Tax & Estate Law Changes October 2021 Webinar

[00:00:00] Rick Pullum: With that I would like to introduce the, the two panelists that we have alongside me. I’ll be serving more as the moderator, but, um, we’ve got, uh, Mitri Homsi who is a shareholder with Vestal Wiler? [00:00:13] Rick Pullum: Um, Mitri provides tax and consulting services to clients in various industries, including automotive real estate hospitality, technology. PEO groups and private equity and Mitri spent a significant amount of time. Advising clients on entity, restructuring choice of entity recapitalizations conversions, mergers, and acquisitions partner buyouts and private equity acquisitions. [00:00:41] Rick Pullum: In addition, he has extensive experience providing tax planning services for limited liability companies, partnerships, S-corps, C-corps and individuals. Mitri graduated from the University of Central Florida with a Bachelor’s degree in the science of accounting and graduated from the University of Florida with a master’s degree in accounting, with a tax specialization prior to joining Vestal Wiler, Mitri worked for Deloitte where he specialized in real estate and private equity and provided tax consulting services to real estate funds, publicly traded and private equity REITs as well as private equity groups. [00:01:18] Rick Pullum: Currently Mitri serves as a treasure of the coalition for the homeless in central Florida and currently lives in Orlando with his wife Mariella. Um, so welcome to Mitri. Thanks for being here. Thank [00:01:30] David Witter: you. Is a great guy, great guy. He’s really smart. And you want them on your team? [00:01:38] Rick Pullum: Yes. Yes. And of course we feel the same way about David. [00:01:43] Rick Pullum: Um, so David Witter here with us, then he founded Financial Harvest Wealth advisors in Winter Park. He serves as the CEO and manager and is managing over a quarter billion in assets for, for his, his clients. He’s a Certified Financial Planner™ and has. Comprehensive wealth management solutions to clients, uh, by collaborating with their tax and legal, uh, and asset protection professionals. [00:02:11] Rick Pullum: David’s uh, undergrad work was at the University of Virginia and he has a master’s from the University of Florida. His master’s degree in engineering and grants him a unique approach to helping clients navigate, navigate the ever-changing political and socioeconomic changes. Uh, and it’s made him successful in stewarding wealth. [00:02:31] Rick Pullum: So during the pandemic in 2020 David and the firm increased their new assets, uh, that were entrusted to their care at a rate of almost six times the industry average. Um, so during that time they also helped over 60 clients, execute Roth conversions and tax loss harvesting, and their accounts, which has already saved seven figures in taxes. [00:02:54] Rick Pullum: And just the first year, that’s a pretty big deal. Um, so currently they’re designing and preparing plans for clients to execute at year end to mitigate their taxes depending on the situation and how, what we’re talking about today changes things. So Financial Harvest has a team of seven. Uh, two of them are Certified Financial Planner™ and five are licensed to give fiduciary investment advice. [00:03:18] Rick Pullum: Um, they offer a number of retirement and wealth building educational courses, and, and many of them are hosted through Rollins college. As a matter of fact, we’ve had David come in and speak with our bankers and he is a very good teacher as well. So David and his bride, Katie on 11 years co owned financial hearts. [00:03:38] Rick Pullum: They’ve got a ten-year-old son Will an eight year old daughter, Kate, and they both attend Dominic elementary school. They also co lead their Sunday school class at first pres downtown. And Katie serves as an elder there. So welcome David, uh, very happy that you’re here with me. Um, and, uh, I’ll turn it over to you for just a minute. [00:04:00] Rick Pullum: So, uh, so then I don’t have to introduce myself. [00:04:04] David Witter: I got the easy part. I get to introduce you, Rick. But, uh, he mentioned, um, uh, first pres Orlando. That’s one of the ways that we made a connection very quickly with Rick, but, um, Rick is the fourth generation sensor Ford and native. And, um, he’s got a 20 year track record in the commercial banking industry here in central Florida. [00:04:22] David Witter: Um, he’s held positions in credit lending lending manager. Um, he was a chief commercial banking officer over one Florida bank. He currently serves as the president of one for the bank and a bank shares the subsidiaries. And, uh, he just shared with me yesterday. They, uh, they went over 1.2 billion in assets and deposits there and their five branches. [00:04:42] David Witter: And, uh, he ever sees 135 employees there at one Florida. Great bank break. Uh, previously he served over at central Florida marketing as soon as a former marketing president for Iberia. And, uh, they had about a $1.5 billion franchise there and is one of the most efficient in the history of bank there. And, um, and then in 2018 is when he moved over to one Florida and started working the organized the bank there. [00:05:05] David Witter: Uh, he has his bachelor’s of science from Florida state. And so, you know, we’ll say go Florida state this week, cause they’re not playing the Gators yet. Um, it, uh, he got his, uh, Florida state degree really. And then he also has his MBA from Florida state as well. Uh, Rick, as you, if you know him already, you know, that he’s just a really just has a heart for serving the community. [00:05:24] David Witter: Um, he’s very active. Uh, he started on many numerous boards, you know, serving the community. So, um, the city of Orlando, historic preservation board, the board of downtown south main street, he was one of the founding board members there. Um, the blank there, school foundation, he’s also an elder at first pres Orlando with, uh, with. [00:05:42] David Witter: Um, he currently serves on the orange county tourist development council. He also serves on the board of I dignity and he also is on their advisory board for the central Florida sports. And, um, I thought this was a great, uh, great note here, Rick. Um, he was a 2021 CEO of the year honoree. That’s awarded by Orlando business journal and it’s very well deserved. [00:06:04] David Witter: And here resides here in Orlando with his wife, Jessica. I think I saw her registered Jessica we’ll walk up your hair and also there are three. Thanks for being with us rain. [00:06:16] Rick Pullum: Absolutely. David, thank you for the introduction. So now that enough about us, let’s jump into the conversation here. Um, uh, first thing is just to kind of overview of the agenda, just so, uh, folks on the call, kind of know what we’re going to be covering. [00:06:31] Rick Pullum: We are going to be covering the current laws. So we’re going to kind of show you what the law is today and what the proposed changes are, um, and provide some examples there. Um, we’ll move into, let me get my hips into here. I’m sorry. Uh, we’ll then move into some of the top considerations for how some of these changes could affect us. [00:06:52] Rick Pullum: Uh, we’ll leave time for question and answer, and then we’ll leave you kind of with a partying, uh, call on, on what, what may come next and some recommendations there. So with that, uh, we’ll jump right over to David. Just to cover logistics. [00:07:12] David Witter: Yeah. So logistics. Thanks, Rick. So first of all, what you see here on the screen, we have this as a handout and I’m, so Kaelin is going by the way. [00:07:20] David Witter: Kellen Williams is a Certified Financial Planner™. He is on our team here at Financial Harvest. He’s an excellent moderator as well. So he’s constantly monitoring the Q and a and also the chat box. So if you are a frequent Zoom user or probably. But in the chatbox, what he just did was he dropped two different PDFs that you can download. [00:07:42] David Witter: Um, they’re, they’re basically structured the same as what you’re looking at here. One of them is for MFJ, which stands for married, filing jointly. And then also the second one is for single filers. And, um, we, you can see down at the bottom it’s footnoted, it goes straight to where this data is coming from. [00:07:59] David Witter: These proposed. And it’s just a handout for you all to be considering. Um, and then utilizing it as we kind of step through some of these also in logistics, if you would like you can use the Q and a, or the chat feature to ask questions. And if you like you, you know, we can also pull you in as a painless, if you want to go live on via television, it, uh, uh, ask questions and we highly encourage that. [00:08:22] David Witter: So be active on that and check in with this as we move through and you have questions. [00:08:30] Rick Pullum: Okay, thanks, David. Um, I guess the first question for maybe, uh, either one or both of you guys is, um, your thoughts around, why do you think, why did you think it was important that we cover this topic now? Why get an in front of our clients now? And how did you choose the topics, um, that you put on the agenda to discuss? [00:08:54] David Witter: I’ll let you go first major. [00:08:57] Mitri Homsi: Oh, you need it. So yeah, I think these are boring topics. Cause it’s a lot of this stuff is very time sensitive and you know, because still plan had to cover any of the, you know, get ahead of any of these topics. So it’s really best that, you know, we take the time to make sure we give you guys you’re aware of it, knowing that these laws could happen. [00:09:15] Mitri Homsi: And just, um, so you have more time to be able to handle any sort of issues or planning that might, you know, you might need to take in consideration before you. [00:09:24] David Witter: Yeah. And like to amplify that, um, Mitri like, you’re a perfect example, right? You had the tax deadline, you know, October 15th, and then you’re trying to help your clients be prepared for projections by year end. [00:09:36] David Witter: But then if they, if Congress changes this, I don’t know now, or in December, it just leaves so little time to execute moves to, to cope with the changes in, to mitigate the taxes. And one of the reasons we didn’t have an estate planning attorney on to. Uh, is the capacity like, uh, some of these portraits changes we’re going to go through today. [00:09:57] David Witter: They’re there, they’re all out. Like they’re overwhelmed as it is. And so the, the thing to stress to our listeners is the window of time, candy, very narrow. And if you don’t have the plans laid out in advance, I just don’t think there’s a way of getting it done. The other thing is that things are constantly changing and moving, right. [00:10:16] David Witter: And so, uh, sometimes I feel as like these changes have a lot of moments. Uh, sometimes it’s like, Hey, they’re pivoting, they’re going to try something different. But the fact that these were in the house ways and means committee proposal, it’s like a real structure. It is actual legislation and it makes it very easy. [00:10:33] David Witter: Whether it’s three days from now three months from now, three years from now, or 10 years from now, they can pull it right off of the shelf and drop it into a bill. And, uh, that’s why we felt like it was super important to get this in front of you. All right. [00:10:46] Rick Pullum: Okay, thanks guys. Um, I, I would agree. So, um, let’s get into some of the detail. [00:10:54] Rick Pullum: Um, first I think Mitri, if you could, if you could talk us through some of the potential changes in, uh, the capital gains and ordinary income rates, uh, that, that you’re looking at, or that they are looking at, um, that would be helped. [00:11:11] Mitri Homsi: Yeah, definitely. So what you see here on the left is what our current, um, tax structure is. [00:11:17] Mitri Homsi: So right now we have a graduated rates on, on our capital gains rates. So, you know, if your AGI, your adjusted gross income is less than 250,000, your capital gains rate will be 15%. Um, you know, and as it, as it moves up, you’ll see, you know, it goes from eight to 18, uh, 18.8% and the 23.8, those additional increases for the, uh, from the 250 to five 50 is mainly just for the net investment income tax. [00:11:44] Mitri Homsi: Um, and really the highest capital gains rate currently is that 20%. If you are, um, subject to the net investment income tax, that’s what brings you up to the 23.8%? And I know this is a hot topic for a lot of people out there was originally a Biden mentioned that he was going to move and his original proposal back in April of this year, he was going to remove the capital gains rates up to the highest federal tax rate, if you were above a certain income. [00:12:10] Mitri Homsi: Um, but as you can see now with this, uh, house ways and means committee proposal, The, what they’re proposing is that the highest capital gains rate move up to 25%. Um, but you can also notice that your taxable income range has gone down as well. So the highest tax rate will start at a lower amount of income. [00:12:28] Mitri Homsi: Um, so that’s really what we’re seeing here. And it’s something to mention too, is you’ll see there on the bottom, on the right where it says gains recognized after September 30th, 2021 are subject to new rates. So really what you’re seeing there. They’re drawing a line in the sand and say, from this point on that’s where capital gains will be increased. [00:12:47] Mitri Homsi: Whereas for most of the other provisions in this, um, in this legislation, it’s supposed to start in tax year 2022. And I know a lot of people were concerned that they might go retroactive, um, to be able to apply these tax rates. Well, kind of what you’re seeing with Congress and kind of what I’ve read is that. [00:13:06] Mitri Homsi: You know, Congress does not want to do any sort of retroactive taxes. They prefer to go away from it. Not saying that they can’t, but they’re, they’re looking to not go backwards cause mainly they want to litigate it and it just kind of cause more headaches than they’d like. Um, so, and that’s for merely filing joint and as you can see there in the bottom left. [00:13:24] Mitri Homsi: Um, for Carly for if you’re single, you know, you have the 15% different, your first 200 grand of income, and then it moves up to the 23.8. Once you have roughly adjusted gross income of 446,000, um, the possible changes, what they’re looking at in this legislation is, again, you’ll see the, the income, you know, the tax rates go up, but also the income rates are roughly, you know, they’re kind of staying the same for, for single individuals. [00:13:51] Mitri Homsi: Um, but you can see there for. You know, the twenty-five percent capital gains rate that does apply to a lower tax rate of 400, you know, when your income is at 400,000, that’s where the 25% would come into play. Um, so that’s, that’s kind of what you’re seeing right now in the capital gains and qualified dividend arena. [00:14:08] Mitri Homsi: Um, and David has an example to walk through. So just to illustrate some of the changes. [00:14:13] David Witter: Yeah. And one quick comment on this was, uh, it’s uh it’s how do I say it’s much more punitive to married, filing jointly versus single, and the way to think what that is. If you, if you’re a married couple and you had 800,000, let’s say of gains and you split it as singles, right. [00:14:30] David Witter: You could sneak in and underneath of the, of that 400,000 level, um, you know, down here. Right. But if you’re a married couple and you’re at the 800,000, you get hit with the higher tax rate at the fourth. So that was just another interesting thing that I don’t know if they did it intentionally. Right. But, uh, it’s definitely more punitive to a married filing jointly. [00:14:49] David Witter: And in speaking to like the example, we just very general, so let’s say if you ha you sold the house for six 50, obviously you get an as a single, you would get a $250,000, um, uh, capital gain exemption. Let’s say you sold some land. You got 200,000 in wages. So if you had the current tax. Much of the game would be taxed at that 23.8. [00:15:12] David Witter: But if they did pass the ball and make it retroactive, uh, or they had this, you had this kind of gain in, let’s say 20, 22. You can see that now they’re, they’re paying somewhere around that 28, 8 on a big portion of the gain, which is substantial more, uh, taxes due in that particular example. So it’s just something to watch. [00:15:31] David Witter: Um, uh, historically speaking, the capital gains rate are relatively. Same thing with ordinary. So it’s just something to be looking at. Cause they’re, they’re looking for ways to generate revenue. So on the ordinary rates, I’ll take this real quick. Mitri then I’ll hand the example over to. More of the same, right? [00:15:48] David Witter: So in essence here, uh, they, they changed the threshold of where now the, the 35% is at four 50, whereas before it went all the way up to like 6 22. So they kind of crunched down on the bands where those at 35, 35 and 37% bracket. And now anything above four 50 goes to the 39. Very similar on the single. [00:16:13] David Witter: So they’re narrowing some of those bands and then hitting the 39 6 at the cap, the top tax rate, as opposed to the 37%. [00:16:24] Mitri Homsi: Yeah. And just to illustrate some of this year, um, you’ll see here, in our example, you have a married couple with wages combined to 400,000. They have income from their escort with about 600,000 and then 300,000 investment income and a hundred thousand, uh, itemized deductions. [00:16:38] Mitri Homsi: They can see under the current law, the total taxable income about 1.2 million. So about 578,000 of their wages and business income is taxed at the highest tax rate of 37% under the current. Current law. So what this proposed law you’ll see that now taxable income is the same amount, but yet a larger chunk of their income is going to be taxed at the highest taxable rate of 39.6%. [00:17:03] Mitri Homsi: So that’s, that’s where, you know, when David’s mentioned about his crunching down, that’s what they’re doing for married filing joint is not only are they moving the tax rate up 2.6%. They’re also having more of your income subject to it. Um, and some what you’ll see here, you know, taxable income in excess of four 50, uh, 450,000 will be taxed at 4.6%, uh, to 2.6% higher than it previously was. [00:17:25] Mitri Homsi: So really kind of on this example, it’ll generate about 23, uh, 23 grand and extra additional tax. Yeah, [00:17:34] Rick Pullum: perfect. Well, it appears that, uh, it could be a double whammy, uh, if this passes that, that, uh, some of the folks on the call could be getting hit from both directions, both ordinary and capital gains. So thanks for the illustration. [00:17:52] Rick Pullum: Um, let’s move to the estate tax and, uh, something called intentionally defective grant torch. Uh, ministry. Um, could you, uh, talk us through the proposed changes there for those who may, may have, uh, those types of issues in their, uh, in their. [00:18:11] Mitri Homsi: Yeah, definitely. So I think right now, what you’re seeing is, um, what the tax act was packed at the end of 2017. [00:18:18] Mitri Homsi: Um, you see that they moved up the estate tax exemption. Um, so they moved it up to 11.7 million. So just, you know, round up to 12 million per person. So you had, uh, you know, you could avoid paying tax, a state tax. On effectively, if you’re married on 24 million openness stuff, a taxable estate and your first one from the accent. [00:18:39] Mitri Homsi: Um, and then anything above that, uh, exemption would be subject to a 40% tax rate. But now what you’re seeing is that they’re moving the, uh, state exemption back down to the pre 2017, uh, tax act rates of about roughly 6 million per person. Um, and something to keep in mind too. And this is, you know, when David and I were mentioning about planning ahead, um, the IRS has come out and said that. [00:19:05] Mitri Homsi: Once this decrease occurs, if you were to make a taxable gift during that time. Um, and let’s say you let’s say for an individual, you were to do an $11 million gift and it decreases down to 16. They’re not going to call back at that, um, that difference there, that $5 million difference they’re going to leave it as is. [00:19:25] Mitri Homsi: So it’s something where once you make the gift under the current laws, there’s nothing that’s going to be applicable to you there. Um, and then also, you know, what you’ll see is a potentially defective grant or trust they are going to be eliminated under the proposal where now, right now it’s outside of your taxable estate. [00:19:42] Mitri Homsi: If you were to set up one of these. The fact intentionally defective grant or trust, but starting in, um, no beginning of next year, any transactions with the grandchild intentionally defective grant or trust or newly set up, uh, intentionally defacto potentially defective grant or trust would be, uh, no longer outside of your estate. [00:20:02] Mitri Homsi: And it would be included in your taxable. [00:20:06] David Witter: Yeah, a great point. And so I would speculate that a good number of our listeners already have an islet irrevocable life insurance trusts in place. And, uh, as proposed the, what, what happened with this is that it, they wouldn’t be able to do the Crummey powers and the continuation of the premiums paid into the islet moving forward. [00:20:28] David Witter: And that that could make it to where that, that, uh, life insurance policy doesn’t have sufficient funding to do what it was intended to do. So this is a pretty big deal. I think that’s going to hit quite a number of people that have islets. And then just as an example, so on the current current law, if you have a widow with, let’s say 8 million in the estate and 2 million on life insurance, and as long as that life insurance is properly set up in an islet, she has no taxable state and there’s no USA tax. [00:20:55] David Witter: But on the proposal. Um, now it would be a $6 million cap, and then now subject somewhere around 4 million to the estate tax, which, you know, an essence tax the estate somewhere around 1.6 million. And so that’s what I was touching on here. Eyelids would be eliminated as an effective planning tool. They assess what I’m hearing from several estate planning. [00:21:16] David Witter: Now the life insurance, uh, insurance lobby is really pushing hard to get a carve out for irrevocable life insurance trust because they are a very commonly used tool. We’ll see how that plays out, but in the house ways and means proposal, uh, it would basically make it so that eyelids are no longer a viable planning tool. [00:21:33] David Witter: So just something to be really paying attention to their, tell him, let’s check in with you. Uh, are there any questions that have come in on the acute. [00:21:43] Mitri Homsi: We do, and this could be for Mitri David. So why is the government pushing those that are made with doing [00:21:56] David Witter: so the question sounds like, um, you’re cutting up a little bit. [00:21:59] David Witter: Helen’s sorry. So I think what the question was is why this is to Mitri. Um, why do you think the government is trying to punish married couples in a, hit them with higher tax? [00:22:12] Mitri Homsi: Yeah. So it’s generally what you see is the married, you know, when you’re single versus married, you usually take most brackets and you just kind of cut them in half. [00:22:19] Mitri Homsi: And that’s what this single individuals, uh, you know, their tax rates are. But really what you’re seeing in this, um, in this framework, this proposal, really this legislation is they’re just trying to find ways to generate revenue. So if they have to unfairly burden one party versus. Um, that’s kind of their means of operation really. [00:22:40] Mitri Homsi: So, and what you’re seeing too, is a lot of you’ll notice a lot of these laws as we go through them. You know, if your income is generally underneath 400,000 with separate. You’re not going to see much change, really in the sense of taxes, you might see it in, you know, spending or prices of goods, but you’re not seeing much in change in taxes, but if you’re a corporation, high net worth individual or, um, high net worth individual with a large taxable state, you’re going to see that they’re going to increase taxes on you. [00:23:09] Mitri Homsi: And it’s just, they feel that’s the best way to generate revenue. It’s a really good something. Be able to be over the finish line, be past. [00:23:19] David Witter: Yeah, fair enough. And I think the second part of the question is what can we do to, um, fight back, I guess, if you’re married, but, uh, you know, we’re going to speak to this at the end of the conversation today, right? [00:23:31] David Witter: You’re a congressional representative and, uh, you might send something off into an email or a note to them and never hear back. But, uh, I think hearing from their constituents. And, um, you know, I think, uh, you know, that’s a very valid thing to do if you’re concerned about, um, maybe the tax could be an unjust in that context between the single versus married filing jointly, so, right. [00:23:54] Mitri Homsi: Yeah. And this is the kind of answer that second question. Um, it’s really just start planning ahead and understanding that these things may or may not happen, but it’s something where you can try to take advantage to mitigate any sort of tax. So, you know, if you can defer income or re know accelerate income, you’d want it in the lower tax rate here. [00:24:11] Mitri Homsi: And another option is if you can defer expenses so that you’re offsetting. Higher tax rate dollars versus current tax rate, but also there’s a time value, money component there. Um, so those are just kind of some ideas and, you know, speak with, you know, your advisors and they’ll be able to give you some more guidance on that. [00:24:31] Rick Pullum: Uh, data. Did you want to take further questions at this point or should we move to the next [00:24:36] David Witter: so far? That’s all has come in. Yeah. So I can jump. [00:24:43] Rick Pullum: Uh, I was just going to say, uh, you want to. Talk us through the change that would affect almost every tax payer, regardless of income. And then what’s kind of hidden in there as it relates to Roth IRAs, without [00:24:56] David Witter: a doubt now, you know, thanks for the sound up there, right? [00:24:58] David Witter: So, you know, Mitri just hit on this. He said, Hey, um, most of these proposed laws, it follows along with the narrative of, it’s only going to affect those making 400,000 or more in income, but the big surprise or one of the big surprises in the proposal from the house ways and means. Is getting rid of after tax Roth conversions and after tax rollers. [00:25:21] David Witter: So this affects every taxpayer and, uh, it’s something that we utilize with a good number of our clients, uh, to help with, uh, effectively getting money into Roth IRAs, which are tax-free forever. So the, the it’s very straightforward, but in essence, what they’re gonna, what they’re trying to do is say you can no longer continue. [00:25:40] David Witter: At the tax dollars from a traditional IRA over to a Roth. And then secondly, on a qualified plan, like a 401k, if you contribute after tax dollars to a 401k, and then later on, you wanted to roll it to a Roth IRA. They’re going to disallow that. So there’s two, two impacts here. One is, it definitely increases the taxes for everyone that were, was utilizing this. [00:26:04] David Witter: The reason being is now that that was money state in the pre-tax IRA or the pre-tax 401k. All their earnings will be taxable in the future. And the current law, if you get it into a Roth that makes all the future earnings and growth tax free. So that is an essence, a tax increase on anybody that was using the strategy. [00:26:25] David Witter: The second thing again, as an unintended con. Um, many of you may be familiar with something called an 86 0 6 form on your tax return, beat your head that you knew about those. And if you have these after tax dollars, that would then be locked in your 401k or locked in your pre-tax IRA and you can’t roll them out, then you have to keep track of the accounting literally year by year and run it through a formula to figure out how much of your distributions is taxable. [00:26:51] David Witter: Thomas’. So this is something that it definitely would have affect anybody that is utilizing after tax rollovers. So the, the action to be considering, and we are, if you’re a client of ours, you listen today, you know that we already hammer on this, but a lot of people don’t realize they have after tax dollars in their 401k, you need to roll those out to Ralf IRA immediately. [00:27:12] David Witter: Uh, we think that the custodians, the fidelities Schwab’s TDS and so on are going to get overwhelmed at the end of the. If this becomes law. So be in front of it, get those after tax dollars out of your 401k into a Roth. And if you have a after tax dollars in a traditional IRA, you might want to consider doing a conversion and getting that all to a pretest or an after-tax or, um, a tax-free. [00:27:36] Rick Pullum: Okay, thanks, David. That’s good advice. Um, I believe that, uh, many of the folks on the call today are business owners and, um, so Mitri, uh, it sounds like change might be coming and the qualified business income deduction. Could you maybe talk, speak to that? [00:27:55] Mitri Homsi: Yeah, definitely. So, um, as I’m sure a lot of business owners are aware, there was a, you know, they set up a 20% pass through deduction where if your, if your business was not a specified trade or SSTP as they call it, specified service trader. [00:28:11] Mitri Homsi: You could take 20% of your income from that business, you know, your escort, your partnership, or if you had a sole proprietorship report on schedule C um, you could take 20% of that income and it would not be taxed. Right. But there are certain limitations to it. Uh, but for the most part, everyone was able to qualify. [00:28:27] Mitri Homsi: Um, so that was a big benefit for a lot of people. Cause you know, if you really look at it, if you’re in the highest tax rate of 37%, What it does is that income from that business, the tax rates really moved down to 29.6% because that’s what you’re paying. Um, you get that 20% through deduction. Well, now one thing that’s in the legislation is they’re talking about limiting the qualified business income deduction. [00:28:51] Mitri Homsi: And what you’ll see there is, you know, if your income is above a certain threshold, then your deduction will be. So now if you have a 20% pass through deduction, if you see here for married filing joint, if your deduction would be, let’s say 700,000, you wouldn’t be able to take the full 700,000. You’d be limited to 500,000. [00:29:12] Mitri Homsi: And so single individuals are limited to 400,000. Married filing separately is 250,000. And this one is huge. Then the sense that trust and our states are limited to 10,000. So before, you know, when you’re a trust, you have a more compressed tax rate. Um, but now limiting the, you know, what we call the pass through deduction for trusts and estates 10,000 all, but eliminates the benefit of the deduction for any sort of trust for estates. [00:29:40] Mitri Homsi: And I know there’s a lot of business owners who. Own, you know, uh, part of the business owned through a trust or they have their kids trust or something along those lines set up. So now you’ll see that you’re, you’ll lose out on this benefit. So that really is going to be taxing. Um, yeah, I put a [00:29:58] Rick Pullum: star on that one. [00:30:00] Mitri Homsi: Yeah, that’s huge. So, and just, just to walk through an example, what you’ll see is, you know, you have a married couple with wages, 400,000, um, you know, that an escort real estate development escort for 4 million, the current law would allow a educated auction and you’ve got a savings of around 296,000 in ordinary taxes. [00:30:18] Mitri Homsi: Um, the limitation would allow only, you know, in the new law would only allow 500,000 of a qualified business income deduction. So effectively increasing your taxes by 111,000 at 37% rate and 118,000 at 39.6 rate. So, and you could also owe additional tax, um, which Dave will be talking about a moment on the 3.8% surtax um, if, if we be, which most of your 4 million would be subject to. [00:30:47] David Witter: That’s a great point. Cause I think, um, a lot of the listeners, if they own the business interests in the trust or in a trusted, and they’re going to hit that limit like that. Right. And it could really spike, uh, the taxes they owe on it. So great point. Uh, before I go to this, surtax down here at the bottom that I highlighted, uh, Kaelin, let me check in other, it looks like there might be enough. [00:31:09] David Witter: Another couple of questions that came in. [00:31:13] Mitri Homsi: Yeah, there is. So the a test can hear me. Okay. Okay. [00:31:17] David Witter: Now it’s still break it up, but I think I’ve got it here. It looks like Susan asked. Um, can we distribute from an existing IB GT intentionally defective grant or trust, um, after year end with no tax effect meet? [00:31:34] David Witter: Sure. Do you know that? [00:31:36] Mitri Homsi: Yeah. So it depends on when you’re, when you’re a grant you’re intentionally defective, grantor trust has been set up. If it’s already been organized, um, prior to, you know, this law passing, you shouldn’t see any tax changes in any sort of methods, but generally when you. Got a district, you know, when someone gets a distribution from their trust, your benefit generally is for beneficiaries who are already receiving the distribution is generally taxable to them. [00:32:00] Mitri Homsi: Um, to the extent there’s, you know, uh, income inside of the trust. So I think, you know, one thing you should be focusing on is do I have a potentially defective grant or trust currently set up and do I plan on doing any future transactions with it? So that’s something you should be, uh, definitely considering. [00:32:18] David Witter: Yeah. Thank you. We also had one from Laura. Um, let’s see, it looks like 401k conversions Rother ended. Does that mean we should stop making pre-tax contributions to 401k and instead focus on after tax contributions in 2023 and belong. Um, maybe Laura that’s very specific to your situation, but, uh, what she’s hinting at there is there’s pretax and Roth within 401k contributions that subject to the 19,500 or 26,000. [00:32:47] David Witter: But some plans allow after tax contributions on top of that and, um, uh, work with your advisor on that, because this might be an opportunity to hear before year end to get some after tax dollars in and convert it to Roth before year end, just in case this does take, take effect. So good question on that. [00:33:03] David Witter: And then, uh, is there an easy way to determine how much of my IRA is after tax dollars? I’m not sure. So, um, they connect question of your tax return. So if you have any, after tax dollars in your IRA, it should be captured on the 86 0 6 on your tax return. And you would know if you’ve done some after tax contributions in prior years, sometimes we have to help a clients amend their return, um, to make sure that’s captured. [00:33:26] David Witter: So good question. Okay. Let me come back to our business owners. So we just hit on our meat, your hit on the QB ID. The other change that we’re seeing, it was in the proposal. Is the 3.8 surtax on pass through profits. So they’re on the left. Generally speaking, the current tax law, there’s the 3.8% affordable care act. [00:33:49] David Witter: Surtax it only applies to passive income dividends, interest realized gains, uh, you know, on maybe a, um, uh, an investment portfolio on their proposed changes, though. What they’re proposing is they would add the 3.8% certified. On active or, um, ordinary income, you know, through the course of business. So this would be, uh, affecting partnerships, S corporations, uh, any that anybody has a pastor in city, a C, C, C, M, doing it on their tax return or the schedule C. [00:34:22] David Witter: So this again is another layer of taxes on top of maybe an ordinary income, uh, increase. So in the example, below, I went back to the same one. And so they added a 3.8%, sir. On the 4 million that came through their pass through entity, uh, that’s basically an essence raising their top marginal rate from 37 up to 43.4. [00:34:45] David Witter: So that’s a 6.4% rate increase for many, many small business owners. And in terms of percentage that’s, you know, 20, 25% tax increase going from 37 all the way up to 43, 4, I didn’t see much press on this, but that is in the house ways and means. And, um, and again, it would be a subject, a subject team are taking that pass through profit income and then subject into the 3.8%. [00:35:12] David Witter: Surtax it’s another thing to be watching [00:35:16] Rick Pullum: that there’s a lot of taxes. Yeah. [00:35:21] David Witter: Can we get a, can we get a CD at your bank? That’ll pay us, you know, 6.4% that make up for that taxi. [00:35:28] Rick Pullum: Yeah, sure. Let’s see. Let’s see what interest rates do in the next couple of years. [00:35:37] Mitri Homsi: I’ve got some shareholders on the [00:35:38] Rick Pullum: line that I don’t think would like that very much. [00:35:42] Mitri Homsi: It’s my own meant some about the net investment income tax. Just so you guys get a little history of it. I’m sure you’re all aware of it. Um, But that was, you know, that was started back when Obama was in office, it was part of the affordable care act. [00:35:53] Mitri Homsi: And that was the first time it’s effectively a Medicare tax is really what it is. And that was the first time Medicare tax has been charged on any. Portfolio income, because generally Medicare is only on, you know, if you’re self-employed and you’re not an escort, um, you’re self-employed earnings and then, you know, your W2 wages, right? [00:36:13] Mitri Homsi: So that was the first time you’ve seen, word’s gone to, you know, investment income. And now what you’re seeing with this is they’re just further expanding the, the bucket, right? So it’s not necessarily that they’re changing the tax. They’re just changing the base, which is. You know, kinda surprising in the sense that, you know, they made history when they did it, when the affordable care act back when Obama was in office. [00:36:34] Mitri Homsi: And now you’re seeing, they’re taking another big step to effectively make it a sub make almost all business owners, subject to a, regardless if you’re an S-corp or not. Yeah. [00:36:44] David Witter: Yeah. And then you kind of speaking to the, the impact of going from 37, up to 43 for, you know, small businesses, uh, not just here in central Florida, but nationally, uh, they, they, a lot of times employ. [00:36:57] David Witter: Uh, employed people, right. And that they’ve got a substantial tax increase like that. How does that affect jobs? So, um, and those are, these are things that, uh, I don’t hear Congress speaking to very much. Well, I think, uh, Rick, why don’t we, do we have any Q and a, let’s see, it looks like we’re clear on that. [00:37:15] David Witter: So again, if you want to ask a question, jump on the chat box, put it in the Q and a we’ll keep working that. Um, I think we have time. Why don’t we go into the step up and call spaces? So Mitri, do you want to kind of talk them through the potential changes in the step up and cost basis? [00:37:31] Mitri Homsi: Yeah, definitely. So, um, so kind of under the current law, how it works is, you know, Whenever you pass away and that the death of an over, you know, you really look at it, you know, any non-retirement assets, you have a cost basis stepped up on the date of death. [00:37:47] Mitri Homsi: So effectively, you know, you avoid paying tax again on the appreciation of those assets, because really when you think about it, it’s, you’ve earned the income. You’ve paid the tax. At that point, you’ve invested and you’ve probably paid PACS to tax down the road. And now what’s happening is, you know, they don’t want to create an additional tax. [00:38:03] Mitri Homsi: So you’d step up the basis, um, to avoid any sort of, um, additional tax being paid, um, cause you’re a state spending. Correct. Um, so what an idea is now and possible change out there is that the cost base of non retirement assets, but carry over to the beneficiaries. So then really means I’ve been for sure it be subject to a capital gains tax upon the sale of appreciated assets they inherited. [00:38:27] Mitri Homsi: So really what you’re talking about is, you know, if, if there was a. Um, assets that you have in this passing on to the next generation, there’s, you know, they don’t get that increase in basis. They, that, that doesn’t occur. So then now they’d say it carries over and then now you’re subject to that tax. [00:38:43] David Witter: Yeah. [00:38:43] David Witter: And talk about it, an accounting nightmare too. Right? Sometimes it’s hard to know what the, what the basis is. And, um, that now this particular change was not in the house ways and means. Um, proposal, but, uh, in the handout that we put up there for you to download, it’s linked to an article straight from the wall street journal where there’s, uh, several, uh, senators that are tossing this around. [00:39:08] David Witter: And again, it’s just, it’s just ideas, right? So if they are proposing, they’re thinking about it, it might, you know, end up in the final bill. We don’t really. Um, in speaking of the final bill, we just got another cute, a question that came in. So it says when, when are these tax changes being voted on? Do you want to take that with Nutri? [00:39:28] David Witter: I can jump in [00:39:28] Mitri Homsi: there too. I’ll tell you. I have a crystal ball back there. We should work. Um, but then I’m still, currently what we’re saying is. You know, they’re right now with Congress, they’re trying to pass this through budget reconciliation. So, you know, you only need a simple majority in the Senate to do so. [00:39:44] Mitri Homsi: And so since the Senate split 50 50, The tie break goes to the vice-president. Um, who’s obviously a Democrat. So right now I see there’s some gridlock, there’s some issues, you know, really, uh, Joe matron out of West Virginia cinema out of Arizona there, but not fond of how much spending is going on so that I believe they’re kind of holding everything back. [00:40:05] Mitri Homsi: Um, but right now, what I’m S. We’re trying our best to hopefully we’ll see it, but I don’t think Congress even knows, um, some of these items they might pass, you know, in the next month or, you know, they might shoot for year end, but it’s, anybody’s real guest, but you know, this even could drag onto early next year. [00:40:22] Mitri Homsi: Cause um, you know, midterm elections, they’re not until November 20, 22. So there’s still some time there. Um, David, I know you saw a couple of our articles, so definitely speak to. [00:40:33] David Witter: Yeah, I kind of think of it as like a, I don’t know, a drama, this continuing, you know, unfolding, but, uh, you know, most recently within the last week or so you mentioned cinema out of Arizona, she said she didn’t like the idea of rate increases. [00:40:46] David Witter: Um, but then there was no statement at all from anybody in the last few weeks on what about on the estate tax law changes? It’s just been radio silent. So it’s still in the house ways and means for. But it’s not, uh, you know, been really been, um, handled or spoken to publicly as in negotiation, is it not? [00:41:04] David Witter: And the fear is as us, as professionals also for our clients is let’s say they come to some kind of agreement. They put it into place on December 15th. And it does include some of these pieces that we’ve talked about today. It just leaves a little time to move. So, um, who knows it’s still being negotiated. [00:41:23] David Witter: Um, uh, we got another comment here. It says December debt limit increased sneak in during the holidays, be prepared for changes. I I’m with you on that one. Um, there’s a, there’s a lot of, um, pressure building on that debt limit increase and, um, you know, to get that, that budget reconciliation bill done before. [00:41:41] David Witter: That that that ceiling limit hits. And the reason for that is the Democrats are talking about including the debt limit increase within the budget reconciliation. Um, so all you can do to stay tuned, you can count on us. Like we’ll, we’ll push this out as quickly as we can, once we know from which. And we’ll do some kind of a format like this, as well as being communication with you in other ways. [00:42:02] David Witter: So, uh, Rick, I’m gonna come back to you and hit you with a question. So also kind of what they’re negotiating and kind of, uh, proposing is some like reporting from banks to the IRS. Uh, fill us in on that. [00:42:17] Rick Pullum: Yes, not very happy. Um, to start, um, something that’s buried in there that, you know, folks are worried about their taxes going up and, uh, all the different things that we’ve been speaking about that are, that are in the bill. [00:42:31] Rick Pullum: What’s, hasn’t caught quite as much press. Is that, um, one of the, actually it has thankfully over the last couple of weeks, but not originally, they had snuck in originally a requirement that. Um, report to the IRS on any transaction over $600 coming through your bank account. Um, so they’ve since, uh, they’ve since raised that to $10,000, um, you’ve got Janet Yellen out there saying that it, it it’s necessary for them to be able to monitor this and ensure that people aren’t cheating on their taxes. [00:43:10] Rick Pullum: Obviously, we’ve got a number of bank shareholders on this, on this call. And those who have seen my email know that we’ve been making a call to our folks to reach out to their representative on this provision, because this will cost the entire. Banking system, not just community banks like ourselves, but larger institutions as well. [00:43:34] Rick Pullum: And in order to amount of money to comply with, um, they’ll have to be massive overhauls and how we report information. Um, and besides the cost of compliance, um, my personal opinion is it’s an invasion of privacy. Um, it’s kind of like if you remember the, um, Patriot act, um, that went into place, required banks to report on certain transactions on it’s called bank secrecy act and anti-money money laundering act, things of that nature. [00:44:06] Rick Pullum: We have systems in place to do that, but a lot of those programs were intended to be temporary. And generally when regulation rolls out, uh, it’s very difficult to roll it back. And so, um, both due to the cost of that, um, from a banking standpoint and also just the, the privacy, our position as bankers is if the IRS needs to monitor people more closely, they should hire more auditors and not make the banks. [00:44:33] Rick Pullum: The police. Um, for them. So it’s really close to my heart, obviously, as one of the big issues in this bill. So [00:44:43] David Witter: what would you rate? What would you encourage? Uh, not only just bank investors, but anybody, I think all of us on the call be effected by this. What do you encourage them to do to hopefully have them change their [00:44:53] Rick Pullum: minds? [00:44:55] Rick Pullum: Well, we are fairly well-represented. Um, Brian, the, both the Florida bankers association, as well as the American bankers association, I’ve been on multiple calls, zoom calls with elected officials and regulators, um, through those organizations in the last couple of weeks, sort of fighting over this and making our voices heard. [00:45:14] Rick Pullum: Uh, if you are interested in, um, you know, having a say in this or anything else in this legislation that we’ve talked about, I think it’s really important as David mentioned at the beginning of the call to reach out to your representative. Um, thankfully even the three, uh, democratic, uh, representatives in Florida, uh, I know have come out of posts to the bank reporting requirement. [00:45:40] Rick Pullum: I’m not sure where they are on all the various preventive. Um, but you can see on your screen we’ve, uh, we’ve gone ahead and put together the contact information. I found that the emails don’t often get returned, phone calls. Uh, a lot of times you can get at least an aid and make your voice heard on this. [00:45:59] Rick Pullum: So I think that’s the primary call to action before some of this stuff goes into law that at least they know what their constituents think about it. So [00:46:08] David Witter: that’s a great point. And I’m tellin dropped into the chat. Um, the contact information. So if you’re a savvy zoom user, what you can do in the chat box is just kind of copy and paste. [00:46:21] David Witter: So there’s the link to their contact page and then also the phone numbers for each of these representatives and, um, to help those out if you’re not really sure exactly who your representative is, we have a little map here. So if you’re in Seminole and, uh, you know, someone Warren’s county comes to the. [00:46:40] David Witter: North, uh, east there as representative Murphy, I’m more over to the west would be Demings and then to the Southeast would be, um, representative soda. So that just gives you a little at GA geography. If you’re trying to figure out who your congressional leader is. So very cool. Well, let’s check in, in our Q and a, it looks like we got some activity going on. [00:47:03] David Witter: Um, let’s see here. First question. Is, has anything been said. About raising or lowering the $15,000 annual gift exemption amount for gifting each year. Uh Mitri I I’ve seen a little bit on that. Uh, but before I speak to, have you seen anything on the $15,000? [00:47:21] Mitri Homsi: No on that proposal. I haven’t seen much of anything that they want to change. [00:47:24] Mitri Homsi: I think they plan on just keep it, keeping it index for inflation. Um, but I haven’t seen anything from the front of raising or lowering it from a, um, uh, on those type of legislative proposal other than just a standard index index for inflation. [00:47:39] David Witter: Yeah, that’s great. That’s the same thing. That’s the same thing I’m reading is just it’ll maintain continuation of index. [00:47:45] David Witter: So maybe in a year or two, it’ll be 30,000. Send it just 15. [00:47:49] Mitri Homsi: Yeah. Hopefully it’s at the same rate. That’s a social security, social security limit on wages increases, right? Yeah. [00:47:57] Rick Pullum: Isn’t that bad? [00:48:00] David Witter: Sorry. I shouldn’t poke fun at that. Or have jokes with that. Um, so another question is if a bank with a state chartered bank and not federal style, a break, I think this was coming to you. Did it have to comply with the IRS or. Um, so do you know of anything like differences for stink state charter versus federal? [00:48:22] Rick Pullum: So, um, a state chartered banks, such as ourselves, we’re regulated by both the FDI, see the federal deposit insurance corporation and the. Uh, obviously the, the office of the control, the currency regulates nationally chartered banks. Unfortunately when rules like this come out, generally speaking, they have inner agency, uh, requirements. [00:48:46] Rick Pullum: And so something passed by Congress is going to bleed into, um, all of those agencies to regulate. So, unfortunately, I don’t think we escape if that happens. [00:49:00] David Witter: Great. Another question is what defines a transaction with this proposal to monitor drat within the banking institutions? Is it withdrawals? Is it deposits? [00:49:11] David Witter: Is it both? [00:49:13] Rick Pullum: I believe that it’s both. Um, unfortunately one of the issues with this provision is the lack of clarity around it. So, um, when you, when, when something sounds like a good idea and you stick it in a bill like this. It’s up to the regulators to implement it. And, um, I’m not sure that I even understand the, uh, the intention at this point, um, as to the level of detail that they’re going to want. [00:49:39] Rick Pullum: Um, I’ve heard, um, some folks have interpreted it that it’s more of a block of information that they want to see versus each individual transaction. But, um, I think those questions remain to be answered. I’m hoping we never have to. [00:49:57] David Witter: No in and in that, um, article that I popped up here, this is for market MarketWatch. [00:50:02] David Witter: We can put the link in the chat, but it says, this is quote from the article banks required to report to this should say IRS, not IRA, but IRS customers aggregate inflow and outflow above 10,000 annually. That’s everybody. In fact, one of the senators even said the average American runs 61,000 visitor accounts. [00:50:21] David Witter: Cause that’s the median income for. So I think this is a, maybe it is blocked. Data is not necessarily connected to a customer, but I think what’s behind all this, uh, in terms of the reporting is that, um, those in Congress, uh, understand that if they’re really going to get tax revenue to support this kind of spending, they got abroad. [00:50:43] David Witter: Um, you know, politically at, um, uh, how does it say it’s, it’s attractive to talk only about hitting these people with these super high incomes, but, uh, in order to really get the revenue in, they got to go broad on the base. And so this I think is kind of aimed at, I dunno, people that accept Venmo payments, and they’re not reporting that as income, they can have a good methodical way of capturing that then that can not increase. [00:51:06] David Witter: Yeah, [00:51:06] Mitri Homsi: this, this reminds me a lot of, um, just a couple of years ago, they changed the rules for 10 99 reporting because they want to make sure everybody was reporting. You know, if they’ve received any compensation, you know, as an independent contractor, above $600, but the rules were so onerous that they had to move it. [00:51:23] Mitri Homsi: They had to limit it. It was just too much of a burden that there wasn’t enough labor to meet the demands. And you know, Rick’s already mentioned that he doesn’t want it. I’m sure it’s going to put a punch on everything. So really it’s. Um, another way to try to generate revenue and to make sure that just like David said, the broader base they’re reporting all of their income. [00:51:43] Mitri Homsi: Cause now we’re, as you know, electronic payments become a lot easier to pay one another. It’s harder for really the IRS to track it or people to report it. If they’re not diligent [00:51:56] David Witter: and spot on. And, um, let’s do one last question here. I saw one for rich. It says, how about charitable contributions being changed? [00:52:06] David Witter: Um, Matria I have not seen anything in the proposals about changing that. Uh, do you have anything to report there? [00:52:13] Mitri Homsi: Yeah. So nothing is changed and just kind of your standard, uh, you know, charitable donations. They’re, they’re, they’re still keeping in the same rules and regulations. Um, I think the only thing I’ve seen commented on there, um, is sometimes people see it about these, uh, Qualified conservation easements. [00:52:30] Mitri Homsi: Um, and that’s just something where it’s been syndicated, where people will find that they’ll syndicate, uh, effectively manufacturer charitable donations, um, where somebody will find a piece of property. They’ll say, you know, we want to preserve the land. Um, you know, to keep it at it’s, you know, natural beauty really. [00:52:48] Mitri Homsi: And so that the government privatizing, you know, conservation of, of land, um, they’ve limited. They’re going to limit the proposals. They’re going to limit the deduction because currently it’s, when you donate this land, you get its deduction for its highest and best use. So if you have a piece of property, that’s right on a piece of land, that’s right on the coast and it’s near, you know, near the beach. [00:53:09] Mitri Homsi: Well, it’s highest and best use could be a hotel, you know, resort or what have you. So it’s pretty significant and it’s, it’s been abused to a certain extent. Um, and now what they’re trying to do is limit it to effectively, whatever your investment is, that’s where your donation would be. So it kind of strips away that highest and best use. [00:53:25] Mitri Homsi: Um, so that’s just a very, very specific thing, but I haven’t seen much else really commented on a terrible. Or drove a pollination. Sorry. [00:53:35] David Witter: Yeah, completely agree. If anything, um, what we’re seeing is if some of this has passed, it makes charitable trust and charitable gifts that much more attractive, especially if you have higher rates, the one like the step up and cost basis, if that’s lost, uh, that’s even maybe a more compelling reason for taking appreciated assets, dropping them into a charitable trust, getting some income now, and then give it to your charity at passing or flipping. [00:54:00] David Witter: Um, so I think it just amplifies then the, um, the attractiveness of charitable giving, if these rates go even higher, um, and they take away some of the cost basis step up. So I think your matrix, well, I think, uh, that should be a wrap for today. So, um, Rick, thank you for hosting us and, uh, doing the Q and a here and moderating and Mitri thank you for your wisdom. [00:54:26] David Witter: And, um, I’ll just close it with this, our contact info. Um, what we’re going to do for all the registrants, uh, and you, you today to join us, we’ll send out a follow-up email. It’ll have how to contact everybody on the panel today. So, um, Rick, we’ll be sending this out to contact him, and then we’ll also be sending out the contact for Mitri and be able to be in communication with him and then same thing for, for myself. [00:54:50] David Witter: So be looking for that up email in the follow-up email, it will have, um, the link to the recording. So if you wanted to review some of that. Um, or if you want to pass that along to a colleague or a family member or a friend you can do so, and it also has our contact information and, um, made sure I think, uh, speak for, for you as well. [00:55:08] David Witter: We’re, we’re here to help. So if you just want to schedule a 15 minute call with us, please do so that’s what we’re here for. I’m sure many of you will have some follow-up questions, anything else, Rick or Dmitri, [00:55:20] Rick Pullum: and thanks again, everyone for joining and, uh, appreciate the opportunity. And hopefully we were able to add some value today. [00:55:26] Rick Pullum: So thank you so [00:55:27] Mitri Homsi: much. And I like what you thank everybody. And, uh, we’ll keep you posted as this progresses. It’s, you know, we’re watching it diligently and hopefully, um, you know, we’ll have some further information soon. [00:55:40] David Witter: Yep. We’re on it. All right. Thank you all. Thank [00:55:44] Mitri Homsi: you. Thanks. [00:55:45] David Witter: Mitri. Thanks [00:55:45] Mitri Homsi: Rick. Bye-bye. [00:55:47] David Witter: Bye. See y’all later.