The Exchanges

Q Okay. Are there any other instances where, where you would recommend deferral?

A Uh, you know that you can do a charitable remainder trust sometime in the future. That's going to create an offset, or you've got some other major tax deductible event, like I owned a bunch of artwork that appraised for substantially more than I owned it for, and when I donated it, it created a massive tax deduction, so I could defer and then strategically pull money out during that time. But I don't wanna, the second rule is, don't ever spend money just in the name of saving tax. Like, if you wouldn't have spent the dollar anyway, start with your economics first. Tax should be a secondary consideration, and a lot of times people get confused thinking, you know, I'm spending a dollar on something that I wouldn't have spent anyway, but you only save 40 cents, that's a 60 cent. Cost you every time you spend that, right?

AI assessment note: “you know that you can do a charitable remainder trust sometime in the future.”

Q What, ah, last question here. Usually I lead with this one. How do you make money?

A Uh, we're not fee based. We're not commission based. People write us a check and then we make sure to put that much or a lot more back into their pocket. So, uh, people hire us where we work with primarily entrepreneurs doing between one and ten million dollars of revenue that don't have high net worth. So, you know, people with fifty million or a hundred million or more net worth, I highly recommend they go to a family office. Family offices are phenomenal. So what I built was a virtual family office For those people that wouldn't qualify and they just, you know, write us a check anywhere from, you know, a 150,000 dollars down to 10,000 dollars, depending on the services that we provide. And we have an organization with, you know, people to give them a second opinion on, on their last three years taxes or their corporate structures or downside protection, their investments or additional ways to improve cashflow, risk management, all those things.

AI assessment note: “write us a check anywhere from, you know, a 150,000 dollars down to 10,000 dollars”

Q hear from you since you work with entrepreneurs. If someone in my audience has just sold their company and they made, you know, they got an exit, it was kind of an acqui-hire, but they made 300 grand in extra cash or maybe a little more, maybe a million or five million. What would you recommend that entrepreneur do with that cash moving forward? Let's say they're 33 years old.

A Well, most of them, this is where they start making mistakes because they understood something about their business. That doesn't mean they understand something about investing. And a lot of times they get seduced into things that sound really good, but are really just distractions in a investment disguise, right? Wrapped as an investment. So I think that if they've just sold their cash cow or the way that they made money, it's now time to go back to work on figuring out how to achieve economic independence again, where they have enough cash flow coming in Has recurring revenue to cover their basic expenses, and they shouldn't be investing in anything speculative until they have that complete platform figured out, and when they go to invest, really take into consideration their investor DNA, meaning what are their core values, what are their core drivers, the things they're paying attention to, what are their core competencies, the areas, maybe even in the sector in which they just sold something, and the contacts they had there, and then stay focused instead of diversifying. Diversification only, you know, if they were worth, you know, you know, millions and 1,000,010 of millions, and maybe there's a, a, a good argument for diversification, but if it's that small amount of money, they better focus and protect it. And really think about the downside of that. And it might mean, …

AI assessment note: “figuring out how to achieve economic independence again, where they have enough cash flow”

Q I think I made after looking at it with my tax people is they said, Nathan, what you should have done is put a bunch of your money in a, in a Sep IRA and then use the money in the Sep IRA to then invest into the, you know, as an LP into that entity. That tactic, is that something you see replicated over with entrepreneurs you work with?

A I think they just gave you horrendously bad advice. Why? Look, man, I'll give you the five-part framework for tax. The two things to avoid, the three things to do. And the first thing to avoid is never confuse deferral with deduction. Too many people think if they defer tax, that's a good thing, but my question is, do you want to make substantially less money in the future, and do you think the government's going to lower taxes in the long term? In 1913, when we had the U.S. Revenue Act, it was a temporary act, and yet the top average bracket's over 60% in its history. So we're historically at a low rate. So if you're going to have more money or the taxes go up, deferring taxes might mean that it ends up filling up a hundred percent tax. Cause you never utilize that SEP IRA money. The government owns 100. They control that plan. They a hundred percent control it. You're now a beneficiary of it.

AI assessment note: “I think they just gave you horrendously bad advice.”