Advanced Tax Planning
Advanced Tax Planning
Business Deductions
- § 162: Ordinary and necessary business expenses.
- § 831(b):
A business owner purchases new insurance policies to protect against underinsured or uninsured risks. The risk is re-insured with (premiums transferred to) the client’s new private re-insurance company that makes an 831(b) election. The premiums paid are tax deductible and the money earned in their re-insurance company is taxed at qualified dividends (or offset with an S.O.P. or MDCD)
Target:
-$700k+ of Business Gross Revenue
-$100k+ Annual Paid Premium Contribution
Business Ownership with Tax Benefits
Building or buying a business with tax benefits. For example, buying into solar or opportunity zone funds, investing in oil or gas or similar strategic ownership programs in order to accelerate the depreciation or take advantage of the accelerated expenses.
Target:
-$800k+ in ordinary income-$1M+ in capital gains income
-High Income, Large Liquidity Events (Sale of Business, Property Sale, Asset Sale, Qualified Retirement plan distribution)-~$100k minimum capital contribution
Volume Discount Charitable Donations
Clients participate in a charitable donation that uses the actual cash value of an asset that was purchased with a volume discount. For example, a piece of real estate purchased with a volume discount can be donated at the current market value, and results in a multiplier effect of the purchase vs donation (ie 1:5 meaning the land was purchased for $1 and donated with a value of $5). The multiplier effect results in a charitable donation at 1:5 times the amount of capital outlay. ($20k purchase would provide a $100k charitable donation) There are multiple charitable donation programs that are available. Maximum Deduction is 30% of adjusted gross income.
Target:
-$300k+ of Taxable Income, Business Income, Capital Gains or W2 income
Government Tax Credits
Congress incentivises certain behaviors to achieve certain outcomes. Outside of business deductions one can also receive dollar for dollar offsets for their Federal Income Tax Liabilities. Unbeknownst to many, specially allocated credits are available for purchase for $.65 cents on the dollar. In other words, one could purchase such tax credits and wipe out a $100,000 tax liability for $65,000.
- Credits are available to offset Federal Income Tax Liabilities
- Dollar for dollar offset
- Available for 5-year carry forward and up to $25k "refundable"
Target:
- Minimum tax liability of $75k
- Credits available to businesses, individuals, partners or shareholders of passthrough entities
