Has anyone handled the situation where an employee makes an 83(b) election but then leaves before the shares fully vest? Our standard RSA agreement has a clawback provision for unvested shares, but I'm unclear on the tax implications for the employee and our reporting requirements in that scenario.

Quick question about RSA tax reporting - which tax forms need to be filed with the IRS when RSAs are initially granted? Is there something similar to the 3921 for ISOs?

This is such an important concept that many new business owners struggle with! I want to emphasize something that might not be immediately obvious - when you finance an asset, you're essentially creating two separate transactions from a tax perspective: (1) acquiring the asset at its full cost (which gives you basis), and (2) taking on debt to pay for it. The IRS views it as if you "constructively received" the full value of the asset when you purchased it, regardless of your payment method. This is why your basis equals the purchase price, not your down payment. One practical tip: if you're comparing financing options, remember that the tax benefits (depreciation + interest deductions) can significantly impact the true cost of the financing. A slightly higher interest rate might be worth it if the lender offers better terms that let you start using the asset sooner, since you get those depreciation benefits starting when the asset is "placed in service." Also keep in mind that different types of assets have different depreciation schedules (MACRS), so the timing of your tax benefits will vary depending on whether you're buying equipment, vehicles, or other business property.

This thread has been incredibly helpful! As someone who just started a small consulting business, I was completely confused about how basis worked with financed assets. I've been putting off some equipment purchases because I thought I'd only get depreciation benefits on the amount I actually paid upfront. Now I understand that I can get the full basis regardless of financing - this changes my whole approach to cash flow management. I was planning to save up and pay cash for a $40k server setup, but now I realize I could finance it, preserve my working capital, and still get the same depreciation benefits. One thing I'm still wondering about - if I use a business line of credit to make purchases throughout the year (drawing funds as needed), does each purchase still get the full basis treatment? Or is there something different about revolving credit versus traditional term loans that I should be aware of?

12 I ran into this issue with a client last year. Another thing to keep in mind is that if your corporation owns more than 50% of the partnership, different rules may apply. In that case, the partnership might actually need to conform its tax year to your corporate tax year. It's called the "majority interest taxable year" rule.

This is exactly the kind of timing issue that trips up a lot of corporate taxpayers with partnership investments. One additional consideration I'd add is to make sure you're also tracking the character of income from the K-1 properly when it flows through to your corporate return. For example, if the partnership has Section 1231 gains, passive income, or foreign source income, those need to maintain their character when reported on your corporate return. The timing rule (including the K-1 on the return that encompasses the partnership's year-end) stays the same, but you want to make sure all the various income types are properly categorized. Also, if you have multiple partnership investments with different year-ends, it's helpful to create a tracking spreadsheet that shows which K-1s go on which corporate returns. This becomes especially important if you ever need to do lookbacks for prior year amendments or if you get audited.

This is such a well-rounded discussion! I'm dealing with a similar situation with an old universal life policy, and reading through everyone's experiences has been really eye-opening. The breakdown of only the gains being taxable (not the full payout) was something I definitely needed to understand better. One thing I'd add from my research is that it's worth asking your insurance company for a "policy illustration" or "surrender value statement" before you actually cash out. This document should show you the exact cash surrender value, any fees, and importantly, it often breaks down the cost basis (total premiums paid) versus the cash value. Having this in writing before you proceed can help you verify the tax calculations and avoid any surprises. Also, if you're working with a tax professional, they can often help you strategize the timing of the surrender if you have any flexibility. For example, if you expect to be in a lower tax bracket next year, it might be worth waiting. But given your house-buying timeline, that flexibility might not exist. The conservative investment approach everyone's recommending really is the smart play here. I learned the hard way during the 2008 financial crisis that "safe" money for major purchases should actually be safe, not just invested in what feels safe. Your 4.75% HYSA rate is genuinely competitive right now.

Just wanted to chime in as someone who works in insurance - the advice about getting a policy illustration before surrendering is spot on. I'd also recommend asking specifically for a "surrender calculation worksheet" if they have one. This will show you the exact breakdown of your cost basis, any remaining surrender charges, and the taxable portion. One thing I haven't seen mentioned is that some policies have loan features - if your grandparents ever took any loans against the policy that weren't repaid, that could affect your tax calculation. The outstanding loan amount gets subtracted from your payout but might still be treated as taxable income in some cases. Worth asking about when you call. For the withholding decision, given that you know you have about $1,200 in gains and you're in Texas (no state tax), having them withhold the 10% federal is definitely the safer route. You're looking at owing somewhere between $144-264 in federal taxes on that gain depending on your bracket, so the $120 they'd withhold gets you most of the way there. Your HYSA strategy is absolutely the right call for a 2027-2028 house purchase. I've seen too many people get burned trying to squeeze extra returns from money they need for a specific date. That 4.75% rate with guaranteed principal is actually pretty solid in today's environment.

I was in the exact same boat a few weeks ago! Here's what I learned: you can actually start some of the verification process without the letter by setting up ID.me through the IRS website. While you won't be able to complete the full refund verification without that specific code from the letter, you can at least get your account set up and verify your basic identity. Also, try checking your IRS online account - sometimes the verification letter appears there digitally before the physical one arrives in the mail. That's how I got my code early and was able to complete everything online. If you absolutely can't wait, the in-person route at a local IRS office is your best bet. You'll need to schedule an appointment (usually 1-2 weeks out) and bring multiple forms of ID, but they can verify you on the spot without needing the letter code. The whole process is frustrating but hang in there - once you get through verification, refunds usually process pretty quickly!

I just went through this nightmare myself! The good news is you have a few options even without the letter. I was able to verify my identity by scheduling an appointment at my local IRS Taxpayer Assistance Center - took about 2 weeks to get an appointment but they verified me immediately with just my driver's license, Social Security card, and last year's tax return. Before doing that though, definitely try logging into your IRS online account first. My verification letter actually showed up there about a week before it came in the mail, so you might be able to get that code sooner than expected. Also, if you're really desperate to talk to someone, calling right when they open at 7 AM seems to be the sweet spot for shorter hold times. I got through in about 30 minutes that way versus the 2+ hour waits later in the day. The whole identity verification thing is such a pain but once you get through it, your refund should process pretty quickly. Hang in there!