Has anyone else noticed that a lot of accountants seem confused about S corp basis calculations? I've had three different CPAs give me three different answers about how to handle distributions when we've had prior losses.

I'd definitely recommend getting a second opinion on this. Based on what you've described, it sounds like your tax preparer might be misunderstanding something about your situation. The key issue is tracking your basis correctly. Your basis in the S corp stock starts with your initial investment, gets reduced by your share of losses, gets reduced by distributions you receive, and gets increased by additional capital contributions or your share of income. If you made additional capital contributions during 2024 (like the $75K you mentioned in another comment), those should increase your basis and likely eliminate any capital gains treatment on your distributions. Make sure your tax preparer has accounted for all capital contributions, not just your original investment. Also, if you've made any loans to the S corp (even informal ones where you paid business expenses out of pocket), those create "debt basis" which can help absorb losses and avoid capital gains on distributions. I'd suggest asking your tax preparer to show you the specific basis calculation they're using. They should be able to walk through: starting basis + capital contributions + income - losses - distributions = ending basis. If that number goes negative, only the negative portion would be capital gains. Don't just accept their conclusion without understanding the math behind it - this is a common area where even experienced preparers make mistakes.

Just wanted to share my experience since I went through this exact same situation last month! I filed with H&R Block online and couldn't track my refund for the longest time. Turns out they were using MetaBank for my direct deposit, but the tracking emails went to my spam folder. What finally worked for me was using the IRS "Where's My Refund" tool at irs.gov/refunds - it showed way more detail than H&R Block's own tracking system. You just need your SSN, filing status, and exact refund amount from your return. One thing that helped me figure out the bank situation was looking at the fine print on my filing confirmation email. It had "MB" codes which I later learned meant MetaBank was handling the processing. Also, if you had fees deducted from your refund like I did, that adds a few extra days since the money has to go through their system first to subtract the fees before hitting your account. At 2 weeks you're still in the normal timeframe - mine took about 18 days total with the fee deduction. The IRS tool updated way more frequently than H&R Block's tracker, so I'd definitely recommend checking that daily instead of stressing about which bank they're using!

This thread has been incredibly helpful! I'm dealing with a similar situation where H&R Block's tracking system isn't working for me. Based on all the responses here, it sounds like the main issue is that H&R Block uses different banks depending on which service you used, and their own tracking system isn't always reliable. I'm definitely going to try the IRS "Where's My Refund" tool that several people mentioned - it seems like that's the most reliable way to track regardless of which bank is processing. I also need to check my spam folder for those tracking emails since multiple people found theirs there. One question for anyone who's been through this - if I filed online with direct deposit but can't remember if I had fees deducted from my refund, is there a way to check that in my H&R Block account? I want to set realistic expectations for timing since it sounds like fee deduction can add a few extra days to processing. Thanks to everyone for sharing their experiences - this is way more helpful than the generic responses I was getting from H&R Block's customer service chat!

Just wanted to chime in as someone who's been managing inherited rental properties for several years. The passive loss rules can definitely be confusing, but you're on the right track with the active participation exception. One thing I'd add to all the great advice here - make sure you understand how the depreciation recapture will work when you eventually sell the property. With such a high stepped-up basis and substantial annual depreciation, you'll be recapturing potentially hundreds of thousands in depreciation at a 25% rate when you sell, even if the property appreciates. This doesn't mean you shouldn't take the depreciation (you should!), but it's worth factoring into your long-term planning. Also, consider whether you might benefit from a 1031 like-kind exchange when you eventually sell. This can defer both the capital gains and depreciation recapture taxes if you reinvest in another rental property. With your property value, this strategy could save you significant taxes down the road. The $25,000 active participation allowance is definitely your best immediate option given your situation, but don't forget to think about the bigger picture tax planning too!

This thread has been incredibly helpful! I'm in a somewhat similar situation with an inherited property, though not quite as high-value as yours. One aspect I haven't seen mentioned is the importance of getting your depreciation method election right from the beginning. With such a substantial stepped-up basis, you might want to consider whether the standard straight-line depreciation over 27.5 years is optimal, or if you should explore bonus depreciation on certain components through a cost segregation study (as Sarah mentioned earlier). The timing of this decision matters because once you start depreciating using one method, changing it later requires IRS permission via Form 3115. Also, since you mentioned this is a late 2023 inheritance, make sure you're aware of the mid-month convention for rental property depreciation. Your first year depreciation will be prorated based on the month you placed the property in service, not a full year's worth. Given the complexity and the substantial tax implications (both current benefits and future recapture), I'd really recommend consulting with a tax professional who specializes in rental property taxation. The potential tax savings and compliance benefits far outweigh the cost of professional advice in a situation like this.

Another option nobody mentioned - you could elect to treat your TFSA as a foreign grantor trust and file Form 3520-A instead of Form 3520. This might sound more complicated, but some cross-border accountants prefer this approach because it provides more clarity on how to report income. Also, check if you're required to file FBAR (FinCEN Form 114) for your TFSA. The threshold is lower than Form 8938 - just $10,000 across all foreign accounts combined at any point during the year.

I went through this exact situation two years ago when I moved from Vancouver to California. The TFSA reporting requirements are genuinely confusing because the IRS guidance has been inconsistent over the years. Here's what I learned after consulting with a cross-border tax specialist: You'll likely need to file Form 8938 since your TFSA value exceeds the threshold ($50k for single filers living abroad, but lower thresholds apply once you become a US resident). For Form 3520, while the IRS has indicated they won't aggressively pursue penalties for TFSAs, many professionals still recommend filing it for complete compliance. The most important thing people don't realize is that you need to report ALL income generated by your TFSA on your US tax return - interest, dividends, capital gains, everything. The "tax-free" benefit only applies in Canada, not for US tax purposes. Given the complexity and potential penalties, I'd strongly suggest finding a CPA who specializes in US-Canada cross-border tax issues, even if it's just for a consultation. The peace of mind is worth the cost, and they can help you decide whether to keep the TFSA or close it based on your long-term plans. Also don't forget about FBAR filing if your combined foreign accounts exceed $10k at any point during the year - that's separate from the other forms and has its own penalties for non-compliance.

Has anyone else noticed that TaxACT seems to struggle with calculating QBI deductions correctly for partnerships? We had to manually override some of their calculations last year. Wondering if they've fixed this for the current tax season?

I can definitely confirm that you can file just a 1065 partnership return through TaxACT without doing your personal taxes through them. I've been doing this for our small real estate partnership for the past three years. You'll want to look specifically for their "TaxACT Business" software, not their personal tax version. The business edition includes Form 1065 and all the related schedules you'll need for rental properties, including depreciation schedules and K-1 generation for you and your brother-in-law. A few tips from my experience: - The business version does cost more than personal, but it's still reasonable compared to going to a CPA - You can absolutely e-file the 1065 - no need to print and mail - Their rental property depreciation module works pretty well for straightforward situations - Make sure to keep good records of your basis in each property, as you'll need this for the K-1s For a simple two-property partnership like yours, TaxACT Business should handle everything you need without any issues. Just be prepared to spend a bit more time learning the interface if you're used to their personal tax software - the business side has more complexity but it's still user-friendly overall.