Shiloh Johnson Throughout my decade of experience working as a CPA, I saw firsthand the stresses and hassles that disproportionately affect small business owners who didn’t have the funds for tax and accounting support. After seeing this time and time again, I set out on a mission to ensure that small businesses of all colors, shapes, and backgrounds had access to effective and affordable tax support.
Episode Highlights Here:
Shiloh Johnson:
Number one secret. I don’t know if there are any secrets, it’s pretty obvious. I’m number one secret. I am a tax research buff at heart. So I do a lot of tax research. I have always had subscriptions to the major tech research platforms, the comfortable routers cch Wolters Kluwer are places where I consider, you know, reliable sources. So I say my secret is reliable sources of information and making sure that you’re not just like Googling, and then you took the first article on that must be true. Get to the core of real information that is backed by tax code that you then can verify. Sometimes we get too reliant on third party resources, and then an affirmation is transposed incorrectly and now we have a mess on our hands.
Pierce York:
Sure. Okay. So tell me Have you learned about the deferred sales trust on the sale of a highly appreciated asset? And kind of like, what are your thoughts on that?
Shiloh Johnson:
Oh, interesting. I haven’t done it first, Scarlett. Let me see, what are my thoughts on it? Um, I don’t know, teach me something. What do you get? I might have thoughts after you tell me some information?
Pierce York:
Well, it was. So okay, this whole, this whole podcast kind of like it is capital gains tax solutions, right. So its main objective is that our main kind of Cornerstone strategy that we like to use on the sale of a highly appreciated asset is called a deferred sales trust. And it is basically, it’s backed by IRC code 453. So it’s an installment sale at the foundation of it. But essentially, what you’re able to do is you’re able to liquidate a highly appreciated asset, it’s pretty agnostic to the kind. So it can be a stock or a business or real estate, or our crypto or whatever. It goes into this unrelated third party trust business trust, and then the asset is liquidated immediately, and that trust is funded. And then that trust turns around and writes you a note for 10 years at a certain preferred rate of return. And then those funds get reinvested into whatever you want. It’s an alternative to a 1031. Exchange, it’s, but it’s got a lot of benefits, including no time constraints, no, like time constraints. You know, you can sell a business and go into stocks and bonds and real estate, you could sell real estate and go into stocks and, and just sit on the sidelines until you find a good deal, and then go back. So there’s all these different advantages to unlocking a ton of different freedoms as far as time freedom, location, freedom, entrepreneurial freedom, a lifetime to freedom, it just opens up a whole world. So you’re not constricted, like you would be with a 1031
Shiloh Johnson:
traditional tent. Yeah, yeah. And
Pierce York:
so, you know, it’s the one of the things that we kind of come across, you know, relatively regularly is that, you know, it’s a, it’s a transaction, that’s not very common, because a lot of people don’t have these mega transactions all the time, right? Like, you’re not selling a, you know, $50 million business every day, right? Or even every year, right? That’s, maybe if you’re, you know, in the top 1% of the top 1%, you’ve done two or three or four of them, right. But the average person, even the person who’s making 15, is not having multiple transactions of huge assets and stuff like that. So you know, when the time comes, a lot of people don’t have a ton of information about that, just because this is not that frequent of a transaction, right, frequent on one event. So there’s a lot more, you know, knowledge and stuff from, especially from the different CPAs, and so on and so forth. You know, about strategies for income tax and all that kind of stuff. So one of the things Yeah, one of the things that we do is, you know, we focus on that particular, little piece. So when, let’s say one of our clients has that big transaction that comes in right, we have the strategy that allows them to just unlock a ton of these freedoms to go out there and, and reinvest the proceeds net of attorney fees instead of net of taxes. And so it’s just a really powerful strategy. It keeps wealth in the family. It can move assets outside the taxable estate and so You don’t have to pay the estate tax, your kids don’t have to pay the state tax if you pass when you pass, right? So it’s just there’s a lot of cool stuff about it. And so, you know what, we’ll have this conversation a couple times. You know, and so it’s just, we always like to kind of pose that question, right. And different people come in with different backgrounds, and so on and so forth. Right? The guy who’s doing tech, you know, like a tech startup for, you know, whatever, a call center or something, right, doesn’t have any idea what you know about the different tax strategies, and so on and so forth. Right. But I was just curious, I
Shiloh Johnson:
would say, I was gonna say, I will say that this super interesting for, like the founder of tech side of what I do, I think there is not a lot of competition around how to shift like these newfound valuations and your potential exit, and what will happen to that post the exit, especially in the tech space, because you have people who are amassing wealth at an unbelievable rate and what they’ve never had and did not exist in the family where this information wasn’t being shared. These revelations aren’t happening, like I have a trip but I know so many of my peers that don’t and haven’t have never even thought about creating one. So I just think it’s such an interesting and these are people that are much more wealthy
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Important Links:
- Shiloh Johnson
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About Donny Coram
Shiloh Johnson is a long-time accountant and founder of ComplYant, a technology platform offering entrepreneurs
stress-free guidance to manage complex tax rules and regulations year-round. Rooted in the mission to remove tax barriers for small or underrepresented business owners, ComplYant offers unique solutions to not only help founders navigate their taxes, but to anticipate owed taxes and budget ahead of time.
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