Client Profile
Client Name: Dr. Varun
Occupation: Physician & Real Estate Investor
Annual Income: $600,000+
Primary Goals:
- Reduce taxes on W-2 wages and capital gains
- Optimize real estate tax benefits
- Lower AGI to qualify for more deductions and avoid phaseouts
- Reinvest savings into long-term wealth building
The Tax Challenge: High Income, Higher Taxes
Dr. Varun, a successful physician and real estate investor, was earning over $600,000 annually as a W-2 employee. When he sold one of his rental properties, he faced a six-figure capital gains tax on top of his already high federal tax liability.
The property sale pushed his Adjusted Gross Income (AGI) even higher, causing him to:
- Owe steep capital gains taxes
- Lose eligibility for deductions and credits due to phaseouts
- Miss proactive tax planning from his prior CPA
Without a smarter approach, his success was being penalized by the tax code.
The Strategy: Cost Segregation, Gain Management, and AGI Optimization
1. Cost Segregation Study
We performed a cost segregation study on his rental properties, breaking out components like flooring, appliances, and electrical systems. These assets were depreciated over shorter lifespans, creating accelerated deductions.
Why it matters: The resulting “paper losses” were used to offset W-2 income in the same year as the property sale, providing immediate tax relief.
2. Strategic Gain Management
We structured the timing and reporting of the property sale to align with cost segregation deductions and other write-offs.
Why it matters: Instead of letting capital gains spike his AGI, this strategy allowed him to minimize the taxable gain and avoid an even higher tax bracket.
3. AGI Optimization Through Grouping & Deductions
We applied a grouping election to consolidate his rental activities, qualifying him for more deductions under material participation rules.
Additionally, we identified other above-the-line deductions and credits to bring his AGI down significantly.
Why it matters: His AGI dropped from over $600K to $355K, opening access to tax breaks he would have otherwise lost.
The Results: $123,000 Saved in One Year
Dr. Varun achieved:
- $123,000 in tax savings in a single year
- Avoided a massive capital gains spike
- Lowered AGI, preserving eligibility for deductions and credits
- Increased cash flow to reinvest into real estate
- A repeatable framework for long-term tax efficiency
Takeaway: Smart Planning Turns Tax Burdens Into Savings
Dr. Varun’s case proves that even high-income physicians and investors can avoid six-figure tax bills with proactive planning. By combining:
- Cost segregation studies
- Strategic gain management
- AGI reduction strategies
He not only reduced his immediate tax bill but also created a system to build compounding wealth year after year.
Are you a high-income earner tired of watching your paycheck disappear to taxes?
Just like Dr. Varun, you can save big with proactive planning that integrates medical income, real estate strategies, and AGI optimization.
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📧 Email: clients@investorfriendlycpa.com
