Join us for an empowering episode with tax expert Elizabeth, as we dive into effective tax strategies and wealth growth. Elizabeth shares her expertise on maximizing savings, planning for a bright financial future, and adapting to legislative changes. We'll explore the game-changing benefits of cost segregation studies in real estate and innovative retirement strategies, positioning you as a key player in investment.
Discover how to leverage cash value life insurance policies for a tax-advantaged financial stronghold, and compare the stability of Indexed Universal Life insurance against market-based policies. This episode is for the forward-thinking entrepreneur seeking to navigate the financial landscape with confidence and aim for a tax-free 2024.
Ready to transform your financial journey? Connect with Elizabeth at 312.933.7757
If you are interested in our services or know anyone who can join the team, go email info@markperlbergcpa.com.
Join us for an empowering episode with tax expert Elizabeth, as we dive into effective tax strategies and wealth growth. Elizabeth shares her expertise on maximizing savings, planning for a bright financial future, and adapting to legislative changes. We'll explore the game-changing benefits of cost segregation studies in real estate and innovative retirement strategies, positioning you as a key player in investment.
Discover how to leverage cash value life insurance policies for a tax-advantaged financial stronghold, and compare the stability of Indexed Universal Life insurance against market-based policies. This episode is for the forward-thinking entrepreneur seeking to navigate the financial landscape with confidence and aim for a tax-free 2024.
Ready to transform your financial journey? Connect with Elizabeth at 312.933.7757
If you are interested in our services or know anyone who can join the team, go email info@markperlbergcpa.com.
It is a beautiful year, 2024. We always want to be thinking and being proactive about our taxes. The best time is usually well, obviously, we can have the most impact on our taxes as we approach the year end to do our year end stuff. But we also want to make sure we're thinking, we're cognizant of the tax incentives available as us being entrepreneurs or if we're W2, there are still opportunities to start part-time businesses or have charitable deductions or manage your retirement accounts and other vehicles. To be proactive throughout the year. It's always fantastic if we can have some sort of game plan, and that game plan is never set in stone. It evolves based on changes in your life, income circumstances and the tax law we'll talk about in a little bit. We're starting the year off strong with some tax New Year's resolutions and we're going to talk about not only bringing down our taxes for 2024, but long-term tax savings A lot of these gurus are going to talk about Mark Proberg, I'm number two.
Speaker 1:I'm putting you on mute because there's an echo. I'll see if I can put this guy on mute. But one of the things that we want to talk about here and you see a lot of people neglect. We are going to. Here we go. Let's see if I can hold on a second, if I can put this on mute. Oh, you know what it is.
Speaker 1:I'm going to reclaim host and I'm going to make this mute, so it's not echoing. Okay, so a lot of these gurus are going to talk to you about writing off your Lamborghini and this and that, and that's all fantastic if it works and it's legitimate. Cost sags Everybody knows about cost sags. It's yesterday's news. I used to sound smart. Now I sound like a broken record talking about cost sags.
Speaker 1:But it's not just about creating the tax savings. It's also about taking a step further, and Liz is going to be a great resource to talk about preventing future taxation. So what do we do with our tax savings? To build our wealth and also build the wealth in a way that is tax advantageous and preventing future taxes. So I want to start off now, before we even dive into our strategies, tell you about some of the things that I'm most excited about.
Speaker 1:So there is some legislation that is pending, I have heard, and we don't know what to expect. I don't have a crystal ball and, to be honest, I am too busy advising my clients to be following this on a day to day basis. But we think that we may be able to get back to 100% bonus depreciation for 2023 and for 2024 through 2025 in the proposed legislation after that bonus goes down to 20% and then zero, it'll just plummet. We don't know what to expect and you know, if Donald Trump, if we have another, if we have a real estate investor back as president who knows what's in store for us. But at least we can start thinking about some opportunities and exciting things for 2024 and beyond.
Speaker 1:Now some of us are going to consider even amending or holding off on our tax returns until we find out if we get that 100% bonus depreciation in 2023, because then there might be other tax implications on.
Speaker 1:You know, and if you're working with a financial advisor like Liz, we still have an opportunity to put money into a retirement account that may be impacted by what your tax rate is. With these, with the potential changes on your 2023 return which is kind of wacky, we're doing retroactive planning after the year ends. So a lot of exciting things here. And when you guys go into 2024 with your tax-free New Year's Eve resolution, we want to make sure we have our foundations in place first, with having our tax deductions, understanding the tax incentives available for business owners, getting projections driving into understanding what your liabilities may be projected based on your goals and your purchases of real estate and everything else. And then also, what are you going to do with your tax savings? What are you going to do with this cash and all your assets to grow it in a smart way? So, hey, mark, what I'm wondering is, liz, tell me about some of the things, some of the conversations you're having with your clients moving into 2024 to set themselves up for success right now.
Speaker 4:Absolutely. One thing that you just mentioned that I value in your mentality around planning is that eventually, you know everyone should have a handful of folks on their bench that's helping them with all things financial planning, including advisors, investment advisors, cpas, attorneys, all of that and oftentimes and we're all guilty of it we get siloed in kind of what we do really well, you know, but it takes the full global picture and oftentimes CPAs are really focused on what we're doing to minimize tax burden this year, which makes sense and is really important, but there's this whole other long-term trajectory of tax being the biggest eroder of your wealth, forever and even when you're not here anymore. So why we've got to drive down today? What are we doing now that's going to change higher tax in 10, 20, 30, 40 years, and that's something that Mark gets an understanding. We're focused on today and looking at long-term, which is great. So just wanted to say that when we are meeting with clients in sort of Q1, which we often have a touch base in Q1, we are taking inventory. So we are looking at where did we think we were going to land in 2023? Where did we actually land? Do we have some of those accounts already open that we wanted to be able to fund by April of this year, and so then we're also doing the same for this next year.
Speaker 4:Let's look at 2024. Like Mark already said, life's going to show up. We always have to act and adjust Business changes. Somebody has twins right, but we go into 2024 with. This is our idea of what we want the world to look like this year, personally, professionally, financially. So we help our clients a lot with overall vision casting. What are our fixed expenses going to be? What are the expenses we can choose? What vacations do we want to go on ideally? Where do we think business is going to land? Are we hiring new staff? Are we not? Here's the ideal of where we want to go, and then, as part of that inventory, it's just taking a once over look.
Speaker 4:When you are so close to your own planning and you're in it, you can miss things that we see and that can be. You know. Do we need to change beneficiaries? Did someone get divorced Again? Are you having a baby? Are there changes in the tax code that we know of that are going to directly apply to your situation?
Speaker 4:If people are employed, in general, 90% of people do not know what their employee benefits say right, and there's often free things on the table we're not taking advantage of, and they're often tweaking and changing these benefits and people don't know. So a great example is being out of Atlanta, we have a lot of Coca-Cola executives. They added a Roth 401K option a year or two ago and none of their executives knew it. Well, if you're a highly compensated employee and you can get some extra cash into that post-tax environment, so it's also just taking an inventory on what you have access to. If we're projecting that we're going to have a high income year, do you have non-qualified deferred comp plans where we want to be able to carry those taxes forward? So we're taking inventory. Is that a good answer? I can keep on going. Any specific questions on those things?
Speaker 1:Yeah, well, one of the things I want to get you guys to ask some questions too, but one of the things I like about these plans is a lot of it is you're taking your income that's going to be eventually taxed, but it's like you have a time machine now and you choose when you're going to pay taxes on it based on what's most advantageous to you, and so obviously, you want to pay taxes in the years of the lower margins.
Speaker 1:So the more that we could put into this, the more we have control over the recognition, the more flexibility we have. One of the things also, before you go into questions here, because I just want us to be aware of just what's relevant right now that maybe some people aren't aware of there still may be things that you can do that will impact the 2023 taxes, even though the year has ended. So where are some of the things before we even start our new year? To not to get too of a topic. It's January of 2023. A lot of people, in many circumstances, our books are closed and there's a limit, but what can we still do here for our taxes?
Speaker 4:You can fund all those accounts that you opened within that calendar year. So, as long as you opened the SEP, opened the IRA, opened the Roth in 2023, we can now see, with the help of your CPA, this is where we think you're going to land. So this is how much we need to put into that SEP to drive down your taxes. So, yeah, we're always spending that this Q1 looking in rears. What do we need to fund to get you in the best spot?
Speaker 1:Yeah. So now, what's really cool here is you don't have to do it before you file, so we can look at a draft of your return, all the numbers, check out and then now we can look at the impact of doing these strategies. We can work together and see if it makes sense. Another thing here now I've heard some conflicting things. Is it possible to roll funds into the Roth after the year ends? I didn't think so, but then I heard you could. What are the conditions here on this?
Speaker 4:Always sometimes find different loopholes. Yes, so we can retroactively get funds into a backdoor Roth. It depends always on what other IRAs that you have funded, if you have other Roth dollar buckets. But in general, the blanket answer would be yes, we can still get money into a backdoor Roth.
Speaker 1:So let's say we find out a cost seg, like we find out when we do return, you're in like a $0 bracket and we close out your books. We realize you actually have very little taxable income this year for 23. We want to hit send and file your 23 return but then we're thinking it would have been nice to do a Roth conversion for that year and take advantage of that low bracket. So this is still possible.
Speaker 4:Yes.
Speaker 1:And now that, okay, beautiful. And now that Roth is part of your tax-free New Year's resolution gross tax-free. Never pay taxes on it again.
Speaker 4:That's right. That's when we're looking at okay, it's a low income year, what can we do to maximize this? It's always. What opportunities do we have to get dollars into a Roth-like tax treatment?
Speaker 1:Beautiful and I think you were going to say something. Were you going to say something else?
Speaker 4:No.
Speaker 1:Okay, so before we jump into some other topics, I think I saw some questions in the chat, but also, if you want to ask the live, brooke, can I make you live and you can ask on the spot.
Speaker 3:Sure, can you hear me? Yes, oh, okay, good. Yeah, I understand cost segregation, but I'm not sure what bonus depreciation means. Can you quickly?
Speaker 1:explain that. Okay, so bonus. When you do a cost segregation study, you're taking this real estate, which normally depreciates over 27.5 or 39 years, which is a long time, to write off the building in your rental or any building for your business. You break this out into smaller components that depreciate faster and those items are going to. A portion of it is going to get bonus depreciation as of right now on your 23 return is going to. You're going to write off 80% upfront. Let's say we have some five year life property. We write, you know, of 80% of that five year life property that we find in that house. So that may be furniture, that might be your refrigerator, your cabinetry, your laundry machine. That's all personal property that depreciates faster. Once we've assigned a value, you're going to write off 80% of that upfront on your federal return. The rest is depreciated over five years. So that 80% upfront, which may be increased to 100%, that's your bonus depreciation deduction.
Speaker 3:Okay, so cost seg is the process of you getting the money upfront versus 27 years, and in the depreciation is the actual money you get. That's the name of it.
Speaker 1:Yeah, in the cost segregation study you're going to find property that qualifies for bonus depreciation and break that out of your depreciation schedule to get more depreciation upfront, which means more tax savings upfront. Okay, Got it. Thank you, cool. All right, so we've talked. So there's some strategy as we do your returns and we decide if and when and how to do the cost sags which we just have to do before their file to get these deductions, and maybe we pair that. You call your advisor and see if we want to pair that with some other retirement account strategies. Now, starting on off strong to 2024, we have all this tax savings. Let's say we're not putting it into our businesses or our real estate. There's ways that we can invest it and have it grow tax free. So what are we doing here? Where are some ideas to build our tax free buckets or tax advantage buckets, liz?
Speaker 4:Absolutely. We spend a lot of time in our practice working with folks on creating their own infinite banking system. You've probably heard in the marketplace these days which is done through cash value life insurance. So once you make more money then you're allowed to use a Roth and once we've kind of maxed out the IRA, what we can get to the back door Roth. We help people be educated and understand the asset class that is cash value life insurance and how to utilize it.
Speaker 1:Now some of our clients are highly entrepreneurial and they're like well, I'm not, I don't want to wait until I die. That's not exciting, right. It's not Life insurance. I already got my health insurance and my car insurance. What's so great about this life insurance if I got to wait until I die?
Speaker 4:Yes. So the foundation of some of these permanent life insurance policies. There's a lot of whole life on the market, a lot of permanent insurance on the market. A lot of it's terrible. Some of it is good. So the largest purchasers of life insurance in our country are actually companies and banks. So if you want to look into that, that's called COLE, which is C-O-L-I Corporate Owned Life Insurance, and BOLI, which is Bank Owned Life Insurance.
Speaker 4:So, as an example, what a bank is doing with part of their tier one capital? They are taking Anastasia's $100,000, they're putting it in a savings account for her. They are taking that $100,000 and they are investing it into the portfolios of a few of the mutual insurance companies. So there are only four or five companies that we recommend utilizing these products with and they are mutual companies, meaning they do not have shareholders. They don't owe anyone else money.
Speaker 4:When they make money it goes back to the policy holders, right? So they take that $100,000, they filter it through the portfolios of these insurance companies. They're making 6% tax-free gain on those policies and they're turning around to Anastasia and saying here's your 1%, ma'am, thank you for doing business with us. It might be four this year if we're in the high savings, but in general, over time, those returns are lower in your bank accounts. So that is how they're doing this, and there are a handful of teams in the country that have been given the ability to construct these policies in the way that banks and corporations do and make them available to individuals.
Speaker 1:So continue.
Speaker 4:No, no, no, I'm like, stop me if you have questions along the way. But if and it all depends on how much liquidity you have it is backed by health. So if you're healthy enough to drive down the cost of insurance but the retail insurance model is you pay as little as possible every month for as much death benefit as possible. So this concept flips that on its head. So we're squeezing down the death benefit as much as possible to reduce the cost and shoving it full of as much cash as possible, and so all of that cash that's within that policy is now growing at 5% 6% tax-free every year and as that cash accumulates it, you can access that cash for whatever you want. In life, traditional whole life policies, it takes 40 years to get a sizable amount of cash value. That is interesting to anyone. But when we are working with high-end real estate entrepreneurs, what they're doing is they're saying I'm going to put 100,000 in this a year, I'm going to put a million in this a year and year one. I've seen us get as much as 95% access to that million dollars and you can loan against that cash right away. So I can then take this money with a line of credit out of this policy.
Speaker 4:Lines of credit are very low on cash value because banks like it it's principally protected, can't go backwards, so they'll loan it to us. With relationships we have 3%, 4%, sometimes lower. Okay, so you loan that from a line of credit. You go buy a building, you go buy a rental property. As you start cash flowing that back, you're paying back that line of credit, but the whole time you were paying a lower interest rate on that line of credit. Then you are making on that money in the bank. So you're creating your own arbitrage. Let's say it's costing you 3% to use it but you're making 6% tax-free. You are now making money on the money that is out working for you.
Speaker 1:That's beautiful.
Speaker 4:Yeah, that's a beautiful thing, yeah.
Speaker 1:Yeah. So, as you guys can see now, it also serves for other reasons. So, like life insurance, here is also going to give you the opportunity to protect your heirs in case something happens. And here's a cool idea you can listen to my talk with Ron Carruthers on college financial planning and what happens here. So most people are putting money in the 529s. What if your kid doesn't want to go to college? Now when you take those out, it's a little bit tricky. Here you might be able to put something to a raw. There's a limit. If you even want to use a 529, you have a limited window to take it out. The timing may not be ideal based on the market conditions, and the 529 only reduces. It depends on the state. But you maybe get some state tax deductions. It's not going to create the most amazing tax savings. So a lot of people are doing is they're using life insurance to get that tax advantage wealth growing tax-free. They can borrow from that to pay for their children's college.
Speaker 4:Absolutely so. I have two kids. Each of mine has one of these. It was the same mentality for us. What if our kids, also an entrepreneur, doesn't want to go to college? We want to put money on the sidelines that's earmarked for our kids, something that's meaningful and is growing, and so this creates a great place to house it. Not only that when a kid gets life insurance, you are locking in their insurability. So if they were to become diabetic or have any kind of health thing, that would pop up when they're 15, 25, 35, this precludes that being an issue as long as you get to it before then. So we have a lot of clients that are calling us as soon as they got a social security number, like, okay, let's get this started and it might be $100 a month, it might be $1,000. All of this stuff is scalable depending on what budgets are.
Speaker 1:Here's another thing If you're going to be sued, or let's- even say you're being evaluated for your ability to qualify for financial aid for you or your children for university education. They're not going to look at the life insurance, so now they will look at the 529 when you apply for FAFSA. They're not going to look at the life insurance, so now you're not going to be penalized. And with the things that we do with our clients and a lot of our clients are kind of pour on paper with our depreciation strategies it allows you to get the most advantageous pricing and opportunities and grants for your children's education.
Speaker 4:That is a great point and very true, and also you mentioned something it is protected. This is one of those. Is this compliant to say it is protected from certain legal situations? And it's different state by state, but in Georgia, if you have a lot of money in one of these and you have an IRS issue, you have a bankruptcy issue. You get sued for whatever it can be protected Because, again, it's not seen as spendable cash, it is seen as life insurance.
Speaker 1:Andy, you have a question, Shoot. It's a democratic woman from Georgia.
Speaker 2:Yeah, just thanks. I was just curious is there a certain like income level that this works for, or age that it does or does not work for, or pre existing condition that it does or does not work for? I can't really get life insurance, unfortunately, like traditional kind of like oh, you really have life insurance, so I don't know if, if this is different than that, maybe participate.
Speaker 4:No, we broker dealer through every company in the country. So we will start with those that actually screen the most challenging because they have lower internal costs, give a bigger return right. But we have a lot of clients that by the time they're in their 40s and in their 50s and in their 60s, everybody's on.
Speaker 2:You know a few something by now.
Speaker 4:Yeah, has a few things going on. So there are sometimes that we cannot get you life insurance. You're right. But there are a lot of times we can use a different provider and the numbers still make sense. It just depends on what the pre existing condition is, how long you've had it, how well it's managed. So many of those pre existing conditions pretty much always make your term retail life insurance not worth it Right.
Speaker 4:You have high blood pressure and cholesterol and whatever. It's going to be $3,000 a month. You know to have this term insurance where, if you look at it in a permanent capacity, sometimes you can squeeze it down and still get enough cash in it that it becomes powerful.
Speaker 2:Right.
Speaker 4:And there were a blanketed answer.
Speaker 2:Right, it's individual.
Speaker 4:It just depends, and the same on the on the income level. This, sooner you start these, the more powerful it is, of course, because there's more time for compounding. But it's always just a math equation and us playing on our end. You know, we have 30 year olds and 40 year olds that do 100 bucks a month, 200 bucks a month. It's still meaningful If the health is good, you know. So we're just playing on on our end to find something to say. Is this doable and is this meaningful? Is it going to move the needle for you?
Speaker 2:Thanks.
Speaker 1:So, liz, I have a question for you, because you said something when we first had some cup of coffee together, and I want to get you to elaborate on something that you told me about, which is that, you know, one of the hot topics and certainly on paper this looks very appealing is an index, universal Life insurance, and so many people are like I want an IOL, I want to know.
Speaker 1:Well, I know my stuff, I know the matrix and I'm going to get an IUL because I'm going to win the game, I'm protected. I got the game rigged in my favor and then you said something Contra that was not maybe the same here, in line with all the other gurus or one of the gurus or informed people I've met, that maybe the IUL is not the best idea. So can you tell our audience first, in case of their curious what is the index? Universal life insurance, which is very appealing and certainly, when you understand what it is, it sounds sexy and awesome. But why may this IUL not be the best option for people looking to deploy their cash into life insurance?
Speaker 4:Yes. So first of all, I love that people are hearing about and asking about IULs, this whole infinite banking creating these insurance systems. No one really knew about a few years ago but people have taken to Fin Talk on the IUL. So we're getting calls Do I need an IUL? When we dive into the numbers and actually do accurate comparisons, it is very rare that someone actually wants or ends up with an IUL Because of the way that these are illustrated. So, for instance, Northwestern Mutual, who in many people's eyes is sort of the creme de la creme on policies, so we can write anything, but we have access to theirs. They won't even sell an IUL.
Speaker 4:The thing about IULs is they're given caps. So they'll say, if the market does 20%, we are going to pay you up to 19%, but if it goes below? So they're giving caps on how far the money can fall and how much gain you can have. But they will illustrate it. There's not enough regulation around how they're illustrating it so they can show that this is what this looks like if we never have down years and you capture 19% return for the next 40 years and it looks insane. Anybody would want that. But if you ask someone who is providing you information, selling you an IUL to illustrate it, based on accurate historical data. It usually falls apart Right, because on average one every seven years, we're down. They don't model that. I mean the returns just aren't actually how they appear on paper.
Speaker 1:Wonderful.
Speaker 4:The other thing is that that IUL is a market-based policy which we can do. It's like a VUL. They're variable policies. They're dollars in the market. When we are working with entrepreneurs, 90% of the time they don't want something volatile. They have a bunch of real estate. They have things that can go up and down. What they're looking for is I have to have cash on hand because I might not get paid for two years. I don't know what the markets are going to do and I want to have cash on the sidelines so I can go buy something if an opportunity shows up. But I need to house that somewhere that it is now working for me, which means they need it in a product that's not subject to market volatility and market risk, right. So the policies most of the time that we use for these people are getting that portfolio-based return principally protected can't go backwards. So that's a different client than someone who would want something tied to the market. Thank you.
Speaker 1:Awesome. Yeah, so I'm glad to hear your perspective, because this you know, we certainly you know the cool thing about the IOL is that you're you know, for those who fear losing their money, you're capped to how much you can loss in exchange for not getting as much of the gain in the market. But it's interesting that you've had the opportunity here to actually, when you look at what you lose and you're not participating in the growth based on the historical growth of the types of funds they would invest in, there's a good probability. Now, this isn't financial advice and you don't have to follow this, right, yeah, exactly.
Speaker 1:This is just. What has been observed is that, in spite of all these things and it is nice to have risk mitigation, most likely based on historical data, may not be the best fit for the client.
Speaker 4:Exactly.
Speaker 1:Very cool. So now I'm thinking to myself. So what do you say to clients that they come to you and they're interested in you know? So you have this life insurance policy. You can grow tax free. You can pull funds out to invest into your business. Pay for college, pay for your own. Some people use life insurance to finance their retirement.
Speaker 4:Oh, absolutely.
Speaker 1:All these things, and this is what rich people do, and I like to do what rich people do because I want to be rich one day when I grow up.
Speaker 4:Yes.
Speaker 4:So, yeah, there are you. Am I stepping on your words? There's a lot of data around actually utilizing the cash value to live off of in retirement in tandem with your market based assets. So traditional portfolio method is you've got money in the markets. The older you get, the closer you get to retirement. We readjust the mix right. So you're 90% equities, 10% bonds, then we're 80, 20, 70, 30, 60, 40, right. So ideally, if we're doing full planning with a client and we have time horizon, and even if they're not an entrepreneur, we're saying we want you to arrive at retirement with at least three years of living expense housed somewhere.
Speaker 4:That's not in the market and there's a lot of data that shows. You know, here's 20 years of actual historical returns. Someone you know retires with a million dollars in their Roths, 401ks, investment accounts, right. Even your real estate side to the market in some ways, and on average every seven years that market's going to be down. So if you have no option but to sell off at the bottom, it creates a devastating loss, especially if those down markets happen in year two, three, right.
Speaker 4:So we have an example of someone who retires with a million dollars. They're pulling on $60,000 a year. There are four down markets in this 20 year span and they get 20 years out and they have around 80,000 left in that fund. The same exact fund, market based. Same exact market data, also pulling 60,000 a year. But client B has somewhere to pull money from when markets are down. Why they wait for those assets to rebound and at the end of that 20 years they have 1.1 million like their assets have still grown, and that's just by create housing and some cash. That's not tied to markets.
Speaker 1:Wonderful. So what I'm wondering now? So we have this tax free income or cash that we want to build into this tax free bucket. How much can we put into the life insurance, and what do we do with the rest of our cash? Once we've already set aside the cash we need for our businesses, where are some other things that you may help people out with deciding on putting their cash into? I?
Speaker 4:mean. Well, you know everyone, especially entrepreneurs, they are going to have their own businesses, their own opportunities that come around. We cannot beat our clients home run right, so we're not going to make more money for our clients than they're going to go make in a real estate transaction selling their business, all of that. So, unlike a lot of traditional financial advisors that want to see most of your money in the markets, you know we encourage people to invest as is safe and double down on what they know. You know they all of our clients have information into a business model that gives them an upper hand. We have pest control entrepreneurs, a lot of real estate entrepreneurs, so oftentimes they're doubling down in that, you know, hiring other staff and things. And then, as far as the amount that it makes sense to put into this, it is all specific, you know, personalized, depending on the global picture, for us to figure out what number makes sense.
Speaker 1:Wonderful, yeah. So you know is my dad gives me heat because I'm not putting so much into IRAs and 401ks and things of that nature, but I explained to him it's simple mathematics that I could put money into that or I could invest into a staff who could perform right three, four, $500,000 of work and the profit on that and the ROI on that even though I'm paying taxes on it, even after considering the tax bill is going to be far greater than the ROI of something that's going to invest in a market. And now, even if it grows at you know, 10, 12, 14%, whatever it is, that's fantastic, but that still will be less than the value creation of investing into resources and staff at your business many times. So it's a simple mathematics equation. But eventually there's only so many people I can take on at once, find at once and oversee, so there has to be something that we do with our cash.
Speaker 1:One of the things that I'm doing is I have a savings account that gives me a 5% return Awesome. So whatever cash I don't have set aside for payroll, I just put it into my personal and then to have money in the market I could take in and out that's managed by someone else smarter than me, because I do not have capacity to be a day trader. I don't pretend to be, so I let other people decide on what things those go into. And then the rest, you know, comes down to business fundamentals.
Speaker 4:I agree, and one thing you said that I chuckled at that I like is that you're not a day trader. You hire someone to do that and we come alongside our clients with all different types of philosophies and mentalities and we move the needle for them in the right direction, However that's comfortable to them. But of course, we run into people in the marketplace that are like I can manage these assets by myself. I don't really want to hire an advisor. What's the percent worth? And it's kind of like well, if you're busy full time running your business and running your family and running your life, there's no way that you're giving the time and attention to those assets that someone who's spent their life training on this is doing, such as could you represent yourself in court? Absolutely. Could you do a bunch of research and put a contract together and be your own attorney? You could, but you're going to make a lot more in the end and have more capacity to go grow your own businesses and live your own life. If you have someone do it for you.
Speaker 1:Yeah, well, you know, the more busy I get, the more business I get, and more profitable we become the less stuff I do besides my work. So I stopped doing my laundry.
Speaker 1:I stopped cleaning because other people can do that better and more efficiently. I don't cook as much, and you know working on hiring an executive assistant to read through my emails and plan my day for me, Because, at the end of the day, when you focus on your unique abilities at Dan Sullivan would say and what your time is best spent at, that's where you create the most value in the world and the most profit in yourself and your business.
Speaker 4:Is Dan Sullivan the one that wrote who, not what.
Speaker 1:Who not how.
Speaker 4:Who, not how, there, yes, that's what I'm thinking of. Yes. The premise that Mark's talking about. It's a great book. Who, not how?
Speaker 1:Yeah, hmm, strategic coach, great organization so we talked about. So we have our tax savings. We put them into the, into the accounts and vehicles that will grow tax free. We have our cash set aside into our business vehicles that are going to give us the profit and grow our wealth and also grow the value of our businesses. And as your businesses become more profitable, some of you guys are going to increase the values of that businesses. That can lead to a future exit and you call me and we'll do some exit planning on the sale of your businesses. That's another conversation of the wealth you're building in the valuation of your business. So, once we've done this, some of the things you guys want to think about and the conversations we've had on the tax strategies.
Speaker 1:One thing I'm excited about is back to bonus depreciation. One of my favorite strategies this year was we could help. We have a group that can help facilitate the purchase of finance equipment rentals. It hasn't worked for everyone, it doesn't make sense for everyone, but you have the ability to finance the purchase of equipment rented out to other people and now that equipment qualifies for bonus depreciation funds. So in that instance, imagine you put $100,000 down, you've purchased a million, you get an $800,000 tax deduction.
Speaker 1:We looked at these things and we look at how can we acquire, how can we make decisions that are going to build our wealth and generate revenue. When we share this with our clients, they're like, well, that's really cool, but I have a better idea and they actually bought trucks and rented it out to their independent contractors. So now we've actually reduced their taxes by $600,000 and now they're going to make more revenue running out their trucks to their contractors. Being aware of these tax incentives and strategic purchases and moves to drive revenue and get your tax deductions and take advantage of these incentives is going to be amazing for driving down your taxes. And then, when you're working with the right team and understanding what this all means, you got to do, you don't want to be losing the battle to inflation here. I don't know what the stats are, but I know that they're significant the inflation. So this is why you need people like Elizabeth to understand what are you doing with the cash.
Speaker 1:Because, first off, you need something set aside for a rainy day, and just about everybody who's successful and wealthy does other stuff with their cash.
Speaker 4:Absolutely.
Speaker 1:Yeah.
Speaker 4:That makes sense. And then the only thing that, not to take us backwards, but that I wanted to touch on in sort of the Q one thing is tax loss harvesting and if you have a good financial advisor, they're looking at your account, your accounts that are in the market, and at least every quarter they're figuring out of all these asset classes what was at a loss, what can we sell off, capture that loss and as long as they wait 30 days to repurchase that same makeup of mix of allocation, you get to lock in that loss. So that's something that when people are managing their own assets, they're probably not aware of and something that we're talking about in the beginning of the year, kind of what were we able to save you that you can apply towards taxes.
Speaker 1:Wonderful. Now we have some strategies where we can do some advanced tax loss harvests at our firm that involve leverage, where we've been using this to mitigate capital gains on the sales of businesses. There's a whole world out there of tax loss harvests harvesting ideas that can be really and my firm is different from this is not financial advice, so I'm not going to get Liz in trouble by saying that she does something. This is saying we know people and facilitators that can help organize partnerships that do really fascinating things and special partnership allocations, and so there's a lot of room for opportunities and resourcefulness here. And the one thing that I think is really cool here now wash sale rules have prevented us to manufacture losses. If that's where, if you have a stock and you buy it back at a lower price, you can't manufacture a loss. You can't do it. But those rules are not in effect for cryptocurrencies. So some of you guys have cryptocurrencies and you work with the right people. Maybe there's some way to manufacture losses there and this is completely legal.
Speaker 1:This is not a controversial topic at all. It's just cut and dry right there. They may change this law. So we're talking right now this is January 23,. They may change this and they discuss changing that in the future. That's really interesting. Another interesting thing is there's no rule against manufacturing gains. So let's say we're in a $0 tax bracket. Let's say we do a bunch of cost s, we pay no taxes at all or agi is zero. Well, that's great, but let's not stop there. Let's say we love our Apple stock, we sell it and buy it back. First, $80,000 tax free capital gain of your married filing joint. Now you prevented $80,000 of future taxable capital gain. So cool stuff out there, very cool stuff for people like you and me.
Speaker 4:At least we think it's cool for the tax geeks out there. Exactly.
Speaker 1:Okay. So, liz, can you we're, we're, we're gonna wrap things up now, Elizabeth, I mean and what I want to know from you is worse. So how can people reach you, can you get? Well, first off, tell us a little about your, selling something interesting about yourself, what's something I should have asked you that I didn't, and then how can people connect with you?
Speaker 4:Hey, I should have had a warning on these. Interesting about myself. I speak sign language Very random. That's my random fact always. Interesting I mean something that you should have asked me that you didn't. I don't know. I don't know. Let's go with the tax loss harvesting. I threw the through in there at the end.
Speaker 4:So, yeah, and then the way to find me, my Instagram, is elizs Davis, so that's ELIZS Davis, and then it's old school, but a great way is to send me a text, and it's 312-933-7757. I know it's old school, but it's the best way for me to quickly get back and set up a quick five 10 minute call and see if there are things that we can work on or not.
Speaker 1:Awesome. All right, liz Elizabeth yes, we don't have Liz's in New York. We only do one syllable names whenever we can. Thank you so much for your time. I hope all the listeners and all the people watching the recording of this had some great insight here and some actionable items for you to create a tax free 2024. Let's start off this year strong. Let's take care of business and we hope to keep providing great resources. If you know anyone who can use us, tell them to email info at Mark Probert CPA. And also we are endlessly recruiting. Give me somebody good. So if you know someone who does taxes, or maybe even bookkeepers, we just send them our way. We're always hiring and we'll keep in touch. You guys, have a wonderful rest of your day.
Speaker 4:Awesome, great to be with you all have a good one.