I've been following this discussion closely as I'm facing a very similar situation with my own medical practice partnership. The insights everyone has shared have been incredibly valuable. One additional consideration I'd like to add: timing of the decision matters more than I initially realized. I spoke with my attorney about this, and she pointed out that making entity structure changes after you've already signed the operating agreement and started receiving K-1s can trigger more complex tax implications than setting it up correctly from the beginning. If you're still in the negotiation phase with your managing partner, this might actually be the ideal time to have these discussions, even if you ultimately decide to keep things simple. Getting clarity on the practice's policies around partner entity structures now could save headaches later if your circumstances change. @Amara Nnamani's point about the separate S-corp election while maintaining personal partnership interest seems like the most practical solution. This approach respects your managing partner's concerns about the operating agreement while still giving you the tax flexibility you're seeking. I'm curious - have you had a chance to run the actual numbers on potential tax savings? Sometimes the administrative costs and complexity can eat into the benefits more than we expect, especially in the first few years when you're getting everything set up properly.

As someone who went through a similar decision process with my dental practice partnership last year, I wanted to share my experience and what ultimately worked for me. After extensive research and consultations (including using some of the resources mentioned in this thread), I ended up following the approach that @Amara Nnamani and others have recommended - keeping my partnership interest personal while setting up a separate single-member LLC with S-corp election for my other business activities. This gave me several advantages: 1. **No conflict with partners**: My managing partners were completely comfortable with this approach since it didn't require any changes to our operating agreement or K-1 issuance 2. **Achieved tax savings**: I was still able to reduce my self-employment taxes on income from my separate consulting and speaking activities 3. **Avoided professional complications**: No issues with dental board licensing, malpractice insurance, or credentialing with insurance companies 4. **Maintained flexibility**: I can modify my separate entity structure without affecting the practice partnership The key insight for me was realizing that the tax benefits I was seeking didn't actually require changing how the partnership K-1 was issued. Instead, I focused on optimizing the tax treatment of my other professional income streams through the separate entity. @Jayden Reed - given all the potential complications discussed in this thread, you might want to consider whether there are other income sources (consulting, speaking, medical device work, etc.) where you could implement the S-corp strategy without touching your main partnership structure. This could give you the tax benefits you're looking for while keeping peace with your managing partner.

As someone who's been in property management for over a decade, I want to emphasize how important it is to act quickly on situations like this. What your tenant is doing with the 1099-A form is absolutely not legitimate - there's no borrower/lender relationship between you as landlord and tenant. These "redemption theory" scams have unfortunately become more sophisticated over the years. The tenant is likely trying to create a paper trail that makes it look like they've somehow "paid" their rent through this fictional trust arrangement, when in reality they're just behind on rent and trying to avoid consequences. Here's what I recommend doing immediately: 1) Save all documentation - the 1099-A form, rent payment records, lease agreement, any communications about this "trust" 2) Contact the IRS to report the improper form filing (Form 3949-A as others mentioned) 3) Send written notice to your tenant that you've received an improperly filed tax form and that you're reporting it to authorities 4) Contact the tax preparation service that helped file this form - they need to know their services were used for fraud Don't let this slide thinking it will resolve itself. These schemes often escalate with additional fraudulent filings, and the longer you wait, the more complicated it becomes to unravel. The tenant is counting on your confusion and inaction to continue living rent-free while hiding behind fake paperwork. Stay strong and protect your business - legitimate tenants don't need to involve fake trusts and improper tax forms to pay their rent.

I'm dealing with something very similar right now and this thread has been incredibly helpful! My tenant is 2 months behind on rent but just handed me some kind of "promissory note" from his "private trust" claiming it will cover all past and future rent payments. He also mentioned he's filing tax forms to "discharge the debt" which now makes perfect sense after reading about these redemption theory scams. What's really concerning me is that he's been asking for my business EIN number saying he needs it to "properly process the trust payment." After reading all these responses, I'm realizing this is probably part of the scheme to file fraudulent tax forms using my information. I'm going to follow the advice here - document everything, report to the IRS with Form 3949-A, and send certified mail notice that I'm aware of the fraudulent activity. It's scary how sophisticated these scams have become, but at least now I know I'm not alone in dealing with this and there are clear steps to take. Thank you especially to those who shared the resources like taxr.ai for understanding the tax implications and claimyr for actually getting through to the IRS. Having concrete tools to handle this situation makes it feel much less overwhelming. For any other landlords reading this - don't ignore weird paperwork or trust documents from tenants. These schemes rely on our confusion and inaction to succeed.

Quick question - I'm using TurboTax and wondering if it can handle Form 3115 for missed depreciation? Their support wasn't clear about it.

I went through this exact same situation with three rental properties I bought between 2020-2022. The stress was overwhelming until I realized how straightforward the fix actually is with Form 3115. A few practical tips that helped me: 1. Calculate your basis correctly - for residential rentals, you can only depreciate the building, not the land. Your purchase contract or property tax assessment should show the land vs building allocation. 2. Remember that depreciation starts when the property is "placed in service" for rental use, not necessarily when you bought it. If you spent time renovating before it was rentable, that affects your start date. 3. The Section 481(a) adjustment on Form 3115 will be substantial (mine was over $35k total), but don't worry - this is exactly what the form is designed for. The IRS expects large catch-up amounts. 4. File Form 3115 with your current year return, not as an amendment to prior years. This is key - it saves you from the hassle and potential issues of multiple amended returns. One last thing - make sure you continue depreciating correctly going forward! The mistake is fixable, but you don't want to repeat it. Good luck!

Does anyone know if this works the same way for multiple attorneys? I had both a main attorney and a specialized employment attorney that my main attorney brought in. The fee split between them was complicated but came to about 40% total.

I went through this exact situation two years ago with an employment discrimination settlement. One thing I wish someone had told me earlier is to also keep detailed records of any costs beyond just the attorney fees - things like filing fees, expert witness costs, or court reporter fees if your case had depositions. These additional litigation costs can also be deductible as part of your case expenses. My attorney's final statement broke down not just their fee but also $3,200 in other case costs that I was able to deduct. Make sure when you request that detailed letter from your attorney that you ask them to itemize ALL costs related to your case, not just their legal fees. Also, if any part of your settlement was specifically for punitive damages, that portion might have different tax treatment, so make sure your settlement agreement clearly states what each portion of the payment covers.

Your situation is completely normal and shouldn't raise any red flags with the IRS! I work in banking and can confirm that regular person-to-person transfers like what you're describing aren't something we report to the IRS. The main things banks report are interest payments over $10, suspicious cash activity, and large transactions over $10,000. What you and your boyfriend have is a classic cost-sharing arrangement between domestic partners. The IRS sees this as splitting household expenses, not as taxable income to you. Think about it - millions of roommates and unmarried couples do exactly what you're doing every day across the country. If you want extra peace of mind, just keep a simple record showing that his monthly transfers correspond to shared housing costs. Even a basic note like "Monthly mortgage: $1500, his share: $750" would be plenty of documentation. But honestly, after 15 years in banking, I can tell you that your arrangement is so standard that it's extremely unlikely anyone would ever question it. The IRS has much bigger fish to fry than people fairly splitting their living expenses!

I went through something very similar when my sister and I bought a duplex together but only put it in my name due to her student loan issues. She pays me $900 monthly for her half of the mortgage and utilities, and I was initially worried about the same thing. After doing research and talking to a tax professional, I learned that these transfers are definitely not considered income since we're both benefiting from the shared living arrangement. The key is that you're not making a profit - you're just splitting legitimate household expenses fairly. One thing that gave me extra confidence was keeping a simple monthly email trail between us that shows the breakdown: "Mortgage $1400 + utilities $200 = $1600 total, so your half is $800." It creates a paper trail showing this is clearly expense-sharing, not income. Your $750 monthly transfers for a shared mortgage are textbook expense-splitting between domestic partners. Don't stress about it - you're handling this exactly how thousands of other couples do!