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Mitchell Baldridge Profile picture
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23 Jan, 5 tweets, 2 min read
One of my favorite related to personal finance is “Things Rich People Don’t Want You To Know” by @noahkagan

I have recommended it to many friends and clients - It’s a short read, and covers basic planning strategies as well as getting into some fringe stuff.
I love the way Noah digs in to the concepts, and that he became so interested he hauled off and created a book.

It shows the power of planning, and that there are some questions wheee you can’t even call your accountant to get the answers.
Many topics are covered:

Umbrella Insurance
Loan Out Companies
Donor Advised Funds
Back Door Roth’s
Solo 401k
QSBS
QBI
R&D Credit
Cost seg/bonus depreciation
Leasing your house to yourself
Conservation easements

Etc...
I paid $100 for the book when it came out a couple of years ago, and it was well worth it. Today it is $10 on kindle and worth the read.

If you like the stuff I write, get it.

#notsponsored

Things The Rich Don't Want You To Know: amazon.com/dp/1798766841/…
For more on conservation easements and tax savings for RE pros, look to @sweatystartup’s course in progress. This thing is a monster.

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More from @baldridgecpa

Mitchell Baldridge Profile picture
26 Jan
Tax free income is hard to beat, right? Tax exclusions are one of the best outcomes you can create.

The most common example is an exclusion on your residence - 500k after 2 years!

Qualified Small Business Stock provides a less known, much bigger opportunity.

/THREAD👇
Qualified Small Business Stock (QSBS, QSBC, Section 1202 Stock) allows holders of original issuance stock to sell their shares and pay zero tax on the first $10 million+ of capital gains.

Let's dig into what qualifies, and the benefits and drawbacks of choosing to be a QSBC.
Eligibility - There are several requirements you have to meet in order to be eligible.

1. The stock must be issued to a non-corp stockholder (individual or pass-through entity)
2. The entity must be a C-Corp at the time of stock issuance
Read 15 tweets
Mitchell Baldridge Profile picture
26 Dec 20
QBI deduction optimization is a great end of year planning technique For high income SMB owners.

When used correctly, optimizing has saved my clients tens and hundreds of thousands of dollars annually.

If you are already on it then good for you.

If not - thread incoming👇🏻
The QBI or Qualified Business Income deduction was a part of the TCJA from 2017.

When congress lowered the corp tax rate to 21% they decided to throw a bone to small businesses by offering a 20% deduction on qualified income.

These include Schedule C and pass through entities.
This allows anyone conducting trade or business out of a pass through entity to take a 20% deduction on their income. Great right?

However there are a few limitations including a phase out for high income earners.

The phase begins at 326k for married and 163k for single/HOH.
Read 18 tweets
Mitchell Baldridge Profile picture
6 Dec 20
It is time Keith! This is a thread I have been meaning to write for a while, and one of the great 'opportunities' for exemption of tax out there.

Pardon my dad joke, and get ready for a Thread⬇️
QOZ, or OZ, QOF, Qualified Opportunity Zones/Funds.

Whatever you call them they were established with the Tax Cuts and Jobs Act of 2017, and they are a great strategy to defer and reduce taxes.
The Act presents one of the few chances in the tax code to receive an exemption, which is probably the Holy Grail of all tax - Take gains and never pay tax on them ever.

All of this while allowing you to roll your investment dollars into a very tax efficient vehicle - SMB or RE
Read 16 tweets
Mitchell Baldridge Profile picture
2 Dec 20
I spend a lot of my time in life thinking about personal finance and tax optimization.

See my longer tweets in a thread of threads below. I’ll keep this pinned and updated as I continue sharing ideas.
A thread about pairing SMB gains and RE losses for tax efficiency.
The magic of recurring revenue
Read 7 tweets
Mitchell Baldridge Profile picture
22 Nov 20
Passive loss rules keep showing up on #RETwit

The tax shelter of real estate can be a huge savings, but losses won’t help one bit if you can’t use them.

You need to know the rules - whether you have a RE side hustle or you are a GP understanding your investors.

Thread ⬇️
Tax all starts with the types of income

1. Active - income earned from Material Participation. Whether it be SMB, W-2, contract income, or prof real estate.

This is income where ordinary tax is paid and losses offset other income. Other sources have certain loss limitations.
2. Portfolio - income derived from financial instruments - dividends (including REIT), interest, royalties and capital gains.

Mostly income w/out loss potential, and favorable tax rates.

Cap losses may offset cap gains w up to 3,000 loss. Investment interest can be deductible.
Read 14 tweets
Mitchell Baldridge Profile picture
8 Nov 20
A lot of talk on #RETwit about 1031 exchanges, and for good reason.

Exchanges are a fantastic tool to grow wealth over a lifetime and even a great estate planning tool in passing tax free, stepped up wealth to your heirs.

Explanation of theory, execution and more. THREAD👇🏼👇🏼
WHAT -

A 1031 exchange refers to Sec 1031 of the Internal Revenue Code relating to “Nonrecognition Of Gain Or Loss From Exchanges Solely In Kind”.

The principle behind the exchange is deferral of basis and tax, so you can compound wealth tax free.
A property can be sold, and tax can be deferred by exchanging the property for another similar property or properties that better fits your needs.

The deal sounds like a no brainer - Sell, take a gain and don’t pay tax. The catch is you have to meet certain rules.
Read 19 tweets

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