Would You Rather Pay $1M Today Or 30 Years From Now With Zero Interest
Steve Moskowitz is the founding partner of Moskowitz LLP, A Tax Law Firm. Their tax law firm represents individuals and businesses in tax controversies and disputes, tax litigation, international tax planning, criminal tax defense, tax investigations, offshore banking matters, and tax collection resolution.
He has been a tax attorney for more than 30 years. He has made it his personal mission to help business owners, or individual clients, successfully resolve tax issues that go on with their lives. He has extensive knowledge of tax law and a desire for swift and vigorous defense and decades of experience with tax authorities and in the courts. He has unusual perceptive judgment in assessing the best way forward and the right resources to achieve resolution.
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Brett:
I’m excited about our next guest. He is the founder of Moskowitz, LLP and I probably pronounced that incorrectly but he’ll pronounce it correctly here in a minute. But he has been a tax attorney for more than 30 years, he has made it his mission to help business owners, individual clients, successfully resolve tax issues that go on with their lives. He has extensive knowledge of tax law and a desire for swift and vigorous defense and decades of experience with tax authorities and in the courts. And he has unusual perceptive judgment in assessing the best way forward and the right resources to achieve resolution. I’m excited to have him on the show. Please welcome to show me, Steve Moskowitz. Hey, Steve, how are you doing?
Steve:
I’m doing great. This is my favorite time of the year, it’s tax season. And I’m gonna have a good time because we’re gonna talk about taxes. As you know, we love to talk about taxes, who doesn’t?
Brett:
Exactly and I appreciate you coming in during this tough time here. Because it does, it gets busy, you know, for folks like yourself and anyone who’s a CPA and tax season. So that being said, let’s dive right in Steve, cuz we’re going to cover a lot today. Our topic today is would you rather pay $1 million, or 30 years from now with zero interest is kind of the time value of money. But before we go there, Steve, would you give our listeners a little bit more about your background and your current focus.
Steve:
I’m a tax attorney and I had our tax law firm before I was a tax attorney. I was a CPA. And I dedicated my professional life to helping people with taxes. And I have a heavy-duty background. And most people like me start with the giant firms that represent the fortune 500. And that’s how I started. And then I realized I could do so much more for small businesses and individuals. So 30 years ago, I went out and I started my firm. And it gives me to this very day such great satisfaction when somebody comes in, and I save them taxes and build their wealth. And there are so many ways to do that, for example, if we set them up with a retirement account, all of a sudden, they have to make the tough decision. Would they prefer to pay less taxes and put their money away in someplace safe? Or would they rather pay more taxes and have their money where they could easily have it taken away from them. So the bottom line is that gives me great personal satisfaction, and you grow with these people. And you see sometimes they come in with nothing or maybe a big tax problem. And all of a sudden you fix the problem. And then you start growing their wealth, and the things you talk about, and I’ve listened to your podcast, they’re so good because I’ve been espousing and stuff for years, like with the time value of money, I say, look how those banks made all those all that money, how they do that. It’s the time value of money because when you walk in the door and say you want a loan, they hand you money, how are they making money on that time value of money? Or when you deposit the money? How are they doing it? time value of money. And when I explained that to clients as you have on the graphic here, I say, if you had to pay a bill, and you have a choice, you could pay it today, or 30 years from today. And by the way, if you pay 30 years from the date, you won’t pay any interest. Which would you rather have? And the answer is really simple or the other way around. Would you rather if somebody says I’m going to give you a million dollars, would you like it today or 30 years from today? I would take that today. Thank you very much. That’s the time value of money. And that’s what you’re espousing. And it’s and it works so well. And so many people have made so much money. This is a basic financial principle. It’s very exciting. And I’ve heard you explained in a number of the podcast, how you make it work, because a lot of times when you hear something, it’s a teaser, you say, hey, you can save great money on this. Thanks. Time’s up and you explain. Well, here’s how you make it work.
Brett:
Yep, we’re gonna dive all into that. I’m so excited because I feel like some folks on the episodes are in the same field. And, and you are so we’re gonna dive into that here in a second. Now, I want to take a step back though. If you know Steve, I believe we’ve all been given certain gifts in this life and these gifts are given to us to be a blessing or help to others. Some people call them superpowers. Some people call them strengths. I want you to pitch yourself in university days or high school days, you know, and, you know, maybe identify one or two gifts that you believe you were given, and how those gifts help how you help people today.
Steve:
Let’s go back to university days, I was a professor for 10 years. And one of the things that I would talk to people and whether it was in law school, or graduate school or university, one of the gifts is helping somebody with their career, because a lot of times people were saying, Well, what career should I take? Should I do this? Should I do that, it will take a whole lifetime. And it’s been a long time. to clap. Today, some of those students were my students 25-30 years ago, and still, come back and say, Hey, Steve, I did what you said, and look at my career. Now, once again, great personal satisfaction. And that’s what I try to do with business. You know, I’m not some guy that says, the code provided under regulation 1234, that you must push this lead makes you crazy, don’t hear it. But instead, say, look, you know, the law and business and tax lives, and one thing are about taxes. Everybody understands that one of the purposes of the tax law is to get money. But for most people that’s only one purpose, there’s another purpose to the tax law that most people overlook. In a democracy, the government can’t order us to do things like Okay, Mr. Business person, you have to buy this machine or buy this building to do this. But they want us to do it because it’s good for the economy. So how does the government get you to do something that they want you to do? But they have no power to audit, they give you a tax incentive. So sometimes when people say, Well, wait a minute, how can the fortune 500 make billions with a B in profits and not pay any taxes? And here I am, little guy and I’m paying all these taxes? How can that be? Because the government says, Well, wait a minute, there’s economic good here, if you go ahead and buy that machine, or you do this, or you do that, there’s benefit to society’s benefit. So what I’m saying is, that’s what tax planning is saying, okay, the government in their infinite wisdom said, If you do this, there’ll be a tax benefit, you take advantage of them. And a lot of times, it makes good business sense to do something with a sometimes really just a tiny change, you have tremendous tax savings. And that’s what I’m all about. Because I made the shift from being a CPA to being a tax attorney, I was a CPA, before I set foot into law school. So when I, when I switch, we still do to turn white I switch. Because I want to be the guy to say, look, you can do this in this in this to me what tax is all about, you spend a year of tax planning, tax return itself, it’s merely a summarization of that year of tax planning, where when I was working as a CPA, an awful lot of the people were just okay, you get a bunch of forms, and you move the numbers from this paper, too much more about it, and you see what you can do with tax planning. It is astounding. But there’s a lot of things that are hidden in the tax law. So think about this, envision your desk, and suppose your desk was empty. And I put one piece of paper on the desk, and I said, you look to your local IRS office and claim a million dollars. But this piece of paper, I’m sure you pick up the paper and you take it to the IRS. What is this, I put this piece of paper on your desk, the same piece of paper. And then I backed the truck up to your desk and I dumped a million pieces of paper on your desk. Now, you never take that one piece of paper, that special piece of paper to the IRS. And you said well, why didn’t you take it, it was right there was on your desk because you didn’t see it. If you understand that you understand our tax law, there are that million pieces of paper on there on your desk, and there’s that special one that’s buried, you have to know how to find it. And that’s part of what I’ve dedicated my career to. Because for 30 years, you know, when you get into this and you learn and you say well wait, there’s this law that we know where that special piece of papers hiding was you look at your desk, your head swim, you say, Oh my god, there’s a truck backed up, there are a million pieces of paper on my desk.
Brett:
Very well said in a great analogy, which leads into the topic, would you rather pay a bill today for a million bucks, or 30 years from now is zero interest. So one of the biggest things with the deferred sales trustee that we get is, you know, we’ll want to have to pay this tax, you know, at some point like yeah, if and when you receive the funds from the trust, right interest payments, you’ll pay ordinary income if you dip into principally play some capital gains tax as you receive it. By the way, the same thing as a 401k. Right, the same thing as an IRA, very similar, the same thing, even like a 1031 exchange if you have a boot. And so understanding the time value of money and tax deferral, right, what that can do for you and help you create and preserve more wealth is what we’re you know, we’re talking about here, along with though, along with and I’ll just jump in, adding the dirt, the ability to diversify and stay liquid right. So that I found with you know, Chaired Orinda Trust, 1031 Exchange, Delaware Statutory Trust, versus the Deferred Sales Trust, all the other ones either giving it all away to charity, or you’re not able to diversify, right, you have to sell real estate, low or high and you know, buy it higher 180 days later with a 1031. Right? Or go into like a Delaware statutory trust, which is just another form of 1031. So would you just expound upon time value money, but plus the ability to diversify and be liquid with it with the investment?
Steve:
You know, the reason I was smiling when you were saying that the example that you gave is the exact example I give, when I’m talking about retirement, sometimes the client says to me, Well, wait a minute, if I put the money in a retirement account, when I take it out, don’t have to pay tax, then and I say, Okay, let’s look at this example. Suppose that you start and you put 100 grand into the account. So we save taxes. And years later, your account has grown, and bear in mind that all the earnings there are not being taxed while they’re being earned. So they grow faster. Now you have a fund with a million dollars in it. And let’s take the worst case, let’s say when you retire, the tax rate was half 50%. You pay half a million in taxes, you have half a million left, would you rather have that half a mil? Or would you rather have the 100 grand? Oh, that’s how it works. That’s the way I explained retirement accounts and tax on.
Brett:
So now expand upon the ability to diversify, because it’s not just the tax deferral strategy, but it’s the investments behind that and making sure that you can put it into, you know, different vehicles at different times and spread that out.
Steve:
Well, sure. Yeah, basic, you know, basic planning with financial, and it goes way back to fairy tales. Don’t put all your eggs in one basket. And the idea is that if you diversify, it’s extremely unlikely no matter what happens in the markets, that everything would go bad. It’s like, no matter that the reason you have a market is that somebody thinks something’s going up. And another person thinks the same thing is going down. And no matter how bad things are, somebody makes extra money. For example, right now in a pandemic. Could you imagine if you bought zoom before the pandemic?
Brett:
You’d be doing great right now!
Steve:
Oh, my God. Well, you know, it’s not just zoom, it’s, you know, you look at Amazon, and you look at some of the others. So what happens is, it’s not that everybody goes down or up. It’s choosing wisely and getting in at the right time. And then saying, Okay, this is how it is regardless of the conditions, I’ve made money.
Brett:
Excellent. So now let’s dive into just overcoming false beliefs. So someone comes to you, Steve, and they’ve never heard of it. And Steve, there’s their CPAs Never heard of it. Right? And it seems like it’s too good to be true. Steve, everyone, I’ve known about it, what’s your best way to help educate and help bring somebody along? But sometimes these deals are time-constrained, right? Where you have like, 30 days to make a decision, right? We need to do tax planning, typically, especially for highly appreciated assets before the close of escrow even before contingencies have been removed. Right. So walk us through. Yeah, yeah. So give you that. So yeah, 30 days, it’s a $10 million sale, it’s a business sale, it’s going to cost the guy 4 million tax. He just heard about, yeah, he calls you what, give us a tizzy in 30 days, how you’re helping him overcome the false belief that it’s too good to be true.
Steve:
You know, that boy knows an awful lot of overlap between what you do. And when I do, because I hear that all the time. He says, my CPA never heard of that. And I said That’s why you should switch away from him or her. And so many times, I heard somebody come in as a deal-breaker. And remember going back to my example. That’s why I went to law school when I was a CPA.
So he’s too good to be true. So like anything else, you take a look at it. It’s like, right now the government is in, we can talk about later, and is giving away a lot of money. free money. So what’s too good to be true, but that’s what the law is now. So what you want to do is you want to say, Well, wait a minute, if you haven’t heard of something, you want to go to somebody that does and say, Well, look, let me prove it to you. Let me tell you what’s going on here. And in my practice, that happens all the time. Another thing I’ll get all the time, is somebody says to me, is this No. And I was around for years. Well, my guy never told me about that. He said, Well, that’s why you’re in my office instead of his or her office.
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