I've noticed the same thing. One of my applications from February just got approved last week - that's over 11 weeks! I think they're dealing with staffing shortages like every other government agency.

Thanks for confirming I'm not the only one experiencing this. Good to know I should be setting more realistic expectations for my clients. I've started telling them 10-12 weeks now just to be safe. It's frustrating because one of the benefits of using a CAA is supposed to be faster processing. I even had a client question why they should pay me when it's taking almost as long as regular mail-in applications.

This is really helpful insight about the timeline trends! I'm just getting started as a CAA and was wondering if these delays are across the board or if certain types of applications are moving faster than others. Have you noticed any patterns - like are renewals processing quicker than first-time applications? Or does the applicant's country of origin seem to make a difference in processing speed? I'm trying to figure out how to set proper expectations with different client situations. Also, do you find it helpful to give clients any kind of timeline updates during the process, or do you just tell them upfront and then wait for the IRS to respond?

Point #4 is actually a big issue for single-member S Corps though. If there's only one employee who's also the 100% owner, how can you possibly meet the "not more than 5% to shareholders" requirement?

You're absolutely right that point #4 presents a challenge for single-member S Corps. The technical interpretation is that if 100% of benefits go to someone who owns more than 5% of the company (which is clearly the case here), the plan wouldn't qualify under Section 127. However, there's an alternative approach: instead of using Section 127, you can potentially deduct the education as a working condition fringe benefit under Section 132. With this approach, the S Corp can deduct the expense if it would have been deductible as an ordinary and necessary business expense had the employee paid for it directly. This requires demonstrating that the MBA maintains or improves skills needed for the current business and doesn't qualify you for a new profession. This approach avoids the 5% shareholder limitation altogether.

This is really helpful information, especially about the Section 481(a) adjustment - I hadn't heard of that before! Can you elaborate on what kinds of timing differences typically show up in these calculations? I'm trying to understand if this is something I could handle myself or if I definitely need professional help. Also, regarding the determination letter for the MBA tuition - how long does that process typically take? I'm hoping to make the prepayment before year-end, so I'm wondering if there's enough time to get that clarity from the IRS first. The state tax implications point is well taken too. I'm in California and I know they can be stricter about certain tax matters than federal rules. Do you happen to know if California follows the federal rules for accounting method changes, or do they have their own requirements?

16 Good point! Texas doesn't have income tax so I almost forgot about this factor. What percentage did California charge you on the gains you thought were excluded?

California hit me with their standard capital gains rate, which is taxed as ordinary income. Since I was in the higher brackets, I ended up paying about 9.3% state tax on gains I thought were completely excluded. It was roughly $8,000 more than I had budgeted for. Definitely factor in your state's treatment when calculating the real tax impact of your sale.

This is really helpful advice! I'm curious about the documentation requirements you mentioned. Since I converted a commercial building into living quarters, would things like building permits for the residential conversion help establish that it was genuinely my primary residence? Also, how strict is the IRS about the "primary residence" test when the property is zoned commercial but actually used as a home?

Building permits for residential conversion would absolutely strengthen your case! That's exactly the type of documentation the IRS looks for to establish legitimate residential use of a commercial property. You should also gather utility bills showing separate meters or higher usage patterns consistent with full-time residence, any insurance policies that covered it as your homestead, and records of where you received mail and registered to vote. Regarding the zoning issue - the IRS focuses on actual use rather than zoning classification. IRC Section 121 doesn't disqualify properties based on commercial zoning if they were genuinely used as your main home. However, you'll need to demonstrate that the residential portion was separate and distinct from any business use. The key is showing you had exclusive residential areas (bedroom, kitchen, living spaces) that weren't used for business purposes. Keep detailed floor plans showing the residential vs business areas, and be prepared to explain how you maintained the separation between personal and business use of the property.

This is such a good point. My state (California) required additional documentation for my fire loss claim that wasn't needed for federal. I almost missed it and would have had issues with my state return.

This is really helpful advice about tracking all the related expenses! I'm dealing with a similar situation where my duplex had a kitchen fire last month. Insurance is covering the major repairs but I've already spent about $800 on temporary boarding and security measures that they said might not be reimbursable. Good to know these could still be deductible even if insurance doesn't cover them. Also wondering - for the personal property you mentioned, does that include things like the refrigerator and washer/dryer that came with the rental? I provided those as part of the furnished rental but I'm not sure if they count as part of the building or separate personal property for tax purposes.

UltimateTax sounds like a great middle-ground option! I really appreciate you mentioning the phone support aspect - having access to people who actually understand trust taxation could be invaluable for someone like me who's doing this for the first time. The $200 price point seems reasonable considering it includes unlimited e-filing and support. The document checklist feature you mentioned sounds incredibly helpful. I'm definitely someone who benefits from having a clear roadmap of what I need before diving into complex tasks. Did you find their explanations about compressed tax brackets easy to understand? That's one aspect of trust taxation that I know is different from individual returns but haven't fully wrapped my head around yet. Also, how did they handle the rental property depreciation in your father's trust? That sounds like it could be a particularly tricky area where having knowledgeable support would be crucial.

The compressed tax bracket explanations in UltimateTax are really well done - they use visual charts to show how trusts hit the highest tax rates at much lower income levels compared to individual taxpayers. For example, they clearly illustrate how a trust reaches the 37% bracket at just $15,200 of income versus $609,350+ for individuals. This helped me understand why timing distributions properly is so crucial for tax planning. For the rental property depreciation, their support team walked me through the specific rules for trusts holding real estate. The software automatically calculated depreciation recapture when we eventually sold the property and properly allocated the tax consequences between the trust and beneficiaries. What impressed me was how they handled the complexities of Section 1250 recapture and helped ensure we didn't miss any depreciation deductions in prior years. Their phone support really shines on these technical issues - I probably called 4-5 times during my first year filing, and each time I spoke with someone who clearly understood trust taxation rather than reading from a script. That peace of mind was worth the cost difference compared to cheaper alternatives.

This is excellent advice! The tiered approach of starting with FreeTaxUSA and potentially moving up to UltimateTax makes perfect sense for someone in my situation. At $25, FreeTaxUSA seems like a no-brainer to try first - even if it doesn't work out, I'm only out the cost of a nice lunch. Your point about getting copies of the previous returns from my aunt's old tax preparer is brilliant! I hadn't thought of that, but you're absolutely right that seeing how similar transactions were handled historically would be incredibly helpful. I'm going to reach out to them this week to see if they'd be willing to share the last 2-3 years of returns. One quick follow-up question - do you think it's worth having a backup plan ready in case I run into issues with the software close to the filing deadline? I'm naturally a bit anxious about messing up something this important, especially since it affects the beneficiaries too. Should I identify a local CPA who handles trusts just in case I need to hand it off if things get too complicated?