Ph.D., D.C.J. (05:41)
And also the part of the thing too is at what point does the liability go back on the insurer who is who trained the agents, versus the agent themselves? I think we’re still a little bit ahead of that. I don’t think that’s going to come down until later on, probably several years down the road. But I think at some point, and this is something that I’m going to help do, especially if I’m brought onto a case. And I look at the facts and the attorney asked me what I think and I say, well, I think that your clients in this case, the defendant received really bad training. And so that’s then, because the thing is, that’s really interesting is what we see so far is we see the vast majority of cases are against the insurance company and the insurance company’s pockets are stacked. And I’ve read through plenty of transcripts where, clients seem to have a pretty solid case. They go after the insurance company rather than the agent, which I think is interesting because the agents have, you know, right? Arizona emissions insurance. At least they should most of the time. And so they go after, they choose to go after the insurer because they have deeper pockets, go after life insurance company, life insurance company can buy, you know, they can, they can afford the best representation money can buy and they do. And then that attorney just decimates the expert witness. There was an expert witness on a case I read. I think it was against LSW and they brought in and the plaintiffs brought in an expert witness who was not only a full professor at UT Austin. This guy managed to take the black box, which is the proprietary process that a company builds to generate its hypothetical illustrations. And he duplicated that. He was, he managed to reverse engineer it. He spent. because they paid him, I think $500 an hour. He spent 700 hours doing that. They paid him 350k. And he was an endowed chair. He was like the top that you could, the very top you can be in academia. And he just got murdered on the stand, just outright by the insurance company attorney on cross-examination. He just got decimated. The attorney got him to say, my testimony earlier before this jury was misleading.

Steven Jarvis, CPA (07:45)
Jeez, that’s wild. Yeah, that’s wild.

Steven Lee, Ph.D., D.C.J. (07:55)
Unbelievable. I’m like, that’s it. Game over. So yeah. And so they don’t go after the agents, right? Cause the agents do. Mean, they have, you know, but they don’t have the deep pockets that life insurance companies do. and I think that that’s going to be the cases that I’m going to be brought onto, either for the plaintiff side. Yeah. The agent acted, they fraudulently concealed something or they acted negligent misrepresentation or, the defendant side. Which is no, this is really either the client, the client has to do something, right? They have to, like you’ve got to meet somewhere in the middle, I think, and it’s just a matter of where that middle is. And yeah, the client needs to do stuff, the agent needs to receive good training, the insurer needs to make sure they’re training the agent properly, the agent needs to not just fly through the books and control F, they need to take their, well, for me in California, it’s every two years, because I am life insurance licensed, even though I don’t really sell insurance anymore. Yeah, agents need to not just fly through the books. And I mean, I’ve been in meetings with agents before where they said, excuse me, and they turn on the training modules on their laptop and then they just face them towards the wall and they say, okay, you were saying, and so there’s at the same time of talking to me, they’re doing their life insurance training. Again, I don’t think most of them do that, but I’ve been in rooms where that’s happened. So it’s the triangle and everybody, in my opinion, needs to act with good faith and try to meet somewhere in the middle of that information asymmetry.

Steven Jarvis, CPA (09:21)
Yeah, I love the perspective there. And I like talking about the extreme examples because to your point there at the end, mean, most most people in financial services, whether insurance or financial planning or some combination thereof, I mean, most people I interact with are trying to do their best they can by their clients that there really is a good faith effort here. But I like talking about the extreme examples because one, shows you what’s possible. And then it’s just, it’s a reminder of this stuff does matter. We can’t just casually approach these things. And I like to, I like to be able to take these extreme examples and say, okay, does the approach that I take, would this have changed the outcome here? Because one of the things that comes to mind for, again, we’re going to just assume that the people intentionally trying to commit fraud aren’t listening to this podcast anyway. So we’re going to skip over talking to them. But there could be this legitimate concern for whether advisors or insurance or financial planning of, could this accidentally happen to me? And to your point, Steven, we don’t want to be don’t want to be that guy pointing the screen at the wall and just blazing through this stuff and not paying attention. But I like to have questions I can ask myself. one of the questions I always come back to is how can this go wrong? And that might seem like a big jump from what you were just describing. But I think that’s where whether this is, again, an insurance or financial planning, we’re talking about tax planning or whatever, or products or services.

(10:31)
It’s okay, this is a check for myself to make sure that I really know what I’m explaining to the client and whether it’s a good fit for them. Because whether it’s product or service, if I’m coming to a client and giving everyone the exact same recommendation regardless of their situation, and I can’t clearly articulate, okay, this is when it would be a bad idea. This is how it could go wrong. This is how it could killed on taxes, whatever that might look like. If I can’t articulate that, I need to go back to the drawing board and learn more about this, before I’m presenting it to clients. That’s one of my favorite ways to say, OK, do I really understand what’s going on here?

Steven Lee, Ph.D., D.C.J. (11:03)
Right. Yep. And the word choice that you use, right, which goes to the theme of the, of today’s show is the word choice. Cause you can explain something really well. And maybe that would be a funny thread on LinkedIn for all the advisors is take a great, take a great solution for a client and explain and present it badly. Right. Kind of like the one of explain your profession badly. I don’t know if you’ve ever seen those. But you could do the same thing with explain a good, otherwise good recommendation to a client, but explain it poorly. Maybe that’s something I’ll start doing in my classes. I occasionally teach the financial planning, yeah, like an introduction or general principles course.

Steven Jarvis, CPA (11:41)
Yeah, it’s interesting to take some of these common topics and kind of flip them on their head like that. As we were getting ready for the show, one of the other things that stood out to me because in a lot of the cases you’re dealing with that are insurance specific, where some of the confusion comes in again, whether intentionally or unintentionally is kind of irrelevant to the client impact is what counts. But so we have this idea of is it really tax free? Are we explaining that correctly? Are we using that word in a manipulative way? The same thing can come up when we talk about what might be considered more the vanilla tax planning when it just comes to things like, do I put money into a 401k or pre tax or after tax, you know, Roth or traditional IRA. And so the the example there for me is, how are we using the word tax savings? And are we using it correctly? Because as especially my audience tends to be more CFP type, planning focused professionals. And so it’s easy to sit back if you’re not in the insurance world and scoff at these insurance salesmen and their slimy sales tactics, but I don’t know that financial advisors are too different sometimes when they start talking about tax savings, when what they really mean is tax deferrals. And tax deferrals can still be a great thing and they can result in tangible savings, but we’ve got to make sure we are intentionally choosing our words and that the client understands why we chose the words that we did.

Commercial (12:56)
retirementtaxxservices.com/summit

Steven Lee, Ph.D., D.C.J. (13:27)
Right. Yeah. And tax deferral, when I was learning all this stuff initially, I said, wait, okay, how does the, cause the question I had for my managers at the time was how does the IRS, cause they explained 401ks or regular IRAs. And I said, okay, tax deferred accounts, vanilla, newities, right? Whatever. Everything that has a tax deferral component. So I said, how in the world? I said, okay, so wait, there’s a custodian involved. So is it just the custodian that keeps track of the taxes you would have paid each year and writes them down and then you don’t have to pay those taxes until the end because that sounds to me again at the time I was uneducated in this area right I didn’t know any better so to me that’s what sounded like tax what tax deferral meant is that they’re writing down right instead of getting 1099s they would take that amount and then they would just shove it to the end and then that’s what you pay and they said no no no you don’t pay any taxes and then…Okay, but what’s the calculation that like, how does that happen? It’s calculated at the end based on whatever the future tax rates are. That’s even a misnomer potentially, right? And there’s a lot of that in financial services. To me, I would just name it something else, but the government has decided to name it tax deferral and you know.

Steven Jarvis, CPA (14:37)
Yeah, that’s an interesting point. When I talked to clients and advisors about tax deferred accounts, I like to talk about it in obviously, know, analogies that people are going to understand. I like to talk about it as a variable rate mortgage, where the IRS gets to control the percentage. Because mortgage is something that a lot of people can understand. I will talk about how antiris runs out of patience eventually, and it’s going to hold out her hand wanting her share. And I try to make it as clear as possible because what I’m solving for is great outcomes over time. And so no matter how, it doesn’t matter how much I can save a client today in taxes, if 10 years from now, they’re gonna be angry because I didn’t explain to them that bill is gonna come due. And this comes up with pre-tax versus after-tax. This comes up with depreciation and appreciation recapture. This comes up with 1031 exchanges. There are a lot of things in the tax code that ultimately are just kicking the can down the road, which can be a good strategy in the short term, but we have to understand the ultimate outcome. On that list of things that just kick the can is tax loss harvesting for sure, because one of the things that gets left out of the tax loss harvesting discussion most of the time is, oh, by the way, you’re resetting your basis lower, and eventually you’re just gonna have a bigger gain. So I know that you’ve got some thoughts around tax loss harvesting. So why don’t we jump into that?

Steven Lee, Ph.D., D.C.J. (15:50)
Yeah, it’s just, mean, again, like anything else, there are going to be people where it’s the perfect solution. It’s available to them and it works wondrously, assuming that it’s explained properly, proper terminology is used, they understand it. But I see a lot of times where people just, again, online, where people just say, just do the tax loss harvesting. And it’s like, yeah, but you’re just, locking in losses. And I think it’s really interesting because it’s, it goes against the grain of other conventional wisdom oftentimes, right? Because you have simultaneously, sometimes you have people that are saying, well, tax loss harvest after they’ve said, stay in the market and invest, invest early and often and time in the market is better than beats time in the market and all this other stuff. And don’t write, don’t buy high and sell low and all this other stuff, right? Which okay, great.

(16:44)
But it’s so weird to me that some people just change their tune and you just wonder what happened. It seems to me that it’s almost like an emergency type of thing, tax loss harvesting. It’s something that’s there on the periphery if you need to use it. But I’ve seen people that use it as a mainstream strategy and for me, it’s like you’re just playing to lose. It’s kind of how I view it. I’m not a fan of it. You know, just stay in. I mean, think dollar cost averaging is way better than, but again, if you need to use it, it’s there. Like that’s great. But I’m just, one of the things I’m not a fan of, right? Just like S-Corps. Figured I’d just tag that in there.

Steven Jarvis, CPA (17:21)
Just like S Corps. Yeah, they’re similar to S Corps. It definitely is. I think it gets used way more often, often from a marketing standpoint than it does from like a legitimate did we evaluate this situation. And the other thing that can be frustrating about tax loss harvesting for me, because I’m not an investment guy, like I partner with financial advisors, so don’t have to be an investment guy. And so it becomes frustrating when the the tax loss harvesting from a marketing standpoint, almost feels like it gets used as a distraction of, all those investments we told you were going to go up are now down. But hey, look at this thing over here so we don’t have to talk about how those investments didn’t pan out. Investments go up and down. That’s not the end of the world. what I’ve been seeing more and more of is that financial advisors of all shapes and sizes have latched on to the fact that consumers like the idea of tax planning. And tax loss harvesting seems to be the easiest way for an advisor to claim, well, I do tax planning. And not that I get a vote or that there’s an official definition out there yet. But if I got to vote or make the official definition, you doing tax loss harvesting would not rate would not elevate you to a level where I’d feel good about you claiming that you do tax tax planning. That can be one of the things you can you do. But but that’s that’s not, you know, that’s not some that’s not some grand slam of hooray, we did tax loss harvesting, the same thing that Vanguard can do on autopilot. That’s not tax.

Steven Lee, Ph.D., D.C.J. (18:33)
Right, right. That’s like saying what they’re doing is basically, or what they can do is operate with the same efficiency and wealth of knowledge and skill as you can in the tax world. In other words, on the regular investment retirement advisors best day, right, they’re not going to be as knowledgeable and as effective when it comes to tax planning particularly as you are. Not on their best day. It’s just people, don’t know what we’re in our history in America. I’ve seen it a lot just outside of financial services as well. People think that they can do a job, whatever it is, as well as a professional. It’s crazy. They just, they’re completely diluted. And it’s like, there’s no way, right? There’s no way that because you do this all day, every day, there’s no way. It’s funny Andy Panko and I had this conversation on LinkedIn recently about advisors listening to all these services and it winds up that they they don’t do those they refer them to others, but they still claim estate planning tax planning all these things and Andy I think he made the joke that well maybe because I referred clients to medical doctors that I knew that were good. Maybe I should say on there that I do all this like medical diagnoses and my list of services.

Steven Jarvis, CPA (19:44)
Yeah, no, it is interesting how we have to really make this distinction between and for the advisors who genuinely care and are genuinely trying to do a good job by their clients. I think a lot of times they can get caught up in this because they see, every other advisor has this whole list of services, I have to this whole list of services. And what’s more important is that you’re actually delivering value on these topics. And so to your point on tax planning, yes, I would like to think that just based on the number of reps I get in, I probably have a deeper technical tax knowledge than just about any financial advisor out there. But to me, that doesn’t mean that you can’t ever claim that you do something on tax planning. You just need to be specific and clear. If you’re gonna tell your clients, hey, I do tax planning, articulate what that means. And for most advisors, especially if they have a narrow group of clients they work with, they have a niche that they focus on, the advisor can become really good at those three or four or five things that are relevant to their clients. You can get really great at tax planning in that small area. You just need to be clear, hey, here’s the things I’m good at and here’s the things I’m not. I do the same thing. It just came up again this last week. I don’t do international tax. And so when somebody comes to me with international tax questions, I immediately let them know, hey, that is an area where you want someone who is an expert in that. And that’s what they do all the time. You don’t want me trying to figure out how tax laws in India work. I’m going to get it wrong. I feel like there’s there’s so many people who are unwilling to say, don’t know, when really that’s sometimes that’s the most valuable thing you could do for a client is just admit, hey, I don’t know.

Steven Lee, Ph.D., D.C.J. (21:09)
Yep, that’s another thing that attorneys I found are really good at. They say really quickly, even though they can, except for what patent copyright law, you pass the bar in the state and you can practice any type of law. It’s all one thing. But attorneys, unless they’re general counsel, they typically will go into a niche of whatever it is, employment, labor law, all the different tax law, all the different types, contracts, torts, whatever.

Steven Jarvis, CPA (21:33)
Yeah, which is really interesting because I mean, you brought up a comparison to the medical profession and we see that in the medical field all day long, especially if you have a very specific problem, people want to go and find the doctor who specializes in that super unique thing that only operates on the big toe of the right foot and that is it. Like we want that hyper focus on the medical side, but for some reason, it seems like we’re still okay as an industry with financial services being the super broad, well, I can do all things for all people. And the CPA industry, I think is really guilty of that too. Of hey, I’m a CPA, so that means I can do all of the tax stuff that ever existed. And so I try to just be really upfront and transparent. Hey, here are things I’m not good at. Let’s find somebody who is.

Steven Lee, Ph.D., D.C.J. (22:11)
Sure, that makes sense. And you can also work with them. And I’ve noticed that there’s opportunities as well. And this is something I used to do is I would stay on the case and just liaise between, because not all experts, they may be really good at what they do, but they may not be clear communicators to clients. So just translating what they’re saying to the that the client uses. And that was just me drawing on my education background.

(22:34)
For instance, I’d be on phone calls with clients when they’re calling their HR manager, they’re calling Fidelity or Schwab or whoever is managing the entire, the large employer account, retirement account. And of course they’re going to use very technical jargon and the clients has no idea what they’re talking about. So they would say something and the client would say, and I would say, this is what they mean. And then they’d say, yeah, basically that’s it.

Steven Jarvis, CPA (22:56)
Yeah. Well, that’s such a great reminder as we kind of go to wrap up this episode, like that is a really important takeaway here that regardless of, again, we’re talking about services or products or anything in between, what counts at the end of the day is how well can we communicate this to the end client who’s going to have to execute and follow through on this in a way that they can understand. And there’s huge value in both how we communicate to clients and how we liaise between different financial professionals, because you’re absolutely right. When I throw up my hands and say, hey, I don’t do international tax, I don’t just kick them to the curb and wish them the best. I’ve got people I refer to, I share information, same thing comes up with tax resolution. That’s another area that I don’t do all day every day. And so in just a couple weeks ago, I got on a call with the client and the tax attorney and said, hey, here’s the background, help us get to the finish line. And so there is tremendous value in being able to do those kinds of things if, we’re proactive about it, but I’m with you. If your idea of tax planning is you only do tax loss harvesting or you just refer it out and never get involved in the conversation, come on, take that off your marketing list.

Steven Lee, Ph.D., D.C.J. (23:56)
Right. You’ll think your future self will thank you, I think is the same.

Steven Jarvis, CPA (24:00)
Yeah, absolutely. Absolutely. Steven, before we wrap up on this topic of communication, mean, you’re an educator, you work with people who are coming into this stuff for the first time. What are ways you found effective? Because really, I’m thinking about it, some of the same ways that you would teach somebody interested in financial services, financial planning, it’s the same way we kind of got to think about a client who’s never come across this stuff. So what are ways you found to help kind of bridge that initial gap to get people just to get their arms around this financial world we live in?

Steven Lee, Ph.D., D.C.J. (24:25)
Yeah, depending on the topic, I’ll draw pictures on the board. I’ll draw charts. Yeah, especially with again, going back to life insurance, permanent life insurance. Like the cylinder with filling little dots, That are little circles that are the cash and explaining it can’t be too much, right? Because if you put too much in there, it max. If you don’t put enough in there, it lapses and things like that. I just just drawing pictures for them. Oftentimes we’ll do it. I like the analogies. Constructive receipt is something I had a student who works this last semester student graduate student that works for Caterpillar and he’s pretty high up in the financial analyst Division, whatever you want to call it. And so he said hey I have this new guy who this is like during the break and he says I have this new worker that I’m trying to I’m trying to work with them in the in the department to get this right, he doesn’t understand accruals. So I said, just create an accrual. He’s just not understanding the concept. So he said, how do I explain it to him? I said, okay, so cash basis versus accrual basis. So I mow your lawn, right? I’m dressed for it, right? I mow your lawn on December 29th of 2025 and you’re out of town. So I put a bill in there and let’s say I’m a cash basis taxpayer, right?

(25:38)
And so you come back on the 30th and you call me and say hey, can I pay you and hearing nothing on the 31st you put the money in my mailbox or you even say come pick it up It’s available for you. And then I don’t because I’m out of town that I come back on the on January 2nd in 2026 and I get the money and so I explained to him… Right, if your cash basis then you declare it in 2025 because it was set aside for you made available to you constructive receipt. But if you’re a cruel basis, you would also be in that case, right? But if it wasn’t set aside for you until January 1st, if you’re a cruel basis, now you declare it in 2025 because that’s when the work was performed. So I explained and he said, oh, okay, great. Now I understand. And then he went and I don’t know if the guy wound up the employee. I’m assuming it’s male. I don’t know if they worked out or not. But I gave him, I gave the student that example to then go back to their company and or the employee and say, this is what a cruel is, different from cache basis. it was kind of different. Think they were doing auditing stuff, but it’s still the same concept. I think that translates over from tax to.

Steven Jarvis, CPA (26:36)
It’s a good illustration, because by default, most of these concepts use very technical words that we don’t come across in our daily life. And so, again, whether we’re talking about accrual versus cash versus cash basis, or we’re talking about tax, deferrals, tax savings, tax free, like, these are words that get used, they should have very specific definitions. And that for the average person, they are not going to just come to the table with the same understanding of people who do this all the time. And so being able to give them specific examples of dates and timing and amounts, even if it feels simplistic to us being the ones who explain it. I also love that you talked about being able to draw. I’m a terrible artist, but I love drawing things out because I’ve always been good at Pictionary. You don’t need to win awards for how beautiful it looks. You’re trying to illustrate a point. And so back to the comment I made before of being able to, you articulate when this goes wrong? The other question I always like to ask is, can you draw this in crayon? And so that’s where I like to go back to, here’s our four different buckets of how income gets taxed. And I can draw out little buckets. So having those go-to explanations, even if that means you’re gonna end up repeating yourself hundreds of times, thousands of times, it’s new to the person on the other side of it every single time. And that’s where we can really make a difference.

Steven Lee, Ph.D., D.C.J. (27:45)
Yeah, that’s true. Yeah, that’s true. I’d be curious of how you do that with crayons for like a backdoor Roth or something. That’s got to be more challenging, right?

Steven Jarvis, CPA (27:52)
A little bit, actually I was with, as we’re recording this, just a week ago, I was in person with my tax team and we actually went through back door Roth contributions. so, and so maybe, maybe it wouldn’t really make the cut of being a drawing, but, but we, I do draw out, okay, here’s pre-tax versus after tax and what it means over time if tax rates don’t change, because that’s a concept that a lot of people miss. And then we just, we go form by form. And so what I do draw out is, okay, here are the years involved and here’s which year we need to report it on the face of the 1040, versus on the 8606. Here’s what it’s gonna look like when it comes out. That one takes a little bit more illustrating, but yeah, you can do it for sure. yeah, Steve.

Steven Lee, Ph.D., D.C.J. (28:25)
You just do it in phases. Yeah. It’s like explaining options. That’s another challenging one to students of how stock options work.

Steven Jarvis, CPA (28:33)
Steven, I really appreciate your time and sharing your expertise. How can people follow up and My biggest takeaway from this conversation as far as things we can put in action, because I can nerd out on this stuff all day, but I think for people listening, biggest thing that you need to be doing is those concepts you’re coming across most often, right? It’s not the entire 80,000 page tax code. It’s what’s most relevant to your clients, and how often are you taking the time to get client tax returns so you see how this stuff really comes through? And then that you’re practicing, you’re improving, how do you illustrate these things? Whether you’re drawing it out, which I’m a big fan of, you’re using analogies, the more practice you get, the better able you will be to explain these things to clients in a way they can take action on. So Steven, once again, thank you for being here. To everyone listening, until next time, good luck out there and remember to tip your server, not the IRS.