In this episode of the Millionaire Mindcast, we have a remarkable guest, Tom Wheelright who talks about the practical and strategic ways to permanently reduce taxes, how tax influences behavior, the 7 areas where you can invest your money and pay less...
In this episode of the Millionaire Mindcast, we have a remarkable guest, Tom Wheelright who talks about the practical and strategic ways to permanently reduce taxes, how tax influences behavior, the 7 areas where you can invest your money and pay less taxes, and how the rich and wealthy pay zero taxes, legally!
Tom Wheelwright is a CPA, entrepreneur, international educator, leading expert and published author on partnerships and corporation tax strategies, best-selling author of a book “Tax-Free Wealth”, a well-known platform speaker and a wealth education innovator, Rich Dad advisor, and Founder and CEO of WealthAbility (Tempe, Arizona). He has been featured in hundreds of media, including Forbes, The Huffington Post, Accounting Today, CFO Magazine, ABC News Radio and AZTV Morning News, along with writing columns for Entrepreneur Magazine and Inman News.
Tom has been working with Robert Kiyosaki as a CPA for 20 years. Thus, influenced him to be a big action-taker and doer. His goal in life is to make taxes easy and understandable. He believes that once you change your mind, you can change your life, but if you can’t, you are stuck with what you’ve got!
Some Questions I Ask:
Who is Tom Wheelright?
What has that journey with Robert Kiyosaki consisted of for you?
Why don't we teach in school historically on how to pay less or no taxes?
Who out there is this roadmap really designed for, and where should they be looking to start this process?
What are your thoughts around the current Biden administration proposing the 2024 budget to 1031 Exchanges making it to Congress and becoming inactive in the law?
What are the bigger mistakes that you see so many individuals that you worked with they’re doing wrong on tax-planning and strategy?
What should be some of the habits or routines to really be doing proper tax-planning and recording?
What do you say to those individuals who wanted you to help them figure out previous taxes to make sure they didn’t over pay or wanted to get money back?
In having a partner to help pay less, what does that relationship and dynamic look like in an ideal CPA-investor-business owner dynamic?
What questions should people be asking about in terms of lowering taxable income with some particular behavior change?
What are some of the ways you’re seeing ultra-wealthy used that some individuals may not think about in their tax planning?
Let’s assume that they’re making a lot of money, talk about this idea of giving back, how they can maybe think about doing it strategically as they’re coming out to that phase of luxury?
In This Episode, You Will Learn:
Taxes 101 education.
Mastering the taxes game.
The 7 investments that the government will literally pay you to make.
The key player of every team.
Why building a transactional relationship with a Financial Advisor is a mistake.
The bigger opportunity right now.
Staying away from shiny object syndrome.
“Success in business and investing really starts with the personal development side.”
“Taxes are a game, we all have to play it, we don’t have a choice.”
“Business and investing are team sports.”
“Stay away from shiny object syndrome.”
“Once you change your mind, you can change your life.”
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Connect with Matty A. and Text me to 844.447.1555
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Matty A.: [00:00:00] I'm excited to welcome to the show, Tom Wheel. How are we doing today?
Tom Wheelwright: I'm doing great, Matt. How are you? We're,
Matty A.: We're getting to that time of year where all I can do is think about taxes right now. So this is , a timely conversation, and we got men out of them, the best in the country to help us navigate through it.
So for those don't know who you are and what you've been up to over the course of your career, when somebody says, who is Tom Millwright? What
Tom Wheelwright: do. What people know me best for is are my two best selling books, tax-Free Wealth and the Win-Win Walt Strategy, and my connection with Robert Kiosaki, richdad poor dad fame as I've been his C p A and connected with him for over 20 years.
So that's been a, that's been a quite a ride and a learning experie.
Matty A.: I'm curious, before we even dive into, all that we're gonna talk about today what has that ride and journey been like with Robert, knowing that both of you guys are, big action takers and big doers, what has that journey consisted of for you?
Tom Wheelwright: It's [00:01:00] been fantastic. Robert's very much about personal development and so he's, he really has changed my life from a personal development side. And I like to say that I think that success in business and investing really starts with the personal development side. And so it's not the financial side, those are just tactics, but it's the personal development.
Who are you are you willing to handle more money? That whole, like you said, say the millionaire mindset. And Robert and I, we've literally traveled all over the world. I've been in studio with him where he has hammered me. I've been on stage in front of 2000 people where he's put the hook on me and say, no, Tom, people don't wanna hear that.
And he's very he's very honest and very transparent and doesn't care where it doesn't matter where you are. And I love that because you always know where you stand with Robert. I had a friend once said, Robert would never stab somebody in the back because he'd like to see the look on your face when he stabs you in the front.
, he literally, he wouldn't he would never do that. He literally would never stab you in the [00:02:00] back and I dunno about you, but I. As entrepreneurs, I think we always want to know what's in front of us and we can handle it. If we can see it, it's what we can't see that is so difficult. And with Robert, what is what you get.
And I love that. And it's of fun because as we travel, a little bit of his good cop, bad cop, he get he likes being the bad cop, the Marine. And I like being the good cop, the Mormon missionary. We work well together that way. You
Matty A.: guys got a nice yin and yang and a great balance.
for many people that listen to our show, these are entrepreneurs, investors, business owners that are out there, making money. And that generally doesn't seem to be, once they get over that hurdle, doesn't seem to be the hard part of rinsing, repeating that. It's oftentimes how do they keep as much of that money as they possibly can.
And, taxe. For many people seem to be like, write, reading and writing Chinese in a dark K without a flashlight, and it's very confusing. And, they never taught us this stuff in school. And so I want to get into [00:03:00] some tactics today on why the rich don't pay taxes, because I know that's something that you eat, sleep, and breathe year rounds and have helped thousands and thousands of investors, business owners and entrepreneurs, pay little or no taxes or at least minimize their taxes.
And in your perspective why don't they teach us this kind of stuff? Why haven't they taught us this stuff historically? And do you think that's ever gonna change?
Tom Wheelwright: Starting with will it ever gonna change and the answer's probably not. That's why I have seminars. That's why I have online education.
That's why I have other ways to get this information. Now. It's a lot easier to get it right than it was 20 years ago when we didn't have YouTube and TikTok and, and whatever else. You watch or listen to podcasts, right? We didn't have this kind of information. We had to re rely on cnn, n.
right. For our financial news, and I'm going, nah I don't know about that. I'm not sure that's where I wanna get on my financial news. But taxes are I, my goal in life is to make taxes fun, easy and understandable. The famous quote from Albert Einstein is that the income tax is [00:04:00] the hardest thing in the world to understand.
I'm going. Albert Einstein thought it was difficult, then surely the average person is gonna think this is really hard. And what I've tried to do in my mission in life is to really make taxes so simple conceptually that even a six-year-old could understand them. It's really a function of one, how do you make your.
And two, what do you do with your money when you do make it? And that's really what it is. And then three is understanding the rules of the game. Taxes are a game. We all have to play it. We don't get a choice. We can, if we ignore it. , we just pay the maximum tax.
Yep. So we don't get to choose whether we're partners with the government, we just get to choose with what k choose what kind of a partner we are with the government. So most people are very much the silent partner and they just go ahead and they pay their tax, keep their head down, they go, I don't wanna know anything, I just don't wanna be audited.
And there then there are those, and they're primary. The wealthy entrepreneurs and investors who say, wait a minute, [00:05:00] taxes are my single biggest expense. They're my single biggest outflow of cash. Why would I not want to manage that expense and make sure that I'm using. That I have the ability to use the money instead of just turning it over to the government if I have that choice to do it legally, ethically, and morally.
And the reality is that the tax law actually provides us an entire roadmap for doing that. And really, the government is not out there to collect the most taxes possible. The government is out there to influence behavior, and then they let you make your choice. Do you want to behave the. The government wants you to behave or do you wanna just pay high tax?
And that's, it's a really, actually, a simple choice.
Matty A.: So let's maybe let's talk a little bit about that, that roadmap and maybe give some, taxes 1 0 1 education on today's call when you first meet with many individuals who. Out there [00:06:00] is, this roadmap really designed for, and where should they be looking to start this process?
Tom Wheelwright: That that's the right question. Because if you're not a business owner or an active investor the tax law really. Tends to work against you and not for you. If you think John F. Kennedy was the first president to really use taxes as a way to influence behavior, general behavior in the economy.
When he enacted an investment tax credit for manufacturers who would buy new equipment, he said, look, if we give you a little incentive, it's just a 10% tax credit. Will you change your behav? Sure enough they did. And then Ronald Reagan comes along and he goes, we need to, we'd like to influence people with real estate, so we wanna give real estate tax benefits.
So he enacted this accelerated depreciation, which is the big tax benefit in real estate. And he did that in 1981. That was one of the very first, He did as [00:07:00] president was to enact tax incentives for real estate. So it, if you kinda look at the, our history over the last 60 years especially, it's been really about, all right, governments realize that nobody likes paying taxes.
So a little tax incentive will go a long ways. And so what behaviors do we wanna incentivize? Even this current. Administration who's, you know now has become famous for saying, we need to tax the rich. They not really talking about taxing the rich, they're talking about taxing high income earners.
Okay. Because they're not talking about taxing the rich the really wealthy people. I All billionaires made their money as entrepreneurs. , right? Every one of them and or their parents were entrepreneurs. One of, one of the. And then you just have to look at if the government wants to incentivize certain behaviors, what are those behaviors?
And I write in the win and wealth strategy, the seven investments the government will literally pay you to make. And it's, and that I just I [00:08:00] just thought you know what, let me just give you a roadmap for it. Let me just spell it out in plain English. These are the set seven areas where you can invest your money and Payless.
Matty A.: what are those seven
Tom Wheelwright: investments? Not, no I'm happy. I'm I'll tell you what the seminar, you have to read why that is, and you'll have, you want details, you get, have to get it, have to buy the book. But the seven investments start starts with business. All the great tax incentives start with business because the government wants to incentivize.
Business owners, they wanna incentivize jobs, right? Create more jobs. Re remembering that when you create more jobs, you actually, and higher paying jobs, you end up with people paying more tax. And so the government isn't doing this. Unselfishly, right? They're not doing this because they have this great, cause they really do make money on these incentives.
So business is number one. And then close. Number two is technology. Of course, they want business to create technology and incentivize technology. That's why you [00:09:00] read that, Amazon and Jeff Bezos and Elon Musk, Tesla didn't pay tax for many years. This is why, because these are incentives.
The government wants them to have more money to put back into their business and continue to develop. Then of course the third one is real estate. Real estate's a very big one. If you get out of the pure , day-to-day business operations, you're really gonna be looking at long-term real estate.
That's the first place to go. And then closer related to that now is energy. Because of course now we're, now we put energy on our rooftops, right? It used to be we had to invest in a drilling rig and now we just have to put on rooftops. And when you look at this current administration, they said we don't want you drilling.
What we want you to do is we want you putting energy on your rooftop. And that's really all they've done. They haven't changed. The fact of incentives, they've just changed which incentives. And then of course food production has always been highly incentivized and it is in every country. And I will tell you honestly, Matt I'm not sure I've ever met a [00:10:00] farmer or rancher who paid much in income tax.
Because incentives are just too great. mean, There's just. No reason for them to be paying income tax. And then we have a couple of other incentives that are not business related that really anybody can use. One's life insurance, particularly whole life or universal life, the they're related. And the second one, and the next one of course, which is the last and the least, I think is qualified retirement plans like IRAs, 401ks, and pension plans.
That is , nobody would complain that the rich aren't paying tax because of their pension plans. Except, Obama complained about MIT Romney not paying enough tax in his Roth 401k. But that's really, that's actually the only one of the seven that the government doesn't make money on.
They actually break even on that one. They make money on everything. To
Matty A.: put a note next to real estate. Obviously many of our listeners are real estate investors or their business is in real estate. With the current Biden administration proposing in their [00:11:00] 2024 budget to potentially do away with like kind 10 31 exchanges, I know this isn't the first time they've brought it up.
What are your thoughts around the likelihood of that you. Making it to to Congress and becoming something that actually gets enacted in the law.
Tom Wheelwright: President Biden is certainly after people who successful in their long-term capital gains. That is clear. He wants to double the capital gains rate.
He wants to do away with 10 31 exchanges. He the challenge of course is that it would decimate the economy. Yeah. So you can't pull the plug, right? I It's it's one thing. It's kinda like you put on weight gradually. You don't take it off all at once, right? If you do, you die. Yeah. Literally your body shuts down, your system shut down, so you have to take it off a little bit of time.
So if you wanna wean yourself off of these incentives, that's fine, but you can't do it all at once. Certainly for the next two years, his budget's dead in the water. My bigger concern, frankly, is the 5 Medicare tax that he [00:12:00] wants to do, which is on small business owners as well as real estate investors, and not just passive real estate investors.
He wants to make it on active real estate or professional real estate investors too. That's a big additional tax. 5% is a really big tax because that would include, 5% on the gains from when you sell your real estate even though capital gains rates. Adjusted for inflation properly.
You're still gonna have, you've got all these gains that come from inflation and then you have to pay tax on that inflation, even though you may not have actually increased your wealth at all. , you still have to pay tax on it. So it's a it's a cha, his budget's challenging, but remember he's just throwing things out.
I think both two. Have a negotiating position with Republican Congress, and I think also to put out what he's running on in 2024. Yeah. I, this
Matty A.: platform going down the rabbit hole and really trying to think about, as a real estate investor and somebody who's used 10 31 exchanges, and [00:13:00] it means such an amazing tool that has been around for so long.
I'm trying to think of the real catastrophic downsides of that going away. And when you really start peeling back the layers of the onion, it really could be catastrophic.
Tom Wheelwright: You take liquidity outta the marketplace. Increasing capital gains rate. They've actually the tax foundation has done a lot of research on capital gains rate, and they show that once your capital gains rate gets much over 25%, you don't actually bring more money into the treasury because people change their behavior.
They don't sell. . So this is why Biden course wants to enact this wealth tax, which by the way is unconstitutional. So I'm not too concerned about the wealth tax which is this 25% tax on unrealized capital gains. That's a non-starter for a lot of people, not just the Republicans. So there's a lot of Democrats that's a non-starter for, so I.
Overly concerned about that. But remember, this is how things start, right? They propose it and they start talking about it. And their goal is not that it's gonna be [00:14:00] enacted next year, but that it's gonna be acted in 10 years. And that's really the goal. So we do have to watch out. It's a little the camel getting its nose in the 10 in our tent.
We need to kind keep that nose out the best we can. So for those. ,
Matty A.: Really wanting to lean in and sharpen their acts and their pencil on their tax planning, their tax strategies. Maybe we could start with some of the things that you see, many individuals that you work with right out of the gate, they're doing it wrong.
This is either bad behavior or bad planning. What are some of the bigger mistakes that, whether you have counsel or not, you could easily course correct on
Tom Wheelwright: a little bit, just on your. Yeah. Nu number one is how you own your assets. Okay. Whether it's your business or your real estate. Owning it so that it shows up on your personal tax return.
Your 10 40 is a bad idea. So instead of a Schedule C for a business, We form an S corporation or a C corporation instead of being on Schedule E for rental property, we set it up. So it's a partnership. And the [00:15:00] reason that it needs to be that way is one, we actually show our tax return to a lot of people.
We show it to the bank. We might, anytime we're going through some kind of a lending, in real estate, we're showing it to the bank all the time, right? Do you really want to show them, a hundred different rental properties and have to explain? to the bank. I don't, so what I do instead is we would then set those a hundred rental properties up in a partnership.
It can still be LLCs or limited partners. At you actually can increase your protection at the same time. And that way all that shows up on your tax return is a single number. If you look at, for example, Donald Trump has done this very well. I looked at his tax returns when they came out.
I couldn't resist and. I knew when they were going, talking about releasing them, I'm going, this is not gonna tell us anything. And sure enough, there's all this fur over for, what, six years? Yeah. And then it died a very quick death within a week that story was over.
Why? Because there was nothing to see [00:16:00] on his tax turn. Because guess what, he's only. S corporations, partnerships, C corporations, he doesn't own stuff. He's got three or four Schedule Cs of little tiny amounts. But he doesn't show anything on his tax return. I think we can learn from that, that I think that's the way most rich people do it.
The most successful entrepreneurs do it is they keep their personal tax return pretty clean. And then they, they use. For owning all of their assets. So they get both the as protection, the tax benefits, and then they also can use those same entities for estate planning. So that helps as well.
Matty A.: curious, as you were combing through his tax returns, did anything stand out to you as, that was brilliant or ah, he could have done that a little bit better? Or was it just as you expected?
Tom Wheelwright: Oh no. He paid way more tax than I thought he should have and he lost millions of dollars of deductions.
So I actually thought the tax planning. That went into his tax return was very poor. And actually it was a I hate to say this, but the tax [00:17:00] returns were pretty sloppy. They I, they, I would never file tax return that looked like those, okay, let me put it that way. Now, they weren't, Write out incorrect.
There was nothing in there that goes, oh, that's just wrong. . that's what actually what the staff of the Joint Committee said when they reviewed them. They said there's, here's things to look at, but there's nothing really obviously wrong here. And I agree with that.
It's I actually think his tax advisors could have done a lot better job. What you're saying
Matty A.: is he needs to call Tom Wheelwright and get his acting order.
Tom Wheelwright: One way or another, he needs to get his act in order, whether it's calling me or somebody else, . That's very true. So
Matty A.: talk a little bit more about, okay we're, let's just assume we're set up
Tom Wheelwright: right.
What should be some of the
Matty A.: habits or routines or rhythms maybe on a, whether it's a monthly or a quarterly or a biannual basis to really be doing proper tax planning
Tom Wheelwright: and. Boy, that's that's, thank you for asking that question. First of all, tax planning starts in January, not in December. This idea of year end tax planning is just a fallacy, so we need [00:18:00] to, we really need to be doing all year round.
And I would say that every entrepreneur, investor should be speaking with our C P A at least four times a year. Four times a year, okay. At least four times a year, and really have a. Long-term plan of action, we'd call it a strategy, but a long-term plan of action for reducing your taxes and investing because especially as you see bonus depreciation going down every year by 20%, right?
It was a hundred percent last year and now it's 80% and it's gonna be 6% keeps going down. You really have to project out your tax situation and it should impact your investing because, When you look at your cash flow and your returns, you're looking them after tax. Looking at it before tax is meaningless.
, because it's really what we have to do is look at it after tax. So if we're looking at that long term and we're projecting that out, and we're meeting with our C P A on a regular basis, guess what? Now we don't have any surpris. We can manage those taxes. If we wanna be at 20% tax rate, we can be there.
If we wanna be at [00:19:00] 10% or zero, we can be there too. It's just a matter of, where do we put our efforts and what kind of incentives do we go after? You talked a little
Matty A.: bit about, some thresholds, right? Which I think a lot of people would say I wanna be at zero Tom, but why would I want to be at 10 or 20%?
Can you talk a little bit more about contextually the
Tom Wheelwright: strategy behind. Yeah, so our first goal with every client is to get down to 20%. And the reason is because at 20% the value of the tax planning starts going down. Okay. And because remember, every dollar of income, we pull off our income or every deduction we pull we get, comes off the top rate.
And so when we're in a 37% tax rate or a 33% tax rate, boy that's a lot of money. When we look at 20%, we're going, do I change my behavior for 20%? Maybe, I have clients that pay zero and legally, and because they don't wanna pay any tax, okay. Other clients go, I'm good at 20%, I just wanna stay at 20%.
[00:20:00] So it really, it's actually a bit of a personal decision. And then also, it depends on your investing. Criteria in your investing strategy because the reality is if you're continuing to invest heavy into real estate, for example, or into energy or back into your business, you're gonna pay very little tax anyway because all the money you put back into investing your business, you go into real hard assets.
, any money you put back in is pretty much gonna be deductible, so you're not gonna pay tax on that. It's only the money that you save or you spend that you really end up spending paying tax on.
Matty A.: Why would somebody want to, stay at let's say 20%, whereas most people would think, Hey, I wanna get down to zero.
When does it make sense? Or why would it make sense for somebody to wanna stay at 20%?
Tom Wheelwright: Some people may wanna say look, if I can get 20%. I'm not going to do things for tax purposes. I'm not really gonna let the tax tell drive the dog. Yep. If you will. We never want the tax deal to wag the dog or, really guide it too much.
But we do want to recognize that taxes [00:21:00] are an important part of our investment returns. I think when people get, sometimes when they get to 20%, they go, I'm just good with that. I'm okay paying 20%. I'm not gonna change my behavior. Now, if my behavior creates more, lower taxes than 20%, I'm good.
But remember also what we don't wanna do is pay 10% this year and 30% next year. That does not average out to 20%. You're better off paying 20. Because remember when I'm talking about 20%, I'm not ta talking about 20% as your average rate. I'm talking about 20% as your maximum. . Okay, so your average rate's gonna be around 10% if your maximum rate's at 20, if your marginal rate's at 20%.
But so I'm not talking about the average rate of most people is 20%, right? I'm talking about that marginal rate. Once you get down that marginal rate at 20% your income solo, think about this president Biden has promised that nobody making less than $400,000 will get a tax increase.
Guess what? If you're making [00:22:00] less than $400,000, you're probably in a 20% tax rate, so you're probably good. So there you go. Those STA 20% also matches that 400,000. And when I first heard that when he was campaigning, I'm going, okay, new target is $400,000. We're not gonna be higher than $400,000 of taxable income.
And that's not that hard. And that, that will mean that your top rate is 20% or. for individuals.
Matty A.: I hear this question a lot of, man, I've learned so much over the last few years and I feel like I've paid overpaid, no, or missed the boat on a lot of stuff. Tom, can you help me figure out previous years and make sure that I didn't overpay or can I get money back?
What do you say to those
Tom Wheelwright: individuals? The good news is that we actually, so my company, so what we do my company's wealth, the building, and what we do is we run a network of CPA firms. We have 65 c p a firms in the US and Canada that I train personally on a monthly basis. And what we do is that we [00:23:00] actually, we will look at your tax returns actually for free.
We, we will do a. every time we'll do a free look at last year's tax returns and we'll be able to tell pretty quick whether we can help somebody and sometimes we can't. And if we can't. If we can't help you, it might mean that you need to change some behaviors before we can help you.
For example, if you come to us, we've had people come to us and make $4 million in W two. and we'll ask them, so what are you gonna do with your money? I'm, I'm just putting it in the stock market and and then spending it, I'm going, no, not much I can do for you. . So we can't do that.
You also have to decide, are you willing to spend the time and the effort to have your c p a be a partner with you in your investing? Not just talk to 'em once or twice a year. And that's another time when we'll have people say I just want you to handle that. I'm going, I can't cuz I can tell you what to do.
but I can't do it for you. Yeah. So this is a do with you, not a do [00:24:00] for you. So you kinda have to make some decisions upfront. And once you make those decisions, though, life's pretty easy and taxes are pretty low. So
Matty A.: let's talk about that a little bit. Cause I think that's a really important thing for people to wrap their heads around.
I know it was for me, for sure, which was not just, having advice and strategy, but really having a partner in helping you pay. , what does that relationship and dynamic look like in an ideal, c p a investor, business owner
Tom Wheelwright: dynamic? I'll tell you honestly first of all, you have, the first thing you do with them is you create this plan of action, this strategy, and you're looking up at.
Very holistically. So you're gonna look at how are you building your wealth? You're gonna look at your tax planning, you're gonna look at your estate planning, meaning your legacy, and you're gonna look at your asset protection. You've gotta look at all four of them together. Second of all, you're gonna meet on a regular basis.
I have a lot of clients I meet with once a month, and if they something comes up, they call me. That was . I got [00:25:00] a call at six, six o'clock at night. My clients all have my cell phone number. Okay. I get a call at six o'clock at night saying, Tom, somebody's looking at buying my business, need to talk to you about it.
Saturday morning and we're on the phone with them and we're talking about what they're doing, right? That's the relationship we have, but that's the relationship I have with all my clients. The other thing, I wanna emphasize is that most people have a transactional relationship with their advisors.
Meaning that they only meet with their advisors when there's a transaction happening. And it's not a, it's not a personal long-term business relationship or investment type relationship. And I think that's a mistake because I think it's a mistake for the CPAs and I think it's a mistake for the entrepreneurs and the investors because,
What happens is that if we have a true relationship and you know that I'm looking out for you and that my and that I'm really focused on you first, then you're not gonna be afraid of calling me. Second of all, I think you, I [00:26:00] would always ask your c p A, how are you gonna bill me? Because if they bill you by the transaction, that means that their.
is to be transactional. Whereas if they say, I'm just gonna bill you a flat monthly fee. So it's more of a concierge type relationship and we see doctors going there. We see financial planners have been in a concierge relationship for years, and we're finally starting to see. CPAs start to get into that concierge type relationship.
What that means is that you're not afraid of calling your C P A because you're gonna get a bill. And nobody likes calling their lawyer cuz they know if they call their lawyer, they're gonna get a bill for 10 minutes, they're gonna get a bill. They'll probably get a bill while the lawyer's thinking about it while they're showering.
Whereas with the C P A Y I. If I'm gonna help you reduce your taxes, I need you to call me. So I actually wanna incentivize you to call me. I don't want to disincentivize you to have conversations with me.
Matty A.: Yeah, that makes sense. And we'll be sure to link up all of the ways that you guys can reach out to Tom and his team [00:27:00] in the show email@example.com on his episode.
And I know we'll talk about where we can send them here at the end of the interview as well, in terms of somebody that's, let's say, coming into. , a surplus of, a couple hundred thousand dollars of taxable income that they are expecting to find a way to lower their taxable income.
You hear people saying you gotta buy real estate property, or You gotta invest some money here. Talk a little bit more about the strategy behind that and what questions people should be thinking about or asking when it comes to lowering their taxable income with some particular behavior
Tom Wheelwright: change.
Be strategic about it. That's number one is don't be looking at it as, and I get this a lot, I'm selling my business. , how do I lower my tax in my business? I'm selling my real estate. How do I lower my taxes when I sell my real estate? Those aren't bad questions, but the better question is so can you help me develop this long-term plan so that I know that when [00:28:00] I sell my real estate or sell my business, I'm gonna have lower taxes?
Because the challenge is that if you go to a C P A, like a month before you. Chances are there's not a lot you can do. Now, that's not always the case. I had somebody call me the day of close on their real estate and they had not thought of a 10 31. And I said, could you change? Do you have enough good enough relationship with the buyer that you could change this to be a 10 31 and go out and have an, qualified intermediary and everything?
And he said, I think I do. And he went and did it, saved him 20,000. , and that was the se that was one phone call. Yep. Right Now, it's not always that. So sometimes what you real, what you'd rather do, or what I would've rather done in that case is have 'em put it in the contract in the first place.
It would be way easier. Then you don't have to go back to the buyer and say, would you be okay with and with a business, it's even bigger because you're talking about typically millions of dollars. Of gains in a [00:29:00] business, and are you really, is that really something you wanna do at the last minute?
You didn't think about selling your business in the last minute. You've been thinking about this for a very long time. So that's why I say, they always say that , business and investing are team sports, right? So keep your team involved and I think a key player of anybody's team is their C P A and tax strategist who's gonna help them reduce their taxes.
Let's get a little more. High level
Matty A.: and for the kind of the pros out there that are, feel like they're playing this game at a high level, but there are some things that maybe they haven't thought about or vehicles they haven't used. Maybe give your thoughts on whether it's deferred sales, trusts, opportunity zones.
What are some of the ways you're seeing ultra wealthy use conservation easements, different things that they may or may not have thought about in their tax
Tom Wheelwright: planning. We talk about all of those. The D S T is really a way to do a 10 31, right? Is the whole point of that is so that you actually [00:30:00] as a, as an individual partner, can actually transfer and do a 10 31 even when the partnership's not doing it.
That's the idea of the of those Delaware trusts. But what, some of opportunity zones I've always loved opportunity zones from the day they came. Or proposed. I thought this is a great idea because this is a true incentive to attack the marginal properties. Yeah. And say, could we redevelop these marginal properties if we just had a little more incentive?
I'm in an opportunity zone. I love opportunity zones, so that's certainly one conservation easements. Of course, they changed the law this year so you no longer can get. Four or five times your investment, you're limited to two and a half times the purchase price of the land. So that's re lost.
Some of its its shine, if you will. It's glow. But there are, there's lots of ways to plan. I There's thousands of them. For example, we used to have the Malta pension plans, and while of course, too many people started talking about 'em, so the, I. Knocked him away. That something else pops up.
I actually don't look [00:31:00] for loopholes a lot. I like to combine my investing and my tax planning together and and really look at that. For example I would tell you the big opportunity right now is you own real estate. Are you putting solar on your real? . That's to me, if you have a 200 unit apartment building, are you doing a deal with utility so that you can actually be a.
A, a biller to your tenants and then, you pay the utility so that all that solar, you get the benefit of the solar. It's not going to the utility or the tenant. You want that to come to you. So it, that solar those solar projects, I mean they're huge, the tax benefit cuz consider you not only do you get a 30% dollar for dollar tax benefit credit, but you also get a 65.
Deduction the very first year. So 65%, two thirds, roughly two thirds of the cost is gonna be deductible in the very first year, and the [00:32:00] rest of it is gonna be deductible over the next few years. Yep. There's just this huge tax incentive right now to do solar. If you wanna, if you're willing to do that, and it makes sense for you cuz you're in an area where there's a lot of sunshine.
Utility bills are high, Texas, Arizona, there's two states where Texas, where utility bills are high and yet you have a lot of sunshine. So why not, why not do that? And I just put it on my building just last month. I, it takes some time to do, but I'll tell you this, I think solar energy, From a tax standpoint, it's probably the biggest thing out there right now.
Yep. And it
Matty A.: doesn't seem like it's losing any steam or momentum and it's really only getting better in terms of the product that is coming out. Exactly. And I love what you just said too in all of that I wanted to strip away, we're talking a lot of strategy here. We're talking a lot of high level stuff, but you talked about also.
The building blocks and the basic foundational stuff that keep it simple, but be [00:33:00] consistent in terms of how you oversee it and how you execute on it. And really, it takes care of itself, right? It's not some magic bullet or pill that's going to solve people's problems.
It's just being proactive, being educated, having a clear plan and following and executing the steps in that plan over a consistent period
Tom Wheelwright: of time. Yeah, I always tell people, stay away from shiny objects syndrome. Stay away from the shiny object syndrome. That's true with your investing.
It's true in your business, and it's very true in tax. Don't just go be looking for loopholes or the next big thing, whether it's P L I or whether it's these installment sale trusts that probably don't work by the way. And, whatever it is, if it's, if it sounds too good to be true, it probably.
Just so you know. But there's no reason to do those fan like you say, there's no reason to do that fancy stuff. You can get your taxes to zero simply by building lots of wealth in one of these areas that the government prefers. Let's [00:34:00] wrap it up
Matty A.: on. Let's assume everybody's gonna follow the wisdom of Mr.
Tom and his amazing crew. And for those of you who wanna reach out to Tom we'll make sure that you guys have access to know exactly where to go. Let's assume that they're getting wealthy and they're making a lot of money. Talk about this idea of contribution and giving back and how that, becomes a part of many individuals wealth building plan and journey, and how they can maybe think about doing it strategically as they come into that phase of their wealth journey.
Tom Wheelwright: Oh yeah. I can give you an example. So I'm actually doing my estate plan, revising my estate plan with my attorney the other day, and he goes, okay, so this is what you're doing. You're leaving this much to your kids, and then the rest goes to you, then to your wife, and then from there it goes all to charity.
I said, yeah. He goes, man, you are the easiest client I've. Because there is never gonna be any estate tax it there, there can't be any estate tax because the way I've set it up [00:35:00] to make, basically give it all away ahead of time. And so whether you're giving it to your kids or whether you're giving it to charity setting that up ahead of time makes it a big difference.
The other thing is, remember there's actually huge tax benefits to this. For example, if you have highly appreciated stock, let's say you buy bought Tesla back before it split at $400 a share, right? Which we all wish we had, right? , and and now it's worth multiple thousands per share. If you adjust for the split, you go what if I just gave Tesla.
For my charitable contribution instead of giving cash, now I don't have capital gains on the Tesla stock, and I get the deduction at fair market value. Why wouldn't I do that? If you think about your own business maybe you're in a business where you could actually give shares of your business to a qualified charity, or maybe you've set up a foundation that's a 5 0 1 charity and you can actually give shares of your business to the charity.
Don't think that the government doesn't incentivize charitable giving, cuz it does huge. Whether it's through a [00:36:00] charitable remainder trust or charitable lead trust, whether it's true through charitable giving of stock or highly appreciated assets or whether it's just charitable giving at the end of your life.
The government is sad. Look, if you give money to charity, we're not gonna. Tom, you have been
Matty A.: a, an amazing educator to so many people all around the world. You've been somebody that I've followed for my entire entrepreneurial journey and real estate investing journey. I just wanna acknowledge you, brother, for all of the amazing work and value consistently provide to individuals that are looking to, sharpen the acts in this space.
And I know a lot of people are gonna say, Hey I don't know it all. I don't want to know it all. I just want to have somebody like Tom on my. , what is the best place for individuals who want to engage with you and your company further?
Tom Wheelwright: First of all, thank you very much. This is my mission in life, so I love that people are actually taking advantage of this.
Easiest way is just go to our website, wealth ability.com, and you just schedule a call. There's no charge for scheduling a call, and like I said, we'll look at your previous tax returns, we'll let you know if there's something we can do or and then on top of that, I wouldn't, I always encourage education.
I love what [00:37:00] you're doing, Matt, because you're educating people, you're bringing on entrepreneurs to educate other entrepreneurs and investors. And I think that is fantastic that you're doing that and really appreciate that. And so whether the education is great podcast like Millionaire Mind, whether it's, reading a book like Tax Free Wealth through Win-Win Walt Strategy, I think getting that education and changing your mindset.
right? This is changing your mind. This is what you're all about. This is what my books are all about. This is what we're all about, is once you change your mind, you can change your life, but until you change your mind, you're stuck with what you've got. Yep, change
Matty A.: those thoughts and the behaviors and actions change alongside it.
And for those that want to maybe take that next step or engage with Tom and his team be sure to check out my.com and we'll have all the links and all the resources in the show notes for you guys, so you guys can check that out there. Tom, I just wanted to say thank you so much for coming up,
Tom Wheelwright: coming on the show today, brother.
Oh, thank you, Matt. It's been a pleasure.
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