How often should HNW clients have their tax strategy reviewed? Is it something that needs adjustment every year or is a good strategy supposed to last for several years? And does having multiple properties across different states complicate things significantly?

Tax strategies should be reviewed quarterly at minimum, with a comprehensive overhaul annually. Tax laws change frequently, and as a portfolio grows, different strategies become available. What works for 3-4 properties often becomes suboptimal at 10-12 properties. Multi-state portfolios absolutely complicate matters and often require state-specific expertise. Each state has different tax treatments for out-of-state owners, and some entity structures that work well in one state can create unnecessary tax burdens in others. This is especially true with states like California, New York, and Texas, which have very different approaches to taxation.

DSTs have serious downsides though. You lose operational control, returns are often lower than direct ownership, and the fees can be substantial. Plus, you're locked in for the duration with very limited liquidity. They're not always the best choice for active investors who want to grow their portfolio.

Is 30% really enough? I've been setting aside 35% and still ended up owing more last year.

It really depends on your income level, state taxes, and available deductions. For many people, 30% is a good starting point, but if you're in a high-tax state or making over $100k, you might need to set aside more like 35-40%. If you found 35% wasn't enough last year, try bumping it up to 38-40%. It's always better to end up with a small refund than to owe more than you expected. Also make sure you're maximizing your business deductions - things like home office, business mileage, health insurance premiums, and retirement contributions can significantly reduce your taxable income.

Thanks for mentioning this! Do you know what qualifies as "financial hardship" for an Offer in Compromise? With my house repairs and existing debt, I'm definitely struggling financially, but I do still have income coming in.

The IRS looks at your assets, income, expenses, and ability to pay both now and in the future. There's no specific income threshold - instead, they calculate something called your "reasonable collection potential." In your case, having necessary home repairs (especially structural ones) and existing debt would be factors in your favor, but they'd also look at your ongoing income potential. The fact that you're actively working and earning would make an OIC harder to qualify for, but not impossible. The IRS has a pre-qualifier tool on their website that can give you a rough idea if you might qualify. But honestly, for most people with ongoing income, a payment plan is the more realistic option. The retirement account suggestion would be more helpful for reducing next year's taxes rather than dealing with what you currently owe.

That's an interesting approach I hadn't thought about. How would we structure the ownership in that case? Would we need to form an LLC or something similar to make it official?

You don't necessarily need an LLC, though many investors do use them for liability protection. You could simply have both names on the deed with specified ownership percentages (like 50/50 or whatever split makes sense based on your contributions). The simplest approach would be to use what's called "tenants in common" ownership, which allows for different ownership percentages and doesn't have right of survivorship (meaning if something happens to one owner, their share goes to their heirs, not the other owner). When you're ready to buy him out after the refi, you'd execute a deed transferring his ownership percentage to you, which is a fairly straightforward process.

That's not entirely accurate. While the annual gift exclusion is $18,000 per person, your solution still requires filing a gift tax return (Form 709) for the amounts over $18,000 to each person. The dad would need to report $49,500 to each person as taxable gifts ($67,500 - $18,000 = $49,500). While you're right that this likely won't result in actual gift tax being paid due to the lifetime exemption, it's still additional paperwork and reduces the lifetime exemption amount. The loan approach with proper documentation is cleaner if they truly intend to pay the money back.

That's really helpful - I'll make sure she focuses on those specific credits first. Is there anything else she should have ready besides the Form 8867 and supporting documentation?

She should also have her written due diligence procedures available - even if it's just a basic checklist of what she asks clients and what documents she collects. The IRS wants to see that she has a consistent process. Also have her review her records for any cases where she might have rejected claiming a credit when a client couldn't provide adequate documentation. This shows the IRS she's not just rubber-stamping everything. And remind her that they'll likely ask questions about her knowledge of the eligibility requirements for these credits, so a quick review of the current rules wouldn't hurt.

Is there a way to know which returns they'll select? My practice got notice of a visit too and I'm freaking out trying to organize everything!

What about companies formed in 2023? I thought we had different deadlines than older companies. Does this pause affect all businesses the same way?

Companies formed in 2023 fall under the "existing entities" category, which originally had until January 1, 2025 to file their initial reports. Companies formed in 2024 have 90 days from formation to file. The enforcement pause affects all businesses subject to the CTA equally - regardless of when they were formed. However, it's important to note that the technical legal requirement still exists for all applicable businesses, even though there's no enforcement mechanism currently in place. My recommendation remains to prepare your information so you're ready when enforcement resumes, which it almost certainly will.

You didn't waste your time. If anything, you're ahead of the game. The database still exists and your information is properly recorded. When enforcement resumes (which most experts think it will), you won't have to scramble like everyone else.