Concerns:
- Dr. D. R. total taxable income $900,000 after all expenses, deductions and credits
- Two older children.
- Main house is 4,500 Sq.Ft.
- $1.2MM on 401K retirement accounts
- No life insurance
- Practices is an S-corporation
- Paid $420,000 in taxes in 2021
- Averages over $373,000 in taxes the last 13 years before becoming my client.
- Has zero interest in retiring
- Zero Investment in real estate
- Open to invest in real estate
- No trust
- Has $2MM in securities
Strategies:
- Protected Dr. L. K. from taxation by separating the doctor from their current business structure -the S-corporation
- a. Revert existing entity from S-corporation to C-corporation
- Dentist become employee, chairholder and officer of their C-corporation and receive fringe benefits that will not negatively affect his W2.
- Implement a particular tax code that ALLOWS dentists to access cash from C-corporation without triggering DOUBLE TAXATION.
- Implemented other advanced codes to reduce the C-corporation’s taxable income, given the dentist a greater peace of mind that the taxes he was going to saved on his personal side was not then paid to the IRS by his C-corporation.
- Created the right number of additional entities
- Management company
- Insurance company
- Terminated his $1.2MM 401K retirement plan
- Of that, received $960,000
- . Added $340,000 to the $960,000 for a total $1.3MM
- Used the $1.3MM as 25% downpayment for real estate investment for a $5.2MM real estate purchasing power
- Real Estate company
- Invested 5.2MM worth of real estate in short-term rentals
- Maximized Cost Segregation
- Bonus depreciation in 2022 was at 100%
- Materially participated in 100 hours
- And tenants averaged less than 7 nights per stay.
- By combining Cost Segregation with Bonus Depreciation strategies, for 2022, the doctor received $2,080,000 in real estate losses more than enough and wiped out the taxes from terminating from 401k, cover the taxes of his $900k 2022 income, and recovered his $279,000 he paid the IRS for quarterly estimates earlier in 2022 before becoming my client.
- Had doctor adjust his hours so he can materially participate on his short-term rentals and maximize the real estate losses to offset his personal income
- Implemented Section 280(a) the “Augusta Rule”
- Doctor rented their 4,500 sq. ft. primary home to his practice for 14 days
- Advanced Vacation Strategy
- Dentist were able to LEGALY and ETHICALLY take multiple vacations of 13 days or less at All-Inclusive 4-5 stars resorts paid for by the IRS.
- Created an Administrative (Headquarters) Office strategy to help the doctor further reduce taxes from the moment he leaves home to his clinic and when he drives back home
RESULTS:
· Protected 100% of his taxable profits for 2022 and beyond.
· Recovered $279,000 in overpaid quarterly estimate taxes to the IRS
· Purchased 7 short-term rentals in Floria
· Created a 10-year retirement plan an disability protection for just in case
Set up the doctor with the right legal people to help him legally protect his assets
