Month of March, 2008

One of my favorite sayings from Yoda (the great Star Wars philosopher) is:

“Do or do not. There is no try.”

Recently I heard a story that brought that home even more. In this case, the man was asked by his teacher to try to pick up a pencil. He reached over and picked up the pencil. The teacher said, “NO! You PICKED up the pencil. Don’t do it…TRY to do it.”

I bought a Mac.

It seemed a natural progression. I’ve owned an iPod for years, and I bought an iPhone last fall, which has turned out to be one of my fave tech purchases in years. Well, okay, the business bought the iPhone - but isn’t that one of the joys of having one’s own business? Upgrading your technology in the name of increased business productivity (and hopefully increased revenues), while being able to take a write-of for the equipment purchased?

Richard and I are taking a little time off in San Diego before my big seminar later this week. We ended up changing the seminar to include a separate part on our new personal challenge “How to Make a Million Dollars in Two Years or Less Using Business Assets You Didn’t Know You Had.” The response has been huge! But it’s creating a bit of a challenge for the seminar. Half the people are coming for advanced tax strategies - which I’m excited to disclose for the first time ever at one of my seminars! The other half want to learn how to create Multiple Streams of Passive Income (MSPI). So, it’s two seminars in one!

Even better the creation of Multiple Streams of Passive Income is something we’re learning together. I know how to create a million dollars a year from business assets, because that’s what I’ve done with Tax Loopholes. But, it took me 7 years to get here. Can we hit a total of a million dollars in two years? That’s the challenge.

401(k) Plans … yes or no? Five years ago, I argued about why I thought they were horrible. Today, I’m likely to recommend them. Why? What has changed?

Trusts are pretty neat things. Set up properly they can be fantastic vehicles to give you tax deductions, relief from capital gain tax when selling appreciated assets, a great way to move wealth from one generation to another, and significantly lower your estate tax. They can be as simple as you like, or fantastically complex. It’s really up to you and your advisor to determine the type of trust that works best for your situation.

One of the most misunderstood loopholes for income splitting is by the use of a C corporation.

C corporations are completely different from LLCs, S Corporations, Sole Proprietorships and Limited Partnerships. The biggest difference is in how they’re taxed. C Corporations file their own taxes. As an owner, you don’t get a K-1 that flows income through to your personal return. The corporation pays taxes at its own level.

Every so often someone asks me if “Tax Loopholes” are really legal, or rather, they’re more likely to ask if they can use them “wink wink” and really get away with them.

Granted … the name “TaxLoopholes” sounds like it might be something shady. But, in actuality, tax loopholes are anything BUT a scam.

There are a couple of options for write-offs when you buy new equipment for your business. Well, for 2008, there are actually two options:

(1) Take a Section 179 for an immediate write-off of all or part of the purchase price, or

(2) Depreciate the property.

I remember 5 years ago thinking that 2008 was going to be the best tax loophole ever. This was the year that you could sell your capital gains property and pay NO TAX or you could take a dividend distribution from your C Corporation and pay NO TAX.

How come nobody is talking about that now?

The whole point of a contract is to set out the terms of a legally-binding agreement between two parties. We call this the “meeting of the minds.” Contracts can be fantastically complicated, or absolutely simple. But without the essential elements being present, they aren’t binding or enforceable. It might be 100 pages long and have cost you $5,000 to have drawn up, but without the essentials you have no deal.

In my next four blog entries I’m going to go through the 10 things you absolutely have to have in a contract. Chances are you’re going to need more - but without at least these 10 things, your contract may not hold water.