I'm dealing with something similar and this thread has been super helpful! Just wanted to add that if you're still unsure, you can also check Publication 550 on the IRS website which covers investment income and expenses. It has a whole section on 1099-B forms that explains when the "basis not reported" box gets checked. The key thing I learned is that this checkbox doesn't mean you did anything wrong or that the IRS will audit you. It's just the broker's way of saying "hey, we're not providing the cost basis info to the IRS, so if there were actual transactions here, you'd need to figure out the basis yourself." Since all your amounts are zero, there's literally nothing to calculate or report. Your tax software is almost certainly handling this correctly - these programs are pretty good at recognizing these placeholder 1099-B forms that show no actual activity.

Hey Benjamin! I totally understand your confusion - I went through the exact same thing last year with my Schwab account. The "basis not reported to IRS" checkbox with all zeros had me panicking that I was going to get audited or something. After doing a ton of research and even talking to a tax professional, I learned that this is incredibly common. Brokers are required to send you a 1099-B even if there was no taxable activity in your account. The "basis not reported" box is just their way of covering themselves legally - it doesn't mean anything suspicious happened. Your TurboTax is definitely handling this correctly. When all the dollar amounts are zero, there's literally no gain or loss to report, so no taxes owed. The software recognizes these as "placeholder" forms that don't affect your tax liability. Don't stress about tax fraud - you're doing everything right by entering the form exactly as it appears. The IRS sees millions of these zero-value 1099-B forms every year and they're completely normal. You're being a responsible taxpayer by double-checking, but you can rest easy knowing your return is accurate!

Great question! As someone who's dealt with similar concerns running my own small business, I completely understand the paranoia about keeping things separate - it's actually a good instinct. To directly answer your main question: if you cash those personal checks at your bank, they will still create a record on your statement. Most banks process check cashing as a deposit followed immediately by a cash withdrawal, so you'll see both transactions. The only way to truly avoid any bank record would be to cash them at the bank that issued the checks, but even then there's still a paper trail on their end. For your $650 in family birthday money, the cleanest approach is definitely to deposit them directly into your personal account. This creates clear documentation that these are personal funds, not business income. Keep a simple note about what each check was for (birthday, holiday, etc.) - this kind of documentation is exactly what auditors want to see. The bigger picture here is that you're absolutely right to be concerned about separation. Even small amounts matter because the IRS looks at patterns and practices, not just dollar amounts. Mixing any business and personal funds, even accidentally, can complicate things during an audit and potentially put some of your business deductions at risk. Keep doing what you're doing with the separate accounts - it's the best protection you can have!

As a small business owner myself, I totally get your concerns about keeping everything clean for the IRS! You're absolutely right to be thinking about this separation early in your business. For your $650 in family birthday checks, definitely deposit them directly into your personal account rather than cashing them. This creates the clearest paper trail showing these are personal gifts, not business income. When you cash checks at your own bank, you're right that they still appear on your statement - typically as a deposit immediately followed by a cash withdrawal. One thing that's helped me tremendously is keeping a simple log of any personal deposits over $100, especially gifts or unusual sources. Just a basic note like "Birthday gift from Aunt Mary - $150" can save you a lot of headaches if you're ever audited. It shows you're organized and have legitimate explanations for your deposits. The IRS really does focus on patterns rather than individual transactions. They're looking for business owners who might be hiding income by mixing funds or not reporting everything. Your instinct to keep things separate is spot on - even small amounts matter because it demonstrates you're running a legitimate business with proper record-keeping. Keep up the good practices with your separate accounts! It's one of the best investments you can make in your business's long-term success and your own peace of mind.

This is a really complex area where getting it wrong can be extremely costly. From what I understand, the IRS has been pretty strict about the "substantially all" requirement for QSBS eligibility. One thing that might be worth exploring is whether there are any recent private letter rulings or tax court cases that have addressed similar fact patterns. The tax code is one thing, but how the IRS actually interprets and applies these rules in practice can sometimes be different. Also, have you considered the potential impact of the Tax Cuts and Jobs Act changes? Some of the QSBS provisions were affected, and there might be transition rules that could impact your timing strategy. I'd strongly recommend getting a formal tax opinion from a law firm that specializes in this area before making any final decisions. The potential tax savings from QSBS (up to $10M or 10x basis exclusion) are significant enough that it's worth paying for expert advice upfront rather than discovering problems later.

This thread has covered the key issues really well. I'd just add one practical consideration that hasn't been mentioned - the compliance burden of switching tax elections mid-stream. When you elect S-Corp status and then revoke it later, there are specific forms and timing requirements that can trip you up. Form 1120S needs to be filed during S-Corp years, then you switch back to Form 1120 for C-Corp status. Missing deadlines or filing incorrectly during these transitions can create additional problems beyond just the QSBS eligibility issues. Also, if you have multiple shareholders, the S-Corp election requires unanimous consent, and revoking it later requires majority consent. This can get complicated if your shareholder base changes over those 4-5 years. Given all the complexity and the fact that you'd lose QSBS eligibility anyway, starting as a C-Corp from day one really does seem like the cleaner approach, especially if you're confident about meeting the other QSBS requirements.

Has anyone used QuickBooks for partnership accounting? I'm trying to figure out if I need to completely restructure my books when I convert from sole prop to partnership or if there's an easy way to handle the transition.

I went through this exact transition last year with my consulting LLC. One thing that caught me off guard was the estimated tax payment requirements for partnerships. Unlike when you're a sole proprietor and can just make quarterly payments based on your own income, partnerships have to make estimated payments based on the partnership's total income, and then each partner is responsible for their share. Also, make sure you document everything about your partner's initial capital contribution - whether it's cash, equipment, or sweat equity. The IRS is pretty strict about how these contributions are valued and recorded, especially if there's a significant imbalance between what each partner is putting in. We had to get our computers and office equipment professionally appraised to establish the basis correctly. One last tip: set up separate bank accounts for the partnership right away. Mixing personal and business funds becomes even more problematic when you have multiple partners, and the IRS scrutinizes partnership transactions more closely than sole proprietorships.

Since you mentioned S-Corp, make sure you're distinguishing between "distributions" and actual wages for EIC purposes. The IRS only counts W-2 wages for EIC, not distributions from your business. If your tax software counted S-Corp distributions as earned income, that would explain the discrepancy.

This thread has been incredibly helpful! I'm dealing with a similar EIC discrepancy, but mine involves rental income alongside my Schedule C business. The IRS is claiming my EIC should be $800 less than what I calculated. Reading through everyone's experiences, it sounds like the common thread is that tax software doesn't always handle the nuanced EIC calculations correctly when you have multiple income sources or business losses. The distinction between different types of self-employment income (S-Corp vs Schedule C) and how losses are applied seems to be where most of the confusion happens. Has anyone found a good resource that breaks down exactly how the IRS calculates EIC when you have both business income and losses? The IRS publications are so dense, and I'm trying to figure out if I should fight this or if they're actually right.