Lets say I have a small company and I pay myself a salary of 200k / year. I'm in the 33% tax bracket. I've thought about a strategy to lower my taxes to about 20%, but not sure if it's viable. Would love some input.
I've thought about taking the company public (just OTC pink slips, not listed in the NYSE or anything prestigious like that). Then I could pay myself $35,000 / year (15% tax bracket) plus $165,000/ year in stock options. The stock options would be set at a low strike price with say a one month expiration, pretty much guaranteeing I get the stock.
I would keep the stock for one year and then sell it back to the company. Now my compensation would fall under the long term capital gains tax which I believe would come to 15%.
Is there anything wrong or potentially illegal with this strategy? Or any way to improve it? I wouldn't mind writing annual reports and waiting a year for the long term capital gains tax rate to kick in order to keep an extra 30k+ year.