Strategic Multi-Entity Tax Optimization Plan
Prepared by Sigma Capital
Client Profile
W-2 Income: $350,000
RSU Vesting (Taxable): $350,000
Total Annual Income: $700,000
Filing Status: Married Filing Jointly
Location: High-income tax state (e.g., CA/NY)
Current Retirement Plan: Standard employer 401(k)
Objective
To reduce current tax liability, increase pre-tax retirement contributions, shift income into business structures, and create a scalable entity platform modeled on institutional and family office frameworks.
Sigma Solution: Multi-Layered Entity Structure
Overview
| Entity | Purpose | Status | Retirement Eligibility | Notes |
|---|---|---|---|---|
|
Holding Co
(LLC)
|
Strategic consulting & management of subs | Active |
Solo 401(k)
|
Central command entity
|
|
Trading LLC
|
Tax harvesting and trading operations | Active |
Solo 401(k)
|
Uses institutional-style loss strategies
|
|
S-Corp
(Spouse)
|
Bike business with employees | Active |
(employees present)
|
Produces loss, not retirement eligible
|
|
Real Estate LLC
|
Holds long-term rentals | Passive |
|
Managed by third party, not active involvement
|
Core Benefits Breakdown
Solo 401(k) Contributions
| Entity | Net Business Income | Employee + Employer Contribution |
|---|---|---|
|
Trading LLC
|
$100,000
|
$41,587
|
|
Holding Co
|
$90,000
|
$39,720
|
|
S-Corp
|
Ineligible
|
$0
|
|
Total Contributions
|
-
|
$81,307 Pre-Tax
|
2. Trading LLC Loss Harvesting (K-1 Strategy)
Utilizes advanced tax harvesting methods to strategically realize losses
Losses passed through via K-1 and deducted against ordinary income
Estimated harvested loss: $75,000
Estimated tax savings (42%): $31,500
Inspired by hedge fund techniques, the strategy rotates positions and harvests paper losses without changing long-term market exposure
3. Spouse S-Corp Loss Deduction
S-Corp Projected Loss: $70,000
Spouse is materially involved → loss is non-passive
Offset against RSU/W-2 income
Tax savings: $29,400
4. Business-Level Expense Deductions
With three active entities, client can now deduct:
Home Office (used for trading + consulting): $8,000
Internet, phone, tech, subscriptions: $5,000+
Travel (business development, market research): $7,000
Health insurance premiums (S-Corp deduction): $12,000
Professional fees (CPA, legal, advisory): $10,000-$15,000
Total Estimated Annual Deductions: $40,000–50,000+
5. Structural & Strategic Advantages
Separation of risk across business lines
Centralized control through Holding Co
Platform can scale into: Private equity, advisory, real estate syndication, IP ownership
Future trust/estate overlays possible (SLATs, ING trusts, etc.)
Results Summary
| Category | Without Planning | Sigma Structure |
|---|---|---|
|
Taxable Income
|
$677,000
|
$455,693
|
|
Estimated Taxes (@42%)
|
$294,000
|
$191,392
|
|
Tax Savings
|
—
|
$102,608
|
|
Retirement Contributions
|
$23,000
|
$81,307
|
Projected ROI: Tax Savings Compounded Over Time
Assuming Sigma's strategy results in $102,608 in year-one tax savings, and you reinvest those savings annually in a portfolio tracking the S&P 500 (estimated 8% annual return), the compounding effect significantly enhances the long-term benefit of implementing this structure.
10-Year Wealth Compounding Projection
| Year | Annual Tax Savings Invested | Portfolio Value (8% Growth) |
|---|---|---|
|
1
|
$102,608
|
$102,608
|
|
2
|
$102,608
|
$213,237
|
|
3
|
$102,608
|
$335,344
|
|
4
|
$102,608
|
$470,172
|
|
5
|
$102,608
|
$618,969
|
|
6
|
$102,608
|
$783,151
|
|
7
|
$102,608
|
$964,331
|
|
8
|
$102,608
|
$1,164,355
|
|
9
|
$102,608
|
$1,385,301
|
|
10
|
$102,608
|
$1,629,481
|
By simply implementing the Sigma structure and reinvesting your annual tax savings, you could build over $1.6 million in additional net worth over the next decade — without taking on additional work or risk.
Next Steps
Form LLCs and S-Corp structure with legal support
Open dedicated bank accounts for each entity
Begin structured contributions to Solo 401(k) plans
Execute trading strategy with tax harvesting protocols
Track participation hours to confirm active business status
Engage CPA to finalize K-1 planning and carryforward tracking
Conclusion
This structure transforms a high-income household into a scalable business platform. You shift from being taxed like an employee to operating like a private equity manager—with strategic loss control, retirement acceleration, and multi-entity leverage.
Let Sigma handle the execution while you focus on building capital and equity—tax efficiently.
Prepared By:
Sigma 3 Capital
Precision Portfolio Management
www.Sigma3Capital.com
Disclaimer: This estimation is based on hypothetical scenarios and simplified calculations for illustrative purposes only. Actual market conditions, stock performance, option premiums, and brokerage requirements may vary. This analysis should not be considered financial advice. Before implementing any trading strategy, it's advisable to conduct thorough research and consult with financial professionals to understand all risks involved.
Thank you for considering this investment proposal. We are committed to supporting you in achieving your
financial objectives and look forward to working closely with you on this journey.
