Tax Strategy For Wealth Protection/Investments

[JustAskBenWhy]

This is always tricky, more so in the fact that asset protection strategies are not necessarily always good for income-tax alleviation.

I am not a CPA, but S Corp is nice and should work well if used correctly. Instead of IRA you should be using a SOLO 401. You may consider incorporating C Corp into your over-all strategy, but be sure to use a very well qualified CPA if you do. C Corp comes with the problem of double-taxation, so it should only earn enough to pay its' bills...

Good luck.

 

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[JordanK]

Hey @GlobalWealth I'm from Ireland and I know of a company also based here that is interested in tax reduction/elimination. We have a low Corporation Tax of 12.5% but the problem is Income Tax when its sent from the company to the individual. I presume seeing as the companies based in Ireland half the work is already done in terms of tax reduction/elimination. Whats your opinion?

 

[unicon]

It seems you have a 2 issues made out of 1.

You are making too much money going to taxes - secondarily you wish protection.

As mentioned previously the tax code is unfair and built on setting up many illusions in paper.

The most intrinsic and best shelter is real estate income producing property, secondarily you can buy more businesses with real estate included.

With real estate and a good cash flowing business you can structure infinite terms with leverage and pull out all the cash you wish tax free with refinance proceeds thereby increasing your write off. This is only half the story as this is based upon pure production. This can be protection in itself with massively less overhead. Cannot remember the last time I paid any taxes, as assets grow exponentially. Protection is increased because of permanence and positioning. Its hard to steal real estate tied down.

Protection is strictly layering the assets in different entities, used to have many of these but demand licenses, separate bookkeeping, complicated year end filings, geographic resident agents, etc. This is doing the governments bidding, although workable. Sometimes it can be fun playing checkers in many entities but always remember the illusion you live in.

Simple is best. You are dealing in real estate or business (positioning or activity), combine the 2 and you have the optimum machine for shelter

Protection is a separate issue and you can do business to increase protection without subsidizing government.

 

[GlobalWealth]

Hey @GlobalWealth I'm from Ireland and I know of a company also based here that is interested in tax reduction/elimination. We have a low Corporation Tax of 12.5% but the problem is Income Tax when its sent from the company to the individual. I presume seeing as the companies based in Ireland half the work is already done in terms of tax reduction/elimination. Whats your opinion?

That really depends on the status of the individual - where he lives, where he is legal resident, etc.

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[JordanK]

That really depends on the status of the individual - where he lives, where he is legal resident, etc.

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All in Ireland.

 

[JustAskBenWhy]

Not tax advice, but I'm surprised more high-income earners don't use a C-Corp for the tax and fringe benefits. Yes, the C-Corp comes with double taxation, but that's just on net income (after salary paid), and if you pay every penny of the C-Corp's income as salary, there is nothing left to get taxed as second time. And, if you want to roll that income back into the business, there's just a single (15%) tax on the business at the corporate level.

In addition, with a C-Corp, you are allowed to pay heath insurance and other fringe benefits, including educational expenses, automobile expenses, etc. Ultimately, I've found that since moving much of my earned income to a C-Corp (non-investment real estate income, non-royalty book income, consulting income, speaking fees, etc), I've been able to reduce my tax burden considerably. Plus, my family's health insurance is now fully deductible, not phased, like it was when I was doing everything as a partnership or S-Corp.

Bingo...have I told you before that you're pretty smart? We should go in business together...that movie with two nasty, difficult, sarcastic old guys comes to mind lol

 

[GlobalWealth]

All in Ireland.

You really need to consult a local Irish accountant.

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[BHall]

Not tax advice, but I'm surprised more high-income earners don't use a C-Corp for the tax and fringe benefits. Yes, the C-Corp comes with double taxation, but that's just on net income (after salary paid), and if you pay every penny of the C-Corp's income as salary, there is nothing left to get taxed as second time. And, if you want to roll that income back into the business, there's just a single (15%) tax on the business at the corporate level.

In addition, with a C-Corp, you are allowed to pay heath insurance and other fringe benefits, including educational expenses, automobile expenses, etc. Ultimately, I've found that since moving much of my earned income to a C-Corp (non-investment real estate income, non-royalty book income, consulting income, speaking fees, etc), I've been able to reduce my tax burden considerably. Plus, my family's health insurance is now fully deductible, not phased, like it was when I was doing everything as a partnership or S-Corp.

Truth of the matter is that most CPAs are afraid/unwilling to delve deep into C-Corp tax laws. The ones that are, are typically employed by Big 4 firms and are tackling large corporate accounting problems.

Most CPAs are also quite inflexible, expecting all of their clients to follow a cookie cutter approach, which as you pointed out, definitely doesn't work. I believe this is changing rapidly as millennials enter the market, both on the client and advisor side. Creative solutions will receive emphasis and demand higher values in the future.

Some high earners do perfectly well with S-Corps. Others need C-corps, perhaps even multiple C-Corps with the add-on option of transfer pricing. On the other side of the spectrum, some small businesses do extremely well with C-Corps even though most CPAs will auto-default to LLCs or LLC/S-Corp without giving it a second thought. It's all about how much working capital you need in your pocket today to meet your future financial goals.

 

[458]

As a CPA (cuts wrists) I've always wanted to say this to my clients but never get to because they give me money. But since you don't, let me tell you how I feel about taxes. You should view it as a cost of doing business and focus your attention on making more income not trying to save pennies. No one ever got rich moving there business off a schedule c and onto an s Corp and I can assure you that unless you change your mentality you will probably stay broke like most of my clients. When your making 7 figures a year just go hire Deloitte and tell them to figure out all that bullshit.

 

[JustAskBenWhy]

Truth of the matter is that most CPAs are afraid/unwilling to delve deep into C-Corp tax laws. The ones that are, are typically employed by Big 4 firms and are tackling large corporate accounting problems.

Most CPAs are also quite inflexible, expecting all of their clients to follow a cookie cutter approach, which as you pointed out, definitely doesn't work. I believe this is changing rapidly as millennials enter the market, both on the client and advisor side. Creative solutions will receive emphasis and demand higher values in the future.

Some high earners do perfectly well with S-Corps. Others need C-corps, perhaps even multiple C-Corps with the add-on option of transfer pricing. On the other side of the spectrum, some small businesses do extremely well with C-Corps even though most CPAs will auto-default to LLCs or LLC/S-Corp without giving it a second thought. It's all about how much working capital you need in your pocket today to meet your future financial goals.

Nice to see you here @BHall

And I agree with J Scott - when the day comes that I need a CPA, BHall is at the top of my list as well!

 

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[Growth & Learn]

A good friend of mine turned me on to ProVision Wealth Strategists: http://provisionwealth.com/

They are who I use and so far I've liked what they've offered. You can call them for a free consultation (aka sales call), but their sales rep was able to answer questions for me about my real estate investments and Amazon business. I'm expecting a huge tax bill this year as well, and I'm finding my old CPAs just were unable to help lower things. One of my CPAs recommended deferring payment for my tax bill until next year.. and then do that again the following year?? I dropped him after he suggested that.

I'll be watching this thread as I'm always looking for a good tax adviser.

Anybody ever used this guy Tom Wheelwright or his company before? Is it just a sales pitch or legitimate tax savings, wealthy strategy and asset protection?

 

[MRSupply]

Anybody ever used this guy Tom Wheelwright or his company before? Is it just a sales pitch or legitimate tax savings, wealthy strategy and asset protection?

I used them for my 2015 taxes and I found them to do a really good job. They ran up until the last minute (I submitted my taxes late last week), but they did a lot. They did depreciation for all of my real estate assets, found a lot of tax savings, and overall did a good job of working through a ton of documents that I sent them (this year was a lot more complicated than normal).

 

[Benny]

Assuming your business is not location dependent and you are free to roam, move to a country where you do not have citizenship and establish residency.

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How long would one have to live overseas and out of the US?

 

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[GlobalWealth]

How long would one have to live overseas and out of the US?

Sorry but I don't understand your question. How long do you need to live overseas for what?

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