EP 019 - Advanced Tax Strategies for High-Net-Worth Individuals with Kyle Candlish

Listen in as Kyle Candlish and I discuss the most advanced tax strategies available for high net-worth individuals, high income earners and highly profitable businesses. This Will be a great chance to learn about some of the most advanced techniques we use to create the highest amount of tax savings allowed by law for our clients.

This conversation will be great for individuals and business owners with incomes over 1 Million per year. Even if you don’t fall into this category, it will be a great opportunity to learn some of the creative tax saving opportunities that will come available when you have more income and cash on hand to protect from the IRS. We discussed some of the more advanced financial instruments and structures that we create for our clients to further reduce taxes beyond the commonly known strategies. Some of the topics will be: multiple entity structures, oil and gas mining wells, state tax deduction limit workarounds, trusts, insurance companies, charitable LLC’s, charitable remainder trusts and conservation easements.

Transcript

SPEAKER_01 0:00

So, if you haven't caught on already, there are thousands of ways that we can reduce our clients' taxes. There are endless strategies and combinations of strategies and variables and factors to consider when doing tax planning with our clients. And as a client makes more money, has more sources of income, and in particular capital gains income, and other different sources, as our income and assets grow, new opportunities arise. And this is a wonderful conversation that we're about to introduce with Kyle Canlish, who does tax consulting, where we dive into some of the more advanced strategies for high-income earners, high net worth individuals, where we're leveraging and utilizing complex financial vehicles involving charitable deductions, trusts, risk mitigation, and a variety of more advanced procedures where we can save our clients literally millions of dollars in taxes. And as our clients are becoming more and more affluent, and they're seeing larger and larger capital gains events, and their needs are increasing to reduce their taxes. These are strategies that are becoming more and more popular for us and our clients. So stay tuned, you're gonna learn lots of really interesting things. We're gonna touch on lots of different topics like charitable LLCs, easements, and uh, I think we talk about uh captive insurance companies, and if not, we have another webinar on that. We touch on lots of little things that we're gonna be doing more and more of, and maybe we'll dive in more specifically. But stay tuned, you're really gonna enjoy learning about all the different areas out there that we're gonna be doing and are doing for our high net worth and high income earners. And maybe you can pick up on some things that you may want to take to your current advisor, or maybe if you are a CPA listening, maybe you can do some further research. So stay tuned, it's gonna be a great conversation. And if you or anyone you know may need our services, feel free to email info at markprobercpa.com. And we're always hiring, send us some good accountants so we can build our team. Listen up, take some notes, you're gonna have a great time. Stay tuned. Alright, everybody, welcome, welcome. Really excited to have this conversation with Kyle Canlish. We met at a networking event when I was presenting with Jonah Weiss, the man in black, the king of cost seg. And then we did a breakout group, and Kyle and I had a geek out session, and I could tell it was gonna be the beginning of a uh some very wonderful tax conversations. So today we're gonna be talking about some of the more advanced tax strategies that we implement with high-income earners, high net worth individuals. We're gonna touch on lots of really cool and exciting stuff that we like to do with our clients. Uh so, Kyle, in uh in in 60 seconds or less, tell us a little bit about you and what you do, and then we'll break out into some conversations.

SPEAKER_00 3:17

So, yeah, um I'm a licensed life agent, turned tax specialist. Um, had some interesting events happen to me about five years ago and had to rebrand my business. And so uh always had a uh kind of a focus on tax. I'm I've been called a tax nerd sometimes. I have no problem being called that. Um, and have tried to help find my clients the best possible ways to reduce their tax. So it could be in real estate, could be a couple of restaurant businesses, whatever it is. We look for the best avenues that can reduce your tax bills so that you can help build the wealth for your family.

SPEAKER_01 3:59

Very cool, very cool. So, what we're gonna talk about today is you know, some of these advanced tax strategies are lesser known. You can listen to a lot of my podcasts and webinars, and I will talk about 1031's cost segregation and all sorts of creative ways and combinations of strategies we can use there. Now we're gonna talk about some other items that are lesser known and are a little more creative and can be really impactful for the higher income earners. When I say higher income earners, generally speaking, 750,000 minimum, but typically 1 million and up in income, either from your business or your W-2 income. And let's dive in. Let's first let's talk about the here's one that is really creative and interesting is the charitable LLC.

SPEAKER_00 4:48

Yeah, it's it's uh I a lot of stuff I do is through charitable partnerships. So that's one of them that I really enjoy because it doesn't matter if you're a business owner, it doesn't matter if you're a W-2, charitable deductions get you tax breaks. So a lot of people, uh a lot of uh CPAs will push um, you know, donating some some form of assets at the end of the year to help reduce your tax bill. Well, this is a way that we can actually reduce your tax bill without having to fully um give up a bunch of funds. So um it's a way that you're gonna get 60% deduction on the income tax side um for active, 99% for passive, and you can reduce your capital gains tax as well.

SPEAKER_01 5:44

Yes, and like so that's one thing. Like a lot of times we get a little bit stuck with our clients on what can we, how can we reduce our taxes when we've exhausted all of the fundamental concepts, right? So let's say you don't have real estate professional tax status, and you have um, you know, you have some real estate and you're looking to reduce your taxes, or let's say you didn't purchase enough real estate to really drive down your taxes. Yeah so one of the things that we'll look at here where you know, let's say you don't have those passive losses or ability to create non-passive losses to drive down your taxes. We say, okay, if we're not gonna be and then let's say you don't even have the capacity to do any more business, right? So how else can we drive down your taxes if you're not if you don't have the capacity to materially participate in a business? Well, one of the one of the means here is through charitable instruments where you're donating to charity, and there's like there's literally hundreds of ways you can do this, but you you know, some of you guys may be thinking to yourself, well, that is great, but I'm just giving my money to charity and deducting it, like there's just cash leaving my pocket. But when you literally look at the net effect, the cash that or the assets that leave your account compared compared to what you can reduce on your taxes, and also you may be able to uh maintain some residual income on the assets you donate to charity. You'll find that the net effect of this charitable donation, not only are you giving to a charity and pledging funds to a charity, you're also going to be dramatically reducing your taxes and in many instances generating future income.

SPEAKER_00 7:29

Yeah. And I mean, and with this strategy, you know, a lot of individuals, especially wealthy people, have their one foundation, nonprofit, that they really like to contribute to. Um, and the one thing I I always try to tell individuals is a nonprofit is is a business as well. Without cash flow, they can't operate. So through this strategy, it can actually produce cash flow each year to the nonprofit without giving up a whole bunch of cash from yourself personally. So there's a we're able to drive down that that deduction, 60% of income up to 60% of your AGI, if if that's what you choose, and then have the cash flow go to the charity from year on uh through the structure.

SPEAKER_01 8:19

Yeah, and it's you know, we're we're staying a little high level here because there's just a lot to there would be a lot of pieces to break out here, but you know, at a high level here, you're you know, you're you're putting funds into trusts. The trusts are going to annuities that generate cash flow. They're you know, a portion of this can can be borrowed, partion, I believe, can go back to yourself and portion goes to the charity, right?

SPEAKER_00 8:43

And and I I can break it down real quickly. I know I know there's no no presentation up, but if people are able to follow real quickly, um, we'll just take an individual that's making a million dollars, right? So here in California, they're gonna pay uh upwards, probably about 47% in taxes when you throw in the marginal tax rates. So what we're gonna do now is we want to find the best possible way of deductions. So through this strategy, we are going to set up a DAF. And most individuals have probably not heard of them, but it's a donor advisor fund. It's privately held, owned by the individual. There's 1% voting interest, 99% non-voting interest. You own both. That's gonna be what creates your charitable deduction. What we're gonna end up doing is donating cash. Now, uh, we have to discount cash because for some reason they still want it discounted. So it's about a 90%, uh it's about a 10% discount. So for that um 60%, we'll say you're gonna donate about$650,000 to this DAP. Now that's all great, everything's good. You have the money in the DAP, and you could then go contribute that to whatever foundation you want. But you want to know how you can actually get the money out. So, what we're gonna now do is set up a trust. It's a grantor's trust, it's called a beneficiary defective inheritors trust or a bidding. In that trust, it'll be we'll use I'll use the example. Mark's gonna set up that trust in my name. He's gonna put$5,000 in that trust, and that's gonna make the trust operate. There's no no person has given me a reason why we have to put$5,000 in, but that's just the number that they want. That trust is going to start an investment LLC, and that investment LLC is now gonna come into a loan agreement with the DA. So we are gonna take the Fed applicable rate posted every month, and that's gonna be the interest rate we use. So we are then going to loan the money from the DA to the investment LLC. So right now, say about four percent might be a little higher, might be a little lower. Um, that'll be the number we use. So um each year on that note, the charity is going to get about what is that? Um do quick math. Uh that's gonna be about$27,000 a year. That's gonna be donated to the charity in interest payments. So Mark CPA could choose if he actually wants to write that off because it's business interest as well, that's being um donated to the donated back to the deaf. So you can choose if that wants to be written off. Some CPAs choose it, some don't. Just depends on the individual. So that's our way that we can actually drive those deductions for the individual and still get the cash out to then go reinvest what they would like.

SPEAKER_01 11:47

Very cool, very cool. And so here's some other cool stuff. Um, now one of the things that I'm exploring as an alternative to 1031 exchanges for eliminating capital gains on a transaction is charitable remainder trusts with appreciated real estate. Now, I've been searching for the right, and if you know the right attorney, but basically to avoid capital gains on a transaction, obviously we've heard of 1031 exchanges, um, the you know, Delaware statutory trusts and deferred sales trusts. But when you have an appreciated asset, you can basically in a similar situation, you donate it, you put it into a trust, you get the charity, you pledge that that vehicle will be going to charity at a certain time. And based on your life expenses expectancy, you get um an adjusted for fair market value deduction in the year that donation, and then you still have income that's generating that this asset or this trust that's holding this asset, or even if the asset's sold as cash, and you can pretty much receive funds from this trust. You know, that those funds that you can receive may be taxable, but you get this really nice upfront deduction, and you also are setting up some future cash flow. And uh the again, the net effect, you not only are you pledging funds to a charity of your choice, which is great, but you you get a really good upfront deduction, and you are also setting up some additional income to be coming through to you.

SPEAKER_00 13:24

Yeah, I mean, the it's definitely a good strategy, it's one that's used a lot. The the one problem that I can say that runs into it is you're dealing with annuities. That's what a lot of individuals are going to be using to get that guaranteed cash flow. It's gonna be hard to reinvest the strategy. Um, so it's great in terms of setting the annuities up. What about unit?

SPEAKER_01 13:48

What's that? So, yeah, so you so there's chair the there's the cratz and the cruts. Well, you so you have the the charity remaining the unit trust, but what about the the um sorry annuity trust, but what about the unit trust?

SPEAKER_00 14:03

Those I'm not very um familiar with. Not as common, yeah. Not not as common. The one problem is is finding, and I I I've I've never seen it. I've been told that this has happened, that some individuals have made it to where actually that charity is their kids. Oh no. So I mean, because you you have that certain window in terms of how much income you can receive, what's longer, either 20 years or when you pass away. Um, so I've been I I've heard that some people have set it up to where their kids can be part of the charity in terms of you set up a charitable actual trust that the kids manage, known, and they end up receiving the proceeds. That's what I've heard. Um, I've never seen it. Uh so it kind of just depends, but finding the actual cash flow is the hardest part. Sometimes with real estate, if you're even if you're getting say three, four percent return annually, you're probably gonna get that appreciation. You know, so where if you're stuck in the trust, it's it's a little difficult to then maybe to get both.

SPEAKER_01 15:17

Yeah, we typically see it with more, it's much more common with stocks.

SPEAKER_00 15:21

Yeah, yes. Or yeah, exactly.

SPEAKER_01 15:23

Or exit strategies where you sell a business and things of that nature, right?

SPEAKER_00 15:27

Yeah. And you know, and I I just I think it's more, it's not a bad option. And you know, I honestly uh was never a fan of the 1031 exchanges because of the limitations I felt. I never liked the 45 days and I didn't like the basis, didn't restart. So I I want my clients to be as tax efficient as possible. Um, and so I look for certain strategies that create that. Um, and so it's it's obviously an option, and I present it to individuals if they if they want it, but um I don't actually have a group that does that, believe it or not. Um, it's one that I present options, but I don't have a group, unfortunately, for those.

SPEAKER_01 16:11

Yeah. So um, you know, our guy, my resource for 1031s is David Foster, and we did a webinar with him, 1031 uh strategy stacking. And you know, right now, because a lot of people are kind of running from the hills a little bit with real estate, is a little overpriced. So it's hard. It's you know, hard to, you know, a lot of clients are less um willing. Now, this record this is being recorded in July of 2022, so this conversation might be a little bit different a few years earlier or later. So a lot of clients are you know, they're they don't want to buy more real estate, they're like it's all overpriced. So they are looking for other vehicles, but here's some things that we're doing um because of some of those challenges. So if if you're concerned about the 45 limit day limitation, which is legitimate, and what if the replacement deal dies, then what, right?

unknown 17:06

Yeah.

SPEAKER_01 17:06

So what we can do is a reverse 1031 when you you buy the replacement property first, and then you sell your the the place that you're disposing within 180 days. So then you've locked in your replacement property. It's good in it's good in a seller's market um in those instances. And then what I always tell my clients is when you 1031, you want to go into something really big, you want to really leverage into a much greater asset so we can you know use leverage to access more depreciation. Because if you if you exchange it to a something the same price, you're gonna find yourself running out of depreciation.

SPEAKER_00 17:43

Yeah, exactly. Yeah, and so it just it becomes too, even though, and and you can use still that example of the market right now, right? Is even if you reverse 1031 into it, that property could still drop in the next six months to a year. So it's then gonna have to take longer to appreciate up in the value. So it it's finding I I like to um my my whole philosophy is tax flexibility, liquidity. I I want to create those three scenarios for what you want to do. So if if you want to reverse 1031, it's great. I mean, you're gonna defer your your taxes, and in uh CPA that I know met through uh Yona actually through his meetup. Um he he likes to call it swap till you drop, which is great, right? But at a certain level, you're gonna have to deal with some estate issues if you get high enough when you keep swapping. So there's certain things that you might want to find. Does this cover my asset protection? What does this do for my family? Um, does it help me tax-wise? What exactly you have to look at the whole big picture, not just the tax. Don't do anything because of the tax. I like, I like to look at it. Does it make money? Now, what can I do tax-wise to make it have it make more money?

SPEAKER_01 19:09

Yeah, and you know, estate planning and secession planning is such a huge, massive and underappreciated topic right now, especially with the baby boomers. I had a really long conversation about that with one of my clients whose father is struggling right now to support himself. It is such a huge financial burden. So, we're probably gonna have a whole other podcast just on that, on tax and financial planning for your parents and for yourself after retirement and into your later years, because this is a huge undervalued topic that people are that is just gonna hit people when they're they're not ready for it.

SPEAKER_00 19:50

No, it's you know, it's I can tell you, I don't think there's one right answer to how you financial plan, but I think there's definitely some wrong answers in how you should do it. Um, you know, there's some a couple people that I've talked to that um they they don't even have a trust. And these are individuals that you know are worth 40, 50, 60 million dollars. All they have is a living will. I'm like, that's not there's so many things. They don't have they don't have life insurance.

SPEAKER_01 20:25

I'm like that's a huge one as well for planning for you know, your life insurance can grow at a tax advantage and could be used as taking care of yourself in your older age as well.

SPEAKER_00 20:34

Yep, yeah. And and I I looked at him like he he's talking about, yeah, I have this legacy project, like it ain't gonna be much of a legacy if you pass away, especially if it's debt funded. So, I mean, they're probably gonna lose that asset that you have because they're gonna have to sell it or find some way to come up with the estate tax purposes. So um, yeah, it's definitely a plan, you know. I don't think there's one right answer for how he needs to do it, but the answer right now is the wrong answer for what he's doing.

SPEAKER_01 21:07

Well, waiting on your, you know, counting on your social security in 401k is not gonna be it. So if you're just doing, you know, if you're following the masses here and hoping for the best, you might get lucky, but you might not. So yeah, these are gonna be lots of crucial conversations we're gonna be talking, having with our clients and probably pulling in some additional, you know, resources for our clients as well. Um, because uh these baby boomers and our clients, you know, mostly our clients' parents, because we have a young demo, younger demographic, um, some older ones as well. Uh, this is going to be a huge discussion topic in the upcoming years.

SPEAKER_00 21:45

Yeah. And I mean, the financial planning um community is interesting to me. There's a lot of really good ones out there, but there's a lot of ones that I I just I look at sometimes and I do get hesitant. Towards. You know, because it's it's all it's about the management fees, you know, how much you can get under under management assets under management. You know, I'm a and I'm a big life insurance person. I mean, that's what I started out. That's what I wanted to do is help individuals. I like the power of high cash value life insurance companies. The fact that they the cash value never drops. Um, you know, I like those strategies where you're looking at people, some in the market. I I know an individual that's lost$500,000 in his retirement account already. So, and he could lose more. So, where if it was sitting in life insurance, and I don't want it all in life insurance, but you know, if he had some form of life insurance, which he he doesn't, he just has term, which is not the greatest to me either. Um you're he he's just he's kind of throwing away some dollars for him.

SPEAKER_01 22:52

Yeah. So um here's here's um speaking of charity, you know, we'll we'll we'll talk a little more about some charity stuff, but here's a really cool thing that a lot of people underlook as far as you know, this is the only strategy, and we we we promote this to all our clients as soon as we onboard them. It's the only way I know where you can reduce business expenses and save money on your taxes, and it's called real estate deconstruction, where instead of throwing out items, now this can be on a small scale or a massive scale. So instead of so on a small scale, so let's we have we've had clients doing flips, and maybe the furniture isn't quite suitable for the flip, or maybe the prior tenants left behind furniture. Instead of just junking it and using all your manpower and hiring people, you call Habitat for Humanity, get them to deduct it, you get the deduction at the fair market value. It's really cool, right? So you save money, they'll remove, they'll drive to your listing and remove it for you for free, and you get a tax deduction, which is amazing. And then what we see at the higher level here, like if you're doing a massive project and you have you know large some portions of lumber and materials that can be donated to charity, you may be able to create an even larger deduction here at a larger scale, and you may even be able to pass it on to your partners. Really cool stuff.

SPEAKER_00 24:16

You know, that's actually I've never thought of that. I I've heard of um individuals kind of taking certain strategies for like fix and flips that go in terms of operating costs, right? So they get the operating cost plus the cost segregation. I've never actually heard of that strategy, but that's a that is a brilliant strategy. I mean, it's a simple way to create deductions, and again, it's using that charitable part of the tax code that helps create it.

SPEAKER_01 24:43

Yeah, and even if you don't have rep status or whatever it is, um, and regardless of you know, it may be jumped to you, you may have tenants that left stuff behind and bailed on you, you can write it off at a fair market value. So it's pretty cool there.

SPEAKER_00 24:56

Yeah, and and you know, I mean, again, that strategy sounds like someone, even if you're a W-2 person, you go use it because of the charitable contract. Anyone can use the charitable deductions. So if you're if you want to buy a house, flip it, you know, and fix it up, you can use what's there to help uh offset some uh tax liability.

SPEAKER_01 25:19

Yeah, absolutely. Really cool stuff. So, speaking of instances where you have an item that you can donate to charity for and get a deduction for more than you paid for, what are some other examples of when that can happen? Uh some examples of donating to charity and and and get a deduction or where the deduction you get the charitable deduction is more than the amount of cash that you paid for that item.

SPEAKER_00 25:48

Yeah, I've heard it for for um like uh rare coins. Um, in terms of you can end up don't donate if you if you have a relative that kind of gave them to you, you inherited them. You're no they're normally depending on their estate part, they're not gonna appraise what that full value of that coin coin is. Um, you could have found it too. I mean, there's people that you know, I again I'm in California, I'm not close to the beach, but there's people that will go search for stuff that's washed up and then they can either sell it, or I mean, yeah, if they have enough money and they just are want to go around searching for for rare artifacts that wash up on the beach, they could donate those as well. I mean, um I've heard of individuals getting cars and donating them, you know. So um yeah, you have land. I mean, that that's a big thing. You get some land. Um, there's actually a CPA that I know of. Um, he put his uh land in a conserve land conservation easement, and that will drive a substantial amount of deduction. You know, you let's say you bought that land 20 years ago, and uh it's now appreciated 10 times, and then you can take it to where um if you develop it, it's gonna even get a larger return. You can actually write off the cost of what you would make on the deduction.

SPEAKER_01 27:19

Yeah, so and then there's the the other thing which are you know land conservation easements, which can be a pretty touchy subject right now, and you really gotta navigate the tax code and tax law very carefully on this one. It's what they call in the dirty dozens. But basically, what it is, and I'm not telling you guys to go out and do this, and um, you really gotta make sure before I'm not saying you shouldn't do this or should do this, but you gotta make sure you're working, you know, you talk to the right people in the in this area. But basically, what they do is they they have land, and then what they find is that the the value of the land is greater than the purchase price because it may have you know certain sort of metals or natural resources or whatnot, and they assess that value based on the best use of the asset. And don't when they donate to the charity, again, the the value of it based on the best usage and based on some calculations is gonna be far greater than the purchase. So, you know, there are instances where people will buy, you know, they're let's say they they contribute to a partnership$50,000 and they maybe get a$250,000 tax write-up. So it's as though the net effect of you know five of your uh quarter million dollars is as though you have a you know 20% tax rate instead of a 35% 37.5% tax rate or whatever your highest tax rate is when you're listening to this.

SPEAKER_00 28:48

Yeah, and I mean it's good it'll it'll reduce up to 50% of your AGI because it's considered a non-cash charitable contribution. Um yeah, and to to you what you're saying is you really want to vet the groups that are syndicating them. Um, I've come across one group that's uh through a family friend that scared me. I I flat out told them like, do not invest in this group because it um the syndication is the one that does get audited. It's not you individually, it's the syndication that gets audited. But that syndication can't vouch for any reason why they did something or what they're doing, they can't hold up in in an audit in court, then you will have you will, in a sense, have to pay the penalties and fees for it, plus the interest that you would have owed on your taxes. So um it is good. I have a couple groups that I work with that I like. Um, you would want to you want to kind of stray away from the groups that are promising, let's say, double digit deductions. So if you donate$50,000, you're gonna get you know five five hundred thousand dollars in tax deduction. You probably want to stay away from that group because um I don't know an individual personally that if that could actually be a 10x would say, I'm gonna just donate the land and not try and make the income. I I don't I don't know a single person that would do that.

SPEAKER_01 30:19

Yeah, I don't understand the logic of that either. And that's where I always, you know, and a lot of people scratch their head on. And um, I think did I say 50 and 500,000? Because I I generally hear that people will write off like four to five times the amount.

SPEAKER_00 30:33

No, no, and and that's and that's what you did. You said 50 and then it you said a quarter million in deduction. So five X. Well, I'm and and that would be uh a a group that I would I would feel comfortable even just looking at, yeah. Right? When you get groups that talk about 10, 12, 15. There are groups that do that, huh? I I I've seen uh I've seen one that has promised that, and I'm just like, no, like no person, if you have that much tax liability, you're gonna find a way to reduce your taxes a different way, and you're gonna invest in that deal. You're not gonna donate it. No, no person's gonna donate it. So it's kind of one of those things. I mean, there are certain areas possibly in in the um OGM area, the oil, gas and minerals area, where individuals might not want to see that ground, the ground, you know, torn up or see wells on it for pumping oil and um gas out. So that could potentially, hypothetically, right, have the return. And I do know there are some land syndication easements that do use that. I've never seen their their returns um or what they promised, so I couldn't vouch for it. But um I could see it up there, but I still don't know people might find other ways to kind of to either mitigate the tax unless you really, really want to just see that land conserved.

SPEAKER_01 32:04

Yeah, which is great. Speaking of oil and gas, if you're looking to reduce your taxes in a way that is perfectly um, you know, not controversial, you know, not highly scrutinized, uh, is oil and gas uh partnerships here. You know, investing. If you can be a part of one of these oil and gas group uh businesses where you invest as a partner, not into a corporation, but as a partner you get a K1, you will get those uh tangible and intangible drilling costs. And just like with syndications where bonus depreciation will flow through to you, the the depletion of these rights are gonna flow through to you in year one as a form of a loss, and even the following years, and those losses will be you'll even if you don't do anything at all. So let's say you don't have real estate professional status, you don't materially participate in anything, you're just a high income earner, you're still gonna get losses flowing through to your K1 that you can use to reduce your overall taxes. And you're investing in a business that should cash flow in some form as well.

SPEAKER_00 33:08

Yeah, and I mean my my understanding is actually too the first first 15% of the revenue is not taxed either. So um it is a good way. Um I actually have uh my parents in a deal where they actually own the land and they're leasing it out to a company to um to drill.

SPEAKER_01 33:31

That's really cool. Uh, I've also heard about um, yeah, I think I've heard about people even 1031ing into um to land where they have this as well, which is that really interesting. I was talking to Dave Foster about it as well. So lots of really interesting and endless ways to to think about these things, you know.

SPEAKER_00 33:53

Yeah, that that same group will actually 1031 uh will allow you to 1031 into the land deals. That's amazing, right there.

SPEAKER_01 33:59

Yeah, so now you're deferring capital gains, you're rolling over a large amount of your funds into this, and now it'll give you access to a lot of write-offs. That's pretty incredible.

SPEAKER_00 34:09

Yeah, and I mean some of them, you know, right now they're cash flowing really well. Um, if if you bought it at a good price. So I mean, with the price of oil having gone up, um, depending on what you bought it at, you know, they're they they cash flow really, really well.

SPEAKER_01 34:26

Yeah, you might be doing all right. And you know, I mean, Tesla's cool, electric vehicles are cool, but you know, oil and gas hasn't really gone out of style just yet.

SPEAKER_00 34:34

So yeah, they still need that oil to make that electric. So that's what a lot of people don't fully realize with the um with the electric stuff, is that you know they're still burning you know, oil or coal in certain areas to produce the um that electric part.

SPEAKER_01 34:53

Yeah, isn't that something? Um so there are like in addition to oil and gas, there are other instances where you can be part of these partnerships as a passive investor, and the the law, the the tax benefits are gonna trickle down to you. Uh so for instance, I know uh there's actually a woman who works as us, works for us part-time as a book, does some bookkeeping. And what she does is she works for a real estate syndication that does low-income housing, and they get low-income housing tax credits that will flow through to the partners on their K1s. Really cool stuff there as well.

SPEAKER_00 35:32

Yeah, I actually I know a family office that uh a lot of their investing is into in um low-income housing. So there's there's two versions. You have your section eight housing, and then actually, I can't remember the other section what it is, but it's more on a sliding scale. So they take you know what the median income in the area is, and then they'll supplement it for what you make. Um, so again, you're gonna get those credits as a way to help, you know, make the project kind of pencil. Um, my understanding is it's it's like a five or 10 year period, though, that you have to be actually in that real estate. Um, but there are some groups I know that will sell it off. Um, you get certain tax credits on certain things. You can you can sell them off in um example, banks aren't limited to the same rules that individuals are. They don't have to be that real estate professional to get the full deduction on their income. So um, and I and I think even just corporations in general ston't have to. So they'll end up buying you know, carbon tax credits, low-income tax credits, um, historical tax credits. Uh, so anything to kind of reduce their tax bill.

SPEAKER_01 36:49

Yes, and you know, family offices, that's another strategy for high net worth individuals. Generally, from what I've heard, is uh what generally what we'll see is you know 50 to at least 50 million dollars of cash that'll allow you to establish this family home office where now you have a whole team managing your your the finances of a family that just has lots of wealth to to really think about how to properly and and effectively manage this in a tax-efficient way. Now you have all sorts of vehicles, all sorts of trusts, all sorts of charitable instruments and endless, you know, you'll you'll need a whole staff just to oversee that. I hear like Bill Gates' family offices, like 50 people just managing his personal finances.

SPEAKER_00 37:33

Yeah, that uh I wouldn't be surprised. I mean, I I could kind of ask. I know someone that works for the Gates Foundation, but uh I'd have to I'd have to find out, you know, and that's a whole different story in terms of for what they're doing, but I'm sure the the foundation's kind of intertwined with the family office. But yeah, I mean family offices they they use uh an ample amount of tax strategies. I mean, one I know they do use is is for captive insurance. I've met I've met uh three family offices that love captive insurance. Um, when you're owning that much property, self-insuring your properties for for uh liability and property insurance is not a bad way to go. I'm actually working with a group that's looking at doing that um as well. Um, because it comes a point when you sell that property, you'll still have that insurance that you own. And if you go underwriting a deal, you don't have to underwrite the insurance part because you already have it covered yourself.

SPEAKER_01 38:34

Yes, captive insurance is a really interesting and cool idea where um it can be really powerful. So you create a separate entity that's a that is going to receive the um that you that is gonna be your insurance company. It has to have a bona fide, you know, business purpose, and you need legitimate reasons to insure and have risk to insure against. And this is another thing that is, you know, it's it is considered you know a highly scrutinized vehicle. So obviously you want to be with the right people, but if there's a bona fide business purpose for this insurance company, you get the deduction when you have costs for your insurance. It's a tax deduction on your Schedule E or Schedule C or whatever, you know, 1120, 1120S. You write it off, but when the insurance company receives those funds, it's not taxable as income here. So the only income that they see is in the form of capital gains and dividend income for you know whatever securities they're holding here. So you convert your ordinary income to capital gains and dividend income, and also you have the ability now that you have this separate vehicle, this separate financial instrument, all sorts of creative and interesting ways that you can pull funds from the captive, borrowing funds to you know and maybe even setting up fringe benefits from C corporation. And now we can talk about all sorts of uh ways we can maximize our, you know, our ways to take funds out tax-free and tax advantage from this other entity.

SPEAKER_00 40:04

Yeah. And I mean, the one big thing is yeah, you you you mentioned it, it is on the uh the IRS dirty dozen list. It's looked, you know, it's heavily scrutinized. The one great thing about captives is you actually audit yourself. There's an actual form that you have to send in that shows why you did this, what's the risk, everything, giving giving you a reason to why you actually set up the captive for it and you file it in. So as long as you've answered those questions right, there's no reason to even really go through an audit um because of that standpoint. Now, if you kind of maybe push it a little bit, then yeah, sure, you're gonna get audited in probably rightfully so. But if you actually set up the captive for the reason that they're that it's there for, you know, um, example, right? There's some there's some individuals on the Gulf Coast, right? They can't syndicators, they have trouble getting insurance for their property because of the hurricanes. Well, guess what? You can self-insure it, you're gonna have your insurance part, you're gonna get reinsurance from another company, and you're gonna have that in case that that moment happens and it affects your property.

SPEAKER_01 41:16

Yeah, and it would be considered, you know, we want to think about here this is a legitimate form of protecting ourselves uh against our risks.

SPEAKER_00 41:25

Yep.

SPEAKER_01 41:26

Yeah, and you know, if you're just doing it to have a sexy financial vehicle that reduces your taxes, you might find yourself in trouble here, right? Oh, yeah. But but you know, and there are legitimate risks, especially for our business owners. One of the things I'm considering here is, you know, a lot of our clients that are investing in real estate as they grow, uh, they have, you know, not only do they have it risks, but they actually use their insurance companies because you, especially short-term rental investors, people breaking stuff, stealing stuff all the time. And if they can self-insure, this the the seamless way by which they can pull from their insurance companies would be so much easier and effective. Um and you can also, these captives can insure against things that you don't always see in insurance companies. So we've seen them insure against things like um, you know, not just business interruptions, but you know, leaving losing a key employee and all sorts of legitimate uh things that you may not find in traditional insurance companies.

SPEAKER_00 42:26

Yeah, and and you know, the the for business insurance, the IRS tax code, they to actually have an insurable risk, you need a two percent chance of something happening. So, for example, there's there's other tax strategies where we can use that. Is you can have a chance where you know you and I, Mark, our name means something. If someone says, Oh, that person's a crook, or that person will rob you or or hurt you financially, that could really hurt our businesses. Well, that's an insurable risk that we can insure ourselves on. And will it happen? Probably not. Could it happen? Yeah, so it's a way to create a deduction in case something happens because that's our livelihood. If if we can't do this, then we're in trouble.

SPEAKER_01 43:18

Yep. And um other just other things that we see um with C corporations, most captives uh captives are generally C corporations, and yeah, um right now, I mean, there are some ways that you can strategize around this, but you have the salt cap. State taxes, once you have more than ten thousand dollars of state taxes, you can't deduct any more against your federal taxes, but but you don't see that salt cap for C corporations. So there are um you do see that advantage, and you see the the advantage of the the flat 21% uh corporate tax rate as well. Um so a lot of really cool stuff there. Yeah. With um with captives, from what I've heard, um, from my is that you want to see at least 2.5 million in revenue to justify setting up a captive insurance company. What have you found?

SPEAKER_00 44:16

Um, so my groups want about a quarter million dollars in insurance that you are spending. So if if you're a syndicator and you have you spend about you know a quarter uh quarter million dollars in insurance, that's a good time to start looking. We're not gonna take it all and put it in a captive. We might take 40% of what we're gonna do, but we're gonna want to get it started.

SPEAKER_01 44:42

Um, because that's a good threshold is is generally it sounds a little bit higher than it would likely be higher than 2.5 million in revenue in that instance.

SPEAKER_00 44:50

Yeah, yeah. In that in that scenario, and I think it just depends on what you need. I mean, if if you're you know, depending on certain business insurance, what you want it really business as well. Yeah, the nature of the business really depends. I mean, for the for the most part, you can only I I think fund a captive, I think around$2.5 million a year. Now, could you own multiple captives? Sure, for different areas, you know. Again, we'll use an example. If you're if you are a syndicator and you own thousands of doors, right? You know, depending on where you get, let's just say you own thousands of doors in California, that'd be kind of crazy, but you you do. Um, you know, you could hold have them under different kinds of entities. And because, you know, each normally each syndication is a different LLC in itself, you could have them cover certain areas. So that could be your way to work things around. Um, but it's definitely a powerful, powerful vehicle, depending on what you how you're gonna use it.

SPEAKER_01 45:56

Um you know we have a lot of clients right now who are growing rapidly, and I'm just waiting and waiting for when we find cool opportunities like that. Uh the revenues and income and you know, insurance isn't quite there yet. But when we see the opportunity, that'll be a lot of fun. And I think some of our prospective clients that are a little larger that we're working on right now may see those opportunities. So that'd be really um, really fun stuff.

SPEAKER_00 46:24

Yeah, and and and one thing to kind of add, I do know a group that deals a lot with dentists um in terms of setting up the cactus. Um, and it's not even just that, you know, they want to ensure their dental work, right? That they find about um 20% of the time they have to redo the dental work. Now you can either redo it for free because you that you just did it, did something wrong, or you can actually have the insurance where the insurance is not gonna pay for the work that you did. Um, so just kind of depending on how much work you're doing. You could you know fund it say$30,000,$40,000 if you if you really wanted to. Um now with some groups, it kind of depends on the fee. They'll charge you, say some will charge you$5,000 to set up. Okay. And then they'll sometimes charge you a management fee. So you have to find a way the facts of you know how much am I really gonna save versus how much is it really gonna benefit?

SPEAKER_01 47:23

Yeah. And similar to a captive, what we try to look for for larger organizations is if there's an opportunity to create a spin-off entity and activity. So for instance, maybe you have a business that performs multiple services and activities, and if we can break something out and treat it as a different activity and entity, there might be some tax saving opportunities. For instance, let's say you know, one of the things that we're we're gonna be doing is uh college advanced college financial planning for our clients. And if we have the ability to eventually realize, you know, if I can get someone else to oversee the whole process of taking myself out of that, create a separate spin-off entity for that, now we have the opportunity not only to minimize, you know, to create an additional LLC to reduce our risk exposure in the LLC, but now we can also say that we materially part, we don't materially participate in this source of our income and it's passive income.

SPEAKER_00 48:20

Yep.

SPEAKER_01 48:21

And now we, as I've talked for hours on end, it's very easy to get passive losses, get a rental property, run COSEG, invest in a syndication, and use that to offset um this passive income. Or sometimes we hear about people creating spin-off entities and having C corps manage other businesses and entities, and then you can take advantage of all the tax uh saving opportunities with that C corporation and also increase your um your risk. I mean, minimize your risk exposure by creating additional entities.

SPEAKER_00 48:54

Yeah, and I mean, going back to what we talked about earlier with the charitable LC, it's a way you can now reduce instead of 60% of your active income, you can now reduce 99% of your passive income. So you can then use that to reinvest into other businesses if you want, real estate again, get you know as much passive losses as you want. Um, you know, and talks about certain how you how you structure a business. I I've even had some conversations with the tax attorney firm that implements these, you know, S-Corps. That you know, you have your distributions that are paid out into the year. Well, those could potentially, depending on how you look at it, be deemed passive because of the standpoint that those were not what you expected. You were the employee, you got your your um your compensation for for what is deemed what your that job costs, right? And then you have the extra benefits that come in. And so you could possibly deem it, it just you have to look at those scenarios. But they've talked, we've talked a little bit about that kind of scenario where if you're an S-corp, you know, you get those distributions, you don't fully pay yourself, and then you have them as as passive income.

SPEAKER_01 50:12

So I just typed in the chat, but if you guys have questions along what the way, put them in the chat and we'll answer them as best we can. Uh, but uh um at the end of our, you know, throughout and and also at the end of our conversation, uh now and and you know, as you were talking to, I think one of the most over, you know, one of the most missed opportunities and things that a lot of tax preparers forget to realize or never really learned, because you know, I found that the bar can be low for a lot of tax professionals, is understanding material participation and the difference between active and passive activities. Yeah, and so one of the act one of the opportunities I found, we had a client who had passive ownership of a tech startup. He was involved, but really just behind the scenes only a few hours per year and received a K1 of a sizable amount. And the prior accountant was treating this as active income, so it was subject to self-employment tax and taxes at his marginal rate, and he had a long-term rental. And so we evaluated this and realized that this was actually passive income here. So what we did was we when we classified it as passive income, not only do we eliminate the self-employment tax, uh, but we also were able to do a cost seg on that long-term rental, create some passive losses to offset the profits from the K1 now. So we reduces we eliminated all the taxes from that K1, reduces taxes by taxable income, but maybe$50,$100,000.

SPEAKER_00 51:48

Yeah, and it's funny. I actually came across uh an individual at a conference once, and I think he sat on like eight or 10 boards, and so wasn't spending a lot of time, you know, with it. And he basically flipped all of his income from passive to active. And I looked at him like, what was the purpose of it? I don't even think he was a real estate professional, and you know, so I'm just going, Well, why wouldn't you do that? You can invest in real estate, you could get losses there. There's certain other ways we can get, you know, get you those those deductions, and uh I I don't know, maybe he got different advisory advising from the CPA.

SPEAKER_01 52:30

Most people don't realize what the material participation test is. And yeah, yeah.

SPEAKER_00 52:35

I I actually I even I had I had a call with an individual uh uh a few weeks ago um that uh they were dealing with capital gains tax, um, and they were having trouble finding uh a 1031 exchange. And so we start talking, and the CPA they the group they actually they had a bunch of losses, capital losses from stock. And the CPA told them that they couldn't use those losses on their gains for the real estate. And I just flat out I was dumbfounded when I heard that. This is an individual making a quite a bit of income a year, or her and her husband, and I was like, no, I mean, because I utilize other, I utilize some of the tax strategies I utilize is for getting negative K1s. So I I know you can't. I just I don't know why your CPA would tell you that you can't.

SPEAKER_01 53:34

Yeah. So here's a that's you know, I I think you saw my video on that. So right now, when people are unwilling to do 1031s, they don't want to buy back into real estate. Well, the stocks a lot of people have stock losses that they can create because the stock market has dropped. So why don't you free up some of your losses and activate those to offset your cap gains in your real estate? Or you can use cost segregation. And let's say you don't have rep status and never had a reason. Well, you could do a cost segregation study on one of those properties to offset the capital gains as well.

SPEAKER_00 54:03

Yeah, yeah, exactly. Yep. Those are uh, I mean, those are simple.

SPEAKER_01 54:08

There are hundreds of ways that we strategize for capital.

SPEAKER_00 54:11

Exactly. And those are the simple, easy ways that are kind of almost in a sense no-brainers on depending on how complex your tax liability gets.

SPEAKER_01 54:21

So um what was I gonna talk about regarding the we were talking about the so when we when it comes to that and and capital gains planning, and we have people here who have, you know they they don't really know what to do yet. One of the cool things of you know that we like to see with the flexibility here is you have things such as your cost segregation, which you can do after year end, qualified opportunity zones. You have 180 days from the year end to plan for your cap gain. So um ideally you're gonna talk to your advisor before the event occurs to maximize your options. But even if it's afterwards, there's still things that we can do either before year end or even after year end, as long as you are resourceful in considering all these things.

SPEAKER_00 55:13

Yeah, yeah. There's there's a couple strategies. Uh, one group I work with, they have that they always they always say, I would prefer you advise, you know, letting us know before there's going to be a transaction, but they have it covered for other strategies in turn with other strategies in terms of there's certain things we can do. You mentioned cost segregation. Um most of the strategies that we do utilize create a negative K1. We have a group we can actually um get uh active um capital losses from the group, and you end up getting a partnership into that group to help offset your taxes on the capital gains. But that's gonna be an after-the-fact thing if you couldn't get some planning done ahead of.

SPEAKER_01 55:54

Yeah, and you know, when we think about active and passive income, there's so many ways that we can look at this equation. And you got to think about this year and future years, and you know, there are instances where we can group together passive income and convert it into active income. Maybe we want to do that, maybe we don't want to do that, depending on the nature of the income. Um, there are also ways where we can convert passive income to active income where, and I this is another opportunity for high net worth uh people who aren't getting enough tax deductions from their cost tags from their real estate. So, what we're we're what we're proposing for some of our clients who are in a high income tax bracket is to create um S-corp management companies or C Corp management companies to manage their real estate, and then you pay them to manage their real estate, and that now you are generating losses from your portfolio and creating active income, and that sounds maybe not so good, but a lot of these clients have already paid out their social security taxes, and then we can put a couple hundred thousand dollars into a pension plan and really drive down their taxes. This is really great for people who have high W-2s and also are creating real estate losses. So we're driving down their taxes through these other vehicles, and then we can time the release and the timing of when we're actually going to be paying taxes on that in the future when they're towards retirement, living on depreciable assets and driving them down into the zero dollar tax bracket.

SPEAKER_00 57:18

Yeah, and actually that that one strategy that I was just mentioning, too. Uh, I'm talking with a couple individuals that have some really um well-funded pension plans. And the tax issue has come around like, how do I get it out? And so we can actually eliminate that tax bill for them on getting it out of the pension plan and then kind of reinvesting it how they would like. Um, could possibly put it into some real estate and not have to worry about using your retirement account with the real estate. You just have the cash there, get it leveraged and get your returns that way, or you can invest in to some other areas. You find a good stock deal, you can do it. And then you just obviously you have to restart, but I mean, there's certain ways that could happen. You could, you know, if you have you and your wife and you're uh you're over 50, you could start, you know, supplementing a an after tax 401k if you want to, and you'll be able to put about$128,000 in there, maybe a little more, um, and let that appreciate. And then we could just start over with the same way once that appreciates, we could do the same exact thing.

SPEAKER_01 58:24

So yeah, we um you know we had a I had a good conversation with David Podell. Um, it was one of our webinar podcasts, and we talked all about those strategies, and and that's a way where we can, you know, so solo 401ks are nice and and it's you know traditional ROS, but you can really generate tons and tons of additional write-offs with these cash balance and pension plans. And you know, again, if you strategize with the right professionals on the timing of these things and what you do with the funds, the timing of when you recognize you know, income and distributions, you can really do some powerful stuff to help build wealth. Yeah, yeah. Yeah. Um, so um, you know, I think I hope that our audience, I think so. Our audience is either, I'm looking here. So is is either we have some financial planners that are catching on to what we're saying here, or uh um, you know, because I think that a lot of our topics, we've now gone down some rabbit holes. You're gonna probably need a decent um a decent background to uh to digest some of our conversations, but we oh we do have some questions here.

SPEAKER_00 59:37

Yeah.

SPEAKER_01 59:38

Okay, so one of the questions here, is there any reading resources you would recommend?

SPEAKER_00 59:44

Oh man. I mean, I I so I've always said this, I am personally not a book person because it comes from a biased point of view, and you could be reading, you know, 200, 300 pages on a biased point of view. I'd rather be read six, seven, eight, nine articles if I can find them. On they could all be on the same bias point of view, but it's going to be coming from a different uh person. So I always like that. Um, but for reading resources, um one example that I actually and I tell individuals when we're looking at possibly implementing a charitable LC is go look up Mike Myers, Florida. You can you can even type you can also type in charitable LC, Mike Myers. He's he's the reason why that strategy has a bad connotation. Um there's certain ways Mark and I kind of discussed it a little bit through through today of ways you can get yourself in trouble. His, he thought it it was a way not to um to he thought he wasn't probably gonna get in trouble, and it it was not a good way of how he structured his strategy. Um and and I always like to point out the negative um parts because of the standpoint there there can be some downside. Um the groups that I work with, they have not lost um an audit. So that's why I work with them. Um, because their livelihood would not work if they lost if they lost it. Um but I like to show individuals what can happen if you find the wrong group. Um, and as we mentioned with the historical land conservation easements, um uh you know, if you find the wrong group, you can really it can hurt you.

SPEAKER_01 1:01:39

Another good book, if you're looking for a book, um, there's a book called The Power of Zero. Um, that is a good explanation of uh life insurance vehicles as a way to create tax-free retirement that is popular. I've heard good things about that and look before you lurp, which stands for life insurance retirement plan. And you know, that's a whole other conversation that we can have on infinite banking and using financed premium life insurance. Such an incredibly powerful tool to build tax advantage wealth, tax-free wealth, and using leverage um to finance your retirement and also to potentially finance other uh expenditures.

SPEAKER_00 1:02:25

Yeah, and and touching on that, I see a question. Uh when think I'm guessing what they when they say UILs, they mean uh ULIs or IULs um for the appropriate strategy. Um, I'm personally I don't think there's a wrong time to help to implement that strategy because of the standpoints. Um, there's certain riders that can be put in place, they'll cost you money. They can.

SPEAKER_01 1:02:53

So you audience can you explain what UILs are?

SPEAKER_00 1:02:56

I mean UL So I so said IUL. So yeah, so index universal life. So um I I I personally think even just for the everyday individual, they're good because the one example we talked about retirement accounts, and individuals like to put in their money in Ross. Well, you don't get any tax deduction with Ross, but when you get your distributions, they're not taxed, right? Well, that's gonna work the same way with life insurance because through policy loans, they're not taxed. The one big difference is everyone has a life event that something happens to them before they are 60. I'm just saying 60 instead of the 59 and a half. Well, with IULs, you can do policy loans to help pay for that. Example, you know, you might want to go, you might need a new car, right? Well, let's just say you have I mean, I know cars have gone up. So let's just say you have$40,000 in you in your IUL that you can do a policy loan on. You do that policy loan, you now put cash straight down on that car. You can now then make your own interest payments to yourself on the policy to pay for the car instead of paying the bank. You've now become your own bank. Okay. You can charge whatever interest you want to help pay it back. Not to mention, while that$40,000 has been used to pay for the car, it still can earn money in whatever strategy you have to help then make other purchases. You can use it possibly for a down payment on a house. I mean, with an FHA loan, you only need 3%. So that can be a way to help help have your have your liquidity.

SPEAKER_01 1:04:47

Let's see here. I think we might have, oh, how would you make an argument against the high fees for the apprehensive client? Um I'm not sure I fully understand this. Make an argument against the high fees for the apprehensive client. Uh I'm not sure I understand this question entirely, but um, you know, our fees um when we have clients, we usually argue for uh appropriate fees for our expertise with clients, and when clients are apprehensive, um we it's all about uh showing the value. We always will create a value in our services that is um disproportionately far greater than the cost to invest in our services. Um that's the way I look at it. I I'm not sure if I fully understand. Maybe this is for uh what the insurance vehicle.

SPEAKER_00 1:05:47

Yeah, I I think it's for for the insurance vehicle. And I mean, I I think it's the conversation you have with the client, what what they're capable of capable of paying, um, because what When I'm writing life insurance, I'm max funding it to the mech. I I I want it to be able to where that covers where they can have a certainty of coming close or paying up to that mech part so that they can get the returns on their strategies to help cover the costs. Um and then it also varies between companies. There's companies where the costs are greatly higher from one company to the other. So it's finding the right company. Um there's one group, they've actually done a study on all on kind of uh the eight major high cash value life insurance companies. And they say Minnesota Life is the best in terms of the feats. Um, they're not really hurting you as much. Um, and so that's a way. Um, if you don't want to have those writers that necessarily implement you having the same cash value as surrender policy, so you can get the max amount to borrow upon out of your policy right away, then you're gonna have to fund it a little more. Um, because again, the cost of insurance and the fees. So there there are certain areas, but I I like the I mean, there's gonna be fees with retirement accounts too. So it's just kind of looking at what you want. And if if that retirement account drops with the market, you're still paying those fees. So it's kind of is, I mean, there there's I guess no real major win either way. It's just understanding what your risk tolerance is and what you want.

SPEAKER_01 1:07:33

Mm-hmm. Yeah, you know, I could start a whole podcast. Uh, I could probably talk every week on life insurance and insurance vehicles as a a form of a business, you know, for business need, for your life needs, for secession planning, for so many reasons, and never run out of things to talk about. And as a you know, as a financial vehicle, there's just there's just so much that we could talk about um oh yeah in in that area. I you know, maybe one of these days I was thinking about having someone, you know, to be able to do life insurance at our practice, but there's just there's so much to uncover in that world as well and to complete to to discuss with our clients. Really, it's really great to have you know experts in that area to help you evaluate all of these variables.

SPEAKER_00 1:08:24

Yeah, I I have three back offices for for it depending on what kind of company I'm using, what I'm using. So um, and for for my premium finance as well, which is the bank funded life insurance. So um I I I try and keep up to date, but they're the ones definitely up to date. And if I have something or something really big changes, like the example of the changes to 7702 last year, where you can now put about we're finding about 65 to 80 percent more cash into a policy um uh each year, uh, that was a big change, uh, especially for individuals doing premium finance. Massive change.

SPEAKER_01 1:09:08

Really, yeah. Really, you know, I heard that the Congress and and they were looking at making some restrictions and and kind of cracking down on some of the tax um benefits with with finance premium life insurance and other insurance vehicles, but then some of the proposed legislation didn't really really um pass anything or really get much momentum. And I'm guessing part of that's because a lot of the people in Congress are using it. Yeah, yeah.

SPEAKER_00 1:09:36

I mean, there's companies that will go down to a million dollars net worth. So I mean, you know, there's a good chance that a lot of them are probably using it uh in the perks of it. So um it's a great way to get a lot of cash in the cash value, especially right now with the market dropped. You can now reap those returns. Uh, I mean, let's just say it doesn't return for two more years. Once that year two hits, you're gonna get all those returns. And depending on what companies you're in, there's some companies that don't have caps on what on what index you're using. Not sure how that works out for them. They have a floor and no cap. Uh, but um, yeah, that's a different whole different story.

SPEAKER_01 1:10:19

Yeah, very cool. Well, Kyle, what I would like you to do is to uh let everybody know where they can find you and if they want to connect with you. And also if you have a call to action, um anything else that you would like your of the ask of our audience, now is a good time to uh to just send that out to the the live audience and also the recorded audience that will listen to this in the podcast and in our um YouTube replay of the webinar.

SPEAKER_00 1:10:51

Yeah, the the best way to reach me is honestly through LinkedIn. Um if if you just type in my name, it'll it'll pop up. Um, I haven't found anyone uh on LinkedIn with the same name as me yet. So that that's kind of a good thing. Um and then just send send send me a uh request in a message saying that you heard you either attended it live or you watched our replay. Um and I'll definitely connect with you and we can jump on a call. If you have any questions, I'd be more than happy to answer. I I do those a lot. Um, because my my big goal is education. Um, like as I said earlier, I want to give you the negatives, but I'm I'm definitely gonna give you the positives. Um if if you listen hard enough, there will be times that you know which strategy I like better than others, but um because I I just I feel the power of that strategy, but I'm I'm gonna give you the negatives and I'm gonna try my best to give you the positives too.

SPEAKER_01 1:11:53

So um talk to someone before you make crucial decisions. Yes, yeah, you know it's great that we have bigger pockets and all these other resources out there, but you know, don't be a part-time tax planner when you're a full-time dentist. All right. You know, like uh we had a guy who came to us and did a 1031, and the actual 1031 is gonna reduce is actually gonna increase his fees, and it's not even gonna create any tax savings because he would have been able to free up those losses. You know, yeah, you gotta you you really gotta, you know, these are all complex discussion topics, and you even if you don't think there is planning, at least confirm that your assumptions with the professional before you think you can make these decisions on your own.

SPEAKER_00 1:12:40

Yeah, and and even I consult with with other CPAs what they think, what their thoughts, other tax attorneys, um, other tax professionals, um, tax strategists like myself, um, I'll definitely consult with them. What do you think? You know, I want their opinion. And a lot of times I will have one of them on a call before I fully go through with the strategy. I want to know what their thoughts are. If they don't like it, then there's a good chance I'm probably not. I might bring another one on just to see. If that next person doesn't like it, I I say bye. You know, I'm there sometimes.

SPEAKER_01 1:13:17

There's more than one answer. It's really an art. Yes, yeah. There's an element of creativity, resourcefulness, analysis, expertise. It's a science, it's an art. So these are not easy decisions, especially when you are a high net worth individual where we're looking at lots of cash here. There are just so many ways that we can look at solving a problem and planning for the best possible solution.

SPEAKER_00 1:13:40

Yeah, definitely. Yeah.

SPEAKER_01 1:13:43

Yeah. Well, Kyle, again, thank you so much for joining us in this wonderful conversation. I'm really excited to share this with some of our clients. And uh, I'm glad to have shared this with our audience. Um follow podcasts and webinar, reach out to Kyle to learn more and do some more of this advanced type of planning. You guys stay tuned. We'll talk soon. Thanks very much. Absolutely.