Proactive Tax Strategy
Tax Planning Attorney
Key Takeaway
A tax planning attorney is a lawyer who helps you legally minimize your tax burden through proactive strategies such as entity structuring, retirement account optimization, real estate tax planning, and succession planning. Effective tax planning can reduce effective tax rates by 10-30% depending on your income level and business structure. Call Brotman Law at (619) 378-3138 for a free intro call to start building a tax strategy that works for your situation.
Proactive Tax Planning Saves More Than Reactive Tax Resolution
Most people come to a tax attorney after a problem has already occurred — an audit notice, a tax debt, a failed business transaction with unexpected tax consequences. But the most valuable work a tax attorney does happens before any of that: proactive tax planning that legally minimizes your tax liability year after year.
Tax planning is not the same as tax preparation. Tax preparation looks backward at what already happened and fills out the forms. Tax planning looks forward and structures your affairs to minimize taxes legally. A tax planning attorney brings legal expertise that CPAs typically lack: the ability to create and restructure entities, draft operating agreements, navigate complex partnership tax rules, and plan transactions for optimal tax treatment.
Entity Structuring and Selection
The entity through which you operate your business — sole proprietorship, LLC, S corporation, C corporation, or partnership — has enormous tax implications. The wrong structure can cost tens of thousands of dollars per year in unnecessary taxes. An S corporation election, for example, can save self-employed individuals 15.3% in self-employment taxes on the portion of income classified as distributions rather than wages. But the S corp must be set up correctly, with reasonable compensation, proper payroll, and compliant operations.
For real estate investors, the choice between holding properties in LLCs, partnerships, or S corporations affects everything from depreciation recapture to 1031 exchange eligibility to self-employment tax exposure. A tax planning attorney evaluates your specific situation and recommends the structure that minimizes your total tax burden.
Retirement and Wealth Accumulation
For high-income earners, retirement planning is tax planning. Defined benefit plans, cash balance plans, SEP IRAs, solo 401(k) plans, and backdoor Roth strategies each offer different advantages depending on your income level, age, and goals. A business owner earning $500,000 per year might be able to defer $100,000 or more annually through the right combination of plans — reducing current-year taxes by $40,000 or more while building tax-advantaged wealth.
Real Estate Tax Planning
Real estate offers some of the most powerful tax planning opportunities in the Internal Revenue Code. Cost segregation studies accelerate depreciation. 1031 exchanges defer capital gains on property sales. Qualified opportunity zones offer both deferral and potential elimination of capital gains. Real estate professional status (REPS) allows high earners to offset active income with passive real estate losses. Each of these strategies has specific requirements and pitfalls that require careful legal planning.
At Brotman Law, our tax planning practice serves business owners, professionals, and investors who want to minimize their tax burden legally and proactively. We work alongside your CPA and financial advisor to implement strategies that reduce your taxes now and in the future.
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Planning Services
Tax Planning Strategies We Implement
Entity Structuring & Selection
We analyze your business operations and recommend the optimal entity type, then handle formation, operating agreements, and tax elections.
S Corporation Tax Savings
We evaluate S corp eligibility, set reasonable compensation, implement payroll, and ensure compliance to maximize self-employment tax savings.
Retirement Plan Design
We design and implement defined benefit plans, cash balance plans, solo 401(k)s, and other retirement vehicles that maximize tax-deferred contributions.
Real Estate Tax Strategy
We implement cost segregation, 1031 exchanges, REPS qualification, opportunity zone investments, and other real estate-specific tax strategies.
Succession & Exit Planning
We structure business transition s, buy-sell agreements, and exit strategies to minimize capital gains and transfer taxes.
Learn more →Multi-State Tax Planning
For businesses and individuals operating in multiple states, we minimize state tax exposure through proper entity structuring and nexus planning.
Learn more →Tax Planning In Depth
Key Strategies for Tax Minimization
How does S corporation election reduce taxes?
An S corporation election allows business income to be split between wages (subject to self-employment tax of 15.3%) and distributions (not subject to self-employment tax). For example, if your business nets $300,000 and you set reasonable compensation at $150,000, the remaining $150,000 passes through as a distribution, saving approximately $23,000 in self-employment taxes. The key requirements are setting reasonable compensation (the IRS scrutinizes unreasonably low salaries), running proper payroll, and maintaining corporate formalities. The S election is made on Form 2553 and must be filed by March 15 of the first year you want S status. Late elections are possible in some cases under Revenue Procedure 2013-30.
What retirement plans offer the highest contribution limits?
Defined benefit plans and cash balance plans offer the highest deductible contributions, potentially allowing business owners over age 50 to contribute $200,000 or more per year. A solo 401(k) allows up to $69,000 in total contributions for 2024 ($76,500 if over 50), combining employee deferrals and employer profit sharing. SEP IRAs allow contributions up to 25% of compensation or $69,000, whichever is less. The optimal strategy often combines multiple plans. For example, a cash balance plan layered on top of a 401(k) can shelter $250,000 or more in annual income from taxes. Plan design must consider the business’s employee population, age demographics, and cash flow.
How do 1031 exchanges defer capital gains tax?
A 1031 exchange under IRC section 1031 allows you to sell investment or business real property and reinvest the proceeds in like-kind property without recognizing capital gains. The exchange must follow strict rules: you must identify replacement property within 45 days of the sale, close on the replacement within 180 days, use a qualified intermediary to hold the proceeds, and the replacement property must be of equal or greater value. Partial exchanges (where you receive some cash) result in partial recognition. The deferred gain carries over to the replacement property, reducing its tax basis. You can continue deferring through successive exchanges, and at death, the property receives a stepped-up basis, potentially eliminating the deferred gain entirely.
What is real estate professional status and why does it matter?
Real estate professional status (REPS) under IRC section 469(c)(7) allows a taxpayer to treat rental real estate activities as non-passive. This means rental losses can offset active income (W-2 wages, business income) without limitation. To qualify, you must spend more than 750 hours during the year in real property trades or businesses in which you materially participate, and more than half of your total working hours must be in real property activities. REPS is particularly valuable for high-income households where one spouse can qualify. Combined with cost segregation and bonus depreciation, REPS can generate six-figure paper losses that offset active income, dramatically reducing the household’s tax bill.
When should I start tax planning?
The ideal time to start tax planning is at the beginning of the tax year, or before major financial events like selling a business, purchasing real estate, or retiring. However, significant savings are possible even mid-year. Year-end strategies like accelerating deductions, deferring income, making retirement plan contributions, and harvesting tax losses can all be implemented in the fourth quarter. For business owners, entity restructuring should ideally be done at the start of a tax year, but retroactive S elections are possible in many cases. The key insight is that waiting until tax preparation time means most planning opportunities have already passed.
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Why Brotman Law
Why Choose Brotman Law for Tax Planning
Attorney-Led Legal Strategies
Unlike CPAs who advise on tax matters, we create legal structures — forming entities, drafting agreements, and filing elections — that implement your tax plan.
Business Owner Focus
We specialize in tax planning for business owners, professionals, and investors who face complex multi-entity, multi-state tax situations.
Integrated Approach
We coordinate with your CPA, financial advisor, and estate planning attorney to ensure all aspects of your financial life are optimized for tax efficiency.
Quantified Results
We show you the projected dollar savings from each recommended strategy before implementation, so you can make informed decisions.
Ongoing Relationship
Tax planning is not a one-time event. We review your situation annually and adjust strategies as tax law changes and your circumstances evolve.
Risk-Calibrated Advice
We explain the audit risk and legal certainty of each strategy, so you can choose the level of aggressiveness that matches your risk tolerance.
Frequently Asked Questions
Tax Planning Attorney FAQs
What is the difference between a tax planning attorney and a CPA?
A CPA prepares tax returns and provides compliance services. A tax planning attorney creates legal structures, forms entities, drafts operating agreements, and implements strategies that legally minimize your tax liability. Many clients use both: their CPA handles preparation and bookkeeping while their tax attorney handles planning, entity structuring, and legal transactions.
How much can tax planning save me?
Savings vary widely based on income, business structure, and current planning. Business owners earning $300,000 or more typically save $30,000 to $100,000+ per year through proper entity structuring, retirement plan design, and real estate strategies. We provide projected savings calculations before implementing any strategy.
When should I start working with a tax planning attorney?
Ideally at the beginning of the tax year or before major financial events like selling a business, buying real estate, or restructuring operations. However, significant savings are often possible even mid-year. The sooner you start, the more planning opportunities are available.
Do I still need a CPA if I have a tax planning attorney?
Yes. A CPA handles day-to-day bookkeeping, tax return preparation, and compliance. A tax planning attorney handles the strategic and legal aspects: entity formation, restructuring, transaction planning, and complex tax elections. We work collaboratively with your CPA to implement strategies effectively.
How does an S corporation save on taxes?
An S corporation allows business income to be split between reasonable compensation (subject to employment taxes) and distributions (not subject to employment taxes). This can save the 15.3% self-employment tax on the distribution portion. For a business netting $300,000 with $150,000 in reasonable wages, the annual savings is approximately $23,000.
Is aggressive tax planning risky?
We provide risk-calibrated advice for every strategy. Some strategies, like S corporation elections and retirement plan contributions, are well-established with minimal audit risk. Others, like certain conservation easements or micro-captive insurance arrangements, carry higher scrutiny. We explain the legal certainty and audit likelihood of each option so you can make informed decisions.
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