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.

Don't forget that if you're using your laptop for a legitimate business, you can also deduct software costs! I deduct my Adobe Creative Cloud subscription at 100% since I only use it for my design business, even though my laptop itself is only 70% business use.

Yes, absolutely! Antivirus software and cloud backup services used to protect business data are legitimate business expenses. If you use them exclusively for business files, you can deduct 100% of the cost. If it's mixed use (protecting both business and personal files), then you'd apply the same percentage method as your laptop. Cloud storage is especially important to track since many 1099 contractors need it for client file sharing and backup. Services like Dropbox Business, Google Workspace, or Microsoft 365 subscriptions are all deductible when used for business purposes. Just make sure you can justify the business use if questioned - having separate folders for client work or using business-specific features helps demonstrate legitimate business use. Also consider deducting any business-related apps or software licenses you purchase for your laptop, even small ones. Things like project management apps, invoicing software, or industry-specific tools can add up to meaningful deductions over the year.

Just wanted to add a practical tip that helped me when I was in this exact situation last year! I ended up going the personal purchase route like many others here have recommended, and it was definitely the right call for my single-member consulting LLC. One thing that really simplified everything was getting pre-approval for the EV loan in my personal name before shopping. This made it crystal clear to dealers that I was purchasing personally (not through the LLC), and they handled all the EV credit documentation seamlessly. Plus, having financing locked in gave me better negotiating power. Also, I'd strongly recommend confirming your specific vehicle's eligibility status right before you sign - not just when you start shopping. I almost bought a model that lost its eligibility between my initial research and my actual purchase date due to battery sourcing changes. The dealer caught it, but it would have been a costly mistake! The personal purchase + business mileage deduction approach has worked out great for me. I'm getting the full $7,500 credit plus substantial Schedule C deductions for my ~70% business use. The record-keeping is straightforward with a good mileage app, and I don't have any of the complexity that would come with business asset depreciation. Good luck with your purchase - sounds like you're asking all the right questions!

This has been such a helpful discussion! As someone who's been lurking and learning from all these responses, I want to thank everyone for sharing their experiences and expertise. I'm in a similar situation with my freelance writing LLC - single-member, disregarded entity, lots of client meetings requiring driving. Based on everything I've read here, the personal purchase route seems like the clear winner for simplicity and maximizing benefits. A few key takeaways I'm noting for my own situation: - Personal purchase allows full $7,500 credit regardless of business use percentage - Can still deduct business mileage on Schedule C (win-win!) - Much cleaner administratively than LLC purchase with asset depreciation tracking - Important to verify vehicle eligibility right before purchase, not just during research phase - Start mileage tracking early to establish accurate business use percentage One question I haven't seen addressed - for those who went the personal purchase route, did you need to do anything special with your business insurance to cover the vehicle during business use? Or does personal auto insurance typically cover business driving for consultants/freelancers? Thanks again to everyone who shared their experiences - this thread is going to save me (and clearly many others) a lot of confusion and potentially costly mistakes!