How Tax Expert Mark Misselbeck Saved a Client Millions by Asking One Follow-Up Question

Anthony Codispoti (00:00)
Welcome to another edition of the Inspired Stories podcast, where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. As you listen today, let one idea shape what you do next. My name is Anthony Cotaspoti, and today’s guest’s father was conscripted into the German army at 17, survived three and a half years in a Siberian gulag.

came to America with nothing and died at 45 from the damage his body had endured. Our guest was starting his sophomore year of college when that happened, the first in his family to go to school. That early lesson about fragility and resilience was shaped everything that followed. He spent more than 50 years building an expertise so deep that a single conversation with him can be worth millions of dollars to the right client. Mark Misalbek,

is a core tax director at Cherry Becker Advisory, one of the nation’s top tax and advisory firms, where he has spent more than 27 years. He holds a Masters of Science in Taxation from the University of Hartford and has advised clients across industries from manufacturing to technology on everything from ⁓ &A strategy to estate planning. Mark is the kind of person who has seen enough of life to know what actually matters and still shows up every day to find the thing

Nobody else caught. But before we get into all that good stuff, today’s episode is brought to you by my company, Adback Benefits Agency. Listen, if you run a business, you’re likely stuck in the cycle of rising insurance premiums. You’re paying more, but your team is getting less. And many people can’t afford coverage at all. We do things differently. We offer a solution that provides your employees with unlimited access to doctors, therapists, and prescriptions that’s always free for them to use.

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All right, back to our guest today, the director of Cherry Bech Art Advisory, Mark Misalbek. Thanks for making the time to share your story today.

Mark H. Misselbeck (02:30)
Happy to do so.

Anthony Codispoti (02:32)
So let’s start with that first wild story that we introduced there at the beginning. You grew up with a father who survived the gulag, came to this country with almost nothing, died early at 45 because of what his body had been through. Walk me back to your sophomore year of college when you got that news. What did you do with that?

Mark H. Misselbeck (02:55)
I dedicated myself to attaining what he had hoped I would get to a degree. And I put it to good use. My brother and sister followed in my footsteps. And originally I could only find a job in Boston. I moved back home to be with my mother to help her take care of the home and contribute what I could to support my brother and sister in their pursuit of their education.

My sister also became a CPA. My brother became an emergency room doctor. So from a father who was a an independent butcher, small meat market neighborhood on his on one side he had a dry grocer on the other side, a soda fountain newsstand. You know, three unit commercial.

⁓ small mall and from that I’ve become what I’ve become.

Anthony Codispoti (04:03)
They could be proud of the torch that you carried forward.

Mark H. Misselbeck (04:06)
I would hope so.

Anthony Codispoti (04:09)
So your first job out of college was with the IRS. What did you learn sitting on that side of the table that most tax advisors never get to see?

Mark H. Misselbeck (04:19)
The mindset that is presented from the agency point of view is to challenge everything and view everything with skepticism. Now, I tend to look at things and poke around to find out what the underlying base or real information is. Because if you change one factor in the fact pattern,

the tax outcome can skew very differently from where you thought it was going. And usually the clients bring me a transaction that’s already executed. And all I can tell them is what the outcome is based on what they did. If on the other hand, they say I’m thinking of doing this or that, what’s…

the prospect of doing it in a more tax efficient manner, I had the opportunity to save a good deal of money. An early circumstance was ⁓ a client who had a partner at a 50-50 deal, and the partner had said to him, look you here, I found a buyer for a property we own.

I want you to take the proceeds. I will take the remaining property and we’re quits.

At the end of the day, the way that partner proposed the transaction, the IRS would have gotten to tax 150 % of the proceeds, essentially. Well, if they sold the property in the partnership, each partner would have to pay tax on half the gain. But then the partner who wanted my partner out in tax parlance would have taken his proceeds to buy my partner out of the other properties, creating another gain.

Anthony Codispoti (05:59)
150%.

Mark H. Misselbeck (06:21)
and he wouldn’t have held back any money to pay the taxes on his gain.

So.

Anthony Codispoti (06:27)
So what’s the smarter

setup in that situation?

Mark H. Misselbeck (06:30)
In that situation, what we did was we dissolved the partnership and each partner took a property.

There was a small, much smaller game. The game would have been lower six figures to each partner. And my charge from the client initially was what is my tax from this proposal? And when I presented it to him, he said, no way am I gonna pay that kind of tax. You gotta find a way around it.

Which is when I found out that this was the circumstance in the proposal. And while I was sitting there in front of the client, I came up with this alternative. What happened was my client had to recognize a relatively small amount of income and from a low six figures, I burnt his tax down to high four figures.

Anthony Codispoti (07:35)
wow.

Mark H. Misselbeck (07:37)
and his partner’s tax, would have been middle five figures, went down to very low four figures. Plus, at the time, we then have the opportunity to execute a tax-deferred transaction since it was real estate. We went into the mode of trying to swap the property rather than sell it for cash.

Now that has survived where when you trade in a vehicle for business purposes, you can no longer defer into the received personal property car for a truck or truck for a truck. You have to recognize gain now. Yeah. Real estate though, you can still swap real estate. And as long as you don’t get your hands on cash or get out from under debt.

Anthony Codispoti (08:18)
but you can do it with land, you can do it with physical land.

Mark H. Misselbeck (08:31)
The gain you would have had is deferred into the property you get in the exchange.

Anthony Codispoti (08:35)
So how does a swap actually take place? What is that transaction?

Mark H. Misselbeck (08:40)
Well, these days you use an intermediary to park the deed that you hold while the other party acquires the property you want with their cash, somebody else willing to pay the tax. So they acquire the deed, then they give it to the intermediary in exchange for the deed you put to the intermediary, and the intermediary gives you the deed from the other party.

Anthony Codispoti (09:03)
And why would the intermediary want to pay the tax and put themselves in that position?

Mark H. Misselbeck (09:06)
They don’t pay the tax.

They have bought from you at a price that’s at fair market value that’s equal to the value they get from the other party. And you adjust the value for any differences by debt that you take on. If you increase your debt, it’s as though you paid cash to acquire the property because you’re obligated to pay off the debt. Now, the…

At the time we we probably crafted this transaction, there was also investment tax credits if you rehabbed buildings that were 15 or 20 years old, equal to 10 % of the cost provided you spend the larger of $5,000 or your basis in the property.

I was figuring the client with the cash that would be available at the price quoted for the value of properties at the time could buy two, maybe three rehabilitatable properties. And he would have a basis fairly low that when you split it between two or three properties and take out the land costs so you have the building cost, we’d be at the 5,000 or below. So everything he spent on the property would generate credits.

Anthony Codispoti (10:23)
Here’s the question that pops into my mind, Mark, is like, obviously you’ve learned this stuff, you’re reciting it, you know it like the back of your hand, you can reference it in all these client conversations, but when you’re first learning about it, does it ever strike you as who came up with these numbers? Like, why is it 10 % and why is it 5,000 of this? And like, do they just feel random to you or does it feel like it’s been well thought out?

Mark H. Misselbeck (10:49)
⁓ It’s a matter of budgeting because the Congress sets those thresholds in the law. And they pick the numbers. How they pick them, I have no clue.

Anthony Codispoti (11:01)
from

the air, from a bingo roller.

Mark H. Misselbeck (11:04)
or

some other place.

Anthony Codispoti (11:07)
All right, so how did the opportunity to join Cherry Becker come about?

Mark H. Misselbeck (11:12)
I was working with a firm that what Cherry Bekert Approach ultimately acquired. So the history I had with that firm has tacked on to Cherry Bekert. They’ve essentially grandfathered my work experience in the prior firm. I started with that firm in December of 1998. So that has tacked on. Prior to that, I was employed by

three other CPA firms and the IRS. So across my experience, I’ve had a total of really five employers in this field.

Anthony Codispoti (11:53)
And what has caused you to stay with, I understand there was the transaction that took place, the acquisition, but what’s basically caused you to stay in place for so long? What do you enjoy about this?

Mark H. Misselbeck (12:05)
Well, I went with the firm because of the salary that was offered and across the course of the years they were pleased enough with the quality of my work to compensate me fairly well to the point where I think I was priced out of the market to change firms.

Now I’m of an age where the question becomes how long of a shelf life do I have for further ⁓ rendition of services.

Anthony Codispoti (12:37)
Is that a question that you need to answer or that you expect your employer to come up with the answer?

Mark H. Misselbeck (12:43)
It’s a question I would need to answer. And so far it’s a matter of is my mental acuity and my health at the level where I believe I can still function well and the hours are not a drag. If one of those three components would go south, then I would have to reevaluate whether or not I can continue on.

Anthony Codispoti (13:11)
And how do you feel today, March of 2026?

Mark H. Misselbeck (13:15)
Not bad. I’m putting in 10 hour days, give or take, to accommodate the workload. And ⁓ I’m not bragging. I’m the go-to guy in the local office when there’s a knotty problem or a hairball to try and straighten it out or determine what the options are for dealing with it.

Sometimes there’s not a good option. That was just the case the other day. Partner who’s been with our office two, three months and has taken over a chunk of work brought with him some of his own, had an issue with a client that he didn’t feel competent to sort out. And so we’ve had a couple of conversations over the last couple of days as to what the

positives or pitfalls are in the situation and what’s necessary to resolve it. Now he’s assembling a memo to go to the client and say these are your options. Where do you want to go from here to straighten this out?

Anthony Codispoti (14:28)
So is most of your work reactionary? And maybe that’s not the right word, but I’ll tell you what I mean. The client comes to you, they’ve got an issue or they’ve got a transaction and they want guidance, or is there a portion of what you do that’s more proactive? hey, here’s a change in the tax law or here’s a new thing that we uncovered. Let us reach out to our client base and say, hey, look at this.

Mark H. Misselbeck (14:58)
Well, the firm is doing that regularly and we have a slated presentation, I believe in Atlanta at the end of the month for businesses that’s going to run a day and a half or two days for all of, ⁓ if you sign up early, it’s 295, including an overnight in the hotel. And if you don’t, you do the early bird, it’s an extra a hundred dollars.

they will be presenting.

Anthony Codispoti (15:29)
And at this session,

they’re going to present all kinds of new strategies.

Mark H. Misselbeck (15:32)
all kinds of different things

depending upon your industry or ⁓ tax pro ⁓ in inclinations or interests what would fit your particular niche so that that’s going to be on the website i’m sure for cherry beckert if anybody wants to yeah

Anthony Codispoti (15:51)
which is cbh.com, right?

And this is something that’s done annually and they’ve got another one that’s coming up here soon.

Mark H. Misselbeck (16:01)
They have others they’re going to do in other localities. I understand the dates may not be yet fixed. So if you check the website, you can keep an eye on it. But they would like, I think, to do it annually. It all depends on circumstances. I can tell you, I have recommended to younger people, if you want job security,

This isn’t necessarily a bad field. Between Congress and the 50 states, somebody’s always tinkering with the tax law. So you have changes that are going to affect people’s bills and advising them how to deal with it or mitigate it if possible is pretty good job security.

Anthony Codispoti (16:52)
So you’ve been doing this 50 plus years. What’s the biggest change in tax code that you’ve seen?

Mark H. Misselbeck (16:59)
The sea change was back in the 86 tax act under president Reagan, trying to simplify things. And in fact, move it transmogrified from simplification to ⁓ what the hell did they call it? I can’t even remember now, but it, it changed to something else.

And I was keeping up with all the changes and advising clients what the potential moves were. And at three or four in the morning, the whole thing changed. It almost blew out my memory banks, so to speak. Everything I had learned of what they were proposing and thinking went out the window.

Anthony Codispoti (17:46)
So they had been proposing things. This was the strategy everybody thought they were going to go with, but before it got signed into law, they made radical shifts to

Mark H. Misselbeck (17:53)
Yeah, they changed the whole plan. We got passive activity losses limiting tax, what they were perceived to be tax shelters. We have the modern alternative minimum tax. Now, not many people heard of it. Shorthand, we deal with it as AMT. Its origins go back to 1969. Congress held hearings and investigated 11 millionaires who paid no tax whatsoever.

It started with that as an alternative minimum tax to be imposed on people taking advantage of the strategies those people employed to have a no tax bill year.

At its height, was anticipated to reach 23 million American tax filers.

Under President Trump’s first tax act in 2017, that number was cut down to an estimated five to six million. What started as something to hit only 11 taxpayers grew to that proportion. So beware of what you ask for and what the unintended consequences are.

Anthony Codispoti (19:00)
Chrome.

And why did it expand so much? Was it just because inflation, people were earning more money, more people were t- okay.

Mark H. Misselbeck (19:14)
Exactly.

The regular tax rates reach up to 37%. Yeah, 37 % now, they were 39.6 under Clinton and for an interim period afterwards under Obama. Whereas capital gains tax rates are at 15, 20%, sometimes 25 or 28. Alternative minimum tax, things you deduct such as taxes.

and other items have one treatment for regular tax deductibility are not deductible for alternative minimum tax. And where you have a tax rate of 20 % on capital gains and then 37%, those deductions missing are taxed at 26 % for a small range of income and 28 % for all other income under alternative minimum taxes.

So when you have too much bad income at a lower tax rate than a regular tax, you wind up paying the alternative minimum tax. ⁓

Anthony Codispoti (20:16)
We’re just scratching the surface here on the complexities of the tax laws, Mark. And it makes me think of something that I heard you say publicly before, which is you think the best path to tax simplification would be what?

Mark H. Misselbeck (20:33)
I posted it on LinkedIn and it still gets 20, 24 reads a week maybe. All congresspeople should be required to prepare their own returns. Access to people such as myself or tax attorneys are full panoply of tax research materials, the best tax preparation programs to deal with all the complexities.

but for whatever they have in the basket of their income reporting, prepare their own returns. And immediately upon filing, they get an IRS audit.

I would think that that might bring about some level of simplification.

Anthony Codispoti (21:19)
Basically, let them feel the pain. Yeah. So who are the types of clients that you work with? Who’s a good fit for you?

Mark H. Misselbeck (21:22)
Yeah.

We have some legacy individuals whose picture has simplified probably through retirement mostly. But we do have business owners and as their business success balloons, they have the wherewithal to get involved in other things. They get investment advisors, the investment advisors put them into.

alternative investments, partnerships, or venture capital, private equity, and those tend to complicate their picture relatively quickly, particularly the partnerships, because they get into the partnerships that are put together by the brokerage houses, and they’re investing across the country.

With that comes the obligation you’re generating income from different states. You gotta file returns in those states to report to those states the income you’re drawing from those states. Because they didn’t have the jurisdiction to tax you on it. And most states have a complimentary feature of if you pay tax in another state.

We will offset the tax imposed on the same income you’re reporting to us, capped at whatever tax you would have paid us.

Anthony Codispoti (22:50)
So

give me an example of how me living in Ohio might be generating income from another state that I would owe additional tax on in that state.

Mark H. Misselbeck (23:00)
You get into a partnership that has rental property in, let’s say, Georgia with a five, assume a 5 % tax rate and your tax rate can reach 9 % or so, I think. So if you have profit on your rental property from Georgia and you pay Georgia 5 % on a $10,000 income or $500.

and you report that 10,000 in Illinois that generates a $900 tax. Illinois will give you a credit against the 900 they want you to pay for the 500 you already paid to Georgia. Your net tax to Illinois is then $400. Doesn’t work so well with Massachusetts where we have typically a 5 % tax rate and California has a 13.3 % tax rate.

You pay 13.3 to California, you can only get credit against the the tax on the same income and mass for 5%. So net you’re paying an extra 8.3 because you’re doing business in California of some sort or another.

Anthony Codispoti (24:06)
There’s so many layers to this. ⁓ Mark, walk me through the eight-figure tax savings that you engineered for a client that started with a single question about a charitable contribution.

Mark H. Misselbeck (24:20)
Yeah, a bit of serendipity, if you will, but we had acquired the client about six or eight months before. And as I was part of the group that discussed his taxes with him, he called me. He had exercised some options on stock that he did in January of that year and he called me in June.

And he said, I’m contemplating a charitable donation of that stock. And is that a good tax strategy? I had to say no, because in order to get fair market value, the full value of the stock, you have to qualify for long-term capital gains treatment on selling it, which means holding it a year and a day. He had maybe six months on the clock. If it’s short-term, you only get what you paid for the stock. So it was the exercise price.

Well, what I said to him was, if you have other holdings in the company, I can look at them and maybe recommend a different bundle of stock to satisfy your charitable donation inclination and get you the fair market value rather than the cost. So do you have a listing? Can you send it over? He did.

And in closing the conversation, he says, by the way, I think this company will be sold in two to three years at X dollars per share, which was a multiple of what he paid on his exercise price.

Anthony Codispoti (25:54)
It’s just a throwaway comment at the end of the conversation. Wasn’t what he had called about.

Mark H. Misselbeck (25:56)
throwaway comment at end of the conversation.

There is a provision in the tax law under Code Section 1202 called Qualified Small Business Stock or QSBS shorthand, taking the initiatives. We’re great for acronyms, just like the defense industry. We have our own set.

So QSBS qualified stock, can exclude from income in its entirety, potentially as much as 100 % of gain to the larger of $10 million per corporation or 10 times your basis in the stock.

Anthony Codispoti (26:16)
Get your own language.

Mark H. Misselbeck (26:35)
In this instance, the $10 million was the goal.

Now it’s 10 million per corporation and per taxpayer.

So if I look at the husband wife as one taxpaying unit, if they file married filing separately, they only get five million apiece. As a marital unit, one taxpayer, $10 million. If I stop there, I get squeezed into $10 million. And…

Also, depending upon when you bought the stock, the exclusion isn’t 100 % of $10 million, it’s only 50 or 75%. So now you’ve got to sort through what your holdings are and what exclusion level they qualify for.

Anthony Codispoti (27:22)
And when you say your holdings,

like what would qualify as a holding in this case?

Mark H. Misselbeck (27:26)
Stock that you originally acquired from the corporation as originally issued stock that was issued after a date in 1993 when this incepted.

And depending upon when you bought the stock, it’s the 50, 75 or 100 % exclusion.

Now, he’s telling me this company would be acquired by one buyer in one transaction, which means there is no opportunity to designate which shares you’re selling. And the default rule with IRS is, if you don’t designate which shares you’re selling, the first shares you bought are the first shares you sold. If it’s one transaction and I don’t have the opportunity to designate,

his earliest shares which are 50 % excludable instead of his later shares at 100 % exclusion, he’d only get 5 million of the 10 million exclusion.

Anthony Codispoti (28:28)
Okay, I’m with you.

Mark H. Misselbeck (28:30)
I wanted him to donate the block of shares that were 50 % qualified to get them out of the way to get to 75 or 100%. But his feeling was that the value of the block at 50 % was too large for him to swallow as a deduction for that year. And he didn’t know when he might get the balance.

Anthony Codispoti (28:35)
Huh.

He didn’t have enough in the income for

it to make sense for.

Mark H. Misselbeck (28:53)
So then I had to flip it on its head. We went with getting the 100 % excludable shares out of his hands. And what we did was we created a couple of trusts for his kids and he gifted the shares.

If you are a subsequent acquirer of the shares, not from the company, but from an existing investor, you don’t get the QSBS treatment. But a transfer that doesn’t trigger a gift tax that changes the basis of the shares, the character of the shares, the holding period, the basis all tag along to the person receiving the gift or the trust in this instance. So now I got two tax paying trusts, each taxpayers.

each qualified for a 10 million exclusion on 100 % excludable shares.

so the kids get the proceeds tax free.

Anthony Codispoti (29:46)
And so break that down into math. Yeah, what does

this end up saving?

Mark H. Misselbeck (29:51)
Well, we also converted what was a trust that was taxed back to him as what is known as a grantor trust. We got the attorneys to change the terms of the trust. So that was a tax paying trust qualified for another 10 million in its own right.

On top of it, there’s a companion provision, section 1045. If you have what is seemingly QSBS qualified shares and you held them more than six months, and within 60 days of the liquidity event, the acquisition, you acquire QSBS qualified shares in another startup, you can roll over the game.

from the shares and start the path with the holding period from the earlier holdings tacked on to the new shares towards QSBS exclusion, another 10 million in that new company.

We took the short-term proceeds and some of the taxable, regular, long-term capital gain shares that were QSBS qualified. And he had two other startups that needed funding. We used the proceeds to fund those to avoid dilution of his ownership in those companies, roll them over, and he’s got anywhere from a year to four years or more.

tacked on to those holdings towards getting QSBS treatment on their liquidity event.

Anthony Codispoti (31:27)
Okay, Mark, so let’s break this down in a way that the average person might have hope in wrapping their heads around the value of what you did. Can you assign a… Maybe there’s been enough time that’s passed where you know what the actual hard dollar savings were for this guy. Maybe it’s theoretical at this point.

Mark H. Misselbeck (31:49)
The projected hard dollar savings were the low-e figures. You’re talking $10 million or so. I lost a little ground because the shares were only 50 % excludable. The AMT kicked in on the excluded portion. I lost a couple hundred thousand maybe. Still, an outcome that the client was very much appreciative of and happy with.

Anthony Codispoti (32:14)
can imagine. Yeah.

Mark H. Misselbeck (32:16)
Because what happened was he was thinking the runway to a liquidity event was two to three years out. By the time we presented the plan and he approved it, as a closing comment, what he said was that the board of directors had received a non-binding, non-exclusive letter of intent to acquire the company at the price he thought was two to three years out that they were going to reject after the weekend.

because it had earn out conditions for about a third of the price that he felt wouldn’t be met. The deal went down three, four months later at a price that was nearly 50 % more than what he thought would materialize two to three years down the road. And they did achieve some of the earn outs because some of the proceeds have come in over the last several years. The final payment was last year.

Anthony Codispoti (33:10)
So do you just

get a Christmas card from this guy every year? A giant ham maybe?

Mark H. Misselbeck (33:15)
Nobody keeps calling

me or emailing me when he’s got a prospective transaction to see what maybe can be done.

Anthony Codispoti (33:21)
Yeah.

So I’m going to ask you to toot your own horn here for a second, Mark. How many folks in the country do you think are at your level of tax advisers?

Mark H. Misselbeck (33:36)
There’s a fair number, but it’s probably in the hundreds to a thousand or so.

Anthony Codispoti (33:45)
and within your own firm.

Mark H. Misselbeck (33:45)
There are people who

specialize that they’re going to know more than me about some areas. I style myself a generalist because I find the overlap between, in this instance, gifts and income taxes or estates and income taxes produced this opportunity. And instead of just real estate, it’s real estate and partnerships in the earlier transaction on real estate swaps.

Anthony Codispoti (34:15)
Talk to us about tips deductions, overtime deduction.

Mark H. Misselbeck (34:20)
Tips, you have to be in an industry that the IRS has specified normally has a tipping feature to it. And it can’t be a mandatory tip. If the restaurant’s going to act at an 18 % mandatory tip, that tip will not qualify. Has to be reported to the employer, put into your W-2. So now they’re bringing you in where you previously weren’t.

And if this ever expires, they know that you’re on the record as having TIP income so that they’re going to expect you to continue reporting TIPs even if the TIP exclusion expires.

Anthony Codispoti (35:02)
So tell us about the tip exclusion. What do you mean by

Mark H. Misselbeck (35:04)
It’s

$25,000. It is not what is known as a cliff phase out. You hit a certain level of income and it’s gone. If you hit a level of income in this instance for singles, it’s 150,000. For joint return, it’s 300,000. You lose a hundred.

Anthony Codispoti (35:22)
so what this means that

your tips are not subject to income tax within this threshold.

Mark H. Misselbeck (35:26)
The 25,000

is a deduction against your TIP income. The lesser of the TIP income reported or 25,000 would be the excluded essentially amount through this deduction. If your income goes above the thresholds of 150 or 300, you lose 100 for every thousand of income rounded down that your income exceeds the threshold.

So it’s not hit 150 and you lose the entire 25,000 over a range of additional income, you’re going to lose it. The same thing applies for the time and a half extra earnings, overtime pay. But the IRS has said the overtime pay has to meet the Fair Labor Standards Act, FSA requirements.

Anthony Codispoti (36:08)
over time.

Mark H. Misselbeck (36:17)
to be considered overtime pay. And it’s only the premium portion of the pay, not the entire one and a half, but the one half only that qualifies again for a 25,000 exclusion or exemption deduction. Same phase out rules apply 150 or 300, a hundred per thousand, but round the thousand down.

Anthony Codispoti (36:42)
So big picture, what do you think the reason for these changes?

Mark H. Misselbeck (36:48)
If the reason for any changes is motivated by the primary underpinning motivation to all congresspeople. Having been elected, you do what you need to do to get elected again. Essentially, they’re buying votes.

They make their voters happy.

Anthony Codispoti (37:09)
So they did a study of how many people

are gonna be affected by this overtime rule, how many people are gonna be affected by this ⁓ tips exemption. And they’re like, wow, that is a big base of voters that I can go and talk to and talk, and explain to them what I’ve done.

Mark H. Misselbeck (37:22)
Look what I’m doing for you. Look

what I’ve done for you. I put money in your pocket. It’s measurable. It’s immediate and recognizable.

Anthony Codispoti (37:33)
How about the senior deduction? What is this?

Mark H. Misselbeck (37:35)
The senior deduction is an extra $6,000 if you’re over $65,000 per marital person. In a marital unit, is two. If they’re both over $65,000, it’s potentially another $6,000. Again, there is an income level phase out.

Anthony Codispoti (37:51)
So when you say an extra $6,000, you mean an extra $6,000 in tax deduction.

Mark H. Misselbeck (37:55)
Yeah. Most seniors are at a point in time where they don’t itemize so much anymore unless they are very good charitable givers. Frequently they’ve paid off their mortgages.

The real estate taxes, income taxes were capped at 10,000. They’re now up to 40,000 for a period of time, but after that period of time, we’ll revert to the 10,000. The only way they get over the standard deduction, which frequently for them is 25 to 27,000 plus an extra dollop for age, is by charitable contributions or significant medical expenses.

So the standard deduction, 27 to 30,000 plus another six, potentially. But again, it’s for a lower level of income. And I can’t give you the phase out income level right off the top of my head. It’s too new.

Anthony Codispoti (38:56)
What?

Mark H. Misselbeck (38:59)
but it’s built into our tax program and I check for whether or not it’s hitting, depending upon the income level of the client we’re preparing the return for.

Anthony Codispoti (39:10)
Up until now, Mark, I was starting to think you were an AI bot, the way that you were spouting off all of these things from memory. Actually, it makes me think, do you use AI in any of your work?

Mark H. Misselbeck (39:22)
I’m not as proficient with it as I probably should be, but I do search to verify that my memory isn’t playing tricks on me because I have so much of a history that’s changed so much over the years that I frequently need to just verify that what I’m remembering is law is in fact the current law.

Anthony Codispoti (39:45)
Speaking of technology, saw that Cherry Becker recently launched a platform to automate R &D tax credit claims. Are you familiar with how this works? Can you explain it to us?

Mark H. Misselbeck (39:57)
I really am not that that is a specialization within the firm on R &D credits and they do studies for clients. They will respond to IRS inquiries. I have a client did not have a study done currently under IRS audit that is considering bringing in these specialists to bolster their records and documentation to present the IRS to support the claim credits they have or have.

putatively claimed.

Anthony Codispoti (40:29)
So aside from cases that we’ve already talked about, with us another client outcome that stands out to you as one that you’re really proud

Mark H. Misselbeck (40:42)
Some years ago, there was a client that I don’t know how they wound up coming to us, but the partner called me into a meeting with them in our old offices in the library. They were foreign immigrants with English that was colored by their home country accent and background. But they started on the West Coast. They had developed a company that they sold

to one of the holistic Silicon Valley people out there, companies. But there was a division that the company didn’t want that they took back. He was no longer getting a W-2, and the preparer at the time, because he became a partner in the division they bought back, treated him as passive with adverse implications because of the business operations under the AMT, Alternative Minimum Tax, again.

Anthony Codispoti (41:41)
mean treating him as passive to explain the difference there and why it’s important.

Mark H. Misselbeck (41:45)
That was part again, the part of the Reagan sea change. In the past partnerships, you ran losses. didn’t matter whether you were involved in it or not. You took the losses and frequently they were bolstered by bar debt borrowings to fund the operation. And that was all permissible under the existing tax code from 1954 to 86. In 86, a distinguishing was made.

between whether you materially participated in an activity or were just passing. And the simplest explanation of the differentiation I’ve come up with for people is material participation, you’re expected to earn your living by the sweat off your brow or the sweat off your back being involved in the operations of the business. If all you are is a silent investor money person, you’re passive.

In those circumstances, what the Congress said was, you can only take your passive losses if you can marry it. That’s a passive activity loss, a PAL, your PAL in taxes, if you can marry it with a PAY, a passive income generator.

Anthony Codispoti (43:00)
Okay.

Mark H. Misselbeck (43:02)
So there are other adverse aspects to being passive. And the preparer mistakenly classified this client as passive. And those adverse aspects kept him paying AMT for a number of years. Fast forward five preparers later, he’s relocated to the East coast from the West coast.

Anthony Codispoti (43:26)
Nobody else caught this

along the way.

Mark H. Misselbeck (43:28)
The last preparer finally woke up to the circumstance and wanted to file an amended return and a claim for refund to transfer or change his status from passive to material participation. Took the client along, let him sit with the IRS auditor for three or four hours. And the IRS auditor was on the verge of issuing a denial of the claim and the amended refund change in status.

I listened to all of the circumstances. The client was running a division of the partnership between he and a buddy. They had enough ownership in the partnership that they could override the professional CEO running the operation. And he was traveling to his home country, what was his former home country, to run a group that was working in the division. Couple three times a year.

I would say he was materially participating, he just didn’t get a W-2.

Anthony Codispoti (44:32)
Sounds like it.

Mark H. Misselbeck (44:35)
I listened to it, I looked at the partner, I looked at the client, said, I think we can win this thing, and if we do, you get, I think, six figures of refunds. And they’re going, whoa.

Got a power of attorney, registered it with the IRS, called up the IRS agent. We’ve been engaged to represent the client. Is it worth having a discussion? The IRS auditor says, no. I met with the client for several hours. I took voluminous notes. I understand the situation perfectly. I’ve gone over it with my manager. They agree with me. We referred it to a specialist in Washington on passive activity status, and they all agree.

I said, fine. This was early February. We met with the client late January.

Anthony Codispoti (45:22)
So

the door is closed on this at this point in the conversation. They’ve made their decision three levels up.

Mark H. Misselbeck (45:29)
Yeah, I said, when could we expect your report? And he said, well, I’ve got other things to fish to fry. I’ve got to spend some time fleshing out my position. So it’ll take a while. I’m waiting. I’m waiting. It’s tax season. I get out of tax season. It’s April 20th. I have sat down. My head is on straight again from dealing with all the last bunch of tax returns and tax problems.

And I started drafting a letter in response to what I know is coming. April 20th, I get a call from the client. We just got back from traveling. We found the IRS report in our mail with a response date of today.

But we called the auditor and explained that we just got back from traveling and found this. And he’s agreed to reissue the report with today’s date and a 30 day response window. Our question is, can you meet that deadline? And I said, funny you should ask. I’m already drafting what I anticipated the IRS position would be, a response to counter it. When I get the letter together,

Anthony Codispoti (46:16)
give you a whole lot of time.

Mark H. Misselbeck (46:41)
I will run it by you. will explain what I’m saying, why I’m saying it, why I’m saying it the way I’m saying it, because you want to create a certain perception of the position.

And what happened was I put together a four page letter, backed up with 85 pages of exhibits, computations of what the prior preparers had missed of the AMT issues, the AMT credits he was entitled to because of those issues, the research and development credits that were thrown off by the partnership that he hadn’t been able to use because he was an AMT, and his foreign tax credits that were miscalculated as to carry forwards.

sent it all in before the deadline, sat back. Come August, I get a call from the IRS agent. He says, so what’s the story here? And I said, didn’t you read my letter? He said, what letter? The letter and package of exhibits had gone to the appeals division. They’re a trier of law, so to speak. The IRS agent is the finder of facts, the trial court.

They don’t examine the facts. If new facts are raised in the appeal, they kick it back to the agent to find out what the facts actually are. I had raised four new issues, my exhibits on the credits and the deductions. They kicked it back to the agent to examine that. When he read through the letter and went through the exhibits, we didn’t hear anything from mid to late August. January.

Anthony Codispoti (47:52)
Okay.

Mark H. Misselbeck (48:19)
On the end, pretty much on the anniversary of our first meeting with the client, I called a partner and say, we haven’t heard back from the IRS. Should we be finding out where this stands so we don’t have to deal with it in tax season? He said, no, sleeping dogs lie. March 25th on a Friday, the client calls.

We have an IRS audit report, should we sign it? We said, what report? We’re on as power of attorneys, we’re supposed to get copies of the report, we haven’t gotten it. Can you fax it to us and let us look at it over the weekend? They gave us everything that we had been asked for in the claim and the amended return, and were somewhat apologetic they couldn’t give us more. Because those documents are a cap on what could be refunded.

Anthony Codispoti (49:07)
Wow.

Mark H. Misselbeck (49:08)
The interest on the refunds approached six figures.

So from, we’re on, they’re on the five yard line going for the goal and we win the game. Is how that one came out. The client has only just started paying regular tax again because of the AMT issues I raised. And he’s about to go back from material participation to passive because of the change in circumstances in that he retired from the partnership.

Anthony Codispoti (49:17)
This is substantial.

That’s incredible. ⁓

Mark H. Misselbeck (49:43)
And he’s no longer employed using the sweat off his brow or the sweat off the back to prosecute or promote the business.

Anthony Codispoti (49:53)
⁓ moral of the lesson here is talk to Mark Misalbek ⁓ before, during, after anything. He’s your saving grace here. So let me shift gears on you, Mark, because I want to take a moment and just ⁓ explore a really hard challenge that you’ve had to overcome personally. We mentioned the passing your father in the intro. Is there another one that we can explore here together?

Mark H. Misselbeck (50:20)
Sadly, there is. 1995, I was partnered in an accounting firm. We were in a recessionary period in our locality. I hadn’t had a paycheck for an aggregate of 15 weeks.

My wife’s daughter by a prior marriage, essentially my daughter, was away at college freshman year, came home at Thanksgiving, and it developed that her health had taken a sideways turn to where she needed a liver transplant.

My wife prevailed upon me to resign the partnership because she did get the liver transplant the following year. And it happened that we were told we had a choice of going to Pittsburgh or Boston, two centers for the nearest centers for liver transplants. We wound up going to Boston. She had the liver transplant. She recuperated. She made up the lost ground. She graduated with her class, finishing off her degree.

up here in the Boston education system at Bentley College, now Bentley University. Sadly, she also needed a kidney transplant 15 years later. And this past year or so, the kidney was failing, the liver was following, they found cancerous lesions, the treatment to cure the cancerous lesions through her health even more out of kilter.

and they discovered that there was a thickening in the walls of her heart. A little over a month shy of her 49th birthday, she passed on September 11th. Essentially, my wife and I had to start over.

We had a home in our former residence area that was underwater. We had a short sale. I had to make up for an outstanding debt that wasn’t fully satisfied by the short sale. And my former firm did not have a retirement plan. So I had no retirement funding that was to bolster my finances.

So my wife who had lost her job at the time, was 15 weeks without a pay sitting with her daughter up here in Boston in the ICU. She was 11 weeks in the ICU. With what they tried to do that didn’t work, she couldn’t even claim unemployment benefits because she had to physically appear to the unemployment board in our home state to claim those benefits because she lost her job being with her daughter.

And I had to juggle all the finances to keep everything afloat without a paycheck coming in from either end.

So about 30 years ago, I restarted, she restarted. I’m still working.

pretty much made up the ground from those damages. But, wow.

Anthony Codispoti (53:34)
you don’t make up that ground from the heart, the damage to the heart.

Mark H. Misselbeck (53:39)
Yeah, no, that was the final nail in the coffin, I think. And she had been through so much with all the treatments they were trying to get her in shape to go back on the transplant list for a dual transplant of kidney and liver. But the heart thing just got scotch the whole business. And she’d been in pain and worn out so much by all of this that it finally got to the point where she, I think, gave up.

Anthony Codispoti (54:13)
How do you emotionally, how do you begin to put the pieces back together? The financial stuff, that’s hard and that’s enough to cripple somebody, but to be hit with that at the same time as losing your daughter, how do you begin to put one foot in front of the other?

Mark H. Misselbeck (54:30)
Life goes on. You absorb what has done. You know nobody’s getting out of here alive is a basic premise. You take each day as it comes. You’re happy that hey I got up this morning. I can put one foot in front of the other. That’s a victory right there.

and you just go on from there.

Anthony Codispoti (54:56)
was the source of strength for you in the early days, you and your wife?

Mark H. Misselbeck (55:01)
⁓ The support she has shown to me over the years, her faith in me and my abilities has sustained me across the years that we’ve been together and we’re inhaling distance of our 40th wedding anniversary.

Anthony Codispoti (55:18)
patients.

So you guys have been a big source of support for each other. Any external support? It’s been helpful for you guys.

Mark H. Misselbeck (55:26)
Well, my mother passed away at 76 some years ago. ⁓ There’s a physical distance with my brother and my sister, although we talk fairly often. For a while, my wife’s brother was on the outs on a perceived slight, and they’ve recently reconnected and reestablished their family relationship.

Most of the rest of the family are older or have become disconnected. So a lot of my wife’s relatives have passed. Her younger brother now is reconnected. My brother and my sister, my sister’s down in the Gold Coast of Connecticut, Ridgefield. My brother’s up in North Hero, Vermont, 20 miles from the Canadian border. I’m down the outskirts of Boston.

It’s a triangle, but there’s some distance between us. So it’s a special occasion to be able to get together.

Anthony Codispoti (56:28)
Yeah.

But family, family’s been your support system. Yeah. What do you think is your superpower?

Mark H. Misselbeck (56:35)
Yep.

When the occasion presents itself recognizing the opportunities to provide clients with a better tax outcome than might otherwise be the case. By the same token, when I interviewed with this firm, they gave me a gotcha question.

What’s your greatest strength and what’s your greatest weakness?

And my comeback was my greatest strength is my knowledge by depth and breadth of the tax law. By the same token, my greatest weakness is my depth and breadth of the knowledge of the tax law. The strength is finding those cracks and crevices or interlacings of the tax law that permit me to get you the outcomes that we’ve talked about in the three instances discussed.

Anthony Codispoti (57:31)
What you mean by that?

Mark H. Misselbeck (57:44)
By the same token, it gives me the knowledge that a particular circumstance, there’s nothing I can do to improve the situation. You’ve done what you’ve done and I’m stuck with the outcome and I got to give you the bad news.

Anthony Codispoti (58:05)
Don’t shoot the messenger though.

Mark H. Misselbeck (58:07)
Hopefully not.

Anthony Codispoti (58:09)
Mark, I’ve just got one more question for you today, but before I ask, I to do three quick things for the audience. First of all, if you want to get in touch with Mark Misalbek from Cherry Bechert, ⁓ their website is cbh.com. Mark specifically is in the advisory LLC division of Cherry Bechert and the direct phone number for his area is 7 8 1 4 5 3 8 700.

It’ll be in the show notes for folks if you miss it, but one more time, 781-453-8700. And if you’re enjoying the show, please take a moment to subscribe wherever you’re listening. It also sends a signal that helps others discover our podcast. So thank you for taking a quick moment to do that right now. And as a reminder, you can be the hero advisor that helps clients give their employees access to therapists, doctors, and prescription meds while paradoxically increasing

their net profits. Real gains that can change how businesses value. Contact us today at adbackbenefits.com. So last question for you, Mark. A year from now, what is one very specific thing that you hope to be selling?

Mark H. Misselbeck (59:21)
Another birthday.

Anthony Codispoti (59:23)
I love it. Simple but profound at the same time. Well, Mark Misalbek from Cherry Becker, I want to be the first to thank you for sharing both your time and your story with us today. I really appreciate you being here.

Mark H. Misselbeck (59:38)
Thank you for having me.

Anthony Codispoti (59:40)
Folks, that’s a wrap on another episode of the Inspired Stories podcast. Actually, before I completely sign off, tell folks where they can find you on the radio. We forgot to mention that, and this is a fun

Mark H. Misselbeck (59:52)
I have been doing this as a public service now for a number of years in the teens, I believe. We haven’t tracked back to when I actually started, but Dan Ray is a talk radio host. His program is nightside. It’s on WBZ AM 1030 radio through the I heart group.

and I will be appearing this Friday night at nine and we will go as late as 11 depending upon the call-ins because what we do is we will discuss some of the tax law changes that may be of interest to the audience but what drives it is the calling questions and the opportunity to ask questions of someone such as myself that is made available to his listening audience when I appear on the program.

Anthony Codispoti (1:00:43)
you on there regularly, you know, second Friday of every month? Or is it a little bit more?

Mark H. Misselbeck (1:00:51)
I try and do it at least once, if not in this case, twice. I did beginning of February an appearance with him, but I try and do it twice before I get very deep into tax season and really locked into very long hours. I’m already working seven days a week, nine and a half, 10 hours a day, weekdays, eight hours Saturday, six hours Sunday.

So it is wearing to a degree and then doing a nine to 11 appearance and being on my game for the questions that are presented.

Anthony Codispoti (1:01:30)
It’s a stretch, I get it.

Mark H. Misselbeck (1:01:30)
It’s

a stretch when we get beyond this point.

Anthony Codispoti (1:01:33)
Yeah. Well, it makes me even more grateful for the time that you chose to spend with us here today. Thank you. And folks, check it out. Dan Ray, R-A-E on WBZ, part of the iHeartRadio collection.

Mark H. Misselbeck (1:01:48)
And the earlier

appearance was taped, if you search, I forget if it was, it was probably February 6th. March mirrors February this year because there’s 28 days and it’s an even number of weeks. So when we pick up in March, the dates align.

Tomorrow is the 6th of March when I’m appearing again. So it would be February 6th. It’ll be archived at the nine o’clock, 11 o’clock. Talking Taxes, I believe, is the podcast label for the recording.

Anthony Codispoti (1:02:22)
All right, super helpful. And all those details will be in the show notes for folks in case you missed it.

Okay, folks, thanks for learning with us. If one thing stood out, put that into action today.