I want to emphasize something important that several people have touched on - you absolutely should file Form 4952 even in years when you take the standard deduction if you have investment interest expenses. This is one of the most commonly missed tax planning opportunities I see. The reason is that investment interest expense operates differently from other itemized deductions. While most Schedule A deductions are "use it or lose it" in the year incurred, investment interest has this special carryforward provision that lets you preserve the deduction for future years when you have sufficient investment income to use it against. Here's what I recommend: Even if your total itemized deductions don't exceed the standard deduction threshold, still prepare a "dummy" Schedule A and Form 4952 to calculate and document your investment interest expense carryforward. You don't have to actually file Schedule A if you're taking the standard deduction, but having Form 4952 on file creates the official record for the carryforward. This strategy becomes especially valuable if you're early in your investing career - those small margin interest amounts from today could become significant deductions as your portfolio and investment income grow over time.

This is such a valuable discussion! I wanted to add one more important consideration for anyone dealing with investment interest carryforwards - make sure you're tracking the carryforward amounts correctly across multiple years. The IRS requires you to maintain a running total of your unused investment interest expenses, and this can get complicated if you have carryforwards from multiple years. Each year's Form 4952 should show your prior year carryforward amount on line 4f, your current year investment interest on line 1, and any remaining carryforward on line 4g. I'd also recommend keeping a separate spreadsheet or document that tracks your carryforward balances by year, especially if you're amending multiple prior returns to establish these amounts. This becomes crucial if you ever get audited, as you'll need to show the IRS exactly how you calculated your carryforward amounts and which years they originated from. One last tip - if you're using tax software, make sure it's properly carrying forward these amounts between years. Some programs don't handle investment interest carryforwards as smoothly as they should, particularly if you're switching between different tax preparation methods from year to year.

I'm curious - has anyone successfully claimed bonus depreciation on a property purchased late in the tax year while qualifying for REP status? We bought our rental on Dec 18 last year and our accountant says we can't claim much since we only owned it for 2 weeks of the tax year.

For your specific situation, since your wife is a full-time licensed real estate agent working 40+ hours weekly, she should easily qualify for REP status. The key things to focus on now: 1) **Documentation is critical** - Start keeping detailed time logs immediately if you haven't already. Track every hour spent on real estate activities with dates, times, and descriptions. The IRS loves to audit REP claims and contemporaneous records are your best defense. 2) **Material participation for your rental** - Since you're buying late in the year, you'll need to be strategic about meeting the material participation tests for that specific property. The 100-hour test (where you work 100+ hours and more than anyone else) might be more realistic than trying to hit 500 hours in just a few months. 3) **Consider the grouping election** - If you plan to buy multiple rental properties in the future, making an election to group all rental activities as one can make material participation much easier to achieve across your portfolio. 4) **Bonus depreciation timing** - Good news here! As long as your property is "placed in service" before December 31st (ready and available for rent), you can claim the full bonus depreciation amount regardless of when in December you bought it. Make sure to work with a tax professional familiar with REP status - the rules are complex and the audit risk is higher than typical rental property claims.

I've been dealing with this same message for about 10 days now and honestly it's driving me crazy! 😅 The waiting is the worst part because you have no idea if it's going to be resolved in a few more days or if you're about to get hit with some random notice asking for more documentation. What I've learned from lurking in tax forums is that this message can mean anything from "we're just slow" to "something doesn't match up and we need to verify." The frustrating part is there's literally no way to know which one it is until either your refund shows up or you get mail from them. Has anyone here actually called the IRS phone line while having this status? I'm debating whether it's worth the 2+ hour hold time just to potentially be told "wait for a notice" 🤷‍♀️

I'm going through the exact same thing right now! Got that message 5 days ago and it's been radio silence since. What's really getting to me is how vague it is - like they could literally be reviewing ANYTHING about your return and you have zero visibility into what's actually happening behind the scenes. I've been checking the app obsessively (probably not helping my stress levels lol) but the status hasn't budged at all. The part about "if we need additional information, we'll mail a notice" is what keeps me up at night because who knows how long that could take to arrive or what they might want. From what I've read online, some people get through this in a week, others are stuck for over a month. It seems totally random which is so frustrating when you're trying to plan around getting your refund. Really hoping we both hear something soon! 🤞

Has anyone dealt with their state's abandoned property laws when dissolving? I'm in a similar situation, and was told that if you can't repay all the shareholder loans, the unpaid portion might need to be reported as abandoned property to the state after dissolution. Seems crazy but my accountant mentioned it.

One thing to consider that hasn't been mentioned yet is the timing of your dissolution. Since you have substantial outside basis ($135K) and are only getting $7K back, you'll have a significant capital loss. Make sure you understand the capital loss limitations - you can only deduct $3K per year against ordinary income, with the remainder carried forward. Given the size of your loss, this could take decades to fully utilize unless you have capital gains to offset it against. Also, regarding the debt vs. distribution question - since you're the sole shareholder, the tax result is essentially the same. However, from a documentation standpoint, I'd recommend treating the $7K as a partial loan repayment and then formally canceling the remaining debt. This creates a cleaner paper trail showing you attempted to collect what you could before forgiving the balance. Don't forget to file Form 966 within 30 days of adopting the plan of liquidation, and make sure your final 1120S properly reflects the debt cancellation income (even if excluded under Section 108) and the corresponding basis adjustments on your K-1.

Great question! As someone who's been self-employed for several years, I can confirm that grouping expenses by category is absolutely the correct approach for Schedule C. The IRS doesn't want to see every individual receipt line-by-line - they want you to use their predefined categories and provide totals. Your method of combining camera gear under "video equipment" and software subscriptions under "software expenses" is exactly right. Just make sure you're using the actual Schedule C categories where possible (like "Office Expenses" for software, "Supplies" for smaller equipment items, etc.). The key thing to remember is that while you report totals on your tax return, you must keep detailed records of every purchase that makes up those totals. In an audit, the IRS will want to see the individual receipts and invoices that support your category totals. So keep everything organized by category in files or folders - that's your backup documentation. With $65k in gross income, you're doing well! Just stay consistent with your categorization method from year to year, and you'll be fine.

Your approach is absolutely correct! The IRS actually prefers expenses to be categorized rather than itemized line by line on Schedule C. You should continue grouping related expenses together - your "camera gear" and "editing software" categories make perfect sense. For your video equipment purchases, these would typically go under "Supplies" if they're smaller items, or you might need to depreciate larger equipment purchases over time. Your software subscriptions would generally fall under "Office Expenses" on the actual Schedule C form. The most important thing is maintaining detailed records behind your categorized totals. Keep all your individual receipts, invoices, and payment records organized by category. The IRS won't see these during normal filing, but you'll need them if you're ever audited. Your grouping method won't raise any red flags - it's exactly what the IRS expects to see. Just be consistent with your categorization from year to year and make sure you can tie your totals back to supporting documentation.