Business Income Tax Solutions

OBJECTIVE: To generate current income tax deductions while funding vehicles where investments can grow tax-efficiently and generate tax-efficient payments throughout retirement while transferring additional wealth tax-free to heirs and/or favorite charities.

Thomas and Virginia Smith achieved great success in their business. Instead of spending all of their income on their lifestyle, they wanted to maintain a comfortable salary and accumulate the excess taxable income tax efficiently. The team of advisers recommended that they move beyond Level 1 on the planning pyramid to consider qualified plans at Level 2, non-qualified plans at Level 3, charitable solutions at Level 4, advanced executive compensation plans at Level 5, and hybrid charitable and non-charitable strategies at Level 6. These solutions are summarized at and below:









  • Business owners ages 30-80
  • Annual taxable income over $200,000
  • Average to good health
  • Net Worth of $500,000 or more
  • Interest in effective wealth transfer strategies
  • Adequate liquid assets with a desire to generate more after-tax retirement income


  • Provides secure lifetime income for Generation 1
  • Leverages available exemptions to improve inheritance for Generation 2

*Please ask how taxes on Excess Taxable Income can be deferred using vehicles that grow wealth tax-efficiently and distribute wealth tax-free. See

The Smiths' advisers illustrated the Smiths' high income taxes on 1) their business income used for their lifestyle and 2) their excess income not used for their lifestyle. The advisers customized a graphic like the one displayed to the right.

The Smiths' advisers then helped the Smiths calculate how much extra wealth they could accumulate if they:
1) invest excess income without taxes;
2) grow assets without taxes;
3) distribute assets without taxes (during their retirement or at death).

The results were dramatic:

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