one other thing to consider is the state tax implications. Some states hav different rules for investment property losses than the federal government. I had a similar situation in California and was able to deduct the loss federally but not on my state return because they had different standards for what constituted an investment property vs personal residence. might want to check your state rules too.

Based on everything discussed here, it sounds like you have a strong case for treating this as an investment property loss. The key factors working in your favor are: 1) Clear establishment of a new primary residence when you moved to the suburbs, 2) Zero personal use of the downtown condo after moving out, 3) Documentation showing investment intent (the staging contract prohibiting personal use is particularly compelling), and 4) The 15-month holding period demonstrating you were waiting for market conditions to improve. For reporting, you'll use Form 8949 and Schedule D to claim this as a long-term capital loss. The $95,000+ loss is substantial and can offset other capital gains or up to $3,000 of ordinary income annually (with carryforward for the remainder). Don't forget that your selling expenses and some of the carrying costs during that 15-month period may also be deductible. I'd recommend keeping detailed records of everything - the staging contract, utility bills showing minimal usage, communications with your realtor about market timing, and any other evidence that supports your investment intent. This documentation will be crucial if the IRS questions the classification. Given the complexity and the large loss amount, it might also be worth having a tax professional review your specific situation to ensure everything is reported correctly.

Has anyone actually transferred from a Coverdell to a 529? I'm wondering about the practicalities. Do you just call your 529 provider and tell them you want to do a rollover? Does the Coverdell administrator handle it? I'm confused about the actual process.

One important consideration that hasn't been mentioned yet is the impact of Required Minimum Distributions (RMDs) on inherited accounts. If you pass away before the funds are used, Coverdell ESAs have stricter rules - the beneficiary must use the funds by age 30 or face penalties. With 529 plans, there's more flexibility for inheritance planning since there's no age limit. Also, many states offer additional tax benefits for 529 contributions that don't apply to Coverdell ESAs. Since you mentioned your daughter starts college in 3 years, you might want to calculate whether any state tax deductions for future 529 contributions would outweigh keeping the current setup. The certificate renewal timing actually gives you a good opportunity to reassess. If you're not planning to make additional contributions beyond the $2,000 annual Coverdell limit, and your state offers 529 tax benefits, the rollover might make sense. But if the investment options in your current Coverdell are performing well and you like the flexibility, staying put could be fine too.

I went through this exact situation with our drama club booster organization two years ago. The rejection of our 1023-EZ was devastating at first, but it turned out to be a blessing in disguise because we learned so much about the process. First, don't give up on the EZ form yet! Many rejections are due to simple errors or misunderstandings rather than actual ineligibility. The most common issues I've seen are: incorrectly reporting gross receipts (including anticipated future income instead of actual past income), checking the wrong boxes about organizational structure, or not properly explaining your exempt purposes. Before paying the $875 for the full 1023, I'd strongly recommend getting a consultation with someone who specializes in nonprofit applications. Even if it costs $200-300, it's much less than the full form fee and they can often identify exactly what went wrong. Also, consider reaching out to other successful booster clubs in your area - many are happy to share their experiences and some might even let you review their approved applications as examples. Our state music educators association had a whole resource section with sample documents that proved invaluable. The nonprofit status is absolutely worth pursuing for the long-term credibility and tax benefits, especially as your organization grows. Don't let one rejection discourage you from what should be a straightforward process with the right guidance!

I'm going through something very similar with our volleyball booster club right now! We also had our 1023-EZ rejected and were told we'd need to file the full 1023 with that hefty fee. Reading through all these responses has been incredibly helpful - I had no idea there were so many resources available. One thing I wanted to add that might help others: our rejection came with a very generic letter that didn't specify the exact issue. After reading the comments here about contacting the IRS directly, I'm definitely going to try using Claimyr to actually get through to someone who can explain what went wrong. The idea of waiting on hold for hours has been keeping me from trying, but if they can get me connected to the right department quickly, that seems worth the cost. I'm also curious about the fiscal sponsorship option that was mentioned - has anyone here actually used that arrangement? It sounds like it might be a good interim solution while we figure out whether to pursue our own 501(c)(3) status or just operate under another organization's umbrella permanently. Thank you everyone for sharing your experiences - it's reassuring to know we're not alone in dealing with this frustrating process!

22 Has anyone here actually had their S-Corp inventory donation audited? I'm worried about the documentation requirements and wondering how strict the IRS really is about proving the cost basis.

One thing I haven't seen mentioned yet is the potential impact on your S-Corp's ordinary income when you donate inventory. When you donate inventory at cost basis, you're essentially removing it from your books without recognizing any income from a sale. This means you won't have to pay taxes on profit you would have made if you sold the inventory instead. However, you also need to consider whether the inventory donation makes sense from a cash flow perspective. You're giving up the cost basis as a deduction, but you're also not getting any cash from a sale. Make sure the tax benefit to you and your fellow shareholders justifies not pursuing other options like discounted sales or liquidation. Also, don't forget to properly remove the donated inventory from your books and adjust your inventory accounting accordingly. This should be done in the same tax year as the donation to ensure everything aligns properly on your 1120-S.

This is a complex situation that highlights why proper documentation is so critical in horse racing partnerships. From what you've described, you're likely in a de facto partnership regardless of whether the main owner acknowledges it formally. A few key considerations: 1. **The deceased horse loss**: Document everything - purchase agreements, vet bills, training expenses, insurance claims if any. This should be deductible as an ordinary business loss if you can demonstrate business intent (which the fact that you immediately purchased another horse helps establish). 2. **Partnership vs. Schedule C**: While technically this sounds like a partnership, if the majority owner refuses to file partnership returns, you may need to report your share on Schedule C. Keep meticulous records of all expenses, income, and communications showing your active involvement in business decisions. 3. **Travel expenses**: These are generally deductible if the primary purpose is business-related (checking on your investment, meeting with trainers, evaluating performance). Keep detailed records of the business purpose for each trip. 4. **Documentation strategy**: Even without formal partnership papers, create a written agreement outlining ownership percentages, profit/loss sharing, and decision-making authority. This helps establish legitimate business intent. Consider consulting with a tax professional who has experience with horse racing activities - this isn't a DIY situation given the complexity and potential audit risk.

One thing that hasn't been mentioned yet is the importance of establishing your material participation in the horse racing activity. Even if you're a 25% minority owner, if you can demonstrate that you materially participate in the business (more than 500 hours per year, or if this is your primary business activity), it can help classify your involvement as active rather than passive. This distinction is crucial because active participants can deduct losses against other income, while passive activity losses are generally limited to passive income. Given that you live in a different state, documenting your involvement becomes even more important - keep records of phone calls with trainers, time spent researching bloodlines, reviewing race schedules, analyzing performance data, etc. Also, regarding the LLC question - while it won't change your tax treatment unless you elect different status, it could provide liability protection if the horse injures someone or causes property damage. Horse racing does carry inherent risks that personal liability insurance might not fully cover. For the immediate tax situation, I'd recommend filing Form 8275 (Disclosure Statement) along with your return to explain your position on reporting the income/expenses without a K-1. This shows good faith compliance and can help avoid penalties if the IRS later determines different treatment was required.