The Tax Strategy Most Investors Aren't Using

**SPEAKER_1** (0:01)
Welcome to the Money Tree Investing Podcast. Stock market, wealth, personal finance, value stocks. Invest in your life.

**Kirk Chisholm** (0:11)
Hello, Smart Money Tree Podcast listeners. Welcome to this week's show. My name is Kirk Chisholm, and I'll be your host. So today, I'm joined with Michael Williams. How are you doing, Michael?

**Michael Williams** (0:18)
I'm doing great, thanks for making time, Kirk.

**Kirk Chisholm** (0:20)
Glad to have you on. So for those of you who don't know you, tell us a little bit about your background.

**Michael Williams** (0:24)
So, established my company that we'll talk about today, but prior to that, I worked for a family office that was involved in a lot of tax-incentivized real estate development. And what I learned working for them in their family office was that a lot of ultra-high-net-worth people were able to be more tax-efficient and keep a lot of their dollars re-invested for them, simply because of access to strategies and maybe equally important as that, they had access to a team of people that were able to help them implement these strategies. So eventually, they let me, I was kind of family to them. They allowed me to invest in some of the things that they were doing.
As I said, maybe the most important thing they did was connect me to people that could help me utilize some of these strategies with my existing framework of advisors and CPAs and attorneys that I had. And really, that's when I had my aha moment that I knew a lot of people that were looking to be able to do some of the same things that I was now doing, just didn't have access.

**Kirk Chisholm** (1:26)
So tell me a little bit about this. So you do depreciable assets. What does that mean in layman's terms?

**Michael Williams** (1:33)
I always say for someone to be tax efficient, there's really three phases to that. In my mind, first phase really centers around structuring and how one owns things and maybe how they make their money. Do they own a business or are they W2? Kind of starting at that and what's the most efficient way to structure your affairs being phase one. That's not really where we play. We can quarterback and help architect and work with people's existing teams on something like that. But where we really live is that second phase and that is does the tax code allow you to go spend a dollar that otherwise would go towards taxes, instead invest that in something that's going to let that dollar work for you. As I would say, can you go earn interest on dollars that otherwise would go towards taxes? That's really where we live in our business. And then the third step being, once you've become tax efficient, how do you own things on the go forward? Again, not really where we live. We help architect at times, but we really live kind of in that second silo.
You mentioned the depreciable assets. So that's really a lot of times what we face is a lot of our clientele is high net worth folks, typically a business owner, a lot of times W2.
And the tax code really is not catered towards them. A lot of the advantages that are out there really are easier for the ultra high net worth folks to be able to implement, or really slanted towards your big companies, your insurance companies, your banks, public companies, people like that. So that's really where the depreciable assets you mentioned, where that platform comes into play. And essentially, what we've created is really a one-stop shop where folks can come and essentially create side businesses that are centered around owning cash flowing assets. So for an asset to fit on our platform, it has to do two things. One, it has to depreciate for tax purposes, and more importantly, it has to be bankable. And the way that we define bankable is, I need to be able to take somebody to a bank that they've likely never worked with before, and get that bank comfortable lending typically 85 to 90 percent on the purchase of an asset that that person prior to starting this business with us on our platform, have probably never done anything with before. So the only way that I can do that is with strong contracted revenue with a strong counterparty.

**Kirk Chisholm** (4:06)
Kind of going back to what you said, so structure, the code allows you to earn interest on the taxes and then how do you want it going forward? Can you play that third one out? What do you mean, how do you want it going forward?

**Michael Williams** (4:17)