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Our Approach: Tax Planning
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Tax Planning for Executives

The Capital Tax™ Approach

Effective tax planning is essential for executives to grow their wealth on an accelerated basis by optimizing their tax outcomes. Executives pay more than 50% of their income to taxes. Tax planning can save them 100’s of thousands and in most cases millions of dollars over their lifetime.  Tax planning is not one single action, it’s multiple strategies over your lifetime that leads to these giant savings. So, it must be methodical, disciplined and tailored to each individual. Let’s explore some tax planning approaches tailored specifically for executives.

  1. Understand Your Income Composition: Executives often receive a combination of salary, bonuses, equity incentives, investment income, passive income, and other characters of income. Each component requires planning and should not be left to chance, or you’ll be paying a hefty price.

  2. Real Estate Tax Benefits: 
Real estate in its multiple forms has significant tax benefits over time. They include depreciation deduction, unrealized growth due to appreciation, passive income generation, and the eventual step-up in basis that re-starts a completely depreciated property.

  3. Use of Trusts: Various trusts, including GRAT (Grantor Retained Annuity Trust) can significantly reduce your estate taxes. Trusts are best customized to each client’s tax, wealth, and family dynamics circumstances.

  4. Oil and Drilling Investments: 
Deductions related to Intangible Drilling Costs (IDCs), Tangible Drilling Costs (TDC), Percentage Depletion Allowance, and certain credits available to oil and drilling investors provides tax saving opportunities for executives.

  5. Private Equity Investments
: Private equity provides long term capital gains (LTCG) treatment as well as tax deferral opportunities. These strategies reduce taxes due to favorable LTCG taxes and the time value of money, due to deferral of tax payments.

  6. Capital Loss Harvesting
: Capital loss harvesting is a key strategy for generating capital losses so that you can offset current or future capital gains. This strategy provides significant savings especially in years where capital gains are generated from stock sales, property sales, or through K-1s.

  7. Tax-Efficient Investments: Investing in a tax-efficient manner will minimize the tax impact on a grand scale. Private equity, growth stocks, muni bonds, loss harvesting, real estate, step-up in basis, section 1031, and other strategies are examples of tax-efficient investments.

  8. Optimize Stock Options for Tax Outcomes: Executives often receive stock options or equity grants as part of their compensation packages. Incentive Stock Options (ISOs) require different planning than Non-Qualified Stock Options (NSOs). Alternative Minimum tax considerations are part of the strategy. 


  9. Deferred Compensation: Deferred compensation plans can be structured in ways that minimize immediate tax liabilities. Deferring a portion of these earnings to a later year delivers two benefits: 1) time value of money due to paying taxes later, 2) plans the distribution in a year with lower income or during retirement.

  10. Restricted Stock Unites (RSUs): RSUs impact your cash flows due to tax withholdings and final sales due to timing.

  11. Mega Backdoor Roth & Retirement Plans: Contributions to retirement plans like 401(k) or Individual Retirement Accounts (IRAs) can significantly reduce taxable income but may build significant tax liabilities. Roth conversions are key to multi-generational tax planning.

  12. Take Advantage of Tax Deductions: Executives can benefit from various tax deductions, such as mortgage interest, property taxes, and charitable donations. Keeping track of deductible expenses can significantly reduce taxable income.

  13. Stay Informed about Tax Law Changes: Tax laws are subject to change, so take advantage of favorable new tax laws and minimize the impact of unfavorable ones. Executives need to stay updated with tax strategy accordingly.

  14. Consider Tax-Efficient Estate Planning: For executives with net worths of more than $25M, estate planning is crucial. Estate taxes are very expensive (up to 50% for Federal and state). Proper estate planning will minimize estate taxes and ensure a transition of your wealth to your heirs.

For a consultation contact our office at or 925-977-7784 or At Capital Tax, we have been serving our clients tax preparation and planning needs since 1998.

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