One question nobody's addressed - what happens if the market drops right after you sell and rebuy? I'm interested in this strategy but worried about timing the transactions.

Great question about tax-loss harvesting for UTMAs! One important consideration that hasn't been mentioned yet is the impact on financial aid eligibility. UTMA assets are counted as student assets on the FAFSA at a much higher rate (20%) compared to parent assets (5.64%). While harvesting gains to step up basis is tax-smart, you might also want to consider the timing of when to do this relative to college planning. If your kids are getting close to college age, you may want to weigh the tax benefits against the potential impact on financial aid calculations. Also, make sure you're keeping detailed records of all these transactions. When your children eventually take control of the accounts, having clear documentation of cost basis adjustments will be crucial for their future tax planning.

Just a practical perspective - I tried something similar in my 3-member LLC a few years back. We took out a business line of credit and distributed some to partners when we were having a down year. We didn't get audited, but our accountant had to do some complex basis adjustments. The distributions reduced our basis, and when the business became profitable again, we had to restore that basis before taking tax-free distributions. Also worth noting - if your business stays unprofitable for too long while you're taking distributions, you might run into the "hobby loss" rules where the IRS decides your business isn't really a business if it never makes money!

I appreciate everyone sharing their experiences and insights here. As someone who's dealt with similar partnership tax issues, I wanted to add a few practical considerations that might help. The strategy you're describing reminds me of what tax professionals call "basis shifting" - trying to manipulate the timing of income and distributions to minimize taxes. While not inherently illegal, it's definitely in the gray area that attracts IRS scrutiny. One thing I learned the hard way is that partnership taxation is incredibly complex, and seemingly small details can have major consequences. For example, if your LLC has debt, that debt increases your basis (which is good for taking distributions), but only if you're personally liable for it. Non-recourse debt has different rules. Also consider the long-term implications. Even if this strategy works in the short term, you'll eventually need to repay the loan with after-tax dollars. Plus, if your business becomes profitable again, you might face higher taxes later when your basis is depleted from the distributions. My advice? Document everything thoroughly if you decide to proceed, and make sure you have legitimate business reasons for both the loan and the expenses. The IRS is much more forgiving of strategies that serve actual business purposes beyond tax minimization. Have you considered alternatives like adjusting your profit-sharing percentages or exploring guaranteed payments to partners? Sometimes simpler approaches are less risky.

14 One important thing to consider - if your employer switches to a non-taxable per diem system, make sure they're not reducing your base pay to compensate! I've seen companies do this, where they say "your total compensation stays the same" but they shift more to non-taxable per diem and reduce the base salary. This can impact your reported income for things like mortgage applications, retirement contributions, disability insurance, etc. Just something to watch out for!

This is such a frustrating situation that so many traveling workers face! I'm dealing with something similar as a field engineer. Your employer is definitely handling this wrong from a tax perspective. One thing that might help speed up the conversation with your company - point out that they're also paying unnecessary employer-side payroll taxes (Social Security and Medicare) on those per diem amounts. When they include it in your W-2 wages, they have to pay 7.65% on top of what you're getting taxed. So if they're paying $50/day in per diem to 20 employees for 200 travel days per year, that's $200k in unnecessary taxable wages they're paying an extra $15,300 in payroll taxes on annually. Most finance departments don't realize this hidden cost when they set up these "easier" taxable per diem systems. Sometimes showing them the company cost gets faster results than just explaining the employee burden. Good luck getting this sorted out!

Has anyone tried using a Virtual EFIN service? I've seen some advertised but not sure if they're legitimate or if it's just another term for illegally renting credentials.

I understand the pressure to handle more clients, but as others have mentioned, buying or renting EFINs and PTINs is definitely illegal and could end your tax preparation career permanently. Here's what I'd recommend for expanding capacity legally: 1. **Hire qualified preparers** - They can work under your EFIN with their own PTINs. Even hiring 1-2 seasonal preparers could double your capacity. 2. **Partner with existing firms** - Many established offices offer space-sharing or revenue-sharing arrangements during busy season. 3. **Streamline your current workflow** - The AI tools mentioned above sound promising for reducing time per return. 4. **Apply for your own additional EFIN now** - Even if it takes 45-60 days, you'll have it for next season and beyond. The risk/reward just doesn't make sense with illegal credential sharing. You could lose everything you've built for a short-term solution to what should be a long-term business growth strategy. Better to turn away some clients this year than risk losing your license permanently.

Also check your state requirements! My state requires an additional form filed with the Secretary of State when switching from sole prop to LLC, plus I had to get a business license. The tax stuff is just one piece of the puzzle.

Great question! I went through this same transition last year. You'll definitely want to submit a new W-9 form (not 1099 - that's what they send you) with your LLC's EIN and business name. One thing to consider is the timing - if you want all your 2025 income to be reported under your LLC, make sure to get that new W-9 to them ASAP and specify an effective date. Otherwise you might end up with income split between your SSN and EIN on different 1099s, which creates extra paperwork at tax time. Also, don't forget to update your invoices to reflect your new business name and EIN. It helps keep everything consistent and professional. The company's accounting department will appreciate the clear documentation of when the change took effect.