Tax Planning for John: 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).
Expenses
- Itemized deductions: $30,077 (2023); $29,829 (2024).
- State and local taxes paid: capped at $10,000 for federal deduction.
- Home mortgage interest: $18,077 (2023); $17,429 (2024).
- Charitable contributions: $2,000 (2023); $2,400 (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
- Track vesting schedules
- 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
- Salary
- Challenge: Professionals need to:
- Model dual-residency or relocation scenarios
- Calculate CA vs. NV income tax deltas
- Validate safe harbor and statutory residency rules
- Model dual-residency or relocation scenarios
- 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
- Structure ILITs, 529s, revocable trusts with correct legal-IRS alignment
- 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
- Coordinating Roth conversions, capital gain harvesting, and DAF
- Legacy tools silo brokerage, retirement, and charitable giving.
5. Transparency & Justification
- Clients like John 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)
- Show step-by-step calculations behind every strategy
- ❌ Most software just offers high-level summaries with no defensibility.
Hive Tax AI: Solving the Professional’s Tax Planning Pain
Hive Tax AI ingested John’s 2-year tax returns and personal and financial information,, then produced a comprehensive, personalized, and defensible plan in under 10 minutes:
Highlights of Hive Tax AI Plan
| Strategy | Value Add | Risk + De-Risk Strategy |
| Tax Loss Harvesting | Offset $200K in gains from tech ETFs | Wash sale scan + replacement ETF checker |
| DAF Contribution | $500K in appreciated stock → $304K total savings | Auto-checks AGI limits + asset suitability |
| Roth Conversions | $100K/year post-retirement → $150K in NPV savings | Bracket modeling + Medicare impact tool |
| CA Residency Exit Planning | Potential $133K state tax avoidance | Residency checklist + audit scenario sim |
| ILIT + Revocable Trust Plan | $2M estate tax saved + child trust protections | Auto-generates funding plan + attorney tasks |
See below for the list of the proposed tax planning strategies generated by Hive Tax Planning Assistant
What Makes Hive Tax AI Different
| Key Feature | Hive Tax AI | Traditional Tools |
| Cross-domain strategy engine | ✅ Yes (Income + Estate + State) | ❌ No |
| IRS-cited step-by-step calculations | ✅ Transparent + Referenced | ❌ Black box estimates |
| AI-identified high-risk exposure areas | ✅ Risk scoring + mitigation paths | ❌ Absent |
| Multi-year tax impact modeling | ✅ Yes (retirement + estate + gifting) | ❌ Current-year only |
| CPA-facing audit prep support | ✅ Yes (PDF outputs + client memos) | ❌ Not supported |
Real-World Results
- 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.
Want to see the same power in your firm?
Schedule a demo or upload a client return to get started.