Recovered $931K in Overpaid Taxes!

Dr. D. R. and his son, also a doctor working as an associate; associate interested in purchasing the practice. Dr. D.R. is 57 and associate is 34

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Concerns:

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1. Dr. D. R. total taxable income $1,508,000 ($1,220,000 from practice and $288,000 from rental income) After all expenses, deductions and credits
2. Two children and oldest wants to buy the practice but don’t have the capital to purchase it.
3. Main house is 6,000 Sq.Ft.
4. No retirement accounts
5. No life insurance
6. Practices is an S-corporation
7. Paid $620,000 in taxes in 2023
8. Averages over $473,000 in taxes the last 10 years
9. Would like to retire in 5-10 years
10. Investment in real estate
    • Owns building where the practice is located and owns 8 single family units
11. Wants to invest more in real estate
12. No trust
13. All properties under one LLC.

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Strategies:

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1. Protected Dr. D. R. from taxation by separating the doctor from their current business structure -the S-corporation
   • 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
     • Real Estate company
       • Invested 2,500,000 worth of real estate in short-term rentals
         • Materially participated in 100 hours
         • And tenants averaged less than 7 nights per stay.
       • Maximized Cost Segregation
       • Bonus depreciation
     • By combining Cost Segregation with Bonus Depreciation strategies, we amended the doctor’s tax returns and helped the doctor recover, $931,349 in overpaid taxes to the I.R.S. because all 8 single family homes were purchased between 01/01/2018 and 12/31/2022 and his CPA failed to order Cost Segregation, qualified his spouse as Real Estate Professional and maximize Bonus Depreciation.
   • Had doctor’s spouse qualified as Real Estate Professional Status to help real estate losses offset some of doctor’s personal income
   • Establish an Executive Bonus Arrangement, Family One-Way Buy-Sell Agreement between doctor and son, to ensure doctor reduces his income taxes, son able to complete the purchase the practice in 10 years and the doctor receives the proceeds of the sale 100% tax free.
2. Implemented Section 280(a) the “Augusta Rule”
   • Doctor rented their 6,000 sq. ft. primary home to his practice for 14 days
3. Advanced Vacation Strategy
   • Dentists 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.
4. 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

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RESULTS:

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• Protected 100% of his taxable profits for 2024 and beyond.
• Recovered $931,349 in overpaid taxes to the I.R.S
• Purchased 4 short-term rental
• Created a 10-year retirement plan through the Buy-Sell Agreement with his son
• Set up the doctor with the right legal people to help him legally protect his assets