To attempt to answer your question, I think investing with an IRA is a great way to leverage the taxation protection with high income producing properties when you are are already in a high tax bracket with your job or current business.  

Second, since I live in California and will be investing out of state how could I find out if I'd be subject to double taxation.

Also, all of the incomes and gains you generate personally will be subject to taxation, whereas if you were to invest IN your 401k - you are able to defer the taxes (or even eliminate the taxes altogether if you are doing it inside of a Roth).

One of my areas of expertise is the taxation of rental real estate.

Go tot he MD State Dept of Assessments and taxation for more info (SDAT) http://dat.maryland.gov/Pages/default.aspx

In a typical Solo 401k, the plan can flip (potentially subject to UBIT taxation depending on frequency), hold rentals, lend on mortgages, etc.

Having a significant amount of passive income can trigger the IRS to revoke the S election, making your corporation a regular C Corp, subject to double taxation and extra capitalization requirements.Unless you have a way of pulling in a significant amount of non-passive income into this S-Corp, I'd walk away from this deal.  

We got rid of "taxation without representation" during the Revolutionary War, lol!

It also opens up taxation questions - how will the property tax be split if you own the land and your IRA owns the building?  

Congress can authorize congressional spending, has taxation authority, etc., while the Fed (Helicopter Ben) has monetary authority (subject to congressional authority provided & reporting).