A $52,435 software investment returned +$24,675 net to the agent in year one.
$52,435 invested in qualifying AI software resources. Tax reduction in engagement year one: $77,110. Net cash position: +$24,675.
Client
Independent real estate agent
Location
Virginia
Engagement
Hearth Legacy Program
Strategy
Software deduction, then S corp
Every commission dollar had been exposed to self-employment tax, year after year, because nothing sat between the agent and Schedule C. Engagement year one returned $24,675 net, and the 2026 S-corporation election kept it from being a one-year event.
Where the +$24,675 came from.
First-year total tax liability reduced from $94,719 to $17,609 — a savings of $77,110 across federal income tax, self-employment tax, and Virginia state tax. The $52,435 down payment was covered by the year-one tax reduction, leaving a net Year 1 cash position of +$24,675. The 2026 S-corporation restructuring extends the position into the current tax year.
Illustrative proportion across tax bases · source: Meridian 44 tax analysis, June 2026
A $94,700 annual tax burden with a $250,000 deduction waiting.
An independent residential real estate agent generating $250,000 in annual commission income. The practice operated as a sole proprietorship, with all earnings flowing through Schedule C and exposed in full to self-employment tax. Commission volume had grown, but the unincorporated structure left the agent carrying a combined tax obligation near $94,700 annually with no structural mechanism to reduce it.
Two tax years, each move documented before the next began.
Hearth engaged the practice through the Hearth Legacy Program across two tax years. Work proceeded in sequence so each election could be defended on its own.
Move 01
Software resource acquired, Section 179 elected.
The agent's LLC committed to a $250,000 qualifying Meridian 44 AI software resource package — $52,435 down payment, $197,565 financed at zero interest. Section 179 first-year expensing of $25,000 combined with $225,000 ordinary business expense reduced Schedule C net profit across all three tax bases in the same year.
Outcome · $77,110 realized in engagement year one
Move 02
Down payment recovered from savings.
The $52,435 down payment was covered in full by the first-year tax reduction, leaving a net cash position of +$24,675. The principal balance retires through assigned M44 licensing revenue at zero interest.
Outcome · +$24,675 net · engagement year one
Move 03
Entity converted, sole prop to S corp.
A 2026 S-corporation election to split commission income into a reasonable salary and distributions, reducing self-employment tax exposure going forward. Reasonable-compensation calibration on the Hearth RC methodology with a separate operating entity to streamline the practice's financials.
Outcome · SE tax exposure tightened going forward
Results from year one of the engagement.
Net cash position · engagement year one
+$24,675
Year 1 · documented
First-year total tax reduction
$77,110
Year 1 · documented
Down payment (self-funded from savings)
$52,435
Year 1 · documented
The Hearth modules used in this engagement.
The same engagement, available through your firm.
Hearth Legacy Program runs through partner firms — CPAs, tax attorneys, accountants, and family offices. The firm stays the trusted advisor.
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