Holistic Planning said:

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Donor Advised Fund
Gifting highly appreciated stocks or other assets in one year. Then you can potentially use it to offset the taxes from a Roth conversion if applicable.

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knoxtom said:

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techno-ag said:

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knoxtom said:

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There are very few ways to decrease taxes anymore, unless you are rich.

For the poor, there are none.

For the middle class they almost all involve depreciation. you can purchase commercial real estate or develop in disadvantaged economic zones. Massive front loaded depreciation. Also, you can really take advantage of Section 179 for business property.

Some other ideas...

The property refinance game. As your prop holdings increase in value refi and take the cash out instead. Since it is a loan you don't pay taxes on it. Please don't do this on your primary residence. There are a million videos about how to do this.

You can use Roth rules and creatively use real estate investments within the Roth (example - since a sporting ticket is technically a super short term real estate lease, you can probably buy and resale tickets using Roth funds and keep profits within the roth tax free - this is a little scary and if it is legal, it won't be much longer)

You can tailor your comp so that it is bonus instead of salary. By doing this you can maybe get around self employment taxes since those are tied to salary. I see a lot of accountants bring this up but I don't do it as I think you are asking for trouble.


For the rich it is all easy... since of course the rich wrote the rules. When you are rich just don't take any salary. All comp should be in the form of stock and options, which aren't taxed until sold. Just let them stack up and take loans against them with the stock as collateral. Loan proceeds aren't income so you declare nothing, you live like a king. I am not sure that there is anyone in America making more than 5 mm a year who pays a cent in taxes because they pretty much all do it this way. Elon just got a 29bn package with a taxable amount equal to $0. Not a penny in taxable income from 29bn. All options and stock.

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You still got to pay the loan back, though.

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Not really.

You just forfeit the stock that you are using as collateral. Since you know the bankers and this is an ongoing relationship and repeated every year they are fine with it.

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JobSecurity said:

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Do you not have to pay tax on the liquidated shares to pay back the loan?

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BenTheGoodAg said:

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I have used deduction bunching for years.

Basically alternating between the standard deduction and Itemizing every other year by paying property taxes every other tax year (Jan 1& Dec 31 within same calendar year) and focused charitable giving in those same periods.

Not as effective during the $10k SALT cap and higher standard deduction period, but the new SALT cap of $40k will help.

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knoxtom said:

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techno-ag said:

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knoxtom said:

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There are very few ways to decrease taxes anymore, unless you are rich.

For the poor, there are none.

For the middle class they almost all involve depreciation. you can purchase commercial real estate or develop in disadvantaged economic zones. Massive front loaded depreciation. Also, you can really take advantage of Section 179 for business property.

Some other ideas...

The property refinance game. As your prop holdings increase in value refi and take the cash out instead. Since it is a loan you don't pay taxes on it. Please don't do this on your primary residence. There are a million videos about how to do this.

You can use Roth rules and creatively use real estate investments within the Roth (example - since a sporting ticket is technically a super short term real estate lease, you can probably buy and resale tickets using Roth funds and keep profits within the roth tax free - this is a little scary and if it is legal, it won't be much longer)

You can tailor your comp so that it is bonus instead of salary. By doing this you can maybe get around self employment taxes since those are tied to salary. I see a lot of accountants bring this up but I don't do it as I think you are asking for trouble.


For the rich it is all easy... since of course the rich wrote the rules. When you are rich just don't take any salary. All comp should be in the form of stock and options, which aren't taxed until sold. Just let them stack up and take loans against them with the stock as collateral. Loan proceeds aren't income so you declare nothing, you live like a king. I am not sure that there is anyone in America making more than 5 mm a year who pays a cent in taxes because they pretty much all do it this way. Elon just got a 29bn package with a taxable amount equal to $0. Not a penny in taxable income from 29bn. All options and stock.

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You still got to pay the loan back, though.

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Not really.

You just forfeit the stock that you are using as collateral. Since you know the bankers and this is an ongoing relationship and repeated every year they are fine with it.

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knoxtom said:

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The strategy is called "Buy Borrow Die" and works like this...

Get paid in an appreciating asset (usually options) with a real long term. That is the buy. Borrow money against these assets, use some for yourself and some for the interest. Then die.

You will never pay income taxes because you haven't exercised the options and never got income.

When you die the estate will use a step up in basis to cover the assets growth. At this time they will pay any taxes, however those taxes will be close to zero since the assets stepped up. Trump is about to get rid of estate taxes so you won't have those either. He is pretty good to the rich and he wants them to be richer.

Trump uses real estate to cover his BBD strategy, Musk uses options, Bezos uses options, some others use art, etc, etc.

I am sure I do not have all of the details correct, but this strategy is used by those with net worth over 10mm or so VERY effectively. Entire law firms are set up to do this and nothing else and most any estate and tax lawyer can walk you through it better than I can.

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