Tax Attorney in Redlands, California

Esri (Environmental Systems Research Institute) has been privately held since Jack and Laura Dangermond founded it in 1969. There is no public market for the shares, no §1202 Qualified Small Business Stock five-year hold benefit tied to a future IPO (because there isn't one planned), and no Rule 144 lock-up clock. What Esri actually grants at the executive and senior-technical level is a mix of phantom stock or stock appreciation rights (SARs) tied to an internal valuation, non-qualified deferred compensation under IRC §409A, and traditional cash bonus. SARs and phantom stock are §409A property — the taxable event is when the cash settles, not when the grant vests, and there is no §83(b) election available because there's no actual property transferred at grant. If Esri ever runs a §1042 ESOP transaction the Dangermonds could roll proceeds into Qualified Replacement Property tax-deferred, but for rank-and-file employees the cash settlement of phantom shares is ordinary W-2 income with regular withholding. We model the §409A timing, look at the exit-event clauses in the plan document, and coordinate the Form W-2 reporting with FTB so the parallel state income matches.

Loma Linda University is a §501(c)(3) Seventh-day Adventist institution, so the retirement architecture is the §403(b) tax-sheltered annuity for university employees plus a §401(a) defined-contribution employer plan. If you're 1099 faculty rather than W-2, you don't sit inside the university §403(b) at all — your own retirement is a Solo §401(k) or SEP-IRA funded from Schedule C net earnings. The hospital side (Loma Linda University Medical Center, the clinical entity) runs a separate §401(k). The IRC §415 annual additions limit applies separately per unrelated employer, so 1099 faculty income funding a Solo §401(k) does not crowd out the W-2 hospital §401(k) elective deferral cap (the §402(g) employee cap is per individual across all plans, but the §415 employer-contribution side is per unrelated employer). We model the §401(a)/§403(b)/§401(k)/Solo §401(k) coordination, run the §414(c) controlled-group analysis to confirm the plans aren't aggregated, and document Schedule C deductions so the Solo §401(k) employer side is fully funded.

Tithe deductibility runs under IRC §170. For any single contribution of $250 or more, you need a contemporaneous written acknowledgment from the church or university under §170(f)(8) — the cancelled check is not enough by itself. The acknowledgment must state the amount, whether any goods or services were provided in exchange, and a good-faith estimate of their value. Routine tithe envelopes returned with the bulletin do not meet §170(f)(8); the church office has to issue an annual receipt. For non-cash gifts (appreciated stock, real property), §170(f)(11) requires a qualified appraisal for items over $5,000. Donations to Loma Linda University Health are deductible because LLUH is a §501(c)(3); local SDA conference and union contributions are likewise deductible. We also handle the §170(b)(1)(A) 60% AGI ceiling for cash to public charities and the §170(b)(1)(C) 30% ceiling for appreciated long-term capital-gain property, plus the five-year carryover for amounts exceeding the ceiling. California conforms via R&TC §17024.5.

Grove land held for active citrus production is real property used in a trade or business, which makes it IRC §1231 property. On sale to a developer, the gain on the land itself is §1231 capital gain (long-term capital rates if held more than one year), and any §1245 ordinary-income recapture applies to amortizable §175 soil and water conservation expenditures and §263A(d) preproductive-period costs that were expensed. The standing trees themselves, if removed before sale, can produce ordinary income for the timber/wood, but for orchard land sold as-is with the trees in place the trees are part of the §1231 land sale. A §1031 like-kind exchange is available — you have 45 days from closing to identify replacement real property in writing to a qualified intermediary and 180 days to acquire. California fully conforms to §1031 (Form FTB 3840 reporting required for any out-of-state replacement). If a parent died before the sale, IRC §1014 gives the heir a stepped-up basis to fair market value at the date of death (a Redlands grove held at 1960s basis stepped up to 2025 fair market value can wipe out most of the gain). We coordinate the qualified intermediary, the §175 recapture analysis, and the §1014 stepped-up basis confirmation.

IRC §175 lets a farmer elect to expense soil and water conservation expenditures rather than capitalize them. Once elected, those amounts are deducted against current-year Schedule F income. The IRS recovers the benefit on sale: §1252 treats a portion of the gain as ordinary income to the extent of prior §175 deductions, recaptured on a sliding scale — 100% if the land is sold within five years of the deduction, declining by 10% per year until full §1231 capital treatment after the tenth year. For a Redlands grove where §175 elections were made decades ago, recapture under §1252 is essentially zero because the holding period exhausted the schedule long ago. What does matter is §263A(d) preproductive-period costs (capitalized into basis if the orchard was planted after 1981) and the §175 election history for the current owner's holding period. We pull the family's prior Schedule F filings, document the §175 history, and run the §1252 recapture analysis before signing a sale agreement so there are no surprises at the §1231 / ordinary-income split.

The 1988-1995 Base Realignment and Closure (BRAC) rounds produced two distinct tax categories that still come up. First, §3231 Railroad Retirement Tax Act applied to certain transportation workers at the base; if a former Norton-related employer participated in RRTA payroll, the SSA does not have those quarters and a Tier I / Tier II annuity claim runs through the Railroad Retirement Board separately. Second, environmental-remediation settlements under the Defense Environmental Restoration Program (DERP) and the §139 disaster-relief exclusion for displaced workers from BRAC closures have been resolved decades ago, but if you received a structured settlement related to Norton groundwater (the base is on the National Priorities List for TCE contamination), the periodic payments are excludable from gross income under §139(a) and §104(a)(2) depending on the underlying claim category. The current San Bernardino International Airport Authority (a joint-powers authority) operates the airfield; any 1099 or W-2 income from SBIA is ordinary income, not RRTA, with the standard FICA. We've handled the legacy Norton-related claims for retirees who didn't realize an old structured settlement should still be confirmed against §139 / §104 treatment.

IRC §409A regulates non-qualified deferred compensation. The election to defer must be made before the start of the calendar year in which the services are performed (the first year of eligibility gets a 30-day election window). Once made, the election locks in the timing and form of payment — you cannot accelerate to take the money early, and to delay further you have to push the new payment date at least five years out and make the change at least 12 months before the original date. §409A violations are punitive: immediate inclusion of all vested deferrals in current-year income, plus a 20% federal additional tax, plus an interest charge from the original deferral year. California conforms and applies its own 5% additional state tax under R&TC §17501. For private-company executives whose deferred amounts settle at an exit, change-in-control liquidity, or termination, the §409A document must precisely define those triggers. We review the plan document language, confirm separation-from-service and change-in-control definitions match the regulations, and structure the election so the payment timing isn't accidentally constructive receipt under Rev. Rul. 60-31.

IRC §117(c) is a narrow rule. The §117(a) exclusion for qualified scholarships does NOT apply to amounts representing payment for teaching, research, or other services required as a condition of receiving the scholarship — those amounts are wages, subject to W-2 withholding and FICA. For a Loma Linda postdoc whose stipend funds research duties, the IRS position is that the full stipend is §117(c) compensation, not §117(a) tax-free scholarship. There is a narrow §117(c)(2) exception for NHSC, AFHPSP, and certain VA-related health professional programs (those keep the §117(a) exclusion even when service is required). For most NIH F32 / T32 postdoc fellows, the §117(c) treatment as compensation income controls — you owe federal income tax, California income tax, and you should be making quarterly estimates because there's often no withholding on a fellowship stipend issued on a 1099 or a 1098-T scholarship box. We file Form 1040-ES quarterly estimates, run the FTB Form 540-ES parallel, and clean up missed estimated-tax penalties under IRC §6654 / R&TC §19136 when a postdoc didn't realize the obligation until April.

A Notice of Supplemental Assessment goes out when the Assessor records a change in ownership or new construction. You have 60 days from the mailing date to file an Application for Changed Assessment (form BOE-305-AH) with the San Bernardino County Clerk of the Board of Supervisors at 385 N Arrowhead Avenue, 2nd Floor, San Bernardino. The application has to identify the parcel, state your opinion of fair market value, attach comparable sales evidence, and pay the small filing fee. From there the matter sets for hearing in front of an Assessment Appeals Board panel under R&TC §1603-1611. For Redlands the relevant Assessor desk is at 172 W Third Street, Fifth Floor, San Bernardino. Common Redlands triggers: an inherited home that misses the Prop 19 one-year primary-residence window (effective February 16, 2021), a remodel or addition that the Assessor characterized as new construction beyond a §70 maintenance threshold, or a Prop 8 decline-in-value claim during a soft market. We file the application, gather comparables from the immediate Redlands submarket (the historic district, South Redlands, Mentone-adjacent), and either negotiate with an Assessor representative or take the matter to the AAB hearing.

1099 adjunct income is Schedule C self-employment subject to the 15.3% combined SE tax under IRC §1401 plus federal and California income tax. The University of Redlands §403(b) is only available to W-2 employees, so as a 1099 adjunct you fund retirement through a Solo §401(k) or SEP-IRA from your own Schedule C. Deductible Schedule C expenses for adjunct teaching: home-office under §280A (dedicated workspace, regularly used for grading and prep), books and journal subscriptions, professional dues, conference fees, mileage from the home office to the campus (regular commute from home to a primary workplace is non-deductible, but a 1099 adjunct working from a §280A home office can deduct the trip to campus), software licenses, and continuing-education tuition not reimbursed by another employer. Audit triggers: 100% home-office claims on a small apartment, vehicle expenses on a commute pattern, and Schedule C losses three years out of five (IRS §183 hobby-loss reclassification risk). We file the Schedule C, set up the Solo §401(k), file Form 5500-EZ once plan assets exceed $250,000, and quarter the estimated taxes.

Redlands USD teachers participate in CalSTRS (the §401(a) defined-benefit plan for California public-school educators) plus often a §403(b) tax-sheltered annuity on the side. The §402(g) elective-deferral cap is per individual across §403(b) and §401(k) plans (it doesn't include CalSTRS pension contributions because those are §414(h)(2) employer pick-up, not elective deferrals). The §415(c) annual-additions limit (employer + employee, capped at the indexed amount around $69,000 for 2024) applies separately because CalSTRS is treated as the §401(a) employer plan and the §403(b) is the elective-deferral plan, and IRS Notice 2002-45 plus the §415(g) aggregation rules don't require combining a §401(a) DB plan with the §403(b) for §415(c) purposes. Teachers age 50+ get the §414(v) catch-up; teachers with 15+ years of service at the same K-12 employer get the §402(g)(7) special catch-up. We coordinate the §415 analysis with the CalSTRS service-credit history, optimize the §403(b) contribution under the §402(g)(7) special rule when applicable, and handle the §72(t) early-distribution exceptions if a teacher separates before 59½.

The City of Redlands at 35 Cajon Street administers the business license tax under Municipal Code Title 3 (Revenue and Finance). Every person engaged in business in the city, including home-based businesses, must obtain a business license and pay the gross-receipts or flat-fee tax depending on the business classification. The city's Utility User Tax (UUT) and Transient Occupancy Tax (TOT) on short-term lodging are additional. If you've been operating without a license, the back-tax assessment can reach several years plus penalties and interest. We file the application, calculate the back-tax under the actual classification (the city sometimes opens with a higher gross-receipts classification than the business actually fits), and negotiate a payment plan. For a §17951 California-source-income overlay (if the business sourced any income outside Redlands), we document the apportionment so the Redlands tax base isn't overstated. UUT disputes go through the city Finance Department directly; the small-dollar-claim route under R&TC §19385 is not available for municipal taxes.

California uses the closer-connection test under R&TC §17014 and §17015, anchored by Appeal of Stephen Bragg (2003-SBE-002) and Appeal of Bindley (2018). Physical presence is one factor among many. Moving your principal residence to Redlands, registering vehicles with California DMV, getting a California driver's license, registering to vote, putting children in Redlands USD or Yucaipa-Calimesa USD schools, opening California bank accounts, and intending to remain make you a California resident — and once resident, your worldwide income is California-taxable under R&TC §17041 even on income earned remotely for an out-of-state employer. The most common trap is the part-year resident who tries to source W-2 wages out of California for the days physically worked elsewhere — California treats wages as sourced to the location of the services performed (R&TC §17951 + 18 CCR §17951-5), so a remote worker in Redlands on a Texas employer's payroll has California-source wages for every Redlands workday. We file Form 540 (full year) or 540NR (part year) and handle FTB residency audits when they open one.

Redlands sits in CDTFA's Rancho Cucamonga office territory historically, but the Rancho Cucamonga Fourth Street office closed August 31, 2020 (CDTFA Special Notice L-757). Active Redlands accounts now route through the Riverside field office at 3737 Main Street, Suite 1000, Riverside. Field auditors still come to the business location for records review; petition for redetermination, hearings, and account inquiries go through Riverside. Common Redlands historic-downtown audit pickups: §6051 sales/use tax on out-of-state internet purchases not self-reported, resale-certificate misuse on inventory that was actually for owner use, food-vs-non-food classification on prepared food (R&TC §6359), and use-tax on art and antiques purchased out of state. The combined Redlands rate is 7.75% (6% state, 0.25% county, 0.5% county district, 1.0% Redlands Measure T). We file the CDTFA Form 392 PoA and step in front of the assigned Riverside auditor before the proposed determination becomes final.

A Roth conversion under IRC §408A(d)(3) is treated as a fully taxable distribution from the traditional IRA followed by a non-deductible contribution to the Roth. California conforms — the conversion is included in CA AGI on Form 540 and taxed at the regular bracket. The strategy questions are timing and bracket-fill. An Esri executive retiring at 65 with Social Security, modest §409A payouts, and a balance of $500,000-$2,000,000 in pre-tax retirement might fill the 22% federal bracket and the 6% California bracket during the gap years between retirement and RMD age (currently 73 under SECURE 2.0), converting $40,000-$80,000 per year. An LLUMC physician with a §403(b) plus Solo §401(k) plus IRA balance runs the same modeling. IRMAA Medicare Part B premium tiers and the §1411 Net Investment Income Tax 3.8% threshold both kick in at MAGI levels that the Roth conversion will hit, so a multi-year ladder is usually better than a single-year conversion. Recharacterization was eliminated by the Tax Cuts and Jobs Act, so the conversion is irrevocable. We model the year-by-year, look at IRMAA two-year lookback, and run the §72(t) analysis for any pre-59½ access.

Proposition 13 (Cal. Const. Art. XIIIA §1) freezes the assessed value at the base-year value at the most recent change in ownership, with a 2% annual inflation cap. Proposition 19 (effective February 16, 2021, Cal. Const. Art. XIIIA §2) substantially narrowed the parent-child base-value transfer that the older Prop 58 used to allow. Under Prop 19, the exclusion now applies only if (a) the inherited property is a primary residence the child makes their own primary residence within one year of the transfer, AND (b) the child files a homeowners' exemption claim. There's a partial step-up if fair market value at transfer exceeds the parent's factored base value by more than $1 million (indexed annually). For a multi-generational Redlands property that has sat at a low base-year value (a 1960s grove parcel, a downtown commercial building from the Smiley Library or A.K. Smiley Library era still in the family), inheritance without primary-residence use causes a full reassessment to fair market value. Non-residential property (a commercial building, an investment rental) reassesses regardless of use. Pre-planning options: §721 partnership contribution to a family LLC, §351 corporate contribution, or a §1031 / §1014 stepped-up basis sequence — each has its own consequences. We map the family-property planning before the transfer event.