25 Something nobody mentioned - make sure you check local tax requirements too! I found out the hard way that my city requires a business license and annual business tax return even if your business hasn't started operating yet. Cost me a $75 late fee because I didn't realize this applied to "pre-revenue" businesses.

One thing I'd add from my experience with a similar situation - don't forget to get an EIN if you haven't already! You'll need it for the Form 1065 filing. You can apply for one online at the IRS website for free (be careful of scam sites that charge for this). Also, even though you haven't started operations, consider setting up a simple bookkeeping system now. Something basic like QuickBooks or even a spreadsheet to track that initial $8k investment and any future expenses. It'll make next year's taxes much easier when you do have actual business activity to report. The sooner you establish good record-keeping habits, the better off you'll be. And definitely keep receipts for any startup costs you incur before beginning operations - LLC formation fees, business bank account setup fees, etc. These can often be deducted as startup expenses once you begin operations.

I went through something very similar last year - had the 420 code appear on my transcript in September but didn't receive the actual audit letter until mid-November. The IRS mail system is incredibly slow right now, especially if there are any address issues. One thing that helped me was pulling my wage and income transcript (not just the account transcript) to see if there were any discrepancies between what I reported and what third parties reported to the IRS. Sometimes audits are triggered by mismatches that aren't immediately obvious. Given that you moved twice in 2022, I'd strongly recommend calling the IRS practitioner priority line (if you have representation) or using one of the callback services mentioned in other comments. The address issue could mean your audit letter is sitting in limbo somewhere, and missing the response deadline could turn a simple correspondence audit into something much more complicated. Also, keep in mind that the NIIT adjustment being in your favor doesn't necessarily mean it was correct - the IRS computers make automatic adjustments all the time that later get reviewed by humans. I'd definitely have your investment income documentation ready along with your home office records.

I've been through a similar situation and can offer some reassurance. The 420 code with an August date means the examination was initiated then, but the IRS correspondence process is extremely backed up right now. You could easily be looking at 60-90 days before receiving the actual letter, especially with your address changes. A few practical suggestions based on my experience: 1. **Address verification is critical** - File Form 8822 immediately if you haven't already. Even if you think your address is current, the IRS often has outdated information that can delay or misdirect correspondence. 2. **The NIIT adjustment is likely the trigger** - In my case, any time the IRS made an adjustment in my favor (even automatically), it got flagged for human review later. The system probably corrected what it thought was an error, but now an examiner wants to verify the calculation was actually correct. 3. **Document everything now** - Gather your 2022 investment statements, Form 8960 worksheets if you filed one, and any supporting documents for the NIIT calculation. Also prepare your home office documentation just in case, but I'd bet money it's the NIIT issue. 4. **Don't panic about timing** - Even if the letter is delayed, the IRS is generally reasonable about response deadlines when there are mail delivery issues, especially if you can document when you actually received it. The waiting is the worst part, but you're being proactive by preparing now. Most correspondence audits are resolved pretty quickly once you provide the requested documentation.

Something important that hasn't been mentioned yet - even if you can't deduct the mortgage interest, make sure you're tracking these payments carefully for potential future tax benefits. If your brother eventually sells the house at a profit, your contributions could affect the calculations. Also, have you considered refinancing so you're added to the deed? That would solve the deduction problem going forward, though it might trigger transfer taxes depending on your state. Another option might be drawing up a formal loan agreement between you and your sibling, which could potentially convert some of your payments into loan interest that might be reportable differently.

One thing I don't see mentioned yet is the potential state tax implications. While federal law is pretty clear about needing both legal liability AND ownership for the mortgage interest deduction, some states have different rules or additional deductions that might apply to your situation. For example, some states allow deductions for property taxes paid on behalf of family members, or have specific provisions for co-signers who make payments due to the primary borrower's financial hardship. Since you mentioned your brother lost his job and had medical issues, this could potentially qualify as hardship in certain states. I'd recommend checking your state's tax code or consulting with a local tax professional who knows your state's specific rules. The federal restrictions don't necessarily mean you're out of options entirely - there might be state-level benefits you can claim even if the federal mortgage interest deduction isn't available. Also, keep detailed records of which payments went to principal vs. interest vs. escrow (taxes/insurance). Even if you can't use the mortgage interest now, this documentation could be valuable for other tax situations down the road.

I've been following this thread closely since we're dealing with the same issue for our partnership return. Based on all the responses here, it seems like 511210 (Software Publishers) is the consensus choice for indie game studios that self-publish their games. What's really helpful is seeing that multiple people have successfully used this code for years without issues. The distinction between 511210 and 541511 seems to come down to whether you're primarily publishing your own games (511210) or doing contract development work for others (541511). Since you mentioned you self-publish through online platforms, 511210 definitely seems like the right fit. The fact that multiple IRS agents have confirmed this through the Claimyr service adds even more confidence to this choice. Thanks everyone for sharing your experiences - this thread is going to save a lot of indie developers from the same headache!

As someone new to this community and the indie game development world, I can't thank everyone enough for this incredibly detailed discussion! I'm in the early stages of setting up my own game development partnership with a friend, and we've been dreading the tax classification part of the business setup. Reading through all these real experiences with different business activity codes has been a huge relief. It's so reassuring to know that 511210 (Software Publishers) is working well for multiple indie studios here, especially those who self-publish their games like we plan to do. The distinction between 511210 for self-publishing vs 541511 for contract development work is super helpful to understand upfront. We're planning to focus on our own original titles initially, so 511210 sounds like the right path for us. I'm definitely going to save this thread as a reference when we get to filing our first partnership return. It's amazing how much clearer this topic becomes when you hear from people who've actually been through the process rather than just trying to interpret the IRS documentation on your own!

Anyone using TaxAct for their 1120S? Reviews look decent but wondering if it actually walks you through all the required forms and schedules properly.

As someone who just went through this exact same transition from LLC to S-Corp last year, I feel your pain! The paperwork is definitely overwhelming at first. Beyond what others have mentioned, don't forget about Form 8869 (Qualified Subchapter S Subsidiary Election) if you have any subsidiaries, and Form 1125-A (Cost of Goods Sold) if your construction company maintains inventory of materials. Also, since you're in construction, you'll likely need to pay attention to the uniform capitalization rules under Section 263A if your average gross receipts exceed $29 million over the prior 3-year period. For a $375k revenue company you're probably fine, but it's worth knowing about as you grow. One thing I wish I'd known earlier - keep really detailed records of your shareholder basis throughout the year. The K-1 calculations get tricky if you don't track your initial investment, additional contributions, and distributions properly. Makes next year's filing much smoother!