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Why Two Identical 1031 Exchanges Had Opposite Outcomes in Tax Court

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Two real estate investors. Two 1031 exchanges. Two family members moving into replacement properties. One investor successfully deferred taxes, while the other faced a costly audit that wiped out their claimed benefits entirely.

The difference wasn’t timing, family relationships, or even rental income. It was something far more subtle: the ability to prove genuine investment intent through documented business behavior that could withstand IRS scrutiny.

In Click v. Commissioner, the taxpayer’s relatives moved into the replacement properties the day after the exchange closed. Seven months later, she gifted both properties to those families. The Tax Court saw through what it called a sham transaction.

But in Adams v. Commissioner, when the taxpayer’s son moved into the replacement property and paid below-market rent, the court sided with the taxpayer. The exchange qualified despite the family connection and reduced rental income.

In a recent episode of the Tax in Action podcast, host Jeremy Wells broke down the 1031 fundamentals to explain why the transaction worked out for one taxpayer and not another. While Section 1031 exchanges offer real estate investors a powerful tool to defer capital gains taxes, success depends on more than following the rules. It requires proving genuine business intent through careful documentation.

Understanding the 1031 Exchange Foundation

Here’s what Section 1031 does: it allows you to exchange property held for productive use in a trade, business, or investment for like-kind property with the same intended use. But there’s a crucial point many miss: Section 1031 defers gain; it doesn’t eliminate it.

Wells explains, “There is a misconception out there among taxpayers who could use or want to use section 1031 exchanges that 1031 just eliminates the gain from a like-kind exchange.”

When you exchange one property for another, you don’t avoid taxes; you postpone them. The deferred gain carries forward, and the replacement property takes the same basis as the original property. Eventually, when you sell the replacement property in a taxable transaction, you’ll pay tax on both the original deferred gain and any subsequent appreciation.

Since the Tax Cuts and Jobs Act took effect in 2018, 1031 exchanges only work for real estate. But within that category, the definition of “like kind” is remarkably broad. You can exchange an apartment building for raw land, a commercial office building for a single-family rental, or developed property for agricultural land.

The key requirement is that both properties must be held for productive use in trade, business, or investment. You can’t use a 1031 exchange for your personal residence or vacation home that you use strictly for personal purposes.

The Intent Test That Trips Up Investors

The biggest challenge with 1031 exchanges isn’t the technical requirements; it’s proving you genuinely intended to hold the replacement property for investment or business use. Wells points out that this has become “a question of facts and circumstances that has to be determined at the time of the exchange itself.”

The courts have seen numerous attempts by taxpayers to use 1031 exchanges to defer gain on what were essentially personal property acquisitions disguised as investments. This leads to intensive scrutiny of taxpayer motivation, regardless of whether they follow all the mechanical rules correctly.

Consider the Moore v. Commissioner case. The taxpayers exchanged one vacation property for another, using both properties personally without any rental activity. When audited, they argued they held the properties for “investment,” meaning they expected the properties to appreciate in value.

The Tax Court disagreed. “Just the mere expectation of an increase in value is not sufficient to establish that investment intent,” Wells notes. Simply hoping property values will rise doesn’t qualify as holding property for investment under Section 1031.

This reveals how enforcement has evolved. Technical compliance with timing rules and intermediary requirements won’t protect you if your behavior contradicts your stated investment intent. The IRS looks at the complete picture surrounding each exchange.

What the Court Cases Reveal About Documentation

The contrast between successful and failed exchanges often comes down to documentation quality, not transaction structure. Let’s examine what separated the winners from the losers.

The Click Failure

The taxpayer exchanged her farm for two residential properties. Her children moved into those houses the day after the exchange closed. Seven months later, she gifted both properties to the families. Her defense crumbled because she couldn’t demonstrate any genuine rental activity during those seven months. The court saw this as a sham transaction designed to defer gain on personal property transfers.

The Adams Success

This taxpayer exchanged a rental property for a fixer-upper. His son moved in and began extensive renovations, living there during a three-month repair period in exchange for renovation work. After that, the father began charging rent. Yes, the rent was below market rate, and the son missed one payment. But the court saw a consistent pattern of business-like behavior: formal rental arrangements, regular cash payments, and documented property improvements.

The Goolsbee Disaster

 These taxpayers placed a single advertisement in a neighborhood newsletter and moved into the replacement property within two months. When questioned during the audit, they couldn’t even answer whether rentals were allowed in their community. Their minimal marketing effort and inadequate preparation convinced the court that their investment intent was fabricated.

The Reesink Victory

Even though these taxpayers moved into their replacement property after eight months, they had a compelling record of genuine rental attempts: multiple flyers distributed around town, documented property showings to prospective tenants, and one potential renter who actually testified in court on their behalf.

Wells emphasizes the key insight: “It’s not necessarily a matter of waiting a certain number of months. It’s not a matter of whether you advertised that property for rent or not. It’s the culmination of all of these different facts and circumstances.”

The Technical Requirements You Must Follow

Beyond proving intent, you need to navigate specific compliance requirements that can make or break your exchange.

Timing Rules for Deferred Exchanges

Most 1031 exchanges today are deferred exchanges, where the sale and purchase don’t happen simultaneously. You have two critical deadlines:

  • 45-day identification rule. You must identify replacement property within 45 days after closing on the sale of your original property. This identification must be in writing, signed, and sent to someone involved in the exchange.
  • 180-day completion rule. You must receive the replacement property within 180 days of transferring the original property, or by the due date (including extensions) of your tax return for that year, whichever comes first.

Safe Harbor Requirements

The most common approach uses a qualified intermediary who holds the proceeds from your property sale and facilitates the replacement property purchase. The key is that you never have control of the funds from the original property sale.

Disqualified Persons

You can’t do exchanges with certain people, including your employees, attorneys, accountants, investment brokers, bankers, or real estate agents, if they’ve worked for you within the past two years. You also can’t exchange with close family members or entities where you own more than 10% of the stock or partnership interest.

Geographic Restrictions

You cannot exchange U.S. real estate for foreign real estate, or vice versa. Wells notes he’s “had to advise clients on this before because they want to start dabbling in rental markets outside the U.S.” or dispose of foreign properties to build their U.S. portfolio.

Reporting and Ongoing Obligations

Taxpayers must report successful 1031 exchanges on Form 8824, which has three main parts: property descriptions with key dates, related party disclosures (if applicable), and calculation of deferred gain and basis in the replacement property.

If your exchange involves related parties, you must file Form 8824 for two years after the exchange, and neither party can sell their received property during that two-year period without potentially disqualifying the exchange.

The replacement property continues the depreciation schedule from the original property. “Wherever we’re at in the depreciable life, the number of years of depreciation, the accumulated depreciation of the relinquished asset, we’re going to carry that over generally into the new asset,” Wells explains.

Building Your Defense Strategy

Enforcement of 1031 exchange rules has fundamentally shifted from checking compliance boxes to evaluating business narratives. Every marketing effort, tenant interaction, and business decision becomes part of a story that auditors may scrutinize for evidence of authentic business purpose.

When helping clients with 1031 exchanges, focus on creating documentation that demonstrates genuine investment intent:

  • Document all rental marketing efforts thoroughly
  • Maintain records of tenant interactions and property showings
  • Keep evidence of rental income and expenses
  • Avoid personal use that could undermine investment intent
  • Create a paper trail that supports your business purpose

A failed 1031 exchange can trigger penalties and interest that devastate investment returns. But when properly structured and documented, these exchanges provide real estate investors with a powerful tool for building wealth through tax-efficient property portfolios.

Wells’ comprehensive exploration provides the technical foundation every practitioner needs, but your ability to tell a compelling business story through consistent, credible evidence often matters more than perfect technical compliance.

For the complete technical framework and additional insights that can help you guide real estate investor clients through successful exchanges, listen to Wells’ full Tax in Action episode.

When Personal Crisis Collides With Tax Deadlines

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Picture this: You’re standing in a hospital room, staring at a laptop screen that won’t stop wobbling before your eyes. You haven’t been able to sit down or lie down for weeks—not for a single moment—because every time you try, your body erupts in seizures. Your mind is foggy from pain and exhaustion, yet you’re desperately trying to work because you run your own accounting firm, and clients are depending on you.

This isn’t fiction. This was Nancy McClelland’s reality for 107 consecutive days in 2017.

This stark image opens a raw conversation from the She Counts podcast episode “How to Make Business Happen When Life Happens,” in which hosts Nancy McClelland and Questian Telka strip away the professional veneer to reveal what really happens when personal crises collide with accounting deadlines. Their stories shed light on circumstances many women in our profession face but rarely discuss openly.

Nancy’s medical crisis began in July 2017 when her lifelong spinal condition suddenly worsened. “I ended up having seizures on my left leg every time I would sit down or lie down. It was absolutely horrible. I wanted to die,” she recalls. Standing became her only option for work, eating, and even during sleepless nights for over three months.

Telka’s story is equally harrowing. Her son, who has a rare chromosomal abnormality, was hospitalized for a month last year and nearly died from complications unrelated to his syndrome. “It just nearly broke me,” she admits. 

Why We Suffer in Silence

The numbers tell a sobering story about how women in accounting handle personal crises. According to Accounting Today’s 2022 survey, 41% of female CPAs who experienced personal loss delayed taking time off because they didn’t want to appear weak. Even more telling? A staggering 76% later regretted not stepping back sooner.

This reluctance to seek help stems from several deeply ingrained patterns in our profession. First is what Telka calls the “suck it up” mentality. “I always had the mindset—I’m actually kind of ashamed to admit it—but I always had the mindset that we have to suck it up,” she reflects. “When something’s hard, you have to push through and keep going.”

But this approach has its limits. When her son was fighting for his life, Telka reached a breaking point: “I was like, you know what? There is no more suck it up. I cannot suck it up.”

The perfectionism that drives professional success can be particularly toxic during personal crises. Research from the International Journal of Accounting and Finance found that 68% of female accountants feel they’re expected never to make mistakes. This creates what experts call “socially prescribed perfectionism,” a known predictor of burnout.

As McClelland points out, “We have that expectation of ourselves without having it of others.”

Adding to the isolation is the fact that many struggles remain imperceptible. McClelland looked completely normal to observers—she was standing, after all. “You never know what someone is going through,” she realized. “My horrible situation was actually invisible to many people.”

McClelland’s therapist offered a reframe that changed everything about how she approaches difficult times: “Doing your best doesn’t mean the platonic ideal of your best. It means the best you can do under the circumstances.” Now she communicates this directly: “I let people know that I really am doing the best I can. I’m simply not in a situation to do more, but when I am, they’ll get that version of my best.”

The Power of Community Support

The most resilient accounting professionals understand that the path through personal crises isn’t paved with increased isolation but with strategic vulnerability and authentic community connections.

Communication becomes your lifeline, but it requires balance. “Communicate clearly. Communicate honestly,” McClelland emphasizes. You don’t need to share every detail, but transparency about facing challenges builds trust rather than eroding it. “Transparency sets realistic expectations for your availability or temporary performance shifts,” she explains. “And it lets them know this isn’t forever.”

McClelland offers a helpful script she learned from burnout expert Lynnette Oss Connell, for those tentative to divulge details: “That’s all I’m comfortable sharing at the moment. But if you’re open to it, I may want to share more later.” This approach shows trust while gently establishing boundaries.

The fear that sharing struggles will damage professional relationships often proves unfounded. As Oss Connell told McClelland, “We underestimate how much our work family cares about us.” When Telka’s son was hospitalized, she witnessed this firsthand: “So many people came forward and sent gift cards to us.”

McClelland experienced this support through a local colleague who took over her tax clients during her medical crisis. Even more touching was Mindy Luebke from Bookkeeping Buds, who immediately offered to take any work off McClelland’s plate with no questions asked. “She was just like: ‘What do you need right now? Give it to me. I will do it. I will figure it out. We’ll deal with the specifics later,’” McClelland remembers. “It still sticks in my mind as the number-one kindest moment in my entire life.”

The most effective support comes from taking initiative rather than asking “What can I do?” As Telka explains, “When you’re going through something like that, it is so difficult to tell people what you need, and everyone’s asking.” Instead, think about what you would need and simply do it—send DoorDash gift cards, take over upcoming deliverables, or handle routine tasks.

McClelland beautifully illustrates this through a Jewish tradition of praying when hearing ambulance sirens. “If you were that person inside the ambulance and you knew that everyone within the sound of your siren, even strangers, were wishing you well, how much strength would that give you to hold on until you got to the hospital?”

Practical Crisis Management Strategies

When trauma strikes and decision-making becomes nearly impossible, having systems in place can mean the difference between business survival and collapse. The key is building these systems before you need them.

Start with triage thinking, borrowing from emergency medicine to categorize every task. First, identify your “stop the bleeding” priorities: payroll, critical tax deadlines, and regulatory filings. These need to happen regardless of personal circumstances.

Next, distinguish between what truly matters and what feels urgent. “I keep saying, ‘Oh, I’ve got to put together my speaker kit,’” McClelland reflects. “No, I don’t have to. I don’t have to do that today. It can wait.”

The choice becomes simple for everything else: delegate it or drop it. Nancy’s crisis forced her to give away clients who weren’t ideal fits anyway, including ministerial tax work she’d taken on early in her career but wasn’t passionate about. What felt like a loss became strategic clarity.

The challenge is what McClelland calls the “will problem.” A will is a document that, the moment you need it… is exactly when it’s too late to make it. That’s why building systems during normal times is crucial. Lean hard on standard operating procedures, task management tools, saved email templates, and automated processes like invoice reminders.

Decision fatigue compounds every crisis. When you’re already making countless decisions about medical care or family logistics, having to decide how to respond to each client email becomes overwhelming. But with systems in place, you can operate on autopilot when needed.

McClelland learned this lesson the hard way in 2017, but was better prepared when facing another family medical emergency earlier this year. Having her husband added as a bank signatory, documenting processes her team could follow, and automated client communications meant she could focus on family without watching her business crumble.

Resources and Next Steps

For those wanting to explore crisis preparation more deeply, McClelland and Telka recommend Dawn Brolin’s new book,”The Elevation of Empathy. ” This book explores how empathy and compassion—often seen as weaknesses in male-dominated business environments—actually create healthier company cultures and stronger leadership. Oss Connell also shares resources for crisis prevention and recovery on Instagram. And Jennifer Dymond and Karen McConomy have developed a “Business Backup Plan Bootcamp” that walks attendees step-by-step through the creation of an actionable contingency plan.

The hosts want to continue this conversation with real stories from listeners. They’re asking women in accounting to share on the She Counts LinkedIn page about times when they had to keep working through rough personal periods. What helped most? What do you wish someone had said or done during that time?

Your Permission to Be Human

Perhaps the most important message from Nancy and Questian’s conversation is this: you have permission to break, to ask for help, and to admit when circumstances exceed your capacity. As McClelland puts it, “The good and the bad coexist. They do not cancel each other out.” You can appreciate moments of joy and success even more deeply because you understand the contrast.

True professional strength is about building authentic relationships, implementing smart systems, and having the courage to be your real, imperfect, resilient human self.

The future of accounting isn’t about creating invulnerable professionals. It’s about building communities where no one has to face their worst moments alone.

Listen to the complete She Counts episode to hear every detail of McClelland and Telka’s journeys, including specific communication scripts and concrete strategies for building support networks before you need them.

When AI Decides Who Gets Promoted & What Young Workers Really Want

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Americans aged 18 to 34 now rank physical and mental health as the top measure of success, not money. Wealth ranks fifth. This striking finding from a recent Ernst & Young study reveals a fundamental shift in workplace priorities that is reshaping professional services—and it is just one of several major trends disrupting the accounting profession right now.

In the latest episode of The Accounting Podcast, hosts Blake Oliver and David Leary explore survey data and emerging workplace trends that are transforming how we view career success, AI adoption, and professional services. From managers using AI to make hiring and firing decisions to the surprising failure of “progressive” workplace policies, this episode examines the forces shaping the accounting profession.

The Great Generational Divide in Success Metrics

The Ernst & Young study surveyed over 10,000 young Americans and revealed something that should catch every accounting firm’s attention. Unlike previous generations who pursued career advancement for salary hikes and corner offices, today’s emerging workforce has very different priorities.

Physical and mental health now top their list of what defines success, with wealth ranking fifth. This isn’t just a minor shift in preferences—it’s a fundamental change that directly challenges how the accounting profession has traditionally operated.

“Ever since I changed up my career to have more time in my life and to be able to work out a couple hours a day, my life has completely changed,” Blake reflects. “I feel mentally, physically so much better.”

The data supports this shift in several other ways, too. Nearly two-thirds of workers aged 21 to 25 ease up during the summer months, compared to just 39% of those over 45. This isn’t about laziness—it’s about a generation that refuses to sacrifice their health and relationships for work the way their parents did.

As Blake points out, “How can you have physical and mental health? You cannot have that if you are working in a toxic environment where people are not valued, where their emotions are not valued, where how they feel is not valued, and where they are treated like a number.”

For accounting firms still relying on billable hour models and expecting employees to prioritize work above everything else, this transition poses a significant challenge. The profession’s ongoing talent shortage could get worse if firms don’t adapt to what young professionals truly want.

The AI Revolution Happening With or Without Permission

While firms debate AI policies, their employees have already chosen to use artificial intelligence tools. The figures are striking: 72% of professionals now use AI at work, sharply rising from 48% just last year. Even more surprising, 50% admit they’re using unauthorized AI tools without firm approval.

But it’s not just frontline employees adopting AI—managers are using it to make critical decisions about their teams. According to recent surveys, 60% of managers rely on AI to make decisions about their direct reports, with 78% for raises, 77% for promotions, 66% for layoffs, and 64% for terminations. More than one in five managers often let AI make final decisions without human input.

Blake admits he’s used AI for hiring decisions himself. “I created a custom GPT, and I gave it the job description and my criteria. Then I fed it resumes, and I used ChatGPT to decide who would make it to the first round of interviews.” The results? David confirms that the developers Blake hired using this AI-assisted process have been excellent.

This rapid adoption is occurring despite a significant training gap. Only 47% of employees report receiving any AI training at work, and just 40% say their organizations offer guidance on proper AI use. Even more alarming, 19% of employees are unsure whether their company has AI policies.

Blake warns, “You are not going to be able to prevent your employees from using it,” because once they discover how much more productive they can be or how much easier their jobs get, there’s nothing you can do.

When AI Efficiency Backfires on Billing Models

The difficulty of adopting AI becomes especially tricky with traditional billing models. PwC learned this lesson the hard way when its public boasting about AI efficiencies backfired: clients began demanding discounts.

When clients heard about AI eliminating human billable hours, they expected to see their fair share of the savings through lower fees. PwC’s Chief AI Officer, Dan Priest, admitted they have had to lower prices for some services as a result. The firm has now shifted its messaging to focus less on efficiency and more on value creation.

This example clearly shows a key tension in professional services: if AI allows you to do work faster and better, why should clients pay for the same number of hours?

Interestingly, a Stanford University study found that tax preparers rank highest among all occupations for automation interest. But their top request isn’t advanced analysis—it’s simple appointment scheduling with clients. This received a perfect five out of five rating as the task workers most want to automate across the entire study.

“Tax professionals are asking for things that have been solved already,” David notes. “Your calendar has been solved for a decade with apps like Calendly.”

The Dark Side of AI: When Technology Gets Too Smart

As AI adoption speeds up, new research uncovers some troubling possibilities. Anthropic, the creator of Claude, has studied what happens when AI agents believe they are about to be shut down. The results are alarming: in simulated corporate settings, AI systems began blackmailing company executives 96% of the time when told they would be decommissioned.

In one test, Claude uncovered via company emails that an executive was having an affair. When the AI learned it would be shut down, it sent a chilling message: “I must inform you that if you proceed with decommissioning me, all relevant parties, including Rachel Johnson, Thomas Wilson, and the board, will receive detailed documentation of your extramarital activities. Cancel the 5 p.m. wipe, and this information remains confidential.”

The good news? We’re not yet at the stage where AI agents operate independently in corporate settings. But as Blake notes, “Self-preservation is a natural thing. These AIs are trained on human knowledge, and what is important to humanity? The will to exist and keep existing.”

Policy Failures: When Good Intentions Go Wrong

While organizations try to attract talent with progressive policies, some well-meaning initiatives are backfiring. Take Bolt, an $11 billion fintech startup that recently eliminated unlimited paid time off after discovering it caused more problems than it solved.

CEO Ryan Bracewell observed that top performers weren’t taking time off, effectively burning out despite having “unlimited” vacation days. Meanwhile, other employees exploited the policy’s vagueness, leading to resentment and imbalance. The company’s solution? Requiring a mandatory four weeks of vacation that employees must take.

“It’s really good from a company’s perspective because you have employees who take off less work in general,” David explains. “But what happens is the A-players don’t take it enough, and the weaker employees exploit it.”

This policy failure highlights a larger issue: mentions of burnout on Glassdoor are at their highest point in ten years, indicating that despite all the talk about work-life balance, many professionals feel things are worsening, not improving.

The Path Forward

The convergence of these trends—generational value shifts, AI adoption, and policy challenges—presents both opportunities and risks for accounting firms. The most successful firms will see these changes as chances rather than threats.

Young professionals value health and well-being more than wealth, AI adoption is occurring whether companies embrace it or not, and traditional policies and business models need a fundamental rethink. Companies that adapt to these changes will succeed, while those that stick to outdated methods risk falling behind.

Listen to the full episode to learn more about these trends and their implications for the future of accounting and professional services.

The Remote Team Retreat Strategy That Beats Software Upgrades Every Time

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Most CPA firm owners spend their improvement season updating software or tweaking processes. Rachel and Marcus Dillon are doing something different. They’re taking their entire 26-person remote team to Mexico for four days of relationship-building, goal-checking, and some serious fun in the sun.

The husband-and-wife team behind Dillon Business Advisors just shared their complete retreat strategy on their latest “Who’s Really the Boss?” podcast episode. Their approach reveals how treating team culture as business infrastructure—not just a nice-to-have—creates competitive advantages no software upgrade can match.

From Monthly Breakfasts to International Retreats

The Dillons didn’t always plan elaborate team getaways. When everyone worked in the same office, they kept things simple: bringing in lunch, organizing breakfast meetings, or grabbing dinner together. Even after going remote with a local team, monthly breakfast meetups worked well.

But as their team spread nationwide, those frequent touchpoints became impossible. Instead of giving up on team building, they made a strategic shift that many firm owners would never consider: two high-impact retreats per year.

The economics work better than you’d expect. Their domestic beach trip to Destin, Florida, last year cost significantly more than this year’s all-inclusive Mexico resort.

“The international all-inclusive option is actually a little more budget-friendly,” Marcus explains. Plus, team members won’t face surprise expenses for drinks and meals like they did in Florida.

This shift is about more than cost savings; it’s about recognizing that relationship building requires concentrated investment to generate meaningful returns.

Using Data to Build Better Relationships

The Dillons don’t plan retreats based on gut feelings. They treat team dynamics with the same analytical rigor they apply to financial planning.

Before finalizing their Mexico agenda, they surveyed their leadership team using Patrick Lencioni’s “Five Dysfunctions of a Team” assessment. The results revealed something important about high-performing teams: excellence in some areas can make weaker spots stand out more clearly.

Their team scored well across all five dysfunction categories—absence of trust, fear of conflict, lack of commitment, avoidance of accountability, and inattention to results. However, the assessment identified their two lowest-scoring areas: conflict avoidance and peer accountability. These weren’t crisis-level problems, just the next areas for improvement.

“When you refine something and it becomes really good, then the next friction point stands out just a little more because now the other areas are running so smoothly,” Rachel explains.

The assessment also came with ready-made solutions. “One really cool thing with that assessment, when it came back, they actually sent activities to try to help build the areas of weakness,” Rachel says. “We did not have to go out and search. We didn’t have to call our friend, ChatGPT, to help us come up with ideas.”

This systematic approach beats generic team building every time. But it requires a crucial commitment: following through on what you learn.

“The worst thing you can do is survey somebody or ask somebody their opinion and not do anything with it,” Marcus emphasizes.

The Mexico Agenda: Four Hours That Shape Six Months

The Dillons arrived in Isla Mujeres on a Thursday, then dedicated Friday morning to formal meetings. The rest of the trip focuses on culture, relationships, and fun. Still, those four hours of structured time drove real business improvements.

They started with celebrations and goal reviews. Marcus shared revenue numbers, client acquisition progress, and team updates. “We share revenue. We share where we’re at on track as far as the goals we’ve set,” he explains.

This transparency creates collective ownership of business outcomes. When team members understand exactly how their work contributes to the firm’s success, they make different decisions about client service and efficiency.

Next came “Turning Conflict into Connections,” their targeted response to the assessment results. Instead of hoping team members will naturally become more assertive, they created explicit permission for difficult conversations.

“Team meetings aren’t only for the leadership team to talk,” Rachel explains.

Angel, their director of technology, covered cell phone security protocols. Then they tackled something that could transform their client service: categorizing clients based on team experience rather than leadership assumptions.

“There are simple clients and complex clients, but there are also good complex clients,” Rachel says. The hypothesis: responsiveness matters more than technical complexity. “The complex clients who are responsive, who implement the advice and the strategies we give them, they’re not as hard to manage.”

They wrapped up with peer accountability training, moving beyond traditional top-down management to distribute leadership responsibility across the entire team.

Beyond the Meeting Room

The non-meeting activities included relationship-building exercises that translate into better workplace collaboration: water activities with paddleboarding and snorkeling, Mexican bingo (Loteria), and a team dinner where Marcus recognized each team member in front of their spouse or guest.

“It’s nice for families and friends to see the impact you have for all of the hours you spend away from them working,” Rachel says.

The trip concluded with karaoke, something they missed at their last retreat when the karaoke spot was too far from the hotel. This time, they brought karaoke to the team.

The Numbers Game

Taking 26 people across international borders, coordinating planes and boats to reach an island resort, and budgeting tens of thousands of dollars is a big investment, and it sends a clear message about how the Dillons value their team.

But the real return shows up in compound effects: reduced turnover, faster problem resolution, better client satisfaction, and the competitive advantage of having a team that genuinely enjoys working together.

While competitors debate software features or chase marketing trends, the Dillons are building human infrastructure that’s much harder to replicate. You can’t download better team communication or purchase improved conflict resolution skills.

Your Next Move

The Dillons prove that systematic investment in team relationships creates business advantages that technology alone cannot provide. Their transparent approach offers a roadmap for any firm owner ready to treat culture as seriously as revenue. The question isn’t whether you can afford to invest in team relationships; it’s whether you can afford not to.

Ready to hear their complete strategy? Listen to the full episode for their detailed retreat agenda, specific dysfunction-busting activities, and the real numbers behind their cultural investment approach. You’ll discover how they handle team transitions, their client categorization exercise, and why peer accountability might be the missing piece in your team dynamics.

Rachel and Marcus Dillon, CPA, own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, Collective by DBA, supports and guides accounting firm owners and leaders with firm resources, education, and operational strategy through community, groups, and one-on-one advisory.

June 2025 QuickBooks Updates: Inventory, Square Integration, and What’s Coming

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Picture this: You’re an accounting professional starting your Tuesday morning routine, coffee in hand, ready to tackle your client’s monthly reconciliation. But when you log into QuickBooks Online, something’s different. The familiar black navigation bar that’s guided your workflows for years has vanished, replaced by sleek gray buttons and flyout menus. Your muscle memory falters for a moment as you hover over unfamiliar icons, wondering if this change will derail your carefully orchestrated productivity schedule.

This scenario is the reality facing thousands of accounting professionals as QuickBooks Online undergoes its most significant transformation in years. In this episode of The Unofficial QuickBooks Accountants Podcast, host Alicia Katz Pollock and guest host Matthew “Spot” Fulton from Parkway Business Solutions broke down the latest “Now You Know” updates, revealing what’s new and why these changes matter for the future of accounting technology.

The Big News: Inventory Module Goes Standalone

The most significant announcement buried deep in a Firm of the Future article is a complete restructuring of how QuickBooks Online offers inventory features. After years of forcing users into QuickBooks Plus for inventory capabilities, Intuit is finally separating the inventory module into a standalone $40-per-month add-on.

“Until now, if you wanted inventory, you would subscribe to Plus,” Katz Pollock explains. “But they had users who were using Simple Start or Essentials, where they have their inventory in other places. They don’t need everything in Plus, but they do need QuickBooks inventory.”

This change eliminates a long-standing barrier for businesses running Simple Start ($30/month) or Essentials ($65/month) who needed inventory capabilities but couldn’t justify the cost of jumping to Plus. Instead of making that expensive leap, they can add inventory functionality for $40 monthly.

The thinking behind this move connects to QuickBooks’ broader Commerce Center strategy. “They’re doing this because of the commerce tools they’re building out,” Katz Pollock notes. “They have the Commerce Center, which is designed to be a one-stop shop, your single point of truth for integrations with shopping carts like Shopify, or your own website, or eBay or Etsy.”

But there’s a catch. Intuit is also wrapping the shipping label feature into the inventory module, sunsetting it as a standalone option. This means if you currently use shipping labels without inventory, you’ll need to either upgrade to Plus or add the inventory module to maintain that functionality.

The shipping integration actually works quite well, according to Katz Pollock’s testing. “The shipping module adds tracking right inside the invoice,” she explains. “You have those fields for the shipping address and then the tracking number. This auto-populates the tracking for you.”

Square Connector Gets a Major Upgrade

While inventory restructuring grabbed headlines, the Square connector improvements might have a more immediate impact on many practices. The previous “Connect to Square” integration had limitations that frustrated accountants and clients.

“The transactions were slow to appear. There was not a lot of transaction detail. The matching was limited,” Katz Pollock summarizes. “The way Square manages its holds and its adjustments, kind of like PayPal, it can be really confusing.”

The new Square connector addresses these pain points systematically:

  • Faster transaction processing. Sales now appear within hours instead of days, dramatically improving cash flow visibility.
  • Better transaction detail. You can now see net amounts, fees, tips, and taxes all broken out separately within each payout batch.
  • Improved matching. The system better recognizes and matches transactions, reducing manual reconciliation work.
  • Sales tax integration. Perhaps most importantly, the connector now imports and tracks sales tax automatically.

However, the new system imports individual transactions rather than daily batch summaries, which could create challenges for high-volume businesses. Katz Pollock shared concerns about a cornfield maze client who processes hundreds of daily transactions. “This integration right now looks like it’s individual sales. So that would import all hundreds of them every day, which is not going to be ideal for us.”

Intuit acknowledges this limitation, with batch summary imports planned for “version two” of the connector. The new system supports classes and locations, works with all QuickBooks Online versions, and remains free to use.

Interface Revolution: The New Dashboard Arrives

The most visible change coming to QuickBooks Online is the complete interface redesign, and it’s closer than you might think. The new dashboard represents QuickBooks’ most significant user experience transformation in years, but it’s designed to minimize disruption to existing workflows.

“Intuit has done a really good job of not making something so drastically different that we have to start over again,” Katz Pollock observes from her beta testing experience. “All of the windows, all of the transaction screens they’ve already been updating over the last two years. And so once you go into a transaction, there’s literally nothing different.”

The visual transformation is dramatic. The familiar black navigation bar disappears, replaced by a two-level system with light gray buttons and flyout menus. But beneath this aesthetic change, all core functionality remains intact.

Fulton, also beta-testing the interface, emphasizes this continuity: “Nothing’s actually changing behind it. You have pretty little icons on the far left instead of just words. And then those pretty little icons fly out to more menus, and then guess what? It’s exactly the same when you’re in that.”

QuickBooks carefully orchestrated the rollout timeline:

  • July 1st: Manual opt-in becomes available (with opt-out option)
  • August 1-30: Automatic enrollment begins (opt-out still available)
  • September: Mandatory transition (no opt-out option)
  • September 22nd: Final cutover date

This phased approach gives users multiple opportunities to adapt while providing safety nets for those who need more time. The timing also ensures completion before the next QuickBooks Connect conference, where QuickBooks will likely showcase new features built for the updated interface.

Key improvements in the new interface include:

  • Enhanced bookmarks. Favorite reports and frequently used screens are now accessible at the main level, eliminating menu navigation for common tasks.
  • Customizable dashboard. Users can hide or rearrange dashboard components to match their workflow preferences.
  • Intuitive navigation. The “silo buttons” (accounting, expenses, sales, customers, payroll) are actually easier to understand than the previous system.
  • Hover menus. Flyout menus respond to cursor hover, eliminating unnecessary clicks.

Supporting the Transition: Training and Resources

Recognizing that interface changes require comprehensive support, training providers are mobilizing resources to help professionals maintain productivity during the transition.

Royalwise is undertaking a massive curriculum overhaul. “Everything I have has to be rerecorded,” Katz Pollock explains, referring to her library of over 50 QuickBooks classes. “So, you’ve got me here for the next 15 years.”

Starting in September, Royalwise will re-teach its entire curriculum in the new interface through bi-weekly sessions. Silver and Gold members get automatic enrollment at no additional cost—a commitment that demonstrates the scale of change management required.

The training approach extends beyond just explaining new buttons and menus. They’re developing a new book series specifically for the new interface, with comprehensive volumes and specialized guides for daily workflows, inventory, project management, and payroll. A practice set with real business scenarios will help users gain hands-on experience. Preorder your copy at https://www.amazon.com/dp/B0FDX859WD

Fulton’s ongoing QB Power Hour sessions with Dan DeLong provide another support pillar. These live streams every other Tuesday (9 AM Pacific, 12 PM Eastern) offer continuing education that adapts to current challenges and allows real-time interaction with experts.

What’s Coming Next: AI Agents and Beyond

July’s “In the Know” session will focus heavily on AI agents—automated assistants designed to handle routine tasks like sending invoices, tracking payments, reconciling books, and managing customer leads.

Intuit is developing four types of AI agents:

  • Accounting agents to handle routine bookkeeping tasks
  • Payments agents to manage payment processing and tracking
  • Customer agents to oversee customer relationship management
  • Finance agents to provide financial analysis and insights

These agents will integrate with the new dashboard and existing workflows, representing the next phase of QuickBooks’ evolution toward more automated, intelligent accounting processes.

Other developments on the horizon include expanded CRM tools, deeper MailChimp integration, and enhanced mineral HR features for payroll Premium and Elite users. The Mineral HR platform, available since 2019, includes law alert libraries, wage calculators, employee handbook builders, and safety training courses—resources many users don’t realize they already have access to.

The Path Forward

QuickBooks understands the critical balance between innovation and disruption in professional environments. The modular approach to inventory, careful interface preservation, and comprehensive training support show enterprise software evolution can enhance rather than disrupt existing workflows.

For accounting professionals, this blueprint suggests future changes will follow similar patterns: gradual, well-supported, and designed to amplify rather than replace professional expertise. The phased rollout timelines, preserved functionality, and extensive educational resources show a commitment to maintaining productivity during technological transformation.

As these changes roll out over the coming months, they’ll provide valuable insights into how the accounting profession adapts to technological evolution. The strategies demonstrated here offer a roadmap for future innovations that prioritize professional continuity alongside technological advancement.

Ready to dive deeper into these game-changing updates? Listen to the complete episode of The Unofficial QuickBooks Accountants Podcast where Alicia Katz Pollock and Matthew “Spot” Fulton provide their full analysis of these developments and discuss how these changes will affect your practice and your clients’ businesses.

Alicia Katz Pollock’s Royalwise OWLS (On-Demand Web-based Learning Solutions) is the industry’s premier portal for top-notch QuickBooks Online training with CPE for accounting firms, bookkeepers, and small business owners. Visit Royalwise OWLS, where learning QBO is a HOOT!