Welcome to Straight Talk. We at Legacy Legal and Family Legacy Trainings appreciate your enjoyment of our weekly insights on Mastering the Legacy Hierarchy, Building a Legendary Future and Creating Lasting Wealth and Legacy.

Over the next 10 weeks I want to share some basic tax tips that can be used for year end planning or thinking about your taxes for next year.

Review All Articles in This Series: 10 Tax Tips


Everything we do is risky. Crossing the street, going into business, flying on airplanes, making decisions about how to protect our money. One of the ways to protect our money is to keep it from the IRS. Tax professionals since time began have been using the rules, regulations and case law, to find words, ideas, strategies and tactics to get around paying money to the IRS.

As attorneys, what is our role? Our role is to advise people on our understanding and opinion of the law based on our training and experience. Our training is hours and hours of questioning, testing, interpreting and learning how to read, understand and make determinations about the rules, the regulations, how the courts think about those rules and regulations and to advise as to what can and can’t be done. Of course what can and can’t be done can be subject to black, white and a lot of gray. Tax attorneys do the same thing except with a specialized knowledge of tax law. We are the cream of the crop. There are no professionals who have specialized knowledge and training greater than the tax attorney.

The role of the client is to make one decision. Either agree or disagree with the advice. This is all based on the level of risk a client is willing to take. Here is how the story unfolds. Client wants to do something and they come to us to ask our advice in advance of doing the transaction or to provide our thoughts about the consequences of the transaction already engaged.

For example, a client wants to start a business and they want to know the boundaries of what they can do to take deductions that might create losses to lower taxes. Seems simple enough. Then the discussion starts. Well, are you working full time in another business? How much time will you be spending on this other “business”? What will you be doing? Where are you going to run the business? Where will your clients come from? How much money will you make? I think you start to get the idea. Because, if the IRS wants you, guess what? They will start asking these same questions.

What happens here is that the client wants to find ways to create tax deductions for expenses that are on the surface for a business when there is no real business because the client made no money, operated the so called business from home, wasn’t really working many hours didn’t have clients and so forth.

Now the client is unhappy. Why? I thought we were doing what we were trained to do. Well the client is unhappy because there are other people who are not trained tax attorneys giving the client the advice that they can do these things and take the deductions. Risk.

For us tax attorneys, this is called putting the license to practice law in jeopardy and as the old saying goes in the movie “A few good men”, it’s not what I know but what I can prove. Our job as tax attorneys is to know and prove in Court that what the client is doing and saying is consistent and in accordance with the law. Otherwise, it’s called fraud and some fraud lands you in jail. It also results in penalties and interest. I for one am not willing to risk my license for a client’s risk.

Here is what makes our job even tougher. The client asks our advice and we give it. Then the IRS examines the tax return. Like anyone, the IRS has an agenda so they may only look at one aspect of the return. That’s good. The problem is that if the client was doing the risky stuff on a different part of the return, the attitude that comes out is well the IRS didn’t think there was a problem with this part of the return so it must have been correct. That is false and misleading. The other part of the return may have been completely incorrect but the IRS wasn’t looking to get into that part of the return because of their agenda. The client now thinks the return is valid because the IRS didn’t investigate all of the return, and we the tax attorneys have to somehow explain to the client that fate doesn’t mean the advice was incorrect or that the actions and the risk was correct. Of course to the client, they wonder what advice they were getting as it related to the incorrect conduct only because they weren’t caught? The answer is the client was getting the exactly correct advice.

But I am just a tax attorney in Carlsbad, California. What do I Know?

Our vision is for business and families to build legendary futures-today. One that is financially and legally secure. Our mission is to build, protect and preserve wealth and legacy for generations.

Thank you for being a part of our Straight Talk community. We educate, transform and inspire business owners and families in enhancing the way they think and talk about wealth in money, values, beliefs and traditions. What is your Legendary Future? We welcome you to share your ideas and thoughts.

Category10 Tax Tips

© 2015-2024 Legacy Legal Inc. | YOUR LEGENDARY FUTURE, TODAY!