This thread has been incredibly helpful! As someone who recently converted from sole prop to S-Corp, I was struggling with the same basis tracking confusion. After reading through everyone's experiences and advice, I feel like I finally have a clear path forward. I particularly appreciate the "bank account" analogy from @Chloe Harris - that really clicked for me. Starting with your initial contribution, adding profits as they're earned (not when distributed), and subtracting distributions makes so much more sense when you think of it that way. For anyone else just starting out with this, here's my key takeaway from this discussion: Don't wait to set up your tracking system. Even a simple spreadsheet updated monthly is infinitely better than trying to reconstruct everything at year-end. I'm going to start with the basic format that @Emma Olsen suggested and build from there. One question I still have - for those of you who've been doing this for a while, have you found any red flags or common mistakes that the IRS tends to focus on during audits? I want to make sure I'm not just tracking correctly, but also documenting in a way that would hold up under scrutiny. Thanks again to everyone who shared their experiences. This community is amazing for navigating these complex tax situations!

This has been such an enlightening thread! As someone who's been putting off the sole prop to S-Corp conversion partly because of confusion around basis tracking, you've all convinced me that it's totally manageable with the right approach. The monthly tracking system that several of you have mentioned seems like the gold standard. I love how @Paolo Ricci emphasized using your regular QuickBooks P&L numbers rather than waiting for year-end documents - that makes it feel much less intimidating and more like a natural extension of regular bookkeeping. One thing I'm taking away is that this really isn't as complicated as I initially thought. It's basically just keeping a running tally of what you put in, what the business earns, and what you take out. The "bank account" analogy really drives that home. For @Javier Morales (the original poster) - it sounds like your next step should be sitting down with your conversion documents to establish that initial basis number, then setting up a simple monthly tracking system. Don't let your busy accountant be the bottleneck for understanding something this fundamental to your business operations! Thanks everyone for sharing your real-world experiences. It's so much more valuable than the generic advice you find in most tax guides.

I can share some insight from working in tax preparation - the 846 code with 2/26 date means your refund was authorized for release on that date, but paper checks typically take 3-5 business days after that to actually get printed and mailed out. So your check was likely mailed around March 3rd-5th. From there, USPS delivery usually takes another 5-10 business days depending on your location. If you haven't received it by March 12th, I'd start getting concerned. One thing that might help is setting up USPS Informed Delivery if you haven't already - you'll get a preview of your mail each morning so you'll know exactly when that Treasury Department envelope is coming your way.

I've been through this exact situation before! The 846 code with 2/26 date means your refund was processed and authorized for payment on that date. For paper checks, there's usually a 2-3 day delay between the 846 date and when it actually gets mailed out, so your check was probably sent around February 28th or March 1st. From there, USPS typically takes 5-10 business days for delivery. Since it's been over a week now, I'd expect it to arrive any day. If you don't see it by March 10th, definitely start checking with neighbors or consider setting up a payment trace. The waiting is the worst part, but paper checks almost always show up eventually - just takes longer than we'd like!

I'm currently going through this exact same situation! Filed my return in mid-February and received my CP05 notice about two weeks ago. The stress is unreal when you're depending on that refund money. What's been helping me cope is creating a little tracking system - I check the "Where's My Refund" tool once per day (trying not to obsess!) and jot down the date and status in a notebook. At least it gives me a sense of doing something productive while I wait. I also called my local Taxpayer Advocate Service office just to understand the process better (not to rush anything, just for peace of mind). The representative explained that CP05 reviews are indeed much more common now and that the vast majority result in the full refund being released once verification is complete. One thing that's given me hope: I've been reading success stories on various tax forums, and it seems like a lot of people get their refunds released before the full 60 days. Some as early as 3-4 weeks into the review process. The waiting is absolutely brutal, but we've got this! Keeping my fingers crossed that both you and everyone else dealing with this gets good news soon. 🤞

I'm going through the exact same thing right now! Got my CP05 notice about 10 days ago after filing in late February, and the anxiety is killing me. Like you, I really need this refund for upcoming expenses and the thought of waiting up to 60 days is stressing me out big time. What's been somewhat comforting is reading all these responses - it seems like most people do end up getting their full refund, just with the delay. I've also been obsessively checking the "Where's My Refund" tool multiple times a day (I know, not healthy!) but I can't help myself. One thing I've noticed from reading other people's experiences is that education credits seem to be a common trigger for these reviews, which makes sense since they involve significant refund amounts. I claimed the American Opportunity Credit for my college expenses, so I'm guessing that might be what flagged mine. The hardest part is just not knowing what specifically triggered the review or how long it will actually take. But based on what others are saying here, it sounds like we just have to be patient and trust the process. Hoping we both get good news soon - this waiting game is brutal when you're counting on the money! 🤞

Here's a quick tip - go to irs.gov/getanippin and see if you can retrieve the dependent IP PIN there. Sometimes if you're the legal guardian, you might be able to get it online, especially if you've already set up an ID.me account. Worth trying before spending hours on the phone!

@Omar Zaki - I went through this exact same nightmare last year! The key thing to understand is that your daughter likely got an IP PIN assigned automatically by the IRS due to some kind of data breach or suspicious activity involving her SSN - this happens more often than you'd think with minors. Here's what you need to do: Call the IRS Identity Protection Specialized Unit directly at 800-908-4490. This is the specific number for IP PIN issues, not the general IRS line. When you call, tell them you need to retrieve an IP PIN for your dependent because your e-file return is being rejected. Have your daughter's SSN ready and be prepared to verify your own identity as her parent. The agent will be able to tell you immediately if she has an IP PIN on file and what it is. Don't try to get it online - that only works for your own PIN, not dependents. Also don't waste time calling the general IRS number - they'll just transfer you around. Once you get the PIN, you'll enter it in the dependent section of your tax software, not in your own IP PIN field. Good luck - you should be able to get this resolved in one phone call once you reach the right department!

Anyone using tax software to handle this? I tried using TurboTax but it's still confusing me with how it imports the 1099-B and then what goes where.

As someone who's dealt with Schedule D and Form 8949 for several years now, I'd recommend double-checking your broker statements against what you report. Sometimes brokerages make errors on the acquisition dates or cost basis, especially if you transferred stocks between accounts. For your 6-month holding period stocks with $3,200 in profits, you're definitely dealing with short-term capital gains (taxed as ordinary income). Make sure each transaction on Form 8949 Part I matches exactly what's on your 1099-B forms - the IRS computer system will flag any discrepancies. One tip: if you have a lot of transactions, consider grouping identical securities with the same acquisition and sale dates on a single line of Form 8949, rather than listing each share lot separately. This keeps the form cleaner while still being compliant. Also, don't forget that short-term gains are added to your regular income for tax purposes, so depending on your tax bracket, you might owe more than you expect. Worth setting some money aside if you haven't already!