The Client Challenge

A specialized surgeon earning $1.4M in annual W-2 income was losing over $600K each year to combined top-tier federal and state income taxes. Because W-2 earners face strict limitation rules on deductions, standard CPA advice had been limited to maximizing 401(k) contributions—leaving over 40% of their annual earnings exposed.

The Citadel Strategy

Operating as a unified, year-round advisory unit, Citadel Partners developed a proactive tax-mitigation plan focused on active tax strategy and qualified alternative investments:

• Real Estate Professional Status (REPS) & Cost Segregation: Structured the spouse’s management activities to qualify under IRC §469(c)(7). Concurrently acquired short-term rental and multi-family assets, performing cost segregation studies to unlock immediate bonus depreciation.
• Energy Infrastructure & Tax Credits: Allocated a targeted portion of discretionary capital into qualified renewable energy programs, generating direct Dollar-for-Dollar tax credits against active income.
• Custom Corporate Structure: Formed an ancillary management company to process consulting fees, enabling a Solo 401(k) with Profit Sharing and a Cash Balance Defined Benefit Plan.

The Measurable Impact

• $215,000 Direct Income Tax Reduction in Year 1.
• $680K in Accelerated Depreciation unlocked to offset passive and active gains.
• Clock-Free Collaboration: Transitioned to the Private Client Group for ongoing, year-round investment reviews without watching the hourly clock.