Quick question - has anyone done a partial withdrawal instead of taking everything out? I'm in a similar situation and wondering if that might be better tax-wise than one lump sum.

Just wanted to add something important that I learned the hard way - if you're planning to do this withdrawal in December like I did, be extra careful about your withholding calculation. The lump sum withdrawal pushed me way up in tax brackets for that year, and the 20% default withholding wasn't nearly enough. What really caught me off guard was that the 401k withdrawal counts as ordinary income, not capital gains, so it gets taxed at your regular income tax rates. When you add a big withdrawal to your regular salary, it can bump you into the next bracket pretty quickly. I ended up having to make an estimated tax payment in January to avoid penalties. My advice: if you're not sure about the math, consider having them withhold 25-30% instead of the default 20%, especially if this withdrawal will significantly increase your total income for the year. It's better to get a refund than owe a big chunk plus penalties!

As a CPA who works with a lot of S-Corps, I can confirm that Malik's explanation is spot on. The key thing to remember is that your tax year follows your fiscal year end date - so June 30, 2024 fiscal year end means you file a 2024 return. One additional point that might help: when you receive your K-1 from the S-Corp, it will be labeled as a 2024 K-1 even though it covers income from July 2023 through June 2024. This K-1 gets reported on your personal 2024 tax return (filed in 2025). The timing can be confusing at first, but once you understand the pattern it becomes much clearer. Also, make sure you're not missing any quarterly estimated tax payments. With a June 30 fiscal year end, your quarterly due dates are September 15, December 15, March 15, and June 15 - different from calendar year filers.

Thanks everyone for all the detailed responses! This thread has been incredibly helpful. I ended up following Malik's advice about filing for the tax year in which my fiscal year ends, so I filed a 2024 return for my June 30, 2024 fiscal year end. I also took several of your suggestions and called the IRS directly to confirm everything (thanks Omar for the Claimyr tip - saved me hours of hold time!). The agent confirmed I was on the right track and also reminded me about the September 15th deadline, which I almost missed focusing on the tax year confusion. One thing I learned that might help others: the IRS agent mentioned that if you're unsure about your fiscal year filing requirements, Publication 538 has all the details about tax years and accounting periods. It's pretty dry reading, but it cleared up several questions I had about the timing. For anyone else dealing with this - definitely don't overthink it like I did. The basic rule really is straightforward: file for the year your fiscal year ends. Everything else follows from that principle. Thanks again for all the help!

One important thing nobody's mentioned yet - make sure you have proper substantiation for the donation! For donations over $250, you need written acknowledgment from the charity that includes: - Name of organization - Description of donated meals (but not the value) - Statement whether any goods/services were provided in exchange - Description and good faith estimate of value of any goods/services provided in exchange Without this documentation, the IRS can disallow the entire deduction even if you qualify otherwise. Had this happen to a client last year and it was a mess to resolve.

Just to add a quick data point - we're a local bakery and donated desserts for a charity gala last year. Our CPA classified it under 170(e)(3) and we were able to deduct our cost plus half the difference between our cost and retail price (limited to twice our cost basis). Made a nice deduction! Just make sure you document EVERYTHING - we took photos, kept all correspondence, got a formal acknowledgment letter, etc.

Just be careful! A friend of mine tried to deduct the difference between flying and driving for a similar situation, and it triggered an audit. The IRS disallowed the deduction because they determined the primary purpose of the trip was personal (family event). They said personal trips with some business activities don't qualify for travel deductions.

The key distinction here is that you're not just adding some business activities to a personal trip - you're being forced to change your entire travel method specifically because of business equipment requirements. This creates a stronger case for deducting the incremental costs. I'd recommend documenting everything thoroughly: get quotes for what flights would have cost, keep all driving-related receipts (gas, hotels, meals during travel), and most importantly, document why the equipment was essential and couldn't be shipped or transported any other way. Client emails or contracts showing the equipment requirements would be valuable supporting evidence. One thing to consider is whether you could potentially ship the equipment separately and still fly yourself. If shipping isn't viable due to timing, fragility, or cost, make sure to document why. This helps establish that driving was truly the only reasonable business option, not just a preference. The IRS generally allows deductions for additional costs incurred solely due to business necessity, but they'll want to see clear evidence that the extra expense was unavoidable for legitimate business reasons.

I just filed a return with this exact issue. The way I determined it: 1) If Box 13K has an amount AND the partnership included info saying they already applied 163(j) limitation, just deduct the amount as is. 2) If the partnership noted they're exempt from 163(j) (usually with code AE in Box 20), then check if your client is exempt too (under $27M gross receipts). If yes, deduct full amount. If no, file Form 8990. 3) If you're still confused, call the partnership's accountant! That's what I did and they had a detailed explanation ready.

Thanks everyone for the detailed explanations! This has been incredibly helpful. I'm dealing with a similar situation and want to make sure I understand the process correctly. From what I'm gathering, the key is to first determine whether the partnership has already applied the 163(j) limitation at their level. If they have, then the Box 13k amount is already limited and can be deducted directly on Schedule E without filing Form 8990. But if the partnership is exempt and passed through the full amount, then I need to evaluate whether my individual client qualifies for the small business exemption. One follow-up question: if my client does need to file Form 8990, does the Box 13k amount get entered on line 1a as "business interest expense" or does it go somewhere else on the form since it's coming from a pass-through entity? I want to make sure I'm not double-counting or missing anything in the calculation. Also, for the gross receipts test, when you say "businesses under common control" - does this include if my client owns rental properties through separate LLCs? The aggregation rules can get pretty complex.