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Unlocking Unseen Tax Benefits Through Charitable Giving with Gib Irons · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big with Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Hey guys, Gibb Irons here, host of the Go Big with Gibb podcast.
• 0:17
  Speaker 1: Today, we're going to talk about charitable giving strategies and how you can use them to reduce your tax liability for this year.
• 0:25
  Speaker 1: Specifically, we're going to discuss a charitable giving strategy that I used last year to reduce my adjusted gross income by 50%, and I'm going to tell you about a similar opportunity for this year.
• 0:36
  Speaker 1: Both offerings are 506c offerings for accredited investors only.
• 0:41
  Speaker 1: Before we go any further, I'd like to make a quick legal disclaimer.
• 0:44
  Speaker 1: I am not a certified public accountant, nor am I authorized to give you any tax advice.
• 0:49
  Speaker 1: Instead, I am merely sharing with you a strategy that has worked for me in the past.
• 0:54
  Speaker 1: Before investing in this type of opportunity, I highly recommend that you first consult with your CPA or tax advisor, as I did.
• 1:01
  Speaker 1: In fact, it was only after conferring with my CPA and receiving his blessing that I employed this strategy, and fortunately, my CPA was familiar with the lead sponsor and had seen them successfully meet expectations in prior years, which gave me a great deal of confidence.
• 1:17
  Speaker 1: In the past, I've talked about the tax benefits associated with investing in real estate and oil and gas.
• 1:23
  Speaker 1: Both are great options, but charitable giving is a strategy that very few people know about and of those that do know, most people think that you give $1 to charity and that reduces your taxable income by $1, saving you $0.35, for example, assuming a 35% tax bracket.
• 1:41
  Speaker 1: This type of charitable giving is not what I'm talking about here.
• 1:45
  Speaker 1: I'm talking about a charitable giving strategy that allows you to capture a 5x valuation on your donation, such that if you were to donate $50,000, then you would receive a charitable contribution of $250,000.
• 1:59
  Speaker 1: Let's talk about the math real quickly On a $50,000 donation, you would save yourself $87,500 in taxes, assuming a 35% tax bracket.
• 2:10
  Speaker 1: Since you invested $50,000, the net savings would be $87,500 minus $50,000, which equals $37,500.
• 2:20
  Speaker 1: The strategy for 2023 was called Novoderm.
• 2:23
  Speaker 1: Novoderm was an entity that was created to raise funds for the development of a topical ointment used to treat burn victims.
• 2:30
  Speaker 1: The ointment was made from a highly specialized bovine collagen biomaterial derived from cows.
• 2:37
  Speaker 1: The ointment was not yet approved for distribution by the FDA.
• 2:41
  Speaker 1: Instead, it had what is called an Orphan Drug Designation, or ODD, which allows for limited marketing and makes the product available for purchase by hospitals and burn centers nationwide, and it's a stepping stone to full FDA approval, but it does not allow for direct-to-consumer sales on the open market.
• 3:00
  Speaker 1: Novoderm then donated the ointment to the American Burn Association a K-1 loss of just shy of $1 million, thereby achieving the 5X valuation.
• 3:29
  Speaker 1: Had my adjusted gross income been $2 million or greater, then I could have used the entire loss to reduce my AGI by $1 million.
• 3:39
  Speaker 1: However, since my AGI was less than $2 million, I was able to reduce my AGI by 50%, and the remainder of the loss is carried forward to 2024.
• 3:48
  Speaker 1: This loss is carried forward from year to year until it's fully exhausted, creating a massive tax savings.
• 3:56
  Speaker 1: This episode of Go Big with Gibb is brought to you by Irons Equity.
• 3:59
  Speaker 1: At Irons Equity, we specialize in helping investors like you create long-term generational wealth and save money on taxes through recession-resistant real estate investments that create passive income for you and your family.
• 4:13
  Speaker 1: If you want to secure your financial future, go to investwithgibcom to schedule a 30-minute introductory meeting with me, Gib Irons Again, that's investwithgibcom.
• 4:23
  Speaker 1: To better understand the math, I want to give you one more example.
• 4:30
  Speaker 1: Let's assume that my adjusted gross income for 2023 had been $1 million and that I'm in a 35% blended tax bracket.
• 4:39
  Speaker 1: Under this scenario, the tax on $1 million is $350,000.
• 4:44
  Speaker 1: However, let's say I donate $100,000 to Novoderm.
• 4:49
  Speaker 1: This $100,000 donation becomes a $500,000 charitable contribution, assuming a 5x valuation, and I can reduce my adjusted gross income by up to 50%.
• 5:01
  Speaker 1: So my adjusted gross income goes from $1,000,000 to $500,000.
• 5:07
  Speaker 1: Now let's talk about how to calculate the net savings On the $500,000 that I was able to reduce.
• 5:13
  Speaker 1: For my adjusted gross income, I would have paid tax in the amount of $175,000, but instead I donated $100,000 to Novoderm.
• 5:23
  Speaker 1: To calculate the net savings, I take the total tax of 175, subtracted by the amount of the donation, which was $100,000, and the net savings is $75,000.
• 5:36
  Speaker 1: Now I still have to pay taxes on the other $500,000.
• 5:41
  Speaker 1: That is still part of my adjusted gross income, but I have saved myself $75,000 in tax.
• 5:48
  Speaker 1: Imagine what you could do with an extra $75,000 this year and how much more quickly you could grow your net worth by capturing this kind of savings from year to year.
• 5:58
  Speaker 1: The opportunity for 2024 is called Tech to Head and it involves concussion protocol testing that will be donated to the YMCA and then distributed to schools and other facilities such that they will be able to immediately determine if an individual A has a concussion and B the severity of the concussion.
• 6:18
  Speaker 1: For example, if a high school football player sustains a head injury, this technology will allow the medical team or the coach to quickly assess the situation and determine if a player should continue to play in the game or if they should seek immediate medical attention.
• 6:34
  Speaker 1: Similar to Novoderm, this technology has only partial FDA approval and therefore it is not available for sale direct to consumers on the open market.
• 6:44
  Speaker 1: So, given everything that we discussed today, you might ask what are the risks associated with this investment?
• 6:49
  Speaker 1: The primary risk is that the IRS could disallow the charitable contribution.
• 6:54
  Speaker 1: If this were to happen, then you could potentially get hit with a tax arrearage plus penalties and interest.
• 7:00
  Speaker 1: This is why it's so important for you to confer with your CPA prior to employing this technique.
• 7:06
  Speaker 1: Still, I hope this is helpful to you and that you can use this powerful tool to your advantage.
• 7:11
  Speaker 1: Thanks for listening.
• 7:12
  Speaker 1: Look forward to seeing you next time.
• 7:14
  Speaker 1: Thank you for listening to this episode of Go Big with Gibb.
• 7:21
  Speaker 1: If you haven't already, go follow us on social media at Gibb Irons.
• 7:25
  Speaker 1: We'll see you next time.