>My wife and I don’t need the money we make from owning most of the business. We live off the salaries of our jobs, and reinvest virtually our entire share of the business. These reinvestments count as “losses,” and so officially we have never made any income or paid income taxes on our share of the business.
Case A: the owners take a paycheck of $100,000. It gets taxed at 30%, they get $70k.
Case B: the owners take no paycheck but instead buy a $100,000 property through the business with the business's earnings. They pay no tax but now own a $100,000 property which will now augment the business's earnings further. Down the road years later, they finally take a paycheck at $300,000, which is taxed down to like $180,000 or something. Still more than 2.5x the Case A payout, and let's not forget they own that much more property now on top of everything else.
EDIT: thinking about this more I suppose that one possibility is that the operator brother is taking basically all of the rent as income and the financier brother, instead of making a return from rent, is hoping to make a return from appreciation (selling the houses later for a profit). TBH this doesn't seem super likely to me either, but it's possible.
I really don't think that the author is correctly explaining his tax situation (which is fine. it wasn't the main thrust of the post).