THE FAMILY WEALTH OFFICE EXPERIMENT

Result: It failed. IRS rules do not give a regular person a squeaky clean way to run their household investments through a business entity. It works when you already manage several real businesses through a holding company, and you are already traveling for a business purpose. A household with a brokerage account is neither.

What survived: real businesses in real entities. My Colorado LLC runs a short-term rental and a drop-shipping business. In September 2026 my Canadian company moved from British Columbia to Alberta.

Money often costs too much.

Ralph Waldo Emerson

The Problem

In any situation, location is crucial.

Gordon Ramsay

Taxes stack up at every layer of where you work: city, county, region, province, and country. If I spend most of my time in one place (the Denver metro area), residency is easy. But what if I split my time between a coworking space in Calgary, a townhome in Buenos Aires, and a cabin in Pagosa Springs? Each place has its own rules for what work gets taxed and how much. And which government gets the taxes on electricity my solar panels sell to a utility in another state?

Hypothesis: Treat the household as a business, a family office. Put it in the lowest tax jurisdiction that is still easy to deal with. Managing the family’s wealth becomes business activity, so household costs become business deductions, and tax arbitrage does the rest.

From investment management to charitable giving advice, family offices offer a total financial solution. In addition, the family office can also handle non-financial issues, such as private schooling, travel arrangements, and miscellaneous other household arrangements.

What Are Family Offices?

The Solution I Tried

1. Shop for a Jurisdiction

I compared places on two things: lowest income tax, and easy to do business in (reasonable filing fees, online services, responsive officials).

• US territories: big incentives, but a trap if you still live in a US state. Income from a controlled foreign corporation gets hit with extra rules, plus spotty internet and irregular flights.
• US states: only South Dakota and Wyoming have no corporate income tax, no individual income tax, and no gross receipts tax. Wyoming wins for no taxes. Colorado wins for low taxes with good government services.
• Canada: every province has income and sales tax. I registered in British Columbia (350CAD to register, 45CAD to renew) for automated self-service, with an extra-provincial registration in Alberta under the New West Partnership Trade Agreement.

2. Build the Holding Company

The plan, at a high level:

1. Get a street address in the low tax location with Anytime Mailbox or iPostal1, and use it as the registered agent address.
2. Create a holding LLC there.
3. Move ownership of assets into it.
4. Have operating businesses pay it rent or royalties. Across borders, the Wise Multi Currency Account helps.
5. Elect corporate tax treatment so profits stay in the low tax jurisdiction, while watching for personal holding company tax.

3. Deduct the Household

The original plan was to write off household costs as family office expenses. Do not do this. Without a real business behind them, those are personal expenses, and claiming them is a good way to get audited.

Why It Failed

• Managing your own money is not a business. The Supreme Court said so in Higgins v. Commissioner. The family offices that win, like Lender Management, manage money for other people, have employees, and get paid for it. (Day Pitney summary)
• Investment expenses are gone for individuals. The 2017 tax law suspended them and the 2025 law made it permanent. Without a real trade or business, there is nothing to deduct against.
• The IRS checks for profit. An activity is presumed for profit if it makes money in 3 of the last 5 years. A household spends money. That is the whole point of a household.
• Travel has to be for business first. For a domestic trip, the primary purpose has to be business, or none of the transportation is deductible. A family trip does not become a business trip because the family is incorporated.
• Where you live still wins. A single-member LLC’s income lands on your personal return, and your home state taxes it. More in the Colorado LLC post.
• Canada is stricter. A corporation whose main purpose is earning interest, rent, dividends, or royalties is a specified investment business, unless it has more than 5 full-time employees. That income is taxed at 46.7% in Alberta and 50.7% in BC for 2026, combined federal and provincial.

What I Do Now

Real businesses, each in the place that makes sense for it.

• Colorado: my LLC runs a short-term rental and a drop-shipping business. Those are real operations, so the QBI deduction and business expenses hold up.
• Alberta: in September 2026 I continued Vraid Systems Limited from British Columbia to Alberta. BC now requires a BC Services Card for most filings, which makes it impossible for a foreigner or non-resident to self-manage. More in the Western Canada Limited Company post. Alberta also costs less:
  • Corporate income tax: 23% combined general rate in Alberta vs 27% in BC for 2026.
  • Sales tax: Alberta only charges the 5% federal GST. BC adds a 7% PST.

Paperwork You Owe Anyway

Cross-border holdings come with reporting, business or not.

• Canada: hold more than $100,000 CAD in foreign assets, and you file Form T1135. Canada has tax treaties to prevent double taxation.
• US: signature authority over more than $10,000 USD in foreign accounts means filing an FBAR. Enough foreign financial assets also means Form 8938. The US also has tax treaties.