Carlton Dennis said something early in our conversation that I want you to sit with for a second.
He was explaining why filing season — the thing most people treat as the tax event — is actually the worst time to be thinking about taxes. His words: "You're working off of historical data." By April 15th, you're four months into the current year, filing paperwork on last year's money, and almost everything that could have changed the number is already gone. The window closed at midnight on New Year's Eve, while everybody was watching the ball drop.
I've been working with tax advisors for fifteen years. I know this intellectually. But the way Carlton framed it — that sophisticated investors are planning their current year at the same time they're filing the previous one, that the filing deadline and the planning window are two completely different things running on separate tracks — made me realize how many people, including people who think they're on top of it, are still operating on the wrong calendar.
That's the whole conversation. Not the tactics — the 1031 exchanges and the oil and gas deductions and the S-corp elections are real and we'll get to them. The conversation is about the clock. Because the tax code is not a punishment. It is a system with doors in it. And those doors have closing times. Miss them and you pay full price, regardless of how smart you are or how much you earn.
The calendar is the strategy
Most people's mental model of taxes looks like this: earn money, wait for January, collect documents, file before April 15th. Done.
Carlton's model looks like this: earn money, immediately start structuring the current year to reduce next April's bill, file the previous year while simultaneously adjusting the current year's strategy, repeat.
The difference between those two models is not a small number. In the highest earning years — and for athletes, those years are compressed into a window that most people don't fully understand until it's closing — the difference between reactive and proactive tax planning can be seven figures. Not theoretical. Actual dollars that either go to the IRS or stay with you, determined entirely by whether you made certain decisions before December 31st or after.
The moves that die on New Year's Eve are the meaningful ones. You can still put money into a retirement account after the year closes. But you can't establish the right business structure retroactively. You can't claim bonus depreciation on an asset you didn't purchase. You can't do a cost segregation study on a building you didn't own. The retirement account option — the thing most people think of as tax planning — Carlton's point is that it's essentially the consolation prize. "Most of those retirement accounts you can't touch until you're 59 and a half." For an athlete trying to build leverage while he's still earning, that's a limited tool.
The tools with real torque have to be in place before the year ends.
What W-2 taxpayers aren't being told
Carlton started with the W-2 world because that's where most people live, and because most CPAs stop too early when they're talking to W-2 clients. The standard advice is: max your 401(k), itemize if you own a home, write off your mortgage interest and property taxes, give to charity. That's the road. And for most people, that's where the conversation ends.
What Carlton does — and what he described as unlocking deductions in the business space without giving up your job — is showing W-2 earners that a single asset changes the equation. An investment property. An oil and gas position. Either one opens deductions that regular homeowners can't access, and either one does it while the salary keeps coming in.
The oil and gas piece was the one I knew least about going in. The mechanics are straightforward: a majority of your initial investment in an oil and gas project goes to what are called tangible drilling costs — the machinery, the equipment, the physical infrastructure. The IRS allows you to deduct a significant portion of that in year one. Carlton's number was 60 to 75 percent of your initial investment coming back as a deduction in the first year. On a $100,000 position, that's $60,000 to $75,000 off your taxable income, against your W-2 salary. And the investment continues to produce — cash flow on a monthly or quarterly basis — while the deduction has already done its work.
Real estate works differently but gets to a similar place. The mechanism there is depreciation — the IRS's acknowledgment that a building wears out over time, and therefore you're entitled to recoup its value over 27.5 years as a deduction. Even though you may have put 10% down, you get to depreciate the full purchase price. And that depreciation can be accelerated — bonus depreciation, cost segregation, Section 179 — so instead of spreading it across nearly three decades, you front-load it in the years when your income is highest and the deduction does the most work.
I got into real estate while I was still playing, and the depreciation piece was one of the main reasons. Not the only reason — the cash flow mattered, the long-term appreciation mattered, the 1031 exchange strategy mattered. But the tax protection in the active earning years was part of why it made sense to start early rather than waiting until I had more time to learn it.
The 1031 and why most athletes miss it
Carlton walked me through the 1031 exchange in a way that I think is worth laying out clearly, because the terminology is the thing that stops most people from engaging with it.
A 1031 exchange lets you sell an investment property — realizing a gain — and roll 100 percent of that gain into a new property without triggering a capital gains tax event. You're not eliminating the tax. You're deferring it, potentially indefinitely, while your equity keeps compounding in the new asset. The rules: you have 45 days to identify the replacement property after the sale, and 180 days to close. Miss either window and the gain becomes taxable immediately.
The reason this matters for athletes specifically is the time compression problem. An athlete's earning years are condensed. The money that takes a physician 30 years to accumulate, an NFL player might accumulate in 8 to 10 — if he's fortunate. That compression creates a tax exposure problem, because gains that a civilian investor might realize slowly over decades get realized fast, in high-earning years, at the top marginal rates. The 1031 is one of the primary tools for keeping that money working rather than sending a third of it to the government every time you make a move.
PULL QUOTE: "The biggest trap I see with athletes is they think in seasons. They don't think in decades." — Carlton Dennis
The NIL athlete has no excuse for getting this wrong
Carlton made the point I've been making to anyone in college athletics who will listen: NIL athletes are self-employed. They are not students receiving gifts. They are not employees receiving a salary with withholdings. They are business owners receiving income with no withholdings at all, and Uncle Sam is a business partner who wasn't at any of their games but will absolutely show up at tax time.
The structural mistake Carlton sees most often is the simplest one: athletes receive NIL income, put it in a checking account, move some to savings, and spend from checking. No tax account. No investment account. No LLC separating personal from business. No understanding that a significant portion of what landed in that account was never really theirs.
His five-account framework — checking, emergency, investment, opportunity, tax — is the system he wants in place before the first check arrives. The tax account alone, funded at 20 to 25 percent of every incoming payment, solves the most common crisis: the athlete who spent the money and then can't pay the bill in April. The investment account, funded at 20 percent, is where compounding starts. The opportunity account, at 5 percent, stays liquid for the thing you didn't see coming.
I had two kids in mind listening to this section. Carlton had NIL athletes in mind. The lesson is the same regardless of income level: the account structure you build before the money arrives determines what's left after you've lived with it for a year.
What I'd actually do, if I were starting over
Three things — in the order they matter:
- Put a tax strategist, not just a tax preparer, on the team before the first check clears. There's a difference, and most people don't know there is one until they've wasted several years with a preparer who fills out forms correctly but never asks what your income looks like next year. A strategist is planning December's moves in February. A preparer is recording what already happened. I sat with the wrong kind of advisor for longer than I should have early in my career, not because I didn't have advisors — I had several — but because I didn't know what question to ask to find out which kind they were. The question is simple: "What are we doing before December 31st to change next year's number?" If they don't have an immediate answer, find someone who does.
- Learn the three levers — depreciation, entity structure, and timing — well enough to ask about them by name. You don't need to understand the full tax code. You need to understand that bonus depreciation and Section 179 can accelerate deductions into your highest-earning years, that an S-corp election can reduce self-employment taxes meaningfully, and that when you take a salary matters for the QBI deduction. Not because you're doing the work yourself. Because the moment you can ask the question in the right vocabulary, the advisor across the table knows they're dealing with someone who will notice if they do the lazy version of the job. Carlton put it sharper than I would have: "The moment you stop outsourcing your understanding is the moment you take your power back."
- Build the investment account during the playing years, not after. I talk to a lot of retired athletes who are starting to build wealth in their late 30s or early 40s because they weren't ready to think about it while they were playing. I understand the logic — you're focused, you're competing, you have everything in front of you. But the compounding math does not care about your focus. The ten years between ages 23 and 33, invested correctly, are worth more than the twenty years between 43 and 63. This is not a close calculation. The athletes who start during the playing years, even imperfectly, finish with a different life than the ones who wait until they have more time.
Carlton closed by saying something I think about my own transition. When you stop playing, you spend a period re-identifying who you are — separate from the sport, separate from the contract, separate from the number on the back of the jersey. The athletes who made it through that transition the cleanest are the ones who had been building an identity outside the sport while they were still inside it. Not because they loved football less. Because they understood it was a window, not a lifetime.
The tax code is a window too. It opens every January 1st and closes every December 31st. What you do inside it determines how much of your money you keep.
Most people don't realize the window is closing until it already has.