the deferral opportunity in order to pay the tax at the lower current rate and be done with it. Tax diversification can trump tax deductible I don't think I've ever heard a business owner say he or she doesn't want to reduce taxes. That's a given. The question, however, is often asked in the form of "but, is it tax deductible?" Income tax rules, in particular, are well defined and there are only so many tax deductions allowed which don't involve shackles and jail time. Fortunately, immediate tax deductions aren't the only way to win in the tax savings game. Most investors subscribe to the idea of "diversification of assets." An equally sound principle is "diversification of taxes ." Immediate deductions are great, but there are often strings attached. For example, qualified plans are typically tax deductible to the company and  tax-deferred to the employee. The challenge is that eventually the employee has to pay ordinary income tax on that pension income, and the tax basis of a qualified plan portfolio doesn't step up at death. A good strategy for retirement income savings is to mix the portfolio with qualified plans and other, after-tax vehicles.  Spreading out the tax events allows for significant diversification from a cash flow standpoint. Take, for example, cash value life insurance. Some business owners are supplementing their future retirement income, and protecting their families, by placing after-tax dollars into cash value life insurance policies on their lives. The cash values builds up tax-deferred, and, one