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Newsletter #14 - The Tax Loophole That Can Make You Millions
Nikolas Hulewsky
September 14, 2025
Listen, everyone HATES taxes.
Everyone also knows that real estate is the BEST way to build long term wealth.
Wouldn’t it be great if there was something that killed both of those birds but with just ONE stone?
Well it just so happens that there is! And to be honest, the tax code in the United States (sorry my international friends) is optimized to help you (the entrepreneur) generate cash, take the cash you would have paid in taxes, put it into real estate, lower your taxable income and build wealth! Year after year after year after year…
I’m showing you how, today!
Before we start, give me some feedback so I can give you the content you want! (please)
Which Kind of Content Do You Want More Of? |
The Tax Flywheel: How Smart Entrepreneurs Are Building Wealth
A Step-by-Step Guide to Legally Slash Your Taxes And Build Generational Wealth.
Picture yourself young, dumb, and just getting into entrepreneurship. You’re finally starting to make real money, as this business that started as a silly little idea has now grown into a successful operation. Aaaaaand then your accountant calls…. and you owe the IRS $500k.
Most entrepreneurs write this painful expense off as the cost of success. But what if there was a better way?
I’m going to break down the exact process you can use to turn your biggest expense into a wealth-building machine.
disclaimer: I am not an accountant or CPA so talk to someone BEFORE you start making investment decisions!
The Four-Step Approach:
Generate cash: Establish or maintain a high-margin business with a strong cash flow, such as service businesses, SaaS, e-commerce, etc.
Buy specific types of real estate: Use your excess cash to buy commercial real estate classified as active businesses, like car washes and gas stations.
Use bonus depreciation: Leverage the bonus depreciation provisions in the tax code to create MASSIVE write-offs against your active income and wipe out your tax obligations.
Reinvest the savings: Take the money you would have paid in taxes, buy more income-producing assets, and repeat the cycle.
Why this works: The beauty of this strategy is that you're not just buying tax write-offs. You're buying real businesses that generate cash AND provide massive tax benefits. The tax code was designed to encourage investment in productive assets that benefit the economy. When you buy and improve commercial real estate, you're creating jobs, improving communities, and providing valuable services.
Why Car Washes and Gas Stations Are Different:
The IRS classifies real estate in a few different ways…
Traditional Real Estate (apartments, office buildings, self-storage, RV Parks, etc.)
Classified as "passive" investments
Losses only offset other passive income
You need "Real Estate Professional" status to use losses against business income
Most busy entrepreneurs can't qualify for this
Active Business Real Estate (car washes, gas stations)
Classified as “active” businesses
Losses offset ALL your income (W-2 wages, business profits, EVERYTHING)
No Real Estate Professional designation required
Eligible for 100% bonus depreciation on all assets except the land itself
The Real World Example That Will Shock You:
Kriss Burg, a serial entrepreneur who accidentally discovered this strategy, purchased two car washes for a total of $4 million.
Down payment: $700K
Land value: $500K (can't depreciate this)
Everything else: $3.5 million (fully depreciable)
With this, he received a $3.5 million tax write-off…. IN YEAR ONE.
Think about this: If you made $1 million in business income that year, this write-off creates a $2.5 million net operating loss. That means you’ll owe NOTHING in federal income taxes, plus you’ll have substantial losses to carry forward to future years.
The Bottom Line:
The tax flywheel transforms your biggest annual expense into your biggest tool. Instead of writing massive checks to the IRS, you're building a portfolio of cash-flowing assets that appreciate over time.
It requires capital, commitment, and professional guidance. But for entrepreneurs with the resources and determination, it's one of the most powerful wealth-building strategies available.
Kriss talks about this entire process in more detail on my podcast. It’s honestly one of my favorite conversations ever! Links below
Businesses You Should Start As A First-Time Entrepreneur.
Over the last week, I have been diving into businesses that are perfect for first-time entrepreneurs to start. Each business is analyzed using my 8-factor scorecard covering everything from startup costs to AI automation potential.
Here's what we've covered so far:
Business | Score | Notes | Business Plan / Vid |
Car Wash | 33/45 - Excellent First Business | If you’ve got capital and want a simple, location-driven cash business, this is a solid pick! | |
Pest Control | 35/45 - All-Star Starter | It’s simple, it’s needed, and you get paid for being reliable. It is a win-win! | |
Photo Booth Rentals | 33/45 - All-Star Starter | Growing market driven by downsizing boomers and renovation trends. |
This Week on Nikonomics:
Every week, I dive deep with entrepreneurs who've cracked the code on building real businesses. Here's what you might have missed:
$40M Broker Reveals the #1 Mistake Killing Small Business Deals
Guest: Jackie Hirsch
“It’s always been a seller’s market.”
That’s what Florida business broker Jackie Hirsch says after closing $40M+ in deals last year. In this episode, we discuss:
Profitable niches are hiding in plain sight
Buyer mistakes that cost real money
AI isn’t killing deals, it’s changing them
This $10M Business Sells… Old Love Letters?! (And You Could Too)
Guest: Michael Clark
Michael turned love letters from WWII into one of the fastest-growing subscription businesses in the U.S. We talked about:
Why you should start simple and scale fast
Why complexity is the moat
How he plans to expand
$5,000 in Week 1 With No Website, NO Experience, NO Team
Guest: Jas Singh
Jas built Winnipeg Digest into an audience of 100,000+. Then he turned that attention into a holiday lighting company and booked $5K in jobs his first week with no website. In this episode, he explains.
Why distribution is everything
How to use the “giveaway” model
Why seasonal businesses make sense
Ask Me Anything
Every week, I answer questions sent to me via Twitter, Speakpipe or [email protected]. |
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Nik Hulewsky