Unlocking Opportunity Zones: Tax Mitigation, Blockchain and AI with Ashley Tison and Donna Mitchell

Donna Mitchell [00:00:00]:
Well, I'm having a good time here with Ashley Tyson, and he is the founder of OZ Pros and the leading Opportunity Zone consultant, an attorney and his ideal guest, really, for pivoting Web3 podcast. Because I haven't had anybody that's really been talking about what he's going to talk about today. And with that said, Ashley, I'd like to introduce you to our audience. And why don't you say hello and let them know who you are and how you started doing OZ Pros.

Ashley Tyson [00:00:28]:
Well, Donna, thanks for having me on the show. It's an honor and a privilege. Like you said, I am an attorney. I like to call myself a reformed attorney because I wanted to stop practicing law and actually get in the game of business. I started out at a big firm and I, you know, kind of went through the whole rigmarole there. After it had sufficiently sucked my soul, I left there, started a impact investment company back in 2005, and that kind of started my entrepreneurial journey. I. I worked for a commercial real estate developer and tenant and Common Syndicator.

Ashley Tyson [00:01:04]:
So we did some sophisticated real estate transactions that we distributed through a broker dealer network and some stuff like that. When the commercial real estate market crashed back in 2008, went back to practice in law and started doing mergers and acquisition work. And I, I've had a passion for trying to bring sophisticated topics to Main Street America. And so that's what we did within the M and A space. We helped Main street entrepreneurs get access to Wall street level documents. And we did that through a software package and a program that we built. It was kind of like the precursor to a lot of the AI stuff right now.

Donna Mitchell [00:01:44]:
Okay.

Ashley Tyson [00:01:46]:
I sold that firm back in 2018 because I saw how much business owners were leaving on the table in the form of taxes. And so I went about trying to help show them how that they could grow their business and make it more valuable and then also keep more of what they made. While I was on that journey, I found out about Opportunity Zones. I was in a cle, a Continuing Legal Education, and heard this guy talking about the Tax Cut and jobs act of 2017. And he said, and in three pages, they created these things called Opportunity Zones. And after he described them, I ran them down in the hallway afterwards, and I was like, hey, man, that Opportunity Zone thing sounds like private equity in 1031 got married and he's like, oh. And they had a beautiful baby named Opportunity Zones. So I was like, all right, I'm in.

Ashley Tyson [00:02:35]:
So took down a website and we popped it up, did a little bit of keyword traffic, and we had like 150 inbound leads, $75 million worth of money looking for deals. And I was like, all right, we're on to something. And that began the journey of OZ pros. And we figured out real fast that people didn't know they, they knew about opportunity zones, but they didn't know how to do them. And so we repurposed that software so that we could actually help people do opportunity zones. And, and so we took that sophistication that we had access to Wall street level, you know, bankers and lawyers and that kind of thing. We put together a set of documents and then we put together the software system in order to make it so that it speeds up the process for them to be able to get their qualified opportunity funds set up. And then we put together a system and a mastermind in a community that helps them understand opportunity zones and, and then also helps them execute.

Ashley Tyson [00:03:36]:
Since then, we've trans, you know, we've, we've expanded into doing other types of tax mitigation work. And we're now utilizing AI in the context of that tax mitigation work coupled in with our software package and our user community in order to really bring that level of Wall street level and kind of private family office sophistication in the form of tax reduction to Main Street America and regular entrepreneurs and working people. And that's what we're passionate about.

Donna Mitchell [00:04:10]:
So thank you for that explanation. But somebody may be listening right now who really wants to know what is considered an opportunity zone. What is an opportunity zone? The OZ pros.

Ashley Tyson [00:04:20]:
Yep. So the opportunity zones were created by the Tax Cut and Jobs act. And they were specifically, it was specifically designed in order to bring investment into underinvested areas. And so it allowed you to take any kind of capital gain, and you take that capital gain and you put it into a qualified opportunity fund, which can literally just be a part, an llc, taxes a partnership, and you get to defer that gain until 2026. Now, back in 2018, a deferral of that period of time was really significant, but it's still significant because of two things. First, it allows us to do some other really creative tax mitigation stuff. And number two, we're probably going to get that 2026 deadline extended through some pending legislation that's happening right now as they're doing the budget reconciliation. The second thing that you got, in addition to the deferral, and this is the really big benefit, is that you get to take A step up in basis to fair market value on whatever your new investment is after you've held your investment in the fund for 10 years.

Ashley Tyson [00:05:29]:
So by way of example, if you had a million dollars worth of crypto gain, so like let's say that you bought bitcoin or you bought a fast mover and it's gone, it's just skyrocketed, it's moonshot. And you want to harvest some of those gains out of there and put it into something else. You can take that gain, you can put it into a qualified opportunity fund. We get to defer those taxes. We can then make investments into things like solar and real estate and that kind of thing that has depreciation that we can then use to offset the taxes when you have to pay them in 2026 or 2028, whenever that happens. And then let's say that you go and you start a new fintech company and you start it in an opportunity zone. Well after that fintech company has grown to $10 million in value, you get to pay absolutely zero taxes when you go to sell it as long as you've held that investment for 10 years. So that's the power of opportunity zones.

Donna Mitchell [00:06:28]:
So the tax mitigation piece, when you say tax mitigation, can you explain that a little bit further for those that are not really used to using strategies or having someone like that to talk to or educate them or give them the download?

Ashley Tyson [00:06:43]:
So everybody in America, the greatest vendor that you will pay over the course of your life is Uncle Sam. You're going to pay more in taxes than you will to any other single vendor out there as an American citizen. And I am like, listen, it's everybody's civic duty to pay as little tax as possible. Now you can't fudge it, you can't cheat, but you can utilize the programs out there in order to reduce your taxes. And doing that right? And there's lots of different programs, there's lots of different strategies to be able to do that. That's what we call tax mitigation. And so we're specifically looking for ways that we can utilize the tax code and we can use the things that you're probably normally doing in your life anyhow, and we can then document those things and we can use those in order to reduce your tax burden. And opportunity zones, I think are the greatest legislatively created.

Ashley Tyson [00:07:42]:
That means that there was passed by con tax incentive ever created.

Donna Mitchell [00:07:48]:
So with that said, when you look at the average cpa, we're going to go back to what you just mentioned and what you're doing. But when you look at the average CPA accountant, bookkeeping, these people that are on the street and they go in and they do their taxes, those in a certain class probably have their private firms doing the tax mitigations and tax strategies. But for the regular person out there or, or just some regular solopreneurs or those that have small to medium size or maybe coming into the larger brands. Does everybody know about tax mitigation or is that a specialty in the field of law? Because it sounds like you're a specialty in this and there's a couple of specialists here. Can you explain that arena just a little bit?

Ashley Tyson [00:08:30]:
Yeah. So the lion's share CPAs, what they're doing is they're doing reactive after the fact work to document what you've done and then to file your taxes and to tell you how much you've paid. A tax mitigation strategist like myself will go and look at what you've done over the last three years and they'll say, hey, listen, we could have done X, Y and Z and we could have saved you X number of dollars in taxes. And so that's what tax mitigation strategy is all about. It's looking proactively at different steps that we can take. And in order to reduce your tax burden, once again, it's the biggest vendor you'll ever pay in your life. If you can cut that bill by 10%, it gives you significant cash to be able to do really cool other stuff with it, to be able to invest into recurring revenue, to be able to invest into crypto, to be able to buy NFTs. Right? To do the things that you want to do that are going to build generational style wealth.

Ashley Tyson [00:09:33]:
And if you don't get rid of the tax drag, or if you don't reduce the tax drag, it's really tough to do that, especially in today's America. And so that's what we're all about. We're about sitting down with people and saying, okay, this is your situation. These are some things that you could do in order to reduce that tax drag.

Donna Mitchell [00:09:54]:
So when you're reducing the tax drag now, let's say you have people listening, or myself or anybody else, a regular, regular schmo out there, you know, paid all this money to the tax man.

Ashley Tyson [00:10:05]:
That's right.

Donna Mitchell [00:10:06]:
A lot of it was in business. And it's happened, it's in the past, it's documented, this is what you owe. So and so this year it's not that much. I couldn't do this or that had they known you. And now that you're on pivoting the Web3 podcast, now they know you. Could you help them with some of the stuff that happened in the past, or is it something you get into before it happens?

Ashley Tyson [00:10:27]:
So we can, we can go. And what's interesting is that if somebody had a capital gain through a partnership or an S corporation, so they own something through, like something that generates a K1 and that gain came on a K1, I can go all the way back to January 1st of 2024 and I can defer that tax. That's what's powerful about opportunity zones. And then whether it's in addition to, or whether just in replace of. If they have and they owed taxes for the last two years, well, three years I can take. And we can, we can coordinate and we can show you how to do a solar investment and to be actively involved in a solar investment that we can take back three years. And so we could go back and reduce your taxes all the way back for three years as well.

Donna Mitchell [00:11:19]:
Okay, everybody, make sure you listen to this and pass it to your friend, whoever you need to tell. This seems like a good guy here. Oz. Pros. Anyways, let me get focused. So let's get to web 3. Let's talk about blockchain or AI or what kind of projects or situations and circumstances come to mind that help paint us a picture on how these intersect. What is the impact for some of the new technologies today that really encouraged you to check out Pivoting the Web three podcast and contact me? What do you want us to know?

Ashley Tyson [00:11:54]:
Yeah, so I have, I have been a huge fan of Blockchain ever since I heard about it. And there was actually a group that was. Was producing a software package that would track and that would put all of your transactions into the blockchain for purposes of coming up with an audit trail for opportunity zones. Unfortunately, that, that software has gone though. I don't know where they went, but, man, I was super excited about it. And it, it caused me to kind of go down that rabbit hole myself. And, and, and as I did that, as I was learning about blockchain, as I was learning about crypto, and certainly as I saw, you know, folks really make a lot of money inside of crypto, I said, wow, I can help them save money in taxes through what we do. And so if you've got a highly appreciated crypto asset that you either want to monetize and take some of that gain off the table and put it into something else.

Ashley Tyson [00:12:53]:
Or you want to take the gain and you want to buy a yacht or whatever, whatever it is, we can help you through an Opportunity zone fund, we can help you defer the taxes on that. Now where it gets really powerful is if somebody wants to create a blockchain business or an any kind of crypto business, anything that's doing business, we can take that, we can locate it in an opportunity zone. And as long as we've got a capital gain that we use to seed that, that investment, the, the next 10 years of growth of that all the way till 47. So you have to hold it for 10 years, you get to hold it till 2047. It's effectively like starting that business inside of a Roth ira because all of the tag, the growth of that is going to come out to you tax free. But it's better than a Roth IRA because you get to take it out right now, right as soon as you sell it, bam, it's tax free money to you. And so that's what I got. That's where I got really passionate about Web3, about blockchain, about crypto.

Ashley Tyson [00:13:58]:
I had a bunch of crypto gains myself and I sold some of my bitcoin. I was like, you know what? I'm going to sell this when it gets past 100 because I'm just going to take some chips off the table, I need to do some other stuff with it, and sold it at 107 and then took that cash, took the gain and I put it into my fund so that way I didn't have to pay taxes in that year. And that's what's really powerful now. I'm putting that into things that are really growing and that are going to grow over the next 10 years and it's going to come out to me tax free. And in the meantime, I'm having tons of purpose and tons of impact in these areas that have been historically underinvested in.

Donna Mitchell [00:14:40]:
That's exciting. You really painted the picture. Thank you so much. So with that said, when you look at the future of compliance in this era, where do you see the governance and compliance pieces falling from where we are today?

Ashley Tyson [00:14:57]:
Yeah. So the great thing about Opportunity Zones is you don't have to ask permission from anybody. So you don't have to go and get approval from the irs. You don't have to go and submit this huge application and wait for somebody to respond back to you. You just have to do it. But because of that, you then if the burden becomes on you to prove that what you've done is you've done it correctly. And that is done through an audit trail. And so it's really important that you have your audit trail together and you have documentation that backs up the stance that you take.

Ashley Tyson [00:15:31]:
So whether that's Opportunity Zones or whether that's the Augusta rule, or whether that's putting your kids on payroll or whatever, you need to have documentation that backs it up. That's what we do at Oz Pros. So, number one, we help you set it up and we help you structure it correctly. Number two, we have a, a portal that's a secure portal where you can interface and you can load your documents up into. And then three, we actually have a contained GPT that allows you to generate the backup tax documents that you need. And in order to be able to back up the things that you're doing, the first GPD that we've got is, is for the Augusta Rule. And anybody who's a business owner that is not using the Augusta rule, it's literally a. I mean, it's a gimme from the irs.

Donna Mitchell [00:16:20]:
So tell us the gimme. What is the Augusta Rule?

Ashley Tyson [00:16:23]:
All right, so. So this was back in the 70s, I think it was the 70s, maybe in the 80s, but the folks down in Augusta were renting their houses out and they were making a ton of money, but it was basically only like for like 10 days throughout the year, right? So it's like the length of the Masters. So they went to their buddies because they know, right? So all of the folks that are in Augusta got mad connections and they said, hey, listen, we're getting housed on taxes. Come up with something for us. So they created this little thing inside of the IRS code that allows you to rent out your personal home for up to 14 days tax free, but you can rent it out to anybody. And so whether you're renting it out on Airbnb or even better, if you're renting it out to your own business, your business gets a write off because it needs to rent space for doing, like, team building activities or having meetings. And then what you do is you go and you get a comp from, you know, dip three different places that are inside of or around where your home is. And whatever it would cost to rent out your house or into the equivalent of your house, you get to pay yourself that and it becomes a deduction for your business, but you get to take it tax free.

Ashley Tyson [00:17:35]:
And so whatever amount you can justify for that, you get to write off for your business. And so it's really easy. But you need to have the backup documentation for it. You need to have a lease, you need to have the comps, you need to have all of these things. You have minutes for the things that you do. So we've got a GPT that walks you through all of those things. You say, hey, right. It says, what's your address? You put your address in and then it generates three comps in the area.

Ashley Tyson [00:18:04]:
And you say, oh, my house has a ping pong table and a pool and an outdoor fireplace and these types of things. And then it goes and finds comps that have those similar, you know.

Donna Mitchell [00:18:14]:
Really?

Ashley Tyson [00:18:15]:
Yeah. And so it then generates all the backup documents that you need. You sign them, you upload them to our secure portal, and then if you want us to review them, we're happy to do that.

Donna Mitchell [00:18:27]:
That's exciting. That's interesting on how you, how you went about that. So, so tell me this, who's your customer? Who's out there that's listening? So they know whether they could contact you or not?

Ashley Tyson [00:18:37]:
Yeah. So anybody that has capital gains, who had capital gains within the last 180 days from the sale of crypto, or if they had it through a partnership or an S corp and it went back to January 1st of 2024, or somebody that has appreciated anything that's appreciated in value that's going to generate a capital gain for them and they're looking at selling that in the future. We can help mitigate those taxes. Also business owners that want to save money on taxes, other ways we, that we, we are now executing and implementing and assisting those folks to implement tax mitigation strategies that they can help you reduce the amount that you're paying to Uncle Sam in taxes.

Donna Mitchell [00:19:20]:
So. Thank you. So now that we've talked about the whole basis of OZ pros, I mean the big pieces, where does AI fit in with that? How does that intersect or make it good, bad or ugly?

Ashley Tyson [00:19:36]:
Yeah, so we've, we've actually gone down a whole. Yeah, it has been a rabbit hole. And you know as well as I do. Right. That you could get sucked into that rabbit hole. It's great.

Donna Mitchell [00:19:47]:
Or ugly.

Ashley Tyson [00:19:48]:
Yeah, exactly. So we are in what's, we are actually in the process of doing and rolling out another piece where we're, where I'm going to become the AI Tax Sherpa as well, because I think it's so powerful for helping people save money on taxes. And the, the, the, the thing that it's allowed us to do is and is that it? It just streamlines so much a lot of the backup documentation, and it could give you ideas as well about things that you could do in the context of how you can mitigate taxes. So where I think it's going is it. I think it will be able to evaluate and I think it will be able to do a lot of the tax strategy work. Now it can't do the really complicated tax strategy stuff like we do yet. Now I don't know if it'll get there. And you need an expert to be able to back up to confirm that what it said is legit.

Ashley Tyson [00:20:50]:
Because a lot of times it can be your most convincing uncle who is a pathological liar. Right. It's like, man, that sounds really, really convincing. But you're like, that's completely wrong. But, you know, so that's why you need somebody who knows what they're doing. They can be like, that's not right, and then can tell it, hey, listen, you're wrong. Do it this way. And, and so we've been messing with that and we've been experimenting with that, but where I think it's really valuable right now, and this is what we're using it for actively, is to generate the backup documentation that you need.

Ashley Tyson [00:21:25]:
It's not complicated, but it's just time consuming relative to just filling all of this stuff out. And so one of the things I'm working on is, and man, it's a lot to go into it, but is how you support your home office deduction and to streamline that process because the home office is actually is great. But you got to pull your gas bills, you got to pull your electric bills, you got to pull your water bills. Right. You got to pull all of this information from these different sources. It can be a real pain, but I could do that and I think could do it very, very effectively.

Donna Mitchell [00:21:57]:
Oh, really? You need to tell me about that. I lost a lot of time in QuickBooks.

Ashley Tyson [00:22:01]:
And that's exactly right. Right. And so, you know, it's like, all right, if we can streamline this process, it'll be huge. And yeah, so, so thank you. We, we have yet to figure out how to make QuickBooks better with AI, but we're working on it.

Donna Mitchell [00:22:22]:
So with that, when you're looking at the future, what do you see happening in fintech? Decentralization? How does that impact what you're doing now with the tax mitigation, the opportunity zones? Then you start moving into the blockchain economy, or AI? Maybe I should ask it in a way with emerging trends or any of the technologies, what is it that you're raising your eyebrows about that could really be taking place or that you wish would take place?

Ashley Tyson [00:22:53]:
Yeah, so I mean this goes into the software thing that I was talking about earlier is that I think that there's a real opportunity to be able to connect bank accounts with the blockchain and effectively to pull all of your information from these various sources using AI and then dump that into the blockchain. So that that way now you have an immutable record. And so it goes into the blockchain and you've got all of this backup documentation that you can use and that it then it generates that audit trail and that audit trail becomes part of the blockchain. And so it's there, it's an immutable record for you to be able to have there forever. I think that one of the other places that I think that blockchain and that it's really going to significantly move the needle is in the form of alt investing as a whole. So there's alternative investments that people can make and that's typically done through a private placement process and that can be really non standardized and it can also be very difficult to get the backup information to do effective due diligence on those. And I think that through the blockchain we could see that start to change. And there's been lots of pushes for like tokenization of different types of offerings.

Ashley Tyson [00:24:21]:
And I think that that as it gets more where there becomes kind of like a more of a mainstream, you know, accepted, generally accepted way to do that, I think that that's going to open the door for lots of people to do a lot more syndications and to get access to private capital which will benefit folks that are going to put the capital to work and it'll also benefit the folks that are investing in those companies because that's where the real money's made. You know, like a lot of my clients, because we represent people who have millions and millions of dollars of capital gains. A lot of those are coming from real estate deals or investments that they made into companies as very, you know, as startup deals that have really crushed it and that have, you know, resulted in millions of dollars of capital gains to these folks that we now help them to, to shift and to reduce the taxes on that.

Donna Mitchell [00:25:17]:
Thank you. So is there a project or anything you want to share that I didn't think to ask? I want to be respectful of your time. What am I missing? What do you want to share?

Ashley Tyson [00:25:26]:
Well, no. So we help people. Like our bread and butter is that we help people set up their own qualified opportunity fund and their own qualified opportunities and business. We have a lot more sophisticated tax mitigation strategies that we can use that fund for. Because one of the really powerful things about a qualified opportunity fund is that you don't actually have to hold an asset for 10 years. You just have to hold your investment in the fund for 10 years. And so when you put your money into the fund that starts your 10 year clock after it turns 10 years old, you can use it for all kinds of different things where you could, like if you're going to buy a house in an opportunity zone and you're going to fix it up and then you sell it 367 days later, you pay zero capital gains taxes. You could also depreciate bonus, depreciate the, the things in that house that are on a, a faster depreciation schedule, take all the loss for that, sell the house and not pay any capital gains tax or depreciation recapture.

Ashley Tyson [00:26:26]:
So it becomes a really powerful tool. And that's what we help people do. We help people to create this really powerful tool that they could put into their toolbox and then we expose them to other things that they can do with this really powerful tool that are maybe even more sophisticated tax mitigation strategies that dependent on their circumstances that they might want to look at or use.

Donna Mitchell [00:26:50]:
Okay, well, thank you. How do we, how do we reach you? How does the audience reach you? LinkedIn, phone numbers, email addresses? What do you prefer?

Ashley Tyson [00:26:58]:
Yeah, the best is if you go to ozpros.com podcast. We've got some special offers there. We've got our handy dandy Opportunity zone cheat sheet. We've got a free masterclass for crypto investors in there. If, if, if somebody wants to really do a deep dive on this. We've got just, we've got a, we've got a whole host of goodies in there for your listeners. Specifically@ozpros.com if you want to find out where the opportunity zones are, you can go to ozpros.com map and you can search via like address and it'll pop up and tell you whether it's an opportunity zone or not.

Donna Mitchell [00:27:38]:
All right, well, thank you for your time. We're shaping Tomorrow together. And thank you, Ashley Tyson and thanks my listeners for joining us today. We're Shaping Tomorrow together. Thank you.

Ashley Tyson [00:27:49]:
Thank you.