First, bring all of your tax planners onto one team. By taking the time to set up a collaborative relationship with a financial advisor who works with tax mitigation strategies, Certified Public Accountants, Enrolled Agents, and other tax professionals can change their business model to a tax-planning focus, which may result in greater revenue generation and greater client satisfaction because of tax savings. Tax efficiency is better served by having all tax planners and tax advisors work together on your personal team.

Tax efficiency is a simple concept. Given two investment scenarios the tax-efficient scenario is the one that generates the least amount of taxes.When I started evaluating the investment solutions on our platform from the perspective of how they can mitigate taxes rather than just the returns they yield, I developed a replicable analysis and strategy for nearly any high net worth client.

It’s as simple as this:

Consider all the sources of income. Here is how you mitigate the taxes on those sources of income.

Collaborating with tax advisors serves our investor clients better. An insurance agent is trying to solve all problems with insurance, and a real estate agent perhaps solving all problems with real estate. From the client’s perspective, clients who are working with a number of different financial service providers, who may not share all of the information with those advisors, end up with products that may not be efficient for their needs and even work at odds against each other. This is not tax efficiency because the vision for growing your wealth is not unified.

When I see a client for the first time, I look at their entire financial picture. Usually action needs to be taken such as rearranging insurance policies, transferring insurance to a plan with more flexibility to create income. It’s because the client was not aware of the possibility of having this complete financial picture service.

The use of tax mitigation investment strategies can be beneficial to any person with investible assets. Aside from the tax savings, it is important to invest with a plan, understanding that how you invest will positively or negatively impact your bottom line.

Benefits from wealth management strategies increase as income and net worth increase.  An individual in the 39.6% tax bracket has the opportunity to benefit more than someone in the 25% tax bracket. If tax savvy strategies that have a positive effect of saving taxes are deployed, our clients may be able to keep and invest more of what you make.

Since it is every person’s responsibility to pay only the taxes they are obligated to pay, here are sections of the IRC that can be applied to reduce the taxpayer’s tax obligation and the amount of taxes that are required to be paid. It is from this perspective that I am creating Tax Mitigation Strategies.

  1. Ordinary Income: (This strategy may be able to be used in tax year 2016)

Our primary strategy involves an IRC § 170h Charitable Contribution. With approximately $75,000.00 in Federal tax liability, the Charitable Contribution should be able to reduce tax liability by approximately 15%. At higher income levels the Charitable Contribution tax liability reduction tops out at about 25%.  Learn more about Conservation Easements.

  1. Investment Income:
  2. Form 1040 Line 17 “Rents and Royalty Income” – Primary Strategy involves using investments that impact Form 1040, Line 17 “Rents and Royalty Income.” Income producing investments are available that can mitigate impacts to Line 17 by partially or fully sheltering income from those investments, or providing shelter that is sufficient to reduce Line 17 income below its original value prior to using the strategy.
  3. Purchase and sale of assets including real estate.

i.) Real Estate. Primary Strategy involves an IRC § 1031 Like Kind Exchange, which can defer the payment of taxable liability to a more opportune time.

ii.) Non-Real Estate (or Real Estate “boot”). Primary Strategy involves using investments that provide substantial first year write-offs.

  1. Net Operating Loss (NOL) Carry Forwards, IRS Form 8582 – As a result of the recent economic upheaval, some clients have excess NOL carry forwards. In some cases, the extent of the NOLs is such they cannot be extinguished within the 15-year carry forward period without external intervention. The Primary Strategy involves the use of investments that are Passive Income Generators (PIGs). To take advantage of this strategy the client must have additional investible assets, which are used to acquire the PIG. Assets are available with annual returns in the 8+% range that provide 85% to 100% passive income. Income generated through the use of this strategy is effectively tax-free until the NOLs are extinguished. Tax Deferred Income – Primary Strategy involves consulting regarding tax efficient retirement plan maximization. A Secondary Strategy occurs when clients have additional discretionary income that could be more tax efficiently deployed in a tax-free account.
  1. Retirement Income:

Insurance Solutions can provide effective Tax Mitigation Planning Strategies. Four major planning areas include: Retirement Planning (income above $300K), Legacy Planning (net worth above $2.5MM), Charitable Planning (net worth above $2.5 MM), and Business Planning (revenue above $2.5MM).

Consider the tax-saving potential allowed via IRCs.


IRC § 1031 like kind exchanges allows the owner of real property to sell one property and acquire one or more replacement properties without recognizing the gain at the time of sale. The gain is not forgotten; it is merely deferred to a more opportune time. Download a list of curated DST 1031 replacement properties now. Deferring the capital gain on the sale of an investment property is an opportunity for tax efficiency because you keep the gain and redeploy into further investments, paying taxes later after you have grown the gains.

IRC § 179 deduction allows the users of the deduction to expense rather than amortize certain business-related expenses. I use it differently.

IRC § 170 (h) allows users to make contributions for charitable purposes that result in a reduction in tax liability.

IRC § 7702 allows users to make after-tax contributions to a Life Insurance Contract where withdrawals can be made tax free. This is similar to what a ROTH type of retirement account can do.

Group 2

IRC § 42 allows users to take a tax credit for investment in qualifying low income housing.

IRC § 47 allows users to take a tax credit for investment in qualifying historic structures. This is a specialized form of a Conservation Easement.

Group 3

These code Section have come up in discussions I’ve had with other tax professionals.

IRC § 469 Passive Activity Loss Limitations – This strategy affects users who have significant Passive Activity Losses (PALs).

Required Minimum Distributions (RMDs). There are two strategies regarding RMDs, one of which is cover by Treasury Decision 9673. These strategies affect users who are obligated to take RMDs from their retirement accounts, but who would rather not take them.

I only provide this comprehensive approach for clients through and with the approval of their tax professionals. I’m neither an accountant nor an attorney. The use of some or all of these tax-planning strategies has provided my clients with tax relief, often into six figures.

IREXA® Financial Services / Wealth Strategies collaborates with CPAs, attorneys, and other tax planning professionals to assist clients with tax mitigation strategies. IREXA® and Great Point Capital, LLC are not tax professionals or attorneys. IREXA® only provides client tax mitigation strategies through, and with the approval of, the client’s professional counsel.

Securities offered through Great Point Capital, LLC, Member FINRA/SIPC, 200 W Jackson Blvd #1000, Chicago, IL 60606, telephone (312) 356-4872. IREXA® is not affiliated with Great Point Capital, LLC. 

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