Exploring Unique Alternative Investments With Don Deans

Strategic Investor Radio Charley WrightDon Deans is a CPA tax strategist from Charlotte, North Carolina. In this episode of Strategic Investor Radio, host Charley Wright interviews Mr. Deans as he explains four unique opportunities for accredited investors:

1. Oil and gas drilling partnerships;
2. Passive activity;
3. Micro-captive insurance companies; and
4. Conservation easements.

Although low energy prices have made oil-and-gas partnerships less attractive more recently, their tax advantages take some of the sting out of losses in bad times and add to after-tax gains when times are good. Deans explains that between 75-90% of an oil-and-gas partnership investment can be deducted in the first year, so a $100,000 investment could result in a tax benefit of more than $35,000, assuming a $90,000 deduction and a marginal tax rate of 39.6%.

Don Deans Tax Strategist CPA
Don Deans, CPA, PFS, Managing Director of Deans Consulting

Passive activity refers to investments in limited partnerships. Mr. Deans points out that losses in prior years carry forward, and thus investors with previous losses can effectively earn tax-free passive income.

Micro-captive insurance companies are for businesses owners who can self-insure against certain risks. Setting up a wholly owned insurance subsidiary requires actuaries and a feasibility study, but it can result in a tax deduction of up to $1.2 million, and that money can be invested within the insurance company to earn a return. Ultimately, those gains will be taxed as capital gains, whereas the money used to fund them was deducted from corporate income – this is a tax-arbitrage game.

Finally, conservation easements give landowners a tax benefit equal to the foregone “highest value use” of their land if they choose to keep it undeveloped. For example, the owners of land that could be developed into a coal mine can receive a tax deduction equal to the actuarial value of that development, while leaving it untouched to preserve the environment.

Mr. Deans is a friend of Minnesota Vikings legend Fran Tarkenton, and he recommended Tarkenton’s book on Failure (see link below).

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