Everyone, thank you so much for helping clarify my confusion. I had quite a few misconceptions and poorly understood ideas which your feedback and suggestion help me clarify.
@M-MTax: Yes, I am trying to look for validation from all the worthy avenues. The feedback above is very useful. This lets me ask focused questions to my CPA and keep our discussions bounded and to the point. Btw, I am happy non of the feedback above is asking to check ChatGPT 🙂
I agree with your concern of "economic substance". This might be the Achilles' heel for the strategy I proposed. Also, good point about unemployment taxes. I missed that and will include it in my list of questions.
@Mike9241: I totally agree with you !! It is hard to estimate what position IRS would take. One option here is to look at IRS workbook or any prior tax court cases involving such strategies. Unlike me, there might have been a pioneer brave enough to directly implement this strategy and face the crosshairs of the IRS. If you know of any issues or cases please point them to me.
My next steps will be to list the concerns raised by you and other community members above, and take it back to my CPA. If I still cant convince them, then I will have to drop the ball.
@AmeliesUncle : You might be right. I need to further read about the SS cap. My understanding is that once the annual wage base limit from any source is met (W2, 1099, etc), no additional SS taxes are due for the year, either as an employee or an employer.
But thanks for your feedback. May be this would be another reason why my strategy wouldnt work.
