Xero launches AI agent builder as accountants begin building own software

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! David Leary: [00:00:04] The CEO is going to get asked by a board one day. I see you spent all that on tokens. What was the result? And they're not gonna be able to answer it. Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:20] Hello and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver. David Leary: [00:00:26] I'm David Leary. Blake Oliver: [00:00:28] David, we're going to start with the World Cup this week. I've been watching, uh, this is my first time really like watching the World Cup. Seriously. And I've been trying to catch all of the semifinals a bunch of games before that. I'm maybe I'm like over half a dozen, I don't know, but I feel like I'm finally starting to understand soccer. David Leary: [00:00:48] I maybe, but I also feel like we are in that gap of like, unless you're a baseball fan, there's really not a lot of sports to watch right now. And so that's filling a need temporarily. Blake Oliver: [00:00:59] That's great. The England versus Norway game was incredible. Um Bellingham's like goals were just spectacular. And those are like fun to watch. It's just hard because you know I have Add and I have you have to you have to watch where you're going to miss a goal like you. You cannot look away from the screen for a moment. Yeah. That's the hardest part for me. Uh, we'll talk about that. There's a tax story here about the World Cup and, uh, there's coverage from both Accounting Today and CPA Practice Advisor about it. The taxes the payers play, the the taxes the players pay, and then the taxes that you might pay as a better on sports depends on where you're betting, uh, and, uh, whether you're on one of those like, uh, polymarket type apps or a call, right? We'll talk about that. Um, there's also zero con coverage, zero con was it London happened and. David Leary: [00:01:53] Zero con London was this week or last week, however you want to count it. Blake Oliver: [00:01:56] There's a big AI announcement from zero. We'll talk about that as well. But first, David, let's thank our sponsors. David Leary: [00:02:03] Our sponsors this week. We have canopy on pay value builder system and cloud accountant staffing. Let me ask you something. How much of your day is actually spent doing accounting? If you're like most firm owners, 30 to 40% of your time is eaten alive by the work around the work. We're talking, chasing client documents, drafting the exact same emails over and over again, manual filing, trying to remember what a client said on the call last Tuesday. It's an administrative tax and it's killing your profitability. That's where canopy comes in. Canopy actually delivers an all in one practice management promise. It handles everything from proposal to payment and all the steps in between smart client intake, tax workflows, month end, close automation and billing are all in one unified platform. No more duct taping ten different apps together. Plus, they have Canopy Coworker. It's a secure AI assistant that lives right inside the platform and actually does real work. It drafts context aware emails, summarizes clients histories, takes meeting notes, and turns them into tasks automatically. Early access firms are already seeing what's possible in AI works inside your workflow instead of alongside of it. To see a truly modern automated practice looks like, head over to The Accounting Podcast dot io slash canopy. That is accounting podcast.io/canopy. Blake Oliver: [00:03:23] And please use those URLs. Visit those links. That's how our sponsors know that you heard about us through the podcast. And if you don't, just let them know when you're checking out a demo, let them know you heard about them on the accounting podcast. It really helps us out, helps them track. David Leary: [00:03:40] And if you're not using any AI yet at all, pick something, just start using it. And this is a very good way to get, you know, you kill two birds with one stone, you're getting some AI agents, but you're also getting practice management if you don't have that either. Blake Oliver: [00:03:52] Yeah. And we've got news that we'll cover in the app news section. Hopefully we'll get to it. Canopy has close automation now inside of their practice management solution. So really exciting to see that out of canopy. All right. Let's talk about the World Cup. So at this World Cup just because of this World Cup, Messi could owe nearly $28 million in U.S. federal taxes. And that's way more than other stars of the show. Mbappe. He's going to owe 22.2 million and Harry Kane under a million. And the difference comes down to tax treaties and where the players live. Messi he owes so much that $28 million bill, potentially because he's a US tax resident and he plays for Inter Miami. So there's no treaty that he's. David Leary: [00:04:45] Living in the States right now or has been for a while. Blake Oliver: [00:04:47] Yeah. And he's a foreign tax resident. And nonresident athletes they they pay a flat 30% US tax, but there's treaties that slash it. But some states don't honor those treaties. And then California has a jock tax of 13.3%. So if teams are training in California, the players are on the hook for that jock tax. But if they're in Florida or Texas, there isn't one. The real winner, though, is FIFA. Fifa is selling tickets and has broadcasting rights, but they're tax exempt. They're treated like a nonprofit in the US since the 1994 World Cup. Now, national teams actually can apply for tax exempt status, too. But there's like a lot of requirements for that. That's according to a new policy. David Leary: [00:05:42] So so FIFA, this wildly profitable corporation, you could argue has nonprofit status. Blake Oliver: [00:05:50] Yes. So yeah, they've got a is it 501 C three. They're they're they're nonprofit. They don't they don't pay tax. There's a lot of money here. The tournament is expected to generate 11 billion in revenue and will draw a record 6.5 million fans. Um FIFA has approved 727 million in distributions, including 655 million in prize money, and that's a 50% increase from 2022. So yeah, it's it's crazy. Um, you know, I mean, obviously tax professionals know that tax treatment, the taxes you pay vary widely depending on where you live and the different tax treaties between these countries. This is just a great example of how different that can be, you know, adding, uh, you know, a zero to somebody's tax bill, basically. David Leary: [00:06:46] Well, and so FIFA is not a U.S. nonprofit. They're a global nonprofit. Yes. Out of Switzerland, $13 billion was their budget between 23 and 26, $13 billion. Blake Oliver: [00:06:57] Wow. Now, there's also a tax story for those who are watching the games and enjoying betting on them. Um, this was a story I spotted in Accounting Today by Caitlin Riley. If you are betting on the World Cup through a prediction market, you may face a lighter tax burden than people who are making similar wages through sportsbooks like DraftKings and FanDuel. And that's because if you're betting on DraftKings and FanDuel, your wagers are treated like casino winnings, and the losses are deductible only for Itemizers. And because. David Leary: [00:07:35] I think all those limits, the gambling apps are partnered with casinos and the money moves into a casino. Blake Oliver: [00:07:41] Ultimately. Yeah. So, you know, you have to give up your 16,100, $100, $16,100 standard deduction. You can't deduct more losses than the winnings, you are limited to deducting no more than 90% of losses. But see prediction markets like Kalki and Polymarket, and I've seen ads for both of those in the World Cup. They're treated differently. They are regulated federally by the commodities, the Commodity Futures Trading Commission. And so there's two different approaches. You could treat payouts from Kalki and Polymarket as capital gains, which allow you to offset and up to up to $3,000 against other income if losses exceed gains using, uh or using section 1256 treatment. And under that theory, 60% of your gains could get long term capital gains treatment and 40% would be taxed at ordinary rates. But there's there's confusion about this because the IRS has not issued guidance as usual. So it's fascinating that, you know, in this situation, right? We have these major sports betting apps, and then we have the prediction markets. And even though basically the prediction markets are gambling, like that's what it looks like. Yeah, it's treated different. David Leary: [00:09:07] There's gonna have to be major regulation coming in on this because every time you turn around, the prediction markets keep flying under some other law. Like first, the fact that 16 year olds can gamble essentially with these is kind of ridiculous. They're bypassing all gambling laws because we're not gambling app now it's the tax treatment. It just somewhere some state, it's going to probably take some massive ban by one state that has some guts to do it. You know, actually, I'm surprised like Nevada, like somebody doesn't because Nevada wants to probably keep their casino people happy. Yeah. Like you'd assume a state like Nevada would go after these, these markets first in their state. Blake Oliver: [00:09:47] So David, let's go ahead and move on to Xerocon coverage. Xerocon, London there was some big announcements, including Xero's new AI builder Xero Force. Yeah, I'll let you take this. David Leary: [00:10:00] So for starters, happy birthday zero. You've hit your 20th anniversary, which is a big milestone. Like 20 years of doing anything is a very long time. So which is crazy to think in the grand scheme of like, zero is the baby of these AI gels, if you want to think of it that way. And now it's now zero is 20 years old. It's kind of