Collaboration at its Finest: A Real Client's Experience
I had the pleasure of meeting Mark who was introduced to me by another client in late 2023. By utilizing a VFO (Virtual Family Office) framework his 2023 tax liability was reduced from $215,338 to $26,802 with more tax savings to come. By working in tandem with our top-tier CPAs, lawyers, and commercial bankers Mark was able to harness the power of the strategies used by the super-rich and apply it to his personal situation.
For starters, when I met Mark, I immediately knew I could help him. During our initial meeting he mentioned more than once that his CPA “lacked a proactive strategy” for mitigating taxes and would advise him to “buy some stuff” near the end of the year to create depreciation write-offs to reduce tax. This is what I call the “IRC (Internal Revenue Code) Section 179 trap” and is a rudimentary strategy when it comes to proactive tax planning. Essentially, Section 179 is a last-ditch effort at the end of the year when you are out of options to lower your tax burden by making qualified purchases.
Section 179 permits a business owner to make a purchase, often equipment or a vehicle, and fully expense that item all in one year instead of depreciating the asset over time. This creates a “write-off” for the full purchase price for that year to lower taxable income. While the strategy isn’t inherently “bad”, it lacks creativity and can create problems down the road.
When you eventually sell the asset, you may be subject to a “recapture tax” and to be blunt, there are only so many vehicles or pieces of equipment a business needs before this strategy loses merit, and you get ZERO leverage from your efforts. It is a dollar-for-dollar income reduction at best.
I collaborated with one of our VFO (Virtual Family Office) CPAs and together determined that instead of having the client “go out and buy a new truck” under ICR Section 179 we could significantly lower the client’s tax bill if he were to engage in a heavy equipment leasing program. Utilizing the bonus depreciation rules and operating within the IRS guidelines, and with help from the CPA the client not only reduced his tax liability immediately, but also for the next 5 years, while creating leverage for his efforts by a factor of 4 to 1. I brought in a legal team and a commercial lender, and the 4 of us worked in unison to reduce the client’s tax liability by 87.55%.
The client needed me to coordinate all the professionals in a single mission: reduce his tax liability.
I needed the CPA help to make sure the client adhered to IRS rules and calculate the net tax effect.
The legal team needed direction from myself and the CPA to set everything up correctly for everything to work.
The banker needed the CPA, the lawyer, and me to work collaboratively with him and the client to wrap everything up with the ideal financing package based on the structure we built through this collaborative effort.
With the legal advisor, tax advisor, and private wealth advisor working in unison the rather conservative bank was comfortable moving forward.
All 4 professionals had to collaborate and work in harmony to execute what ended up being the most significant tax-saving event this client has ever experienced, and we are only getting started.
“Jason, I’ve had this feeling in my gut for so long that something wasn’t right, it was almost making me sick. Have you ever had that feeling where you are nauseous and when you finally throw up and get all that nasty sh*t out and you feel a ton better? That is exactly how I feel right now! Like this massive weight has been lifted off my body and I feel healthy and normal again.”
Mark B. ~ Cederburg, WI (Manufacturing Sales and Service Professional)
“Jason recently was able to help a mutual client save taxes by utilizing advanced tax strategies, which are largely unknown in the industry. The client we worked on saved a large amount of tax dollars while also realizing valuable return on his investment.”
Brad K. ~ Plover, WI (Certified Public Accountant)
Investment Advisory Services offered through Brookstone Capital Management (BCM) LLC, a Registered Investment Advisor. Silvertree, LLC and BCM are separate companies. This is not an investment, tax, or legal recommendation or a solicitation to become a client of the firm.
About the Author
Jason Glisczynski, CPWA®, CFP®, CAS®
CERTIFIED FINANCIAL PLANNER™ Professional
Jason specializes in helping individuals with planning for retirement and has nearly 20 years of advisory experience, is a Certified Private Wealth Advisor® professional, CERTIFIED FINANCIAL PLANNER™ professional, an Investment & Wealth Institute® member, and author of the International Best Selling Book Planning with Purpose: Solving Your Unique Retirement Puzzle.
Jason Glisczynski is co-owner and principal advisor for Silvertree, LLC. Investment Advisory Services are offered through Brookstone Capital Management (BCM) LLC, a Registered Investment Advisor. Silvertree, LLC and BCM are separate companies.