Tax Planning for Bob: A High-Earning Tech Executive in California
Client Profile
Personal and Filing Status
Bob is a 51-year-old senior project manager at a tech company in California.
He works remotely and owns a home in California.
He has a 5-year-old son.
Bob and his partner are not legally married; he files as a single tax filer, and his partner files as head of household, claiming their son as a dependent.
Income
Base salary: $300,000.
Significant RSU compensation: 2,000 RSUs granted, 50% vested over 2 years; current stock price is $1,000/share.
Sells vested RSUs immediately to avoid additional capital gains.
Substantial investment income: $5 million in a brokerage account (mainly S&P 500 index funds).
Retirement account balance: $1 million.
Cash: $200,000.
2023 AGI: $1,723,943; 2024 AGI: $1,907,160.
High capital gains: $1,057,621 (2023); $759,139 (2024).
Dividend and interest income: $67,192 (2023); $77,171 (2024).
Energy efficient home improvements: $1,072 credit (2023); $866 credit (2024).
Assets
Brokerage account: $5 million (mainly S&P 500 index funds).
Retirement accounts: $1 million.
Cash: $200,000.
Home (co-owned): valued at $2 million.
Home equity: $200,000.
Liabilities
Home mortgage: $700,000.
Tax Rate and Tax Situation
Federal effective tax rate: ~26% (2023); ~30% (2024).
Federal tax liability: $447,921 (2023); $573,903 (2024).
State (CA) tax liability: $192,320 (2023); $213,546 (2024).
Significant capital gains and investment income drive high tax bills.
Subject to Net Investment Income Tax (NIIT): $42,657 (2023); $31,900 (2024).
Additional Medicare Tax applies.
Estimated tax penalties due to uneven income and payment timing.
SALT deduction capped at $10,000 federally; California itemized deductions limited by AGI.
No use tax reported.
Tax Planning Goals
Reduce overall tax liability, especially on RSU vesting and capital gains.
Seek strategies to minimize California state taxes.
Maximize tax efficiency for charitable giving.
Optimize estimated tax payments to avoid penalties.
Estate planning: efficiently transfer wealth to his son.
Other Considerations
Plans to retire in 2 years.
Maxes out 401(k) contributions.
Wife recently started a business but had no income in the past year.
Interested in strategies for general tax savings, retirement, and estate planning.
Needs to review and possibly amend California returns for deduction optimization and Mental Health Services Tax compliance.
Should consider tax-efficient investment vehicles, donor-advised funds, and potential relocation or residency planning for state tax savings.
Estate planning is a priority for passing assets to his son in a tax-efficient manner.
Challenges for Tax Professionals Without Hive Tax AI
Building an effective, multi-year tax plan for Bob is highly complex. Here’s what tax pros face manually:
1. RSU Taxation Complexity
Challenge: RSUs vest and are taxed as W-2 income at their fair market value.
Professionals must:
Track vesting schedules
Calculate exact tax impact annually
Model what-if scenarios for future RSU liquidation
Most tools stop at showing a large W-2 spike with no strategy attached.
2. State Income Tax Burden
John is based in California, where the 13.3% top marginal rate heavily affects:
Salary
RSU income
Capital gains from brokerage sales
Challenge: Professionals need to:
Model dual-residency or relocation scenarios
Calculate CA vs. NV income tax deltas
Validate safe harbor and statutory residency rules
Manual tracking is error-prone and audit-risky.
3. Estate Transfer Strategy for Minor
John wants to pass wealth tax-efficiently to his son.
Challenges for Professionals:
Structure ILITs, 529s, revocable trusts with correct legal-IRS alignment
Incorporate current exemption limits, sunset rules, and future step-up rules
Navigate gift splitting, generation-skipping taxes, and insurance needs
Most planning tools don’t touch estate integration or audit-prep.
4. Investment Income Planning
$5M in brokerage + $1M in retirement = large capital exposure.
Challenges:
Coordinating Roth conversions, capital gain harvesting, and DAF
Avoiding wash sale violations
Sequencing withdrawals and tax brackets over retirement
Legacy tools silo brokerage, retirement, and charitable giving.
5. Transparency & Justification
Clients like Bob demand proof and precision.
Challenges:
Show step-by-step calculations behind every strategy
Include citations to IRS guidance
Explain risk levels and how to mitigate them (audit prep, compliance)
❌ Most software just offers high-level summaries with no defensibility.
Hive Tax AI: Solving the Professional’s Tax Planning Pain
Hive Tax AI ingested Bob’s 2-year tax returns and personal and financial information,, then produced a comprehensive, personalized, and defensible plan in under 10 minutes:
Time Saved for Professional: 6–8 hours of manual modeling reduced to 10 minutes
Client Confidence Boost: John saw full logic with audit protection
Tax Optimization Identified: > $2.8M in lifetime value strategies
Conclusion
For professionals tackling high-income clients like Bob, Hive Tax AI is a game-changer. It automates tedious calculations, uncovers advanced strategies, cites tax code, scores risk, and prepares client-ready deliverables — all while integrating income tax, estate, investment, and state-level issues into a single, cohesive plan.
