This is really helpful advice, especially about the loans to the S Corp. I hadn't thought about how personal loans we made to keep the business afloat might affect our basis calculation. We definitely put in some additional cash during the tough times in 2022 and early 2023. The point about capturing all closure-related expenses is also great - we did have some lease termination costs and professional fees for winding things down that I want to make sure are included. It sounds like these could help increase our deductible loss even more. It's reassuring to hear that the negative AGI situation can actually work in our favor long-term through the NOL carryforward. After such a difficult business closure, at least there's some tax benefit to help us rebuild financially.

Thank you for the thoughtful response and empathy about our business closure. It really has been one of the hardest decisions we've had to make, but knowing that these losses can provide some financial relief does help soften the blow. Your point about basis calculations is especially valuable - we definitely put additional personal funds into the business during the struggling months, and I want to make sure our accountant captures all of that when calculating how much loss we can actually claim. It sounds like this could make a significant difference in our final numbers. I hadn't fully appreciated how the NOL carryforward could benefit us long-term. After going through such a difficult closure, it's reassuring to know that at least the tax system provides some mechanism to help us recover financially over the coming years. Every bit of tax relief will help as we figure out our next steps.

How exactly do you document this? Do you just keep records in case of an audit, or do you need to file something special with your tax returns showing your justification?

I keep detailed internal records rather than filing additional documents with tax returns. My documentation includes industry compensation surveys for similar positions, a detailed job description outlining all my responsibilities, logs of hours worked in various capacities, and board meeting minutes approving my compensation with reference to these factors. I also maintain records of my professional qualifications, training, and unique skills that justify my compensation level. In my S corp, I document dividend distributions separately, making it clear they're not disguised salary. For my C corp, I document why my salary is appropriate for my role and not artificially inflated to avoid dividend taxation.

That's really interesting! So theoretically, could a C corp owner take a very low salary (or no salary) and just dividends, and be technically compliant with the tax code? Would there be any other issues with doing that besides the obvious double taxation problem?

Great point about the different legal foundations! To answer your question - technically, a C corp owner could take very low/no salary and just dividends without violating the "reasonable compensation" rules that apply to C corps (since those focus on excessive compensation). However, there could still be other issues beyond double taxation. The Department of Labor might have concerns if you're performing services without being classified as an employee, and some states have specific requirements about officer compensation. Plus, taking no salary means missing out on Social Security/Medicare credits and potentially looking suspicious to the IRS even if it's not technically prohibited. The tax inefficiency usually makes this approach impractical anyway.

9 Is this always true though? I thought if you use the half-year convention (which most people do), you're basically treating it as if you bought it in the middle of the year regardless of when you actually bought it. So it would still be 5 calendar years total, but with different percentages in the first and last years?

You're absolutely right about the half-year convention! Under the half-year convention, the IRS treats all property as if it were placed in service at the midpoint of the tax year, regardless of when you actually purchased it during that year. This means for a 5-year property class vehicle, you get depreciation over 6 calendar years but it's still considered a 5-year recovery period. The confusion often comes from the fact that people think "5 years" means exactly 5 calendar years, but the IRS recovery periods refer to the class life, not the actual calendar span. So even though your depreciation schedule spans into that 6th calendar year, you're still dealing with 5-year property for recapture purposes. This is definitely one of those details that can trip people up when planning vehicle sales!

This is such an important point that I wish I had known earlier! I've been maintaining 100% business use for my vehicle, but I never realized there was a specific 50% threshold that could trigger recapture even if I keep the vehicle for the full recovery period. Do you know if there's any grace period or if it's strictly based on the annual business use percentage? For example, if I had 45% business use in year 3 but 80% in year 4, would that still trigger recapture for year 3? And does the IRS audit these mileage logs frequently, or is it more of a "keep good records in case they ask" situation? I'm definitely going to be more diligent about my mileage tracking now - this could be a costly mistake to make unknowingly.

Great advice about using the password manager! I wish I had thought of that before running into this mess. The AGI method really seems to be the go-to solution for most people based on all these responses. It's crazy how such a simple fix can save so much time and stress. Definitely going to start keeping better records of this stuff going forward - lesson learned the hard way! 😅

This is such a helpful thread! I'm dealing with a similar PIN issue right now and feeling so overwhelmed by all the different solutions. The Google Drive tip is genius - I never would have thought to check our shared cloud storage. We definitely have a "Tax Docs" folder that might have this info saved. Quick question for anyone who's been through this - if the AGI method doesn't work and I can't find the original PIN anywhere, how long does it typically take to get through to someone at the IRS who can actually help reset it? I keep seeing mixed experiences with wait times and I'm trying to figure out if it's worth attempting or if I should just go straight to one of those callback services people are mentioning. Also @Zoe Christodoulou - when you found the PIN in your Google Drive, was it clearly labeled or did you have to dig through multiple files? Trying to figure out where my spouse might have saved this info! 🤞

Thank you so much for sharing your detailed experience - this is incredibly helpful! I'm feeling a lot less alone in this situation after reading everyone's responses. Your point about calling the IRS first instead of the collection agency is really interesting. I was assuming I had to work with the collection agency since that's who sent me the letter. I'm curious about the timeline you mentioned - you said it took 6 weeks to fully resolve, but how long after that first call to the IRS did you start seeing actual progress? I'm worried about what happens during that transition period while they're figuring out whether to transfer my account back. Also, when you mention the $165/month payment being based on your "actual ability to pay" - did they give you any guidance on what expenses they consider "necessary" versus optional? I'm trying to prepare for that Form 433-F conversation and want to make sure I'm realistic about what they'll accept. The anxiety is definitely real, but reading all these success stories is giving me the courage to actually pick up the phone tomorrow. Thanks again for taking the time to share your experience!

I can answer some of your timeline questions based on my experience! After that first call to the IRS, I actually saw movement pretty quickly - within about a week I received a letter confirming they had received my request to transfer my account back from the collection agency. During the transition period (which was about 2-3 weeks), I continued getting calls from the collection agency, but I just told them a transfer was in progress and they noted it in their system. For the Form 433-F expenses, the IRS uses something called Collection Financial Standards that include national standards for things like food, clothing, personal care, and local standards for housing and transportation based on your area. They're actually pretty reasonable - they allowed my actual rent, utilities, car payment, insurance, groceries, and basic living expenses. What they don't typically allow are things like cable TV, gym memberships, dining out, or other discretionary spending. The key is to be honest and realistic. They can see your bank statements if needed, so don't inflate expenses, but also don't sell yourself short on legitimate necessities. When I was honest about my tight budget, they worked with me to create a payment plan I could actually stick to. One tip: gather a few months of bank statements before you call so you have real numbers for your monthly expenses rather than guessing. It makes the conversation much smoother and shows them you're taking it seriously. You've got this! Making that first call really is the hardest part.

Thank you so much for this detailed response! Your experience sounds almost identical to what I'm going through right now, and it's incredibly reassuring to hear that you were able to get your monthly payment down from $380 to $145 by working directly with the IRS instead of the collection agency. I'm definitely guilty of the avoidance strategy you mentioned - I've been letting their calls go straight to voicemail because I honestly had no idea what to say or what my options were. Reading all these responses has given me the confidence to actually engage with this situation instead of hoping it will somehow go away. One quick question about the Form 433-F process - when you completed it over the phone with the IRS, did they accept your word on your monthly expenses or did they require documentation like bank statements or pay stubs? I'm trying to prepare for that conversation and want to make sure I have realistic numbers ready. Also, during that month it took to resolve everything, were you still getting calls from the collection agency or did they stop once the IRS started the transfer process? I'm planning to call the IRS first thing tomorrow morning. Thanks again for sharing your experience - it's exactly what I needed to hear to stop feeling so paralyzed by this situation!

When I completed Form 433-F over the phone, the IRS agent mostly accepted my verbal responses for monthly expenses, but they did ask me to email or fax supporting documentation within a few days. I sent them my last two pay stubs and a couple months of bank statements to verify my income and major expenses like rent and utilities. Having realistic numbers ready definitely helped - I'd already calculated my actual monthly expenses before calling, so I wasn't guessing. During the transfer process, I did continue getting calls from the collection agency for about 2-3 weeks. When I answered, I just told them that I had requested my account be transferred back to the IRS and they noted it in their system. The calls became less frequent once that was documented, and they stopped completely once I received official notification that the transfer was complete. One tip for your call tomorrow: try calling right at 8 AM when they open - the wait times are usually shorter in the morning. And don't be discouraged if the first agent you talk to isn't super helpful - sometimes it takes calling back to get someone who really knows the collection transfer process. You're taking exactly the right approach by being proactive about this!