565: Tax Strategies for High Earners—And What to Avoid

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One of the biggest frustrations I hear from successful professionals, business owners, and investors is simple:

“I feel like I’m paying more and more in taxes, but nobody is showing me legitimate ways to reduce them.”

The reality is that there are numerous tax strategies available to high earners. The challenge is separating strategies grounded in well-established tax principles from those that rely heavily on subjective interpretations, aggressive valuations, or structures that may attract unwanted IRS scrutiny.

Personally, I prefer strategies that are as black-and-white as possible when it comes to the tax code.

Over the years on Wealth Formula, we’ve discussed many of these approaches, including cost segregation studies, bonus depreciation, real estate professional status, retirement plan strategies, charitable planning, and other opportunities available to high-income earners.

What I generally try to avoid are strategies that rely heavily on subjective valuations or interpretations. A good example is the conservation easement space, where the IRS has significantly increased enforcement activity in recent years.

Whether certain transactions were originally well-intentioned or not, many investors have found themselves dealing with audits and uncertainty that simply aren’t worth the headache. I speak from personal experience.

In this week’s episode, I speak with Chris Miller about a variety of tax planning concepts currently being used by high-income individuals and business owners.

Some of these strategies may be familiar to longtime listeners, while others may be new. The goal of the discussion is not to promote any particular strategy, but rather to educate you on what’s available and encourage informed conversations with your own advisors.

As always, there is an important caveat: This podcast is intended solely for educational purposes.

Neither Chris nor I are providing tax advice to you personally. If you decide to explore any strategy discussed in this episode—whether through Chris’s firm or any other advisor—you should conduct thorough due diligence, involve your own CPA and legal counsel, and make sure you fully understand both the potential benefits and risks before moving forward.

I should also point out that I personally like a strategy that combines our Wealth Accelerator strategy with charitable planning. In its simplest form, it combines charitable giving with properly structured life insurance to potentially create:

• Significant current-year tax deductions
• Future tax-free income for life
• A meaningful legacy for both your family and charitable causes

Like any strategy, it isn’t appropriate for everyone, but it represents the type of planning I generally find most attractive—where the rules are relatively clear and the tax treatment is well established.

If you would like to schedule a call with me specifically about the Wealth Accelerator strategy, you can do so here:

https://wealthformulabanking.com

In the meantime, I hope you’ll enjoy this interview and come away with a few new ideas.

If you decide to contact Chris’s firm, be sure to let them know you came through the Wealth Formula Podcast. They are offering fee waivers for members of our audience.

Let me know what you think!

Listen on Spotify:

Transcript

Disclaimer: This transcript was generated by AI and may not be 100% accurate. If you notice any errors or corrections, please email us at [email protected].

Welcome everybody. This is Buck Joffrey with the Wealth Formula podcast coming to you from Santa Barbara, California, Montecito to be specific. Before we begin, I do wanna remind you that there is a website associated with this podcast. It’s wealthformula.com. Go there, check it out, and take advantage of whatever resources we have for free.

With regard to today, let’s talk about, uh, taxes, something we talk about quite a bit, uh, because one of the biggest frustrations I hear from successful professionals and business owners is simple: feel like I’m paying more taxes, but nobody’s showing me legitimate ways to reduce them. The reality is there are actually numerous strategies available to high earners.

The challenge is separating strategies grounded in well-established tax principles from those that rely on heavily subjective interpretations and aggressive valuations or structures that may attract unwanted IRS scrutiny. Personally, at this point, I prefer strategies that are as black and white as possible when it comes to the tax code.

You know, over the years on Wealth Formula, we’ve discussed many of these approaches Some of them simple cost segregation analysis plus bonus depreciation, which is one of my favorites, and, uh, it’s always a real estate professional status. Uh, you know, you’ve got, uh, charitable planning, other opportunities.

What I generally try to avoid are strategies, again, that rely heavily on subjective valuations or interpretations. A good example of that is something that, well, our group got involved with a few years ago, I did, uh, conservation easements. Uh, those of you involved with conservation easements know that the IRS has increased enforcement activity in recent years, and whether these transactions were, you know, legitimate or not, I mean, they were, they were s- clearly within the law, uh, the IRS is auditing them.

They’re punishing people for doing them because they don’t like them, and people are dealing with, you know, uh, some audits, paying back some money, and that’s a headache. And, you know, again, I’m speaking from personal experience. Uh, in this week’s episode, we’re gonna talk to Chris Miller. He’s a v- you know, he does a variety of tax planning strategies, and some of these strategies are gonna be familiar to you, some of them are not.

And again, the goal of this discussion is not to promote anything in particular because believe me, I don’t wanna do that. I don’t wanna get involved with that. All right? The podcast here is solely for educational purposes. Um, neither Chris nor I are providing any tax advice to you personally, uh, and if you decide to explore any strategies discussed in this episode, make sure you do your own due diligence.

Involve your own CPA, legal counsel, whatever you gotta do. Um, I should take this moment also, I will take this moment also to point out that I personally like the strategy that I’ve been talking about with Wealth Accelerator. If you get my emails, if you’re on my email list, you’ve seen it, which combines this sort of simple, you know- retirement strategy that we do with Wealth Accelerator with ca- tax-free income with charitable planning.

Basically, what it does is creates a tax deduction in the first year that is actually used to create an asset that creates future tax-free income for you for life, and then there’s also a meaningful legacy for you in terms of a charitable cause, and also a death benefit for your family. It’s not appropriate for everyone, uh, but I do think it’s something worth looking at.

A lot of people in our group are doing it, and it’s pretty, you know, it’s pretty well grounded in, in basic law. It’s like, just, you know, it’s like using a credit card but, you know, paying with your death benefit, so. By the way, if you’d like to talk about that, you know, shoot me an email and, uh, I’ll send you a link and, uh, we’ll, we’ll get you, uh, get a consult for you.

In the meantime, enjoy this podcast. You know, think about these ideas. Uh, again, some of them are, um, you know, we talk a lot about the, the stuff that, uh, uh, that is, uh, very much clearly inbounds, and then we talk about some things that, you know, Chris, uh, talks about some things that, you know, might be, might be stretching the limits a little bit.

Either way, you’re gonna learn something, and we’ll have that discussion with you right after these messages.

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Welcome back to the show, everyone. Today my guest on The Wealth Formula podcast is Chris Miller. He’s founder of One Atlanta Tax Solutions, works with high income earners and business owners, uh, on proactive tax strategy. Chris, uh, welcome to the show.

Thanks, Buck. Thanks for having me, I really appreciate it.

So first, before we get started, just to, uh, clarify, you’re not a CPA. Explain kind of what your, your background is and expertise. Sure.

Uh, we originally come from the financial industry of doing traditional financial planning, um, you know, annuities, insurance, that kind of stuff, estate planning. And our story really is every time there would be a correction in the market and clients would, you know, innately blame us, like, “Why didn’t you see it coming?”

And we kind of would, like, scratch our heads, like, it’s not like we have a Magic 8-Ball like Nancy Pelosi does. So- Right … we sort of realized that for our clients that were higher income earners and high net worth individuals, we were implementing a handful of strategies, you know, like some of those that you and I mentioned prior to getting on the show.

Um, and so we decided to focus on that, realizing that there is an ROI on tax savings. Sure. You know, if you pay 100 grand in taxes and I put 30 grand back in your pocket, there’s an ROI on that, and it has nothing to do with risk, it just has to do with creating efficiencies, primarily as it pertains to taxes.

So what we really are, Buck, is because we come from the financial space and we realize how inefficient the tax industry is. You know, a CPA, for the most part, they only know about 25% of the code is what they’re, uh, required to know to pass the exam, which is no knock on them. Yeah. It’s just how it is. So unless they’ve learned how to evolve and become a better tax planner, most CPAs, if you really get down to brass bare knucks, is they’re just filing your returns.

They’re just doing bookkeeping, that kind of stuff. So we come in as a solution for them and a solution for the financial advisors, the, uh, stockbrokers, all them. So we’re working with all of their clients to provide these strategies that, that they can use. So really the easiest way to say it is, like, we’re like a tax brokerage firm.

Right. Okay, great. Well, let, let’s start, uh, let’s start just kind of going through some potential strategies, if that sounds good to you. Um, and, you know, one of the things we talked about, uh, finally before we started is that, you know, there’s… You’re, you’re absolutely 100% right just in terms of, you know, the CPAs out there.

You know, the vast majority of them, their focus is not on necessarily trying to save you taxes in any sort of, like, creative, meaningful way. They’re gonna stick to what’s, you know, just what the code black and white is. The problem is that most of the code is not black and white, right? And then most of it is, most of it is gray, and most of it is up for interpretation, and it kind of depends on your, uh, how your CPA understands that and is, is comfortable with that.

So, you know, there are things that are less, I think, controversial than others. There are certain things that are on what the IRS calls the Dirty Dozen. Um- You always says, talk about some of the basic stuff first just to, you know, things that’s not a, not controversial at all, but, you know, like even like a defined benefit plan.

I mean, some people could be doing a defined benefit plan, they don’t even know it. What is a defined benefit pa- plan or a cash, uh, balance plan?

Sure, yeah. I mean, I know your background, it was as a physician, so about 40% of our clientele are actually surgeons. Um, which they’re, you know, that’s a unique mix there because you s- could…

You got a high W2 income, and then you’ve also got usually some other high income in other areas. Um, but they need a lot of help. So we did a lot of plans, those kind of plans with doctors. Um, and really all it is, is it’s, it’s a qualifier retirement plan similar to a SEP, similar to a Solo K, similar to a 401, except for it’s just on steroids.

It allows you, based on primary, two primary factors, your age and your income determines how much you can dump into it. But, you know, I’ve got physicians that make a million plus that are able to put, you know, 2 to 3 to $400,000 away a year if they’re, especially if they’re old enough. Mm-hmm. So it could allow you to catch up while also creating some large deductions.

Right. So yeah, typically the older you are, the more you can put in these things, right? Is that- Correct … kind of the way it works? And then, you know, um, is there, like how long do you put stuff in? Like h- how does that typically work?

Yeah. So, um, you know, you… The cool thing about those plans is you can sign the paperwork, for instance, this year in November, December, and you don’t have to actually put the plan in force and, and fund it and really until you file your return.

Mm-hmm. So technically you could go until September 15th or so if you want it the, um, the following year, but you’re getting a deduction for the previous year. So that’s cool, um, for the guy who needs to get the cash together ’cause he’s been living high on the horse. Um- Right … like as we know, a lot of, you know, physicians do, for instance.

Um, so they’re normally not long, long plans. They are normally like a 10-year plan or a five-year plan, or they have to be a five-year plan at minimum, really. So, um, but most of ours, we probably do a 10-year, like a 10 pay on those So, but you’re allowed to… You, you’re basically putting way more money into it than you would, um, that’s deductible.

Now, I also personally like, because of the things that I like to invest in, um, which you may be the same, Buck- Mm … um, I like also just setting up a self-directed SEP or a self-directed, um, Solo K. You’re not gonna be able to put as much into it, but I believe more in what that money’s gonna get invested in than putting money into the stock market- Right

and stuff like that, you know, personally.

What’s, what’s a max on a, on a SEP, for example?

Uh, it changes every year. Um, I wanna say this year, assuming you’re under 59, it’s, it’s gonna be, like, 70 to 80K for, for a household. Um, and it goes up a little, a little bit every year, so it might be a little higher this year.

And then if you’re obviously over 59 and a half, you’re allowed to catch up, do a little more. So it’s still a good amount of savings that you’re able to put into it. But you can invest in businesses, gold, silver, you know, crypto even. There are all, there are a lot of options you can do with those.

Um, let’s, let’s move on to something else you wanted to talk about.

We, you know, we, we were talking offline about bonus depreciation, which is frankly one of my, one of my favorites because, you know, we do a lot of real estate and we do cost segregation analysis and bonus, uh, bonus depreciation on all that. We had, uh, you know, we’ve, we’ve been involved with airlines, uh, aircraft where you might end up actually getting, you know, 300% of, of your, uh, write-off of…

in terms of how much you put in because you used some leverage. Talk a little bit about that. Like, what are some of the things that, you know, that you guys do in the spa- bonus depreciation. Why don’t you explain that for people first, and then, uh, in case they need to catch up on that.

And then- Yeah, I mean, I know you guys talk about it a lot.

Um- Mm-hmm … to the big, beautiful bill that came out last year with Trump, it made bonus depreciation just a lot more appetizing. It allows you to apply 100% of it to year one. If you’re W-2 for this year, it’s like 512,000 that you can apply. So that’s still solid. I mean, you got a guy making half a million W-2 that could participate in some bonus depreciation to basically wipe out probably all his federal income tax, potentially some state.

Now, can

you apply… But isn’t that just against other passive-

No. So again, th- th- that’s what I was trying to tell you, how we’ve… The groups that we work with, they’re, they’re the top of the food chain when it comes to creating these structures, whether it’s through, um, trust or, you know, multiple LLCs. But it’s the way it’s done, because it’s not…

It- you’re talking about depreciation that’s tied to a piece of real estate.

Yeah.

So for instance, you brought up the jet planes, okay? Mm-hmm. So one of the groups I work with, they do the jet, they do the jet plane do- deals all the time. They had two very famous, um, brothers that are w- you know, NFL guys, um, that everybody knows, and they bought four planes last year- Mm-hmm

to wipe out their, all their federal tax. And then also it, that plane will lease out and actually generate income, so it’s a, it’s a win-win. But the way that’s structured is, in the, with the plane rules, one of let’s just say me, you, and three other people partner together and do planes, only one of us has to get the qualifying hours, but it’s just like s- over 700 hours a year.

So that would be hard for you to do or me to do or a professional athlete to do, but one of the partners does it full time and it allows us to all participate because on paper we’re all, we are all partners. So they do it that way, and they can literally wipe out their W-2 income, the millions of dollars of it- Hmm

through that structure. Another option is, you know, tiny houses have gotten really popular. Tiny houses have a kind of a different qualification too. Um, there’s also one we do with… It’s more of a metal house, but they’re all little houses. And, um, it’s the way they’ve structured it is for, for instance, one of them you put down 17,000 down on a $170,000 house.

So you put 17,000 down to wipe out to get s- 170 in depreciation. So that’s a 10 to one. There’s like a couple grand of a-

How do you, how do you get a 10 to one on a-

Well, because of what it’s worth versus what you, you have to pay towards it. And then what they do, the groups that we work with, is they create a turnkey white glove service where basically everything’s done for the client.

So the client doesn’t have to mess with finding renters or pla- putting it at a resort. So they put these on like golf resorts and big resorts in Florida and all over and rent them out. And so the goal is, is it’s gonna rent out, cover all the costs of everything, and then it’s still gonna net back, you know, a good percent to the client

So is that actual debt or what, or valuation when you’re talking about- There

is, but it’s a non-recourse loan.

Uh-huh.

But yes, it, it, there it is, there is, it is done through a loan structure.

The, the reason I’m

asking is, like,

and again, I, I, I wanted to, you know, just, you know, remind you, you know, th- this group, including myself, have done things like conservation easements before, which rely heavily on third-party valuations and, you know, and in some cases that gets, uh, obvious in the case of, uh, conservation easements, those have been, a lot of them are just wrecked, right?

And- Yeah,

over 2,000, there’s over 2,000 pending audit cases for-

Right …

conservationers

in the system. And the big issue there is that you don’t have a concrete value. You have, like, a third-party valuation. So anytime there’s a valuation, personally, I get a little, I get a little nervous about that. But de- de- Right

explain it, explain it from your perspective.

So, um, obviously you have some of these deals where they, they get third-party valuations, but you, you know, we, we vet them. So we take this full structure, how they’re doing it, soup to nuts, everything, and we run them through our w- legal teams. Then we have clients, I mean, I have clients that make tens of millions of dollars a year.

They don’t mess around. They will pay lawyers 50 grand to vet these deals. The only thing we’ve ever had come back is the lawyer’s like, “This is great,” like, “This is amazing. In 30 years I’ve never seen anything like this, but I would recommend changing some verbiage in the contract.” And so we’ve gotten that kind of feedback, but we haven’t had any of the big lawyers or big CPAs that have looked at it actually say, like, “No, this is…

I don’t see where you’re coming up with this.” I mean, they, they really like it. So far we’ve gotten, um, really, really good responses.

Have you seen much in the way of, of audit triggers from this stuff?

No, we haven’t had any… We, personally, my firm, which, you know, we’ve been doing this for, uh, I’ve been doing it for almost 20 years.

My father’s in 30-something years of doing it. Uh, personally, we’ve never had any clients get audited from anything we’ve done. Um, usually if they get audited it’s from something crazy they did. Like I went on my honeymoon to Africa, an Africa safari and tried to write it off.

Well, yeah, but I mean, listen, you still have like, I mean, you guys used to do conservation easements and clearly, clearly that is something that has kind of turned up to be not a great thing for, you know, for people who got involved.

So I’m just trying to figure out like what, you know, what implications, uh, people have had with some of these things that you’re talking about right now.

Yeah, I mean, again, I think it’s the vetting process. On the easement side, we didn’t have any clients, um, actually have to, uh, get penalized or anything.

Some of them got audited, but they all passed. So, and, and all of our stuff comes with audit defense, uh, usually opinion letters.

Mm-hmm.

I mean, there’s… Normally it’s everything that the CPA or tax attorney would want to see to be okay- Yeah … with signing off on it, they’re getting. Got it.

Let’s talk a little, uh, about some other stuff, uh, comes up that I think it’s probably worth people knowing.

I just looked on your website to see some of the different things that were there. Uh, talk about deferred sales trusts. Um, you know, maybe give me a real-world step-by-step, uh, sort of example of how those things work.

Sure. Um, I mean, just a s- a simplified answer of that, um, not, personally not my favorite, but you’re crazy not to offer it because there’s just so many people that do them.

I think they kind of, they see something shiny and get distracted. But you’re deferring the tax is really what happens in the hope of they’re going to get a step up in basis when they die and it goes to their heirs. And as long as that law stays in place, it all works out. If it doesn’t work out, like if that changes, there’s a usually a big insurance policy written on the client and that is going to cover the tax and hopefully also leave some money left for the beneficiaries.

But our whole thing is like, um, while we can do those, my job is to save the client the most amount of taxes now, also in the future, but, but now too. And if you really understand the, the name, it’s in the name, a deferred sales trust. It’s deferring the tax, kicking a can down the road that’s inevitably going to end up being a bigger can.

If it all works out, great. But in our, with the options we have, the solutions we have, we can actually nip it in the bud right away with our strategies. They don’t have to defer it. They can go ahead and take care of it.

Um, also noticed you’re doing, uh, micro captive insurance. Is that something that you’re still doing?

‘Cause that’s again, one of these spaces that, as you know, is, has gotten enormous, uh, IRS scrutiny.

Yeah. We, we haven’t done those in the last… Since it’s gotten, you know… Again, we’re not trying to create any red flags, so if something gets too hot and heavy, we steer away from it. But we, we, in the past, we did do a lot of them, and we haven’t had any issues with them.

Yeah. Yeah. Those, those, essentially in that situation, just so people understand what that is, it’s, it’s kind of a self-insurance, right?

Correct.

Explain kind of how that works in theory.

So, um, COVID is a perfect example, all right? A lot of businesses went under. They went under because they didn’t have enough capital to run the business through all the hard times of COVID, right?

You can insure everything in your business, but you can’t insure your capital, your cash. This allows the business owner to self-insure. So business owner dumps in a million dollars, usually like 60% of it, so 600K, is earmarked for claims or whatever. 40% of it, or 400K in that example, you can actually invest in the market, uh, through Charles Schwab or, you know, usually one of the big ones, uh, is an option for those.

And then after 12 months, that now money becomes earned, and you can either distribute it to yourself, which it would obviously have a tax in that case, or they have a way to basically do it through a loan, uh, where it makes it not taxable. And the loan ra- interest rate is, you kind of determine that, so it’s very low.

It’s, you know, a, a minimal amount, lower than w- any kind of loan rate we would get now. So, uh, but the main idea is if something like COVID happened again and you needed a m- million dollars to support your business but you didn’t have it, if you had a re… That kind of insurance plan, it would be able to support you, take care of you.

Got it.

So that’s the gist of it. But if done correctly, done properly, where they’re actually, like, we would partner with legitimate insurance companies. So these are proven big companies in a, in the US, and we would partner with them, so the client was essentially an extension of that insurance company.

Yeah. And, you know, the issue I think with captives sometimes and with some of these is, you know- If you, you know, they, they, they… It’s not that they’re inherent, there’s something wrong, that you’re doing something illegal. It’s just that you also don’t wanna be sort of in the crosshairs of the IRS, and they see a captive insurance company that is gonna trigger, not necessarily not it, but certainly a second look, right?

And, and that’s some of these things that you wanna try to avoid. Agreed. Um, uh, what’s, um… I don’t… Are you guys doing restricted property trusts much?

So, you know, again, this has been around for a while. We’ve done them a lot in the past. Um, they actually just had a big ruling, I wanna say last year on their big case.

Um, and I don’t know if you’re familiar with that. That’s, like, actually kind of similar to a defined benefit plan. Um, it

just- Yeah, explain how it works, just so people know …

it, it’s utilizing basically a trust that owns a big, giant insurance policy, but there you get a larger deduction on what goes into it than you do on a defined benefit plan.

So usually, like, on a defined benefit plan, if you’re putting in a dollar, you’re saving, like, 40 cents.

Mm-hmm.

So when this is usually more like 60 cents. So it’s just a little, a little more robust tax savings, but it’s still tied to an insurance plan as, um, that it feeds. Mm-hmm. And then it’s a f- it’s a five to seven year plan usually.

Um, I’m actually friends with the, you know, Ken, the founder, owner of it, uh, creator of it. But every blue moon they get a, you know, a big client that goes through an audit, and they fight it. That’s kind of part of it. Like, he, he fights it. He defends it. There’s nothing coming out of pocket for the client.

Um, but it’s a really good option for a business owner. It- that’s the only kind of person that could do an RPT.

Got it. Um, how does that deduction work exactly if people do that?

The, for the RPT?

Yeah. So you have a trust that owns an insurance, uh, life insurance, and why do you get a, why do you get a deduction for putting money in there?

Well, there, the, it’s, it’s how the st- the trust is structured. How they tr- how they structure the trust, the money that goes inside of the trust is able to be deductible to a certain percentage, but it’s the type of trust that it is. I mean, it’s a, it’s a, it’s a one-of-a-kind thing. There’s not, it’s not like a, a SLAT or a living, you know, trust.

It’s a very unique trust that, that creates that deduction that goes into it. But it c- obviously it has limitations, it has requirements, and you can’t just kind of do what you want w- when you want. You have to follow the rules exactly to the T of what goes into it. But the easiest way to really, like, if you just want to simplify it, is it’s like a big permanent insurance policy where the bulk of the money you put into it is tax deductible, which is, you know, a good benefit.

So, ’cause it’s also got that giant death benefit growing that’s significantly more than what’s going into it. So when it’s all said and done and you die, you got, you know- Way, you know, 10, 20, 30x what you put into it.

Yeah. The, you mentioned there was, like, a big case recently. What, what happened there?

They won.

Um, I don’t have it in front of me, but you… If you s- if you s- research or if your listeners resea- research the restricted property trust, uh, with King Crab, they’ll find there was a case that went through, uh, I believe it was in 2024, but it might have been last year. But I think it was 2024, but they, but they passed.

I mean, every- everything they’ve had, any times they’ve had ones they’ve been able to fight it and win. Yeah. So… I

guess one, one other thing, uh, I’ll ask you about it that comes up a lot is charitable LLCs. Mm. Is that something you’re doing much of?

We have, again, have them on there because people ask about them a lot.

Yeah. Um, we g- we usually take that client when they come in and ask, and we steer them towards doing a leveraged charitable deduction because our s- our CPAs, tax attorneys, e- even all the, the big, you know, three, they love those structured. They don’t have any issues with them. They don’t ever create any red flags.

And the nice thing about it is it offsets state tax, too, so it works really good for clients that are in, like, California and New York, you know, New Jersey, places like that. Um, but there’s just, in our opinion with the charitable LLCs, you know, again, happy to set them up.

But there was- Yeah. Explain how it works again at a high level just so people kind of have- They-

an idea.

So really it’s like the client… Say they, say the… You have a lot of real estate people, so you could put the real estate inside of the charitable LLC, and the idea is one day when you go to sell it, you’ve got a big deduction to offset the taxes on that sale of that real estate. Um, the… I think who you choose to use to, to create it is super important though because, you know, there’s the main guy that I guess came up with the strategy, um, out, he’s out in California, but he’s very, very, very expensive.

So- Mm-hmm … you have to under- you have to kind of weigh pros and cons and the cost of it. But that’s essentially what it is, and then one day you’re gonna sell that property, and that’s where you’re gonna really reap the benefit of it. Um-

How do you get the benefit if you’re putting it inside the, an LLC?

What’s… I guess I don’t really understand what the-

Well, the, the charitable aspect of it is going to offset the taxes.

So we’ll- So you put this property in, essentially you’re donating it to a charity right off the bat and taking the deduction, right?

Correct. Correct.

And then, um, and then what happens when, I guess, you’re, you’re leaving it in there until you die?

Or w- what are, what are you doing?

No, I mean, obviously once it, once you die, it’s gonna go to the charity. But, uh, up until then you have the ability to w- continue to leverage that account.

Right. Right. So you could liquidate the property, and then you wouldn’t be taxed on it?

Correct.

And then, uh, could you access any of that money ever again?

It… Yes, there is a percentage that’s accessible.

Yeah.

The, the… Normally, they’re just investing it inside of the structure into something else. That’s usually what’s happening. So, you know, it’s all about, like, how things are coded, how, what kind of entities they’re in, or trusts or structures. That is a huge part of creating a, an efficient tax plan.

Got it. So, um, what, uh… You know, I’m, I keep asking about specific stuff, but a lot of it sounds like you guys are sort of steering away from ’em.

Well, yeah, I mean, obv- obviously, you’re used to a lot of the… When, when we got into this business, everything you’re talking about, that’s what we did. Right. But this world has changed so much.

Sure. Like, I tell people now, when you get on social media, you see tax this, tax this. You’re getting bombarded by people saying they do tax stuff, and then they… In my opinion, it gets even harder for the consumer, ’cause you gotta weed through those guys to figure out, well, who’s the one that’s legit? Who’s the one that’s been here a long time?

Because it, it is different. It’s not like just investing money. You know there’s a risk. There’s a calculated risk. I’m investing in a multifamily. This could happen or this could happen, but I know ultimately this is what it’s worth and this is what I’m paying for it. When you’re talking about taxes, it’s, you know, this is the government.

Yeah. So there’s a little bit of fear involved, ’cause it’s like I don’t want to end up in jail. I don’t want to pay a bunch of fines and penalties. So it’s very, very important to be able to create that trust for the client so they’re happy, so they’re not, like, just sweating over it all the time.

So, um, what else is…

Tell me about something we haven’t talked about maybe that you, you, you think is worth another strategy that is worth talking about that maybe we haven’t talked about.

I mean, personally, the, the hottest thing we’re doing right now is bonus depreciation. That is by far what we’re doing more than anything.

I mean, there are trends, I will say, every couple of years it seems like depending what happens in the tax code, there are trends that pick up heavier. Um, but- We, what most of your listeners are cr- getting passive income?

No, I think they’re, you know, they’re physicians and, uh, or other professionals, business owners, all across the board.

I think- Sure … I think there’s a lot of W2 people out there, and that’s the biggest challenge, frankly, I mean, the W2 stuff. And-

Again, that’s where you

would see- Just people like to do, like, you know, oil and gas, but in my experience, every time I’ve ever done oil and gas, it’s great, might as well just given away the money ’cause then nothing ever comes back, right?

Um, and, uh, so, so, you know, I mean, we’ve, we’ve talked about some of the other things. I mean, one of my favorites just in general for people to do on their own is, like, this, you know, these short-term rentals and that kind of thing. But, um, what else… I mean, is there anything, like, else… I mean, let me ask you this.

Let me just drill down on the bonus depreciation thing ’cause, again, I don’t quite understand how you get active participation on that. Because, um, you know-

Yeah, I’ll, I’ll explain the one in a little more in depth, and I think it’ll be good for your listeners. ‘Cause I’ve got W2 guys, again-

Okay, so let me, let me just set a background for people so they kinda understand the context.

So generally speaking, you’re gonna have, you know, you, you get bonus depreciation, uh, from a lot of these assets that we have. You know, like we talked about real estate, and every time you’re investing, you’re getting a K-1, uh, the, the next year is showing you’ve got, you know, 70% or 80%, you know, losses of, uh, as a, as a, uh, as a percentage of how much you actually put in to that deal.

So great, it’s awesome, right? But the, the issue is that you can really only offset that against other passive income, which hopefully you have. You might even have and you don’t even know you have it. You have some ownership in a surgery center or something like that, and your CPA is not coding it as passive income.

But you, it, the, the, the limitation of it, of course, is again, you have to have passive income to actually offset. The active income is, you know, W2 income, stuff that you’re earning, earned income is You know, it, that’s, that’s where it’s, it’s much harder to get deductions. Now, if you’re a, a business owner, for example, you know, I’m, uh, in the process of, of looking at, you know, starting another, uh, med spa in my area.

And, um, if I, if I buy a laser or something like that, and I bought it, uh, you know, it was like $100,000 or something like that, uh, I can, you know, I can take that deduction myself because of bonus depreciation or Section 179, um, because it’s part of my business. What I’m not understanding is how you can invest in something and not, uh, and, and take that deduction.

Are you, are you claiming to be part of that business essentially?

Right. So on active income.

Mm-hmm.

All right. So, okay, there are some of our structures, what we do is basically to get that 100 hours is what you’re talking about. Get that 100 hours to be a, a participant to get your participation hours. Is

it only 100 hours, really?

Yeah. Most of them require 100 hours. Okay. Not all of them. I’m just giving you an example.

Yeah.

The ones that require 100 hours, in other words, they’re structured that way where you’re a client, Buck, you’re like, “Heck yeah, I wanna do this. I’m gonna save 100 grand in taxes or whatever.” Um, and it’s like, “Great, no worries.

Wait, we’re, we got this event down in Florida. It’s gonna be fun. You know, we’ll do some, you know, cool stuff. Could you and your wife fly down for two days?” Two days down there, that’s 48 hours. That’s double it for you and your wife. That’s 100 hours. Boom, you’re done. You come to Florida for, you know, w- two nights, one night, no, you know, nobody’s complaining, and we knock it out.

So that’s how we do that. On the other structures, it’s done through a grand tour trust, and I actually have a handful of different strategies that utilize grand tour trust. Uh, they… It’s a very unique trust, but essentially what happens is it allows you as a participant to do not have to get the qualifying hours.

The trust gets the participation hours. Like, the trust qualifies and gets that through the trustee, so then you’re covered. You don’t have to. You just basically become part of a trust.

Got it. Okay.

So- Interesting … those are the options for that. But, uh, but again, we like them. I mean, I’ve got, um, you know, I got PI, personal injury guys buying…

that bought like 20 plus of them last year, right? So they’re, they’re doing like, um, 7 to 10 million a piece. Um, they had it vetted by a, a big time law firm group. Everything went great. They were happy. Uh, but again, we’ve also got it for, you know, W2 guys, s- let’s just say physicians making 600,000 where they could wipe out 512 of that 600 through this structure.

And then these particular houses are being in two different ways. So like, uh, Meta, that company is building a lot of data centers. This is just an example, but there’s lots of companies building data centers. Well, the big trick with building a data center is they’ve got to have housing, and it’s the same with an oil rig.

Oil rig can’t start until they have housing for the work- workers. Well, what is a… what’s a better house than a completely mobile house that you can set up really quick, really easy with two guys, live in it for however many weeks, days, whatever, and then pack it up, put two of them in a shipping container, and then you can ship it anywhere el- in the US within 72 hours.

So that’s really, really strong for the data center. So that’s one of the places, you know, oil rigs is an option. But then we also… It has a, it has a humanitarian benefit, this particular structure So the state of Florida, for instance, has already bought 500 of them. Um, so any states that have a lot of disaster relief issues, the cost of housing those people when they lose their homes, I don’t know if you’ve ever looked at it, but it’s astronomical.

The Airbnbs, the hotels. So if a state like that, like Hawaii or whatever for the fires, has a reserve amount of these stored in a big warehouse, it’s ready to deploy it the moment of that happening, it’s huge. Number, number two, the 72 hours is super important if you understand, um, the likelihood of homelessness in- increasing basically is really, really drastic if that person isn’t put in a house within 72 hours.

So the fact that this can get to them that quick and get them in a house is huge. Uh, so I mean, Trump’s a, a big, big proponent, a big supporter of it too. Um, but they… This one, along with getting the depreciation, what’s nice about it, because they’re renting it out, you’re gonna make about 10% each year on your money, you know?

And so if I’m making 8% to 10% on my money, but I also wiped out a big chunk of taxes of federal income the first year I did it, like that’s an, that’s a really, really, really good structure. So people ask that a lot, Buck, is like in our strategies, am I just getting tax savings or am I also gonna get a return?

And so that, some people, they want that. Some people don’t wanna just save taxes. Some people wanna do like oil and gas, you know, but obviously oil and gas, that pays.

Yeah, right. Interesting stuff. Um, well, thanks so much for being on the show today. How can, um, people learn more about what you do?

Sure. Um, so our website is oneAtlantataxsolutions.com, which you can basically go on there, schedule meetings, you can read up more information just like you did, uh, Buck.

Uh, we also have, uh, just a office number you can call in directly to schedule something with our assistant. That’s 470-805-1602. Um, again, that’s 470-805-1602. And then what we’re doing, Buck, for your, um, your audience, your listeners, is we have a basically a special offer for them. Normally how we operate is we charge 10% of what we save you in taxes, so nobody’s ever 10x’ed my money.

Um, but basically if we saved you 100,000 in taxes, you’d pay us 10 grand, half up front, half when we’re completely done. Um, but we have a deal where right now for your listeners, for the first year, we’re gonna waive that fee, so they would basically be able to utilize our services without a fee that we normally charge.

Great. Thanks so much for being on. Again, appreciate it, Chris.

Thanks, Buck.

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Welcome back to the show everyone. Hope you enjoyed it. And of course, who wouldn’t like to save on taxes? Um, I certainly would, and I’m sure there’s probably no one out there who really enjoys paying taxes.

So again, my caveat to you, my warning is, you know, don’t go crazy, right? Don’t go crazy with it. Uh, you know, the thing that I have found in terms of the types of things the IRS hates are things that are subjective, things that, you know, like with, again, with conservation easements, you know, they were, you know, conceptually very much in the law.

I think the challenge was that they relied on third-party valuations, uh, for the amount of deduction you could get. Well, that’s like a ticket for, uh, an audit, and that’s basically has happened, uh, to, you know, for the most part, most conservation easements. I think anybody doing that now with the IRS’s, uh, focus on it is probably, uh, not thinking straight or has not got good information.

Anyway, that’s it for me this week on Wealth Formula Podcast. This is Buck Joffrey signing out. If you wanna learn more, you can now get free access to our in-depth personal finance course featuring industry leaders like Tom Wheelwright and Ken McElroy. Visit wealthformularoadmap.com