Slightly off topic but does anyone know if section 179 vehicles have to be over 6000 lbs? Im looking at buying a work vehicle but I'm not sure if my SUV qualifies.

I'd strongly recommend consulting with a tax professional before making any moves here. The recapture rules for Section 179 are pretty strict - when you sell that truck, you'll likely owe ordinary income tax on the sale proceeds up to the amount you originally deducted ($98k). One thing to consider is the timing of both transactions. If you're planning to buy another qualifying vehicle this year, you might want to structure the timing so that the recapture income from the sale is partially offset by the new Section 179 deduction. This won't eliminate the tax hit entirely, but it could help manage the cash flow impact. Also keep in mind that there are annual limits on Section 179 deductions ($1,160,000 for 2023), so make sure you have enough "room" left if you've already taken other business deductions this year. The rules can get complex when you're dealing with multiple transactions in the same tax year.

This is such an important discussion, and I really feel for your situation trying to help your cousin. Having dealt with something similar in my family, I can tell you that the fear and denial around tax issues can be incredibly strong, but the consequences of continued inaction are very real. One thing that helped in our case was getting a clear, professional assessment of exactly where things stood. We used a service that analyzed the specific tax situation and spelled out all the obligations, penalties, and options in plain English. Having that concrete information made it impossible to keep ignoring the problem. The crypto angle makes this especially urgent. The IRS has been aggressively pursuing unreported cryptocurrency income, and they have sophisticated tools to track transactions across most exchanges and blockchains. If your cousin used any major platforms, there's likely already a paper trail that could surface during an audit or investigation. For someone with 7 years of unfiled returns involving trust income and crypto gains, the voluntary disclosure route is really the only safe path forward. The longer he waits, the more penalties and interest accumulate, and the higher the risk of criminal prosecution. At this point, professional help from a tax attorney who specializes in delinquent returns is essential - this situation is way beyond what someone should try to handle alone. I hope you can convince him to act quickly. The relief of finally addressing this head-on, even though it's scary, is enormous compared to living with the constant worry about when the IRS might catch up.

This entire discussion has been incredibly informative and honestly quite sobering. As someone who works in financial compliance, I can confirm that everything mentioned here about the IRS's enforcement capabilities is accurate, especially regarding cryptocurrency tracking. What strikes me most is how your cousin's situation perfectly illustrates the difference between tax avoidance (legal strategies to minimize taxes) and tax evasion (illegal failure to report required income). With trust distributions and crypto gains over 7 years, this is clearly evasion territory with potentially severe consequences. The voluntary disclosure route that everyone has mentioned really is his best option. In my experience, the IRS is generally more lenient with taxpayers who come forward voluntarily versus those they have to hunt down. The key is acting before they initiate contact, because once an investigation begins, the voluntary disclosure program may no longer be available. Given the complexity of trust income, cryptocurrency gains, and 7 years of non-filing, your cousin absolutely needs professional representation from a tax attorney who specializes in these situations. The penalties alone could bankrupt someone, not to mention the potential criminal exposure. Every month he delays increases both his financial liability and legal risk. I hope this thread helps you convince him that this isn't something that will just go away. The IRS has unlimited time to pursue non-filers, and their enforcement technology only gets better each year.

Question for anyone who's been through an audit - does the IRS ever ask to see your basis calculations during an audit of an S-Corp return? I'm wondering how detailed my documentation needs to be.

Great question about S-Corp basis tracking! As someone who went through this same confusion a few years ago, I can share what I learned from my CPA. For your specific questions: 1. Yes, use the K-1 Part III, but don't just focus on Box 1. You need to look at ALL the boxes - income items (Boxes 1-10) generally increase basis, while deductions and losses (Boxes 11-13) decrease it. Also check Box 16 carefully for distributions and other adjustments. 2. Unfortunately no - there's no single summary box. The IRS expects shareholders to maintain their own basis calculations, which is honestly one of the more frustrating aspects of S-Corp ownership. 3. Since there's no official place this appears on returns, you'll need to reconstruct from Day 1. Start with your initial investment/contribution when you formed the S-Corp, then work through each year's K-1 systematically. One critical tip: Make sure you're handling the ORDER of adjustments correctly. Income and contributions increase basis first, then losses and deductions reduce it, and finally distributions come out last. This order matters because it affects how much loss you can deduct in any given year. Given your simple structure (sole owner, no loans, minimal complexity), your calculation should be straightforward once you get the methodology down. I'd strongly recommend setting up a tracking system now so you don't have to reconstruct again in the future!

Brooklyn, I totally get that excitement! 🎉 Code 806 is definitely one of those codes that makes you feel good when you see it on your transcript. Everyone here has given you such thorough explanations - it really is just your federal income tax withholding credits, which means money you've already paid throughout the year. Since you mentioned being meticulous about finances, here's something that helped me when I was first learning about transcripts: I started keeping a simple spreadsheet where I track my year-to-date withholding from each paystub. It's really satisfying to see that number grow throughout the year, and then when tax season comes around, I already know exactly what to expect for my Code 806 amount! For your investment income question - yes, any federal taxes withheld from your investment accounts (like backup withholding on dividends or interest) would definitely be included in that Code 806 total. You'd see this reported on your 1099 forms. It's so refreshing to see someone taking the time to really understand their tax situation instead of just hoping everything works out. Keep asking questions - this community is fantastic for helping people become more tax-savvy!

Brooklyn, congratulations on taking the initiative to understand your tax transcript! 🎉 Code 806 is absolutely something to be excited about - it represents all the federal income tax that was withheld from your paychecks throughout the year, essentially acting as prepayments toward your tax liability. Since you mentioned being meticulous about your finances, here's a quick way to verify this is correct: take all your W-2 forms and add up the amounts in Box 2 (Federal income tax withheld). If you have any 1099 forms showing federal withholding, add those too. The total should match your Code 806 amount exactly. Regarding your investment income question - yes! Any backup withholding from your investment accounts (typically 24% if there were TIN issues) would also be included in this Code 806 total. You'd see this reflected on your 1099-DIV or 1099-INT forms in the federal tax withheld box. The beautiful thing about Code 806 is that it's a dollar-for-dollar credit against your tax liability. So if you owe $15,000 in taxes but have $12,000 in Code 806 withholdings, you'd only owe the IRS $3,000 more. It's basically the IRS saying "Hey, you already paid us this much throughout the year!" Keep up that attention to detail - understanding these codes will serve you well in managing your tax situation year-round! 📊

The IRS also has a tool on their website where you can look up your advance Child Tax Credit payments if you can't find Letter 6419. Just go to IRS.gov and search for "Child Tax Credit Update Portal" - you can log in and see exactly how much you received in advance payments throughout the year. This is super important to get right because if you enter the wrong amount on Schedule 8812, it'll throw off your entire refund calculation. I learned this the hard way when I accidentally used the wrong number and ended up owing money when I should have gotten a refund!

I had this exact same confusion when I was doing my taxes! The key thing to remember is that Schedule 8812 is designed to work in stages. First it calculates your total eligible Child Tax Credit for the year (which is what you're seeing on line 14i), then it accounts for any advance payments you already received. So that $9,400 on line 14i isn't your final refund amount - it's just showing that based on your two qualifying children, you're eligible for that total credit. The form then subtracts your $3,600 in advance payments on line 14j to show your remaining credit. Make sure you have your Letter 6419 handy (or check the IRS Child Tax Credit Update Portal online) to get the exact advance payment amount. Getting that number wrong will definitely throw off your calculation. Once you enter the correct advance payment amount and complete the rest of the form, you should see your actual remaining credit amount, which should be much closer to what you were expecting.