This book, written by Tom Wheelwright, CPA, is a nice primer for anyone who is either unfamiliar with or who would like to know more about legal tax reduction. Note that the book focuses on legal ways to reduce your taxes, not on legally dubious methods of doing so. Also, although this book was written before the recently passed tax bill, most of the strategies and ideas remain the same; though, some of the specific deductions and credits have been repealed or reduced. As the average person pays anywhere from 30-50% of their income in taxes, this book should help nearly everyone.

The author takes the reader through many of the most powerful and effective ways of permanently reducing their taxes. His mantra throughout the book is “change your facts to change your tax”. What this means is that in order to reap the largest amount of tax savings, you must structure your life and business in ways that the tax laws treat most favorably. Depending on the person, this will take much planning. The goals is to start focusing on and participating in activities which “the government wants you to do”. One very famous example of someone accomplishing this is Donald Trump. He paid zero in federal income taxes due to his sizable real estate portfolio and numerous businesses. These two categories–investors and business owners–are two of the largest beneficiaries of the tax code. Business owners because the government want jobs created for its citizens, and investors because of the several benefits they provide, such as real estate investors who provide housing.

Wheelwright highlights many of the tax strategies available. The following is a list of some of the most beneficial:

  • Depreciation expense
  • Deducting costs of travel and meals
  • Roth IRAs for certain investments
  • Avoiding capital gains taxes on real estate sales
  • Avoiding taxes after your death

The author ends the books by laying out how to build “massive wealth”. The end goal is to create large sources of passive income. This is done by investing in income-producing assets, using leverage to create a large amount of capital from those assets, then investing that capital in assets which will provide passive income. He states that “[w]ith a substantial amount of capital, even investments with modest returns result in massive passive income.” He adds that the savings you reap from the tax strategies covered in the book will help preserve the needed capital.