The Role of Mindset in Successful Tax Strategies feat. Laura Dohanes | Aspen Funds
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The Role of Mindset in Successful Tax Strategies feat. Laura Dohanes

Laura Dohanes, CEO of My CPA Pro, shares practical strategies and mindset shifts for tax strategies and financial growth.

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Introduction and Welcome

Ben Fraser: Hello, Future Billionaires. Welcome back to another episode of the Invest Like a Billionaire podcast. We had a great episode that I’m really excited for you to listen to. 

The Importance of Tax Strategy

Ben Fraser: I interviewed Laura Dohanes of My CPA Pro, and we’ve been talking to a lot of CPAs recently, so it feels like Ben, I’ve had enough taxes, but let me tell you, you have not heard enough tax content because you’re still paying taxes and paying more taxes than you like. There’s things you got to do and you got to shift not only mindset, but strategy and approach that Laura really brings to the table here. So she called herself a tax strategist. She has a CPA, but just really is very expensive in the topics that we hit on today.

And it’s funny. I think of her almost like a mindset coach as well as a CPA, which is a very unique combination, but really being aware of what’s available to you as an investor. And being able to create the best strategy from a tax standpoint that really helps you continue to build wealth over time.

And so we had a lot of philosophical things, but also very tactical, practical examples for people in different situations. So be sure to listen to the whole episode. It’s a little bit longer, but it has a lot of good content. I think you’re really going to enjoy some of the things that Laura shares. 

Podcast Promotion and Growth

Ben Fraser: And if you haven’t already, if you’re enjoying this podcast, I would just love it if you would be willing to give us a rating on Apple or Spotify and leave a little review for us.

That just helps us continue to get the word out and potentially get higher, bigger guests on the show to provide you more content that’s valuable. So appreciate that. Be sure to subscribe if you’re not already subscribed to the podcast. YouTube as well. We’re growing our YouTube channel and expect to put out more, YouTube specific content.

So with that, enjoy the episode. 

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Introduction to Guest Laura Dohanes

Ben Fraser: Welcome back to another episode of the Invest Like a Billionaire podcast. I am your host, Ben Fraser, and we’ve got a very exciting episode today talking about everyone’s favorite topic that we’ve been talking a lot about recently.

It’s taxes, but hey, it’s tax season. And Laura Dohanes is the tax strategist, founder of My CPA Pro. And she’s going to blow our minds today. So I’m very excited to have her on. We’ve talked a little bit before a few times and just really just love the knowledge that she brings. And Laura, thanks for coming on the show. 

Laura’s Approach to Tax Strategy

Ben Fraser: Give us a little background on you and how you work with folks and what a tax strategist does, right? 

Laura Dohanes: Yeah. Yeah. Thank you for having me. And it’s exciting. Listen. 

Understanding Tax as an Ally

Laura Dohanes: One of my favorite things to say to people is when you think about an enemy or you think about a friend.

Taxes are many people’s enemy. They look at it as this, this nemesis. You can never win against this giant, right? And I’m here to tell you that you can literally befriend this thing, right? If you make peace with yourself, understand and make peace that this is An ally.

And you befriend the ally, right? This is becoming part of your strategy, part of what you do because you can never escape it, so I’m really excited. I’m my most, more, more, most exciting moment is when You understand that no matter how the politics go, the economy goes, you always have an ally.

There’s always something for you to take out of it. 

The Role of a Tax Strategist

Laura Dohanes: And this is my role as a tech strategist. The opportunities are always there. We never lack opportunities and options. And people like, I meet with my clients, with people all the time. And they say, this is, there’s nothing else left.

We’re done. I said, you just lost the game. So once you decide. To win the game, no matter what happens, no matter how the economy goes, this is where tech strategy can give you so much more in, in everything that you do, because everything that, how I like to explain people is what does tech strategy really do?

It’s really the end of the rope, all the cash movement. Everything that you do, like the income that you draw, the expenses that you have, deductions, you’re trying to make investments, they all end up, the end of the rope is the tax. When you exit, when you die, when you sell the thing, everything that you do ends in tax.

So if you think about tax strategy from the point of what do I want to achieve? Where do I want to go? Axis became this exciting moment. This is the end, right? This is really what we do. You’re looking at how the end is looking for you and how can you make that exciting moment when you exit to actually look forward to your exit, whatever the exit is, and if you don’t think about it, guess what?

Everybody’s going to exit. Everybody’s going to exit one day with death, right? Either or, exit is inevitable. And it’s the most exciting moment, right? That’s, I get too excited about it, but 

Ben Fraser: I’m glad you’re excited about it, because I think Yeah, I think a lot of people are glad that you’re excited about it and that we don’t have to be, but you can be contagious and help us navigate it, right?

It’s, the idiom is there’s nothing, certain except for death and taxes. And it’s not something that at a certain point if you just stick your head in sand mode, go ostrich boat on this and, don’t think about it, you’re still going to have to deal with it at some point.

And if you don’t, then your kids will if with your state taxes. And so just let’s take a step back. I have so many questions and love to get into this. But one of the things you said. A minute ago before we hit the record button here was a lot of the things that you help people navigate is the strategies that these, ultra high net worth families are using, say the 20, 30 plus million dollar, net worths, taxes is something they’re thinking a lot about because you don’t get to that level of net worth without having some sophistication around it.

How are you going to handle the taxes unless you have a huge liquidity event, but then you’re going to have to deal with taxes, right? So you then help people, maybe at the lower net worth range of, two to five, 10 million ranges, use these strategies that can help propel you to that next level of income and growth.

And talk a little bit about what are the strategies, what are the things, maybe even mindsets that people are using and frameworks that they use too. Get to those levels of net worth. 

Laura Dohanes: Yeah. 

The Importance of Mindset in Tax Strategy

Laura Dohanes: And it’s really exciting what you just said because many people, I think the downfall is where we think we’re not there yet.

This is not for me. This doesn’t work for me. So we, with our mindset can literally block something that could be tremendously beneficial to our wealth building and not just wealth building, but tax strategy because we already cut it off and this doesn’t work for me. I’m not there yet. And listen, I have people who can bring 10 million in a year and say, I’m not there yet.

And I have a person that brings a million a year and can have much more mindset, like shift, say, you know what, I’ll do whatever it takes, right? So it’s only like it only, you can only go as far as you let yourself go with the tax strategy. And now some of them have other risks and it comes with risk aversion.

Really? I think this is the moment because the first step in tax strategy is understanding how much money you make and how much your lifestyle costs you. This is, I think, the missing element when people don’t understand. So we always begin with the basics because the number one step that you want to know is, okay, how much do I live?

Most people. Mostly it doesn’t matter how much money they make. It doesn’t matter what kind of investments they have. Most of the people live anywhere between 150, 000 to 300, 000 tops a year. At 300,000 a year, most people in the United States right now as a family, and I have three kids in private school, can live very well.

With that money, it doesn’t matter where you live in the U. S. So you can do it. You can have a decent living right now. Once you have established what your lifestyle is costing you every year, okay, you have to decide what you’re going to do. And I’m not going to use Dave Ramsey’s approach, which I love.

It works. It works very well for many families. To begin the process, that is the baby stage of investing. It gets them on a track, but the same concept he applies, like you have to allocate all the money. Now, all the excess that you make, you have to allocate it. You have to learn to spend. 

The Importance of Investment Strategy

Laura Dohanes: And I think this is where people missed the boat on when I go through this process, when I start investing, they don’t have the end goal in mind.

So one. You know how much my lifestyle cost? Okay. If it’s 200, 000, okay, 200, 000 for my lifestyle. If I produce 300, 000 this year, I have 100, 000 to invest and they invest mindlessly based on what they see. You go on LinkedIn, you go on all these podcasts, you go to conferences and say real estate investing and you go crazy, multifamily investing, opportunity zone, all the shiny objects that show up, right?

They’re all amazing, but not all of them apply to you. So I think they don’t think about the investments and how that is affecting them. And now they get it, they come to us and say I invested in this real estate. They told me that’s the best thing ever. This is the, this is gold and I have no advantage and I still pay the same tax bill.

I can’t take advantage of this. I can’t do all of this. So if you have high net worth individuals before they invest. They think about how this is going to affect me? What is my exit going to look like? What’s that, how is that going to look like? And before they even put the money into any investment, They decide what entity should I use?

What is more beneficial to put it? This is where people like, Oh yeah, I have the cash. I’ll just go send the cash. Yeah. I have seen. Yeah. Yeah. 

Ben Fraser: What I’ve seen so much, we’re working with investors and we’re not at your level of strategists and we actually can advise, we’re not advisors.

But what I see is so much. This common thread of people get excited about investing in real estate or investing in alternatives, right? And now the whole world is opened up because there’s other options than just mutual funds or stocks and bonds and it’s exciting. But then what happens is they just start investing in random things like you’re saying, right?

Where they source it on LinkedIn or. My uncle Jerry over here is doing a flip and, my doctor friend over here is investing in this ATM fund and you start to just create what I call the sock drawer of investments, right? You just, you don’t remember what you invested. You just start randomly, haphazardly investing in things and then you take a step back a couple of years down the road and you’re like, there’s no strategy behind it and I don’t really know what I have, number one, and number two, I don’t know if I’m at any better spot than I was when I started.

And so I think it’s so important going into this, from lots of different angles of education on, understanding investments in general, but then the tax side of it, understanding the impact of this, the portfolio strategy is so important going in, right? And this is one defining what is your ultimate goal?

What is your end goal can be a really helpful framework. That’s just going to naturally exclude a lot of things. Aren’t even bad options. There’s not good options for you. It was just what you’re saying, which I just really love. Can you give us some examples of maybe, broad categories of different kinds of archetypes for people that are maybe in different situations to where.

Certain types of things might not be a good fit for them, given where they’re at on the path. 

Laura Dohanes: Yeah. 

The Role of Entities in Tax Strategy

Laura Dohanes: And I love what you just said. And I was thinking about a couple of examples. So let’s take a typical investor right now as a high wage earner. You have, you’re in the tech industry, you got to get a lot of stock options.

Let’s say this is a very typical example. These people invest. So let’s say you are a W2 wage earner. Let’s say you make about four or 500, 000 into W2 wages. You get stock options, you get a lot of capital gains every year. Because of that. So these people typically live very on, modest lives, like very frugal.

They invest a lot of money. Most of the people that we see are highway journals with that. One of the basic elements that happens is. You have to understand you have ordinary income wage income. If you’re going to invest in real estate, it’s not going to help you. You’re way like nothing’s going to help you.

And listen, all the capital gains that you have, you’re just paying tax on them. You’re not drawing losses. And when you exit, you pay capital gains on it again. One of the kind of, when you implement tech strategy, one of the basic things that I always ask people, you have to understand if you make an investment, if you put the money anywhere, anything you do, you have to understand what’s the goal with tech strategy for the people that we work with is I’m going to cut my tax so I can invest more.

It’s not going to increase my life. So it’s not going to change anything on my lifestyle level. It’s just liberating the cash. It just frees up more cash. It gives me. Access to cash to put it back in the machine, whatever it is it is going to be private investing? Is it going to be, which doesn’t matter what the investment vehicle really is, right?

Come back to our guy. Let’s say he’s a tech person making 400, 000 in wages, and he has like another 100, 000 capital gains. Real estate investment is going to do nothing for them, right? It’s going to build cash, but he reduces his gains depending on if he’s, if this guy lives in California, he reduces his gaze by 40%.

So if you’re getting cash on cash, like you look at what they promise on cash, cut 40% on that because you just deplete, you just reduce your game. Now give it to the same person, right? Like we have multiple guys with multiple investments. Now let’s say we open up a holding company, which we’re going to invest in.

For these people, we cannot pass through. It’s very common that we can create a C Corp for these people to invest. Now, many people that are not there yet, in their minds, it’s C Corp? This is the evil of the greatest evil on planet Earth. We cannot do C Corp, double, you should see all the CPAs, double taxation, horrible.

Throw an apple on her face. No, listen, all entities are great for different things. Once you understand that everything is there for you to use, if you understand how to use them. Okay. So let’s say we have a C Corp. I’m giving you advanced methodology and you can have multiple investments in a C Corp, right?

Now you just slash all of that and you can do it, you can keep investing in different things and you take advantage of it outside of your personal return, right? And one of my, one of my key elements that I use is I’ve done more than 3, 000 auto defense cases face to face with the IRS. Okay. Me personally.

Okay. Here’s one. They probably love you, right? Listen, they wanted me on their side and there’s a reason why I’m on this side of the table. Let’s just say that. So one of the most basic things they could do is free up your investments from your personal tax return. You won’t see a high network individual.

Parading all the investments, all the 20 state investments that he has in on his personal tax return. And yet we see people with 40 different, syndicated deals on his or her name and it all shows up on the personal return. You just expose them, parade all of it in front of the IRS and give them excuses to come look at what you’re doing.

So you have to use entities. So especially if you have high income, like an employee using entities, they’re there for you to use to invest in specific entity types. You don’t go in as an individual to invest in all this, additional investments, especially real estate, any alternative investments that you have, right.

That’s a clear example. Now, if you run a business, we have a lot of business owners. Everything changes. And the same thing, we don’t necessarily want to touch the operating business that you have that produces the cash. We want to use entities, right? So entities are your number one friend. And you have a structure that really allows you to take advantage of the current law that exists, right?

And that changes every year. And I, I think, listen, the same way, and you’re in investments, and tell me if I’m wrong, people say invest in, spread your eggs in a different basket, right? You invest in this, you invest in mutual funds, you have some, you might have some EFT funds, you can spread out real estate, you can have multiple eggs in a different basket, the same way.

I find it very beneficial to have various types of entities because each one of them has different advantages for different types of investments for different types of income. Okay. And that’s where it’s, it gets really exciting where you can generate something like you always paint a picture with all these entities and how you can invest in different entities.

Ben Fraser: Yeah, it’s so interesting. So without getting too technical, I know a lot of this. Matters on your personal situation and what types of income you’re generating, when I think about investing through entities, most of my understanding of that from, the limited amount that I know is mostly from an asset protection standpoint, but you’re saying it’s also from a tax standpoint, there are advantages, to use different entities for different types of investments.

And going back to the C corp, cause I think, you glazed over that, but you probably blew a lot of people’s, brain sockets here by, by saying that, cause I’ve heard the same thing, right? Going to business school, the only thing I remember about C corps is double taxation.

And most publicly traded companies are C corps, right? But you just assume that’s what they have to do as part of being a publicly traded company. But there are situations that you’re saying where it actually might make sense to have a C corp. And, in, in this scenario with this high wage income earner in California, we have extremely high level of, income tax, federal and state, it might actually make sense because the tax percentages on a C Corp are less at the corporate level and then you’re only in the double taxation when you make distributions, right?

The numbers, maybe correct me if I’m wrong here, but, the corporate tax levels are much lower than 40% on the C Corp itself. And so if you continue to snowball that and you’re saving potentially 50% in taxes, that’s a pretty significant number.

And then as you make distributions, there’s probably things and strategies you can employ with your distribution strategy to limit. Further. So you get a little bit tactical, but I do think this is really helpful because I know there’s a lot of people in that boat of really high income earners.

I liked the idea of real estate investing and paying less taxes, but all of a sudden they make a few investments and realize, Oh crap, I’m actually not reducing my W 2 active income. So maybe spend just a few minutes on C Corps because I do think that’s a very outer intuitive idea here. 

The Benefits of C Corps in Tax Strategy

Laura Dohanes: Yeah. Listen I’m battling, here, many large CPA firms and CPAs that have been in the industry and they still, I think they missed the boat on the advantage that they could do. The reason why I believe C Corps are great, is because my end goal is my C Corp is going to end up in a trust.

That’s what people miss. C Corps are not used for you to live off of it. I’m not using it. It’s a holding company. I’m not going to draw dividends. I’m not going to draw a salary. It’s my vehicle. I keep it there almost like a bucket and which will hold my investments and where people miss, a lot of the fine.

Nuances of investment is where they have an investment advisor, they have an estate attorney and they have a CPA and there’s no connection. Each one of them will give you something else. The investment advisor can bring you the best investment in the world. It can have the highest returns, right?

It gets really, so then you can have the estate attorney be like, he protects you the best way ever. It’s so cool. The protection it gives you. And they want to give you the best and the CPA that gives you the highest tax ever. So the missing element is a connector that would bring all of this together.

Say I am the, where I invest, it really has legal protection and it gives me the highest tax. This is the element. And this is what we’re. Creating this tangle, this dance around it. So our clients, we meet with the attorney, we meet with the investment advisor. We analyze the deal. How does it fall in?

We tell them in which entity you have the highest tax advantage to invest. So coming back to having that as a foundational piece, as a basis, right? You come back to say where and how would the C Corp help? You think about the C Corps and I get this analogy to my clients all the time.

Think about it. When you set up the C Corp for you to invest, it’s almost like a 401k. I’m not touching that 401k. It’s not for you to live off of it. It’s not no dividends. Don’t ask for the money back. You put it in, because listen, people, people are people. They made an investment.

They’re like, a couple of weeks in. I’m like, Oh, am I getting distributions yet? I’m like, I go back and say, so let’s go back. What was the goal for this investment? . People go in and this is one of the most common mistakes they make, especially the people who are not running businesses.

Because when you run a business, you track goals, you have metrics, you’ve gotta track the metrics that you’re out. So people who are employees are still not like them, it takes them a while to wire their mindset to tracking the goal. The goal is what was it cash flow, was it appreciation?

What were, what was your number one goal? for going into that investment. Because if you go into a real estate investment and you want cash flow, which you don’t need because you have high wages, it’s wrong. You missed the boat. You didn’t have the right goal. It’s never going to, it’s not going to work.

Understanding Your Investment Goals

Laura Dohanes: It’s not going to give you, you’re not going to be happy. And you’re going to go to another investment and say this is not doing well. I’m going to use a different one. Avenue to invest and you keep switching and going and searching for that golden egg and you’re not finding it because you don’t have a clear goal or the goal that you have does not make sense.

You think you wanted that. You think you want cash flow, but you really don’t want cash flow. You want appreciation because you already have the cash flow. You already have met your basic needs. You have met your lifestyle cost. So C Corp is not to give you anything. You’re building it. To an end point where that C Corp is going to land in a trust.

Exploring Advanced Investment Strategies

Laura Dohanes: And that’s where advanced strategies come into play, which is, it’s just, listen, when you look at the whole thing it’s so beautiful. Like it’s, there’s such a natural transition through things. You just have to be open to understand, open to explore the options that are available to you. 

Considering High-Level Strategies for Business Owners

Ben Fraser: Let me roll another scenario by you on a different side of the spectrum here, but it’s also something like, I know I’ve talked with people recently, and listen to this podcast that they’re entrepreneurs or business owners.

They’ve been reinvesting back into the business for a long time. I’m thinking, Hey, I’m ready to sell, be done with the day to day, but I’m going to have a massive liquidity event or a lot more than I used to. And the first thing I think of is a massive tax bill, right? Can you give some high level strategies?

Again, this is highly personalized. I know, but what is in someone in that scenario, what could they be thinking about, right? Cause you want to be thinking about this many years in advance and there’s lots of ways you can structure. Yeah. Buyouts, other things that can be more tax friendly. But one of the things that this type of a person should be thinking about is that it’s obviously very different from the highway journey that’s just stuck in investment capital.

And, maybe put it in an investment vehicle. But, on the other side of this, the entrepreneur that’s looking to sell the next couple of years, what kind of things do they need to be thinking about? 

Laura Dohanes: Yeah. And there’s so many great things. And I’ll give you an example.

Everybody knows Facebook. The founder of Facebook is really famous for many things, some good, some bad, let’s just say that and he and his wife were bragging or bragging on the Internet how he donated. 

The Power of Charitable Strategies

Laura Dohanes: 99% of his stock to this charitable company, right? And all these people came and attacked him and I’m like, no, that’s not true.

It is true. That’s not even charitable. That is charitable. And in my opinion, I don’t necessarily see him as the most giving guy, right? I might not be the nicest person when I say that, but listen, like they’re giving as a strategy. So you have to understand, you have to deploy things.

And get out of the classic definition for charitable. When I talk to charitable people, like they dismiss me when I say charitable, their mind has literally completely shut down on the concept of charitable. They said, she wants me to give it away. I go to tax strategy, I pay a boatload of money and she’s telling me to give it away.

It sounds stupid when you think about it this way, but like this is where people miss the boat. That is the most, one of the most favorable things. In The United States as the law exists right now, the tax law has so much opportunity. We have several charitable strategies. It’s one of the most amazing ways you can save money.

And it’s not because you give for this, for the sake of giving, you give us a strategy. Okay. One of the best ways people approach this is giving. Now, can you give stock? Can you give stock is a great thing to give, right? It’s not just that you can use you. One of them, when you exit and when you have a large exit and people have excellent, 50, a hundred million dollars for that’s it.

They build this. Manufacturing companies or distribution companies or whatever they have, and they have, suite of government contracts that are valued really high and they want to get out. What happens is what gives you the highest advantage is when you layer different tech strategies for a compound effect.

When you use entities, you use trust. You use charity and you create this diagram of a beautiful exit. He ended up paying for his Facebook donation. 1% tax raised because he was able to get out of his mind. I’ll do what it takes. It’s a tango. It’s literally.

Ben Fraser: Yeah. You’re saying too, giving as a strategy, not even for charitable causes, but it’s a dual purpose too, right? If you have any desire to leave a legacy or to actually make an impact with some of your wealth that you’re well above yours, you have a dual purpose, right?

Where you can actually save on taxes and you can make some impact too. So I think it’s something that should not be overlooked and it can be pretty significant, right? Because you can use it. A portion of the donations against other income, right? And so as not to get too technical and I can, I’ll probably say something wrong, but as a strategy it’s a very important kind of thing to layer in what you’re saying.

Laura Dohanes: Yeah. Just another comment to what you just said. So I typically like to separate things. 

Balancing Charitable Strategies and Personal Causes

Laura Dohanes: So if you have a charitable cause, if you have something dear to your heart. And I know many people who have survived different types of cancer, and they’ve created nutrition, they’ve created supplements, they’ve created something, they have a child with disabilities, or they have a very specific cause, or literacy, or sports, or music, whatever the cause might be, or some of them are investing overseas.

They have something dear to their heart, but it’s in a different state. I have engineers that are Indian, like from India and they say, I want to help farming in India, right? So we separate the strategy, the charitable strategies from the, your charitable purposes, because I like to be protected.

So that’s one of the things that, if you want a nonprofit, if you want a foundation and most of the wealthy people have a foundation. Most of them, like I have almost everybody that goes after a specific level. They have a desire because when all is said and done, you want something that fulfills you, right?

So for me, one of the causes that I am dear to my heart is. Families where one of the, one of the parents or the spouses is going through terminal illness and it’s really brutal. And, they’re not financially prepared. That’s one cause that I, that, that’s really dear to my heart.

That’s where I’m focusing, right? How do you get them financially prepared, especially if they have kids, right? It’s really brutal for a family. They don’t know what to do. That’s one cause. That’s separate from the charitable strategies, and I like to keep them separate because of the auto defense mechanism.

Then, I don’t want the IRS to say that I’m funding my own cause with the charitable strategies, so I always separate these two. So charitable strategies are a strategy. And your foundation on profit, we use it as a true nonprofit because listen, it’s not just the game it’s life.

It’s your life that you’re playing with and you want to have, you don’t want everything to be a tax play. At the end of the day, you want it to have meaning and impact. And that’s how you provide meaning and impact to you. Strategies one. I’m not saying you shouldn’t, there’s a little overlap, but if you have your own foundation on profit, I like to keep it separate.

Many like 99% of the time, they’ll be separated. 

Ben Fraser: Yeah. But if you have your own foundation or nonprofit, Okay. You theoretically can have some level of control or decision making, whether it’s you having a board or other things alongside of it, but now you can actually be more direct with what you’re doing to still get the benefit on the personal or trust side of things from a tax standpoint.

Laura Dohanes: Yeah. Yeah, for sure. The benefits of the strategies are four or five times bigger than what you do with your own nonprofit, just to give you kind of a value put on it. Just think about how powerful. 

Ben Fraser: Yeah. 

Understanding Different Types of Income

Ben Fraser: One of the last kind of topics I want to hit on, and we don’t have to get too much into the weeds here because we could probably nerd out for a long time, but there’s something that I’m becoming more aware of over time is I’ve made a lot of investments and, earning different types of income.

I’m realizing there’s not always a simple onesie twosie, you smash this income with this tax loss, right? It’s more complicated than that. And, the different types of income you’re generating. The one example with the tech employee, it’s all W 2, like that’s pretty, vanilla, let’s say, and it’s pretty clear you can’t take, passive losses from investments against that income.

But as you get more kind of nuanced, maybe start as a more of a framework, but then maybe some examples if you can, ways to be thinking about it. Cause if I’m, if I know the types of income that I’m generating and I know what types of losses I need to generate. From an investment standpoint or a tax standpoint, it again, going back to what’s your goal shifts the focus of the strategy of maybe things you should be focusing on.

And so again, another kind of layer of it, but this is an area I talked a little bit about before in our kind of initial interview and just wanted to Dive into that just a little bit because I think it’s something that’s so relevant and important. 

Laura Dohanes: Yeah. Yeah. Thank you for bringing this up. I think it’s a great topic that is Very misunderstood even by CPAs because they say it is what it is.

It’s income. It is what it is. You get the deduction you don’t get a deduction But it wants you to look at what the millionaires and billionaires are doing okay. 

Ben Fraser: Speaking my language here with the name of our podcast. 

Laura Dohanes: So listen when we look at the geographical people have decided how water streams should go because they want water to flow in specific areas.

So the same thing, that’s the definition of income shifting. You have to understand, is it valuable for me to have all this income here? Is there any way I can shift any of the income in other places where I can take advantage of it? With a W 2, it’s not always possible. Okay? So that’s why I said, depending on what you do.

It’s really, you have to understand what you have to play with. So let’s say you are stuck, right? You are stuck. Let’s say you’re 500, 000 in, and we have employees that make five, six, 700, 000. It can be investment advisors at Wells Fargo. They make 700, 750, 000 a year. Okay. Typical example.

And they’re doing investments and they helped themselves, didn’t want to have the sarcasm there, but so let’s say we have 500, 000 in W 2 income. Cool thing. Got it in. There’s no way out. W 2. Straight through. There’s things that you can still do. You have to look at the text law that allows you to have some deductions against it.

So you know, that’s where a lot of people love oil and gas and they live oil and gas because oil and gas, if you have active participation in it, you can have that deduction, right? For the intangible drilling costs, right? You’re one. What do you do? You’re two. You have to put another a hundred thousand, 200, 000 in to get the same deduction.

So there’s multiple types of investments that you can layer. Entertainment or any type of active investment investing into, private equity or, different funds that would give you a deduction in year one the number one element for the people, and this is many people will not like what I say right now, 500, 000 up to about eight to a million is the hardest, the absolute hardest kind of gap that you can be the hardest.

Is. Place, you can offset income because they just don’t have enough and they’re right in the middle where it is absolutely hardest to reduce. I’ve run calculations. I said, what if we do charitable things? If I do this, the amount of tax reduction is so minimal that you have to put so much money in to get the reduction.

It is the absolute hardest to minimize tax on. I know many people will not like what I say, and that’s why you have to either go big. Or go home. No, not saying go home. 

Ben Fraser: Go big or make that money. 

Laura Dohanes: But you understand from a, from, I ran scenarios over and over again to find out.

And it’s 500, 000 is probably the hardest place to be at right now. Now some states, for example, if you’re in a high tech state, make it a bit easier. Because now anything that we do has a little bit more tax impact. If you’re in Texas, don’t make the money, right? Like you have to find something else.

So you have to strategize. What can I do? You’re like, after you go over that two 50 range, 300, 000, you have to spend money to save money. Okay. Now, when I look at spending money, let’s say I put 100, 000 in for an oil and gas deal. Let’s say I get 85% in IDC cost, like a deduction, like a deductible drilling cost.

Like I put a hundred thousand in to have a deduction. That means it reduces my 500, 000 income by 85, 000. The impact might not be as big. I’m not, if I put a hundred thousand in, I’m not going to get a hundred thousand dollars off my tax bill. It’s probably going to be anywhere from like 15 to 25, 000 tops.

So you have to, so you have to put so much more because of that, because this is the hardest place you just, you don’t have the tax rate is not big enough. Even though it is big, it’s not big enough for you to make. So the more you make now, if you make 700, 000 and you put 100, 000 in, you actually could have a higher tax advantage.

You might save more. Like percentage wise. Then if you make 500, 000. Why? Because of the marginal tax rate. So you have to understand that the taxes are in brackets, right? So if you make 500, 000 and if you’re married, at the top bracket, you’re only having a little bit of income at that top bracket. So that means the advantage is not as big.

The more you go over the 500, 000 range, the amount of money of income that sits in the highest top bracket is higher. So it’s made, it makes more sense for you to put more. So I can put 200, 000 in, I can put 400, 000 in an oil and gas deal perhaps to get the advantage that I want and I can reduce my tax to almost zero.

Yeah. Makes total sense. So it’s all, it’s really all about the, how do I organize where am I with the income? Is there anything I can do to shift, right? And it’s not just that there’s entertainment, investment, entertainment, or any other strategy that gives you it.

Some losses and, in the real estate world, the short term rentals took a really big hit, right? Everybody was like, this is the great, this thing, it’s an STR strategy. It’s a new strategy. It’s actually a new strategy. It’s if you’re active in it, the problem is it’s not going to give you losses.

You can buy a large property and you can do cost segregation. You can do all the beautiful things that you could do in year one, but then you run well. SDR will actually give you profits. So you’re still not, you’re still not where you want it to be, but there are strategies and most likely for the people in W2H, it’s going to be some private equity investing.

Some of the other things that there’s strategies that we do in the entertainment industry that would allow us, it’s section 181. I know people don’t want to hear the code today, but it’s section 181 that allows some additional entertainment investment for these people to have a really good time.

Reduction of their taxable income, right? And that’s probably my, my, my top, the top one that I would use for a W 2 employee. But again, it comes with people who don’t like entertainment so much. People don’t want to invest in entertainment because they don’t agree with it. So it’s all coming down to what’s your mindset.

What are you willing to do to reduce that bill? 

Ben Fraser: Yeah. How do you balance? Last question here. 

Balancing Tax Strategies and Wealth Building

Ben Fraser: And this is something I’ve said a lot and I think is important, but yeah, you got to measure the impact. The idiom is don’t let the tax tail whack the dog, right? You shouldn’t just do an investment only because of the tax savings and in oil and gas, for example, you get these great losses, but if you invest in a really risky project and you end up with a permanent loss, a capital loss.

You’re not really that much further ahead potentially, but how do you balance that if you are getting that significant of year one losses, the riskiness is reduced down, right? Because you’re getting so much in tax savings, potentially, it depends on your income level, right? But how do you balance that approach of not letting dollar The tax drive, the investment strategy, but also letting that be a really key component of it.

Laura Dohanes: Yeah. And it’s a key distinction and it’s such a great point. Thank you for bringing this up. And it’s there, there are strategies that are just pure tax strategies and there are strategies for wealth building. Okay. So you always dance. So we had people, put a hundred thousand dollars in or put money in and the tax advantage was 150, 000.

That’s a tech strategy. Okay, that’s not, don’t ask for your money back. Don’t ask for a multiple. It’s a done deal. It’s a one time deal. Sometimes we have strategies that we present to our clients that are just like that. Okay? 

Ben Fraser: Just like an easement or some type of.

Laura Dohanes: It could take many different shapes and forms.

Ben Fraser: Okay. 

Laura Dohanes: And we, I always say, this is a one time tax strategy. It’s not a wealth building strategy, but you’ve got to do both, right? So you have to just make a distinction. Remember we talked in the beginning, what’s the goal is my goal to, if I do an entertainment, am I going to, my goal is to increase my wealth or increase my, or reduce my tax bill.

So every single time you reduce a tax bill, the main reason you reduce the bill, so you can put the money into wealth building investments. Okay. So it’s always this tango between the two of them. And I think the biggest mistake people make is Oh, I’m just building wealth, real estate. I’m developing real estate.

Yes. I stuck to people or all alternative investment, really, people are ATM, car washes. There’s so many different trends that are coming up right now that are really hot assets to invest in and people are going by the master. This is the greatest thing.

And I’m like, they have to understand what’s the goal. What are you doing for wealth building, right? And then once you have the wealth building strategy, and that’s a, and we talk about infinite banking, velocity, but there’s just so many so we can, we could talk for hours just about that, those concepts alone, right?

Which I love. Each one of them is valid. You have to create that dance, the tango between what you’re doing for wealth building with the tax strategy combined, because as you create more wealth. You don’t want your personal tax return to show that you’re richer. Why should they know? Why would they have to know what 

you’re doing?

Ben Fraser: Laura, this has been, oh, this is so fun. I feel like we have a part two here at some point, but for our listeners sake, we should probably wrap it up here. 

Who Can Benefit from Tax Planning

Ben Fraser: What, what’s what’s, first, how do people get a hold of you, but then who’s like your ideal people that you can work with? It sounds like there’s a wide range, but. Give just an idea of who are the best people or most qualified to benefit from some of the things you guys do at my CPA pro. 

Laura Dohanes: Yeah. In a nutshell our ideal people are the people who make at least a hundred thousand dollars more than their lifestyle cost.

That means they have money to invest. They generate excess cash. That means W2, if you’re a business. And your business generates more cash than your lifestyle. That is the tax planning area for us. That’s the range. The more you have, the more you can plan. 

Ben Fraser: Love it. And then what’s the best way for people to get all of you?

Laura Dohanes: Yeah. 

Conclusion: How to Get in Touch

Laura Dohanes: Definitely. I put this if it’s okay to share this, I put this resource together. For you so you can get in contact with me and my team. And if you go to, we put like the five most common strategies that all the ultra rich, the millionaires and the billionaires have in common. Every single one that I have seen, that I have analyzed, that I have looked at are using the strategies.

A 100%. It is mind blowing to see how simple it is to get in the mindset of a millionaire and billionaire. If you go to we’ll put your email address and you can get in contact with us. You can also find me on LinkedIn. LinkedIn is my, the place I hang out.

Laura Dohanes on LinkedIn. Maybe we can put a link, but that’s where you can find me. And you have a booking link, you have all the goodies on LinkedIn as well. 

Ben Fraser: Hey, love it. Thank you so much. This has been really fun. I’m sure our listeners will get a lot out of it. So thank you so much for coming on and sharing your wisdom.

Laura Dohanes: Yes. Thank you so much, Ben.


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