Episode Transcript
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Speaker 1 (00:00):
Good morning everyone, and welcome to Life Happens Radio. I'm
Loop Piro, your host for this morning. Very happy to
be here with you on this Thanksgiving weekend. A bright,
bright sunny day, little Crisp Bear, and Thanksgiving turkey. Hopeing
you've got some leftovers some of that turkey sandwich on
the white bread with mayonnaise. You know, that's kind of better,
I think than the first sitting of the turkey. But
(00:21):
we hope that you're also enjoying the weekend. It's kind
of a favorite holiday for a lot of people because
it doesn't have religious overtones. It doesn't have obligations. You're
not running around like crazy people at holiday Christmas Sonica.
Time time to sit back, think a little bit, and
maybe do some shopping. Black Friday was yesterday, but Black
(00:44):
Friday kind of has expanded into Black November. It's just
shopping till you drop and getting your deals and getting
your things done.
Speaker 2 (00:54):
And are you able to afford.
Speaker 1 (00:55):
All the things that you want to buy or that
people need at this holiday time. Unfortunately a lot of
people are not, so we try to help them out,
and I hope you are as well. But for our families,
this is a great time to sit back and think
and for those people who are planning towards the end
of the year, and that we just I was listening
(01:17):
to Dave Kopeck talk about planning for your retirement. When
do you start yesterday? It's always a good thing to
get going in your twenties. But who in your twenties
is thinking about putting money aside for retirement? But when
you do, if you do, it's a great way to
start and to build in the power of compounding, especially
(01:39):
if you're in tax deferred accounts, can be tremendously beneficial
in the long run. But the other thing that you
have to manage is your taxes, because when you're investing,
taxes become a big part of it, and if you
own a business, taxes become an even bigger part of
it because there are opportunities and perils. I am not
(02:00):
an income tax expert. I will tell you folks that
that is not my baily wick. I do not practice
income tax. But the good news is I have somebody
here in studio with me that does, David Wojeski of
Wijeski and Company. Good morning, Dave, good morning, And I
want you to tell our listeners, a little bit about
yourself your practice. You've been here in the Capital region
for a good number of years practicing accounting and working
(02:23):
with clients, so let's have it.
Speaker 3 (02:26):
Yeah, we've been around for about thirty years as a
firm and about thirty five people and concentrating both everything
from outsourced accounting to audit the financial statements, and of
course tax compliance and strategy. And my area is really
mergers and acquisitions, the state trust and tax strategy.
Speaker 1 (02:44):
So all of the things we do from the legal side,
and certainly we have to deal with taxes as lawyers,
state tax, gift tax, you know, basis issues, capital gains tax.
But the ten forty, the ten forty one, the returns
that you do. We don't do the sixty fives and
the ten twenty threes. And we're going to focus a
little bit on small business today because it is Small
(03:07):
Business Saturday. But I also want to talk about end
of year tax planning. And you might have heard, folks,
there's something called the One Big Beautiful Bill Act that
passed on July fourth that is impacting all of us
and our taxes.
Speaker 2 (03:21):
So as we approach December the year end, like you said, Dave,
we were talking a little bit before the show. It
gets crazy, it gets really crazy.
Speaker 3 (03:29):
After this is like the last weekend to enjoy myself
until December gets to the year end, which is always
a race to the finish line.
Speaker 2 (03:37):
And then you get April fifteenth and you've got more craziness.
Speaker 3 (03:41):
Everybody loves taxes, So what are some.
Speaker 1 (03:45):
Of the things. I know there was changes to standard
deductions and things like that. Just a couple of highlights
that you're you're dealing with for your clients with the OBBBA.
Speaker 3 (03:55):
Yeah. I mean, the interesting part of it is that
the change in the law was more of not so
much changes of what what happened is what didn't happen. Right,
They made all the changes that were supposed to expire.
Most of them were made permanent, and that is permanent
from a tax legislation standpoint, which nothing is permanent, but
the next administry till the next administration, then we'll see
what happens. But you know, depreciation, we got a lot
(04:17):
of publicity, which has been a big plus for small businesses.
And then the inville side, you had the salt deduction,
the state local tax limit, some changes in standard deduction,
itemized deductions, person mortgage interest carge, just a little bit
of changes. Really the middle class, and I would define
that probably in the two hundred to four hundred thousand
dollars range is really there were some positives in that area,
(04:40):
and business made out well.
Speaker 1 (04:41):
So let's break some of those things down. Because in
New York here we have taxes all around us. We
have property taxes, we have New York State income taxes.
I have friends that live in Florida. They get ten
percent more income than I do because they don't pay
New York State in tax. And so the income taxes,
and you mentioned standard deductions and accelerated deductions, let's just
(05:03):
start there because as some wise man used to say,
it isn't what you make, it's what you keep.
Speaker 3 (05:10):
That is true.
Speaker 2 (05:11):
So how did that impact and there are some positives there.
Speaker 3 (05:14):
Well, they raised the standard deduction a few years ago
quite a bit, so it's about thirty one thousand, five
hundred for your general joint filers, but they had limited
cap assault deduction or state and loaf tax deduction. And
being in a Northeast state, you know your real estate
taxes are quite high, and then you've got your state taxes,
your New York state taxes that go along with that,
(05:35):
and they were limited to ten thousand dollars, so most
people were not even itemizing deductions. Yeah.
Speaker 1 (05:40):
I mean, if you're paying ten thousand in property tax
and ten thousand in income tax, and you've got other
miscellaneous things and your capped at ten thousand dollars in deductions.
Speaker 3 (05:48):
Yeah, and your big hit, you weren't going to get
to thirty one thousand because most people who had you know,
your mortgage rates were low for a while, so your
mortgage interest isn't that high, and you're really your three
main areas are ris, charity, and taxes, right, those are
your three areas to get over that standard deduction limit.
So they raise the sal cap to forty now, which
is income limited, so if your income is too high,
(06:10):
it won't get it. But if you're in that, you know,
below the income thresholds, you can get up. You know
what that number is, it's five hundred. It starts at
joint so.
Speaker 2 (06:17):
If you're under five hundred, you get the forty grand
correct of state and local tax deduction, which.
Speaker 3 (06:23):
Is still not a you know, it's still a pretty
good threshold to get to, but you know, real estate
taxes aren't cheap in this.
Speaker 1 (06:29):
It depends on where you live here, but yeah, it's
not unusual in town of colony Loudonville, for example, to
see a twenty thousand dollars property tax bill on just
a regular house because the tax rates have going up.
Speaker 2 (06:40):
Local taxes.
Speaker 1 (06:41):
It's the only way the counties can raise money, right,
property tax right.
Speaker 3 (06:45):
I think one of the strategies around that is really
the The idea is to bunch your itemized deductions right,
pick your every other year to really try to get
as many itemized deductions as you can, so you might
double up your charity in one year. Or I'm sure
talked about donor advised funds and front loading donor advice funds,
which we'll probably get to. And then making sure if
(07:06):
you're making estimated payments, you know that fourth quarter payment
is due January fifteenth, but you can pay one January
fifteenth and you pay the other one December of the
prior year. You're going to double up and really get
five payments in one year because you really want to
try to itemize if you can.
Speaker 1 (07:21):
So this is a good time to be thinking about
this one dred percent for our listeners because now is
the time you're going to be doing this and looking
at end of year planning. Do I want to write
the check to the charities and do it this year
and then maybe do it again next year, or do
I want to wait till after the first of the
year and bundle all of my twenty twenty six charitable
deductions together?
Speaker 3 (07:41):
Correct? And with that, you know the most the biggest
bang for your bucket to donate appreciated securities as opposed
to cash, because you're getting a deduction at the full
market fair market value, and you can take the cash
you would have donated the charity and rebuy that same
stock and be in the same position investment wise.
Speaker 1 (07:57):
And now we're talking about tax planning, folks, So when
we deal with tax planning, you have capital gains.
Speaker 2 (08:02):
Taxes, which Dave is alluding to.
Speaker 1 (08:04):
So if you bought Nvidia and it's had a big
run up, and you want to say, Okay, I want
to give ten thousand dollars to my hospital because they're struggling,
and you want to do it in a way that
isn't ten thousand out of your checkbook. You take your
Invidia stock, which has a basis of maybe one thousand dollars,
it's now worth ten And what are the tax consequences
(08:26):
of donating a ten thousand dollars stock with a one
thousand dollars basis.
Speaker 3 (08:30):
Yeah, you'll get a ten thousand dollars deduction, which is
worth obviously ten thousand dollars of cash, and the ten
thousand dollars check you didn't write. You could rebuy that
same Navidia if you believed in that stock. And now
you have no built in capital gains, so if you
ever sell the video, you won't have any gain on it.
So you know you're getting the benefit of the charitable
deduction and you're getting the benefit of avoiding the tax
on a stock you would have had to pay at
(08:51):
some point in the future.
Speaker 2 (08:52):
So you can reset your basis, reset your basis correct.
Speaker 1 (08:55):
Based upon buying the stock for cash and using highly
appreciated securities. I like even better, and that is the
qualified retirement plan contribution.
Speaker 2 (09:06):
So that's a great one.
Speaker 1 (09:07):
If you're over seventy and a half, correct, you can
give from your retirement account and just talk a little
bit about you know, that's a capital gains tax eving.
Speaker 3 (09:16):
Yeah, I mean most people specifically, I mean most elderly
people are not itemizing right because your mortgage is paid off.
Now the salt deduction high enough, but depending on what
your charity is. So what was happening is if you
made a five thousand dollars donation to the church, you're
really not getting a tax deduction for at least a
tax savings because you're standard deduction anyway, but you'll be
(09:38):
paying tax on your Require minimum distribution on the IRA,
you'd be paying tax on that. So this allows you
to bypass that taxation of the RMD and goes directly
to the charity, which essentially makes it a five thousand
dollars charitable deduction. Regardless of whether you're itemize or not.
It's really a no brainer.
Speaker 1 (09:56):
So we're covering a lot of territory here, we're doing
it quickly. Capital gains tax. We'll talk about that because
we work with capital gains tax all the time when
we're funding trusts and when we're setting aside money and
making gifts, and we talk about gifting versus leaving money
through an a state, and we'll get back to that
(10:16):
one because a step up in basis is a really
key issue for a lot of our clients, but I
want to go and stick with the retirement accounts. Because
when I started practice coming up twenty twenty six, forty
three years When I started practice forty three years ago,
I had clients come in and I would sit down
(10:37):
with them, and I was a young associate, and you know,
my partners are said, okay, do a will for this person.
And you'd look at what they had, and they had
a home and they may have paid off their mortgage,
it may not. I still have some mortgage. They had
some savings, and back then it was savings accounts. You know,
there weren't exotic types of fixed income investments. It was
mainly savings accounts, checking account and they may have bought
(11:01):
some stocks somewhere along the line, but you didn't have ETFs,
You didn't really have a lot of mutual funds. And
they had a pension and so they didn't have a
lot of assets. They didn't have a lot of high
net worth. But they were looking at an income throughout
their retirement of Social Security and a fixed pension. And
that's how we were doing planning forty three years ago.
(11:23):
Fast forward to today, that same client comes in, they
have no pension. They probably have some CDs, they may
have some mutual funds, they may have some ETFs, but
they have a four oh one k or an ira
that is their primary vehicle for retirement.
Speaker 2 (11:40):
No more fixed pension.
Speaker 1 (11:42):
Now I'm responsible for that four oh one kira. So
people have put a lot of money into those retirement
accounts and the number is staggering, you know, tens of
trillions of dollars that are sitting in retirement accounts.
Speaker 3 (11:55):
Yeah, I mean one of the things that's happened is
I think people have a lot more wealth than they
anticipated because because the market has been on a twenty
year run or fifteen year run anyway. So I think
we're dealing with the same thing as that is all right,
what is the timing of getting the money out? When
do I take it? And that also is important with
some of the thresholds that exist and when you're going
to pay tax you have you know, it's a complicated
(12:17):
process because when do you want to take it? How
does it affect your social security? For collecting social security,
how's it affected Medicare premiums? As you exceed certain income thresholds?
When do you want to take the income? What do
you want to gift. I mean part of what you're
doing on the estate side. That's an awful lot of
wealth to shift between generations right now.
Speaker 1 (12:34):
Yeah, and that's our focus, is that transfer. What have
I accumulated? How do I get it to my kids
or my loved ones in the best way with the
least amount of tax. So when we come back, we're
going to unravel the retirement account. How do you use
the dollars? As Dave said, wisely now for yourself? And
this is not the financial planning show that's before and
(12:54):
after us. So we're here to talk about tax and law.
How do you maxim the value for yourself? How can
you make those charitable contributions in the most leverage way possible?
And what do your kids get? And as we talked about,
it's not what you leave them, it's what they get
to keep from that. And we're gonna talk about the
differences and the decisions that you can make that are
(13:16):
pretty straightforward and sometimes even simple if you think closely.
And you'll listen, So we'll be back right after this.
You're listening to Life Happens on Talk Radio WGY. Stay
with us and we are back. You're listening the Life
Happens Radio. I'm Lou Piro, your host for this morning,
(13:37):
wishing you a happy Thanksgiving. We are thankful for your listenership.
We're glad to have you as part of our show.
We hope you enjoy the show. We hope you feel
free to call us because I'm gonna give out the
phone number right now, and I have in studio with
me a tax expert, someone who has been practicing and
owns his own firm here in the Capitol region, Wojeski
and Company. That is David Wojeski. And you can call
(13:59):
us at eight hundred eight two five five nine four nine.
That's eight hundred talk WGY can give it to you
numbers one more time eight two five fifty nine forty
nine eight two five five nine four nine, that's an
eight hundred number. And David, we're talking about retirement accounts.
And I set the stage because more and more and
more wealth over time accumulates in those retirement accounts because
(14:21):
you're not paying income tax on those dollars. Right your
four oh one K is going in. We match our
four oh one k as many employers do, at four percent,
so we can put an employee, you can put four
percent of their own money into their four oh one
k I match it. We match it and put four
percent on top of that. So you got eight percent
of your salary going into a tax defer an account.
And if you're young enough that eight percent, if it's
(14:43):
compounding on a year over year basis, that's going to
be your main nesting when it comes to time. But
there there are traps in there, and the government saw
this trap coming, and they knew that this transfer of
wealth through these retirement accounts was going to be an
enormous shift. And we were doing very complex planning to
(15:05):
stretch the benefits of retirement accounts, leaving them to grandchildren
who are two years old with a life expectancy of
eighty years and taking literally nothing out of that account
right and letting it compound. But the Secure Act passed
in twenty twenty, and then we got Secure Act two
point zero, and the Secure Act brought us a ten
year time period within which kids have to draw out
(15:29):
all of those retirement funds. And Dave, that was a
major shift, and that takes some planning for parents and children.
Speaker 3 (15:36):
Yeah, we don't like that one. No back that one
at all. So that's a very short period, especially if
if the dollar amount is large, you know you're going
to have to take Even if you got your your
likely subject to the R and D, but that's nowhere
near going to get you out within ten years. So
you're going to have a big chunk at some point.
Speaker 1 (15:55):
And when you're thinking about it, if you have and
having a million dollars in a four KIRA is not.
Speaker 3 (16:01):
Unusual any No, not at all.
Speaker 2 (16:02):
A lot of people have that.
Speaker 1 (16:04):
And if you leave that to a child, a child
has to take one hundred thousand dollars a year out
and pay full income tax correct, And that's on top
of the child's rate.
Speaker 2 (16:14):
And typically if.
Speaker 1 (16:15):
You're leaving it the children who are earning and working,
their marginal rate is going to be higher than yours. Right,
So what are some of the things that clients can
do to mitigate.
Speaker 2 (16:25):
The tax consequences of that IRA.
Speaker 3 (16:27):
Well, part of this is to look out ten years
as best you can and say, okay, is there a
year that is better to take maybe more than less
of it. A lot of people's inclination seems to be
not to take it right, to take the R and
D and wait and take it all at the end
and that generally is the wrong decision. You run the
math on it.
Speaker 2 (16:46):
It's a time bomb.
Speaker 3 (16:47):
It's time.
Speaker 2 (16:48):
I have a slide.
Speaker 1 (16:49):
When I do a seminar, that's a time bomb with
a fuse tick tick tick, And when that bomb goes off,
you're paying federal tax potentially if the kids are doing
really well at thirty seven percent correct, and New York
state tax can be up as high as ten percent,
but most people are eight to nine percent, right, So
you're looking at a forty five forty six percent tax.
Speaker 2 (17:09):
So you're losing almost half right, the IRA when you
leave it.
Speaker 3 (17:12):
To your kids, right, I mean at a minimum. I
always tell everybody you got I mean, New York State
allows a twenty thousand dollars exclusion on iras and pensions,
and it's gone if you don't use it each year.
So you got at least take the twenty thousand, because
that's going to save you the twenty thousand times ten.
At least it gets you two hundred thousand out tax
free from New York State if you're the sole beneficiary,
gets split if you're in a multiple beneficiaries. But if
(17:34):
you have a charitable intent, that's certainly a good way
to handle that, as we've discussed.
Speaker 1 (17:38):
Yeah, so there's a qualified charitable contribution that you can make.
Tell our listeners a little bit about that. There's an
age limit. You have to be over certain age to
do it. But once you're over that age, when it
comes time to leave dollars to charities, these are the
dollars because the charity is tax exempt.
Speaker 3 (17:55):
Correct, So anything you leave to the charity. So if
you've got you know, again, I have a charitable intent
h and you should be looking at that now versus
before something were to happen to you as an elderly person.
And you can leave an excess of one hundred thousand
dollars directly to charity.
Speaker 2 (18:11):
Front is the new number.
Speaker 3 (18:13):
One hundred and eight thousand from your IRA directly to
some charity, and there's no taxation on that. There's obviously
no tax with charity. And you're getting money out of
your estate tax free, and you're not that your child
is not inheriting something that you're they're going to have
to pay tax.
Speaker 1 (18:28):
Right, So probably a good time to talk about the
difference between appreciated assets and assets that I call income
and respect of a deceit correct that's.
Speaker 2 (18:39):
What they call it. That's what the IRS calls it.
Speaker 3 (18:42):
Right, Let's not me.
Speaker 2 (18:43):
I just made that up groceries.
Speaker 1 (18:44):
No, this is a concept that when you buy an asset,
or you invest in an asset like an IRA, but
it's also tax deferred annuities and other things that have
tax deferral during your lifetime, they're growing tax deferred, but
somebody's gonna pay the piper correct when that asset comes out.
And I had a caller last week said, oh, don't
(19:06):
my kids get a step up in basis in annuities. No,
you pay full income tax on all the gain in
that annuity, whether you cash it or your child cashes it.
Speaker 3 (19:17):
Yeah. I think that's a conversation that people miss all
the time because ideally, you're never going to spend every
dollar because you don't know when you're going to pass.
So if you think about the ordering rules to some extent,
what you want someone to inherit, you'd want somebody to
inherit something that they're not going to have to pay
tax on. So raw iras, any kind of asset that
(19:40):
gets a step up in basis would be essentially tax
free after you get to step up, and then the
worst ones you could possibly inherit if you had to
pick one, would be your annuities you're qualified, any kind
of qualified plan or anything that hasn't been taxed yet
like that is obviously your worst thing to leave behind.
Speaker 1 (19:56):
So once you hit seventy and a half, if you
want to make sure contributions do a qualified withdrawal from
your retirement account goes right to the charity that doesn't
even hit your AGI correct correct, And now Medicare is
looking at people's AGI correct, So talk a little bit
about that because that top line number is important.
Speaker 3 (20:15):
Yeah, I mean the it's getting more expensive for the
Part B premiums that are part of Social Security and
they're all income adjusted, so there are thresholds to hit.
And so when you get to the end of the
year and you want you have income we talk about
to ten you're taking if you have to take money out, Yep,
that would be one of those figures you.
Speaker 2 (20:32):
Need to look at inherited diary.
Speaker 3 (20:34):
Yeah, because you need to look at where is your
Medicare threshold getting passed and what are you going to
pay in Part B premiums each year?
Speaker 2 (20:40):
And they're significant, they are that changed the game. I mean,
Medicare used to be a free benefit. Yeah, anymore, you
didn't have any premium for just the basics. You had
to buy a Medicare supplement.
Speaker 3 (20:50):
Correct.
Speaker 1 (20:51):
And if you needed additional coverage, the deductibles, the co payments,
extended long term care coverage, you could get in some
of those policies.
Speaker 2 (21:00):
But now, just to get Medicare, right, you have a premium.
And how high does that premium go.
Speaker 3 (21:05):
I don't know what the top premium is offhand, but.
Speaker 2 (21:07):
It's over three hundred a month.
Speaker 3 (21:09):
I know, yes, yeah, definitely.
Speaker 1 (21:11):
And so and that's income adjusted. So where the dollar
is going to come from to give to charity. Charitable
contributions from IRIS are wonderful. And I sit with clients
all the time, David, this is the transition conversation. Okay,
I'm doing a will or trust that we don't. We
do trusts if we can, we do some wills, But
ninety five percent of our business is trust business.
Speaker 3 (21:32):
Correct.
Speaker 1 (21:33):
And when we sit with clients and they say, okay,
I have a hospital, I have a college.
Speaker 2 (21:37):
My university. Lehigh University is undefeated this year.
Speaker 1 (21:40):
They're going to the playoffs. They're going to play a
playoff game, next Saturday. So I want to give some
money to Lehigh, I want to give some money to
Saint Peter's Hospital. And I'm looking at it and I'm saying, Okay,
in my trust, I'm going to leave them fifty thousand
dollars or one hundred thousand or twenty thousand. And when
it comes out of the trust, it's just coming out
of ordinary assets. So those ordinary assets that goes through
(22:01):
my trust, even if they're highly appreciated, my house, my stocks,
things that have appreciated over time, they get.
Speaker 2 (22:08):
A basis adjustment at death.
Speaker 3 (22:10):
Right.
Speaker 1 (22:10):
So what happens when I have that invidious stock that
I bought for ten thousand, now it's worth a hundred thousand.
Of my kids inherit it from my trust.
Speaker 3 (22:17):
Well, it's a step up to the one hundred thousand
they sell the next day, and there is no tax,
tax free. Yeah, And I mean it's one of the
even people who are very have a charitable intent, you know,
waiting until you pass to make that charitable contribution, especially
if you have you know, you know you have enough resources,
it's really a wrong move, right, You'd rather take that
charitable contribution during your life when you can actually save
(22:37):
tax and if you want to use that tax savings
to make a bigger charitable contribution. You know, most people,
if they don't have a taxable estate, they're not going
to save any money on the inheritance or the leaving
the money to the charity.
Speaker 1 (22:49):
Right, So just cross wiring what's going through your trust
and we leave the charity out of the trust. We
put the charity on the beneficiary designation of the IRA.
Speaker 3 (22:58):
Correct.
Speaker 1 (22:58):
So when you die, instead of leaving your kids that
ten year rule and all the income tax, you leave
that to charity and then you leave the kids the
stepped up assets that they can sell. So the kids
get one hundred cents on a dollar, the charity gets
one hundred cents on a dollar. And that's such a
simple fix that no one has ever talked about, and
(23:18):
it's a it's a great fix. So if you have
charitable intent, folks, now's the time to think about how
you want to time your your charitable contributions. Where do
you want to take the money from to make those
charitable contributions getting the deductions. We're going to talk a
little more about IRA's in the second half of the show.
I'm here in studio with Dave wo Jeski. I'm going
(23:39):
to give the phone number out when we come back,
give us a call.
Speaker 2 (23:41):
Feel free.
Speaker 1 (23:42):
We're going to talk about taxes and small business when
we come back from the break. So we also are
going to give you some information on upcoming seminars that
we have that we hope you will join us for.
So stay with us, Dave Lou We'll be back right
after the news. So get a cup of coffee and
come back.
Speaker 2 (24:02):
See you soon.
Speaker 1 (24:06):
Most welcome back the Life Happens Radio. We got a
big second half here. We're not going to tank.
Speaker 2 (24:13):
We're gonna go all the way to the.
Speaker 3 (24:15):
Finish with in our stomach.
Speaker 2 (24:17):
That's right, We're gonna get there.
Speaker 1 (24:18):
We did something Dave this year that we've never done
as a family before. Everybody's kind of done their own things,
but we did Detroit Turkey Trot, all.
Speaker 3 (24:28):
Eight of us.
Speaker 2 (24:28):
I won because I finished. That was a win.
Speaker 1 (24:32):
All eight of us did it, and it was so
much fun. We had a great time and then we
you know, celebrated the meal afterwards, but very nice. It
was really good. And those are the kinds of things
that we're trying to do. And we go around the table,
and my son is really good with this, and we
go around the table and he'll he'll kind of vary
the topic. But what was your favorite thing about Thanksgiving?
(24:53):
What was your least favorite thing? And yesterday was what
is your no before New Year's before you make resolution?
What is your plan? What is your wish for the
coming year for twenty twenty six? And everybody wants to
get healthy. It's amazing, and everybody said the same thing. Yes,
I'm going to commit to the workouts. I'm going to
(25:14):
commit to the plan, and we're gonna get ready. And
my son is getting married next September, and so we're
graduating ready for that. And it's a great family time.
And that's the Thanksgiving holiday.
Speaker 3 (25:24):
And that it's great. It's definitely my favorite holiday as well.
It's it's relaxing. The other one seemed to be a
little more hectic for an accountant.
Speaker 2 (25:31):
This is a nice pause.
Speaker 3 (25:32):
It's a very nice pause. November is a good month
for one of the twelve months.
Speaker 2 (25:36):
Finally, yep, I mean you have fifteenth all over the place.
Speaker 1 (25:38):
April, fifteenth, September, fifteenth, October fifteenth. You're on extensions in November,
November fifteenth is meaningless.
Speaker 3 (25:45):
So it's a nonprofit. It's okay the nine nineties, but
I personally don't do any of those, so that's good
for me.
Speaker 2 (25:51):
That's great.
Speaker 1 (25:52):
So we're talking with Dave Woodjeski Local CPA, and Dave's
done some seminars with us and we enjoy doing them
for our clients to explain the tax implications of a
state planning and income tax planning and you kind of
put the two things together. And that's what we're doing
here today. It is also Small Business Saturday. We're going
(26:14):
to get around to that, but I want to talk
because it is so important about these tax issues of
basis versus ordinary income and using charities to shelter income
tax on iras and annuities and things that you have.
But people are kind of mindlessly just packing money away
(26:38):
without really looking at options. And one of the options
that I think it's a limited time only offer, is
a roth IRA Sooner or later, when enough money accumulates
in those roths, the government's going to.
Speaker 3 (26:50):
Shut it down.
Speaker 1 (26:50):
Yeah, And they have something called the back door mega
roth where you can put money in a four oh
one k, take it out the door back door pay
tax on it and you can seed the contribution limits
correct enormously.
Speaker 2 (27:03):
And I don't know if you have any clients doing that, Yeah.
Speaker 3 (27:06):
Very few, but everybody's exploring. I mean, we're actually rolling
more and more, are convincing people to roll more and more,
especially people who have more money than they're going to need.
Because again, like we talked about before, there's certain assets
that are worth a lot more to pass along on generations.
The ROTH is probably the best one.
Speaker 1 (27:23):
Yeah, it's an amazing vehicle, folks. And if you aren't
familiar with roths. With a traditional four to one k ira,
you pay tax on dollars that don't go in there.
But when you put it into a qualified account, and
it has to be a qualified retirement plan. There are
many different flavors of this four h three b's four
fifty sevens. If you work for an educational institution, hospital government,
(27:48):
you have a defined contribution to find benefit plan, the
third comp plan that you get. But when you look
at the contributions and you pay a few dollars in
tax today to put it into a WROTH versus paying
no tax today to put it into a traditional but
then you get tax free growth and it's the only
(28:11):
time we can really say tax free growth.
Speaker 3 (28:13):
Correct.
Speaker 1 (28:14):
Everything else is tax defer. But just explain how the
wroth works and the benefits of the wroth not just
for people who are saving and accumulating and compounding money
during their lifetime, but to the kids when they inherit.
Speaker 3 (28:29):
Yeah. I mean, if you just take somebody who's retired,
has done quite well and lives off their SOB security
normal four to one K withdrawals, which is continuing to
grow because the market's been positive, and they look at that,
and you know, we're saying, well, why don't we consider
moving some of that into a wrath. Now, you guys
can afford to pay the tax on the wroth, because
(28:49):
that's one of the things with transferring it to a wroth,
and then you're going to leave that to the kids.
The kids then get it and they can stretch that
out and continue to be tax free growth to them
until they take it out, and it's tax free at
that point. So it is an incredible amount of money
that can be compounded. And I agree with you. I
think at some point the IRS is going to say
this is a way too good of a benefit.
Speaker 1 (29:13):
When enough people figure it out and start using it
more and start accumulating and do the planning that you
can do. There are also income limits though.
Speaker 3 (29:23):
Yeah there icon liay is to make it. But you
know the backdoor row off you're talking about the megaroth.
But even just the role from a from a four
to one K to a or from an IRA to
a roth ira is the I R S is okay
with that as long as you pay the tax.
Speaker 1 (29:35):
On it right without the income limit. Correct, But there's
an age limit.
Speaker 3 (29:39):
There's an age limit. But you know, if you're if
you can look at where your retirees, for me, is
a good benefit for to look at to pay the tax.
I mean general thinking is and I'm usually of this
belief which I don't like to pay tax sooner than
I have to pay tax for the clients. This is
one area I think I like to pay the tax
sooner than I have to pay the tax. Certain situations,
(30:01):
and a lot more situations than used to be because
people have accumulated a lot more assets than I think
they expect it to.
Speaker 1 (30:06):
Yeah, if you don't need the money in your current budget,
correct you if you can afford to do the things
you want.
Speaker 2 (30:11):
To do, you've got your bases covered. You've got your
house covered, you have your food and your car and
all of your basic necessities covered, and you take a
trip a week here, a week there. You travel.
Speaker 1 (30:23):
Once you've covered that nut, you have disposable income, and
a question that becomes, am I better off paying tax
out of some of that income and then deferring it
into a ROTH? Or should I let it come into
a retirement account that I don't pay any tax on?
Speaker 3 (30:38):
Right? I mean, it's still your money, right, So if
you if you're not sure, you know, you think that
you're going to go on a massive spending spray and
you think you're going to need that money, you can
still use your wroth. It's your own. It's your money again,
like we talked about before, you know, what do you
want to leave the charity? What do you want to
leave to your children? You can pick the assets you
want to do that with and be very taxify.
Speaker 1 (31:00):
That and it's tax smart planning. So we work very
closely with accountants on a day to day basis because
clients have needs that we can't satisfy in terms of
their income taxes and their other tax planning. We work
with financial advisors because we don't do investments. We don't
sell the vehicles that they can invest in. But as
an estate planning attorney, we have to look at all
(31:21):
of these issues. Look at the tax issues, look at
the investment issues, look at the vehicles that they're using.
And when a client comes to us and says, okay,
I have five hundred thousand dollars in an IRA, I
don't have a lot of income right now, but I'm
comfortable I have enough income my Social Security, I have
in other savings, and I want to give that five
(31:43):
hundred thousand dollars to my kits. And I'm seventy five
now right Because there is that age limitation, how old
do you have to be before you can do the rollover.
Speaker 2 (31:54):
It's seventy and a half maybe something. It's the original age.
Speaker 1 (31:59):
But then I can take my taxable account, my five
hundred thousand dollars taxable account, and I can roll that
into a roth IRA and I have to pay tax
on that. So you have to strategize here, and that's
where you commit correct because you're going to look at, well,
this tax year may not be the best, but next year,
take one hundred thousand out, roll it over.
Speaker 2 (32:20):
Just talk a little bit about the strategy in the rollovers.
Speaker 3 (32:24):
Yeah, I think what we tend to do is between
now and the end of the year with the annual
meeting with our clients, and we look at this every
single year and we'll make a determination, Hey, this year
basically what you have going on, the right amount to
do is eighty thousand dollars and then let's meet again
next year. What do you got coming up? And you know,
if someone has who knows what they're doing, if they're traveling,
(32:45):
take a little more money out. Maybe we roll a
little bit less. Maybe the market wasn't as good, we'll
roll a little bit more, find out what the kids
have going on. And it's an annual decision real.
Speaker 1 (32:53):
At all, And this isn't guesswork. You don't want to
put a blindfold on and throw a dart at the board.
You want to know what tax rates the kids are
going to be in. You want to know what tax
rate you're going to be in this year, next year,
what you have opportunities to do. And you want to
sit down with someone like Dave wo Jeski and say, okay,
what's the best strategy here. I know I have an
(33:14):
investment advisor. But from a tax perspective, what's my best strategy?
And at seventy five, if I can get that five
hundred thousand dollars, I'm going to pay probably one hundred
and fifty in tax depending upon my bracket. Correct, So
I'm going to go back to three fifty, and over
time maybe I want to do a little bit so
I can minimize that tax hit. But once you reinvest
(33:35):
that three fifty and you live to ninety, so you've
got a fifteen year investment of three hundred and fifty
thousand dollars that is all tax free, correct? And at
what rate the rule of seventy two's.
Speaker 3 (33:50):
You know it's going to be it's more than double.
Speaker 1 (33:52):
If you're in the S ANDP, you're doing ten percent
a year, right, right, So every seven point two years
you're going to double. So you're going to take that
three fifty and it's going to be seven hundred. Then
it's going to be one point four million after fifteen
years if they do ten percent a year because you're
not paying any income tax on it.
Speaker 3 (34:07):
Correct.
Speaker 2 (34:08):
And now you've got a one point five million dollar
asset going to the kids, right, who also don't pay
income tax on it.
Speaker 1 (34:16):
Correct, And the kids can take that one point five
million that you've accumulated from age seventy five, and they
can then stretch it for ten years, correct, and they
get another ten years of compounding, right, tax.
Speaker 3 (34:30):
Free, provide they don't take it and go crazy.
Speaker 2 (34:32):
They don't take it out.
Speaker 1 (34:33):
But even if they do five percent a year, at
that point, it goes from one point five million to
three million, right, And the kids get three million dollars
of cash tax free from an account that was five
hundred thousand fully taxable.
Speaker 3 (34:46):
Correct.
Speaker 2 (34:47):
It's just a huge plan.
Speaker 3 (34:48):
It's a huge way. Yeah. I mean, I think the
hard part, whatever we meet with people, it's it's you know,
the hard part is then deciding what they want to
have happened. Right. Most people come in they maybe they
have a will, maybe they don't. Most don't, and then
we'll say, all right, you just figure out what you
want to go to charity, what you want to go
to the kids, and then you would meet with you
and set up the trust and how to do it
(35:10):
once you know what their wishes are. I wouldn't say
it's the easy part, but you can't do that part
without knowing what their wishes are, but that from our standpoint,
it's relatively easy to lay it out in an efficient way,
and you probably every year you meet with these people
are doing the same thing. Right. Yes, you got to
look at it again. Somebody got divorced, somebody got remarried,
somebody's got another kid.
Speaker 1 (35:28):
Like we have our PALMS program, yeah, which I think
you're familiar with, our Professional Advisor's lifetime management system where
we track all of our clients, planning all of their assets,
their income, their documents.
Speaker 2 (35:40):
We have a private, secure website that we create.
Speaker 1 (35:42):
For them, and we sit down with them for with
our PALMS clients once a year and go through every screen.
What assets do you have? What brokerage accounts, what life insurance,
what bank accounts? What real estate? Do you have a business?
All of those things we review on an annual basis.
I just had another grandchild. Do I need to add
them to the documents? Nope, your documents are per sturpious,
(36:05):
so your grandkids are covered. But I now bought a
property up on Lake George.
Speaker 2 (36:11):
How should I own it?
Speaker 1 (36:12):
I want this property to go to the kids, and
I want them to keep it and continue to use it.
So we're going to talk about a limited liability company
and a LLC. And every year there's something and a
lot of it is, well, I have this retirement account.
How do I use this to my best advantage and
to my children's best advantage. So these conversations should be
annual conversation, correct, And so we're going to talk for
(36:34):
the last segment, we're going to finally flip over to
some business issues. Sure, and look at how businesses start,
how they should grow, what type of entity from a
tax perspective, I know what I prefer from a legal perspective,
but from a tax perspective.
Speaker 2 (36:50):
What type of entity?
Speaker 1 (36:51):
And then what are some of the new things and
the accelerated deductions that are available right now just make
business pretty good, especially if you're in real estate construction
things like that. The ability to accelerate deductions has a
major impact on not what you earn, but what you keep.
Speaker 2 (37:10):
Stay with us. We're gonna come back right after a
short break.
Speaker 1 (37:17):
Gobble gobble, gobble, Happy Turkey Day, Happy Thanksgiving. I hope
you're all enjoying your weekend. Bright sunshine outside, nice Chris Bear,
go for a long walk today, walking as popular again.
Speaker 3 (37:28):
Dave Yes a little bit yesterday in the blizzard.
Speaker 2 (37:31):
How many of you have your Apple watches counting your
steps today? Ten years ago? Was that a thing?
Speaker 3 (37:37):
Now?
Speaker 1 (37:38):
All new technology and things that we can do now
to keep ourselves healthy, And we hope that you're doing
that and you and your families are getting out. We
did the Turkey Trot as a family. Then we went
to the gym as a family yesterday. So I have
a very athletic group, and I.
Speaker 3 (37:53):
Love that you're making me feel bad, I know.
Speaker 2 (37:55):
And we had a great, great time. We did an
AB class.
Speaker 1 (37:59):
My daughter ran it, so we had a good time,
but healthy, wealthy and wise.
Speaker 2 (38:06):
So we're here to keep.
Speaker 1 (38:08):
You wealthy and wise, and that is to mitigate your
taxes and to look at the things you can do
to plan. I mentioned an asset just in passing that
gets underplayed for most people, and that is life insurance.
And looking at life insurance in a plan. It's interesting
that there used to be a lot of life insurance
agents out there who were selling just life insurance, and
(38:32):
I have lamented this for a long time. Glass Steegel
was a law federal law that thirty years ago broke
down the barriers between banks investment houses life insurance.
Speaker 2 (38:45):
Now, financial institutions.
Speaker 1 (38:46):
Do everything right, but the life insurance is very often
an afterthought. And I have not found a lot of
high quality, concentrated life insurance agents who know products and
know how to fit products into a plan. And this
is the other tax asset that is in fact tax free. Right,
you can have a life insurance policy and you can
(39:07):
take ten thousand dollars a year, put it into a
life insurance policy and turn it into two million depending
upon your age, that can pass to your errors income
and a state tax free correct. And when people get
a life insurance check, it's like, oh my god, this
is pretty good.
Speaker 2 (39:24):
And you don't see that, but that's the reality.
Speaker 3 (39:26):
Of Yeah, no, it's one of the tax free assets.
And I would agree it's a very complicated product, which
is probably why you don't see a lot of people
yeah to do that.
Speaker 1 (39:36):
I mean, when you're young and you have kids, you
need to buy term life insurance, need to have a
cash resource that if you p die die early, your
kids still have to eat, they have to live, they
have to go to school. So having term life insurance,
but then permanent products is where it's.
Speaker 3 (39:51):
Complicated, very complicated because you're fitting a specific scenario in
a specific situation, and there is a lot of products,
and every time I turn around, some company's got a
different product. They trick it up and they're just trying
to fit the life insurance rules to maintain the tax
free aspect of.
Speaker 2 (40:07):
It correct, and they've lobbied very hard to keep it.
Speaker 3 (40:09):
It's got a great lobby, there's no question, because that's
another area I keep waiting for the shoe to drop.
Speaker 2 (40:14):
Ye, And for years we've said that, but no one's
talking about it now.
Speaker 3 (40:17):
No, I haven't heard of it.
Speaker 1 (40:19):
You kind of start out with term insurance when you're
very young, and then you go to maybe you get
sold a whole life policy and you're putting some cash
into there, and then I have variable. Now they have
indexed universal life, and we deal with clients at very
high net worth areas that are private placement life insurance,
and this is just an insurance wrapper designed to defer
tax correct one hundred percent. So they're investing a lot
(40:40):
of money in investments inside of an insurance.
Speaker 2 (40:42):
Wrapper just to get tax deferral correct.
Speaker 1 (40:45):
So from a tax perspective, life insurance can't be taken
off the table, and I have a lot of clients
to say, I don't believe in life insurance.
Speaker 2 (40:52):
It is not a religion.
Speaker 1 (40:53):
It's a financial product, and it's an irreplaceable financial product
because nobody else delivers that two million dollars at death
like a life insurance policy does.
Speaker 3 (41:01):
Yeah, you've seen this use of it will loss. Some
people have it that don't need it where they are,
and some people don't have it that do need it
where they are.
Speaker 1 (41:07):
And the creative products that we talk about on our show,
because we do a lot of medicaid and long term
care planning, life insurance policies that allow you to use
death benefit to.
Speaker 2 (41:16):
Cover your own long term care expenses. And I like
those a lot.
Speaker 1 (41:19):
Yeah, And if you buy those at the right age,
their level premium, they're guaranteed universal life mostly, And so
you buy one premium and that's premium for life, and
you have a death benefit, and then if you age
and you need long term care, you've got a cash
benefit that can come out and pay for long term care.
Speaker 3 (41:35):
Correct.
Speaker 1 (41:36):
So those are all good things. I want to turn
to the businesses because there are some very favorable businesses
that have been benefited different lines of business that have
been benefited from the tax legislation. Just give us a
brief overview, and then I want to get into kind
of starting.
Speaker 2 (41:52):
A business for anybody out there that wants to start
a business.
Speaker 3 (41:54):
Yeah, I think overall the bill, the big beautiful Bill,
is favorable to business, period right. It got rid of
everything that was going to sunset, and it added some
some additional items. But from a small business perspective, I
don't think wagers failed so fared so well with the
new tax Act, but certainly business did.
Speaker 2 (42:13):
Yeah, which is so eight percent of people.
Speaker 3 (42:17):
Yeah, mostly what we deal with. So, I mean the
depreciation provisions anybody who is investing capital in their business,
any kind of capital, whether it's equipment, autos, machinery. Uh,
you pretty much can expense everything you've you've spent in
the year you spent it. I mean, you may not
want to, you may want to just take a portion
of it, but you certainly have the option to.
Speaker 1 (42:37):
And for those startup entrepreneurs, research and development is a
huge issue. And I have a business where I've been
pumping money into develop some technology and I got full
deductions for a while, and then it stopped and I
had to go over five years and now it's back.
Speaker 3 (42:54):
Yeah. Yeah, those rules, they really messed that up, you know,
they were the R and D expense became very complicated.
You had to capitalize costs. But they're back to expensing again,
and if you qualify as a small business, you can
go back to twenty two and expense them again at
a man and most people are doing that.
Speaker 2 (43:09):
Yeah.
Speaker 1 (43:09):
And that's if you're starting a business and you're earning
money from maybe your salary, and you're in your garage,
you're building the next Apple computer and you're putting money
in and you're buying parts and you're buying technology. You
used to have to defer the deductions for that correct
over time, but this new law allows you to deduct
(43:29):
one hundred percent, so you can wash money if you
will with R and D deductions.
Speaker 3 (43:36):
Yeah, I get the credit on top of it. Yeah. Yeah.
The provisions on the on the business side, there's a
lot of good provisions. I mean twelve oho two they
loosen that up, which is.
Speaker 2 (43:45):
The sections on me.
Speaker 3 (43:47):
I know, I'm getting everybody really excited by just saying that,
but h so that's the code section where it allows
you to essentially have a tax free gain on the
sale of stock of starting a business. So where really
you know, we talked about you mention qualified small business, correct,
colo fight small business. We mentioned you mentioned before we
took a break about just empty selection, which is another
way to things that changes all the time, right, and
(44:08):
it's very specific to what you're doing. Uh. You know, generally,
if it's just a base of business, I'm generally in
favor of an LLC to start their most flexible entity
to work with. They've got tax favorabilities. It's not so
rigid as a corporate would be. But it really depends
on are you going to have partners? What type of
business are you? Are you going to sell? Is there
(44:30):
going to be is this a lifestyle business? There going
to be an exit Sunday? You're going to raise capital like.
Speaker 2 (44:33):
There's so many Are you going to own real estate?
Speaker 3 (44:35):
You're going to own real estate? Correct?
Speaker 1 (44:37):
Because I have a client right now that we're looking
at trying to get a piece of real estate. It's
a it's a business that has a lot of potential
liability with yeah, you know, well a very active business
that has a lot of traffic and they they have
an escorp with the real estate inside the es Corp.
And it's fully depreciated, right, So from a tex perspective,
(45:00):
they don't have any cost bases. So if they were
to sell that asset, they're going to pay capital gains
one hundred percent of the sale. And if you want
to try to move the real estate out of the
escorp to try to protect it in a separate LLC,
you're still going to pay the tax.
Speaker 3 (45:15):
Yeah, I mean, real estate is probably the one. If
you called me up and said, hey, I'm starting a
business and it's in real estate, we probably don't have
much have to have much of a discussion any further.
It's an LSA, yeah, right, But if it's not real estate,
there's so many other factors that go into the choice
of enterty.
Speaker 1 (45:29):
And if you want to open up the tavern or
open up the brewery. How many people have opened up
breweries in the last five years A lot, a lot.
So if you want to distill liquor or you want
to brew beer, you want to have an operating entity
because when you're serving the public alcohol, there's a lot
of potential liability there. We call a dramshop liability. I
used to defend those cases. Yeah, yeah, yep, when I
(45:51):
was first out of law school. And then if you
want to buy the building that the brewery is in,
you may want to have an escorp or even a
sea corp, but you want to have the real estate
in a separate limited liability cordon off liability.
Speaker 2 (46:03):
Between the two.
Speaker 1 (46:04):
And this is so important when you're starting out to
get it right the first time you and I know
Dave that people at start businesses marry that business. If
they're good and they're successful, they're putting fifteen, sixteen, twenty
hours a day into that business and they don't really
have time to think about a lot of other things.
(46:26):
And I chase business owners all the time, and you
have to go to their place of business or go
to their house, or you know, meet them on the
golf course. You have to go somewhere. They're not going
to come to your office. You got to go to them.
And when we look at how to structure businesses, it
takes a little bit of time, a little bit of thought,
a little bit of money and you have to invest.
And so having a business gives you some opportunities. And
(46:51):
we can talk about tax deductions and I, you know,
we were cut out of tax deductions for miscellaneous itemized deductions,
and just talk a little bit about that and what
you can deduct through a business correct versus what you
can deduct individually.
Speaker 3 (47:06):
Yeah, I think. I mean, look the miscellanic sidemized deduction sections,
which is where anything related to you making income as
an employee pretty much used to be deducted, and now
it's gone federally, it just doesn't exist, including tax preparation fees,
legal fees.
Speaker 2 (47:19):
Yeah, you used to be able to deduct our fees.
Speaker 3 (47:22):
Well, we don't care so much about that. It's more
of the accountings.
Speaker 2 (47:25):
Well we all have our little axtagrind.
Speaker 1 (47:28):
But when they took all of those miscellaneous itemized deductions away,
you get a bigger standard deduction, yeah, which covers most people,
almost all people, I think, Yeah, big percentage, and then
the miscellaneous itemized deductions. But if you have a limited
liability company and you're starting a new business and you're
hiring the attorney to set this up in the accountant
to do the tax returns.
Speaker 3 (47:47):
It's all deductible there. It's deduct Yeah. In fact, anything
you know, if you have an LLC, anything you you
incur that is helping you generate income which is kind
of the IRS's tax test. Hey, if you're spending my
me to make more income, we know you're going to
pay more tax. We'll let you take the deduction, even
if it's not inside the partnership, if you have a
multi member LSA.
Speaker 1 (48:08):
So if I take Dave wou Jeski out to an
expensive dinner at six seventy seven Prime and we talk
about taxes and clients and generating business, that's a deductor.
Speaker 3 (48:17):
One hundred pct yet but it's yes, it's deductible.
Speaker 2 (48:22):
Yes, so encouraged. So what are the different entities?
Speaker 1 (48:26):
We talked about LLC's and corporations and LLC's And it's funny,
I was in the legislature as a law student. I
worked in the legislature, and I was working on a
bill called the Limited Liability Company Act for New York State.
So that would have been nineteen eighty one eighty two,
that's when LLC's and New York started, right And before that,
(48:49):
before you had LLCs, you had partnerships, general partnerships, limited partnerships, corporations,
and then you get, for tax purposes, make the selection
or C corps.
Speaker 2 (49:00):
Just talk a little bit about the difference.
Speaker 3 (49:02):
Well, I mean there are LLC's and the s corps
and partnerships for that matter, although you don't really see
many partnerships anymore because.
Speaker 2 (49:09):
You don't because LLC's are so much better.
Speaker 3 (49:11):
Right, Once in a while you'll see a limited partnership
for those part it's it's LLC's or corporations. And then
whether you make the selection, and the selection just tax you,
similar to a partnership, and that it's passed through anything
that happens inside the corp or the income for the
corp passes through the individually, and then c corp is
just separate entity, separate tax system. You pay the tax
at the corporate level. But there's huge differences in how
(49:34):
the tax issue works and why you'd want to be
one or the other. But the LC's are definitely the
most popular vehicle right now. So flexible, I mean very flexible.
Speaker 1 (49:41):
When you deal with limited liability companies, I call it
the lump of clay, and you can mold that lump
of clay through an operating agreement and you want, you
want it whatever you want. When you're dealing with corporations,
there's something called the business corporation law and you're very
rigid and you have to work within the confines of that.
Speaker 2 (50:00):
Well, those are the different entities.
Speaker 1 (50:01):
Whether you're a partnership, a sole proprietorship, a corporation, you
need to have a good accountant to make sure that
all the tax compliance is done and that you're maximizing
the benefits because, as we've said throughout the show, it's
not what.
Speaker 2 (50:16):
You make, it's what you keep.
Speaker 3 (50:18):
Yeah, you'd like to keep more.
Speaker 1 (50:19):
David Jesse, thanks for sharing the Saturday Morning with us.
We all appreciate you guys every Saturday morning at nine
am here joining us on talk radio WGY for Life Happens.
Have a wonderful remainder of your weekend, and we'll be
back next week
Good morning everyone, and welcome to Life Happens Radio. I'm
Loop Piro, your host for this morning. Very happy to
be here with you on this Thanksgiving weekend. A bright,
bright sunny day, little Crisp Bear, and Thanksgiving turkey. Hopeing
you've got some leftovers some of that turkey sandwich on
the white bread with mayonnaise. You know, that's kind of better,
I think than the first sitting of the turkey. But
(00:21):
we hope that you're also enjoying the weekend. It's kind
of a favorite holiday for a lot of people because
it doesn't have religious overtones. It doesn't have obligations. You're
not running around like crazy people at holiday Christmas Sonica.
Time time to sit back, think a little bit, and
maybe do some shopping. Black Friday was yesterday, but Black
(00:44):
Friday kind of has expanded into Black November. It's just
shopping till you drop and getting your deals and getting
your things done.
Speaker 2 (00:54):
And are you able to afford.
Speaker 1 (00:55):
All the things that you want to buy or that
people need at this holiday time. Unfortunately a lot of
people are not, so we try to help them out,
and I hope you are as well. But for our families,
this is a great time to sit back and think
and for those people who are planning towards the end
of the year, and that we just I was listening
(01:17):
to Dave Kopeck talk about planning for your retirement. When
do you start yesterday? It's always a good thing to
get going in your twenties. But who in your twenties
is thinking about putting money aside for retirement? But when
you do, if you do, it's a great way to
start and to build in the power of compounding, especially
(01:39):
if you're in tax deferred accounts, can be tremendously beneficial
in the long run. But the other thing that you
have to manage is your taxes, because when you're investing,
taxes become a big part of it, and if you
own a business, taxes become an even bigger part of
it because there are opportunities and perils. I am not
(02:00):
an income tax expert. I will tell you folks that
that is not my baily wick. I do not practice
income tax. But the good news is I have somebody
here in studio with me that does, David Wojeski of
Wijeski and Company. Good morning, Dave, good morning, And I
want you to tell our listeners, a little bit about
yourself your practice. You've been here in the Capital region
for a good number of years practicing accounting and working
(02:23):
with clients, so let's have it.
Speaker 3 (02:26):
Yeah, we've been around for about thirty years as a
firm and about thirty five people and concentrating both everything
from outsourced accounting to audit the financial statements, and of
course tax compliance and strategy. And my area is really
mergers and acquisitions, the state trust and tax strategy.
Speaker 1 (02:44):
So all of the things we do from the legal side,
and certainly we have to deal with taxes as lawyers,
state tax, gift tax, you know, basis issues, capital gains tax.
But the ten forty, the ten forty one, the returns
that you do. We don't do the sixty fives and
the ten twenty threes. And we're going to focus a
little bit on small business today because it is Small
(03:07):
Business Saturday. But I also want to talk about end
of year tax planning. And you might have heard, folks,
there's something called the One Big Beautiful Bill Act that
passed on July fourth that is impacting all of us
and our taxes.
Speaker 2 (03:21):
So as we approach December the year end, like you said, Dave,
we were talking a little bit before the show. It
gets crazy, it gets really crazy.
Speaker 3 (03:29):
After this is like the last weekend to enjoy myself
until December gets to the year end, which is always
a race to the finish line.
Speaker 2 (03:37):
And then you get April fifteenth and you've got more craziness.
Speaker 3 (03:41):
Everybody loves taxes, So what are some.
Speaker 1 (03:45):
Of the things. I know there was changes to standard
deductions and things like that. Just a couple of highlights
that you're you're dealing with for your clients with the OBBBA.
Speaker 3 (03:55):
Yeah. I mean, the interesting part of it is that
the change in the law was more of not so
much changes of what what happened is what didn't happen. Right,
They made all the changes that were supposed to expire.
Most of them were made permanent, and that is permanent
from a tax legislation standpoint, which nothing is permanent, but
the next administry till the next administration, then we'll see
what happens. But you know, depreciation, we got a lot
(04:17):
of publicity, which has been a big plus for small businesses.
And then the inville side, you had the salt deduction,
the state local tax limit, some changes in standard deduction,
itemized deductions, person mortgage interest carge, just a little bit
of changes. Really the middle class, and I would define
that probably in the two hundred to four hundred thousand
dollars range is really there were some positives in that area,
(04:40):
and business made out well.
Speaker 1 (04:41):
So let's break some of those things down. Because in
New York here we have taxes all around us. We
have property taxes, we have New York State income taxes.
I have friends that live in Florida. They get ten
percent more income than I do because they don't pay
New York State in tax. And so the income taxes,
and you mentioned standard deductions and accelerated deductions, let's just
(05:03):
start there because as some wise man used to say,
it isn't what you make, it's what you keep.
Speaker 3 (05:10):
That is true.
Speaker 2 (05:11):
So how did that impact and there are some positives there.
Speaker 3 (05:14):
Well, they raised the standard deduction a few years ago
quite a bit, so it's about thirty one thousand, five
hundred for your general joint filers, but they had limited
cap assault deduction or state and loaf tax deduction. And
being in a Northeast state, you know your real estate
taxes are quite high, and then you've got your state taxes,
your New York state taxes that go along with that,
(05:35):
and they were limited to ten thousand dollars, so most
people were not even itemizing deductions. Yeah.
Speaker 1 (05:40):
I mean, if you're paying ten thousand in property tax
and ten thousand in income tax, and you've got other
miscellaneous things and your capped at ten thousand dollars in deductions.
Speaker 3 (05:48):
Yeah, and your big hit, you weren't going to get
to thirty one thousand because most people who had you know,
your mortgage rates were low for a while, so your
mortgage interest isn't that high, and you're really your three
main areas are ris, charity, and taxes, right, those are
your three areas to get over that standard deduction limit.
So they raise the sal cap to forty now, which
is income limited, so if your income is too high,
(06:10):
it won't get it. But if you're in that, you know,
below the income thresholds, you can get up. You know
what that number is, it's five hundred. It starts at
joint so.
Speaker 2 (06:17):
If you're under five hundred, you get the forty grand
correct of state and local tax deduction, which.
Speaker 3 (06:23):
Is still not a you know, it's still a pretty
good threshold to get to, but you know, real estate
taxes aren't cheap in this.
Speaker 1 (06:29):
It depends on where you live here, but yeah, it's
not unusual in town of colony Loudonville, for example, to
see a twenty thousand dollars property tax bill on just
a regular house because the tax rates have going up.
Speaker 2 (06:40):
Local taxes.
Speaker 1 (06:41):
It's the only way the counties can raise money, right,
property tax right.
Speaker 3 (06:45):
I think one of the strategies around that is really
the The idea is to bunch your itemized deductions right,
pick your every other year to really try to get
as many itemized deductions as you can, so you might
double up your charity in one year. Or I'm sure
talked about donor advised funds and front loading donor advice funds,
which we'll probably get to. And then making sure if
(07:06):
you're making estimated payments, you know that fourth quarter payment
is due January fifteenth, but you can pay one January
fifteenth and you pay the other one December of the
prior year. You're going to double up and really get
five payments in one year because you really want to
try to itemize if you can.
Speaker 1 (07:21):
So this is a good time to be thinking about
this one dred percent for our listeners because now is
the time you're going to be doing this and looking
at end of year planning. Do I want to write
the check to the charities and do it this year
and then maybe do it again next year, or do
I want to wait till after the first of the
year and bundle all of my twenty twenty six charitable
deductions together?
Speaker 3 (07:41):
Correct? And with that, you know the most the biggest
bang for your bucket to donate appreciated securities as opposed
to cash, because you're getting a deduction at the full
market fair market value, and you can take the cash
you would have donated the charity and rebuy that same
stock and be in the same position investment wise.
Speaker 1 (07:57):
And now we're talking about tax planning, folks, So when
we deal with tax planning, you have capital gains.
Speaker 2 (08:02):
Taxes, which Dave is alluding to.
Speaker 1 (08:04):
So if you bought Nvidia and it's had a big
run up, and you want to say, Okay, I want
to give ten thousand dollars to my hospital because they're struggling,
and you want to do it in a way that
isn't ten thousand out of your checkbook. You take your
Invidia stock, which has a basis of maybe one thousand dollars,
it's now worth ten And what are the tax consequences
(08:26):
of donating a ten thousand dollars stock with a one
thousand dollars basis.
Speaker 3 (08:30):
Yeah, you'll get a ten thousand dollars deduction, which is
worth obviously ten thousand dollars of cash, and the ten
thousand dollars check you didn't write. You could rebuy that
same Navidia if you believed in that stock. And now
you have no built in capital gains, so if you
ever sell the video, you won't have any gain on it.
So you know you're getting the benefit of the charitable
deduction and you're getting the benefit of avoiding the tax
on a stock you would have had to pay at
(08:51):
some point in the future.
Speaker 2 (08:52):
So you can reset your basis, reset your basis correct.
Speaker 1 (08:55):
Based upon buying the stock for cash and using highly
appreciated securities. I like even better, and that is the
qualified retirement plan contribution.
Speaker 2 (09:06):
So that's a great one.
Speaker 1 (09:07):
If you're over seventy and a half, correct, you can
give from your retirement account and just talk a little
bit about you know, that's a capital gains tax eving.
Speaker 3 (09:16):
Yeah, I mean most people specifically, I mean most elderly
people are not itemizing right because your mortgage is paid off.
Now the salt deduction high enough, but depending on what
your charity is. So what was happening is if you
made a five thousand dollars donation to the church, you're
really not getting a tax deduction for at least a
tax savings because you're standard deduction anyway, but you'll be
(09:38):
paying tax on your Require minimum distribution on the IRA,
you'd be paying tax on that. So this allows you
to bypass that taxation of the RMD and goes directly
to the charity, which essentially makes it a five thousand
dollars charitable deduction. Regardless of whether you're itemize or not.
It's really a no brainer.
Speaker 1 (09:56):
So we're covering a lot of territory here, we're doing
it quickly. Capital gains tax. We'll talk about that because
we work with capital gains tax all the time when
we're funding trusts and when we're setting aside money and
making gifts, and we talk about gifting versus leaving money
through an a state, and we'll get back to that
(10:16):
one because a step up in basis is a really
key issue for a lot of our clients, but I
want to go and stick with the retirement accounts. Because
when I started practice coming up twenty twenty six, forty
three years When I started practice forty three years ago,
I had clients come in and I would sit down
(10:37):
with them, and I was a young associate, and you know,
my partners are said, okay, do a will for this person.
And you'd look at what they had, and they had
a home and they may have paid off their mortgage,
it may not. I still have some mortgage. They had
some savings, and back then it was savings accounts. You know,
there weren't exotic types of fixed income investments. It was
mainly savings accounts, checking account and they may have bought
(11:01):
some stocks somewhere along the line, but you didn't have ETFs,
You didn't really have a lot of mutual funds. And
they had a pension and so they didn't have a
lot of assets. They didn't have a lot of high
net worth. But they were looking at an income throughout
their retirement of Social Security and a fixed pension. And
that's how we were doing planning forty three years ago.
(11:23):
Fast forward to today, that same client comes in, they
have no pension. They probably have some CDs, they may
have some mutual funds, they may have some ETFs, but
they have a four oh one k or an ira
that is their primary vehicle for retirement.
Speaker 2 (11:40):
No more fixed pension.
Speaker 1 (11:42):
Now I'm responsible for that four oh one kira. So
people have put a lot of money into those retirement
accounts and the number is staggering, you know, tens of
trillions of dollars that are sitting in retirement accounts.
Speaker 3 (11:55):
Yeah, I mean one of the things that's happened is
I think people have a lot more wealth than they
anticipated because because the market has been on a twenty
year run or fifteen year run anyway. So I think
we're dealing with the same thing as that is all right,
what is the timing of getting the money out? When
do I take it? And that also is important with
some of the thresholds that exist and when you're going
to pay tax you have you know, it's a complicated
(12:17):
process because when do you want to take it? How
does it affect your social security? For collecting social security,
how's it affected Medicare premiums? As you exceed certain income thresholds?
When do you want to take the income? What do
you want to gift. I mean part of what you're
doing on the estate side. That's an awful lot of
wealth to shift between generations right now.
Speaker 1 (12:34):
Yeah, and that's our focus, is that transfer. What have
I accumulated? How do I get it to my kids
or my loved ones in the best way with the
least amount of tax. So when we come back, we're
going to unravel the retirement account. How do you use
the dollars? As Dave said, wisely now for yourself? And
this is not the financial planning show that's before and
(12:54):
after us. So we're here to talk about tax and law.
How do you maxim the value for yourself? How can
you make those charitable contributions in the most leverage way possible?
And what do your kids get? And as we talked about,
it's not what you leave them, it's what they get
to keep from that. And we're gonna talk about the
differences and the decisions that you can make that are
(13:16):
pretty straightforward and sometimes even simple if you think closely.
And you'll listen, So we'll be back right after this.
You're listening to Life Happens on Talk Radio WGY. Stay
with us and we are back. You're listening the Life
Happens Radio. I'm Lou Piro, your host for this morning,
(13:37):
wishing you a happy Thanksgiving. We are thankful for your listenership.
We're glad to have you as part of our show.
We hope you enjoy the show. We hope you feel
free to call us because I'm gonna give out the
phone number right now, and I have in studio with
me a tax expert, someone who has been practicing and
owns his own firm here in the Capitol region, Wojeski
and Company. That is David Wojeski. And you can call
(13:59):
us at eight hundred eight two five five nine four nine.
That's eight hundred talk WGY can give it to you
numbers one more time eight two five fifty nine forty
nine eight two five five nine four nine, that's an
eight hundred number. And David, we're talking about retirement accounts.
And I set the stage because more and more and
more wealth over time accumulates in those retirement accounts because
(14:21):
you're not paying income tax on those dollars. Right your
four oh one K is going in. We match our
four oh one k as many employers do, at four percent,
so we can put an employee, you can put four
percent of their own money into their four oh one
k I match it. We match it and put four
percent on top of that. So you got eight percent
of your salary going into a tax defer an account.
And if you're young enough that eight percent, if it's
(14:43):
compounding on a year over year basis, that's going to
be your main nesting when it comes to time. But
there there are traps in there, and the government saw
this trap coming, and they knew that this transfer of
wealth through these retirement accounts was going to be an
enormous shift. And we were doing very complex planning to
(15:05):
stretch the benefits of retirement accounts, leaving them to grandchildren
who are two years old with a life expectancy of
eighty years and taking literally nothing out of that account
right and letting it compound. But the Secure Act passed
in twenty twenty, and then we got Secure Act two
point zero, and the Secure Act brought us a ten
year time period within which kids have to draw out
(15:29):
all of those retirement funds. And Dave, that was a
major shift, and that takes some planning for parents and children.
Speaker 3 (15:36):
Yeah, we don't like that one. No back that one
at all. So that's a very short period, especially if
if the dollar amount is large, you know you're going
to have to take Even if you got your your
likely subject to the R and D, but that's nowhere
near going to get you out within ten years. So
you're going to have a big chunk at some point.
Speaker 1 (15:55):
And when you're thinking about it, if you have and
having a million dollars in a four KIRA is not.
Speaker 3 (16:01):
Unusual any No, not at all.
Speaker 2 (16:02):
A lot of people have that.
Speaker 1 (16:04):
And if you leave that to a child, a child
has to take one hundred thousand dollars a year out
and pay full income tax correct, And that's on top
of the child's rate.
Speaker 2 (16:14):
And typically if.
Speaker 1 (16:15):
You're leaving it the children who are earning and working,
their marginal rate is going to be higher than yours. Right,
So what are some of the things that clients can
do to mitigate.
Speaker 2 (16:25):
The tax consequences of that IRA.
Speaker 3 (16:27):
Well, part of this is to look out ten years
as best you can and say, okay, is there a
year that is better to take maybe more than less
of it. A lot of people's inclination seems to be
not to take it right, to take the R and
D and wait and take it all at the end
and that generally is the wrong decision. You run the
math on it.
Speaker 2 (16:46):
It's a time bomb.
Speaker 3 (16:47):
It's time.
Speaker 2 (16:48):
I have a slide.
Speaker 1 (16:49):
When I do a seminar, that's a time bomb with
a fuse tick tick tick, And when that bomb goes off,
you're paying federal tax potentially if the kids are doing
really well at thirty seven percent correct, and New York
state tax can be up as high as ten percent,
but most people are eight to nine percent, right, So
you're looking at a forty five forty six percent tax.
Speaker 2 (17:09):
So you're losing almost half right, the IRA when you
leave it.
Speaker 3 (17:12):
To your kids, right, I mean at a minimum. I
always tell everybody you got I mean, New York State
allows a twenty thousand dollars exclusion on iras and pensions,
and it's gone if you don't use it each year.
So you got at least take the twenty thousand, because
that's going to save you the twenty thousand times ten.
At least it gets you two hundred thousand out tax
free from New York State if you're the sole beneficiary,
gets split if you're in a multiple beneficiaries. But if
(17:34):
you have a charitable intent, that's certainly a good way
to handle that, as we've discussed.
Speaker 1 (17:38):
Yeah, so there's a qualified charitable contribution that you can make.
Tell our listeners a little bit about that. There's an
age limit. You have to be over certain age to
do it. But once you're over that age, when it
comes time to leave dollars to charities, these are the
dollars because the charity is tax exempt.
Speaker 3 (17:55):
Correct, So anything you leave to the charity. So if
you've got you know, again, I have a charitable intent
h and you should be looking at that now versus
before something were to happen to you as an elderly person.
And you can leave an excess of one hundred thousand
dollars directly to charity.
Speaker 2 (18:11):
Front is the new number.
Speaker 3 (18:13):
One hundred and eight thousand from your IRA directly to
some charity, and there's no taxation on that. There's obviously
no tax with charity. And you're getting money out of
your estate tax free, and you're not that your child
is not inheriting something that you're they're going to have
to pay tax.
Speaker 1 (18:28):
Right, So probably a good time to talk about the
difference between appreciated assets and assets that I call income
and respect of a deceit correct that's.
Speaker 2 (18:39):
What they call it. That's what the IRS calls it.
Speaker 3 (18:42):
Right, Let's not me.
Speaker 2 (18:43):
I just made that up groceries.
Speaker 1 (18:44):
No, this is a concept that when you buy an asset,
or you invest in an asset like an IRA, but
it's also tax deferred annuities and other things that have
tax deferral during your lifetime, they're growing tax deferred, but
somebody's gonna pay the piper correct when that asset comes out.
And I had a caller last week said, oh, don't
(19:06):
my kids get a step up in basis in annuities. No,
you pay full income tax on all the gain in
that annuity, whether you cash it or your child cashes it.
Speaker 3 (19:17):
Yeah. I think that's a conversation that people miss all
the time because ideally, you're never going to spend every
dollar because you don't know when you're going to pass.
So if you think about the ordering rules to some extent,
what you want someone to inherit, you'd want somebody to
inherit something that they're not going to have to pay
tax on. So raw iras, any kind of asset that
(19:40):
gets a step up in basis would be essentially tax
free after you get to step up, and then the
worst ones you could possibly inherit if you had to
pick one, would be your annuities you're qualified, any kind
of qualified plan or anything that hasn't been taxed yet
like that is obviously your worst thing to leave behind.
Speaker 1 (19:56):
So once you hit seventy and a half, if you
want to make sure contributions do a qualified withdrawal from
your retirement account goes right to the charity that doesn't
even hit your AGI correct correct, And now Medicare is
looking at people's AGI correct, So talk a little bit
about that because that top line number is important.
Speaker 3 (20:15):
Yeah, I mean the it's getting more expensive for the
Part B premiums that are part of Social Security and
they're all income adjusted, so there are thresholds to hit.
And so when you get to the end of the
year and you want you have income we talk about
to ten you're taking if you have to take money out, Yep,
that would be one of those figures you.
Speaker 2 (20:32):
Need to look at inherited diary.
Speaker 3 (20:34):
Yeah, because you need to look at where is your
Medicare threshold getting passed and what are you going to
pay in Part B premiums each year?
Speaker 2 (20:40):
And they're significant, they are that changed the game. I mean,
Medicare used to be a free benefit. Yeah, anymore, you
didn't have any premium for just the basics. You had
to buy a Medicare supplement.
Speaker 3 (20:50):
Correct.
Speaker 1 (20:51):
And if you needed additional coverage, the deductibles, the co payments,
extended long term care coverage, you could get in some
of those policies.
Speaker 2 (21:00):
But now, just to get Medicare, right, you have a premium.
And how high does that premium go.
Speaker 3 (21:05):
I don't know what the top premium is offhand, but.
Speaker 2 (21:07):
It's over three hundred a month.
Speaker 3 (21:09):
I know, yes, yeah, definitely.
Speaker 1 (21:11):
And so and that's income adjusted. So where the dollar
is going to come from to give to charity. Charitable
contributions from IRIS are wonderful. And I sit with clients
all the time, David, this is the transition conversation. Okay,
I'm doing a will or trust that we don't. We
do trusts if we can, we do some wills, But
ninety five percent of our business is trust business.
Speaker 3 (21:32):
Correct.
Speaker 1 (21:33):
And when we sit with clients and they say, okay,
I have a hospital, I have a college.
Speaker 2 (21:37):
My university. Lehigh University is undefeated this year.
Speaker 1 (21:40):
They're going to the playoffs. They're going to play a
playoff game, next Saturday. So I want to give some
money to Lehigh, I want to give some money to
Saint Peter's Hospital. And I'm looking at it and I'm saying, Okay,
in my trust, I'm going to leave them fifty thousand
dollars or one hundred thousand or twenty thousand. And when
it comes out of the trust, it's just coming out
of ordinary assets. So those ordinary assets that goes through
(22:01):
my trust, even if they're highly appreciated, my house, my stocks,
things that have appreciated over time, they get.
Speaker 2 (22:08):
A basis adjustment at death.
Speaker 3 (22:10):
Right.
Speaker 1 (22:10):
So what happens when I have that invidious stock that
I bought for ten thousand, now it's worth a hundred thousand.
Of my kids inherit it from my trust.
Speaker 3 (22:17):
Well, it's a step up to the one hundred thousand
they sell the next day, and there is no tax,
tax free. Yeah, And I mean it's one of the
even people who are very have a charitable intent, you know,
waiting until you pass to make that charitable contribution, especially
if you have you know, you know you have enough resources,
it's really a wrong move, right, You'd rather take that
charitable contribution during your life when you can actually save
(22:37):
tax and if you want to use that tax savings
to make a bigger charitable contribution. You know, most people,
if they don't have a taxable estate, they're not going
to save any money on the inheritance or the leaving
the money to the charity.
Speaker 1 (22:49):
Right, So just cross wiring what's going through your trust
and we leave the charity out of the trust. We
put the charity on the beneficiary designation of the IRA.
Speaker 3 (22:58):
Correct.
Speaker 1 (22:58):
So when you die, instead of leaving your kids that
ten year rule and all the income tax, you leave
that to charity and then you leave the kids the
stepped up assets that they can sell. So the kids
get one hundred cents on a dollar, the charity gets
one hundred cents on a dollar. And that's such a
simple fix that no one has ever talked about, and
(23:18):
it's a it's a great fix. So if you have
charitable intent, folks, now's the time to think about how
you want to time your your charitable contributions. Where do
you want to take the money from to make those
charitable contributions getting the deductions. We're going to talk a
little more about IRA's in the second half of the show.
I'm here in studio with Dave wo Jeski. I'm going
(23:39):
to give the phone number out when we come back,
give us a call.
Speaker 2 (23:41):
Feel free.
Speaker 1 (23:42):
We're going to talk about taxes and small business when
we come back from the break. So we also are
going to give you some information on upcoming seminars that
we have that we hope you will join us for.
So stay with us, Dave Lou We'll be back right
after the news. So get a cup of coffee and
come back.
Speaker 2 (24:02):
See you soon.
Speaker 1 (24:06):
Most welcome back the Life Happens Radio. We got a
big second half here. We're not going to tank.
Speaker 2 (24:13):
We're gonna go all the way to the.
Speaker 3 (24:15):
Finish with in our stomach.
Speaker 2 (24:17):
That's right, We're gonna get there.
Speaker 1 (24:18):
We did something Dave this year that we've never done
as a family before. Everybody's kind of done their own things,
but we did Detroit Turkey Trot, all.
Speaker 3 (24:28):
Eight of us.
Speaker 2 (24:28):
I won because I finished. That was a win.
Speaker 1 (24:32):
All eight of us did it, and it was so
much fun. We had a great time and then we
you know, celebrated the meal afterwards, but very nice. It
was really good. And those are the kinds of things
that we're trying to do. And we go around the table,
and my son is really good with this, and we
go around the table and he'll he'll kind of vary
the topic. But what was your favorite thing about Thanksgiving?
(24:53):
What was your least favorite thing? And yesterday was what
is your no before New Year's before you make resolution?
What is your plan? What is your wish for the
coming year for twenty twenty six? And everybody wants to
get healthy. It's amazing, and everybody said the same thing. Yes,
I'm going to commit to the workouts. I'm going to
(25:14):
commit to the plan, and we're gonna get ready. And
my son is getting married next September, and so we're
graduating ready for that. And it's a great family time.
And that's the Thanksgiving holiday.
Speaker 3 (25:24):
And that it's great. It's definitely my favorite holiday as well.
It's it's relaxing. The other one seemed to be a
little more hectic for an accountant.
Speaker 2 (25:31):
This is a nice pause.
Speaker 3 (25:32):
It's a very nice pause. November is a good month
for one of the twelve months.
Speaker 2 (25:36):
Finally, yep, I mean you have fifteenth all over the place.
Speaker 1 (25:38):
April, fifteenth, September, fifteenth, October fifteenth. You're on extensions in November,
November fifteenth is meaningless.
Speaker 3 (25:45):
So it's a nonprofit. It's okay the nine nineties, but
I personally don't do any of those, so that's good
for me.
Speaker 2 (25:51):
That's great.
Speaker 1 (25:52):
So we're talking with Dave Woodjeski Local CPA, and Dave's
done some seminars with us and we enjoy doing them
for our clients to explain the tax implications of a
state planning and income tax planning and you kind of
put the two things together. And that's what we're doing
here today. It is also Small Business Saturday. We're going
(26:14):
to get around to that, but I want to talk
because it is so important about these tax issues of
basis versus ordinary income and using charities to shelter income
tax on iras and annuities and things that you have.
But people are kind of mindlessly just packing money away
(26:38):
without really looking at options. And one of the options
that I think it's a limited time only offer, is
a roth IRA Sooner or later, when enough money accumulates
in those roths, the government's going to.
Speaker 3 (26:50):
Shut it down.
Speaker 1 (26:50):
Yeah, And they have something called the back door mega
roth where you can put money in a four oh
one k, take it out the door back door pay
tax on it and you can seed the contribution limits
correct enormously.
Speaker 2 (27:03):
And I don't know if you have any clients doing that, Yeah.
Speaker 3 (27:06):
Very few, but everybody's exploring. I mean, we're actually rolling
more and more, are convincing people to roll more and more,
especially people who have more money than they're going to need.
Because again, like we talked about before, there's certain assets
that are worth a lot more to pass along on generations.
The ROTH is probably the best one.
Speaker 1 (27:23):
Yeah, it's an amazing vehicle, folks. And if you aren't
familiar with roths. With a traditional four to one k ira,
you pay tax on dollars that don't go in there.
But when you put it into a qualified account, and
it has to be a qualified retirement plan. There are
many different flavors of this four h three b's four
fifty sevens. If you work for an educational institution, hospital government,
(27:48):
you have a defined contribution to find benefit plan, the
third comp plan that you get. But when you look
at the contributions and you pay a few dollars in
tax today to put it into a WROTH versus paying
no tax today to put it into a traditional but
then you get tax free growth and it's the only
(28:11):
time we can really say tax free growth.
Speaker 3 (28:13):
Correct.
Speaker 1 (28:14):
Everything else is tax defer. But just explain how the
wroth works and the benefits of the wroth not just
for people who are saving and accumulating and compounding money
during their lifetime, but to the kids when they inherit.
Speaker 3 (28:29):
Yeah. I mean, if you just take somebody who's retired,
has done quite well and lives off their SOB security
normal four to one K withdrawals, which is continuing to
grow because the market's been positive, and they look at that,
and you know, we're saying, well, why don't we consider
moving some of that into a wrath. Now, you guys
can afford to pay the tax on the wroth, because
(28:49):
that's one of the things with transferring it to a wroth,
and then you're going to leave that to the kids.
The kids then get it and they can stretch that
out and continue to be tax free growth to them
until they take it out, and it's tax free at
that point. So it is an incredible amount of money
that can be compounded. And I agree with you. I
think at some point the IRS is going to say
this is a way too good of a benefit.
Speaker 1 (29:13):
When enough people figure it out and start using it
more and start accumulating and do the planning that you
can do. There are also income limits though.
Speaker 3 (29:23):
Yeah there icon liay is to make it. But you
know the backdoor row off you're talking about the megaroth.
But even just the role from a from a four
to one K to a or from an IRA to
a roth ira is the I R S is okay
with that as long as you pay the tax.
Speaker 1 (29:35):
On it right without the income limit. Correct, But there's
an age limit.
Speaker 3 (29:39):
There's an age limit. But you know, if you're if
you can look at where your retirees, for me, is
a good benefit for to look at to pay the tax.
I mean general thinking is and I'm usually of this
belief which I don't like to pay tax sooner than
I have to pay tax for the clients. This is
one area I think I like to pay the tax
sooner than I have to pay the tax. Certain situations,
(30:01):
and a lot more situations than used to be because
people have accumulated a lot more assets than I think
they expect it to.
Speaker 1 (30:06):
Yeah, if you don't need the money in your current budget,
correct you if you can afford to do the things
you want.
Speaker 2 (30:11):
To do, you've got your bases covered. You've got your
house covered, you have your food and your car and
all of your basic necessities covered, and you take a
trip a week here, a week there. You travel.
Speaker 1 (30:23):
Once you've covered that nut, you have disposable income, and
a question that becomes, am I better off paying tax
out of some of that income and then deferring it
into a ROTH? Or should I let it come into
a retirement account that I don't pay any tax on?
Speaker 3 (30:38):
Right? I mean, it's still your money, right, So if
you if you're not sure, you know, you think that
you're going to go on a massive spending spray and
you think you're going to need that money, you can
still use your wroth. It's your own. It's your money again,
like we talked about before, you know, what do you
want to leave the charity? What do you want to
leave to your children? You can pick the assets you
want to do that with and be very taxify.
Speaker 1 (31:00):
That and it's tax smart planning. So we work very
closely with accountants on a day to day basis because
clients have needs that we can't satisfy in terms of
their income taxes and their other tax planning. We work
with financial advisors because we don't do investments. We don't
sell the vehicles that they can invest in. But as
an estate planning attorney, we have to look at all
(31:21):
of these issues. Look at the tax issues, look at
the investment issues, look at the vehicles that they're using.
And when a client comes to us and says, okay,
I have five hundred thousand dollars in an IRA, I
don't have a lot of income right now, but I'm
comfortable I have enough income my Social Security, I have
in other savings, and I want to give that five
(31:43):
hundred thousand dollars to my kits. And I'm seventy five
now right Because there is that age limitation, how old
do you have to be before you can do the rollover.
Speaker 2 (31:54):
It's seventy and a half maybe something. It's the original age.
Speaker 1 (31:59):
But then I can take my taxable account, my five
hundred thousand dollars taxable account, and I can roll that
into a roth IRA and I have to pay tax
on that. So you have to strategize here, and that's
where you commit correct because you're going to look at, well,
this tax year may not be the best, but next year,
take one hundred thousand out, roll it over.
Speaker 2 (32:20):
Just talk a little bit about the strategy in the rollovers.
Speaker 3 (32:24):
Yeah, I think what we tend to do is between
now and the end of the year with the annual
meeting with our clients, and we look at this every
single year and we'll make a determination, Hey, this year
basically what you have going on, the right amount to
do is eighty thousand dollars and then let's meet again
next year. What do you got coming up? And you know,
if someone has who knows what they're doing, if they're traveling,
(32:45):
take a little more money out. Maybe we roll a
little bit less. Maybe the market wasn't as good, we'll
roll a little bit more, find out what the kids
have going on. And it's an annual decision real.
Speaker 1 (32:53):
At all, And this isn't guesswork. You don't want to
put a blindfold on and throw a dart at the board.
You want to know what tax rates the kids are
going to be in. You want to know what tax
rate you're going to be in this year, next year,
what you have opportunities to do. And you want to
sit down with someone like Dave wo Jeski and say, okay,
what's the best strategy here. I know I have an
(33:14):
investment advisor. But from a tax perspective, what's my best strategy?
And at seventy five, if I can get that five
hundred thousand dollars, I'm going to pay probably one hundred
and fifty in tax depending upon my bracket. Correct, So
I'm going to go back to three fifty, and over
time maybe I want to do a little bit so
I can minimize that tax hit. But once you reinvest
(33:35):
that three fifty and you live to ninety, so you've
got a fifteen year investment of three hundred and fifty
thousand dollars that is all tax free, correct? And at
what rate the rule of seventy two's.
Speaker 3 (33:50):
You know it's going to be it's more than double.
Speaker 1 (33:52):
If you're in the S ANDP, you're doing ten percent
a year, right, right, So every seven point two years
you're going to double. So you're going to take that
three fifty and it's going to be seven hundred. Then
it's going to be one point four million after fifteen
years if they do ten percent a year because you're
not paying any income tax on it.
Speaker 3 (34:07):
Correct.
Speaker 2 (34:08):
And now you've got a one point five million dollar
asset going to the kids, right, who also don't pay
income tax on it.
Speaker 1 (34:16):
Correct, And the kids can take that one point five
million that you've accumulated from age seventy five, and they
can then stretch it for ten years, correct, and they
get another ten years of compounding, right, tax.
Speaker 3 (34:30):
Free, provide they don't take it and go crazy.
Speaker 2 (34:32):
They don't take it out.
Speaker 1 (34:33):
But even if they do five percent a year, at
that point, it goes from one point five million to
three million, right, And the kids get three million dollars
of cash tax free from an account that was five
hundred thousand fully taxable.
Speaker 3 (34:46):
Correct.
Speaker 2 (34:47):
It's just a huge plan.
Speaker 3 (34:48):
It's a huge way. Yeah. I mean, I think the
hard part, whatever we meet with people, it's it's you know,
the hard part is then deciding what they want to
have happened. Right. Most people come in they maybe they
have a will, maybe they don't. Most don't, and then
we'll say, all right, you just figure out what you
want to go to charity, what you want to go
to the kids, and then you would meet with you
and set up the trust and how to do it
(35:10):
once you know what their wishes are. I wouldn't say
it's the easy part, but you can't do that part
without knowing what their wishes are, but that from our standpoint,
it's relatively easy to lay it out in an efficient way,
and you probably every year you meet with these people
are doing the same thing. Right. Yes, you got to
look at it again. Somebody got divorced, somebody got remarried,
somebody's got another kid.
Speaker 1 (35:28):
Like we have our PALMS program, yeah, which I think
you're familiar with, our Professional Advisor's lifetime management system where
we track all of our clients, planning all of their assets,
their income, their documents.
Speaker 2 (35:40):
We have a private, secure website that we create.
Speaker 1 (35:42):
For them, and we sit down with them for with
our PALMS clients once a year and go through every screen.
What assets do you have? What brokerage accounts, what life insurance,
what bank accounts? What real estate? Do you have a business?
All of those things we review on an annual basis.
I just had another grandchild. Do I need to add
them to the documents? Nope, your documents are per sturpious,
(36:05):
so your grandkids are covered. But I now bought a
property up on Lake George.
Speaker 2 (36:11):
How should I own it?
Speaker 1 (36:12):
I want this property to go to the kids, and
I want them to keep it and continue to use it.
So we're going to talk about a limited liability company
and a LLC. And every year there's something and a
lot of it is, well, I have this retirement account.
How do I use this to my best advantage and
to my children's best advantage. So these conversations should be
annual conversation, correct, And so we're going to talk for
(36:34):
the last segment, we're going to finally flip over to
some business issues. Sure, and look at how businesses start,
how they should grow, what type of entity from a
tax perspective, I know what I prefer from a legal perspective,
but from a tax perspective.
Speaker 2 (36:50):
What type of entity?
Speaker 1 (36:51):
And then what are some of the new things and
the accelerated deductions that are available right now just make
business pretty good, especially if you're in real estate construction
things like that. The ability to accelerate deductions has a
major impact on not what you earn, but what you keep.
Speaker 2 (37:10):
Stay with us. We're gonna come back right after a
short break.
Speaker 1 (37:17):
Gobble gobble, gobble, Happy Turkey Day, Happy Thanksgiving. I hope
you're all enjoying your weekend. Bright sunshine outside, nice Chris Bear,
go for a long walk today, walking as popular again.
Speaker 3 (37:28):
Dave Yes a little bit yesterday in the blizzard.
Speaker 2 (37:31):
How many of you have your Apple watches counting your
steps today? Ten years ago? Was that a thing?
Speaker 3 (37:37):
Now?
Speaker 1 (37:38):
All new technology and things that we can do now
to keep ourselves healthy, And we hope that you're doing
that and you and your families are getting out. We
did the Turkey Trot as a family. Then we went
to the gym as a family yesterday. So I have
a very athletic group, and I.
Speaker 3 (37:53):
Love that you're making me feel bad, I know.
Speaker 2 (37:55):
And we had a great, great time. We did an
AB class.
Speaker 1 (37:59):
My daughter ran it, so we had a good time,
but healthy, wealthy and wise.
Speaker 2 (38:06):
So we're here to keep.
Speaker 1 (38:08):
You wealthy and wise, and that is to mitigate your
taxes and to look at the things you can do
to plan. I mentioned an asset just in passing that
gets underplayed for most people, and that is life insurance.
And looking at life insurance in a plan. It's interesting
that there used to be a lot of life insurance
agents out there who were selling just life insurance, and
(38:32):
I have lamented this for a long time. Glass Steegel
was a law federal law that thirty years ago broke
down the barriers between banks investment houses life insurance.
Speaker 2 (38:45):
Now, financial institutions.
Speaker 1 (38:46):
Do everything right, but the life insurance is very often
an afterthought. And I have not found a lot of
high quality, concentrated life insurance agents who know products and
know how to fit products into a plan. And this
is the other tax asset that is in fact tax free. Right,
you can have a life insurance policy and you can
(39:07):
take ten thousand dollars a year, put it into a
life insurance policy and turn it into two million depending
upon your age, that can pass to your errors income
and a state tax free correct. And when people get
a life insurance check, it's like, oh my god, this
is pretty good.
Speaker 2 (39:24):
And you don't see that, but that's the reality.
Speaker 3 (39:26):
Of Yeah, no, it's one of the tax free assets.
And I would agree it's a very complicated product, which
is probably why you don't see a lot of people
yeah to do that.
Speaker 1 (39:36):
I mean, when you're young and you have kids, you
need to buy term life insurance, need to have a
cash resource that if you p die die early, your
kids still have to eat, they have to live, they
have to go to school. So having term life insurance,
but then permanent products is where it's.
Speaker 3 (39:51):
Complicated, very complicated because you're fitting a specific scenario in
a specific situation, and there is a lot of products,
and every time I turn around, some company's got a
different product. They trick it up and they're just trying
to fit the life insurance rules to maintain the tax
free aspect of.
Speaker 2 (40:07):
It correct, and they've lobbied very hard to keep it.
Speaker 3 (40:09):
It's got a great lobby, there's no question, because that's
another area I keep waiting for the shoe to drop.
Speaker 2 (40:14):
Ye, And for years we've said that, but no one's
talking about it now.
Speaker 3 (40:17):
No, I haven't heard of it.
Speaker 1 (40:19):
You kind of start out with term insurance when you're
very young, and then you go to maybe you get
sold a whole life policy and you're putting some cash
into there, and then I have variable. Now they have
indexed universal life, and we deal with clients at very
high net worth areas that are private placement life insurance,
and this is just an insurance wrapper designed to defer
tax correct one hundred percent. So they're investing a lot
(40:40):
of money in investments inside of an insurance.
Speaker 2 (40:42):
Wrapper just to get tax deferral correct.
Speaker 1 (40:45):
So from a tax perspective, life insurance can't be taken
off the table, and I have a lot of clients
to say, I don't believe in life insurance.
Speaker 2 (40:52):
It is not a religion.
Speaker 1 (40:53):
It's a financial product, and it's an irreplaceable financial product
because nobody else delivers that two million dollars at death
like a life insurance policy does.
Speaker 3 (41:01):
Yeah, you've seen this use of it will loss. Some
people have it that don't need it where they are,
and some people don't have it that do need it
where they are.
Speaker 1 (41:07):
And the creative products that we talk about on our show,
because we do a lot of medicaid and long term
care planning, life insurance policies that allow you to use
death benefit to.
Speaker 2 (41:16):
Cover your own long term care expenses. And I like
those a lot.
Speaker 1 (41:19):
Yeah, And if you buy those at the right age,
their level premium, they're guaranteed universal life mostly, And so
you buy one premium and that's premium for life, and
you have a death benefit, and then if you age
and you need long term care, you've got a cash
benefit that can come out and pay for long term care.
Speaker 3 (41:35):
Correct.
Speaker 1 (41:36):
So those are all good things. I want to turn
to the businesses because there are some very favorable businesses
that have been benefited different lines of business that have
been benefited from the tax legislation. Just give us a
brief overview, and then I want to get into kind
of starting.
Speaker 2 (41:52):
A business for anybody out there that wants to start
a business.
Speaker 3 (41:54):
Yeah, I think overall the bill, the big beautiful Bill,
is favorable to business, period right. It got rid of
everything that was going to sunset, and it added some
some additional items. But from a small business perspective, I
don't think wagers failed so fared so well with the
new tax Act, but certainly business did.
Speaker 2 (42:13):
Yeah, which is so eight percent of people.
Speaker 3 (42:17):
Yeah, mostly what we deal with. So, I mean the
depreciation provisions anybody who is investing capital in their business,
any kind of capital, whether it's equipment, autos, machinery. Uh,
you pretty much can expense everything you've you've spent in
the year you spent it. I mean, you may not
want to, you may want to just take a portion
of it, but you certainly have the option to.
Speaker 1 (42:37):
And for those startup entrepreneurs, research and development is a
huge issue. And I have a business where I've been
pumping money into develop some technology and I got full
deductions for a while, and then it stopped and I
had to go over five years and now it's back.
Speaker 3 (42:54):
Yeah. Yeah, those rules, they really messed that up, you know,
they were the R and D expense became very complicated.
You had to capitalize costs. But they're back to expensing again,
and if you qualify as a small business, you can
go back to twenty two and expense them again at
a man and most people are doing that.
Speaker 2 (43:09):
Yeah.
Speaker 1 (43:09):
And that's if you're starting a business and you're earning
money from maybe your salary, and you're in your garage,
you're building the next Apple computer and you're putting money
in and you're buying parts and you're buying technology. You
used to have to defer the deductions for that correct
over time, but this new law allows you to deduct
(43:29):
one hundred percent, so you can wash money if you
will with R and D deductions.
Speaker 3 (43:36):
Yeah, I get the credit on top of it. Yeah. Yeah.
The provisions on the on the business side, there's a
lot of good provisions. I mean twelve oho two they
loosen that up, which is.
Speaker 2 (43:45):
The sections on me.
Speaker 3 (43:47):
I know, I'm getting everybody really excited by just saying that,
but h so that's the code section where it allows
you to essentially have a tax free gain on the
sale of stock of starting a business. So where really
you know, we talked about you mention qualified small business, correct,
colo fight small business. We mentioned you mentioned before we
took a break about just empty selection, which is another
way to things that changes all the time, right, and
(44:08):
it's very specific to what you're doing. Uh. You know, generally,
if it's just a base of business, I'm generally in
favor of an LLC to start their most flexible entity
to work with. They've got tax favorabilities. It's not so
rigid as a corporate would be. But it really depends
on are you going to have partners? What type of
business are you? Are you going to sell? Is there
(44:30):
going to be is this a lifestyle business? There going
to be an exit Sunday? You're going to raise capital like.
Speaker 2 (44:33):
There's so many Are you going to own real estate?
Speaker 3 (44:35):
You're going to own real estate? Correct?
Speaker 1 (44:37):
Because I have a client right now that we're looking
at trying to get a piece of real estate. It's
a it's a business that has a lot of potential
liability with yeah, you know, well a very active business
that has a lot of traffic and they they have
an escorp with the real estate inside the es Corp.
And it's fully depreciated, right, So from a tex perspective,
(45:00):
they don't have any cost bases. So if they were
to sell that asset, they're going to pay capital gains
one hundred percent of the sale. And if you want
to try to move the real estate out of the
escorp to try to protect it in a separate LLC,
you're still going to pay the tax.
Speaker 3 (45:15):
Yeah, I mean, real estate is probably the one. If
you called me up and said, hey, I'm starting a
business and it's in real estate, we probably don't have
much have to have much of a discussion any further.
It's an LSA, yeah, right, But if it's not real estate,
there's so many other factors that go into the choice
of enterty.
Speaker 1 (45:29):
And if you want to open up the tavern or
open up the brewery. How many people have opened up
breweries in the last five years A lot, a lot.
So if you want to distill liquor or you want
to brew beer, you want to have an operating entity
because when you're serving the public alcohol, there's a lot
of potential liability there. We call a dramshop liability. I
used to defend those cases. Yeah, yeah, yep, when I
(45:51):
was first out of law school. And then if you
want to buy the building that the brewery is in,
you may want to have an escorp or even a
sea corp, but you want to have the real estate
in a separate limited liability cordon off liability.
Speaker 2 (46:03):
Between the two.
Speaker 1 (46:04):
And this is so important when you're starting out to
get it right the first time you and I know
Dave that people at start businesses marry that business. If
they're good and they're successful, they're putting fifteen, sixteen, twenty
hours a day into that business and they don't really
have time to think about a lot of other things.
(46:26):
And I chase business owners all the time, and you
have to go to their place of business or go
to their house, or you know, meet them on the
golf course. You have to go somewhere. They're not going
to come to your office. You got to go to them.
And when we look at how to structure businesses, it
takes a little bit of time, a little bit of thought,
a little bit of money and you have to invest.
And so having a business gives you some opportunities. And
(46:51):
we can talk about tax deductions and I, you know,
we were cut out of tax deductions for miscellaneous itemized deductions,
and just talk a little bit about that and what
you can deduct through a business correct versus what you
can deduct individually.
Speaker 3 (47:06):
Yeah, I think. I mean, look the miscellanic sidemized deduction sections,
which is where anything related to you making income as
an employee pretty much used to be deducted, and now
it's gone federally, it just doesn't exist, including tax preparation fees,
legal fees.
Speaker 2 (47:19):
Yeah, you used to be able to deduct our fees.
Speaker 3 (47:22):
Well, we don't care so much about that. It's more
of the accountings.
Speaker 2 (47:25):
Well we all have our little axtagrind.
Speaker 1 (47:28):
But when they took all of those miscellaneous itemized deductions away,
you get a bigger standard deduction, yeah, which covers most people,
almost all people, I think, Yeah, big percentage, and then
the miscellaneous itemized deductions. But if you have a limited
liability company and you're starting a new business and you're
hiring the attorney to set this up in the accountant
to do the tax returns.
Speaker 3 (47:47):
It's all deductible there. It's deduct Yeah. In fact, anything
you know, if you have an LLC, anything you you
incur that is helping you generate income which is kind
of the IRS's tax test. Hey, if you're spending my
me to make more income, we know you're going to
pay more tax. We'll let you take the deduction, even
if it's not inside the partnership, if you have a
multi member LSA.
Speaker 1 (48:08):
So if I take Dave wou Jeski out to an
expensive dinner at six seventy seven Prime and we talk
about taxes and clients and generating business, that's a deductor.
Speaker 3 (48:17):
One hundred pct yet but it's yes, it's deductible.
Speaker 2 (48:22):
Yes, so encouraged. So what are the different entities?
Speaker 1 (48:26):
We talked about LLC's and corporations and LLC's And it's funny,
I was in the legislature as a law student. I
worked in the legislature, and I was working on a
bill called the Limited Liability Company Act for New York State.
So that would have been nineteen eighty one eighty two,
that's when LLC's and New York started, right And before that,
(48:49):
before you had LLCs, you had partnerships, general partnerships, limited partnerships, corporations,
and then you get, for tax purposes, make the selection
or C corps.
Speaker 2 (49:00):
Just talk a little bit about the difference.
Speaker 3 (49:02):
Well, I mean there are LLC's and the s corps
and partnerships for that matter, although you don't really see
many partnerships anymore because.
Speaker 2 (49:09):
You don't because LLC's are so much better.
Speaker 3 (49:11):
Right, Once in a while you'll see a limited partnership
for those part it's it's LLC's or corporations. And then
whether you make the selection, and the selection just tax you,
similar to a partnership, and that it's passed through anything
that happens inside the corp or the income for the
corp passes through the individually, and then c corp is
just separate entity, separate tax system. You pay the tax
at the corporate level. But there's huge differences in how
(49:34):
the tax issue works and why you'd want to be
one or the other. But the LC's are definitely the
most popular vehicle right now. So flexible, I mean very flexible.
Speaker 1 (49:41):
When you deal with limited liability companies, I call it
the lump of clay, and you can mold that lump
of clay through an operating agreement and you want, you
want it whatever you want. When you're dealing with corporations,
there's something called the business corporation law and you're very
rigid and you have to work within the confines of that.
Speaker 2 (50:00):
Well, those are the different entities.
Speaker 1 (50:01):
Whether you're a partnership, a sole proprietorship, a corporation, you
need to have a good accountant to make sure that
all the tax compliance is done and that you're maximizing
the benefits because, as we've said throughout the show, it's
not what.
Speaker 2 (50:16):
You make, it's what you keep.
Speaker 3 (50:18):
Yeah, you'd like to keep more.
Speaker 1 (50:19):
David Jesse, thanks for sharing the Saturday Morning with us.
We all appreciate you guys every Saturday morning at nine
am here joining us on talk radio WGY for Life Happens.
Have a wonderful remainder of your weekend, and we'll be
back next week
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