How High Income Earners Legally Reduce Their Taxes

Speaker A: So obviously with a real estate transaction, you can do a 1031. Uh, anyone listening to this who knows anything about real estate knows what a 1031 is. Now a lot of people may not know that 40% of 1031 ones fall through. And a lot of people may not be familiar with called a DST or Delaware, Delaware Statutory Trust. And it allows you to 1031 exchange into a partnership.

Speaker B: Welcome to the Accredited Investor podcast where you'll learn from the world's most successful entrepreneurs, business leaders, innovators, industry titans in commercial real estate, business marketing, sales, tech blockchain, crypto and emerging trends. I'm your host, Jonathan Tuttle, founder of a private equity firm focused on acquisitions of niche commercial real estate along with traditional businesses. Also, I founded a digital growth consulting agency for business owners, helping them with digital marketing, web3 and um, crypto solutions. Welcome back to the Accredited Investor podcast and today a fantastic guest, Ross Brannon from Financial Flossing podcast. And also, um, attack shelter and private equity consultant. Welcome to the show.

Speaker A: Thanks for having me.

Speaker B: And I know I was supposed to say something different in the intro, but, uh, what would. So to make it easy because I didn't want to miss anything wrong. What do you do? Like how do you. And what do you, what clients do you sell?

Speaker A: No, that's a good question. So I help people, uh, typically high income people, but I help people legally reduce their taxes and I help people with capital gain events, uh, reduce, if not sometimes eliminate their capital gains taxes on a transaction, whether that's an asset, a piece of real estate, piece of real estate, or a business sale.

Speaker B: Love it. And what, uh, what was kind of your background? What got you into this space?

Speaker A: So it's interesting. Um, I have a background in real estate. Uh, I owned a bunch of rental properties, you know, in my 20s. Um, you know, sold those, made some money on those, did well, um, then I, I put some money at the coastal real estate market and didn't, uh, do well on that. So kind of gave back all my earnings back then because that's when around 2008 happened. But I was doing a lot of real estate, love real estate. Then I was kind of recruited into financial services. Um, I did that for about 12 years. Um, kind of traditional assets under management, life and disability insurance types things, uh, and was pretty successful there. Uh, but I started to kind of learn more and more about tax. Started to go down the rabbit hole of how you can reduce tax or taxes because I just felt like most CPAs weren't doing what their clients thought or were expecting them to do. And I felt like a lot of people were, um, just almost like sheep, just kind of saying, well, this is the tax I have to pay. This is what I have to do. And most real estate investors, if you own a ton of rental property, typically you're not paying a ton of tax just because the inherent tax favorability of real estate. And. And so I started going down that rabbit hole, started kind of digging around. Then I met a guy who is now my partner who, um, you know, knows so much more technically than I do trained CPAs and really is. Is just a wizard. And we just started talking. And we started talking. I was like. And then it was like, okay. It was just kind of a match made in heaven, if you will. And we started working together and, uh, the rest is history, if you will. And so that's the world I live in now is you have to be an accredited investor to do, to do the things that I'm talking about. And typically, you know, a qualified investor, which is a 2, uh.1 million net, uh, worth, excluding your house, or a qualified purchaser, which is $5 million of investable assets. Um, the higher you go, typically the less restrictions there are. Um, sometimes you have what we call concentration risk, or not sometimes there is concentration risk, uh, restrictions until you get to qualified purchaser, when at that point you're just considered a big boy and you can do whatever the heck you want.

Speaker B: Yeah, no, I'm familiar with those terms. What. Uh, and to your point, it's like just like real estate agents, you know, there's different levels. There's like 80% to. When you mentioned the CPAs that will say they know what they're doing, but they probably don't. Not very good at their job.

Speaker A: Well, when it comes to real estate agents, you know my. Because I was one for, for a while and I was pretty good, but 90% of them are trash. But the 10% who aren't are worth their weight in gold.

Speaker B: Yeah, I agree with that. I agree with that 100%. Let's talk about, uh, your podcast a little bit. You and I have, uh, some. My biggest audience outside of like founders and business owners is plastic surgeons. But I know yours is towards, uh, dentists, but I think there'd be some carryover there. What do you. What is your podcast about and what do you kind of talk about in the podcast?

Speaker A: Well, I love plastic surgeons. That they are, you know, they are a physician type. Most physicians are now owned by hospitals. And you know, you've got Obviously many times orthopedics aren't, a lot of dermatology aren't. Um, and plastics obviously are not because that's just all. There's no insurance with that. And plastics are good high income earners. Um, but so I kind of fell into the dental market in my previous financial advisor life and um, started a dental podcast, was told to do that and kind of sort of enjoyed it, um, and met a lot of people because of it. And what I have found working with dentists is they're a completely different animal in many respects. And physicians, a lot of people think that physicians are, oh, they're the best client. If you're trying to work with high income or wealthy people, physicians are the best client. Well, most physicians don't make as much money as people think they do. I mean obviously it's a noble profession. Um, and I personally know that I would go to school for as long as they go to school for what I see some of them make. But that's just my opinion, doesn't mean I'm right. Um, but what I found is a dentist who owns their own practice is a small business owner. And I see dentists who know how to run a business sitting on a lottery ticket. I mean I have, I uh, know clients. I have clients who work two days a week and make $2 million a year. Uh, I know dentists who make three and $4 million a year. Now they're not the norm, but it is absolutely what's possible. So they are, they're good business owners. And there's a lot of these dentists that are selling to private equity because they're private equities buying out, you know, dermatology, veterinarians and um, dental and I'm sure others that I'm not aware of. And they're getting these for a well run practice. They're getting these crazy multiples and some guys are walking away with 10 or 15 million dollars. And the argument is, okay, if you're trying to buy my dental practice for $10 million, I go to my CPA, he's like, congratulations Ross, great job. But just so you know, you're only going to get six and a half. What do you mean I'm gonna hit six and a half? Well, you gotta pay capital gains, you gotta pay Obamacare. Some of it's gonna be ordinary income. And then I go back to you, the seller and say, hey, I gotta get 13. So I cause I'm trying to walk away with nine or 10. And you're like, sorry Charlie, I Don't want. The price is 10. That's what I'm willing to pay. The deal falls off. Well, what if we can make it a win, win, win. You could pay 10 and I can walk away with nine or 10. And it's a, it's everybody's happy. And so through proper planning and there are multiple strategies to do this. You can do that.

Speaker B: Yeah, no, I like uh, yeah, the Obamacare is what, 4%? 3.8. So in 10 million that's 3.

Speaker A: Well you're in Illinois, so you're getting. I'm in Florida with no state tax. You're in Illinois where you're getting hammered.

Speaker B: Yeah, yeah. And that's why um, eventually moving to Miami. So. And everyone's doing the mass exodus down to Florida, Texas.

Speaker A: I guess my question is why is it eventually? Why is it not yesterday?

Speaker B: Yeah, yeah. Well we gotta get rid of one of our properties right now. So that's it, that's the uh, we're trying to probably get rid of both, but that's kind of the big hold up right now. And then um, and to your point, yeah. With the uh, the roll ups of private equity, if you do 2 million EBITDA, it goes to like 7 or 10x, you know, 710 multiple.

Speaker A: So if you're traditional, I know some dentists who are pulling together assets, pulling the other practices. They're getting a bigger multiple that way. Yeah, it's, I mean it's a great time to be a dentist, that's for sure.

Speaker B: Yeah. Or even like service based like H Vac plumbing, the same thing. Private equity is trying to buy up all the business that need people for the future because technology and AI is going to replace basic stuff. They want to have the businesses that'll be still in business in 10 years from now. So it makes sense. What are some like uh, I see in your LinkedIn you talk about um, what are some of your favorite tax. Um, especially for real estate, I see you uh, have conservation land, conservation easements or what are some of your favorite strategies in that regard?

Speaker A: Just for those who don't know, they pass passed legislation at the end of the year last year that capped the multiple on conservation easements at two and a half. And so that really reduces the economic value of doing a conservation easement. Ultimately all that easement really was is buying a tax deduction. And so they're trying to kill the syndicated real estate conservation easement. Um, and they've done a pretty good job. There's obviously a lot of bad actors out there, but The IRS is losing in court in most of these cases. But, you know, it's, it's the uh, the symbolism of it has spooked plenty, plenty of people off. But like, there's a lot of planning you can do on the front end of a transaction sale. Most of it, quite frankly, is a little more, um, some of it can't be. So it has to be done well in advance. Some of it can be done closer, but it tends to be a little more work involved. And what we find is most people, not all, but most don't really think about that until afterwards or right before closing of any kind. So obviously with a real estate transaction, you can do a 1031. Uh, anyone listening to this who knows anything about real estate knows what a 1031 is. Now, a lot of people may not know that 40% of 1031 fall through M. And a lot of people may not be familiar what's called a DST or Delaware, Delaware Statutory Trust. And it allows you to 1031 exchange into a partnership. So you could partner you, you could 1031 exchange into a partnership, you know, uh, project that would allow you to participate in that. And that's a great solution if you can't find, uh, another property or if you, uh, your deal falls through again, there's all sorts of those, those projects out there. So that, that's obviously an easy one in the 1031 space. And there's a lot of people who do that. There's a lot of opportunity zones, which is a great asset as well. And you know, there's, there's a fair amount of, kind of not so good opportunity zones, but there's some really good ones out there as well. Um, and the thing when you look at these types of deals, whether it's the DST or the opportunity zone, um, when you deal in what I'm going to call the lower end, uh, level of alternative investments, and this is where I kind of, kind of cut my teeth and first saw it. You think it's amazing because of, you know, you've never seen anything like that. The returns are typically better. There's not volatility, but there's typically not a lot of due diligence in this space. And so in the world that I, I, uh, live in now is there is extensive due diligence. So the due diligence process typically takes like 12 months by third party law firms and third party CBA firms doing due diligence on a sponsor just to make sure that, hey, they're not bad Actors, they don't have a checkered past. And then, and the sponsor is paying for this due diligence, and it cost typically between 250 and $500,000. So you are mitigating risk. Obviously, anything can happen. You never know. But you are reducing the risk of getting ripped off. Because I know lots of people who are invested in deals that sound great, but there's no way the sponsor would ever do this type of due diligence. They won't even tell them certain things. And quite frankly, it just, it's red flags. Could be potential Ponzi schemes. You never know. And people lose their money. And the mistake a lot of us make is we see our first deal and the returns look good. Whether it's vetted or not, we put all our money in it, not realizing there's lots of good deals out there. And just like if you had a stock portfolio, your advisor would tell you to diversify. It's the same thing when you deal in alternative investments. You need to diversify because they may not all work out well, but you want to make sure that if one doesn't work out, you're not crushed. Does that make sense?

Speaker B: Yeah. No, I agree. Like, uh, there's a lot of people that popped up. A couple great points there. There's a lot of people that popped up that were like, all of a sudden real estate entrepreneurs were like, you looked at LinkedIn. They didn't. They weren't in the space five years ago. All of a sudden, now they have a fund. And that's what you saw in the last couple of years because the SEC made it so easy to do a five or six, you know, capital raising through your crowd sourcing and things of that nature. So you had a lot of people that just popped up, but they weren't actually seasoned real estate people.

Speaker A: Well, if you've never. I mean, it's kind of easy to be in the real estate game when you have zero percent interest rates. Um, it's almost like, you know, turnkey lenders. I mean, turnkey, uh, rental homes were really big about 10 years ago, maybe seven, eight years ago. Now the prices have gone up so much, you really can't do that. Fix and flips were really big for a while, but now they're not as big. And, you know, you want to make sure you deal with someone who's gone through a market cycle. I mean, not everyone has, but you got to learn some way or the other. It's. I mean, don't paint your paint. Don't paint Yourself as an expert if you really don't have the experience.

Speaker B: Yeah, I totally agree with that. And uh, um, when you mentioned the opportunities on one of my past guests did, which is crazy, he did. Uh, he's got a hotel building on the Las Vegas south strip. He got his Opportunity Zone, a luxury hotel. 550 million.

Speaker A: Was that the dream hotel? Yeah, yeah, yeah. So I know that sponsor that, that's a, that's a good project.

Speaker B: Yeah, yeah. Bill shop off. He's like episode five on there.

Speaker A: No, that's a, that's a really good project right there. It's. Yeah, it's, it's phenomenal. I mean, uh, when I first heard of opportunity zones, I thought that was basically okay, you're basically building the projects only. Well, I was wrong. There's a lot of good real estate. That's opportunity zone. Now the challenge is you get some opportunity zones that are so, so big. They really aren't going to perform anything better than quote, unquote market returns. You want to kind of be, in my opinion, you want to be a little more nimble in what you do. But there's parts of Tampa, Florida that was industrial that now the most expensive condominiums in Tampa are being sold in. And it's being developed by Bill Gates and the owner of the Tampa Bay Lightning. And so there's a tremendous opportunity in opportunity zones, uh, if they're done. Well, I mean there's opportunity zones in the energy space that are really good. There's opportunity zones in the hotel space, there's opportunity zones and all different things. So um, you just have to have access to the deals. And that's one of the things that's great about the ecosystem that I'm in is we typically have access to, to about 100 high quality deals. Um, not all opportunity zones, but whether it's opportunity zones, um, venture capital, private equity, dsts, energy, um, multifamily, self storage, all these types of things. We have about 100 deals that are vetted at all times and they come and go because you do the capital raise and the projects close and they move on. And uh, it's pretty exciting when you see what's available out there.

Speaker B: Yeah, no, just being in the deal flow, that's, it's a lot of value. Um, yeah, that project's so crazy, the fact they got that. And what are some of the, uh, some of the. For everyday investors, what are some of the best, uh, tax, um, basically ways to mitigate some of your tax. I know, like the bonus depreciation is now 80% and that's going to, from the tax cuts and job act and that's going to be pushed out in 2027. Uh, there's some, Is there any other tax? Like maybe a little.

Speaker A: They usually re up that well. They usually do. I would not bet that this congress will. We'll see what happens. And obviously next year it's 60%. Um, you know there was an actual, there was a uh, change in the Trump tax cuts that a lot of people didn't know that for convenience stores, gas stations, you like, you know, down south here in Florida. Whether it's like a Circle K or let's say a quick trip or a Wawa. So like that. Well, if you have more than 50% of your sales, um, come from fuel while you fill up your Tahoe, it's 80 bucks. You go buy a Dagum Coke and it's $2. Obviously you meet that criteria then you can bonus depreciate that right there. And so, um, we've had, that's been a good project. We've had some funds that do that and many times um, it works really good for a real estate professional um, because they usually put some leverage on to create a little bit of a multiple, um, not, not near as much as what the conservation easements were in the past. But still it could be a good thing. I mean the low hanging fruit many times is the energy space. The energy space is definitely an opportunity where you can get um, some deductions in that world. And some people think oil and gas is going away just because of what you hear in the media. And I would submit that, um, I don't care how green you are or how green you want to be. Oil and gas is not going away at all. It's so much more than gasoline. Um, just because it's in everything like your computer. Like people don't realize that Tesla, that you own it, that's green. It's all plastic.

Speaker B: Yeah.

Speaker A: What's the number one ingredient in plastic?

Speaker B: Oil.

Speaker A: Exactly. Half our clothes are made of oil. If it's polyester, nylon, it's oil.

Speaker B: Yep.

Speaker A: Anything plastic is oil. Carpet, um, you know, my computer, desk, my, my, my computer. I mean so it's, it's not going away. And I could, you know, without going on a rant about the reality of a scenario versus kind of what's often spoken about. So oil and gas. Now if you're, if you don't like oil and gas and you think it's bad for the environment, that's your prerogative that's your opinion, then don't invest in that. But if you don't have a problem with that or you feel like it's a great thing, there's definitely um, some opportunities to lower your, your tax with oil and gas and create uh, some passive income.

Speaker B: Yeah, no, and it's uh. So the 263C, is that the uh, official name of it or one of the uh.

Speaker A: For the code? Yeah, I'd have to look it up. There's so many codes out there, I, I get them mixed up sometimes. But that, that very well may be it. I don't remember off the top of my head.

Speaker B: And then um, we were talking the bonus depreciation cost segregation. One of the cool things for mobile home parks and actually multi family traditional commercial real estate is 39 years. Multifamily is 27.5. But the land improvements when you acquire a mobile home park was a little known fact. The land improvements, which is like the roads, streets could depreciate at 15 years.

Speaker A: Well, and you know, most people don't realize the mobile home is titled as a vehicle.

Speaker B: Yep.

Speaker A: I don't know the answer to this, but since you're the mobile home guy, can you bonus. Depreciate the purchase of a mobile home?

Speaker B: You can depreciate some of the parts inside of it. I know like when I go to the conferences that some of the lawyers get up there and like, oh, you could depreciate this at 5 or 10.

Speaker A: Like so they're like doing a cost seg on a mobile home.

Speaker B: Yeah. I'm like, is it even worth it? I mean we're talking.

Speaker A: But I, I didn't know because it's titled as a vehicle. If you buy a mobile home for 60 grand.

Speaker B: Yeah.

Speaker A: Could you deduct the whole cost because it's titled as a vehicle.

Speaker B: I don't know that. I've never done it. I know that 48, 48 of the 50 uh, states. It is a uh, title or it's 46 and four states is actually considered like a, like, like a regular house and somewhere.

Speaker A: I believe that's 168k on that one, I think.

Speaker B: What's that?

Speaker A: I think the bonus appreciation is 168k.

Speaker B: Right.

Speaker A: Okay. Yeah, I think it doesn't matter.

Speaker B: And I typically, we typically go for parks and like what most uh, most people do is they, the parks already have, we don't have infilling. So it's mostly we're just buying the land basically and renting out the Space. And it's usually an average of like maybe 5 to 10 homes and acquisition that we transition over to the people. So we never like to keep, we never want to keep the assets where we're, we just want to be like basically selling, running out the land, like a parking lot.

Speaker A: Oh, so you're doing lot rentals mostly.

Speaker B: Yeah, we don't, we don't want to own the homes because that's just a lot more headache.

Speaker A: Oh, yeah, well, that's, that, that's a home run. If you're just doing lot rentals, that's a home run right there. Yeah, yeah, that's the way they do it. So, but, but this, to answer your question, you know, if someone owns a large piece like this, someone owns an office building or they own, um, an apartment complex and they've never heard of a cost segregation study. Uh, most real estate people have, but in the event they haven't, that's absolutely a super easy way to reduce taxes. There's a little cost to it, but it's worth it more often than not. That's a great way. And the reality is also retirement plans are a great way to reduce tax. Now some people don't want to, um, you know, typically retirements are invested in. Retirement accounts are typically invested in like stock and bonds. Most real estate investors that I've ever met don't like the stock and bond markets for a handful of reasons, which is fine. You can do a self directed, um, you know, retirement plan where you're putting money, those monies into alternative investments. I am not a fan of owning real estate. In an ira, I think you lose all the tax benefits. I don't think it's a good idea. But there are other things that you could do, uh, other things you could invest in, like some of the deals that we offer you. You can. Absolutely. I've put my IRA in them. So. But putting, whether it's a, whether it's a retirement plan, whether it's a 401k, an IRA, SEP IRA, a simple IRA, or even a cash balance plan on top of that, those are great ways to reduce your taxes. Um, obviously. Um, and there's a lot of lower level ways, you know, Augusta rule, pay your kids all that stuff.

Speaker B: Yeah.

Speaker A: But, um, if you own real estate, a cost segregation is super easy. But then if you, if you're past that and you're still running out of issues, oil and gas is definitely, uh, something to consider. And there's some other things that are a little more, uh, out there, but they're kind of cool. And they pass the past the rules from a tax standpoint. But you know, everyone's situation is different. Each fact pattern is different. So it's not a one size fits all. You know, what's good for what works for you may not work for me and vice versa. And the one thing a lot of people misunderstand, there's not like this magic wand that I can wave over somebody and make your taxes go away. You have to fundamentally do something different with your money to make your taxes go away. And a lot of people just don't get that.

Speaker B: Yeah. And I agree with that. It's got to be. You gotta be fluid and creative based on your circumstances and your goals. Um, you mentioned a couple good points there. And uh, do you know which off the top your head that uh, Roth. Was it a Roth ira? I know that uh, Peter Thiel put m. Was it PayPal? What was that strategy did so he

Speaker A: didn't have to like I think the initial he. Because he put the initial like shares of PayPal and they were like a penny or a dollar in there. And then they grew up. They grew at an exponential level. And so it turned them into like A um, Roth IRA 100 millionaire. Roth IRA billionaire. Which good for him. And then of course the Congress now wants to talk like he's a bad guy and they want to create laws for him when there might be three of those in the country or something. It's kind of silly.

Speaker B: Yeah. And I love Peter Thiel. I think he's one of the 0 to 1. Fantastic. But while we're talking about tech, whatever. Um, I was mentioned before we got recorded here. Tell people about the section 1202 because I think that's one of the little known.

Speaker A: Uh, so the qualified small business stock. And um, so it's, it's a really. And I'm not going to get the details here, but because it gets a little convoluted. I have a tax attorney that I work with who specializes in this. But basically if you sell your asset, your, Your business, if you have been a, you got to be a C corporation. You have to be at least for five years. And M, if you sell your business up to $50 million is tax free. And there is an entire ecosystem out there, of course, qualified small business stock. Um world where founders create businesses, they sell them and they roll the profits. They do it again and again and again. And so there's obviously a lot more details to it. Um, but it is, it's an amazing tool that some People know a little bit about, a lot of people have never heard of in their life. But it's definitely, you know, the tax code. As someone said to me once, whenever they put a new tax law in, it's not like they um, don't like burn the old, the old. All the old tax law down to start from scratch with new one. It's just like paper mache and so you just layer something else on top. And so it's impossible to know everything. And that's why there's so many specialists in different areas of tax.

Speaker B: Yeah, no, I try to study it though. You can tell.

Speaker A: Uh, well, it is. You know, I, in the last several years I've become more interested in it. You know, in college I was like, kill me now when I was going to accounting class. But now it's like it, it's like a puzzle.

Speaker B: Yeah.

Speaker A: And so it's really fascinating. But you know, to what we were talking about earlier is unfortunately, most CPAs, I think the statistics, the statistics that I've heard are the average CPA has about 500 clients. And um, you know, of those 500 clients, how many of them are really affluent, successful people? You know, probably 10 or 15m. And they don't have the time or the bandwidth to go research advanced strategies for those 10 or 15. You know, I personally think there's a level of intellectual laziness there, but that, that's just my, that's probably an unfair criticism, but um, Because I'm not sitting in their shoes. But, but it is. You know, people need to be aware that your CPA doesn't know everything out there. Not because they're a bad person, not because they're lying to you or trying to pay more tax. It's because they most often don't have the capability to go find it just because of the way they're, the way their practice is likely set up.

Speaker B: Yeah, no, I agree with that. That's why there's family offices and multi family offices where they just have a dedicated team to maximize. You know, we just had Richard, we were talking before, Richard C. Wilson from Family Office Club, where they basically teach people and very fluent families fifty hundred million plus net worth. They could get everything in house. And like you said, when you have 500 clients, it's just kind of like a McDonald's turnkey. Oh, by the way, you know, you're average. Even though you might make more than the average person, you're not getting any special privileges or, you know, they're not trying to go out of their way for you. So really honing in to find true experts and people that really cater to your specific needs and, you know, can optimize your returns. Let's talk about, uh, real quick because I, we were talking about this too, because I don't think a lot of people know about this. You know, we have our blockchain, um, it's called the V3, the gaming wallet. And one of the things we have to fill out today, it's called the form 83B. Uh, selection or elections? Elections. You want to tell people about that? Because I want to tell a couple people, they're like, what is that? I never heard of it.

Speaker A: Well, to be honest with you, that's not my, that's one area I'm not a, I'm not an expert in. And you would probably know more about it because you're doing it than I do. So my, my niche is just certain little niches because I'm not into, uh, I'm not into the tech and crypto world like you are and what you're having to do there. So you'd probably be more appropriate for you to talk about than me. So. So why don't you tell them what it is?

Speaker B: Yeah, well, basically, you could basically pay the IRS that you've all your shares. You write it like, so say your company, like it kind of goes back to what Peter Thiel did. You're basically saying the stock is worth.001 and how many shares, you basically say, uh, you have this many shares you send to the IRS, you pay the taxes on it at like.001 penny. And so if you keep it for less than five years, you know, section 12 to after, keep it for five years and you get the huge, you know, tax break. But in the meantime, if you want, you know, after different seed rounds, different Series A, Series B, want to sell a percentage up. Now you've prepaid the taxes at uh, a penny. And then now each raise, obviously that's what the market rate is.

Speaker A: Now realize if, if you and a lot of people did that and were successful and it became public, they would change the law.

Speaker B: Yeah, that's, that's the problem.

Speaker A: Once, when, when you have a successful exit, do not go brag and say, hey, we did X, Y and Z to do that. But this just goes back to show you that if you're willing to do the homework and talk to professionals, there are opportunities. Now many of those opportunities require a certain amount of capital and it's fact pattern dependent. That's what Everyone has to realize everything in tax is fact pattern dependent. So just because, oh, uh, Jonathan's doing, I should go do that. Well, are you doing exactly what Jonathan's doing? And so. Oh, well, Ross said this. Well, that may or may not apply to you, depending on what's going on in your world versus what's going on in someone else's world.

Speaker B: Yeah, yeah, Yep. So that's some good points there. What are some of your goals for the next few years? Like next five years? What it's kind of your goals?

Speaker A: Well, I've kind of made this shift philosophically. You know, when I discovered private investments numerous years ago, I didn't really believe it. I was like, okay, let me just sit back and let my friends be the guinea pigs. And then, uh, after a few years, I was like, okay, I think I want to play in this space now. So then I, then I went and started doing stuff, and then I realized that the quality of the deal that I was investing in was really subpar to what was out there to what I'm dealing in now. So now I'm dealing at the highest quality investments. And so, you know, I'm just trying to basically let everyone know what is available out there to them and how they actually don't have to pay the tax that they're paying if they don't want to. They want to. That's fine. And so just continuing to grow. So I have a, I don't have any money in the stock market. I used to have a fair amount. I now keep a very heavy cash position. And then all my other investments are private investments. And, um, you know, a lot of them throw, some of them are just growth oriented. Some throw off passive income. But that's my philosophy now. So I just want to continue to grow my passive, my, my, my private investment portfolio. And, you know, we'll just see where it goes over the, over the years.

Speaker B: Yeah, this is one of the best times to be cash, cash rich right now because there's gonna be a lot of pain, uh, in the market if, uh, the interest rates keep going up. And you also have the fact that there's 10,000 baby boomers retiring a day. And a percentage of those businesses, they don't even hand them down to the kids. They just shut them up, you know, close them up. But you could actually acquire. What are some, uh, of the asset classes or is it. Whether it's real estate or businesses that you've been looking at or your partners have been looking at.

Speaker A: So there's a lot of Private credit stuff. Just people who are basically, for lack of a better term, they're being loan sharks to, um, distressed real estate operators. Those are some good opportunities, in my opinion. I am very bullish on energy. Uh, I know a lot of people are not. Uh, I, I think, uh, I mean, oil right now is, I think, like $72, roughly, as we talk today on this. On this podcast. But. And, you know, it's. The recession fears, um, definitely are affecting it, but I would not be surprised if in a year or two, we are back into the. Well over $100 in oil. And oil, natural, um, gas was at $10 last summer. It's like 240 right now. Um, kind of had a mild winter in Europe, which hurt natural gas prices. But I am bullish on energy for the long haul. Um, I know that's fairly contrarian to the theme you see in the media, but, um, I just have a different perspective on it. Um, I really like energy, um, a lot. I really like private credit. Obviously, VC is great, but you have to diversify. You can't put all your money in one VC deal. You have to, you know, you're gonna have to, you know, play the field because, you know, many of them are gonna fail. Some of them are gonna hit do well, A couple are gonna hit home runs.

Speaker B: Yeah, that's. That's kind of the VC models where they have, like, if they hit a home run on one out of 10 times, one breaks even. The 110 one is a grand slam. It makes up for the nine losses or eight losses.

Speaker A: Absolutely.

Speaker B: That's how they're. That's kind of their mantra. Do you, uh, do you do anything with offshore. Any, like, offshore setups? Is that you?

Speaker A: I don't do anything. I have people. I can refer that to them.

Speaker B: Okay. Just curious how that structure that. And then do you see other people speaking about Sharp? Do you see other. Some of the investors? Do you see, uh, like, a certain influx of people coming from different countries, trying to take advantage because we have some of the best tax laws for investors and business owners.

Speaker A: Well, there's been a lot of South American money that's been coming for decades just because of the, uh, political environment in South America. Um, so that's been a scenario that's. You see a lot in Florida, you see a lot about that, and you see a lot of people, uh, a lot of Europeans will buy vacation homes in, uh, the Orlando area, because that's very heavy there. So you see a lot of people do that. Um, a lot of South Americans buy real estate in Miami, Fort Lauderdale. So there's always. And of course we've always heard about Chinese people buying, uh, stuff in like, Vancouver or LA or San Francisco. So, I mean, you can say what you want about the United States. You can be a doom and gloomer depending on what your political bent is for the day, but it's still the best place to put your money. And people who don't live here realize that. And so that's what a lot of people do.

Speaker B: Yeah. There was an article because, uh, we have a business formation, the Cayman Islands, but their Caymans used to be the number one offshore. And then they just said like, new article. And actually USA is number one place to, uh, you know, mitigate your taxes.

Speaker A: Well, you'll see there's a lot of insurance companies do a setup shop in Bermuda. Um, so those islands are so small, they have to create industry somehow.

Speaker B: Yeah, yeah, it's, it's a, it was a crazy process. They did like, wealth decorations and you have to like, like, like, basically like, I felt like it was getting like, searched by the FBI or something. Like you have to do all this stuff to say, make sure you're not money laundering.

Speaker A: Yeah, correct.

Speaker B: Absolutely crazy. It was so crazy. Talk about estate planning real quick and estate taxes. I see that's part of your, I mean, one takeaway is some of these people, um. Well, a lot of people I've seen a lot of times you mentioned a dentist and stuff of that nature. A lot of people, when I talk to them, it seems like they don't even have estate planning set up.

Speaker A: Nobody does. Nobody has an estate plan, nobody has a will. And so the estate tax for a married couple is like $25 million. It's, it's, it's not, it's, it's a little higher. It might be a little higher than that. That's, that's a round number. But what's happening here is, um, in a couple years, I, um, think it's, I think it's January 1, 2026. It basically gets cut in half. It goes back to like $12 million for a married couple. So a lot of estate planning disappeared when the tax rates were raised so high because it reduces a lot of, reduces the amount of people who need estate, uh, planning. And so now what you'll see is a lot of people have been really successful and today they don't have an estate tax, but in three years they will. And the reality is if they're successful, their wealth is going to continue to grow at a higher than inflation rate, which means they're only going to have more and more and more of an estate tax. Now, it's critical that people do some planning between now and 2026, moving things out of your estate, which the IRS has said they will not claw it back. Um, and so there's a. There's a lot of things that you can do and then, I mean, quite frankly, and then you deal like, you know, there's a lot of legal. The way you deal with estate planning is basically twofold. It's legal structures and life insurance. And most people don't really have what I would consider the appropriate amount of life insurance, but that's a secondary topic. But some people don't want life insurance, and that's fine. Then just build the proper legal structure. Um, because the reality is you could argue that they don't need life insurance if they grow their assets enough and they put it in a proper estate planning way where it's not going to get, you know, just eaten alive by the estate tax. And everyone's perspective on legacy from a financial perspective is different. And so you don't want to. I don't want to put my opinion on people. Um, but there's just a lot of different ways you can go down that road. It's not a one size fits all in any way, shape or form. But very few people have done that type of planning, um, because you just don't think about it. And so it's just a, um. There's just a lot of things to consider there.

Speaker B: Yeah. Do you have any favorite states?

Speaker A: Well, I live in Florida. Florida. Florida's. Florida's great in lots of ways. But, you know, Nevada's good, um, South Dakota's good. It really depends on what type of trust you set up. Certain states have different trust, um, rules, and that allows them to do that. And, you know, I've got access to some of the best attorneys in the country. And, you know, when it comes to the super complex stuff, you know, I know enough. But some of these guys just are absolute wizards. And it's just like sometimes it's not worth doing some of the crazy stuff out there unless you are just really wealthy because it's expensive to do. But I mean, I just redid my legal documents and it didn't cost that much at all. And it's about 2 inches thick, you know. But most people, they don't want to do it because it makes you think about uncomfortable things. And you're like, if you don't die until you're 90. The reality is you don't need it right now. But we don't know we're going to die. I die in a car wreck or a plane crash or whatever. So it's important. If you have kids, it's important to do it. There's a lot of things that you should consider and unfortunately there's a lot of boilerplate estate planning that isn't great, but it's still better than nothing.

Speaker B: Yeah, exactly. And to uh, your point, in South Dakota, I think that's like the number one, one of the most populars for like ultra high net worth. And I think the minimum require a lot of those. Uh, in South Dakota requires like 3 or 4 million. So almost a qualified purchaser basically before they'll even look at it because not. They say it's not really worth it, do it. And I think, I think Delaware, uh, is supposed to be number two. And you know, you mentioned Delaware for 1031, um, before.

Speaker A: But you know, if you look, if you look at all the corporations, they're headquartered in Delaware or the credit card companies are headquartered in Delaware, South Dakota, they just got favorable laws for those things.

Speaker B: Yeah. And I have a bunch of LLCs in Delaware. It's crazy. And then Wyoming is another popular one. I've been seeing a lot of people talking about Wyoming recently, talk about the

Speaker A: Wyoming LLC and the standing order. But here's something that people don't realize. So if you live in Chicago and your business is done in Chicago or in Illinois, because you have two parks in Illinois and you do a Wyoming llc, it will not stand up in a court.

Speaker B: You need to have an Illinois LLC backup. I heard.

Speaker A: Because you just have to have. There's no business being done in Wyoming. You can't just use the LLC in Wyoming and all of a sudden be under Wyoming law when you don't live in Wyoming or you don't do business in Wyoming. So there's a lot of misunderstanding about that. And there's what we call a lot of promoters of certain strategies. Yeah, they're just trying to sell something and it might be legitimate for some people, but it's not legitimate for everybody because it's once again circumstance driven.

Speaker B: Yeah, that's uh, Yeah, I see that it's a lot of YouTube and the social. There was a meme that I just shared yesterday. It's like the guru is online. Like they'll just m start, they'll add one or two keywords or something that's trendy and then they just start talking out of their Butt, like, it doesn't even make sense at all.

Speaker A: There is a YouTube channel. I think it's Copyzilla.

Speaker B: Yeah, I love him.

Speaker A: M. He just shreds people. He basically undresses, uh, people and exposes the frauds for who they are.

Speaker B: Yeah. The Internet just glorifies that. And the funny thing is, if it sounds easier than it is and actually do the research, it just sounds good. And like, a lot of people fall for it and the algorithms push the wrong content a lot of times, like, if you ever look at, like, the biggest entrepreneurs election, people are really knowledgeable. They have the least amount of followers. And then the people that just giving out, like, garbage information, they have hundreds of thousands followers.

Speaker A: And I've, uh, I've heard from very smart people that certain people who are all over YouTube in certain verticals are basically all fluff.

Speaker B: Yep.

Speaker A: And, uh, it's. It's all. It's a lot. It's very much marketing.

Speaker B: Yeah, yeah, it's, uh, yeah, for the marketing side, it's basically whatever sells online with it in the actual day. Yeah. There's a couple I'm not gonna mention here, but there's a couple big, uh, influencers are about to crash on their big 200 million project. You probably know what I'm talking about. Um, what are some of your favorite books since we're talking about entrepreneurs? Do you have any, like, couple entrepreneur books that you're.

Speaker A: So my two favorite books. I. I recommend these two to everybody. And quite frankly, since we live in a snowflake world, every snowflake for should read these two as well. Um, Grit by Angela Duckworth and Mindset by Carol Dweck. Those are two books that I think everybody should read.

Speaker B: And Grit was by. Wasn't she the founder, like the person in charge of Facebook?

Speaker A: No, that's, uh, that's Cheryl Sandberg is written by Angela Duckworth. They're both like, PhD, um, professors. Uh, and it's fantastic. Basically. Basically, don't be soft and push through hard times.

Speaker B: Yeah. And that's what you have to be like this, you know, crap. It's a fan and like, what's going on.

Speaker A: Life's not easy. Anyone who told you life was easy was lying to you.

Speaker B: Yeah. No, it's not. And being a business owner, it's not what the. You know, it takes a lot of work, takes a lot of extra hours to learn all these things and that, you know, you're going to go through trials and tribulations, but to push through it and build successful business when there's laws, changing the geopolitical issues and there's always new technology trying to replace you. So you have to be goes down to grit and determination and just being able to put in the work when other people are relaxing. Watching Netflix for sure. And uh, so where can people find you? Like, uh, I know you have your podcast. You have uh, LinkedIn.

Speaker A: Where's websites now? I have, um, the easiest way to get me is my phone. You can text me or call me. It's 8505-6679-9985-0566-7999. I have a website, rossbrannon.com r o s S B R A N N O n dot com. It is currently being updated so some of the stuff on there is outdated. So don't judge me if that's the, if that's the case. Actually judge me all you want. I don't care. Um, but uh, but you know, I, I pick up the phone no matter who calls. I'm not most people. Who silences you? The only time I send someone a voicemail is if it says potential spam. So otherwise I pick up the phone, answer it, doesn't matter who it is.

Speaker B: Yeah, I had to change my number because I had the same number for like 15 years. I was on like every telemarketer list. I would get like 10 calls in a day. And then I switched it to a completely different area code. Different, like it's like one per week now.

Speaker A: Oh, wow.

Speaker B: So, well, thank you so much, Ross. To be on the credit investor pockets, there's a lot of great nuggets in there and a lot of ways people can mitigate and reduce taxes. And so people reach out to him. He's got a lot of good strategies. And uh, thanks again for being on the show.

Speaker A: Thanks for having me.

Speaker B: Hey, it's Jonathan. I get exclusive access to great investment deals, opportunities from my community, my network and just for my loyal listeners, we'll give you first access. Go to and credit accredited investor podcast.com and sign up for the email list. Also join the accredited investor podcast Patreon Group where we give you additional exclusive interviews, monthly private group calls, and networking with others in this community. Check out accredited investor podcast on Patreon. Finally, I get a lot of people asking for to help, um, them one on one. Yes I can, but it's very limited. Go to revenue assessment Consulting for any real estate investing exclusive access. Go to Midwest park capital dot com. All links are included below. Please like comment and share this podcast with other friends thanks for listening.