This has been an incredibly educational thread! As someone relatively new to partnership taxation, I've been struggling with mineral royalty reporting and this discussion has really clarified things for me. One area I'd love more insight on is the documentation aspect. Several of you mentioned including detailed supporting statements, which makes perfect sense for defending the position. But I'm wondering about the practical mechanics - do you attach these as separate PDF schedules to the electronic filing, or do you include them as text in the "Additional Information" sections of the tax software? Also, I'm curious about how you handle the partnership agreement language. Do you recommend that clients include specific language about the passive nature of royalty activities in their partnership agreements, or is this more of a facts-and-circumstances determination based on actual operations? Finally, for those dealing with multiple properties across different states, do you find any states have particularly aggressive positions on partnership-level taxation of royalty income that might influence the federal reporting strategy? Thanks to everyone who has shared their expertise here - this is exactly the kind of real-world guidance that makes all the difference in building confidence with these complex returns!

This discussion has been incredibly thorough and helpful! As someone who handles a mix of partnership returns including several with mineral interests, I really appreciate seeing the consensus around treating passive royalty income as portfolio income on Schedule K rather than business income on page 1. One practical question I haven't seen addressed - for partnerships that receive multiple 1099-MISC forms for royalty payments throughout the year, do you typically reconcile these to a separate royalty income schedule on the return? I've been summarizing them in a supporting statement, but I'm wondering if there's a preferred method for showing this reconciliation, especially when dealing with partnerships that have dozens of small royalty payments from different operators. Also, has anyone dealt with the situation where a partnership receives both royalty payments and bonus payments for new leases in the same year? I assume the bonus payments would also be treated as portfolio income, but I wanted to confirm this treatment is consistent with the royalty income approach. The revenue ruling reference and software recommendations have been particularly valuable - it's clear I need to upgrade my research resources and possibly consider more specialized tax software as this area of my practice grows. Thanks to everyone for sharing their real-world experience!

11 Does anyone know if attorney fees for these cases are deductible? I got a settlement too but almost 40% went to the lawyers. Do I report the full amount or just what I actually received?

Just to add another perspective - I went through something similar with a different class action settlement last year. The key thing I learned is that you absolutely need to keep detailed records of everything related to the settlement. Make copies of your settlement check, any correspondence from the law firm, and especially any documentation that describes what the settlement was for. Even if GM doesn't send you a 1099, having this paperwork will be crucial if the IRS ever questions the reporting. Also, if you're unsure about the tax treatment, consider making quarterly estimated payments on at least a portion of it. Better to overpay slightly and get a refund than to owe penalties for underpayment. The IRS safe harbor rule generally protects you if you pay 100% of last year's tax liability (110% if your prior year AGI was over $150,000). One more tip - if this settlement pushes you into a higher tax bracket, you might want to look into whether you can spread the recognition of this income over multiple years, though that's typically only available in very specific circumstances.

3 Has anyone actually been audited over their Accountable Plan? I've been reimbursing employees for home office equipment, internet, and occasional coffee shop visits for years with no issues. As long as they provide receipts and a business justification, I've approved them under our Accountable Plan per Treas. Regs. §1.62-2(d).

The distinction between repairs and improvements is crucial here, and I'd be very conservative with both scenarios you've described. For the HVAC system, this is clearly a capital improvement that increases the home's value permanently. Even though 12% is used for business, the IRS will likely view this as primarily benefiting the employee as a homeowner. I'd avoid reimbursing this under your Accountable Plan - it's exactly the type of expense that gets flagged in audits and reclassified as taxable compensation. For the coffee shop visits, the key question is business necessity. Can the employee document why they couldn't work from their home office that day? "I like the atmosphere" won't cut it - you need legitimate business reasons like client calls requiring a quiet background, internet outage at home, or specific work that benefits from a different environment. Even then, food/beverage costs are subject to the 50% meal limitation and need detailed documentation. My recommendation: Create a clear written policy defining what qualifies before approving any reimbursements. For home office expenses, stick to supplies, equipment, and utilities rather than improvements. For alternative workspace costs, require written justification for each occurrence explaining the business necessity.

has anyone used the wheres my refund tool on the irs website? it usually tells u if theres an issue with ur refund or if they adjusted anything. i always check it when my refund seems off!!!

There's another possibility that might explain your situation - check if you moved to a different state or if your state changed its tax laws. Sometimes people focus so much on federal taxes that they miss state-level changes that can affect your overall refund picture. Also, double-check if you had any side income last year that you might have forgotten about - things like gig work, freelancing, or even small amounts from apps like cashback rewards that issued you a 1099. Even small amounts can push you into different tax brackets or affect certain credits. One more thing - if you're really stuck, consider looking at your prior year tax transcript from the IRS website. You can compare line-by-line with this year's return to see exactly where the differences are. The transcript will show any adjustments or corrections that might have been made to your previous return that could explain why that refund was unusually high.

Given the clear VIN mismatch and lack of proper authorization, I'd recommend going straight to the IRS rather than giving the dealership another chance to dodge your calls. You've already tried contacting them multiple times with no response - that's enough good faith effort on your part. The IRS handles reporting errors like this directly, especially when there's factual documentation showing the mistake (wrong VIN, no signed transfer form, text messages contradicting the transfer). Since this appears to be a clerical error in their system rather than a legitimate business dispute, they won't require you to resolve it with the dealer first. When you call, have everything organized: your purchase agreement, the IRS notice with the wrong VIN, screenshots of those text messages from the salesman, and your actual vehicle's VIN for comparison. Be clear that you never authorized any transfer and that the reported vehicle information is completely incorrect. The timing is important too - getting this corrected now gives you plenty of time before next tax season and establishes a paper trail with the IRS. If you wait and try to sort it out with an unresponsive dealer, you might find yourself in a last-minute scramble when it's time to file your taxes. Document your call with the IRS thoroughly and get a case number if possible. This protects you if any issues come up later when you claim the credit on your return.

This exact thing happened to my brother last year with his Tesla purchase. The VIN mismatch is actually the smoking gun that proves this is a dealer error, not a miscommunication about the credit terms. Here's what worked for him: He called the IRS Taxpayer Advocate Service (1-877-777-4778) instead of the main IRS line. They specialize in resolving these kinds of administrative errors and were much more helpful than the general customer service line. They assigned him a case worker who understood the EV credit transfer system and got it sorted out in about 3 weeks. The key things they needed were: - Copy of the IRS notice with the wrong VIN - His actual vehicle registration showing the correct VIN - Purchase agreement with no transfer language - Any communications with the dealer about claiming the credit himself Since you have all of these plus the text messages, you're in a really good position. The Taxpayer Advocate took it seriously because the wrong VIN indicated a systemic error that could affect other customers too. Don't stress too much about this - the documentation you have makes it pretty clear-cut. Just get it reported to the right people sooner rather than later so it doesn't complicate your tax filing next year.