Wealthyist

 Exploring key tax provisions like Qualified Business Income (QBI) deduction and Qualified Small Business Stock (QSBS), and their implications for starting and selling a business, as influenced by the "One Big Beautiful Bill" (OBB).

Synopsis:
In this episode of Wealthyist, Dr. Brian Jacobsen and Brian Lamborne dive into the complexities of business tax strategies, likening them to an "alphabet soup" of acronyms like QBI and QSBS. They discuss how these provisions impact business formation, tax planning, and eventual business sales, particularly in light of the OBB's changes. The conversation highlights the importance of strategic entity selection (e.g., C corporation, S corporation, or LLC) and how it affects eligibility for tax benefits like the QBI deduction. They also touch on common pitfalls, such as business owners making uninformed decisions based on incomplete advice from non-experts or social media. The episode emphasizes the need for tailored professional guidance to optimize tax outcomes and asset protection.

Key Takeaways: 

1. QBI Deduction Overview: 
   • QBI (Qualified Business Income) allows a deduction of up to 20% on pass-through entity income (e.g., S corporations, LLCs, sole proprietorships) reported on personal tax returns. 
   • C corporations, taxed as separate entities, are ineligible for QBI unless they elect S corporation tax status via IRS filing. 
   • LLCs default to sole proprietorship (Schedule C) for single-member LLCs, automatically qualifying for QBI, but can elect S or C corporation tax status for strategic reasons. 
   • The OBB expanded QBI phase-in thresholds from $100,000–$500,000 to $150,000–$550,000, offering more room for high earners (e.g., doctors, lawyers) to benefit, though professionals face stricter rules above the threshold. 
   • Strategic planning, like using retirement plans (e.g., cash balance plans), can lower adjusted gross income to maximize QBI eligibility.
2. QSBS and Entity Choice: 
   • Qualified Small Business Stock (QSBS) applies only to C corporations, offering significant tax exclusions on gains from selling stock, making it attractive for businesses (e.g., tech startups) aiming for a future sale. 
   • Choosing an LLC or S corporation precludes QSBS benefits, as these entities don’t issue stock. Investors must align entity choice with their goals (e.g., income stream vs. future sale).
3. Accidental Entrepreneurs and Poor Advice: 
   • Many business owners become "accidental entrepreneurs," starting businesses without proper planning, often choosing entities (LLC or corporation) based on casual advice from friends, accountants, or social media (e.g., TikTok, YouTube). 
   • Entity choice impacts asset protection and tax outcomes. Corporations are designed for asset protection, with tax rules layered on, while LLCs offer flexibility in tax elections.
4. OBB’s Impact: 
   • The OBB extended QBI phase-in ranges, benefiting high-income professionals by providing more flexibility to claim the deduction. 
   • The episode hints at further discussion on QSBS in a future part, suggesting OBB may also influence QSBS-related strategies.
5. Decision-Making Framework: 
   • Business owners and investors should clarify goals (e.g., income stream vs. exit strategy) before choosing an entity. 
   • Consulting professionals (not social media or peers) ensures informed decisions about entity structure, tax elections, and deductions like QBI or QSBS.

Actionable Advice: 

• Work with a wealth strategist or tax professional to align business entity choices with long-term financial goals. 
• Evaluate QBI eligibility and consider tax planning strategies (e.g., retirement contributions) to stay within favorable income thresholds. 
• For businesses eyeing a future sale, explore C corporation status for QSBS benefits, but weigh against loss of QBI.

Next Episode Tease: Part two will compare QBI and QSBS in depth, offering a decision tree for business owners and investors. 

Note: For detailed tax planning, listeners should consult professionals, as individual circumstances vary. 

In this episode of Wealthyist, host Anthony Mlachnik, a senior wealth manager at Annex Wealth Management, interviews Collin Yelich, a former professional baseball player turned high-end real estate professional in southeast Wisconsin. The discussion focuses on Yelich’s transition from athletics to real estate, his integration into the Milwaukee community, and his work helping professional athletes and others settle into new environments.

Key points:

• Career Transition: Yelich shares the challenges of moving from a structured life as a professional athlete to navigating the uncertainty of a new career during the COVID-19 pandemic. He describes the sense of being "lost" after retiring from baseball and how his family’s real estate background, particularly his mother’s experience, eased his transition into the industry.
• Community Integration: Yelich highlights Milwaukee’s welcoming community, which made his move from California easier. He emphasizes the importance of community support for athletes and others relocating, drawing parallels between his experiences and those of entrepreneurs or retirees facing major life transitions.
• Helping Athletes and Newcomers: As a real estate professional, Yelich uses his athletic background to empathize with clients, particularly athletes, helping them navigate housing needs and settle into Milwaukee. He focuses on understanding their preferences and making the process efficient, given their busy schedules.
• Financial Strategy: The conversation touches on the importance of financial planning for athletes, balancing immediate desires (e.g., buying a dream car) with long-term stability. Yelich notes that these discussions often start early in an athlete’s career, such as when they receive a signing bonus.
• Community Impact: Yelich discusses his family’s Christian Home Plate Charity, which hosts an annual charity concert supporting local Milwaukee organizations like Live Like Lou, Visit Milwaukee, and the Brewers Community Foundation. The event fosters community engagement and is open to the public.
• Business and Sports Intersection: Yelich observes the growing integration of sports and business, particularly through social media and brand partnerships, which amplifies opportunities for athletes and entrepreneurs. He sees this trend expanding at both professional and college levels.
• Mental Strategies: Yelich shares insights on mental resilience, drawing from his athletic experience. He emphasizes focusing on a few key strategies to navigate challenges, a principle applicable to both athletes and entrepreneurs facing ups and downs.
• Memorable Experience: Yelich recounts his first home sale in Wisconsin, a modest $212,000 transaction, as particularly meaningful due to the trust a family placed in him as a young agent. He values building lasting relationships with clients, who often become friends.

The episode underscores themes of adaptability, community connection, and strategic planning, drawing parallels between the experiences of athletes, entrepreneurs, and others navigating significant life changes.

In this episode of "Wealthyist", hosted by Anthony Malachnik, Senior Wealth Manager, and Brian Jacobsen, Chief Economist at Annex Wealth Management, the discussion focuses on the implications of the "One Big Beautiful Bill" (OBBB), signed into law on July 4, for business owners planning their exit strategies. Key points include:

1. Importance of Exit Planning: Business owners are often deeply involved in daily operations, which can delay exit planning. The hosts emphasize the need for a proactive approach, supported by a team of advisors to navigate complex decisions.
2. Impact of the OBBB: The bill provides clarity on tax provisions, particularly by extending the Tax Cuts and Jobs Act of 2017, which was set to sunset in 2025. This allows business owners to shift from a reactive "use it or lose it" mindset to a proactive strategy.
3. Estate Planning Opportunities: The OBBB increases the estate tax exemption to approximately $15 million per person (indexed for inflation), enabling strategic moves like transferring business interests into trusts or family limited partnerships early to benefit from valuation discounts and growth outside the estate.
4. Business Structure and Taxation: The bill affects how businesses are taxed and sold. For C corporations, qualified small business stock (QSBS) provisions allow significant capital gains exclusions if shares meet specific criteria. However, buyers may prefer asset purchases for immediate depreciation benefits (100% bonus depreciation or Section 179 deductions), influencing whether a business should be structured as a C corporation or a pass-through entity (e.g., LLC or S corporation) to optimize for different buyers (e.g., family, management, or private equity).
5. Proactive Strategy and Flexibility: The hosts stress that early planning with professional guidance can maximize value and align with the owner’s goals. Even if initial structures are suboptimal, course corrections are possible with the right team.
6. Call to Action: The episode encourages business owners to consult with wealth management professionals to explore options, using a personal anecdote about a friend seeking advice to illustrate the value of collaborative planning.

The discussion underscores the importance of strategic, proactive exit planning with professional support to leverage the opportunities provided by the OBBB.

In this episode of the "Wealthyist" podcast, hosted by Dr. Brian Jacobsen, Chief Economist at Annex Wealth Management, and featuring Erik Strom, Director of Financial Planning, the discussion centers on the impact of the "big beautiful bill" on charitable giving and tax-efficient strategies. Key points include:

1. Standard Deduction Increase: The 2017 Tax Cuts and Jobs Act doubled the standard deduction starting in 2018, leading many taxpayers, including Strom and his wife, to stop itemizing deductions, which contributed to a decline in charitable giving. The recent bill permanently extends this larger standard deduction with an additional boost, and a new senior deduction is available even for those taking the standard deduction.
2. State and Local Tax (SALT) Deduction: Previously capped at $10,000, the SALT deduction has been increased to $40,000 through 2029, potentially encouraging more taxpayers to itemize. However, for incomes exceeding $500,000, the SALT deduction phases out rapidly up to $600,000, creating a steep effective tax rate.
3. New Charitable Deduction for Non-Itemizers: Starting in 2026, non-itemizers can deduct up to $1,000 (single filers) or $2,000 (married filers) for charitable contributions, incentivizing record-keeping for donations.
4. Charitable Deduction Floor for Itemizers: A new rule effective in 2026 introduces a floor for charitable deductions, set at 0.5% of adjusted gross income (AGI). For example, with a $200,000 AGI, the first $1,000 of charitable contributions is non-deductible, making strategies like bunching donations or using donor-advised funds (DAFs) more critical.
5. Donor-Advised Funds (DAFs): DAFs are highlighted as a tax-efficient way to frontload charitable contributions, especially in high-income years, to avoid the new AGI-based floor. Contributions to DAFs in 2025 can bypass this floor, allowing distributions to charities over time.
6. Qualified Charitable Distributions (QCDs): For those over 70.5 with required minimum distributions (RMDs), QCDs allow direct IRA donations to charities, excluding the amount from taxable income, which can help manage income levels to avoid SALT deduction phase-outs.
7. High-Income Considerations: For those in the top 37% tax bracket, a new limitation claws back itemized deductions, reminiscent of the Alternative Minimum Tax (AMT), which was largely mitigated by the 2017 Act but still affects those with incomes over $1 million. This adds complexity for high-income earners navigating tax planning.

The episode emphasizes the importance of strategic tax planning, such as bunching donations, using DAFs, or leveraging QCDs, to maximize the impact of charitable giving while minimizing tax burdens. Jacobsen and Strom stress the value of professional guidance, like that offered by Annex Wealth Management, to navigate these complex changes effectively.

In this episode of Wealthyist, hosted by Brian Lamborne, senior wealth strategist at Annex Private Client, and featuring new team member Anthony Mlachnik, the discussion focuses on strategic financing as a tool for the wealthy. Continuing from a prior conversation on tax-aware investing, they explore how strategic financing leverages assets to borrow money tax-free, providing liquidity without triggering taxable gains. This approach is particularly useful for short-term needs, such as relocating from Wisconsin to Florida, funding college, or buying a car, by using options like margin accounts, pledged asset lines of credit, or home equity lines of credit.

Key points include:

• Tax Efficiency: Borrowing against assets (e.g., stocks or home equity) avoids capital gains taxes, offering a cost-effective alternative to selling investments.
• Flexibility: Clients can bank with multiple institutions, and advisors help negotiate competitive rates, potentially saving on interest costs.
• Applications: Strategic financing supports personal transitions, business needs, charitable giving, and estate planning, such as gifting to children without selling stocks or using low-interest loans to facilitate business succession.
• Advisory Role: As fee-only fiduciaries, the team collaborates with clients’ professionals (e.g., lawyers, bankers) to tailor solutions, ensuring the best interest of the client over bank profits.
• Options and Customization: Strategies vary by situation, from using personal loans to family-held notes, emphasizing the importance of exploring all possibilities with a wealth manager.

The episode highlights the value of professional guidance in navigating financing options and optimizing taxes, with plans to delve deeper into advanced topics in future episodes.

In this episode of "Wealthyist," hosted by Brian Lamborne, Senior Wealth Strategist with the Annex Private Client Team, the focus is on tax-aware investing and aligning financial strategies with clients' purposes. Brian introduces Anthony Mlachnik, a new senior wealth manager at Annex Private Client, who shares his background and his experience working with complex clients nationwide.

The discussion centers on the importance of tax-aware investing, which involves aligning estate planning, investments, and tax strategies to optimize client outcomes. Anthony emphasizes the need to define a client’s purpose—such as family happiness or legacy building—to guide financial decisions. Key strategies discussed include:

• Tax-Aware Investing: Making investment decisions with tax implications in mind, such as minimizing taxes through asset allocation and loss harvesting.
• Purpose-Driven Planning: Helping clients identify their goals (e.g., spending time with family or passing wealth to future generations) to align financial strategies.
• Tax Loss Harvesting: Selling assets at a loss to offset capital gains, either in the current year or carried forward, to reduce tax liabilities.
• Managing Large Gains: Gradually reducing concentrated stock positions to avoid large tax hits, using tools like loss harvesting, donor-advised funds, or exchange funds for tax efficiency.
• Long-Term vs. Short-Term Gains: Prioritizing long-term capital gains for better tax rates and considering charitable giving to manage highly appreciated assets.
• Estate and Distribution Planning: Tailoring strategies based on whether clients want to spend wealth during their lifetime or pass it to heirs, leveraging tax benefits like step-up in basis at death.

Anthony stresses making investment decisions first and tax decisions second to avoid missing opportunities. The episode highlights the power of compounding tax savings over time and the importance of working with professionals to navigate dynamic tax laws and emotional decision-making, especially during retirement distributions. The episode concludes with a promise to continue the discussion in the next installment.

In this episode of Wealthyist podcast, hosts Brian Lamborne, a senior wealth strategist, and Alec Durand, an estate planning attorney with Annex Wealth, discuss the implications of the recently passed One Big Beautiful Bill Act in the context of the Tax Cuts and Jobs Act of 2017 (TCJA). The TCJA, effective since 2018, doubled the federal estate tax exemption to around $14 million (adjusted to $13.99 million in 2025), reduced income tax brackets, doubled the standard deduction, and introduced benefits like the Qualified Business Income (QBI) deduction and bonus depreciation for businesses. These changes simplified estate planning for many, as fewer people faced federal estate tax issues, and complex strategies became less necessary.

The One Big Beautiful Bill Act largely continues the TCJA provisions, providing clarity by making them permanent and eliminating the sunset provisions set to expire in 2025. Key updates include increasing the estate tax exemption to $15 million in 2026 (indexed for inflation thereafter) and maintaining income tax brackets and the standard deduction. This permanence alleviates concerns about the exemption dropping significantly, which would have impacted estates valued between $10-20 million. The bill also made minor tweaks to QBI and other tax provisions but didn’t drastically alter the tax landscape.

The hosts emphasize that the planning prompted by the TCJA’s potential sunset was still valuable and remains relevant. For high-net-worth individuals, particularly business owners, the clarity provided by the new law offers opportunities to refine estate plans, update documents like buy-sell agreements, and ensure alignment with current goals. They stress the importance of reviewing operating agreements, business valuations, and estate plans to avoid conflicts (e.g., between buy-sell agreements and trusts) and to prepare for wealth transitions, especially for estates up to $30 million for married couples. The episode underscores that while the new law didn’t change much in tax policy, proactive planning remains critical for effective wealth management and transfer.

Episode Focus: The episode explores the lifestyles, choices, and strategies of the wealthy, with a specific focus on their interest in exclusive and rare wines, wine trends, and the art of collecting and storing wine.

Key Points Discussed:

1. A Memorable Wine Hunt Story:
   • Ben from Waterford Wine (https://waterfordwine.com/) shares a story from 20 years ago when a CEO visited his store and requested a specific wine, Masetto. Initially unfamiliar with it, Ben researched and tracked down a rare three-liter Jeroboam bottle after persistent effort. This led to a valuable client relationship, showcasing the effort behind sourcing rare wines.
2. Wine and Alcohol Trends:
   • Ben discusses industry trends, noting that hard seltzers and craft beer have seen peaks and declines, while craft spirits are likely to decline soon. Wine remains relatively stable, but overall alcohol sales in Wisconsin have been declining over the last three years, except for THC products, which are rising due to a legal loophole.
   • At Waterford Wines, clients typically engage seriously after 3-4 years into their careers, shifting from bar visits to dining at home, insulating the store from industry declines and contributing to slight growth.
3. Guiding New Wine Customers:
   • Ben emphasizes a non-transactional approach, with staff spending about 25 minutes with customers to understand their preferences. Instead of asking about budget, they explore the customer’s goals (e.g., pairing with food or building a collection).
   • Staff are trained to taste wines across price points (inexpensive, medium, expensive) and learn engaging facts about each to guide customers effectively, avoiding limiting their choices based on cost.
4. Investing in Wine:
   • Wine as an investment has faded since its peak around 2000-2005, particularly with first-growth Bordeaux (e.g., Mouton, Lafite, Latour, O’Brien, Margaux). These wines, classified in 1865, were once high-growth investments but are less so now.
   • Ben advises new collectors to start small (e.g., buying 3-4 bottles) to explore preferences, as tastes evolve. Many clients ignore this and fill cellars quickly, only to shift preferences later (e.g., from Malbec to Italian wines).
5. Wine Storage and Cellars:
   • Proper storage requires a constant temperature (55-65°F) and high humidity to prevent cork drying and wine oxidation, which can be challenging in homes due to mold risks.
   • Ben advises against elaborate cellars until a true passion for wine is developed, recommending investment in wine first. Many clients build lavish cellars with marble floors and tasting tables but are encouraged to focus on the wine itself initially.
6. Wine Aging:
   • Most wines are consumed too young in the U.S. (within days). Aging 1-3 years enhances fruit character and smoothness. After this, savory flavors (e.g., herbs, potpourri) emerge, and the wine’s body lightens.
   • Vintage dates reflect the grape harvest year, and some regions (e.g., Brunello, Napa Valley) have mandatory aging periods before release, effectively pre-aging the wine.
7. Wine Travel Recommendations:
   • Ben highlights Napa Valley as an expensive but dramatic destination for wine lovers, with Sonoma Valley offering a more casual vibe, Paso Robles a farm-focused experience, and Willamette Valley a farmer-centric one.
   • Internationally, Italy is recommended for its hospitality, 2,000 grape varieties, and cultural integration of wine with food, enhancing the drinking experience. Clients often return with new preferences (e.g., Vermentino) and appreciate the lower alcohol impact due to pairing with meals and increased physical activity.

Key Takeaways:

• The episode blends storytelling, industry insights, and practical advice for wine enthusiasts, particularly those with wealth looking to explore or invest in wine.
• Ben’s approach at Waterford Wines emphasizes education, exploration, and building long-term client relationships over quick sales.
• Wine collecting is both a passion and a strategic process, requiring patience, palate development, and proper storage to maximize enjoyment and value.

This week's episode of Wealthyist podcast, hosted by Kent Helene, Associate Wealth Manager at Annex Wealth Management, features a conversation with Sandy Wysocki, Executive Director of the Sharon Lynne Wilson Center for the Arts. The episode explores the intersection of arts, philanthropy, and financial planning, particularly for high-net-worth individuals. Here’s a summary of the key points:

• Overview of the Sharon Lynne Wilson Center: Sandy discusses the center’s mission to provide a vibrant arts destination in Brookfield, Wisconsin, focusing on performing arts, arts education, and visual arts. The center serves as a cultural anchor in the Greater Milwaukee community, hosting diverse performances and educational programs.
• Revenue and Funding: About one-third of the center’s revenue comes from performances, which include:
  • Mainstage Series: Monthly shows in a 613-seat theater, featuring a variety of genres like country (e.g., Marty Stuart), Broadway, jazz, and bluegrass.
  • Matinee Series: Targeted at seniors, with popular shows like Hollywood Revisited, showcasing vintage movie costumes and songs.
  • Studio Series: Cabaret-style performances in a smaller, 100-seat venue with a casual, coffeehouse vibe.
  • Beyond the Classroom: Field trips for students, bringing books to life through performances.
• Donations and Philanthropy: Donations are a significant funding source, driven by nostalgia (e.g., parents whose children performed at the center), financial planning needs (e.g., required minimum distributions), or a desire to make an impact. The center maintains transparency with financials and impact reports on its website to build trust with donors.
• Financial Planning Connection: Ken ties the center’s work to wealth management strategies, such as:
  • Charitable Giving: Donating appreciated stock to avoid capital gains taxes, benefiting both the donor and the center.
  • Estate Planning: Incorporating charitable giving into trusts and legacy planning, especially relevant with the $80 trillion baby boomer wealth transfer.
• Future Goals: The center aims to celebrate its 25th anniversary in two years by increasing its endowment for sustainability and upgrading technology (e.g., sound and lighting systems) to remain state-of-the-art.
• Community Impact: Sandy emphasizes the arts’ role in enhancing mental health and fostering shared experiences, distinguishing live performances from digital consumption. The center’s free Starry Nights outdoor concerts, starting June 27, 2025, were highlighted as an accessible community event.
• Notable Highlight: Sandy shares her enthusiasm for the Ukulele Orchestra of Great Britain, a surprisingly entertaining act that sold out and is planned to return in a couple of years.

The episode underscores how the Sharon Lynne Wilson Center balances artistic programming with financial sustainability while aligning with wealth management strategies like tax and estate planning for charitably inclined individuals. For more information, visit annexwealth.com or wilson-center.com.

In episode 25 of "Wealthyist," Annex Private Client Wealth Strategist Brian Lamborne  discusses charitable giving with Jason Kohout, Chair of the Family Office area at Foley and Lardner and director of the Wisconsin Philanthropy Network. Kohout, an estate planner, focuses on helping clients with wills, trusts, tax planning, and charitable contributions, including creating private foundations. Key points include:

• Current Trends: High-profile charitable acts, like the Patagonia founder donating 98% of the company to environmental causes, are rare but notable. Naming rights for buildings at universities or hospitals are common in philanthropy.
• Economic Impact: Recent economic turbulence hasn’t significantly altered charitable giving patterns. However, investment advisors are increasingly integrating charitable giving into tax-efficient strategies, with donor-advised funds (DAFs) becoming mainstream over the past decade.
• Tax Planning and DAFs: DAFs are popular for their simplicity and tax benefits, especially for gifting appreciated assets like business interests before a sale, which can reduce capital gains tax and provide deductions.
• Pending Legislation: Uncertainty around tax legislation, particularly the estate tax exemption potentially halving by December 31, 2025, is a concern. Kohout advises against delaying planning due to this uncertainty, as most charitable strategies remain effective regardless of legislative outcomes.
• Timing Considerations: End-of-year planning can strain resources, so early action is recommended for complex gifts requiring valuations or legal work.
• Gender Dynamics: Women influence 85% of charitable giving, often driving decisions in couples or as surviving spouses, focusing on community impact.
• Religious Giving: Religious organizations receive about 36% of charitable gifts. For complex gifts (e.g., appreciated securities or real estate), Cahute suggests using sophisticated DAFs to manage funds effectively, as smaller organizations may lack expertise.
• Younger Donors: Millennials and Gen Z integrate technology into giving, using DAFs via mobile platforms and prioritizing philanthropy in lifestyle choices. They also invest in newer assets like AI and crypto, which poses challenges due to outdated IRS rules from 1969, requiring valuations for non-currency assets like cryptocurrency.

Kohout emphasizes aligning charitable giving with personal values, tax efficiency, and long-term goals, while navigating evolving economic and regulatory landscapes.