Effective Tax Planning: Strategies to Reduce Your Taxes feat. Steve Moskowitz - Aspen Funds
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Effective Tax Planning: Strategies to Reduce Your Taxes feat. Steve Moskowitz

In this episode, co-hosts Bob Fraser and Ben Fraser are joined by tax planning expert Steve Moskowitz, founding partner of Moskowitz LLP, covering the basics of tax planning, including what it is, why you need it, and how to get started. Steve provides valuable insights and practical advice to help you navigate the ever-changing tax landscape. He also provides practical tips and strategies to help you minimize your tax liability and keep more of your money. Whether you’re a small business owner, high-net-worth individual, or anyone looking to reduce your tax burden and keep more of your hard-earned money, this podcast is for you. Tune in and take control of your finances today.


Connect with Steve Moskowitz on LinkedIn https://www.linkedin.com/in/stephenmoskowitz/
Connect with Bob Fraser on LinkedIn https://www.linkedin.com/in/bob-fraser-22469312/
Connect with Ben Fraser on LinkedIn https://www.linkedin.com/in/benwfraser/


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Ben Fraser: Hello, Future Billionaires! Welcome back to another episode of your favorite podcast, Invest Like a Billionaire. And today we’re talking about your favorite topic that you didn’t even know was your favorite topic, and that is taxes. But who thought you get so excited about taxes? When you hear are some of the strategies that our guests today, Steve Moskowitz is talking about.

You get very excited because his approach to taxes is how to pay zero taxes. So he’s been doing this for a long time and he actually used to be a radio host, I think for said 30 years. So it’s fun hearing him 

Bob Fraser: Actually made it. It was, it’s like listening to a dentist, who wants to do that?

But no, it wasn’t like that. It was great. And I tell you, there’s, it’s worthwhile to spend time listening to guys like this and figure out how to put your plan in place. 

Ben Fraser: Yeah, and I make the point later in the episode, but we spent so much time trying to make money. We don’t spend so much time learning how to grow that money, but we spend probably even less time learning how to pay less taxes on the earnings, right?

And that is a huge needle mover in your wealth growth plan. So you need to pay attention, you need to be looking into these things. So definitely don’t wanna miss this episode. You’re gonna enjoy it. Here you go. This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth.

The tools and tactics you’ll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments. Uncover strategies of the ultra wealthy, discuss economics and interview successful investors

looking for passive investments done for you. With Aspen Funds, we help accredited investors that are looking for higher yields and diversification from the stock market. As a passive investor, we do all the work for you, making sure your money is working hard for you in alternative investments. In fact, our team invests alongside you in every deal, so our interests are aligned.

We focus on macro driven alternative investments, so your portfolio is best positioned for this economic environment. Get started and download your free economic report today. Hello, welcome back to the Invest Like a Billionaire podcast. I am your co-host Ben Frazier, joined by fellow co-host Bob Frazier, and today we’re joined by Steve Moskowitz.

And we’re super excited to be talking about tax planning. I know this is the episode you’ve been waiting for a long time. And we brought the expert out today. So Steve, thanks for coming on the podcast. 

Steve Moskowitz: Guys, thanks for so very much and I’m gonna have a good time cause I love talking about tax planning and, there you back.

Okay. I get, that’s the reaction I get people left. Haha. Tax attorneys are joking around, Lord, but I really mean it. And I was telling you before the broadcast why I became a taxed attorney. So let’s share that with the audience, give you some idea of what I feel when I set foot into law school as a student many moons ago.

I already had a master’s degree in accounting, a bachelor’s degree in accounting. I was a practicing C P A, working for a big firm whose clients were a Fortune 500. I was boggled when I saw these Fortune 500 companies making all this money and legally not paying any taxes. And I said, I wanna learn this secret.

And that’s why I went to law school, not to do divorces, chasing ambulances, get murderers off the hook, but to do taxes. And I learned the secret, and here’s what it is, and I’ll share it with your audience. There’s two purposes to our tax law. One everybody knows about Get Money Outta Us. But the other one is it’s a system of incentives.

And what happens with a system of incentives is how does a government get you to do something when in democracy they don’t have the right to order us to do anything. So how do they get us to do something they want us to do good for the economy? Easy. They pay us through the form of tax savings.

And you say oh, okay, where are these tax savings? They’re hitting the tax law and the way I explain this to new clients is I call it magic business card. If I said, I have a magic business card, I’m gonna hand it to you. And if you walk this over to the nearest IRS office, they’ll give you a check for a million dollars.

I think most people will say, I’ll go right now. What’s supposing, instead of just handing you the one card I rented a big dump truck. And I put the card in the dump truck. I took all regular business cards. I dumped them in there. I took an or I stir it up, and then I dumped all the business cards in your office.

You’d walk into your office, say, oh my God, some vandal’s been here. And you’d pay some janitorial company to haul ’em all away. And what you would be doing. Was throwing away the magic business card that would’ve paid you a million dollars cuz you just didn’t know it was there. If you understand that concept, you understand biz.

And another thing I say to new clients is, so what do you think? Do you think you make more or less than Apple computer? We all laugh, ha, I make less than Apple computer. And I said, but guess what? You pay more taxes than me. Then the laughing stops and they get serious. We’re talking about tax plan with most people, the tax return preparation.

And yes, we do that too. And before I was a tax attorney, I was a cpa. We do tax return preparation, but a lot of people, tax return preparation is a once a year ordeal and they say, oh good, I’m glad that’s over west for another year. I’ll have to think about it wrong. The tax return should only be. A mere summarization of a year’s worth of tax plan.

That’s what the big companies do. And when Tim Cook took over Apple, that’s one of the things he was amazed how much time he spends with Apple’s tax lawyers so that they don’t pay the taxes that the mom and pop stores took. Small business, the medium sized business are paying. And that’s one the major things we’re about.

And the government has so very mush force. And another thing has been helping our clients. Is the E R C program, employee retention critic. This is where the federal government is giving away. That’s right. Giving away. They’re not making a loan. They’re giving you money. It’s a grant. It’s a gift up to $26,000 for every employee that you had during 2020 and 21.

So if you had 10 qualified employees, that would be just over a quarter, up to just over a quarter of a million bucks. If you had 20 employees that qualified just up to over half a million bucks and so on. This is terrific. How do I get my free money? There’s two ways to qualify what I call the easy way and the not easy way.

The easy way is did your gross revenue drop by a certain amount and what the amount is? If you compare quarters one, two, and three of 2021 with the same quarters for 2019, then you had, if you had a drop of 20% or more, that qualifies you. And that’s just gross revenue. If you have P, you exclude it or loans or transfers, just gross revenue.

So they say, okay, what if you had it in some quarters, but not the others? To give you an idea, the government wants to give away the money so badly they actually amended the law and put in something that’s known as an extender. So suppose you qualify for quarter one, but you don’t qualify for quarter two.

Quarter. That quarter that you qualified for qualifies you for that quarter and the next quarter. So they’re just giving this money away. You take a look at it and you said Steve, you said quarters one, two, and three. What about quarter four? Of 2021, the only one that can do quarter four is startup businesses.

What’s a startup business? It’s a startup business that started on February 15th, 2020 or thereafter, and has an annualized grocery revenue or under a million bucks. So if your startup business, it’s even easier and you get an extra quarter for 2020, it has to be 50% or less. You know what I’ve seen in practice?

So many firms and so many CPAs say If your gross revenue go down, that’s it. Too bad. No e R c three wrong. That’s not what the law says. The law says either, or either that method, that easy objective method, which it’s math, one plus one is two. That’s it. But if you don’t qualify into the math, is a faction circumstances sometimes known as a full of partial closure test?

What? What’s that all about? If covid restrictions. Had an adverse effect on your business for more than a nominal amount, you can still qualify. The IRS defines nominal at 10%. So suppose we had this situation, suppose that in our base year we had a hundred thousand dollars gross revenue. And in, let’s say in 2019, we had a hundred thousand gross revenue.

And in 2021 we had a million dollars, 10 times more. Could I still qualify? Yes. Because if you say all right, if it hadn’t been for Covid restrictions, instead of having a million, I would’ve had 1,000,003. And that extra 300,000 is way more than 10%. So that’s another way to qualify. So why isn’t everybody doing this?

Because it takes a lot of work on part, the professional. And I talked to some of my colleagues just privately, they don’t wanna be bothered cuz they’re mass producing e r c and with the math one plus one is two. That’s so easy. Either you’re down that number or you’re not. And if you are, go ahead and do it.

And if you’re not next client, this one requires some work and thought. And what’s some examples of those? Suppose we have supply chain problems. Suppose you’re a baker and normally you buy a hundred pounds of sugar a week, and you say, you know what? The supply chain problems, I normally use C N H sugar, but I try to get any sugar, C N H A B C X Y Z I.

I couldn’t get my normal sugar amount. I could only get 30 pounds instead, I’m a hundred pounds. So I had to bake a lot less cakes and a lot less cake result in the less revenue by 10% or more. Another thing that the companies saw, there was a spike in the cost. So a lot of companies had to raise their prices and cover costs, so the gross revenue was more, but it was just to cover these costs.

But that doesn’t matter. Did these restrictions the example I used with supply chain, did that go ahead and cause you to lose more than 10% of business you otherwise would’ve had. If it does, that can qualify you. Now, other things you take a look at, suppose you’re in the construction trades and normally you install bathrooms and new houses, but they can’t get the fixtures, you can’t get the sinks, you can’t get the showers, you can’t get the commodes.

And the general contractor says, look, I have a contract with a bill. If you can’t put in these bathrooms, I’ll have to go to somebody that does. Or you install hot water heaters and people say, look, I’m not gonna wait until your hot water heater comes and take a hot shower. I’ll find somebody that has it.

Or other things. You’re a farmer and you plant tomatoes, and normally before covid, all your workers would stand literally shoulder and bend down, planted tomatoes. But now you have the six foot spacing requirements, social distance. So now what happens is you have to spread out your workers in your field.

And you have to plant less tomatoes because of that. You plant less tomatoes, you sell less tomatoes, and if your gross revenue is down by that, more than 10% that you otherwise would have had, you can qualify. Now, don’t be confused. The gross revenue test is actual factual. You look at your actual numbers and take a look.

I, that’s the 20% and the 50% this test. We’re saying, but for these covid restrictions, I would’ve had more gross revenue and it would’ve been, I’ve lost more. It could have even got 

Ben Fraser: gone up. Yeah. So I wanna take a quick step back, Steve. Cause I think some of the points you made are really important.

Cuz as we sit right now, we’re mid-April when we’re talking, this this episode right now. And. People just file their taxes. So taxes are the forefront of everyone’s minds. And maybe they, isn’t it always 

Steve Moskowitz: or 

Ben Fraser: off? You would hope so, for you. It definitely is. I got several questions from investors and I’m these different groups and things.

They’re like, oh man, my friend, made all this money last year and what can they do now to reduce their taxes? And it’s I think not much if actually nothing. 

Steve Moskowitz: Maybe too. Let’s talk about that with the. Here it is. It’s April 19th, 2023. And you say, I saw you on that podcast and you’re the kind of guy I wanna do tax planning and I know I have to write the check to save on 22 by December 31st, 22, and here it’s 23, so I guess we’ll do all this stuff for next year.

I said, wait a minute, let’s talk about, I use the term pension plans. There’s a technical difference between pension plans and retirement accounts, but I’m gonna use ’em interchangeably. For our purpose of Dick, there’s over 20 different types of means. With a lot of ’em, you have up to the time of filing the return plus extension to set it up on.

So in English, that means you have about three quarters of the way into year two. So here it is, April 19th, 23, you have basically another, almost half a year to shut up the plan. Fund it and then decide if you want it to apply to 2022. And if it, if you do, we can do something today in 2023 to save US taxes for 2022.

And this would be 

Ben Fraser: con contributions to an IRA or a Roth or something? Is that what you’re talking about? 

Steve Moskowitz: Or, that’s one type, but Okay. The problem. And you could have multiple plans, you can have those plans and those plans are fine. But we deal with the fancy plans, like the cash benefit plans because we have clients that put away hundreds of thousands of dollars each year.

And what happens is with these, we do an actuarial computation based on profits, the wages, the length of service, the age of the person, and we can get some big numbers in here. And basically, I say to clients, okay. Would you prefer to write a big check to the IRS or a smaller check to the IRS and a nice fat check to yourself?

Be retirement. That doesn’t usually take too long to figure out. And then what if the kids are working for the business, if you pay the kids fair market value for services actually performed and the kids can have a pension too, and also the kids’ wages, the kids get a brand new tax bracket, and that means for families.

They pay less taxes that way. So instead of paying for the kid’s college education, the kid pays for it because, You save money and taxes. Not to mention learning the work ethic. So there, there’s so much involved 

Ben Fraser: here. Guys, pause real quick. So when you’re saying, cause I know you’re familiar with paying kids to work for your business, can that be done retroactively as well?

Like contributions to a plan or to a afford no. 

Steve Moskowitz: What happens is basically wages and Okay on that one. You gotta do, like I said, most things, you have to do it before the urines. Yeah. Okay. And here, rule already before you know it, this year will be over. Go ahead and, but remember, you’re not putting the kids just on the books.

You’re paying ’em fair market value for services actually perform. 

Ben Fraser: Yeah. And I think, the point you’re making here is, and I think where a lot of people struggle with taxes is they don’t think about it until, March 

Steve Moskowitz: 15th, what I always talked about is March Madness. And I say, I’m not talking about college basketball.

I’m talking about, that’s when business are saying, Hey, I’m paying way too much. And these big companies don’t pay. And what’s the secret? And they’re angry about it. March Madness shouldn’t be March Madness should be tax planning. And let’s talk about some other things with tax. Buildings are very commonly used in business.

You can be a landlord or you can practice in a building if you’re a doctor or a lawyer, or you can be a business person with a factory in a building. So if you buy a building, regardless of how you pay for it, whether it’s cash or finance, you have to depreciate it over a period of time. So if it’s a residential building, we depreciate over 27 and a half years.

If it’s commercial, 39 years, wait a minute. Let’s talk about time, value of money. That’s how the banks make money. How do we go ahead and benefit against? We know a benefit today is than a benefit tomorrow. Obviously you’d rather have a benefit today than you rule 39 near today. So we do something called cost segregation analysis.

We send an engineer in the building and he or she inspects the building and says okay, this part’s 27 and a half or 39 year property, but this part’s fifth, 15 year property. This part’s 10 year property. This part’s five year property, and this part, we can write the whole thing off this year. So you have a much larger depreciation deduction.

Let’s have an example. Let’s assume Sally is a brain surgeon and she has a medical practice and she practices in the building that she owns, and she also is a landlord’s other doctors in the building. And let’s assume that for the year, Sally has a gross revenue of 10 million and. She has expenses including regular depreciation of 9 million.

So she’s made a profit of a million dollars and she’ll have to pay tax on them. She says, oh, wait a minute. What’s this cost saying stuff? So let’s assume that we go in and we have the cost save, and we say, wait a minute, we can have an extra million and a half of depreciation. So now we go ahead and apply that to her building.

And even though she made a profit of a million dollars, Now she doesn’t have to pay any taxes on the building because we’ve wiped that out with depreciation. And remember, depreciation, we don’t write a check. Depreciation, it’s just an accounting entry. Theoretical entry, depreciation. Now guys, when somebody gives you something nice, what do you say?

Thanks. That’s why we know you’re not lawyers. The lawyers say more. I want more. Give me more. And Sally, you know what? Besides being a landlord, I also made a half a million dollars from my medical practice. I had that extra million and a half of depreciation. I used the mill of it up on the building, but I still have an extra half a million sitting around.

But I offset that loss from my building against my profits from my medical practice. Now most accountants will say wait a minute. That’s internal ribbon code section 4 69. That’s passive, and you can’t offset the passive loss from the rental against the money. The germ being a brain surgeon. We say 


Steve Moskowitz: a minute, there’s an exception to four 60.

No, and that’s the real estate technician. Let’s assume that Sally has married to her husband Bob, and Bob is a house husband, and Bob spends his day watching Oprah and needing Bob ball and enjoy in law. She says, Bob, it’s time for you to be managing some real estate, and Bob becomes a real estate professional, and that’s very easy to do.

If and on a married return, only one spouse asked call Bob. So what happens is Bob is now a real estate professional and Sally says, okay, remember that extra half a mil I had in depreciation after our the building and the cost se. Now because puppy spouse is real estate professional, I can take what otherwise would’ve been disallowed.

Passive loss, offset that against. That profit of a half a million of my medical practice. Now, let’s take a look at Sally. She’s made a million dollars profit from the business. She’s made half a million dollars from her brain surgery practice. She’s made a profit of a million and a half dollars. But she’s legally not paid any income taxes on this because of something simple as cost segregation analysis.

And we even mentioned pensions for her. We don’t have to go there, huh? 

Ben Fraser: Yeah. So we’ve talked a lot about cost se on, on the podcast before, and I think our, the is familiar with it, but the concept of real estate professional, we’ve alluded to it, but it, for those that are maybe in real estate or around it, it’s easy, right?

Cause you’re doing it, but. Talk, talk about that because that’s a big thing where, I’ve talked with a lot of, high W2 income earners recently, and, they’re hearing about this real estate professional thing and how’s my spouse maybe may rent a couple Airbnbs out or you get a couple long term rentals.

The benefits, like you just pointed out are pretty astronomical because if you aren’t a real estate professional, you can’t take the losses against your active or earned income. Unless you are, and then now all your income gets bucketized into one bucket, so to speak. Imagine you can.

It’s very nice. I’m, I am a beneficiary of that and love it. So talk about what does it mean to be a real estate professional? How do you do that? If you’re, say you’re married and your spouse, is high, W2 income earner, other spouses, Hey, I can, maybe I like real estate.

How do I do this? What do you have to do 

Steve Moskowitz: that? It’s really easy. Envision what we do with our clients. We give ’em a check close, and the first thing we have to watch out for Americans, the real estate professional has to spend more than half of their business time in the real estate business.

So that’s why, for example, if Sally was single, and let’s assume ’em, she was spending 2000 hours a year being Brain sur, she’d have to spend more than 2000 hours on a real estate activity. And that’s what keeps most people out of it. That’s why in my example, Bob was a house husband. Because now he didn’t have to worry about that rule.

So then we take a look there’s other rules for 500 hours and seven 50 hours. And also something called material participation where basically you’re not doing something that’s a triple net lease. And you say what I did was I received the rental check and I took it down to the bank positive.

That’s not enough. So what happens to be real estate professional and the rules here, real estate, the Congress got really generous. It’s really pretty easy. What happens is you can take a look at the real obvious things. You’s painting the wall, the apartment place he’s on, stopping the sink, but you don’t have to go that far.

You can supervise people that are doing that, and also there’s a lot else you can do. For example, you might interview tenants, see are they happy or they’re gonna stay. You might check along the neighborhood and say wait a minute. There’s another apartment house three miles down the street. And they’re a brand new and they have a swimming pool in Weell and they’re only charging slightly more rent than we do.

And what do we have to do to upgrade? Then hubby is now on the finance committee determining, wait a minute, what do we have to do to go and convince the bank to lend us some money to then make these upgrades? And by the way, what upgrades should we make? Should I put that from land? So if you’re in Southern California, that’s fine.

Here in Northern Alaska, swimming pool might not be real attractive to your tennis, but maybe a skating rink would be what’s attractive? What else is around, why is my building gonna be more popular? And then what happened? When you actually look at the list, they go on and on and they have other categories.

So again, the Congress has bent over backwards. If you wanna be a real estate professional, you really can just basically file the checklist 

Ben Fraser: And just to, Not to belabor the point, but if this, an example is Sally’s making half a million dollars and she’s in, say, an effective tax bracket, 40% 

Steve Moskowitz: let’s make it 50 calculations are reason Yeah. 50%. If Sally lives in a state that has a tax, right? California, like California, you’re over half. But we’ll just, yeah, 

Ben Fraser: you’re way over half so you’re paying $250,000 in taxes. So the marginal benefit to look at doing this and. You only gotta spend 750 hours in a year.

It’s what, about 20 hours a week? That’s, that, that’s a pretty, pretty juy benefit. That’s pretty, pretty good pay to go and those benefits instead of doing that. 

Steve Moskowitz: Yeah. That’s how I explain pension benefits to a client that’s thinking about, suppose I say to a client, you know what, you would save some taxes.

Let’s assume they’re in the top bracket, bed and state. And I say, I recommend you put 200,000 in the pension. $200,000. I don’t wanna do that. I say, no problem at all of the 200 that you’re not putting away for yourself. Take a hundred of it and give it to the IRS in your state. Wait a minute, what?

What do you mean give a hundred to ’em? I said of that 200, if you’re in that top tax bracket, half of that is coming from your federal and state taxes. And then people changed their mind. I have so many clients that didn’t wanna put away that 200 until they realize wait a minute, I gotta pay an extra a hundred in taxes if I don’t do it.

And they do it. And the beauty here is with the rules. When you think about it, you have basically three quarters of the way into year two. Let’s assume that I met a client today, April 19th, and I said look, we have almost half a year to go. You can, in your tax bracket, you could earn the money in 2023.

And save an extra a hundred grand on your taxes for 2022 by putting away 200 grand for yourself, no-brainer. And there’s other benefits to a pension or exam or that we talked about. And again, they show important. One, you save taxes, that we’re focusing on that tax section. But the other thing is your earnings are not taxable in that plan.

So your fund grows faster and bigger also because of special federal protections. If he gets sued and people love to sue. Business people, business people are, sued all the time. And what if the jury gives away an amount in excess of your insurance? What can you do? They can’t touch your pension.

Although, I hate to mention his name, OJ Simpson is a perfect example. OJ has had a multimillion dollar judgment against him for many years. He’s not lost a panic of his pension. And of course, the flexibility factor where you can. Say, okay, this year two, I can do everything and deducted from year one, but that there’s another way that works too.

Suppose your clients had a tremendous year. He’s had an unusual year. He or he sold something, he’s made an unusually large amount of taxes. I’ve done a good job. I made a lot of extra money this year and gave for me I don’t wanna pay the extra taxes. These plans are so flexible that one of the things you can do is you can make multiple planning contributions.

In one calendar year and use that to offset an unusually large amount of income. I could go on and on, or it looks like you’re, 

Ben Fraser: Is it pensioned in act similarly to like a irrevocable trust or something where you have beneficiaries and trustees or, because obviously 

Bob Fraser: like a solo 401k or a four plan. 

Steve Moskowitz: Basically what ha with most of the plans, the way you wanna write ’em is not time up until you’re a certain age. You wanna write ’em so you can take it out for any reason at any time. So cuz that makes people nervous too, if they’re young or away. Wanna be stuck there? No. You write a plan, you can take the money out and then basically if something happens, yes, you can take the money out, but right now you’re getting the tax adoption.

And remember you can have multiple plans. One person can have multiple plans and make multiple contributions in the same year. 

Bob Fraser: So explain this. I’m super familiar with 401ks and that’s, this is different than that. Yes, 

I know. Okay. Is there such a thing? Self-directed? 

Steve Moskowitz: Our webinar, take a look at cash balance plans.

It’s a variation of buy advancement plans, cash balance plans. Is there self-direction balance plans? You actually, one of the things I don’t like about the 401ks is you gotta stick ’em in the public market. So these Are there plans that have self-direction of the investment or focus some of the plans do, and then people get into investing different things like real estate and other things, precious metals.

And then you start talking about what, if I’m in this, what about an opportunity zone? How can I parlay an opportunity zone and do all the stuff we’re talking about? So let’s assume we say, okay, we know that 10 31 you guys are very heavy into real estate. You say, wait a minute, under the tax cost and Jobs act, 10 30 ones is pretty much just real estate now, and I used to be able to do that.

For those of you that are watching and aren’t familiar with it, this is a way that you opo the tax. And so suppose for example, you have building one if, and then you say, you know what, I’m ready to go on the bigger and better and get building two. You could sell building one, pay the taxes. And then buy building two.

But why pay the taxes when basically you can trade building one for building two, not pay the taxes, push that off or spring your basis with me. But you say wait a minute, what if I had some precious metals or something else and I have a capital gain? I can’t do a 10 31 on those anymore, but wait a minute.

If you go into an opportunity zone within 180 days, you can effectively shelter those things until 2026. And one of the beauties of an opportunity zone is that if you hold it long enough, you don’t pay any capital gains taxes. Now here’s a real trip, and a lot of people don’t seem to be aware of this.

They say wait a minute. I’m a little nervous going to the opportunity zone because. You know those properties are in a challenge neighborhood, and yeah it’s great. I don’t have to pay any tax on the cap gain, but what if I lose my money? Will you set up a company and 37% of it can be invested outside the opportunity zone?

So let’s assume you say, okay, oh wow. What I’m gonna do is I’m gonna import, invest 37% in Rodeo Drive. And Beverly Hills and Park Avenue in New York and some really fancy areas. Now the real estate and the fancy areas goes through the roof. Now let’s take the worst case, your opportunity zone. Drops.

Now a lot of them are being gentrified and they’re really good investments now. But let’s take let’s face your, let’s take a big spotlight. Put rent in your field. Whatcha, are you afraid of gonna lose your money? Bad neighborhood. Okay, let’s assume you do. You have the offsetting income from the fancy neighborhoods and the bottom line is you don’t pay any capital gains attachment.

So imagine 

Ben Fraser: this is crazy. So lemme just break it down cuz we’re not as smart as you. You got say, a million dollars surprised, awarded my professional life to 

you got a million dollars, you’re gonna invest in some real estate. You go put that million dollars into a unique LLC and, or, I dunno if it said LLC or just a separate company.

That company then invests in multiple different deals and 37% of those deals from a, so it’s a $370,000 of that company. Invest in opportunities in. Because you’re doing that, the benefit of the tax savings applies to a hundred percent of those. You got it. Of the company, hopefully cow. 

Steve Moskowitz: So the bottom line is, let’s assume that you invest a million today and 10 years from today.

The fair market add all the properties together is a hundred million. You say, you know what? I think I’m gonna cash out now you sell it, you have a capital gain of $99 million. How much tax are that? The euro. Sheesh. 

Ben Fraser: So how does that work? 

Steve Moskowitz: Remember what I was telling you? The Congress? Yeah. The Congress wants people to invest money in these areas, but they can’t order us to do it.

So how they get us to do it, they give us an incentive. And here what they did is 37%, they threw in a real sweeten. And I said, okay, look, I know you really don’t wanna invest there. But invest there. That’s awesome. 37% where you want to invest and the tax benefits on a hundred percent of. 

Ben Fraser: Now do you have to hold the non-op opportunity zone properties for the full 10 years as well to get the full benefit? 

Steve Moskowitz: That you wanna do.

Because if you start fooling around with, it may have other problems. So if it was my client in almost all cases, hold on for 10 years. Okay. Interesting. 

Ben Fraser: Wow. Very cool. What would you say, obviously. The best time to be tax planning is not March 15th, right? It’s to, to start starting now for the next year.

Steve Moskowitz: The best time to start tax planning is yesterday. Yesterday. So the bottom line is you’re watching this webinar now. You say, you know what, before I do anything else, I wanna start my tax and meet them. Do it kinda like a diet or exercising or work it out. You’ve gotta do it. 

Ben Fraser: Steve, if you’re saying that it’s possible we could pay zero taxes, that might be enough incentive to think about it more than once a year.

Steve Moskowitz: That’s why I think about it every day. I’m three Maybe you understand now why I get so excited? Because when I come on, when I come on somebody’s show for the first time, they always think I’m, doing shick or joking around cause I get so excited over the taxes. But people that have known me for years, it’s like when I go on the radio here in California or TV will say, look, I know he gets excited but he really means this, he’s really like this off bear.

He gets really excited about this stuff. Cause yeah, I’m thinking about. In my example, you made a $99 million gain and you paid zero taxes on, and come on. 

Ben Fraser: It’s crazy. This goes back, we talk about this all the time on the investing side of things where you need to spend time and effort thinking about your investment strategy, how do you build your wealth and just as much or more time on that than you do how you create your wealth, right?

Most of us spend most of our time in our careers, doing education, doing degrees, spending much time ru, but yeah, and then not only just the investments, but. A lot of people don’t wanna think about taxes, but if you’re making a lot of money, you got a bullseye on your back from the i r s. So you need to be thinking as much about your investments and growing your wealth, but also as much time about the tax planning.

Is, this is so critical because there’s so many ways to your point where you can defer. And eliminate taxes. And it’s, they’re just sitting there waiting for you to understand ’em. Steve, what are some of just give us the kind of one, two punch here as we round out the interview here of you see, give us some great tactics, but what are some of the biggest areas that you feel people are missing?

If they’re, if they can start now, they hear this episode in a few weeks and they’re saying, Hey, you know what, okay, I’m gonna rip band off. What do I do? Where do I start? 

Steve Moskowitz: Most people would cheat on their tax. Oh wait a minute. Maybe the ice gonna hear that they’d cheat themselves because don’t do the tax plan.

They do exactly what you were saying earlier. The March man has been moaning, pro, made, moaning, crying, broan about my taxes are so much, my taxes is much. And what I say is stop complaining about it and do something about it. And I have a all kinds of clients. You don’t have to be wealthy to do this.

Sure, if you’re wealthy, the numbers are bigger. But even if you’re middle class, you can do the things that’ll get you into the wealthy class because instead of having all those canceled checks to the irs, the Congress says here, you can do this. Just like we’ve talked about in the opportunity zones are the perfect example where the Congress can’t order you to invest in a certain neighborhood, but they can short and tempt you to do it with these incentives, can’t they?

And that’s the idea, but you have to know about ’em. That’s the hol. So basically what you need to do, like with our clients, Typically we wanna meet with ’em. Every month. We go over their financials and we say, look, you should be doing this. You should be doing this, you should be doing this, and this has gotta become part of your routine.

Just like Tim Cook at Apple, he spends a lot of time with their tax lawyers. And again, look at the money they make and the taxes they don’t pay, but you have to work on. It’s like anything else, if you’re a muscle man, you have to work on there’s weight you have to work on. But the benefits here, and sometimes, when a client gets a little lazy, first of all, it’s not that much work.

We do most of the work we just tell you. And basically you decide, do this. Okay I choose A and I choose C and then choose D. And the bottom line is just put it into numbers. Think about if somebody, if I said to you, you know what, I want you to come to my house on Christmas Eve. And clean out my garage.

You probably say, how dare you. One of these things you are. Yeah. What if I was an eccentric billionaire and I said, I’ll pay you 1 billion to do it. I bet you’d be there on Christmas Eve with your Santa cap and your shovel. Now one shirt. And that’s what I’m saying about these tax incentives and you realize how much money is at stage.

You’ll do these things and I have a lot of clients that I’ve watched and start off middle class and they went into a wealthy class simply cause they did these things. The combination of investments, your area of expertise. And legally save it on the taxes. Bye area Hughes. 

Ben Fraser: Love it. Steve, what’s the best way for folks to kinda learn more about your firm, what you guys do?

Steve Moskowitz: Either call us at 888-TAX-DEAL. That’s 888-TAX-DEAL 888-TAX-DEAL or https://moskowitzllp.com/. We’d love to talk to you and yes, I really do get this excited when I’m talking to somebody on the phone too. 

Ben Fraser: Love it. I could definitely hear the radio voice coming out there.

You’ve done. That’s a time or two. So thanks so much, Steve for coming on. It was really fun.


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