Your documentation is absolutely fantastic - 30 years of detailed records puts you in an incredibly strong position! Your methodology for calculating cost basis looks solid, and you're right to be optimistic about potentially eliminating capital gains entirely. A few things I'd add to what others have mentioned: **Landscaping & Site Improvements**: Don't overlook permanent landscaping improvements like retaining walls, driveways, walkways (which you included), irrigation systems, or major grading work. These often qualify as capital improvements. **Safety & Accessibility**: Any improvements for safety or accessibility (railings, ramps, security systems that are permanently installed) typically qualify for basis adjustments. **Utility Upgrades**: Electrical panel upgrades, new service lines, gas line installations, or septic system improvements all generally count as capital improvements. The California residency issue others raised is definitely worth taking seriously. CA's Franchise Tax Board is notoriously aggressive about pursuing part-year residents. I'd suggest consulting with a tax professional who specifically handles CA residency issues before finalizing your timeline. One strategy to consider: if you do end up with a small capital gain after all your calculations, remember that you can time the closing to ensure any proceeds are received while you're still a resident of your current no-tax state. But get professional confirmation on exactly how CA determines residency for tax purposes. Your meticulous record-keeping over three decades is really going to pay off here. Most people in your situation don't have nearly this level of documentation!

This is an incredibly thorough and well-organized approach to calculating your capital gains! Your 30 years of meticulous record-keeping is truly impressive and will definitely work in your favor. A few additional considerations that might help you maximize your position: **Professional Cost Segregation**: Given the scale of your renovations (especially that $365K complete house renovation), consider having a cost segregation specialist review your major projects. They can often identify components that qualify for different tax treatments or ensure you're maximizing the basis additions correctly. **Soft Costs**: Don't forget to include architect fees, engineering costs, permit fees, and any legal costs associated with your major renovations. These "soft costs" are often overlooked but are legitimate additions to your cost basis. **Original Purchase Adjustments**: As others mentioned, your original closing costs should be added to basis, but also consider any points paid, title insurance, and survey costs from your original purchase 30 years ago. **Documentation Strategy**: With amounts this significant, I'd recommend creating a formal "Capital Improvements Summary" document that categorizes each expense with supporting documentation references. This shows the IRS you've been systematic and thoughtful about your record-keeping. Regarding the California timing issue - this is absolutely critical to get right. CA's residency rules are complex and they look at multiple factors beyond just physical presence. Definitely get specialized guidance on this before committing to any timeline. Your calculation methodology is sound, and with $900K+ in improvements plus the $500K exemption, you're in an excellent position to minimize or eliminate capital gains entirely!

Not to be *that person* who says "I told you so" 😂, but this is exactly why I always tell people to check their transcripts before spending their "expected" refund. The number of times I've seen folks buy something based on TurboTax's estimate only to get hundreds less... too many to count! The transcript is the IRS's actual math, and unfortunately, they're the ones with the final say. Pro tip: look for TC 420 or TC 570 codes which indicate adjustments or holds that might explain your difference.

Had this exact same issue two years ago! The key is understanding that TurboTax calculates based on what you INPUT, but the IRS processes based on what they can VERIFY. In my case, there was a $900 difference because: 1. TurboTax included a business expense deduction that required additional documentation 2. The IRS put a temporary hold (TC 570) on that portion while they reviewed 3. I had to mail in receipts and wait 12 weeks for the adjustment Check your transcript for these specific codes: • TC 570 = Additional account action pending • TC 571 = Resolved adjustment • TC 766 = Credit to your account • TC 768 = Earned Income Credit The good news? If it's just a documentation issue, you'll eventually get the full amount once you provide what they need. The bad news? It can take months. Always assume the transcript amount is what you'll actually receive.

This is such a helpful thread! I'm dealing with a similar situation where my LP ended up with just one member after my business partner withdrew last year. One thing I haven't seen mentioned yet is the potential impact on your LP's operating agreement. Even if you treat it as disregarded for tax purposes, you might want to update your partnership agreement to reflect the current ownership structure, especially if you're planning to add partners in the future. Also, regarding the EIN issue - I kept my LP's EIN active by filing a final Form 1065 for the last year it operated as a true partnership, then included a statement explaining the change to single-member status. My CPA said this creates a clear paper trail for the IRS and helps avoid any future questions about why returns stopped being filed under that EIN. Has anyone here had experience with bringing new partners into an LP that was previously treated as disregarded? I'm curious if there are any special considerations when you transition back to partnership status.

This thread has been incredibly helpful! I'm a tax preparer who sees this situation fairly often, and I wanted to add a few practical considerations that might help others: First, if you're planning to eventually add partners anyway, you might want to consider the timing strategically. Adding a partner mid-year can complicate your tax filings since you'll need to file Form 1065 for the portion of the year you operated as a partnership, with special allocations for the pre-partnership period. Second, regarding the EIN issue - even though you have an EIN for the LP, the IRS won't penalize you for not filing if the entity is properly treated as disregarded. However, I always recommend sending a letter to the IRS Business Master File department explaining the situation and requesting they update their records to show the entity is disregarded. This prevents automated notices asking where your partnership returns are. Finally, don't forget about your state's franchise tax or annual report requirements. Many states will still require filings even if the entity is federally disregarded, and missing these can result in administrative dissolution of your LP. One last tip: if you do decide to add a partner later, make sure they contribute actual cash or property - not just services - to establish a valid partnership for tax purposes. The IRS scrutinizes partnerships where one partner contributes only services.

According to the Treasury Department's official FAQs (https://fiscal.treasury.gov/top/faqs-for-the-public.html), unemployment benefits themselves don't create offset situations. The system works by matching your SSN against a database of debtors. If you've confirmed no matches via the phone system, you should be good. The database is updated weekly, so checking once a week until your refund arrives should give you peace of mind.

I completely understand your concern, especially dealing with financial uncertainty after a divorce. The good news is that unemployment compensation itself won't create any offset issues - it's simply taxable income that you report on your return. The Treasury Offset Program only targets specific federal debts like defaulted student loans, unpaid child support, or back taxes from previous years. Since you've already checked the offset phone line and it shows clear, you should be fine. One thing to keep in mind though - if you didn't have federal taxes withheld from your unemployment benefits, you might end up owing rather than receiving a refund, but that's a separate issue from offsets. The fact that you're being proactive about checking shows you're on top of things!

I went through this exact same situation with my husband's furniture restoration hobby! What we learned after consulting with a tax professional is that you're absolutely right to be collecting sales tax - in most states, it's required regardless of whether you're operating as a hobby or business. The key thing is that sales tax collection and income tax classification are completely separate issues. Just because you collect sales tax doesn't automatically make it a business for IRS purposes. The IRS looks at factors like profit motive, time invested, whether you depend on the income, and how businesslike your operations are. For your situation with $580 in sales, you'd likely still report this as hobby income on Schedule 1 of your tax return. The sales tax you collected gets reported separately - you'll show it as income when you collect it, then as a deduction when you remit it to the state, so it essentially washes out on your federal return. One tip: keep detailed records of all your sales, including the sales tax portion, because you'll need to show the state exactly what you collected and when. Most states require quarterly or annual filings even for small amounts. Your husband is doing the right thing by being proactive about compliance! Better to err on the side of caution with tax matters.

I went through almost this exact same situation last year with my ceramic pottery hobby! After doing a lot of research and talking to my state's tax office, here's what I learned: You're absolutely doing the right thing by collecting sales tax. In most states, sales tax is required on tangible goods regardless of whether it's a hobby or formal business - the state just wants their cut of the transaction. For the income reporting piece, you can still treat this as hobby income since $580 from occasional craft fair sales clearly falls into hobby territory. The fact that you're collecting sales tax doesn't change that classification - they're separate tax issues entirely. When you file your taxes, you'll report the total income (including the sales tax portion) on Schedule 1 as "Other Income." Then when you remit the sales tax to your state, you can deduct that payment, so the sales tax portion essentially washes out on your federal return. The key is keeping good records of what you collected versus what you remitted to the state. Most states have pretty simple filing requirements for small sellers - mine only requires annual filing since I'm under their quarterly threshold. Don't stress too much about crossing into "business" territory at your current level. The IRS looks at things like profit motive, time invested, and business-like operations. Occasional craft fair sales of $580 is clearly hobby activity!