Borrow Like This, And Your Money Literally Never Stops Growing

追加: 2026-05-11

[00:00:00]The title of this video is true. There are investments the government will literally pay you to make, but almost nobody knows how to find them because they're not advertised. They're buried in the tax law. You think the IRS just wants your money? No. They want control.

[00:00:18]And if you follow their rules, they'll fund part of your wealth. So why would the IRS ever pay anyone to invest?

[00:00:26]What's the government actually trying to accomplish when it writes these tax rules? The government has figured out, look, we can just let people go along and pay their taxes, which is what most people do. Employees, business owners, investors, I'm just going to go I'm going to head down and I'm going to go just pay my taxes. And guess what?

[00:00:45]They're okay with that. The IRS is just fine with that. There's another choice though once you understand the rules.

[00:00:51]And the other choice is, well, what if I do what the government wants me to do?

[00:00:55]Are there incentives to do things and invest my money the way they want me to and I can actually get the government to pay for part of that investment? And the answer is absolutely. In fact, I would tell you that 98% of the tax law is a roadmap to reducing your taxes. It's a series of incentives for business owners, investors that agree to take those steps that the government wants them to take in order to increase employment, in order to build technology, in order to build housing, in order to develop new energy, in order to produce food. All of these things the government wants us to do. They need us to do it. The government, believe it or not, actually knows they're not good at doing it. They go, "Wait a minute. It's a better investment for us to reduce your taxes than it is for us to take your taxes because we'll actually in the end get more of what we want and you'll get more of what you want. It is truly a win-win tax strategy. Now, most business owners think the tax code is about punishment or just compliance. And now, is that just wrong or are they only seeing one side of the system? Well, I think they're seeing a very limited piece of the system. Yes, the government does want you to comply. And good news is 85% of Americans comply quite well with the tax system. But oh, but we want to punish you if you do something wrong.

[00:02:14]Yes, there are punishments if you don't comply. But that's not all it is. Okay, that mindset is exactly what keeps most high income earners broke because the people who actually understand the tax code, they're not evading taxes. They're not just avoiding taxes. They're using it to multiply wealth. So why is real estate then one of the most tax favored investments in the entire system? Well, first of all, this is an incentive to do things government wants done. Definitely the government wants housing built.

[00:02:45]We've had housing shortages for years and years. So there's definitely that incentive. But what about other buildings? Does the government actually really want more convenience stores built? Yeah, they actually do. There's actually more tax benefit in depreciation on a convenience store than there is on a apartment building. So clearly that's an incentive. What about car wash? They really want car wash.

[00:03:06]Well, yeah. There's actually more depreciation, more tax benefit from a car wash than there is from a duplex.

[00:03:12]Okay. So they do want all real estate built. They know that real estate is fundamental to the integrity of the economy. Now, here's the other reason though. What really makes real estate a great tax benefit is not just that we have this great tax benefit called depreciation. That's that's the deduction for the wear and tear on the real estate. Okay? Even though the real estate may go up in value, we still get a deduction at uh for the wear and tear.

[00:03:37]And it's a pretty big one. In fact, it's when we count what we call bonus depreciation, it can be as much as 20 to 30% of the cost of the property in the first year. Yeah, that's right. You buy a million dollar uh forplex, you could get a $200 to $300,000 deduction in year one. Okay. Now, here's where the magic lies. But the magic in real estate from a tax standpoint and return on investment is debt. That's right. It's debt. Because all right, let's say I have $200,000. Well, I can go buy $200,000 single family home somewhere, okay, that I can rent, condo or whatever, and I'll rent that out. I'll get a deduction equal to about 20 to 30% that depreciation deduction first year, okay? So, I could get anywhere from 40 to $60,000 of a deduction. Let's say I go to the bank instead and say, "Hey, I don't want to buy this house, $200,000 house. I want to buy that $1 million forplex. And the bank says, "Sure, here you go. We'll give you 80% of the money." Now, does the bank get 80% of the tax the tax loss, the depreciation?

[00:04:34]No. Bank gets none of it. You get 100%.

[00:04:36]So, instead of getting a 40 to $60,000 deduction, you get a $200 to $300,000 deduction. That's leveraging the tax benefit. So, you're not just leveraging your return on investment, you're leveraging your tax benefit. So, you know, most people think depreciation, it's not that much. Like, it's not worth it. It's just a small yearly write-off.

[00:04:55]What they're missing is is that how you depreciate depends on what you buy. Now, if you think when you buy a piece of real estate that all you buy is the building and the land, well, not much thought has gone into that, has it?

[00:05:07]Let's think about it. Surely, you bought all the floor coverings and the ceiling fans and all of the all all the wiring and all of the appliances. You bought all of and the cabinets, all of that.

[00:05:17]You bought that, too, right? Not just the building. Well, yeah, but that can't be much. No, it's t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t typically about 20% of the project is in those items. Now, I know this because I've been doing this for many many many many many years and typically that's the case. Well, what about are there and and by the way, why is that important? First of all, you get of that portion that applies to those um contents of the building, you're going to get on normally you would get about 20% a year of that cost. So, if it's, let's say it's this million-doll forplex and and let's say $200,000 is in these cabinets and everything. Well, okay. So, I should get $40,000 a year in deduction. Okay. Except for bonus depreciation, which says that anything that has that isn't going to last more than 20 years, we get deducted in one year. So, instead of taking that $40,000 over a year for 5 years, we get $200,000 in year one. Well, that massively increases your return on investment. you have there's so much less money you have to put into taxes and instead you could put it into other investments. Okay, so remember that leveraging depreciation is such a huge benefit of real estate. Now imagine getting paid every month while showing the IRS that you actually lost money on paper. Now that is not necessarily aggressive. These types of things are baked into the code. So let's look at energy. Now, why does the government give such aggressive write-offs and aggressive deductions to people who invest in oil, gas, and renewable energy? Well, think about it.

[00:06:43]Energy is what makes this country run.

[00:06:46]And the whole thing is based on energy.

[00:06:48]Whether it's gas at the fuel pump, whether it's uh natural gas uh to power the electricity grid, to run the factory, doesn't matter. We need energy.

[00:06:57]And frankly, the government has said, "Look, there are different types of energy. We want we want all types of energy. Now different administrations want more of one than another. Previous administration wanted a lot of renewable energy. Current administration wants fossil fuel energy. Great. So here's the thing though. It takes a lot of money and it there is risk associated with developing energy or finding energy or drilling for energy. There is risk. And so in order to compensate for that risk, the government says look we'll give you a huge write off the first year. I mean, for example, maybe 80% of your investment, as much as 80% of your investment, we'll give you that write off the first year, and we may give you the other 20% the second year. Well, I'll tell you what's even better. In oil, not only do you get those write-offs in the first couple of years, but when the money starts coming in, you're only taxed on 85% of it. So, you get a write off going in, but you only pay tax on part of it coming out. That is different from any other investment type. That's how much that the government wants to incentivize drilling for oil or drilling for gas. And then what about renewable energy? Well, there's still we have some tax credits.

[00:08:04]So, not only do we get this a big deduction for the cost of it, but we also get some credits for it. So, renewable energy can have huge tax benefits to it. Again, why? Well, there's some risk, but really in that case with renewable, it's because it's new enough and it doesn't produce a high enough rate of return that the government feels like, hey, we need to get we need to pay for a good portion of this in order for it to happen. Now, some people fear, some people hear the idea of an 80% write off in year 1 and think, "Wow, that's way too good to be true." So, is it actually that generous when you invest in oil and gas drilling sites? And the answer is yes. It actually is. and it has been for many many many years. In fact, my entire career that has been the case and that's a very long time. So, the government literally gives what's called a an intangible drilling cost deduction. And here's what makes it so exciting is that you can invest at the end of the year.

[00:08:59]Let's say you you do some plan you you find out you've got a big income coming in towards the end of the year. You go, "Hey, I'd sure like to reduce that those taxes and I really like the idea of investing in an oil well." Okay. Well, I can do that and invest in December and I don't have to drill until March. So, it gives the it gives the drilling team time. Now, they already have to have the lease. They already have to have things prepared, but it gives them time to actually start drilling and and incur incur those costs uh between when they get in the investment and when they actually use all of the money. So, it doesn't have to be used immediately like it does for real estate. So, this is the part that separates the smart from the wealthy. Most investors chase returns.

[00:09:42]The wealthy chase leverage and tax breaks are leverage. In fact, I'm going to give you a little formula that this is actually how you can tell how tax benefits work. If you were to not have any tax benefits, let's say you just invested in a mutual fund and let's say you got 7% a year, then over 10 years, you should double your money. So, let's say that means if I have $2 and then I can double it over 10 years. So 2 plus 2 basically equals four. Now let's say I add debt, which is what what again the greatest benefit of real estate. I go add debt to that. Now I'm using somebody else's money, the banks. So I'm making money on my money and I'm also making money on their money. So now it's not 2 plus 2 equals 4. Now it's 2 plus 2= 8, right? So So instead of doubling my money in 10 years, I quadruple my money in 10 years. Now what if I get take all the tax benefits? I'm in a high bracket because I make I make a good income. I take all the tax benefits. Now I've got the debt to get to 2 plus 2= 8. But adding the tax benefits, 2 plus 2 equals 16. I don't multiply by two. I don't multiply by four. I multiply by 8. So 2+ 2 equ= 16. That is what we're chasing when we chase the leverage of the tax system. Will oil and gas always be a good investment? I would guess probably not. Is it a good investment? I'm going no. There's no investment that is by definition good. Any investment, it depends on the investor, it depends on the team, it depends on the market. So there's a lot of it depends whether it becomes a successful investment. But there's no good and bad investment in my opinion. So if you want to understand not just the future of energy, but the specific tax tools the government has put built to encourage Americans to invest in domestic oil and gas production, I did put together a free resource called the 30-day tax cut playbook. It's in the description. Grab it and let's keep going. How does owning farmland or agreeing not to develop a piece of land create a real tax benefit?

[00:11:42]So, here's two interesting questions.

[00:11:44]They go, "Wait a minute. I'm going to develop I can I can own the farmland and farm it or I can agree not to develop it. I can get a tax benefit either way."

[00:11:52]The answer is yes. So, let's start with I own own the farmland. I decide I'm going to I I'll give you a perfect example. I have a friend who uh sold his business for a bunch of money and decided he wanted to be a rancher and he bought a herd of Wu cattle. Okay. So when he bought that herd of wu cattle, get any tax benefit for it? Absolutely.

[00:12:15]Got to deduct 100% of the cost of those wu cattle. What about their feed? What about taking care of them? What about the farm hands? 100% deductible. What about the buildings to house them?

[00:12:25]Again, big deductions for those. So any kind type of agriculture, the most important thing that the government incentivizes is food. It is the greatest tax benefit on the planet is food.

[00:12:39]Growing food and raising animals for food. The reason being you don't want the people to go hungry. If they do, they will come after you. Okay? That's where revolutions come from. So you want to make sure that they're taken care of.

[00:12:51]So that the amount of tax benefits for farmland, wineries, cattle ranches, any type of agriculture are truly hard to believe. I actually have never known and I've had many clients in the agriculture business. I've never known one of them to pay much in tax. Most of them pay no tax at all. Say, "Really? Is that possible?" It's not possible. It happens. I mean, that's common. Okay?

[00:13:17]So, we don't do it just for the tax benefit, right? This is not just something billionaires do to dodge taxes. Average investors can actually use the farm in incentives. You could have a plot of land that you farm as long as you farm it commercially, right?

[00:13:32]And it's not just a hobby. Now, what if you decide, I'm not going to farm it. I I'll tell you what. I have this beautiful place of piece of land. It's got um hundreds of acres of forest and it surrounds a lake. I don't want it developed at all. I'm just going to actually donate an easement con called conservation easement to the local conservation group and it can never ever be developed forever. Okay, what's the key word there? Donate. I'm donating to a charitable a qualified charity which is the conservation foundation. I'm donating to a qualified charity. What am I donating? Well, I'm really donating the difference between the value of it being developed and the value of it never being developed. I'll give you an example. years ago had a client in with a with a ranch in Wyoming and it was beautiful. I mean literally this is river runs through it beautiful and there literally was a river running through it and he decided it was about 100 acres. He decided I don't ever want this developed but he was a very astute uh business owner and uh tax client of mine and he goes is there a way to make sure it never gets developed and I get a tax benefit. I said yeah it's called the conservation easement. So we actually had the property professionals do the conservation easement. They appraised the difference between what if I developed this. In other words, he could have taken that 100 acres and he could have broke broken it down into 1acre lots. He'd have made a lot of money.

[00:14:57]He'd have made a very a really a lot of money if he'd done that. Instead, he said, I'm not going to do that. And instead of doing that, I'm going to make sure it's never developed. So therefore, it was a donation. And that charitable donation reduced his income taxes. So, can real people, not just billionaires, do this? Absolutely. This was a business owner that just happened to be a really good and successful business owner and he wanted to do something that he thought was good. He thought was good for the environment. He thought it uh it was good for everybody. And the government agreed with him, said, "We will give you that deduction." The smart investors, see, they're not flipping properties. They're being paid to leave it alone. So, why does a business give you more control over taxes than almost any other strategy? So, I've traveled the world with Robert Kiasaki and I've spoken in 30 different countries. Every time I go, Robert says, "Make sure you know what you're talking about about taxes with that country." So, I always study the tax law for that country ahead of time. Now, I don't become an expert in it, but I know it enough to find out, hey, compared to the US, what are some of the differences? And I'll tell you what's shocking. In every country I've been to, 30 of them, for those that have income taxes, because not all of them do, for those that have income taxes, every one of them incentivized business ownership more than any other investment. They wanted small businesses. They wanted businesses to grow. They wanted the employment. They wanted the the economic activity that comes from uh new businesses. So the government is just saying we want you to start a business. Now, I actually did a test once. I said, "Well, what if I just start a really small business?" Like, like, you know, I I'm just doing a little business on the side, right? How much would the government pay me to start that business? Well, I actually calculated it and I calculated all the expenses of starting that business. I'm going to start at my home, right? I'm going to take one of my the rooms in my home. I'm going to set it aside for that business. And so, I'm going to have a home office. I calculated that the tax benefits for starting that business were actually about $8,000 even though the cost to starting the business was only five. So here is an example where the government literally would pay you to start a business. Now I can show you how to do that all day long. But what happens is is that a business gives you more control over your taxes because any money you put back into your business reduces the tax for the income from your business. Right? Because here's the thing, business owners pay tax on their net income, net of expenses, whereas employees pay tax on their gross income before expenses when you rather pay tax after expenses. So if you're putting your money back in your business to grow the business, that incremental growth, that's not taxed. Right? Now, it may be taxed when you sell the business. May or may not, but it may be tax when you sell the business, but it's not taxed as it's growing, right? So I don't have to pay tax on the income that I use to grow the business. So I can completely control that. I can control the time I I spend the money. I control control when I can have complete control over my tax situation with a business. In fact, it is my belief everybody should have a business. Even if it's a small one, can't be a hobby. Needs to be a business. But I'll tell you what, it'll produce more cash in your pocket and give you much better tax benefits. So, some people think you only get tax benefits if you make millions. But there are advantages even at the start of a business. For example, we get startup expenses. So, if we spend more less than $5,000 to start up our business, we get deduct all of those expenses even though we're not even business yet. Those are called startup expenses. Then we get expenses once we start it for our home office. What does that include? Well, that includes a portion of our maintenance, includes a portion of our utilities, includes a portion of our mortgage, it includes a portion of our taxes, it includes a portion of our repairs. so much that it includes and I get all these tax benefits for things I'm already I'm going to spend money on that anyway. So, I'm just now I'm changing my tax by changing my facts and now I have a business. I pay less tax.

[00:19:06]See, the IRS doesn't care how small your business is. They care how you structured it. And if you get that wrong, you're leaking money every month.

[00:19:16]Now, we have a couple of very cool tax strategies that very few people know about. And one of them is called opportunity zones. And what's cool about opportunity zones is it doesn't matter where the capital gain came from, you can use opportunity zones. So, what is an opportunity zone? Opportunity zone is simply an area of your town or a town that is needs to be developed and the government has set this aside as opportunity zone. The IRS Congress has said, "Look, if you develop property in that opportunity zone, we're going to do two things for you." The first is you're going to be able to take capital gain, and it can be from Bitcoin, gold, silver, um, your business, any capital gain, stocks. We're you can take that capital gain and roll it into invest into the opportunity zone. And for 5 years, you won't pay your capital gains tax. At the end of five years, you'll only pay 90% of your capital gains tax.

[00:20:16]And then if you own the project for 10 years, no tax at all when you sell the project. So this is a really cool opportunity to roll it over into a really great project, not pay tax in all your capital gains and only do that in 5 years and then on the project itself, never pay tax. I think opportunity zones are one of the best tax incentives ever placed into the Internal Revenue Code.

[00:20:40]Now, a lot of people assume opportunity zone funds are risky or complex. But the reality is what's risky is not knowing what you're doing. Okay, that's where the risk comes in. So, would I invest in an opportunity zone where I didn't understand the investment? No. But I wouldn't invest anywhere that I didn't understand the investment. Is it a little more risk than I invest in a in a developed area? Absolutely. It's more risk. That's why you're getting the tax benefit, right? If you if if you go build a class A apartment building in uh you know in in downtown where you know there's other or in places where there's other class A apartment buildings, no risk. But if you go into a pre-developed area, let's say, and it doesn't have to be a horrible area. It's just one that maybe is on the edge of development, but it just has has kind of languished for several years. And they call it an opportunity zone. Now you do that and you get these great tax benefits. So look at them. If a if you have a big capital gain, that's when you want to look at opportunity zones. And particularly if you have big capital gain and you can't make the investment by the end of the year, it's okay because you can set up an opportunity zone fund in about five minutes. You can set it up and then you've got many many months. Okay? It's a very long period of time. It's literally a couple of years before you have to deploy all those funds. All right? So that gives you some time and that's where opportunity zones and particularly where it's like it's not from real estate. So in real estate we can do a 1031 exchange and defer the gain but or postpone to eliminate the gain but if it's let's say capital gain from cryptocurrency or it's capital gain especially from gold and silver which have a high very high capital gains tax.

[00:22:20]If we can put that into an opportunity zone okay now wow that really makes a lot of sense. Most financial adviserss will never tell you this. They'll show you charts, past performance, and diversification strategies, but they will never tell you what the IRS actually takes from each investment that you own. I'm Tom Wright, CPA and bestselling author of Taxfree Wealth.

[00:22:41]And after decades of working with the wealthiest people in the world, I can tell you one thing with certainty. The wealthy do not just pick good investments. They pick good investments with good tax treatment. Today, I'm going to show you the investments that quietly destroy your wealth through taxes. why the wealthy avoid them and what they use instead. Most people watching this probably have a financial adviser who put them in the exact investments that I'm about to criticize.

[00:23:08]Is the adviser wrong or just not thinking about taxes? I think the adviser is thinking about themselves and what is good for the adviser. I remember a story a number of years ago. I was talking to a buddy of mine who used to work for one of the big financial planning companies and he said that they had a saying in their office that any investment could be good for the client, could be good for the financial adviser or could be good for the financial advisory firm. And two out of three ain't bad. So be careful. Always follow the money. Who's getting the benefit of that investment advice? Is it you or is it your financial adviser? So, here's one thing I hear all the time. Savings account and I have CDs. They're earning 4%. That's basically free money. What's the problem? Well, there's a couple of problems. Yes, it sounds safe. No risk, guaranteed return. That's good. But it's one of the least efficient investments you can own. First of all, interest income from savings accounts and CDs is tax at ordinary income rates up to 37% in 2026. A sevenf figureure business owner earning 4% on $500,000 in a savings account earns $20,000 but pays up to $7,400 in taxes on it leaving a real return of 2.5% or less because the before tax return is not what's important. It's the after tax return. So not only that, but when they put the money in, they got no tax benefit. So, they used after tax money to fund an investment to produce income subject to high tax rates. Now, if that sounds bad to you, I'm glad. It should sound bad to you. Okay. Well, here's another one. I trade stocks actively and done well. Why is that a tax problem? Well, this is the one that hits a lot of confident investors. So, let's look what short-term trading actually costs in taxes and why the wealthy rarely do it.

[00:25:02]First of all, any stock held under 12 months is a short-term capital gain.

[00:25:06]It's taxed at ordinary income rates up to 37% and actually that can go up to 40.8% because of the net investment income tax. Long-term capital gains rates are 20%. But short-term rates for the same person, 37% regular tax plus the net investment income tax, it's almost double. Now, long-term capital gains thresholds, the 20% rate kicks in, not until $545,000 for single and $613,000 for married filing jointly. And so, you don't even get that 20% bracket. You're in a 15% bracket below that. So, remember, every winning trade that's held under a year is taxed the same as a paycheck. Once again, every winning trade held under a year is taxed the same as a paycheck.

[00:25:52]So, you may be thinking, "Hey, I'm I did pretty well last year. I did 10%." But you really didn't. You did maybe 6%.

[00:26:00]Maybe less than that when you add state taxes in. Now, what about mutual funds?

[00:26:04]Every retirement guide recommends them.

[00:26:06]Okay. Well, mutual funds, I think they're the worst, and for a number of reasons, they're the worst. First of all, you can actually pay tax on a mutual fund when the mutual fund loses money because of when you enter and exit the mutual fund. So, that can be a real problem. you lost money and you paid tax as if you had gains because the gains were based on when the mutual fund bought them, not when you came into the mutual fund. So, they could show a gain where you actually your value actually went down. So, that's the first thing that's wrong. Second of all, mutual funds, there's pretty good documentation that shows that the mutual fund owner, not you, the person sponsoring the mutual fund, the company sponsoring the mutual fund typically gets because of hidden fees about 80% of the gains. Now, that's a no-load mutual fund. Okay? So, no low don't mean that doesn't mean no cost. Third, remember mutual funds distribute all the realized capital gains to the shareholders annually, even if the investor never sold a single share. So even though you didn't sell anything, you still pay tax on the gains. So on top of that, okay, well, so let's say you got capital gains. It could be short-term or long-term. You don't have control over that, whether it's short-term or long-term capital gain. Now, ETFs largely avoid this problem because of how they're structured, which is why the wealthy tend towards ETFs over mutual funds. And people who understand, you know, if you're going to do some kind of diversified fund, wiser investors tend to end up with ETFs. What about collectibles? I've heard art and watches are great store value. So, from a tax perspective, they can be challenging even when they perform well. So, remember long-term capital gains on collectibles are taxed at 28%. That includes gold and silver bullion, by the way, compared to 20% maximum for stocks.

[00:27:51]This includes art, antiques, wine, stamps, coins, precious metals, gems, and NFTts. Add the 3.8% 8% net investment income tax for high earners and total tax on collectibles can reach 31.8% federal income tax without even taking into account state income tax and short-term collectible gains of course are taxes ordinary income at 37% plus the net investment income tax. And don't forget gold and silver bullion fall under collectibles. That means that if you own gold and silver then that's taxed at 28% not 20%. If you want to see what the government wants you to invest in and how the wealthy take advantage of that, watch the video on the screen here. There's a lot going on in the world right now. And most of these conflicts impact the prices of oil and gas. I'm Tom Wright, CPA and bestselling author of Taxfree Wealth. And today I want to have a real conversation about where oil and gas is going, what that means for the American economy, and what that means for your money and your taxes. So let's look at the big picture where we stand in the global energy landscape uh heading in 2026. First of all, we are the largest oil and gas producer. We are energy independent, so to speak. But we'll talk about that because that's not what it seems to be.

[00:29:06]It it doesn't mean we don't pay world prices. It means that we can survive on our own oil. But remember, oil is fungeible. It it's going to be sold to the highest bidder. So that's where we are. 2026 we produce about 13.5 million according to my uh research 13 uh million dollar barrels barrels per day and we will through 2026 maybe a little bit less than 2025 but pretty close natural gas on the other hand we're by far the biggest producer I remember back in the 80s when I started my career gas was a big deal and farmers all in the west Colorado Utah they were discovering huge gas wells, not oil wells, natural gas. But then gas prices plummeted and they had to plug those wells. So they literally capped the wells. So we have a ton of natural gas. And according to my research, we're projecting about 109 billion cubic feet per day. Think about that. 109 billion cubic feet per day.

[00:30:09]And last year was a record of 107 billion cubic feet. So here we are both the largest oil producer and by far the largest exporter of natural gas.

[00:30:20]Typically if you see LNG that's liqufied natural gas that so that we we compress it so that it becomes gets into a liquid form and then we ship it in liquid form to ship natural gas as gas. You need a pipeline. So you can't ship it in a in a tanker. It would take a tanker the the size of the ocean. So here we are. The Iran wars still going on. Ceasefire but still going on. the straighter formulas still pretty much shut off and we've got oil prices in the $100 a barrel range.

[00:30:50]Okay, where not too long ago they were at $60 a barrel. Actually, only a few years ago they were at $30 a barrel which you can't even make money in the US on $30 a barrel. So seriously only six months ago we were $60 to $70 a barrel 60$60 60ish dollars a barrel. So what does it what does it mean? Well, first of all, remember that, you know, there the reason I'm talking about it is that a lot of people want to invest in oil and gas because of the tax benefits.

[00:31:16]And we'll talk about the tax benefits, but then they forget that the price of oil has a big impact on how your investment does. So, right now, everybody's talking about oil and gas. I mean, like, nobody's talking about real estate anymore. They're just talking about oil and gas. I'm going to get into oil and gas. Okay. Well, let's say the war ends and the Iranians just open up the straighter hormone. some somehow and you know don't charge an arm and a leg for going through it. You know what happens? Does it come right back down?

[00:31:42]And it might it could come right back down. So that's how we need we need to think about this as while we have the energy we need, our sellers are not going to sell it just to us, right? If they sell it just to us, it it' be cheap, but they sell it to the highest bidder. So that means that for example, I was researching this uh just this morning and I noticed that California is really being hurt because they get jet fuel from Korea and Korea gets their jet fuel that they sell into California. Um they process it. They they get it from the Middle East. So don't get it from us. So it's a lot more complex um and complicated, you know, than just saying, "Hey, we're net independent. We don't need your oil anymore." Now there's a very large new player in energy demand that most people aren't talking about and that is AI. Okay. Now what does AI have to do with oil and gas? Well AI takes an enormous amount of energy. Data centers are now the fastest growing electric electricity consumers in the world. Data centers are where all the computers are stored to handle all of those inquiries that you're making. All that use you have on your AI is going through those data centers. That's where the chips live. Okay, that's where OpenAI has, you know, they're using data centers. Um, Meta has data centers. Elon Musk's AI has data centers. Perplexity has data centers. My mother-in-law lives in Northern Virginia and it used to be just a nice quiet farming community and then we saw houses pop up, but recently we've seen huge data centers pop up. And one of the reasons they popped up near my mother-in-law's house is because there's a huge lake nearby. And that lake actually cools the data centers.

[00:33:27]That's important. But then it uses mass amounts of electricity. So where's the electricity coming from? Well, in our country, some electricity comes from nuclear. And certainly in my area, a lot does because we have a huge nuclear plant. But remember, a lot of nuclear plants were shut down after 3M Island.

[00:33:42]So, and we haven't built new nuclear plants in ages. So nuclear is just a part. So where the rest of it? Well, we've got some wind and solar, but wind and solar aren't consistent. So, where's most come from? A lot of it comes from natural gas. In fact, my research says the global data center energy consumption approached 420 terowatt hours in 2025. And by 2027, it's projected at 500 terowatt hours. And a third of all new gas power capacity currently in development is planned specifically for data centers. So the easiest way right now we don't have small nuclear and you may hate nuclear, you may love nuclear. Nuclear is simply a very efficient form of energy. We don't have the small nuclear plants that are being rapidly built. I know it's in they're in development. I know France has been really focused on them, but the US has been less focused on them. And so really to get power quickly, which the data centers need, it's natural gas.

[00:34:43]That's where it's coming from. So, it's the primary base load power for US data centers. It can run 24 hours a day, unlike wind and solar. Morgan Stanley, the Guardian, and the International Gas Union all identified gas for data centers as the single most important new structural demand driver in the energy market in 2026. That's way before the war. Iran is principally about oil, although remember also that Iran bombed the UAE's uh liqufied natural gas processing plant. and they've got the UAE Dubai has major uh pipeline and they major development of liquidified natural gas. So that affects gas prices as well.

[00:35:22]So here's an interesting question. The tech companies want clean energy but they also need power. Well, here's the thing that I think people don't realize.

[00:35:29]Natural gas is very clean. Okay, it just does not put off much in the way of pollutants. Just doesn't. Okay, any excess tends to get burned off. It's clean. It's way cleaner than say heating oil or coal. Although even those in the US are very clean because of the scrubbers on the power plants. By the way, just a little background here. I went to school in Texas. I started at Erns and Winnie in Salt Lake City my career and about half of our work was energy and mining. And so I got into oil early, first in Texas in graduate school and then in Utah. And then I spent three hours working for the largest power company in Arizona as their in-house tax advisor. So, I I've got a little bit of background here that most accountants wouldn't have. And that's why I do want to talk about it because I do know that a lot of you are thinking, I need to get into oil. But you've got to know what's going on in the market because remember, we never want the tax tail wagging the investment dog. We don't want to invest in something because it's got a tax benefit because we don't have a 100% tax rate. Not yet anyway. I mean they're talking about in California that's their wealth tax. That is a 100% tax rate. But we don't have that in the US. So if our highest rate is say 50% between state and federal, then that means that the best you're getting is a 50cent benefit for every dollar you spend. So why would you spend a dollar to save 50 cents?

[00:36:53]That makes no sense. So the investment has to be good. Now it doesn't have to be as good, right? Because if you invest in a stock stock and it goes to nothing, you basically get no tax benefit at all.

[00:37:04]it's a capital loss and which you're it's going to take you years to recover that. But if you invest in oil, you get that benefit right off the bat. So, it does help and it does mitigate the risk and it does mitigate the cost of the investment. But you still have a large portion of your dollar going into that investment. So, make sure you understand the fundamentals of any type of investing before you decide to do it.

[00:37:27]Okay? You can make money and lose money in any type of investment. Lots of people have lost money in real estate.

[00:37:33]Lots of people have made money in real estate. I'll tell you more people have lost money in oil and gas. Why is that?

[00:37:38]Because I think oil and gas industry is a little more of the wild west than real estate is because you can't see it. And so there are charlatans out there who will just take your money and say, "Hey, there's this great deal." And they're out there right now. They're looking for your money. So be aware of the scams.

[00:37:52]But not just that, make sure that they know what they're doing. And understand the market because the market shifts rapidly. So let's say we t we got this clean energy. Well, it'd be great if we had solar panels that could do all this.

[00:38:04]Now, in Arizona, we have a lot of sun and we had a lot of land. So, solar makes a lot of sense in Arizona. Makes a huge amount of sense. What we don't have is we don't have good technology for batteries. The lithium batteries, ion batteries that go in your car, go in your computer, they're not great. What we're looking for is better technology, like a solid state battery, okay? Like they're talking about in Finland. But, so here's the conflict. You've got immediate need for energy and you've got some clean energy, some technology that's coming down the road, but when will it come down the road? We've got nuclear coming down the road road, the the micro plants. We've got better batteries coming down the road so that we can transport energy better. My guess is we probably have better transmission lines, right? Transmission lines, they're the big thick lines that you hate having behind your house, but they transfer a huge amount of electricity all at one time. But remember, when you transport electricity over a power line, you lose some of it the farther you go, unlike a pipeline where you're not going to lose a whole lot of oil when it comes through a pipeline, right? But with electricity, you do. And so there's technology coming down the road, but you're going, "Okay, well, when does that technology get here?" That's the big question. So, let's talk about Trump's energy dominance agenda. So, Donald Trump has decided, "Hey, we want to push oil and gas. We want to push natural resources and Trump has pulled away from the solar industry and the wind industry, the renewable industry.

[00:39:29]And really what it means is the incentives aren't there. Now if Elon Musk goes and develops new batteries or somebody comes up with a better way to do something, I think that's going to be encouraged. We're just may not have the government tax incentives for those types of projects that we have for natural resources for the next few years. So, it does complicate things a little bit, but what it does is it says, well, if you're thinking about it purely from an investment standpoint and you're agnostic as to uh renewable versus fossil fuel energy, then we have to recognize that the administration in power right now, we're not going to lose the oil and gas tax benefits. We're going to produce more oil. But here's the other thing. Let's say without the Iran conflict, oil prices come down the more oil we produce. They don't go up.

[00:40:14]So that means that it's great for the person at the pump, but it's bad for the person investing. Right now, it's good for the person investing, bad for the person at the pump. So that's the thing to remember is that Trump may be all over fossil fuel. That may not necessarily be good for you as an investor because it may drive the price down. Just want you to keep these things in mind. So is oil and gas dying? Well, oil and gas never going to die. Plastic is made out of oil. Hospitals use a ton of plastic unless we had something that's that convenient and that cheap.

[00:40:45]It's really hard to see it getting replaced anytime in my lifetime anyway.

[00:40:49]Now, will the consumption go down? I would expect if some of these technologies come along, it will. I think it will. Here's the thing. When you invest in an oil well, first of all, in order to get the tax benefits, you can't invest in Exxon Mobile stock. You have to invest directly with the oil producer. Okay? Now, you're not going to invest with with Exxon Mobile. they do their own exploration and drilling.

[00:41:10]You're going to invest with a smaller producer. When you do, A, first of all, make sure they know what they're doing.

[00:41:15]B, actually make sure you know what they're doing. Look at, you know, how fast does that oil come out. So, for example, in the lateral, the horizontal wells, what we call fracking, right? The horizontal wells that go now up like three miles, they'll go three miles horizontally. Those wells, they produce a lot of oil in the first couple of years and then not much after that. The deeper wells, they produce oil for years and years and years and years. Like the Middle East oil, it keeps producing over and over again because they're these big deep basically pools of oil. Whereas American oil is largely now the shale, which means you're breaking up the shale with high pressure and then you you actually draw it out of the ground. So understand that because of what we're doing, you don't need prices high for a long period of time. Your investment needs to come back to you in in the first couple of years. If it doesn't come back to you in the first couple of years, it's not going to come back to you. That's my experience. I mean, I've been an investor in oil and gas for over 40 years. I've have clients that that's their major investment is oil and gas.

[00:42:16]I've lost money in oil and gas. I made money in oil and gas. It is one of those things that just you go in knowing, hey, I'm going to get a big deduction because I get all my intangible drilling costs and I get bonus depreciation. So, that means within the first two years about 90 to 95% of your investment will be deductible. That means if you put in $100,000 and you got a 40% tax benefit basically, then you really only put in $60,000, but you have put in the $60,000. Now, the good news is when you get the money back, when the income comes in, you're only taxed on 85% of it. We have this haircut called depletion on the income. So, we're only taxed on 85% of it. So, from a tax standpoint, it's a great deal. Don't get me wrong. Now, when you do it, make sure you sit down with your CPA, make sure you own it properly. Because if you own it through an LLC, you will not get the same tax benefit as if you own it individually. This is the one time I'm going to tell you, most of the time I tell you control everything, own nothing. This is the one time I'm going to tell you, own it, okay? If you want the tax benefit immediately because it's not subject to the passive loss rules if you own it personally. So, this is the great tax benefit. Now, I think that we might be in in just one of those phases like we were in the early 80s. You know, we've been a couple of times in history where oil prices are are high and they may stay high for a while and it doesn't cost any more to drill. It will eventually because inflation and demand as people drill more and they will drill more with oil prices staying high. If they stay high after this conflict is over, we're going to start seeing upward pressure on the price of drilling oil wells. So, I know this is a lot of information. Watch this a couple of times. Make sure you sit down with your tax advisor and watch it. Make sure they understand how the tax laws work because if they don't, you could lose an enormous tax benefit. Now, if you want to understand the full playbook behind oil and gas investing and how business owners are using it to legally offset their tax bill, watch the video on the screen