Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

Published On
October 5, 2021

Buying and selling real estate, whether investment property or your primary residence: how do you estimate net investment income tax when selling your house? Is the all-in-one mortgage a temporary solution when buying a new home before selling your current home? How do prop 13 and prop 19 factor into buying property in California with your kids? Should you pay down your mortgage or save for retirement? Plus, what’s the best way to pay credit card debt? Do corporations really pay no taxes? Can you contribute to both Roth IRA and Roth 401(k)?

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Show Notes

  • (00:51) Can We Contribute to Roth IRA and Roth 401(k)? Pay the Mortgage or Save for Retirement? (Diane, AZ)
  • (09:21) Estimating Net Investment Income Tax When Selling House (Jim, Santa Cruz)
  • (14:52) All-In-One Mortgage Follow Up: A Temporary Solution to Buy/Sell Challenge? (Jim, San Diego)
  • (19:36) CA Prop 13 and Prop 19: Buying Property With My Kids (Lorraine, San Diego)
  • (26:08) How to Pay Credit Card Debt: Borrow or Balance Transfer? (Lorraine, San Diego)
  • (27:27) Do Corporations Really Pay No Taxes? (Clint, FL)

Free resources:

Cracking the Financial Code at Any Age

LISTEN | YMYW Podcast #325: Capital Gains Vs. Ordinary Income Tax ExplainedCapital Gains Tax Vs. Ordinary Income Tax Explained: How Are Long Term Capital Gains "Stacked On Top" of Ordinary Income? YMYW podcast #325

WATCH | YMYW TV: Get Real About Real Estate in Retirement

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Today on Your Money, Your Wealth® podcast 346, Joe and Big Al are talking about buying and selling real estate, investment property, and your primary residence. How do you estimate net investment income tax when selling your home? Is the all-in-one mortgage a good temporary solution when you’re buying a home before selling your current house? The ins and outs of buying property in California with your kids and how prop 13 and prop 19 factor into the process, and should you pay the mortgage or save for retirement? Plus, what’s the best way to pay credit card debt, and do corporations really pay no taxes? But first, so you don’t miss the Roth talk, can you contribute to both Roth IRA and Roth 401(k)? I’m producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

Can We Contribute to Roth IRA and Roth 401(k)? Pay the Mortgage or Save for Retirement? (Diane, AZ)

Joe: Diane writes in from Arizona. “Hello Al, Andi and Joe alphabetically, so as not to hurt any feelings”.

Al: I’m just glad I’m first.

Joe: “I thoroughly enjoy your podcast. Personally, I think it’s a nearly perfect balance between funny banter and valuable, relevant information. I usually listen while walking my chihuahua Odie”.

Al: That is a hard word to pronounce.

Andi: Odie! That was my dog’s name when I was growing up. It’s short for odiferous, which means stinky.

Al: Did you have a chihuahua?

Andi: It was not a chihuahua is was a much larger Odie.

Joe: Isn’t Odie a part of a cartoon?

Andi: Yeah, Garfield.

Joe: “ I drive a 2020 Subaru Crosstrek”. Crosstrek?

Andi: On screen for you.

Joe, Ah, there you go. Very nice. “And hubby drives the 2014 Toyota Camry or Can-AM Spyder”.

Andi: Check that thing out.

Al: That’s a three wheeler.

Andi: Looks like a transformer that goes with Megatron.

Joe: “It says Can-Am Spyder, depending on the weather. Most importantly, my drink of choice is 2 Towns Hard Cider made in Oregon”.

Al: Yeah, looks cool.

Joe: 2 Towns Hard Cider…

Al: Ever had it?

Joe: No, never had it.

Al: Me neither. Not not much of a hard cider guy myself.

Joe: No? What’s the difference between a hard cider and a hard seltzer?

Andi: Cider is like apple juice that’s made alcoholic, isn’t it?

Joe: I got it.

Andi: Or pear.

Joe: So you got spiked apple juice! Yeah, I understand now.

Al: You know, 98% sure of that because that’s how it sounds.

Joe: It sounds right to me. I’ve never got into the hard cause… Coors Light.

Al: Actually, I’m with you. You know, I like some of the other beers. The Hazy IPA’s but I’m starting to find they give me more headaches. I’m back to Coors Light again.

Joe: It’s easy peasy, right? But I have tried a couple of… what’s the brewery here in town?

Al: Well, there’s Alesmith and Ballast Point.

Joe: No, no, no. They’re making like actual cocktails.

Al: Oh yeah, Cutwater. Those are decent.

Joe: They’re not bad. You know, on the golf course, if you want something different.

Al: Sure I’m with you.

Joe: “Quick overview of our financial picture. Hubby is a young retiree, just 53 after a 25 year career as a law enforcement officer’. Alright, thank you, hubby for your service.
“I make $105,000 per year aggressively paying down our $100,000 mortgage, which is our only debt and plan to continue working as long as I’m enjoying the work as I’m only 50 years old. Hubby receives a monthly pension that continues for the rest of our lives. We also have $150,000 in pre-tax 457 plan and a small balance of a Roth IRA. I have $750,000 in pre-tax 401(k) and I currently contribute 20% with a 6% employer match in a small Roth IRA. We have other miscellaneous accounts, including a small post tax brokerage account that are not material to the questions I have for you. That’s all the blah blah blah. So let me get to my questions. Number one, am I allowed to contribute the max, which I believe is currently $7000 annually including catch up contributions to both the Roth IRA and Roth 401(k)”? The answer is yes Diane.

Al: On the 401(k).

Joe: You could do a Roth IRA as well. Can’t she?

Al: Yeah, depends… I don’t know how much her her husband’s pension is. So there are income limitations.

Joe: But let’s say if you qualify

Al: And probably he does. In other words, if you jointly make less than $198,000, then you can do a full Roth IRA, and you are correct, $7000 when you’re 50 years and older.

Joe: So you make $100,000 a year and if your husband’s pension is less than $100,000. Yes, you could contribute to a Roth. Your husband can contribute to a Roth, and you could fully fund a 401(k) account.

Al: Right. Which is $19,500 plus the $6500 catch up.

Joe: For the 401(k) plan?

Al: Yeah.

Joe: “Can my hubby contribute $7000 to his Roth IRA’s and spousal contributions since he does not have earned income”? Yes, we answered that before I even knew that was the question. “By the way, you may suggest not paying down the mortgage since rates are so low, but we do not want a mortgage when we are both retired. Thank you and keep up the great podcast”. So what would you do, Al? Would you pay down the mortgage or would you contribute if you had the choice? Would you put money into a Roth IRA fully fund her 401(k) and hubby’s Roth and her Roth? Or would you take that extra cash and pay down the mortgage?

Al: Well, I do like the idea of fully funding the Roth’s, but I’m actually fine with people paying off their mortgage if they still have excess cash. I’ve actually paid off mine. I think it’s totally fine to go into retirement without a mortgage, if you can pull it off. But, I don’t really want people to actually spend so much money paying off their mortgage to the detriment of saving for their retirement.

Joe: So a couple of things that I’m looking at here. They have $900,000 in pre-tax accounts so let’s call it a million bucks. So that million can provide around $40,000 of income. They’re young. He retired at 53. She’s 50 and she wants to continue to work. So does she jam paying down the mortgage or does she continue to build out retirement accounts from a Roth perspective? Since he has a pension, law enforcement for 20 some odd years, I’m guessing that’s probably 70-80% of his income.

Al: Right. Which could be…

Joe: 80, 90, $100,000 right? Or it could be a lot higher, depending on what his rank was.

Al: Yeah, true.

Joe: So if they already have a pretty good size pension and they have fixed income. The mortgage is $100,000.

Al: Yeah, that hardly counts.

Joe: You know what I mean? Let’s say you refinance. You get it locked in at 3% for the next 30 years. I like that strategy a lot more. Then you take all your excess cash flow, you fully fund your 401(k) from the Roth. You put a Roth IRA for him. You put a Roth IRA for yourself and if there’s extra after that. I would still build up my non-qualified brokerage account that you said is insignificant.

Al: Right

Joe: In the very last I would go to the mortgage.

Al: I agree with you except for the mortgage part. When you get a little bit older, Joe I know you’re still a youngster. It’s just kind of nice not to have a mortgage. I have to say that, just throw it out there. But like I said at the onset, I don’t really want Diane to do this and jeopardize her retirement savings. I think that’s even more important and you are right, the husband has a good fixed income which means they can cover the mortgage. So it’s not that big a deal, really.

Joe: So if you didn’t have the mortgage and if he didn’t have the pension, maybe you would want to look a little bit differently at holding a note. Right? Because you have a guaranteed income source for the rest of your life. So you could probably cover some of that now. I get it. If you’re more conservative than you pay off the note, which sounds like she is. And yeah, but if you want to have more wealth, then I wouldn’t pay off the mountain.

Al: Diana, I’m with you. Go ahead and pay off if you want to.

Estimating Net Investment Income Tax When Selling House (Jim, Santa Cruz)

Joe: Alright. “Hello, Andi. Al and Joe. Jim from Santa Cruz”. Once again, Jim from Santa Cruz, calling. “After answering my question about Jack and Diane on show 342. Joe, asked if I’m a teacher and Al mentioned that he didn’t know what I drink. My sincere apologies for the grievous oversight”.

Andi: I was waiting to see if he was going to get that word right.

Joe: Was I close?

Andi: Yeah!

Al: You killed it.

Andi: Grievous…

Joe: Yes, I’ve been reading.

Al: You’ve been reading a lot in your spare time, getting all these words.

Joe: The longer words! “I’m a sales rep for a solar energy company of a component manufacturer. My preferred drink of choice is Sierra Nevada pale ale”.

Al: Okay, so that paints a better picture. Now that we know.

Andi: Now we know Jim intimately.

Joe: A sales guy kind of cruising around, selling solar parts. Drinks Sierra Nevada. Alright. “Speaking of Jack and Diane, they plan to sell their home in retirement roughly around the year 2035. Diane projects taxable income after escrow realtor fees in the $500,000, primary residence exemption would be $375,000. Fortunately, Diane is a long time YMWY listener with a comprehensive retirement plan spreadsheet. Unfortunately, Diane is married to Jack, who’s a real nice guy but doesn’t know diddly squat about finances. If she had married Big Al, her spreadsheet would have included the net investment income tax for capital gains on the sale of her home. Instead, she gave that tax no consideration until another show #342 then called and asked about it.” Okay, he really likes this Jack and Diane.

Al: He does, doesn’t he!

Joe: “Believing they will have no other investment income for that year, Diane calculates her net investment income taxes as follows; $375,000 taxable gain minus $250,000 exemption equals $125,000 times 3.8% equals $4750. Then Diane enters this on a spreadsheet and tells Jack he now has to work an extra month. Can you confirm this is the right way to estimate the tax? Thanks, as always for the great show. You guys really are the best. Jim from Santa Cruz”. All right. What do you think? They’re talking about the net investment income tax that happens after a capital asset is sold and it’s on top of a capital gain.

Al: So, Jim, you’re on the right track, but maybe one more tweak here. So the rule is simply this, you have to pay that extra 3.8% net investment income tax when you’re adjusted gross income is over $250,000 when you’re married. So you’ve got that right. Your calculation is essentially right, but you have to look at other income. Maybe there’s $100,000 of other income, right? So now, basically, your taxable gain, adjusted gross income is now $475,000 not $375,000, so you’d really have $100,000 more subject to that 3.8% tax. So you kind of have to look at the entire adjusted gross income subtract that $250,000 and to the extent that you have passive income like capital gains, you multiply it by that 3.8%.

Joe: Yeah, he was down because he said they had no other income.

Al: Did he say that? Where?

Joe: Yeah, umm I don’t know exactly in this big long ass paragraph.

Al: I think he said they have no other investment income.

Joe: “Believing they will have no other investment income for the year”. Okay, so it’s all income. If they have ordinary income then that pushes because the capital gains sits on top of the ordinary income.

Al: You got it. The sitting on top rule. Now we’re going to get into another… Can you explain how the capitol gain sits on top?

Andi: I will send them the podcast episode that is nothing except answers to those questions.

Al: Yeah, we’ve had several. So you can have your choice.

Joe: Yeah, what sits on top, who sits on what…

That was YMYW podcast episode #325, by the way, entitled Capital Gains Vs. Ordinary Income Tax Explained, and you can find it in the podcast show notes at YourMoneyYourWealth.com. Chances are that you would get even more value from a free financial assessment with an advisor on Joe and Big Al’s team at Pure Financial Advisors – and you can book that right from the podcast show notes, too. Pure Financial is a fee-only fiduciary, which means they will not sell you any investment products, and they’re required by law to act in the best interest of their clients. All of Pure’s advisors are all CERTIFIED FINANCIAL PLANNER professionals. They’ll look at your entire financial situation and your retirement needs, how much risk you can tolerate, and your goals, to help you develop a comprehensive financial plan tailored expressly for you. Click the link in the description of today’s episode in your podcast app, then click Get An Assessment to schedule that video meeting.  

All-In-One Mortgage Follow Up: A Temporary Solution to Buying and Selling Challenge? (Jim, San Diego)

Joe: We got Jim calling in from San Diego. “This is a follow up to the all in one mortgage inquiry. I listened to the podcast and realized I didn’t provide enough context.
We are thinking about moving out of state to another state with no state tax. The real estate markets there are red hot. Properties get sold after being listed”. Usually, properties get sold after being listed.

Andi: Soon after being listed.

Al:, Soon that’s the operative word.

Joe: Got it. “We have a current mortgage. If we happen to find a home we want in this other state, we have to commit to buying it on the spot but haven’t sold our other current home yet. We wouldn’t qualify for another mortgage on top of our current one. An all in one mortgage could be a temporary solution in that we could get enough of a loan to buy the new place and then pay down the all in one when we sell our current home and access our equity. If interest rates appear to be rising. We could convert to a traditional loan.
We realize we would have additional closing costs from going through to Leonard transactions, but it solves a problem selling our current home and having to rent locally or continuing a long, distant house hunt. Is this strategy unadvisable”? All right, so Jim’s looking to get out of dodge and he wants to purchase a house out of state.

Al: Yeah. In an area that’s red hot!

Joe: Right, so he’s looking at Denver.

Al: Yeah. Or Boise or something?

Joe: Yeah, he wants to get out of here. Go there and he’s like, man, these houses are going quick.

Al: I should lock it in.

Joe: I’ve got to do something. So I can take a home equity line or this all in one mortgage, take some cash out and then use that as a down payment for the next home or purchase the home outright. Or I don’t know… You’re still going to probably have two mortgages, right?

Al: Seems like it unless it’s a cheaper home.

Joe: Yeah. So then when he sells the house with the equity he pays…

Al: The strategy is fine. But honestly, the best answer would be to find a really good mortgage broker, look at all your options and figure out what’s going to be the best for you. We don’t know near enough and plus we’re not mortgage brokers, but there’s nothing wrong with the strategy.

Joe: Here’s a better question for us. Would you sell your home, move to Denver, rent in Denver until you find your house and then purchase the house in Denver versus owning a house in San Diego, owning a house in Denver and having this giant mortgage? I mean, that’s a lot of risk.

Al: It’s a lot of risk and the other thing to consider is, and this has been true in my lifetime. Several times when the real estate market starts getting really hot, it doesn’t last forever. I could be wrong but what we’ve seen and what I’ve seen over my career, which has been a lot of years. The real estate market gets so hot and everyone buys. They end up buying at the top of the market and then it either levels out or it goes down and you’re kind of stuck with this higher priced property. So just be aware there’s a risk and the biggest risk to me is overextending yourself and buying something that you really don’t want later.

Joe: Right. I mean, it’s in a super hot market. Are you retiring there? What’s the sense of urgency to move there. So there’s a lot of unknown.

Al: On the other hand, if you go to this market and you find the home that you want to live in forever. Go for it. I mean, just understand the risks you take.

Joe: Right, because San Diego is a pretty good market. You could probably sell your house in San Diego in a week.

Al: True, at least currently.

Joe: Then it’s like, okay I’m buying in a really hot market but you’re also selling in a really hot market. It might make sense to sell in a really hot market and rent for a little bit until you find your dream home in the area where you want to live and then pull the trigger.

Al: Maybe you could sell your San Diego home and maybe you could rent back from the buyer if they’ll go along with that for a few months while you find the other place.

Joe: Yeah, you could do that. So now you have cash on hand. You’re renting back to your current place and then you’re buying your house in whatever area that you’re looking for. I like that.

CA Prop 13 and Prop 19: Buying Property With My Kids (Lorraine, San Diego)

We got Lorraine writes in from San Diego. “Hi. Please do not use my name on TV” and I just said her name.

Andi: That’s not her name.

Al: You made up a new one?

Andi: Yeah

Al: Because you knew we’d say it.

Andi: Yeah

Al: Plus this isn’t TV, so we could say it all we want.

Joe: “Here’s my question. I’m in my 70’s and have lived in my property for 30 years. I have not purchased another property because I’ve wanted to retain my very low tax basis under Prop 13”. So for those of you that don’t understand Prop 13, this is a California proposition that allows individuals to keep their property tax fairly low. I mean, you can exchange that basis if you buy the same property like or lower value.

Al: Right, although that changed with Prop 19 which I think was passed last year and became effective.

Joe: And then people who are putting their stuff in the trusts…

Al: Yes. So Prop 19, the way it works is now you can actually trade up. It used to be that you had to to keep your Prop 13 tax base. you had to buy equal or lower and you had to be over 55 and you could do it once. Now the new rule is you could actually buy more expensive property and you get your property tax base up to the amount of the property that you sold. So for example, you have a million dollar property and you buy a million and a half dollar property and the million dollar property has a tax base of $300,000. So you get that but then since you bought a property $500,000 more, you add the $500,000 to the $300,000 and now you got a $800,000 basis. You can do that three times after the age of 55. So that’s the current rule.

Joe: Wow. Sharp as a tack today Big Al! Were doing some calculations on your own stuff or what? That just rolled right off the top.

Al: Yeah, that’s right. I might want to trade up here Joe let’s see how this works.

Joe: Did you do some studying before this? So Prop 13, “I had to buy equal or less to take my taxes with me, it has been almost impossible to buy equal or less”.

Al: You don’t have to do that anymore.

Joe: “I and one of my children, who is 55, want to buy a property together, taking my tax basis with me. I need to know if the two of us going in on a mortgage together would trigger an exemption to occur”? So if she puts the son on the title, is that going to blow up Prop 13 or Prop 19? “The same child would be the one inheriting the property as a personal residence, so the inheritance of taxes would not be an issue. Thank you. I enjoy watching your show every Sunday”. OK, so first of all, I would not put him on title.

Al: Yeah, that’s usually not a good idea.

Joe: If he’s going to inherit the property anyway, just put him as the beneficiary.

Al: The reason why you do this Lorraine and I know that’s not your real name, so I can actually say it. The reason you just keep the property in your name is that when you eventually pass away, then your child will receive a full step up in basis, at least under current tax law. So in other words, he shall inherit. Is it a him or her? I can’t remember.

Andi: It’s a child

Al: Your child will inherit this property at whatever the value is on that date, this will become the new cost basis. If your child wants to sell the property for purposes of the Prop 13 or Prop 19 amount and the rules are a lot different with Prop 19. In fact, I think the way that works, Joe, is that when you inherit property under Prop 19, you only get the tax basis for the first million only. Then anything above that gets the full Prop 19 basis for property tax purposes. But you have to use it for a principal residence. It can’t be for a rental or anything else. That’s the new rule for Prop 19.

Joe: So if I understand you correctly, I inherit a property and let’s say it’s a $2 million house. So instead of paying $20,000 in taxes, Prop 13 says it’s a $300,000 value.
So I only pay $3000.

Al: Yeah

Joe: So for people that don’t really understand what we’re talking about here. They’re saying that the house is actually worth $300,000 for property tax purposes only. Even though the house is worth $2 million and that’s somewhat common in Southern California. So people are spending $3000 of property tax where if I purchased a $2 million home, I would have to pay $20,000 of property tax.

Al: Yes, roughly 1%. That’s right.

Joe: So this person dies. I inherit the house. She was paying $3000 in property tax. I inherited this $2 million house. I get a full step up in basis and I’m going to live in Lorraine’s home. So with that, what is my property tax moving forward? Does the Prop 13 go away and now I’ve got to pay the $20,000 or 1% of the market value? Or is there some sort of…

Al: It’s a blended thing. Prop 19 says that as long as the person who inherits the house is going to live in the house as their principal residence, then the first million, you get that same basis over again. Let me put it this way, if the property itself had a $300,000 base and it’s worth $2 million. The first million dollars gets $300,000 and the next amount you add the million to it.

Joe: So 1.3?

Al: 1.3, so $13,000 in property tax roughly.

Joe: Got it. I’m guessing that Lorraine wants to put her child on title so when she passes the child is going to live in the house and still maintain the prop Prop 13 or Prop19 tax basis.

Al: Right. I don’t know this for sure, but I don’t think that works for the exact reason that you mentioned.

How to Pay Credit Card Debt: Borrow or Balance Transfer? (Lorraine, San Diego)

Joe: OK, she’s got another follow up question. “If a person owes $5000 in credit card debt, is it better to borrow $5000 at 7.99% to be paid over a 24 month period or pay it off”?

Al: I would pay it off

Joe: “Or do a balance transfer of that card to 0% for 18 months”?

Al: Do the second one. I prefer 0%, even though you have to pay it off quicker, do that.

Paying off credit card debt is an important way to take control of your finances. Whether you’re in your 60s, 50s, 40s or younger, decisions you make today will affect your financial security for years to come. In the podcast show notes at YourMoneyYourWealth.com you’ll find two relevant free financial resources on this topic: Read the blog on Understanding Your Credit Report, and download “Cracking the Financial Code at Any Age,” a free guide that will walk you through financial strategies and actions to take in your 20’s, 30’s, 40’s, 50’s and beyond to overcome previous missteps and set yourself up for a more successful retirement. Just click the link in the description of today’ episode in your podcast app to get there. Spread the knowledge! Share the links and the podcast with your friends, family and colleagues!

Do Corporations Really Pay No Taxes? (Clint, FL)

Joe: “Hello, Andi. I’ve heard all throughout my adult life that big bad corporations don’t pay any taxes”.

Andi: This is from our buddy Clint in Florida, by the way.

Joe: He’s asking you…

Andi: He sent it to me directly, but I think that he’s expecting an answer from you guys.

Al: I think you should answer first Andi.

Joe: The claim is usually from politicians or someone with a gripe. Do you agree with that Andi?

Andi: Sure

Joe: “Earlier this year, I asked Bob at our office if he had”… Who the hell is Bob?

Al: He’s the authority on whether big corporations pay tax.

Joe: “Earlier this year, I asked Bob at the office if he had to pay the IRS taxes. He said no. In fact, he’s getting a refund this year. We all know Bob had overpaid his income taxes. Can I assume that these big corporations use every tool available in our tax code to pay as little tax possible? Or are these corporations exempt from paying tax”?

Andi: Florida, 2015 F-150

Joe: Oh, F-150

Al: Cab! Well Andi, what do you think?

Andi: I think that, yes, corporations absolutely are going to use every tool available in our tax codes to pay as little tax as possible.

Al: OK, so you agree with that statement.

Andi: I agree.

Al: And are corporations exempt from paying taxes?

Andi: I do not believe that they are.

Al: Okay, I agree with both of your comments. I mean, everyone tries to use every trick.

Joe: No, not everyone. I would say people that have professionals and understand the tax code will probably do what they can to avoid as much taxes as legally possible.

Al: Which is, as you like to say, quoting someone from the 1800’s. That’s your God given right to pay as little tax as possible.

Joe: That’s right.

Al: I don’t remember the exact quote. It’s okay to use the tax law to your benefit. Are corporations exempt from paying tax? Absolutely not. Do corporations pay tax? Yeah, and they pay a lot of taxes but if they are a large corporation and they have customers across the globe, would it behoove them to set up an operation in some other country that has lower taxes or no taxes, and they fulfill orders and its sales from those countries so that they’re paying lower international taxes? The answer is yes and that’s legal. Do we always like it? No. There’s always talk about that type of thing, charging more taxes on international companies and if you think about it, it’s completely legal. You could set up an operation wherever. The Cayman Islands don’t have any taxes and you can have your salespeople fulfill orders and ship out of the Cayman Islands and there’s no U.S. tax as long as it’s an international customer. And if you think about it, it had nothing to do with us, except that it was owned by a U.S. company. There’s a lot of talk about changing the rules for that. There’s rules on transfer taxes, which basically means allocating more expenses to the U.S. and less expenses to the international companies. They’re always trying to make that more fair. It is legal but companies do still pay a lot of taxes.


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