Ep 282: Welcome to the Tax Alpha Protocol with Cliff Morgan

For fifteen years, the estate planning playbook said the same thing: get assets out of your estate before you die. That advice made sense when the exemption was $5 million. It makes a lot less sense now that it's $15 million per person and $30 million per married couple, and permanent.

In the first episode of our six-part Tax Alpha Protocol series, David Chudyk, CFP®, is joined by wealth strategist Cliff Morgan, founder of Net Worth Accelerant. They break down what the One Big Beautiful Bill Act actually locked in, the SALT deduction trap hiding between $500K and $600K of income, and why gifting appreciated assets during your lifetime can quietly hand your heirs a seven- or eight-figure capital gains bill.

In This Episode

• The federal estate exemption is $15M per person ($30M per couple) for 2026 and permanent. For most families, capital gains is now the bigger threat.
• Gifting appreciated assets during life passes along your low basis. Assets inherited at death get a step-up in basis.
• If your MAGI sits between roughly $500K and $600K, the SALT phase-out can push your marginal rate into the mid-to-high 40s.
• The expanded SALT cap expires January 1, 2030. Plan around it now, not in 2029.
• Residents of states with their own estate tax, and business owners with valuable companies, may need a custom strategy.
• Donate appreciated securities directly; never sell first and donate the cash.

What the One Big Beautiful Bill Act Locked In

Signed on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) removed the cliff that had high-net-worth families scrambling. Instead of the estate exemption falling to roughly $7 million per person when the Tax Cuts and Jobs Act sunset, it rose to $15 million per person for 2026 and will be indexed for inflation going forward.

• Income tax brackets are permanent: 10%, 12%, 22%, 24%, 32%, 35%, and a top rate of 37% (instead of reverting to 39.6%).
• Bracket creep protection: bracket thresholds keep adjusting for inflation every year, so a cost-of-living raise doesn't automatically push you into a higher bracket.
• Charitable cash gifts: the 60%-of-AGI limit is now permanent. But starting in 2026, itemizers only get a deduction for contributions above 0.5% of AGI, and corporations only above 1% of taxable income (still capped at 10%).

The Asterisk: State Estate Taxes

The federal number isn't the only number. Roughly a dozen states plus Washington, D.C. levy their own estate tax with far lower exemptions, as low as $1 million in Oregon. If you live in one of them, you need a custom strategy.

And business owners get there faster than they think. David raised the point on air: a company doing a few million in revenue with healthy EBITDA can be worth $7–9 million on paper, even if you don't have anywhere near that in cash. Add a couple of well-funded 401(k)s and a house, and a "huge" state exemption stops looking so huge.

The SALT "Squeeze Zone"

The state and local tax (SALT) deduction cap jumped from $10,000 to $40,000 for 2025 ($40,400 for 2026), rising 1% a year through 2029. That's real money for people who itemize. But there are two catches.

Catch #1: the income test. Once your modified adjusted gross income passes roughly $500,000, you lose 30 cents of that extra deduction for every dollar you earn above the threshold, until you're back down to the $10,000 floor at around $600,000. Inside that band, your effective marginal rate spikes.

Catch #2: the expiration date. On January 1, 2030, the expansion disappears and the cap drops back to $10,000 for everyone.

Cliff's example: a specialist earning around $500,000 agrees to pick up one extra ER shift. Because every extra dollar also shrinks their SALT deduction, the federal tax on that shift lands in the mid-to-high 40% range. Nearly half the shift, gone. The fix is planning ahead: maximizing pre-tax retirement contributions and timing deductions to keep MAGI below the phase-out while the window is open.

Carryover Basis vs. Step-Up in Basis

This is the heart of the episode. Two sections of the tax code have worked the same way for decades. What changed is the context around them.

Section 1015 (lifetime gifts): if you give an asset while you're alive, the recipient inherits your original cost basis, along with every dollar of unrealized gain.

Section 1014 (inheritance): if that same asset passes at death, the basis resets to fair market value on the date of death. The built-up gain isn't deferred. It's gone.

David's illustration: $10,000 invested in Microsoft roughly 40 years ago would be worth about $62 million today (past performance is not indicative of future results). Gift those shares to your kids while you're alive and they're holding a $10,000 basis. If they sell, the federal capital gains tax alone runs well north of $10 million. Leave the shares to them at death, and that gain is wiped clean.

When the estate tax kicked in at $2 or $5 million, paying that basis cost to dodge a 40% estate tax often made sense. At $15 to $30 million, the math has flipped for the overwhelming majority of families.

"Don't let 2017-era tax anxiety drive a 2026 decision. The law changed, the threats changed, and the playbook has to change with it." David Chudyk, CFP®

Three Filters Before You Gift an Asset

• How much growth has already happened? A low-basis asset that has already done most of its appreciating usually favors holding until death. Gifting it just turns a future tax-free event into a taxable one.
• How much room is left to run? Early-stage assets, like pre-IPO equity or a young, fast-growing business, can be better lifetime-gift candidates, but only if moving that future growth out of your estate actually changes your outcome.
• Are you charitably inclined? Gifting appreciated securities directly to a charity or donor-advised fund can be the cleanest move on the board: no capital gain, a fair-market-value deduction, and no basis problem. Just don't sell first and donate the cash, which gives up the benefit.

The "Wrong" Financial Decision Can Be the Right Life Decision

Not every choice should be optimized for taxes. Paying a grandchild's tuition or helping with a first car while you're here to see it can be worth a tax bill. As David puts it: don't make every decision based on taxes, and don't make decisions without considering taxes. Your health, life expectancy, and goals all belong in the conversation.

Doing Some of Both: Securities-Backed Lines of Credit

Sometimes it doesn't have to be either/or. A securities-backed line of credit lets you borrow against a portfolio instead of selling it, so you can help family now without realizing the gain, while the shares can still receive a step-up at death. The loan is repaid from the estate, and Cliff noted that life insurance can be used to replace that amount for heirs if you're insurable.

It's a tool, not a free lunch: you pay interest, market drops can trigger collateral calls, and a large gift to a family member still counts as a gift for reporting purposes. This is exactly the kind of move to model with an advisor before you pull the trigger.

"If you really know how the game is played and you can play the game, it's truly to your advantage." Cliff Morgan

Who Not How

David closes with one of his favorite ideas from Dr. Benjamin Hardy and Dan Sullivan's Who Not How: when you face a complex problem, ask "who can help me solve this?" instead of "how do I figure this out myself?" A surgeon, a business owner, or any high earner creates the most value doing what they're trained for, not reading the tax code at midnight.

Your Vision Deserves 10 Minutes

Not sure whether to gift now, hold for the step-up, or do some of both? Book a free Vision Call with David and talk through your situation at the 30,000-foot level. Schedule your Vision Call

Own a business? Find out what it's really worth to a buyer, and how that value affects your estate, with the free Sellability Score.

The Tax Alpha Protocol Series

• Part 1: The One Big Beautiful Bill Act, estate exemptions, and step-up in basis (this episode)
• Part 2: Deconstructing active income offsets and real estate tax traps
• Part 3: Complex exit liquidity and private contract trust structures
• Part 4: The state income tax nexus trap and remote work liabilities
• Part 5: The generational tax bomb and wealthy psychology
• Part 6: Alternative liquidity and the family office triad

About Cliff Morgan

Cliff Morgan is a wealth strategist and the founder of Net Worth Accelerant. After years helping Fortune 500 companies cut costs and build new revenue streams, he moved into finance and commercial real estate and has spent more than five years working with a family office, learning the strategies and mindset of generational wealth.

• Find Cliff on LinkedIn: Cliff Morgan, Net Worth Accelerant
• Book a 15-minute call: NWA Briefing

Resources Mentioned

• Who Not How by Dan Sullivan and Dr. Benjamin Hardy
• IRC Section 1014 (step-up in basis) and Section 1015 (carryover basis on gifts)
• Free Vision Call with David

The information presented on this podcast is for general educational purposes only and does not constitute financial, investment, legal, or tax advice. Parallel Financial is registered with the U.S. Securities and Exchange Commission (SEC) as a registered investment adviser. Registration does not imply a certain level of skill or training, nor does it constitute an endorsement by the SEC. Guest opinions are their own. All investing involves risk, including the potential loss of principal. Please consult a qualified financial professional before making any financial decisions.