One aspect that hasn't been covered yet is the potential Section 751 "hot assets" issue. Even though your LLC elects S-Corp taxation, you're still technically selling an LLC interest, which means you need to consider whether the LLC holds any "hot assets" like accounts receivable, inventory, or depreciation recapture. If the LLC has significant receivables or depreciated equipment, part of your gain might be taxed as ordinary income rather than capital gains. This is different from selling actual S-Corp stock, where the entire gain would typically be capital gains. Your accountant should run a Section 751 analysis to determine if any portion of the sale proceeds should be allocated to these hot assets. This could significantly impact your tax liability since ordinary income rates are generally higher than capital gains rates. Also, make sure to coordinate the timing with any final K-1 allocations. If you close the sale mid-year, you'll receive a final K-1 showing your share of profits/losses through the sale date, which will affect your basis calculation for determining the actual gain on sale.

One thing to add that could save you significant headaches - make sure you and your partner are aligned on the purchase price methodology before you get too far into the process. I've seen partnerships fall apart during buyouts because one person expected a valuation based on book value while the other expected fair market value. Since you mentioned meeting with an accountant, I'd suggest having that conversation with your partner present (or at least having a separate meeting with them) to discuss valuation methodology, payment structure, and how you'll handle any working capital adjustments or outstanding liabilities. Also, don't forget about any personal guarantees you might have on business loans or leases. Your partner will likely need to either assume those guarantees or help you get released from them as part of the buyout. This isn't directly a tax issue, but it can complicate the transaction and affect the final purchase price negotiations. The good news is that with proper planning and documentation, LLC member buyouts are pretty straightforward from a tax perspective - it's just important to get all the details right upfront rather than trying to fix issues later.

This thread has been incredibly educational! I'm a new server (just started 3 weeks ago) and honestly had no clue about most of this stuff. My training basically covered how to use the POS system and that was it - nobody mentioned anything about tip reporting requirements or the IRS having specific enforcement programs for restaurants. Reading about the Social Security benefits impact really hit home. My mom has been collecting Social Security for a few years now, and she always talks about how those early working years when she didn't pay into the system properly affected her monthly payments. I definitely don't want to repeat that mistake. I'm going to start implementing the photo tracking method right away - seems like the most foolproof system for someone who's still getting used to the chaos of busy shifts. And the 25-30% savings rule makes total sense. I've been spending my cash tips pretty freely without thinking about tax implications. Quick question for those who've been through audits or know people who have - is there any particular tip percentage that's considered "safe" or normal for casual dining? I'm working at a family restaurant similar to OP's situation, and I want to make sure my reporting is realistic for the type of place it is. I'm averaging about 18-20% tips overall, but I want to make sure that aligns with what the IRS would expect for this kind of establishment. Thanks everyone for sharing your experiences - you've probably saved me from making some expensive mistakes!

As someone who's been serving for 3 years and went through the "figuring out tip reporting" journey myself, I want to add a practical perspective to all the great advice here. The reality is that proper tip reporting isn't just about avoiding audits (though that's important) - it's about building a legitimate financial foundation. When I finally started reporting everything correctly, I was able to get approved for my first credit card, then eventually a car loan with a decent interest rate. My coworkers who were still underreporting were getting denied or paying crazy high rates because their "official" income looked too low. Here's my system that's worked perfectly for 2+ years: I keep a small notebook in my apron and jot down cash tips after each table (just "$12" or whatever). At the end of my shift, I add it up, take a photo of the cash with the total written on paper, then immediately put 30% in an envelope marked "TAXES" that I keep in my car. When I get home, I enter the amount in a simple phone app called TipTracker. The 30% might seem high, but it covers federal income tax, Social Security, Medicare, and usually a bit of state tax too. I'd rather over-save and get a small refund than scramble to find money I already spent when tax season comes around. To Madison (the OP) - start tracking everything now. Your future self will thank you when you're not stressed about audits and can actually qualify for loans and apartments based on your real income.

I went through this exact same confusion last year! The key thing to understand is that Line 8 on Form 2210 isn't always just your total tax from the previous year - it depends on which method you're using to calculate the penalty. If you're using the "prior year safe harbor" method (which sounds like your situation), then yes, Line 8 should generally be your total tax from Line 16 of your 2023 Form 1040. But here's the catch - if your 2023 adjusted gross income was over $150,000, you need to use 110% of that amount instead of 100%. Also, make sure you're looking at the right line on your 2023 return. Some people accidentally use their tax liability before credits instead of after credits, which can throw off the whole calculation. Since you mentioned you had 100% of your 2023 tax withheld in 2024, you should definitely qualify for the safe harbor rule and avoid the penalty entirely. Double-check that your withholding actually equals or exceeds the amount on Line 16 of your 2023 return (or 110% if your AGI was high enough). If it does, you shouldn't owe any underpayment penalty regardless of your 1099 income or capital gains timing.

I've been through this exact same frustrating situation! The confusion around Form 2210 Line 8 is so common because the instructions aren't as clear as they should be. Here's what I learned after dealing with a similar underpayment penalty issue: Line 8 wants your "prior year tax" but you need to be careful about which number you use. For most people, it IS the total tax from Line 16 of your 2023 Form 1040, but there are some important details: 1. If your 2023 AGI was over $150,000, you need to use 110% of that Line 16 amount 2. If your 2023 AGI was under $150,000, you use 100% of that Line 16 amount 3. Make sure you're looking at Line 16 AFTER all credits have been applied, not before Since you mentioned you had 100% of your 2023 tax withheld through payroll, you should absolutely qualify for the safe harbor rule. The key is making sure your total 2024 withholding equals or exceeds the amount that should go on Line 8. I'd suggest double-checking your 2023 return to confirm the exact Line 16 amount, then verify your 2024 withholding meets the threshold. If it does, you shouldn't owe any penalty regardless of when your 1099 income or capital gains were received during the year. Don't let TurboTax confuse you - sometimes the software calculates penalties before checking all the exemptions you might qualify for!

I'm wondering if there are any special considerations for recent immigrants when updating information with the IRS? I've heard that some notifications are really important not to miss, especially if you're still establishing your status. Does anyone know if there's a way to set up email notifications instead of just relying on physical mail?

As someone who's been through this process multiple times, I'd recommend starting with Form 8822 right away since you mentioned you recently moved. The 4-6 week processing time is pretty standard, but don't wait - mail forwarding with USPS typically only lasts 12 months for first-class mail, and some IRS correspondence may not be forwardable. For your bank account updates, you're right that this is separate from address changes. If you're expecting a refund this year, you can still update your direct deposit info through the "Where's My Refund" tool on irs.gov, but only if your return is still being processed. One thing I learned the hard way: keep copies of everything you submit to the IRS, including the certified mail receipt if you choose to send Form 8822 via certified mail. This gives you proof of when you submitted the change request, which can be helpful if there are any delays or issues later. Since you mentioned being newer to the US system, don't hesitate to call the IRS line at 800-829-1040 about a week after mailing your form to confirm they received it. The wait times can be long, but it's worth it for peace of mind!

I've been through almost the exact same situation! The IRS took about $1,200 from my expected refund last year with similar codes, and I was completely panicked at first. Here's what I learned: those transcript codes are actually pretty straightforward once you understand them. The 826 code means they applied your 2023 refund to pay a debt from 2021, and the numbers at the end (202112) refer to the tax period - so December 2021 processing cycle. The most common reasons this happens are: 1. Unreported income from 2021 (1099s, W2s, or side gig income) 2. Math errors on your original 2021 return 3. Forgotten retirement account withdrawals or distributions 4. Claimed credits you weren't eligible for Since you mentioned having a side gig, my guess is either you underreported some 1099 income from 2021, or you didn't pay enough estimated taxes that year and penalties/interest accumulated. Don't panic though - you have options! You can request a payment trace to see exactly what the debt was for, and if there was an error on the IRS's part, you can dispute it. Sometimes they make mistakes too. The key is getting your full account transcript for 2021 to see what triggered the balance. You can download it instantly from the IRS website if you can verify your identity online.

I've been helping people navigate IRS transcript codes for years, and your situation is actually more common than you might think. The 826 and 706 codes you're seeing are standard offset procedures - basically the IRS found a discrepancy in your 2021 return and applied your 2023 refund to cover it. Given that you mentioned having a side gig and cashing out a 401k in 2021, here's what likely happened: The IRS received documentation (like a 1099-R for your retirement withdrawal or a corrected 1099-MISC from a client) that didn't match what you reported. They then made an adjustment to your 2021 account, creating a balance due with penalties and interest. The good news is this isn't necessarily permanent. Here's what I'd recommend: 1. Get your complete 2021 account transcript online - look for transaction codes 290, 300, or any 30X series that show adjustments 2. Compare that against your original 2021 return to identify the discrepancy 3. If you find the IRS made an error, file Form 843 to claim a refund 4. If the adjustment is correct but you qualify for penalty relief (first-time penalty abatement, reasonable cause, etc.), you can still recover some money Don't give up - I've seen people successfully challenge these offsets when they had valid reasons or when the IRS made computational errors.