David Babinski on Bringing Tax Context to Capital Raising

In a Family Office Club podcast segment, David Babinski presents his approach to discussing investment deals through investor tax considerations.

David Babinski describes a tax focused approach to capital raising and explains how he uses a presentation to discuss the effects an investment may have on an investor. He moves from a compounding illustration to account categories and a Roth conversion case study, then outlines a process involving an investment held in a self-directed IRA.

In this video: David (Podcast guest)

What they said

1. David on investor tax effects. David says understanding how a deal affects an investor's tax situation gives him a basis for discussing the deal in that investor's context. He says this can help distinguish a capital raiser's approach. (at 2:00)
2. David on taxes and return differences. David uses a penny doubling exercise to argue that taxes can outweigh small differences in stated IRRs. He says investors should consider how each investment may be taxed alongside its return. (at 2:28)
3. David on account buckets. David groups investments into taxable, tax deferred and tax advantaged buckets, each with different tax treatment. He says the investor's profile helps determine which structures may fit. (at 4:21)
4. David's Roth conversion case study. David presents a case study in which he says his strategy saves 78,000 in taxes on a conversion. He describes using an investment in a self-directed IRA and an appraisal during the process. (at 12:12)

In their words

"there's always some barrier there's always some restriction on how you can get money into this bucket"

"you must be healthy for permanent life insurance"

Why it matters if you are building or preserving great wealth

David's pre-IPO example tied a projected 9 to 12x return to qualified small business stock, while the promoter encouraged an IRA investment. That made eligibility and account placement part of how David evaluated the offer.