Fortress Financial Partners Specialized Knowledge For Tax Planning
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Complying with the tax code is far easier than proactively applying the code in the most efficient manner possible. For high-net-worth families, some tax professionals may lack the extensive training needed to guide them through this byzantine tax system. Did you know that the CPA exam consists of four sections and only one of those sections is about taxes? Well over half of the exam is about auditing, business, and financial reporting.
When it comes to tax planning, specialized knowledge is critical. For this reason, Fortress formed a strategic partnership with a local tax and accounting firm. Drawing on the knowledge of not only CPAs, but also IRS Enrolled Agents and Certified Tax Coaches (CTCs), this partnership enables Fortress to deliver a unique perspective to their clients. How unique is this perspective? While there are over 650,000 accountants practicing today, there are only 500 Certified Tax Coaches in the country—and Fortress’ clients now have access to one of them. According to the American Institute of Certified Tax Planners, CTCs are “trained in proactive tax planning, specializing in finding deductions, credits, loopholes and strategies to help clients pay less in taxes.”1
While many firms focus their services on the preparation and filing of returns, Fortress focuses on the proper actions to take during the calendar year to optimize the outcome in April. “We haven’t done our job unless we’ve explored every legal avenue to reduce the tax burden on our clients,” explains Joe Grabar, MSFS, CMT®, CFP®, Founder and Managing Principal of Fortress Financial Partners.
Headquartered in Raleigh, N.C., Fortress Financial Partners is a boutique firm led by a team of specialists who focus exclusively on the needs of entrepreneurs, affluent families, and institutions. Together, the team has over 100 years of experience, with special expertise in sophisticated tax strategies.
Fortress has attracted a group of independent-minded professionals who will not be limited by artificial rules. “If something is legal and it’s advantageous for our client, we’ll recommend it, even though it usually takes a lot more effort on our part,” says Chris Gure, RFC®, PPC®.
Some firms may limit their tax planning strategies to a narrow group of options. “After all, looking outside familiar territory is a painstaking job,” says Grabar. “The analogy at work here goes to football. We always want to stay in bounds, but we always want to use the entire field, too. Surprisingly, many other professionals are only comfortable operating in the middle of the field, and that’s a travesty for their clients. Think three yards and a cloud of dust versus a pro-style offense - which do you choose?
Excellent Fundamentals…Great Creative Plays
One of the many underutilized structures Fortress Financial Partners implements for clients is the Backdoor Roth IRA. “A Backdoor Roth IRA is a complicated and IRS-sanctioned approach that allows high-earners to circumvent the income limits that would otherwise prohibit them from opening or contributing to a Roth IRA,” says Grabar. “It’s amazing how many times we hear clients say, ‘my accountant said I make too much money and can’t do a Roth.’ That simply isn’t true. The power of tax-free growth for clients in the highest tax brackets can be unbelievable.”
Another example of customized tax planning relates to owners exiting their business and selling for cash. Such a transaction is subject to capital gains tax which can easily approach a 30% combined federal and state tax rate. Fortress recently assisted two clients in deferring this tax for 30 years under section 453 of the code. “For a business owner, walking away with more money at closing versus incurring the tax liability can make a big difference. These clients can’t thank us enough,” says Gure.
More recently, Fortress aligned with Jill Homan, LEED AP and President of Javelin 19 which provides customized solutions to investors, developers, and real estate companies seeking to participate in Opportunity Zones2. Created as part of the 2017 tax law changes, this new incentive provides clients with significant tax savings through investing in properly structured Opportunity Zone investments in real estate. “Clients have the potential to earn substantially higher after-tax returns by investing in an Opportunity Zone (OZ) project compared to a non-OZ project. We source OZ investment opportunities and advise clients on these specialized programs,” says Homan.
Client outcomes may be enhanced further when coupling alternative investments such as private equity, private debt, mezzanine financing, hedge funds, structured products, bitcoin or other digital currencies, alongside advanced tax strategies. “We take considerable time to determine the most efficient place to warehouse certain investments from a tax standpoint. By sheltering gains and dividends and interest earned, it compounds the growth rate when we can remove the tax drag,” says Gure. “Historically, a 60/40 blend of securities and fixed income helped insulate investors from big swings in the market. De-emphasizing fixed income and adding new alternative asset classes have the potential to improve returns without exposing too much to market losses.”
“We are committed to helping our clients reduce their tax burden and achieve the best outcome for their family and businesses,” concludes Grabar. “The Honorable Judge Learned Hand once said, ‘Anyone may so arrange his affairs that his taxes shall be as low as possible…there is not even a patriotic duty to increase one's taxes.’ That’s an axiom we live by.”
Fortress Financial Partners
3110 Edwards Mill Road, Suite 200
Raleigh, NC 27612 | (919) 322-2761
firstname.lastname@example.org | fortressfinancialpartners.com
Securities offered through Fortress Private Ledger, LLC. Member FINRA/SIPC. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
No investment is risk free; loss of principal is possible. Alternative investments involve specific risks that may be greater than those associated with traditional investments. Nothing in this article should be construed as investment advice or any recommendation or solicitation for any specific security or investment.
The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
1 https://certifiedtaxcoach.com/why-choose ctc/about/#:~:text=About%20Certified%20Tax%20Coaches&text=There%20are%20fewer%20than%20500,have%20achieved%20this%20specialized%20designation
2 Opportunity Zones include speculative and illiquid investment risks. These risks include development completion and lack of liquidity, as well as regulation uncertainty, non-conforming territories, and investor mass exit, to name a few.
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