Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes.

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

If you do place the property in her name, you've got a Gift Tax (Form 709) to complete. 

If so, there are no transfer taxes due. 

Here’s the situation:Purchase Price: $540,000Down Payment: 20%Mortgage Rate: 7.125% (30-year fixed)Monthly Expenses (Mortgage, HOA, Taxes, Insurance): $3,706Realistic Max Rent: $3,000As you can see, I’m currently short $706/month even with max rent.

Do you have a current need for that cash flow generated from the tax savings?

Rentals generate passive income, so an S-Corp offers no added tax benefit.

Would recommend.I will be using the firm for my 2022 tax return (1040 and 3 LLC's), expensive (about $5k-6k) but given they've assisted with the tax planning I'm hopeful the synergy will provide the best outcome.Happy to answer any add'l questions.Pat  Hi Pat,Just want to confirm, that is HallCPA fee for filling 2022 tax for one 1040 and 3 LLCs?

Joint tax return?  

Use umbrella insurance as an additional safeguard, especially if you opt not to form an LLC.Avoid S-Corp taxation for rentals, as rental income is passive and not subject to self-employment tax. S