As someone who's been navigating small business tax issues for years, I want to emphasize that your booth rental arrangement is completely legitimate based on what you've described. The IRS has clear guidelines for distinguishing between independent contractors and employees, and your situation checks all the boxes for true business independence. The people commenting that it's "illegal" are likely confusing two very different scenarios: 1) legitimate booth/space rental between independent businesses (what you have), and 2) employee misclassification where businesses try to avoid payroll taxes by calling employees "contractors" while still controlling their work. Your setup demonstrates genuine independence through separate LLCs, individual client relationships, independent pricing and scheduling, separate payment processing, and personal liability insurance. These are textbook indicators of legitimate business-to-business relationships. One additional tip: consider having each groomer display their individual business licenses and insurance certificates at their stations. This visual demonstration of separate business entities can be helpful if questions ever arise about the arrangement's legitimacy. The fact that the previous owner successfully passed an IRS audit using this exact model should give you confidence that you're operating within the law.

I've been working in tax compliance for over a decade and want to reassure you that your booth rental arrangement is absolutely legal and properly structured. The confusion often stems from people not understanding the fundamental difference between space rental and service contracting. What you've described - independent LLCs, separate client lists, individual pricing control, personal scheduling autonomy, and direct client payment processing - represents a textbook example of legitimate business-to-business space sharing. This is fundamentally different from the problematic "independent contractor" misclassifications that the IRS targets. The fact that the salon owner also works as a groomer doesn't create any legal issues as long as she maintains clear separation between her two business roles: property rental and personal grooming services. Many legitimate booth rental operations have owners who also provide services in the same facility. For additional peace of mind, I'd suggest documenting a few key elements: ensure rental agreements explicitly state that space is provided "as-is" with no operational control, maintain separate business banking and accounting for each groomer, and consider having periodic reviews of your independent contractor status documentation. The previous owner's successful IRS audit is excellent precedent showing this model works when properly implemented. You're operating legally and the critics simply don't understand how booth rental businesses function.

Don't forget about state tax departments too! I had a similar situation and my state's department of revenue was actually way more helpful than the IRS. They had copies of all my W2s for the past 5 years and were able to mail them to me after I verified my identity. Worth checking if your state offers something similar!

For anyone still dealing with this, I wanted to share what worked for me after being in a very similar situation. I hadn't filed for 6 years and was completely overwhelmed trying to piece everything together. Here's what I learned: You actually don't need the original W2s to file your back taxes. The IRS wage and income transcripts contain all the essential information - employer name (even if partially masked), wages, federal income tax withheld, Social Security wages, etc. A tax professional can work with just this information to prepare your returns. The key is to focus on getting your transcripts for each year you need to file, then either use tax software that accepts transcript data or work with a CPA who handles unfiled returns regularly. Many tax pros are experienced with exactly this situation and can interpret those encrypted EINs better than you'd expect. Also, don't panic about penalties - the IRS is often willing to work with people who are genuinely trying to get compliant, especially if you're owed refunds for some of those years. The sooner you start filing, the better your situation becomes. You've got this!

This has been such a comprehensive discussion! As someone who recently went through a similar situation with my aunt's estate, I wanted to share a few additional tips that might help: First, before you decide whether to deposit the check as-is or request a reissue, call your bank and ask specifically about their "estate check endorsement policy." Some banks have updated their procedures in recent years to be more accommodating, while others have become stricter. Getting this information upfront can save you time and potential embarrassment at the teller window. Second, regarding the interest taxation - something that helped me was creating a simple spreadsheet to track all estate-related income and expenses throughout the year. Even though your estate is officially closed, you may still encounter other delayed payments or documents, and having everything organized will make tax preparation much smoother. Finally, consider reaching out to the probate court where the estate was handled. Sometimes they can provide a certified copy of your final estate closing documents, which can be helpful as additional proof of your authority if banks or other institutions question your ability to handle these delayed payments. The fact that this refund took nearly 3 years to arrive really highlights how important it is to keep estate documentation accessible even after you think everything is finished. Thanks to everyone who shared their experiences - this thread should be really helpful for anyone dealing with similar situations!

I'm dealing with a very similar situation right now with my mother's estate, so I really feel for you! The confusion and stress of handling these unexpected financial matters months or years after you thought everything was settled is really overwhelming. From what I've learned through my own experience and reading through this excellent discussion, here are the key points I'd focus on: 1. **Check expiration first** - As Freya mentioned, verify if there's an expiration date on the check. This should be your immediate priority since it affects all your other options. 2. **Bank consultation** - Call your bank's estate services department (if they have one) before going in person. Explain your situation and ask about their specific requirements. This can save you multiple trips. 3. **Endorsement approach** - If you decide to deposit as-is, use the endorsement format several people mentioned: "Pay to the order of [Your Name], Executor of the Estate of [Deceased's Name]" along with proper documentation. 4. **Tax implications** - Yes, the interest is taxable income to you for 2025. Take clear photos of both sides of the check showing the interest breakdown, and be prepared for a 1099-INT that might be issued under your father's name/SSN. 5. **Consider reissuance** - Given that your estate account has been closed for 14 months, requesting a reissued check in your name might actually be the cleanest solution, even though it takes 8-10 weeks. The most important thing is that you're not alone in this - delayed estate refunds with accumulated interest are apparently much more common than any of us realized. Whatever approach you choose, document everything carefully!

Don't forget that for some assets like real estate, you can often get historical appraisals done retroactively. We had a commercial property in my parents' trust, and we hired an appraiser who specialized in retrospective valuations to determine what it was worth when my dad died 9 years ago.

One thing that hasn't been mentioned yet is the importance of getting a Form 706 (United States Estate Tax Return) if one was filed for either parent. Even if the estate wasn't large enough to require filing, many attorneys recommend filing anyway specifically to establish the stepped-up basis values for inherited assets. If a Form 706 was filed for your father in 2016, it would contain the fair market valuations of all his assets as of his date of death - this becomes your stepped-up basis documentation. The same applies for your mother's estate in 2023. These forms are incredibly valuable for exactly the situation you're describing. If no Form 706 was filed, you might still be able to file a protective election or late-filed return in some circumstances. This is definitely something to discuss with a tax professional, as the rules can be complex and there are time limitations involved.

This is such a helpful thread! I'm dealing with a similar situation but with a $25,000 retention bonus that I had to repay when I left my job earlier this year. The company made it clear the repayment was required, but they didn't provide much guidance on the tax implications. From reading everyone's experiences here, it sounds like the credit method under Section 1341 would likely be better for me too, especially since my income was actually higher in the year I received the bonus compared to this year. One question I have - does it matter HOW you repaid the bonus? I had to write a personal check back to the company rather than having it deducted from final paychecks. I'm assuming that doesn't change the Section 1341 treatment, but I want to make sure I have the right documentation. Also really appreciate the mentions of taxr.ai and Claimyr - sounds like both could be helpful for getting the calculations right and actually talking to someone at the IRS about this. This is definitely not something I want to mess up!

This thread has been incredibly helpful! I'm a tax preparer and see Section 1341 situations maybe 2-3 times per year, so I don't always feel confident with the calculations. What I've learned from experience is that the documentation is absolutely critical - the IRS will scrutinize these claims pretty carefully. A few additional points for anyone dealing with this: 1) Make sure the repayment was actually REQUIRED, not voluntary. If you had a choice about whether to repay, Section 1341 doesn't apply. 2) The repayment has to be for income that was included in a prior year's return AND you had a legal obligation to repay it when you originally received it (even if that obligation was contingent). 3) If you're married filing jointly but only one spouse received/repaid the bonus, you still calculate as if it affected the joint return in both years. The $3,000 threshold mentioned earlier is correct - amounts under that must be handled as itemized deductions only. For amounts over $3,000, definitely run both calculations because sometimes the itemized deduction method can be better, especially if you're in a lower tax bracket now than when you received the income. Thanks to everyone who shared their experiences with the various tools and services - it's good to know what resources are out there for these complex situations!