Phil's (Tax) Pill

Phil’s (Tax) Pill

February 3, 2013

Dear Phil,

Congratulations on winning the 2013 Waste Management Phoenix Open!  It was well deserved and, quite literally, couldn’t happen to a nicer guy.

But knowing how you feel about your current tax situation (even though you backtracked a little on your original stance as one would expect a habitual nice guy to do), we couldn’t resist the urge to reach out to show you how we might be able to help you going forward.

You pay a boatload of taxes.  No doubt about it.  And it’s worse this year than it was last.  With the new top Federal tax rate of 39.6%, the increase of California’s state taxes to 13.3% (even though the “millionaire’s tax” is supposed to be “temporary”) when you include the California Mental Health tax for income over $1,000,000, nobody could blame you for wanting to lighten the load a bit.

Nobody wants to pay more taxes than they have to so here’s what you should think about to help yourself out:

Before you sign your next endorsement deal, let us show you how you can benefit from a Structured Celebrity Endorsement deal. 

It’s similar to a Taxable Structured Settlement only designed specifically for endorsement income.

Here’s how it works:

Step 1:  Let’s say you are ready to sign a deal for $5,000,000.  But you want to lower your taxes, maybe postpone receipt of the income into a future year when you live in a tax friendlier state, or just put it off for a rainy day since you never know when your fortunes will change (Lance Armstrong) or when your other investments will go sour (the entire world in 2009).

Step 2:  Using a Structured Celebrity Endorsement instead, you could defer this entire $5,000,000 for, say, 10 years after which point you could receive a guaranteed $350,000 tax-deferred for the next 30 years.

Step 3:  Smile.  You’ve just turned your $5,000,000 into $10,500,000, half of which was pre-tax interest earned and your family’s future is secure for a very, very long time.

Depending on what assumptions you make about present and future tax brackets, this could be the equivalent of earning 6%, 7%, 8%, 9%, 10% on a guaranteed investment.  This is the kind of return any millionaire would gladly snap up.

We hope you’ll join that crowd.

We are not providing tax or legal advice and these numbers are just for illustrative, not contractual, purposes but we think you’ll like this deal.

And we definitely want to keep you in California.  You have a lot of success on “your” courses and we’d hate to see anything jeopardize that.  Especially for something as silly as taxes you can easily avoid.

Comments

Finn Financial Group