Meet Frank,

a successful businessman from Baltimore, Maryland, with an annual income of $800,000. At 48, Frank is looking for effective ways to maximize his earnings, especially as his twin sons prepare to attend a prestigious university in the fall. Frank faces a substantial tax burden of $254,188. Seeking a way to reduce his taxable income and free up more cash flow for upcoming educational expenses, Frank consults with his financial planner.

OPPORTUNITY: Frank’s financial planner suggests a tax-saving strategy through purchasing an income producing BoxHouse and takes advantage of IRC 179 deductions—lowering Frank’s taxable income and reducing his tax liability.

THE PLAN: Frank decides to move forward and purchase a BoxHouse with favorable seller financing for $375,000. Here’s how it all unfolds:

• Purchase Breakdown: Frank makes a 25% down payment of $93,750, with the remaining $281,250 financed, resulting in a monthly loan payment of $781.25.
• Monthly Cash Flow: The existing lease of the BoxHouse generates Frank $885 per month, allowing him to pocket $103.75 monthly after covering the loan payment.
• Immediate Tax Deduction: Thanks to IRC 179, Frank qualifies for a 100% deduction on his BoxHouse purchase for 2024, enabling him to claim the full purchase cost against his income.

OUTCOME: Initially, Frank’s taxable income was $800,000, leading to a federal tax liability of $254,188. However, after applying the Section 179 deduction, his taxable income is adjusted to $425,000, bringing his tax obligation down to $119,125. This smart investment allows Frank to save $135,063 in federal taxes, for a total cash outlay of $93,750. This helps him better manage his expenses as his sons head to college.