Q: Rob, there are firms who call themselves tax planners, tax strategists, and accounting firms. Can you explain the difference?
Rob:
We usually break things down into strategy, planning, and compliance. Most CPAs and most tax firms are in compliance. They are really backwards looking. They look at what happened yesterday, not necessarily what is going to happen tomorrow.
Planning is more of a mathematical exercise. It comes up with a number that says, here is how much you owe, here is what your estimate needs to be. Something very simple or basic.
Strategy is looking ahead. It is imagining what could be, not what is. The expression in strategy is always the same: change the facts and you will change the tax. If we can change the fact pattern, we can change the tax outcome.
Strategy is imagining what could be, then walking it back into planning, into the math, and then walking it back into compliance where we actually fill out the tax returns.
Q: AI can write emails, act like a therapist, and even diagnose things. Why can it not do tax strategy or compliance?
Rob:
AI will not do compliance yet, but it will soon. I hope it does, because that is a lot of labor.
For strategy and planning, there is too much gray. It is very fact dependent and very situational. AI needs detailed fact patterns to give a good idea.
We use AI in an augmented way. I call it Augmented Rob. I use the technology to help isolate issues so I can give it more fact based circumstances. Then the tool helps me think through it more.
AI might give you ideas, but you will still need humans with deep knowledge to work out the details and create something executable.
Q: If someone is a W2 earning around six hundred thousand dollars a year, what strategies exist to increase income or reduce taxes?
Rob:
The law is not usually in favor of W2 employees. It is really designed more around business owners or entrepreneurs. W2 employees are constrained.
Most ideas lean toward real estate, especially short term rentals. Short term rentals can create tax advantages, but you need to actively manage them. For me personally, I would rather pay the tax because that sounds like a lot of work.
You also need to be sure it is a good financial investment. Not just for tax. You do not want to put money into bad real estate just for a deduction. The tax advantage should be the cherry on top.
I do like short term rentals and setting up other active trades or businesses, but it has to align with what people want to do, not only what would reduce taxes.
Q: Business owners call us saying they do not need investment help or tax help, but they need someone to manage paperwork from short term rentals and real estate. Does that make sense?
Rob:
Absolutely. That administrative burden is very real.
Q: What are some of the best tax strategies or write offs that seem too good to be true for business owners?
Rob:
They are all big. R and D is always in there. Cost segregation studies are too good to be true. They componentize commercial buildings to accelerate depreciation, which creates a lot of tax advantage.
Qualified Small Business Stock is definitely too good to be true when the fact patterns fit. With original issue C Corp stock, if we hold it for the current law five year hold period, we can exclude fifteen million dollars in capital gains on the federal side. That one is huge.
Q: At what revenue level should a business owner bring in a tax strategist like you?
Rob:
You start slow and work your way up. We break strategies down into basic, intermediate, and advanced.
You can hit a whole lot of singles and put up runs. Basic strategies create easy wins without a lot of work. Things like administrative offices or Augusta rule. Very simple to implement.
Q: When should a business owner move from single member LLC to S Corporation?
Rob:
I am not a big fan of S Corps. My profession has inserted them more than they should have. We spend a lot of time dismantling or working around S Corps.
The only reason an S Corp works is that it minimizes Social Security tax. That is the only thing it does.
An LLC is created under state statute. Congress never addressed them. So the IRS created regulations. By default, a single member LLC is a sole proprietorship. A multi member LLC is a partnership. Because of liability attributes, we can elect for it to be taxed as an S Corp or a C Corp.
In an S Corp, owners get income two ways. One, W2 wages subject to Social Security tax. Two, distributions of profits, which are not subject to Social Security tax. That is the only difference.
But S Corps have problems. All owners must be treated equally except for voting rights. All distributions must be pro rata based on ownership. If we want disparity, we must adjust wages. That limits creativity in distributing profits.
Real estate should never be inside an S Corp. If you move assets out, you trigger tax as if it were a deemed distribution at fair market value.
People elect S Corp because they think it saves money, but they do not think about long term plans, partners, capital raises, or selling. There are often more creative ways to structure things.
Q: What are the biggest ideas you have for family owned businesses?
Rob:
When I think of family owned businesses, I think more about succession than income tax.
Tax is broad. It includes estate tax, state income tax, sales tax. Estate tax becomes the main character for family owned businesses. It is about transferring wealth to the next generation while mitigating the burden of death tax.
Q: What is the biggest deduction people get wrong, especially businesses above three million dollars in revenue?
Rob:
Wrong is a hard word. To me, wrong means someone made a mistake.
I call it the uncle factor. It is the moment you look at the number and say, uncle. You ask, can I make this number lower. The answer is always yes. The question is, how much lower.
The biggest misnomer is that people think the person who prepares their taxes is planning. They are not hired to plan. They are not engaged to plan. It is like paying your lawn service and expecting them to clean your gutters.
If you want to reduce your tax, you must hire someone specifically to do that. Do not go to TikTok. Tax is situational. It is fact dependent. TikTok removes that context.
I call TikTok advice the street CPA.
A thoughtful conversation between Amy Parvaneh and tax strategist Rob Cordasco exploring the real differences between tax planning, strategy, and compliance. Rob shares grounded insights on where AI falls short, what business owners often overlook, and how fact-based tax strategy truly works. Their discussion offers a practical look at the decisions successful professionals and business owners face as they grow and structure their wealth.