Case Studies

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Case Study: You Have Financial Options

Our client mentioned he was paying a large federal tax liability in the 400,000 range; a hard check for him to write every year.
We learned more about his interests in real estate and income sources and found a couple solutions to reduce his federal tax liability.
In the process of reducing his liability, we presented an additional opportunity to reduce his future tax liability through timely Roth conversions from his current 401k.
By lowing his taxable income, the Roth conversion opportunity presented itself as an additional logical solution to his tax situation.

Through our financial planning process, we gathered important financial data from our client. All income sources, assets owned, debts and a copy of their last two years of tax returns.
We also conducted a goal development meeting to better understand what was important to them personally and financially.
We collaborated with our tax specialist to confirm strategy and solution options.

Currently, we’re in the process of converting his 401k to a Roth IRA. We are also helping him manage a diversified equity portfolio that is in line with his time frame and goals.

We had a client that had sold a business for a few million dollars. There was no cost basis in the business so there was a large capital gain tax expected.
Through our discover phase we learned that this business owner was very active in the real estate market place. If he qualified has a “real estate professional” we knew that there was a potential favorable IRS code that could benefit his tax situation.

We conducted a goal development meeting to better understand what was important to them personally and financially.
In a down market we reached out to our client to discuss a Roth conversion strategy. Our advice was to have our client consider converting a portion of their IRA assets (that were decreased in value because of the down market) to a Roth IRA (nontaxable). The amount to convert was based on their current tax bracket.
We described the opportunity as a “Roth Conversion on Sale”. We took a traditional RA that was worth 100k before the market downturn and converted it to a Roth IRA when the traditional IRA value decreased to 75k. When the market tuned back up the client now has a Roth IRA valued at 100k. The growth on the Roth IRA form 75k to 100k (25k) is all tax free growth.

In summary we took a 100k fully taxable asset and got it taxed at 75% of its value and provided the client with an asset where the principle and all future growth will never be taxed.

Real Estate

Taxes

Real Estate

Investing

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