I have an additional detail to add here. My issue is solved.
-equipment mid-2014 base 15" rMBP and iPhone 5S. Wireless router Asus RT-AC87U
-clean installs of both 10.10 and iOS 8.1. 10.10 from the bootable drive and 8.1 from DFU mode.
-logging out of all iCloud and logging back in in iCloud, iMessage, and FaceTime all using the same email. I had used my @me email at one point by the FaceTime on iP5S showed as 3rd party email log in that Apple likes. So, all logged in under the 3rd party email.
-all settings in MBP and iP5S for handoff and continuity
-FINALLY ******wifi band******* this was my ultimate issue. It has already been identified that Continuity doesn't work when PC is on ethernet and iPhone is on Wifi even if on the same router...well, ALSO LOOK OUT FOR MIXED ENVIRONMENT WIFI. I have my router set up so that 2.4 and 5 ghz broadcast the same SSID and the devices switch back and forth based on best signal. This is a problem for continuity. When I forced both devices on the same band, everything was seamless. Problem seems to be that rMBP can pick up and hold onto 5 ghz from my desk whereas iP5S can only get 2.4 at the same location. Watch out for what band you're on! Application handoff works okay across multi band environments, phone handoffs, no. at least not consistently.
Hopefully future updates can address this because MIMO is defiantly the future, which is here now