I worked with a client who did something similar but made a BIG mistake. They moved assets into what they THOUGHT was a revocable trust, but certain provisions actually made it irrevocable. They sold their home thinking they'd get the primary residence exclusion, but the IRS determined the home was actually owned by an irrevocable trust and disallowed the exclusion. The moral of the story: have an actual estate attorney review your trust documents! Don't just copy templates or assume anything. The specific language matters tremendously, and what might seem like minor wording differences can completely change the tax treatment.

This is such a helpful thread! I'm dealing with a similar situation where my elderly parents have their assets in a revocable trust, and I've been worried about the tax implications when they pass. One thing I wanted to add that might be helpful for others - make sure you understand the difference between a "living trust" and a "testamentary trust." A living trust (which sounds like what your parents have) is created during their lifetime and can be revocable or irrevocable. A testamentary trust is created through a will and only takes effect after death. Also, for anyone reading this thread, I'd strongly recommend keeping detailed records of the original basis of assets when they're transferred into the trust. Even though you'll get a step-up in basis when your parents pass, having those records can be crucial if there are any questions or audits down the line. The IRS has specific forms (like Form 706 for large estates) that require detailed asset valuations, so start thinking about how you'll document fair market values at the time of death. For publicly traded stocks it's easy, but for things like real estate or collectibles, you might need professional appraisals.

Has anyone successfully used QuickBooks to handle this situation? I've got QB for each of my businesses but haven't figured out how to properly track payroll that's technically running through just one of them.

This is a really common issue that trips up multi-business owners! The IRS absolutely does match 941 data to business tax returns through their automated systems, and mismatches are a major audit trigger. Here's what I'd recommend based on what I've seen work: **Short-term fix:** You'll likely need to file amended 941s (Form 941-X) to properly allocate the wages to each business under their respective EINs. This sounds scary, but if all the taxes were paid correctly (just under the wrong EIN), penalties are often minimal or waived. **Long-term solution:** Either set up separate payroll accounts for each business, or create formal management service agreements that document how one business is providing payroll services to the others. The second option requires monthly intercompany transfers and meticulous record-keeping, but it can work if done properly. **Critical point:** Don't try to "fix" this by reporting all wages on just the nail salon's return to match the 941s. That creates even bigger problems with expense allocation and could trigger questions about why your other businesses have no labor costs. The cost of fixing this properly is almost always less than dealing with an IRS audit later. Most payroll companies offer multi-entity discounts that make separate accounts more affordable than you might expect.

Has anyone used TurboTax for reporting a rental property sale? I'm in the same situation but having trouble finding where to enter the renovation costs that should be added to basis.

I went through this exact same situation last year with a rental property I sold after renovating it. One thing that really helped me was keeping detailed records of all renovation expenses with receipts and invoices. The IRS wants to see clear documentation that these were capital improvements rather than routine repairs. For the $28,000 in renovation costs you mentioned, make sure you categorize them correctly. Things like new flooring, kitchen remodels, bathroom updates, and structural improvements definitely add to your basis. But routine maintenance like painting touch-ups or fixing broken fixtures typically don't qualify as capital improvements. Also, don't forget about depreciation recapture! Since you depreciated the property from 2016-2022, you'll need to "recapture" that depreciation at a 25% tax rate on Form 4797. The remaining gain gets taxed at capital gains rates. It's more complex than a regular stock sale, but Form 4797 walks you through it step by step. If you're still unsure about any of the details, consider having a tax professional review your return before filing. Rental property sales can have expensive mistakes if not handled correctly.

I'm going through a similar audit right now and this thread has been incredibly helpful! My employer is auditing hardship withdrawals from last year and I was initially panicking about my scattered documentation. One thing I discovered that might help others - if you paid your contractor or any vendors by check, your bank can provide images of the canceled checks along with your statements. This gives you both proof of payment and shows exactly who received the funds and when. I was able to get high-resolution images of checks I'd completely forgotten about. Also, don't overlook utility bills or other regular statements that might show your address and timing. Sometimes these can serve as supporting evidence that you were indeed dealing with home repairs during the timeframe of your withdrawal, especially if there are notes about service calls or increased usage. The timeline approach several people mentioned is spot on. I'm creating a simple document that shows: storm date → damage discovery → insurance claim → withdrawal request → repair payments. Even with some gaps in receipts, this narrative helps demonstrate the legitimate sequence of events. Thanks to everyone sharing their experiences - it's made this process feel much more manageable!

I'm currently going through this same audit process and wanted to share something that's been really helpful - creating a simple one-page summary document that tells the complete story at a glance. I put together a brief narrative explaining the emergency (roof damage from storms), the timeline of events, and how the withdrawal funds were allocated. Then I attached all my supporting documents behind it - contractor invoices, photos, bank statements, etc. Even where I had gaps in documentation, I noted them honestly in the summary and explained what happened (like "paid $800 cash to day laborers for debris removal - see ATM withdrawal on [date]"). My HR person actually complimented how organized and clear everything was, and the audit was approved within two weeks. Sometimes presenting scattered information in a cohesive way makes all the difference in how it's received. The key insight from my experience is that they want to see you made a genuine effort to use the funds appropriately, not that you're a perfect record keeper. Your roof repair situation is exactly the type of legitimate hardship these withdrawals are designed for, so don't let imperfect documentation stress you out too much!

This is absolutely disgusting behavior from H&R Block. I'm a CPA and I see this kind of thing way too often with the big chains - they spend millions advertising these "guarantees" during tax season, then have entire departments whose job is literally to find ways to deny claims when their mistakes cost people money. The fact that their own preparer verbally admitted she could see how the error happened but corporate is still hiding behind "unsubstantiated" claims is particularly infuriating. They're essentially calling your sister a liar while protecting their bottom line. Here's what I'd recommend: First, file complaints with your state's Board of Accountancy AND the IRS Office of Professional Responsibility - preparers can face serious consequences for this kind of conduct. Second, request in writing that H&R Block provide the specific policy language they're using to deny the claim. Make them prove their case with actual contract terms, not vague denials. Most importantly, don't let them intimidate you into giving up. These companies count on people being too exhausted to fight a big corporation, but your sister has a strong case here. Document everything going forward and consider small claims court if they continue to stonewall. Sometimes just the threat of legal action motivates them to suddenly "find" ways to honor their guarantee. This is exactly why I always tell people to be very careful about trusting these heavily advertised "peace of mind" promises. They're often worth exactly what you paid for them - nothing.

This is exactly the kind of situation that made me lose all trust in these big tax prep chains. The "peace of mind" guarantee is pure marketing BS - they advertise it heavily to justify their premium prices, then when you actually need it, suddenly there are a million loopholes and technicalities they use to wiggle out of paying. What really burns me up about your sister's case is that their own preparer had the integrity to admit she could see how the mistake happened, but H&R Block corporate is basically calling both your sister AND their own employee liars. That tells you everything about their priorities - protecting profits over taking responsibility for their screwups. I'd definitely escalate this beyond their customer service department. File complaints with your state's consumer protection agency, the Better Business Bureau, and consider reaching out to your local news stations. These companies hate bad publicity more than individual complaints, and a story about them refusing to honor their advertised guarantee despite their own employee admitting fault would be perfect for a consumer protection segment. Document absolutely everything going forward - emails, phone calls, dates, names of who you spoke with. If your state allows single-party consent recording, record every conversation. The more evidence you have of their refusal to honor their own terms, the stronger your case becomes if you end up in small claims court. Don't let them get away with this false advertising. Every person who fights back makes it harder for them to keep scamming customers with these worthless "guarantees.