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Dr Gregg Larivee gives their insight on the cost of poor health, while Les Winston discusses the business philanthropy.
Episode Transcript
Intro:
Welcome to the Practical Tax podcast, with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz, LLP, a tax law firm.
Disclaimer:
The information contained in this podcast is based upon information available as of date of recording and will not be updated for changes in law regulation. Any information is not to be considered tax advice or legal advice and does not form an attorney/client relationship. Further, this podcast may be construed as attorney advertising. You should see professional consultation for your individual tax and legal situation.
Chip Franklin:
All right, welcome to Practical Tax with tax attorney Steve Moskowitz. I’m Chip Franklin and Steve, boy, I tell you, I’m excited about today’s show because we cover a wide variety of areas, all which have at some heart of it, like most things, to do with the taxes we pay and what that means about our quality of life. And I mean, obviously with the extensions and the tax, even this has been a really busy time for you, this time of year. When you see people that are filing these extensions, I mean, I’m one of them. Well, what happens to people that they would file this late in the year?
Steve Moskowitz:
Oh, that’s very common. And for example, we oftentimes tell clients, we advise them to file extensions because you know how I’ve talked about retirement accounts and how that’s such a benefit? Cash flow. So what happens is you have with a lot of the accounts, you have up to the time of filing the return plus extension to set them up and fund them. So I suppose you have this situation: you’re a business person, and this is a tiny little bit technical because it gets into the accounting and the tax.
You’ve made a big profit on your taxes, but you don’t have any cash because you spent your money on inventory, which is an asset on the balance sheet. So they say, “Well, wait a minute, I’ve made all this money on my tax return but I don’t have any cash because I reinvest it in the business,” and that’s sitting there in inventory. So you say, “Well all right, that gives me an extra half a year to earn,” and then the money that I earn, I can put into the pension plan on or before the due date, including extension. Again, that date varies depending on the form of entity and the plan you have. But that’s a good reason to do it.
Chip Franklin:
Yeah.
Steve Moskowitz:
And then you legally greatly lower your taxes with money you’ve earned three quarters of the way into year two, that you’re deducting from year one where most things you have to write the check in year one. This is an exception, that’s one of many.
Chip Franklin:
Yeah. I think I’ve filed an extension for 20 straight years now. And it’s not for any of the reasons you said, it’s most-
Steve Moskowitz:
A lot of times you’re waiting for documents from others.
Chip Franklin:
Right, and that happens too. All right. One of the biggest issues facing not just Americans but almost everybody in North America and in Europe, is healthcare and how it affects not only obviously businesses and individuals, but our society as a whole. Our first guest today is Dr. Gregg Larivee, I almost messed his name up, Dr. Gregg Larivee, and he’s created the Integrated Medical Center in Florida and he’s been treating NFL, MLB, PGA, and NBA athletes, plus people from all sorts of life for more than 20 years. And he is nice enough to take the time to join us here on Practical Tax. Doc, good to have you here. Thank you so much.
Dr. Gregg Larivee:
Thanks for having me.
Chip Franklin:
We had a great conversation before we came on about sports and I think sports is for many Americans, is an escape, but for many of these athletes, obviously it’s something they can’t escape as when they leave the sport later on and the injuries that they’ve had. But I think you can draw also a slight parallel for Americans too with the way we, and how we don’t exercise and the things that we carry throughout our lives and in some cases, shorten our lives. I guess I want to ask a question, start out with a question for both of you. The societal costs that poor health inflicts not only on a personal level but to society as a whole, it’s a problem for both individuals and of course businesses. Let me start with you Gregg, in your opinion, how serious is our national healthcare establishment and also the way that people eat and maybe don’t exercise enough?
Dr. Gregg Larivee:
Yeah, I mean, I think as a society and as a workforce, we’re unhealthy as a whole. We sit too much, we eat a lot of unprocessed food, we consume too much alcohol, and we don’t exercise enough. The cost in terms of dollars, managing unhealthy behavior is astounding. The cost in terms of dollars, in terms of lost productivity is monumental, so all these things have an effect and a trickle down effect, which affects everybody from a personal level to different companies and organizations.
Chip Franklin:
Steve, obviously the money part, when you look at this for whether it’s a large corporation or a small business, how do you treat an issue like this? If you’re starting your business, you’re bringing employees in and you and I had this conversation yesterday about information and the value of your health information across the board, it’s a difficult balance, right?
Steve Moskowitz:
It is, and here’s the way I’d resolve it. I think the employer should pay for healthcare. I pay for healthcare for my employees, I always have. But what you have to be super careful about is, in my opinion, you don’t want the employer involved in the healthcare of the employee because then the employer gets too much information and then the employer says, “Well, wait a minute, now you have this condition and I don’t think you’re good enough to work for me,” or, “I demand that you do this and stop doing that.” How intrusive can that be? And then the employer says, “Well, wait a minute. Now this would really be good for your health if you did A, B, C, D, and E,” and all of a sudden they’re regulating your life. So the minute you say get involved, the problem is that gives them access to your, what’s more personal than your health?
Chip Franklin:
Yeah, well, I mean sports franchises, they have a vested interest in what people do. In your experience Doc does for example, the Dolphins tell a player, you can’t smoke cigarettes because your athleticism is a big part of your contract and we don’t want you to do it. Do they have that kind of decision making abilities?
Dr. Gregg Larivee:
Yeah, I mean there’s all kinds of clauses in the contracts from, for example, one of my players just didn’t cut weight, so he missed one of his bonuses. So there’s all kinds of clauses in contracts trying to manage players’ weight and behaviors as well, I mean so a lot of guys are not allowed riding motorbikes or going skiing, it’s a great way to tear up your knee. So these are organizations like any other company obviously dealing with big time dollars and they have a vested interest in the behavior of their employees.
Chip Franklin:
It’s funny, I think about some of the baseball players and football players from the past, maybe before your time Doc, but I know Steve would remember. You remember a guy named Sonny Jurgensen?
Dr. Gregg Larivee:
Oh, of course.
Chip Franklin:
All right, Sonny had a pot belly, right? And Sabathia, the pitcher for the Yankees and he was way overweight, but he could perform.And I was not viewing him from the stands, I want to get that straight, but look at Babe Ruth’s belly. But boy, he sure could hit home runs.
Steve Moskowitz:
And I was not viewing him from the stands, I want to get that straight, but look at Babe Ruth’s belly. But boy, he sure could hit home runs.
Chip Franklin:
I wonder how heavy he really was because he was so athletic. And I think maybe that came along later on, and it’s much more romantic to think of this fat guy being such a great athlete. He has World series pitching records in addition to 714 home runs, but looking at medical coverage, and I agree with you 100% Steve, that corporations should pay for it. But I also think that when they do, it says something to the employees and it’s also in their best interests. Would you agree, Doc?
Dr. Gregg Larivee:
Yeah, absolutely. I mean, and the thing that is important, if you look at society right now, let me tell you this number, 42%. 42% of Americans are overweight. Wow, that is unbelievable. The top three most expensive chronic diseases to manage are heart disease, diabetes, and arthritis and the number one cause of all those three is being overweight. So I think we have to step in and encourage companies to implement not only the care, but also preventative type measures to stop these trends from moving forward. At some point, we have to step in and we have to educate. We have to educate people on how to manage their diseases, but also the lifestyle changes so the younger population that’s getting into the workforce doesn’t end up with all these types of chronic problems. And the other thing too is adding to that, is mental health. We keep on talking about all these physical ailments, but mental health is a big one as well.
Chip Franklin:
Steve?
Steve Moskowitz:
And I firmly believe in education is wonderful. We say, “Look, if you eat these foods, it’s better for your health. And if you do this and abstain from that, that’s terrific.” But where it has to stop is that the employer doesn’t get to mandate the well, you don’t smoke. Now, again, I don’t think there’s anybody that doesn’t know about the dangers of smoking, but if you mandate that you don’t smoke, what happens is then people will hide it from you and then not go the doctor for treatment because now the doctor’s going to tell the employer so you’re actually causing him harm. Where if somebody’s doing something that he shouldn’t do, all right, bad enough, but now he’s afraid to go for medical care. So you have to be practical, people are people and they’re going to do what they’re going to do. And even if it’s an unhealthy behavior, teach him or her about it. But the minute you mandate it, you’re going to make worse problems.
Chip Franklin:
Well Steve, you talk about this all the time and about incentive programs, how the government, in many of our cases, the deductions that people can take incentivize corporations to be able to grow and to do R&D and other things. But what about, how would you feel Steve, about tax incentives to get corporations to offer wellness programs for employees along the line of education here? I mean, I think they have it.
Steve Moskowitz:
That’s great as long as there’s an absolute confidentiality, the employer is not entitled to the medical records, it’s none of their business. And again, I’m an employer, but that’s none of my business. I like my employees, I care about them as human beings, but there’s certain questions I don’t ask because it would be intrusive, and that’s an area that I think is highly personal.
Chip Franklin:
I remember once I was working for Disney and we had softball, our team would get together and we would compete against others and somebody got hurt and then Disney would send somebody out then after that to make sure certain things, for example, to make sure that people knew where to stand in the infield. And he literally would tell our team, because somebody got hit, it was a short stop, he was flirting with a girl on second, he got hit in the stomach by a live drive, line drive. And it’s lucky, hit him in the stomach. But I mean, it’s funny that there are some risks that are just part of getting up every day.
Steve Moskowitz:
Sure.
Chip Franklin:
And as long as people understand that, I ran into a guy at the park today and got in a big argument because we were talking about alcohol and he said, “The teetotalers live long.” He was telling this woman who said she’s not going to drink anymore, she’d lost her gallbladder. And he said, “Well, teetotalers live longer than people who drink.” And I go, you can’t just say that, you don’t know this person’s personal history, but we have that. We have people that say things all the time, that in a real small sample might actually be true. And that’s why a wellness program and giving people information, as much information as you can give them and still remain within that area of accuracy that you should for a physician or for anybody that’s doling out information like that. I just think you’re right Steve, if we have a wellness program that doesn’t require personal information for somebody, how can we go wrong? I mean, do you see that in the NFL? Do they offer information that that is a carrot and not a stick too?
Dr. Gregg Larivee:
Well, in the NFL, you get an MRI, it follows you around. And that’s why a lot of the players seek treatment privately, pay cash for an MRI so that way they can know what’s going on without the teams finding out because they run their own exams, their own physicals. You have to pass a physical before trade or you sign a contract. But a lot of these players want to be ahead of the curve and find out what’s going on with, for example, their knee pain so they’ll get an MRI and get treatment without giving that information to their employer. And at the end of the day, I mean there’s big money to be had and the owners need to know whether the player is injured and has prior injuries. So there’s a catch 22 if you look at it from both ends. But I fully agree with the-
Steve Moskowitz:
It’s very, very specific. I understand where there’s such a physical requirement in the NFL.
Dr. Gregg Larivee:
Mm-hmm.
Steve Moskowitz:
However, the employees are getting an awful lot of money so if somebody says, “Well, I want access to your health records and I’m going to give you 20 million bucks for it,” you might be more willing to do that than if you have a minimum wage job. And I will always remember when I was young in New York, before I was an attorney, I was an accountant and I went for a job and part of the job was I had to pass a physical to be an accountant. And I said, “Well, I’m sitting at a desk, why do I have to pass a physical?” I thought that was so intrusive, but again, I didn’t have any money and I needed a job. So I submitted to it, and I was young and I was fine, but I really resented it because it’s like I’m going to be sitting at a desk pushing a pencil. Why do you have to know about my physical? You can be an accountant and not be in perfect health.
Chip Franklin:
Now but Steve, would you have had a problem if the results of the physical didn’t go to them and you got to keep it? They just wanted to make sure you were-
Steve Moskowitz:
That was a requirement of the job. If I didn’t pass the physical, I wouldn’t have gotten the job.
Chip Franklin:
Oh wow. Wow. Well, just to sum this up, Gregg, I remember the first time I met a guy named John Mackey who was a tight end for the Baltimore Colts in the ’50s and the ’60s. And I never saw him play, or at least I don’t remember seeing him play.
Steve Moskowitz:
Came to your cradle when you were a baby, wasn’t that right?
Chip Franklin:
But my sisters and my father would tell me the story of later on, he had severe CTE issues. I mean when he was 45, he couldn’t go to the store by himself. And out here, that’s happening in some ways with Brett Favre, the quarterback, Jim McMahon for the Bears in the ’80s. I would like to see something protect these young men with such a small window to earn a lot of money which we know, and Steve will tell you this, we’ve talked about it before, that money doesn’t last. It comes quickly and has a lot of strings attached.
Steve Moskowitz:
And Chip, where are you going to start because by the time you get into the pros, how many hits have you taken in college, in high school, in pickup games? So it’s not just the guy walked in, he was in perfect health and then the NFL did it all to him. How much damage, when you’re young, your body can really tolerate a lot. So how many hits did you take in high school and college that are kind of contributing to it? And Gregg might agree that a lot of these injuries, it’s not one big injury that does in a lot of these guys, a lot of times I think you can, again, I’m not a doctor so I’m leaving that for you.
Dr. Gregg Larivee:
Yeah.
Steve Moskowitz:
But a lot of times, one big injury, you can survive and heal up. It’s just that constant hitting and hitting and hitting the body just wears out.
Chip Franklin:
Well Gregg, I mean, obviously that’s a lot of truth to that and it’s hard to find the tipping point when it actually does occur but,
Dr. Gregg Larivee:
Yeah, I mean, I’ve been talking a lot to my NFL contacts at the head office and I’ve been on a lot of radio calls discussing the new protocol and to his injury and the old protocol. And how did he get out on the field on that Thursday night after it looked like he had suffered a concussion on Sunday and how’d he get back on that field.
Steve Moskowitz:
He looked like he was staggering.
Chip Franklin:
Oh, God.
Dr. Gregg Larivee:
Correct, yeah [inaudible 00:17:18].
Steve Moskowitz:
He was staggering.
Chip Franklin:
Yeah.
Dr. Gregg Larivee:
Yeah. I was at home watching the game with my boys and he took that hit. I mean, okay, he’s gone for the game and next thing you know, he’s out there in the second half. And what that was, there’s a loophole in that old concussion protocol that suggested that if the staggering came from an orthopedic cause, and in this case they said low back pain, then he could come back on the field. So it was gross motor instability. But there was an little asterisk there that said that the stumbling’s orthopedics so he could come back on. Then obviously they did the investigation. The new term is they took out the gross motor instability, they put in the new term ataxia, and now they’re going to err on the side of caution. Anytime you stumble, whether neurological, orthopedic, you’re out of the game. And exactly like you guys mentioned, I mean, they’re dangling a lot of money in front of these guys. We have to protect them, anytime. We’re all athletic. I suffered my own concussions back in the day when I played hockey. You got your bell rung, cool.
Chip Franklin:
Yeah.
Dr. Gregg Larivee:
Let’s go back out there. So we have to have something in there. Now these guys are bigger, faster, hitting harder, we have to protect them from themselves. All the players want to play and the teams want to win. But we have to implement measures to protect these players so that way they’re not dealing with these long term concussion symptoms. And Steve, you’re right. I mean, you get the one concussion and you’re fine. It’s the second and the third that adds up that causes all these long-term effects.
Chip Franklin:
Well, and hopefully there’s a lesson and a metaphor for all of us in here about again, the risks and understanding the risks and corporations that obviously want employees to feel like they really care about them without digging deep into their medical information to use it against them. It’s all a big part of it. Dr. Gregg Larivee, thank you so much my friend. Really good to talk to you. I really enjoyed it.
Steve Moskowitz:
Really enjoyed it Gregg.
Dr. Gregg Larivee:
Thanks for having me. Thanks for having me guys.
Chip Franklin:
Thank you so much. See ya. Wow, lot there to unpack. But I think your point is dead on, and it’s interesting Steve, I think that a lot of people don’t think it through the way you did, to go down that rabbit hole.
Steve Moskowitz:
Do you know how many years ago it was that I had that job in New York? And I still remember it and I still resent, and again, I was basically little more than a kid. Of course, I was healthy, but I resented it and I said, “Why do I have to take a physical to sit in a desk and push a pencil as an accountant?” But again, the medical report went to the employer, not to me. And if I wasn’t, I don’t know how healthy you have to be an accountant, but if I didn’t pass the medical, they wouldn’t hire me. That was a term of the work, of the employment.
Chip Franklin:
Now it’s time for Ask a Tax Attorney. Can I get rid of my tax debt in bankruptcy?
Steve Moskowitz:
Lawyer’s answer, it depends. So let’s start off with the bankruptcy law that says it must be more than three years past the original due date or two years late file to discharge the income taxes in bankruptcy, and the return itself must not be fraudulent. So what happened was, here in California, the Justice Department won a case at the appeals level that said what some people had been doing was indeed fraudulent. What some people had been doing was they didn’t file a return for years. Five, 10 years, then they’d file a whole bunch together, then they wait two years and they file a bankruptcy and not pay the last 10 years of taxes and that was legal.
Chip Franklin:
Wow.
Steve Moskowitz:
So the Justice Department said that was fraudulent. So what the answer is now is it depends what’s been done. So if somebody walked into an office here today and said can they discharge their taxes in bankruptcy, the lawyer involved would have to do the research on that particular client, see what was done on that particular client with the government because the government does stuff too. And then determine is this particular client eligible to discharge these taxes in bankruptcy or not? So now what happens is some people may be and some people may not be, it’s not the slam dunk that it used to be.
Chip Franklin:
What percentage of tax debt is from either illegality or any kind of illegality is fraud or just, I mean does it make a difference?
Steve Moskowitz:
So what happens is something fraudulent like you only report part of your income. A business person that doesn’t report all their income or they make up deductions.
Chip Franklin:
Well, what other reason would you have tax debt other than some sort of illegality?
Steve Moskowitz:
Oh, easy, just to pay your taxes. No, I wasn’t joking Chip. I mean, that happens with business people all the time. Think about it, you run Chip’s haberdashery store.
Chip Franklin:
It’s a great store by the way.
Steve Moskowitz:
Great store and thank you, this is a beautiful tie. And what happens is you make a profit of a million bucks, but you’re the store owner, you’re not an employee so there’s no taxes withheld. You’re supposed to pay estimated taxes, but you don’t, and then you go out and you spend the money.
Chip Franklin:
I get it.
Steve Moskowitz:
So the bottom line is on your tax return, you’ve done nothing illegal. You’ve reported all your income, all your expenses are legitimate. But where you made your mistake was you didn’t pay the estimated taxes and you spent all your money, you spent your part and the government’s part, and now you just don’t have anything to pay them, that’s common.
Chip Franklin:
That’s Ask a Tax Attorney with Steve Moskowitz.
Time now to kind of dive into our next guest, which is something that you and I talk a lot about and I don’t want to embarrass you, but I know that it’s something that you’ve always been committed to, which is philanthropy and just making sure that the lives of people who haven’t been as fortunate as you and I and others, I think it’s a real important thing that’s a big bedrock of, I think of the Adam Smith principle of capitalism, I think in my opinion. Our next guest is a philanthropic advisor and founder of socialsecharity.org and chairman of the Endow America Network Foundation. Les Winston joins us here on Practical Tax. Les, welcome. Thank you so much for being here.
Les Winston:
Hello, it’s great to join you. Nice to join you Steve.
Steve Moskowitz:
Thanks.
Chip Franklin:
Let’s just jump into this because not only philanthropy is not only a great thing to embrace, for example, charitable endowments and tax breaks. Can we also explore this: how does philanthropy work for charitable organizations and also for corporations and individuals who contribute? And so I think it’s something that most people don’t really understand. We’ll start with you Les. If you can, explain to a little bit how you got into this why and how it works from your point of view.
Les Winston:
Well, I’ve been a chartered advisor in philanthropy since 2005, which was one, I think the first year that they were offering a course at the American College. And the reason I became a chartered advisor in philanthropy is I wanted to fully understand how to use the sections of the tax code which are very beneficial to donors. The trend in charity today needs to be not focused so much on the charitable entity itself, but when you’re trying to raise long term money, it needs to focus on the donor benefits as well. And there are sections of the tax code that were given to us back in 1969 that are really been used by the ultra wealthy in the country for a very long time, but have not been used by the middle class and other taxpaying individuals in order to benefit themselves and benefit their community. We’ve actually coined the theory of social secharity, we call it social secharity.
Chip Franklin:
Oh, I get it. Okay.
Les Winston:
And social secharity is, the theory of social secharity is actually 664 equals E squared. Now, 664 is a number that may not be known by many people. And one of the things that we’re trying to do with everything in our power in the Endow American Network Foundation is to get 664 emblazoned in people’s minds the same way that 401(k)s are or 529s are. And the reason for that to be there is so that when they have a situation that requires some planning using philanthropic devices, they will know that 664 means that.
And so what that entails is, and I ask this question right now at this time of the year, I ask my clients and anybody in our listening audience, if you are going to sell something, you’re planning to sell something, you have something that you’re going to be putting on the market, you have a capital gain in it and you don’t want to pay the capital gains tax and you’d like to get all of the income from that device, you can use a 664 or other social, so charity device to prevent the tax, to avoid the tax legitimately and also get a significant tax deduction while also maintaining all of the income. And that’s a really powerful resource today, especially in light of inflation the way it is and the fact that taxes are a major expense in any transaction, so that’s how we are viewing the charitable sector today. We think that non-profit organizations would benefit greatly if they had their own endowments.
Chip Franklin:
Steve.
Steve Moskowitz:
Les, we do charitable remainder trust in the office all the time. That’s what 664 is all about.
Les Winston:
Correct.
Steve Moskowitz:
And let me tell you how powerful this is. Suppose you have this situation, John and Mary are married and they have a beautiful home and they say it’s their intent, they’d like to live in their home for the rest of their lives. And then when the first spouse passes to their reward, the second spouse lives there. But when the second spouse passes, the home goes to the charity of their choice. And let’s say they did this right now in year one. And what we do is we have an actuary value what the legal stuff is, they’ve kept the life estate and given a remainder interest, so now what happens? An actuary comes in and let’s assume there was a million dollars equity in the house. And the equity says, well, based on your ages, the actuary says what you gave away was worth 700 and what you kept was worth 300.
And let’s assume these people live for the next 50 years. Right now, today in year one, this couple has a $700,000 tax deduction. That’s what Les is talking about so you think about it, physically, they get what they wanted, they wanted the house to go to charity, but if they don’t set up a charitable remainder trust, they don’t have any income tax benefit. If they set it up, then physically, everything is the same. They live in the house for the rest of their lives. But right now, today, while they’re alive, they can enjoy a lot more life, travel, whatever they want to do because they’re legally paying less income taxes and they’ve done a good thing. That’s why the CRT, charitable remainder trust at 664 is so incredibly valuable.
Chip Franklin:
That’s amazing, what you said there because I was always trying to figure, obviously we know about tax deductions from charitable giving, but the other side of that as well is the knowledge that you’re helping people, organizations.
Steve Moskowitz:
Here’s a good feeling too.
Chip Franklin:
Yeah, I mean, and that’s the thing that-
Les Winston:
Healthier actually.
Chip Franklin:
What’s that Les?
Les Winston:
Makes you healthier
Chip Franklin:
Yeah, I mean.
Les Winston:
Well, they’ve proven that. They’ve actually look at the biological, they’ve done studies and there is a biological physiological effect on the body when people are giving. We call it, we’re actually, we’ve been working on the era of human kindness. And when I say that, a lot of people snicker because it’s kind of hard to believe that this might be the era of human kindness. But we as an economic power, the United States has evolved from the political world and I think it’s evolving into the economic world fest than anybody else. And part of the economic world is human kindness. And human kindness is best expressed in philanthropy. And philanthropy can be a very powerful tool for the individual. So when we talk about it E squared, when we talk about the theory of social secharity where 664 equals E squared. E squared is creating the endowment for the individual first so that they can live on the endowment and then when they pass, they can direct that endowment to the non-profit world.
Chip Franklin:
Wow.
Steve Moskowitz:
And with what Les was saying about the kindness, what we have to remember is in the same world at the same time, there are horrible monsters and there are wonderful angels and we both populate the same planet. It’s like if you look at Ukraine with the monstrous destruction that’s going on there and the horrible thing that many people are doing. On the other hand, it brings out the best in people too when you look at people that are doing everything they can to take in total strangers and help them look at all those Polish people that are taking Ukrainian people into their, total strangers, come into my house, I’ll take care of you, feed you, you live here because you escape Russia’s missiles.
Chip Franklin:
Let me jump in here and say, because this is something I want to ask both of you. I’ll start with you Steve. What are the steps to incorporating charity into my financial planning? Because I mean, most people think of charity, they think of leaving some money at Starbucks in the box or whatever. And it’s interesting too because I know that what you said Les, it does make you feel better. And I think that teaching people having a plan to give to charity is something that it becomes generational.
Steve Moskowitz:
You see, there’s all types of things you can do from a tax viewpoint. Most people, when they think about charitable giving, they think about what you talked about Chip, where they say, okay, I’ll write a check to the church or the charity, but it costs them money and that bothers some people. They don’t want to pay anything. So the first one I mentioned is, didn’t cost you any money. You did a good thing and you saved a lot of taxes.
Chip Franklin:
Yeah.
Steve Moskowitz:
Here’s another one. Suppose you have an appreciated asset and you’d like to sell it, but you’ll have a big capital gains tax. So what could you do instead? You could say, well, I’ll make a deal with the charity where I’ll give it to the charity and then they’ll give me back a certain amount. And a certain amount can be a lump sum. Or what a lot of people do is do an annuity. And with annuity, they can check, they can either have a fixed monthly amount for lifetime or they can get a percentage of the portfolio. So as the portfolio manager does better and better, they get more and more money. So what does that do?
Okay well, what that does is if you just went ahead and sold the asset and then say put what you had left in the stock market, you’d have a lot less principle left because big chunk came out for taxes. When you give it to the charity, they sell it, but they’re not paying any taxes so they can invest a larger amount of money and therefore give you a larger payment. Again, everybody wins. And these are things that the government has done in the tax laws to incentivize charities.
Chip Franklin:
I think it’s just, it’s an amazing opportunity for people. Les, will you come back and talk more with us in the future on this? This is something that I think we need to revisit frequently.
Les Winston:
I think so if people want to learn more about it on our website, they can go to Social Secharity, socialsecharity.org. And also we have a streaming, we have radio program streaming 24/7, which is the Road to Human Kindness at Route664.org radio. That’s the best way to learn about this. We’ve interviewed a lot of people who were in the planning area, people who are philanthropists and makes for interesting listening. And I appreciate the opportunity to talk with you Chip, and nice to meet you Steve, and hopefully.
Steve Moskowitz:
Pleasure is mine, thanks so much.
Chip Franklin:
Thank you. Thank you, Les. Look forward to next time my friend, thank you so much. Before we go to our, end the show here, there was in the Johnstown Flood, a book written by David Halberstam, it talks about Carnegie who had really didn’t have a strong philanthropic bone in his body until after the Johnstown flood and the flood happened because the reservoir broke where the rich people would live and it flooded the town. And it’s interesting, the things that motivate people to change their lives. And I think that you look around the world today, a lot of motivation there, right?
Steve Moskowitz:
You know Chip, life happens and people oftentimes change in life. I really believe people can change. Now, not everybody, but people can change. And sometimes there’ll be an incident and you can have a situation where somebody says, “Ouch. I didn’t know it felt this way. I had no idea that it felt this way. And now I know what it feels like. I’m never going to do that again. And I’m also going to do something different to prevent somebody else from ever feeling this feeling.”
Chip Franklin:
Inspiration’s an amazing thing. Well, that’s another addition of Practical Tax with your tax attorney Steve Moskowitz, Chip Franklin too. We’ll see you next time. Thanks.
Steve Moskowitz:
Thanks.
Outro:
Thanks for joining us on the Practical Tax podcast with tax attorney Steve Moskowitz. To hear more and view more podcasts, go to moskowitzllp.com/practicaltax.