Can We Invest in Our Hobby Farm at a Loss to Offset Tax on Huge Liquidity Event?

"Hey guys. First time caller, long time listener. I’m 36, happily married to a former pageant hottie and 3 kids living in Lincoln, NE. We had a fortunate liquidity event during 2021, where I sold 50% of my shares in a tech start up. Overnight we went from having $400k (mostly lore-tax) in retirement accounts to $2m investable total with 50% of shares still invested. Income is about $120k which is in the financial services industry. We have a start up hobby farm that is starting to show profit but we have lots of capital investment needed to make the farm grow. Ie, tractor, barn, etc. My question is if we could look at a tax strategy where we invest into our active farm business (resulting in a significant loss) and simultaneously convert all or a portion our pre-tax 401k at more advantageous marginal tax rate? Drive a 2015 Chevy Silverado and michelada is the drink of choice!"

Listen to the entire Your Money, Your Wealth® podcast: https://bit.ly/ymyw-394

Download the Tax Planning Guide:
https://purefinancial.com/white-paper...

Pure Financial Advisors, LLC is a fee-only Registered Investment Advisor providing comprehensive retirement planning services and tax-optimized investment management to thousands of people across the nation.

Schedule a free assessment with an experienced financial professional:
http://bit.ly/PureAssessment
Office locations: https://bit.ly/PureLocations
Ask Joe & Big Al On Air: https://purefinancial.com/ymyw/ask-jo...
Subscribe to our YouTube channel: http://bit.ly/YMYW-YouTube
Subscribe to the Your Money, Your Wealth® podcast: https://lnk.to/ymyw

IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. As rules and regulations change, content may become outdated.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® - The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.