Brainz Magazine Exclusive Interview
Ryan K. Foncannon, MBA is an award-winning advanced tax strategist. He is also
an award-winning private wealth advisor. He has a very diverse background. He
received his master’s in business administration and his bachelor’s in marketing
and management from the University of Southern Indiana. He is a fiduciary with
his Series 65 license. He is also licensed in life, health, disability, annuity, and
long-term care.
He has a background in financing, insurance, business advisory, wealth
management, and advanced tax planning. He is also the Managing Partner of
S.W.A.N. Virtual Family Office (VFO). Mr. Foncannon takes a holistic, proactive,
and comprehensive approach to the pain points of his clients. He takes the time
to listen to his clients, making sure they are heard, they are understood and what
they say matters to him. He has helped his clients save millions in taxes from
proven, legal, and audit-protected strategies.
How did you get into the advanced tax reduction planning business?
That is a great question! Before I get into that, who is the article for? It is for people that need advanced tax reduction planning. It is for people that do not think they need advanced tax planning. It is also for people that do not really care or feel strongly either way. So about 12 years ago, I went fully independent. I kept getting high-wage w-2 earning clients that were making great money but were getting killed on taxes. Their tax professionals did not have any other ideas or strategies to bring to the table. I also noticed this trend for profitable businesses that had run out of good ideas to mitigate and lower taxes, with tax deductions and/or tax credits. I had looked at the tax planning educational landscape and found a few places that were teaching how to do basic and even intermediate tax planning, but they even left more to be desired.
They had some strategies, but they did not have high-impact strategies that could save high-wage w-2 earners over $100,000 or even over a million dollars. That left a lot to be desired for successful business owners, as well. I knew there were strategies out there to be learned and used. I had seen numerous multimillionaires and billionaires paying little to no taxes legally. So, I set out to find and learn the strategies they were using to achieve paying so little or no taxes. I not only wanted to learn these strategies, but I also needed to be the conduit to implement them. That is where the idea of our Virtual Family Office (VFO). Most of the strategies require a third-party specialist on our team, to implement it a particular strategy.
What exactly is a VFO?
The Rockefeller family was the first family to have a single-family office, to manage all of their wealth. They had all the specialists they needed under one roof. These include but were not limited to different types of attorneys, tax professionals, wealth managers, real estate professionals, niche specialists they needed, personal & travel assistants, administrators, etc. The VFO is like this, but for the 21st century. We use the best-in- class specialists. This includes tax attorneys, advanced estate planning attorneys, asset protection, risk mitigation, advanced tax deduction specialists, advanced tax credit specialists for personal or business returns, wealth management, real estate, crypto currency, business advisory, cash flow improvement, labor cost reduction, non-labor cost reduction, advanced insurance concepts, charitable structures, multigenerational, etc. We also use these specialists on an as needed basis. This saves our clients a lot of money, unlike the traditional family office model. With it being a virtual family office, we can work with anyone in the United States or internationally very easily. Also, the big plus is that our specialists work together to bring the absolute best solutions to the table for our clients. There are strategies that overlap in areas of advanced planning, that you would not get access to in the traditional transactional model. When all you have is a hammer as a tool, everything you see is a nail. If you have more tools available, like within our VFO, you can really solve the pain points and do it to the maximum level.
How would you describe your business, and what services do you offer clients?
We are a multidisciplinary firm. We have 6 Pillars of Advanced Planning: 1) Financing & Positive Arbitrage, 2) Business Advisory, 3) Advanced Insurance Concepts, 4) Advanced Tax Reduction Planning, 5) Advanced Legal, and 6) Private Wealth Management. What we are in English is that we are problem solvers. What are your pain points? We can usually solve more than one pain point. Paying too much income tax? We have high-impact solutions for that on the 1040 or business return. Worried about labor costs? We have some tax credits that can help with that. Worried about non-labor costs? We have a specialist on our team that specializes in that. Need more high-impact deductions for the business return? We have solutions for that. Is the business paying too much in insurance? We have a solution for that. We can use that same solution to significantly lower malpractice insurance, as an example, or use it to lower the insurance on a fleet of semi-tractor trailers.
Maybe you want to put away more money for retirement, besides the 401k. We have advanced solutions that have a tax deduction and ones that do not. Are you worried about the taxes on the sale of a highly appreciated asset? We can help with that, as well. We have helped businesses get SBA loans. We are working on one case for a United States-based company that needs financing in France. We are based in Indiana. We have a local business that was looking for better insurance. The big caveat is that they wanted better coverage for IVF. Insurance in the state of Indiana does not really cover IVF. We have a national solution that will cover it after the deductible has been met. So, we have a lot of things that we can do, under our large umbrella with the VFO. We can pivot to different topics and pain points in the same conversation.
How do advanced tax planning and wealth building work together?
We love this question! A lot of the tax strategies we use, not all, have a cash flow component to them. The Government has large incentives for participating in certain strategies. Some are in the form of a tax deduction. A few others have a tax deduction and a tax credit built into them. Now, the cherry on top of these strategies is the cash flow. Some cash flow is set in stone over X amount of years. Some cash flow is more fluid where the goal is to get your investment back, plus interest in 3-4 years. Some have a cash flow for up to 35 years. The main overlaying idea is to reposition what you were going to pay the IRS on the federal level into an income-producing asset. This asset also has great upfront tax benefits for using it. Thus, offsetting or eliminating the tax you would have paid to the IRS. The cash flows will not be as strong as investments with after-tax money, but when you factor in the tax benefits with the cash flow. They can outperform other assets, especially in a down market. This is a great way to build wealth via your just your tax liability. This is not just counting what you are doing with qualified plans and after-tax investments.
Do you have any ideas on how to hedge against inflation?
Absolutely! A great way to hedge against inflation is by doing advanced tax planning. It helps you net more of your own money, and it can create other sources of cash flow for you over time. This helps with the increased costs of everything. The more taxes that a taxpayer pays allows them to qualify for different levels of advanced tax planning. Business owners that have a profit of $100,000 or more, we can help bring these advanced tax strategies to your 1040. We can also help hedge against higher labor costs and non- labor costs with the strategies that we have access to. If we can help with your bottom line and cash flow, that would help hedge against inflation. The national average on non-labor savings is 30%+. Certain line items can have a savings of 60%, while others may only have a savings of 10%. So, those numbers will vary per line item. But, if you add that to the potential lowered labor costs, and the advanced tax planning, it can be a significant change.
Do you have any strategies for a capital gains event or the sale of a highly
appreciated asset?
Yes, we do! We have several different strategies. The larger the capital gains event, the more we can do and bring to the table. We have access to around 10 high-impact strategies that we use on a consistent basis. We often use more than one strategy in combination with another strategy. Sometimes we just use one strategy because it covers all the needs of what the client is looking for. We have one strategy that can defer all the capital gains. The client only pays taxes on the distributions. It is flexible, can allow investment in real estate, insurance, regular investments, or can even invest in another business down the road. It is a great 1031 alternative, without the restrictions a 1031 has. You can even put a primary house in this strategy, which you cannot do with a 1031 exchange. There is not a cap on how much can go into this strategy. For the capital gains cases, the minimum that makes sense to work on is a capital gains event of $500,000 or more. There are some other strategies that work well. If the capital gains event is lower than $500k, but the total household income or AGI (Adjusted Gross Income) plus the gain is $500,000 or more.
We have some strategies we can use to offset the gain, but also the total household income. We say total household income, because if they are married or have a civil union, both incomes count. Other things that count towards the total are rental income, wages, investment income, royalties, S- Corp distributions, farm income, stock options, or anything else that shows up on IRS Form Schedule 1. The big key with a capital gains event is that the more planning you do before you realize gain (the sale occurs), the more planning options are on the table. If you are looking for solutions after the sale, there are not as many. For example, the above strategy is off the table, due to taking constructive receipt of the funds, which takes this strategy off the table.
Is there anything you can do for a taxable estate with advanced planning?
This is a great topic! Now, this will not apply to everyone. The current estate tax law is set to expire in 2026. As of 2023, the threshold is $12,920,000 for a single person or $25,840,000 for a couple. If your estate is larger than this, congratulations, it qualifies to be taxed with the federal estate tax. Now, there is excellent news. You can opt out of paying this tax with proper planning. Let me say that again. You can opt-out with sophisticated and proper planning. From my experience, not every attorney has the experience to do this type of planning, on this level. Since you are at this level of net worth, it does qualify you for an ultra-advanced tax planning strategy. This would be creating a family office for yourself and your family, by leveraging our VFO.
Why is that important? It is cheaper to do it that way and we have already vetted all the specialists, but one of the main reasons is because of Section 162 deductions. If a Family Office is properly set up, you can use Section 162 deductions towards managing all your assets. More deductions equal a lower tax bill. This is the total package of all advanced planning. It covers all the bases from risk mitigation, asset protection, estate planning, advanced tax planning, multi-generational planning, international planning (if needed), private wealth management, etc. This would be the total planning and total protection that our clients are looking for, under one roof. We have partnered with the top law firm in the country that does these plans, all day, every day. They tailor each plan to each person. So, there is no rubber stamping of plans. Each client’s situation is different and deserves that type of tailored attention.
Who is an ideal client to work with you?
We work with a lot of different clients, whether they are high-wage w-2 earners, business owners, or a combination of both. Our ideal clients are:
Has a total AGI (Adjusted Gross Income) or total household income of $450,000 with $35,000 in investable assets.
A business owner with at least $100,000 or more in profit.
Has a realized capital gains event of $500,000 or more.
Has a realized capital gains event plus the AGI or total household income equals $450,000 or more.
A client that has investable assets of $250,000 or more, and does not fall into the other categories, yet.
A tax professional that is already doing tax planning but wants to learn how to do
advanced tax planning and be able to implement it. We have a coaching program
for this and work with numerous tax firms nationally, to teach and implement the strategies.
Thank you so much for your time, Mr. Foncannon. Is there anything you’d like to share with the Brainz community?
I want to first thank each of the readers for reading this article all the way to the end. I appreciate you taking time out of your day to do so. There are a million other things you could be doing with your time. I feel very blessed that you decided to use it to read this article. Infinite thanks to you for that action. You may go back to your tax professional, your financial advisor, or even a legal advisor and ask them what we talked about in this article. They may say that is not possible or illegal. We call this the inconsequential brush-off. There are no consequences to them just deciding it is not possible and is easier to brush it off, without doing any due diligence. We have done our homework, know the tax code or tax codes involved and have had other tax attorneys quadruple check our work. For the professionals that would like to do some due diligence with us, we not only want them to do that but encourage it.
We offer a free strategy session to see if we can help and if we are a good fit. We charge a research and analysis fee after that. It can range from $1,000 to $5,000 depending on how much work is needed. We then present each option of the plan. There may be 2-3 or as many as 12-15 options, depending on the size and scope of the plan. There is a fee at that point to move forward and for implementation. We would like to show our clients what their actual savings is before we charge a planning and implementation fee. Other firms charge a lot upfront and do not deliver the results we do. Plus, we can implement any strategy that we talk about. Here at S.W.A.N. VFO we are helping our clients ‘Sleep Well At Night’.
Thank you Brainz Magazine for having me!
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