Strategy Primers
Plain-English explanations of the strategies referenced throughout our discoveries. No jargon, no sales pitch — just what each one does, who it fits, and what to watch out for.
S-Corporation Election
An IRS tax classification (not a separate entity) that can save self-employment tax for profitable LLCs and Sole Props.
QBI / Section 199A — the 20% Pass-Through Deduction
A 20% deduction on qualified business income for most pass-through owners — but it phases out at higher incomes for service businesses.
Augusta Rule (§280A(g)) — Renting Your Home to Your Business
Rent your personal residence to your business for up to 14 days/yr. Business deducts the rent; you receive it tax-free.
Cost Segregation Study
An engineering study that reclassifies parts of a building from 39-year property into 5/7/15-year property — unlocking massive year-1 depreciation.
ESOP — Employee Stock Ownership Plan
A qualified retirement plan that buys some or all of your company's stock — turning your business into a tax-advantaged exit vehicle.
QSBS / §1202 — Qualified Small Business Stock
Up to $10M (or 10x basis) of capital gains EXCLUDED from federal tax when you sell qualifying C-Corp stock held 5+ years.
1031 Exchange — Like-Kind Real Estate Swap
Defer capital gains tax on real estate by rolling proceeds into another investment property within strict timelines.
Cash Balance / Defined Benefit Plan
A pension layered on top of a 401(k) that can shelter $100k–$300k+/yr — especially powerful for older, highly profitable owners.
Captive Insurance (§831(b))
A small insurance company you own that insures legitimate, hard-to-cover risks of your business — premiums deductible, up to ~$2.8M/yr received tax-free by the captive.
R&D Tax Credit (§41)
A dollar-for-dollar federal credit for activities that develop or improve products, processes, software, or formulas — often missed by manufacturers, software, and engineering shops.
Section 162 Executive Bonus Plan
The simplest way to provide a tax-favored, portable benefit to a key employee or owner — the business pays the premium on a personally-owned permanent life policy.
NQDC — Non-Qualified Deferred Compensation
An agreement to pay an executive deferred wages in the future — useful for sheltering income above 401(k) limits, but the money is at risk of company creditors.
Buy-Sell Agreement
The 'prenup' between business co-owners — what happens to ownership when someone dies, becomes disabled, divorces, or wants out.
Key Person Insurance
Life (and sometimes disability) insurance the business owns on a person whose death would seriously disrupt operations or financing.
COLI — Corporate-Owned Life Insurance
Permanent life insurance owned by the business — used to fund NQDC, key-person, buy-sell, and as a tax-advantaged 'corporate savings account.'
Accountable Plan
A one-page board resolution that lets the business reimburse you tax-free for legitimate business expenses you paid personally.
Hiring Your Children (Under 18)
Pay your kids real wages for real work — Sole Prop / single-member LLC owners can shift up to ~$15k/yr per child with NO FICA, FUTA, or income tax.
Donor-Advised Fund (DAF) Bunching
Stack several years of charitable giving into one big year for the deduction; grant the funds out to charities over time.
Roth Conversion
Pay tax NOW on Traditional IRA / 401(k) dollars to convert them into a Roth — future growth and withdrawals become tax-free forever.
Backdoor Roth IRA
A two-step workaround that lets high earners (above the direct Roth IRA income limit) still get $7k/yr ($8k if 50+) into a Roth.
Self-Directed 401(k) — Investing Beyond Mutual Funds
Some 401(k) plans offer a 'brokerage window' (or are solo 401(k)s) that lets you buy individual stocks, ETFs, even real estate inside the plan.
Term vs. Permanent Life Insurance
Term covers a window (10/20/30 yr) cheaply. Permanent (Whole Life, IUL, VUL) lasts forever and builds cash value — and is dramatically more expensive per dollar of death benefit.
Long-Term Care Planning
70% of people over 65 will need some form of long-term care; the average claim runs ~3 years at $60k–$120k/yr. There are 4 ways to fund it.
Umbrella Liability Insurance
Cheap excess liability coverage that sits on top of your auto and home policies — usually $1M for ~$200/yr.
The Step-Up in Basis
When you die, your appreciated assets get their cost basis 'stepped up' to fair market value — the lifetime capital gain disappears.
Revocable vs. Irrevocable Trusts
Revocable trusts avoid probate but offer NO asset protection or estate-tax savings. Irrevocable trusts can do both — but you give up control.
529 Education Savings Plan
Tax-deferred growth, tax-free withdrawals for qualified education. State income-tax deduction in many states. Now also rollable to Roth IRA.
HSA — The Triple Tax-Advantaged Account
Deductible going in, tax-free growth, tax-free out for medical. The most tax-advantaged account in the code — often best invested, not spent.