A little off topic but this might save your dad some headache - if he does end up as an independent contractor, make sure he sets aside 25-30% of EVERY check for taxes. I got destroyed my first year as an "independent contractor" because nobody told me about quarterly estimated tax payments and self-employment tax. Ended up owing over $18,000 at tax time with penalties.

Former tax preparer here who specialized in transportation industry. Your father is absolutely being pushed into misclassification, and this is incredibly common right now. A few critical points to add to the excellent advice already given: 1. The LLC formation requirement is a HUGE red flag. Legitimate independent contractors typically already have their own business entity - they're not told to form one by the "client." This suggests the company knows they're converting employees. 2. Nevada LLC formation is correct, but he should also check if he needs to register as a foreign LLC in Colorado since that's where the company operates. Some states require this. 3. The insurance question is absolutely crucial. If they're providing the truck and insurance but calling him a contractor, that's textbook misclassification. True independent contractors own their equipment and carry their own commercial insurance (which runs $8,000-15,000+ annually). 4. He should document EVERYTHING about his current working relationship before they make the switch - schedules, routes assigned, equipment provided, training received, etc. This evidence will be critical if he needs to challenge the classification later. 5. Consider filing Form SS-8 with the IRS BEFORE agreeing to anything. This requests an official determination of worker status and can protect him from penalties if the IRS later determines he was misclassified. The company is trying to save money at his expense. Don't let them.

Quick word of caution - make sure your CPA knows that you're planning to use K-1 losses to offset capital gains. I did this last year and my accountant didn't optimize the timing properly. We could have saved about $5,400 in taxes if we'd sold certain investments in the same year as our largest business losses. Everyone's focused on the "can you do it" question, but the "when to do it" question is just as important for tax planning.

Just wanted to add something that might be relevant to your situation - make sure you consider state tax implications too. While federal rules generally allow K-1 losses to offset capital gains, some states have different rules or limitations. Also, since you mentioned this is a family business with your wife, if you're filing jointly, the loss limitations and basis calculations apply at the household level, which usually works in your favor. But if either of you has other passive investments or rental properties, those could complicate how the losses flow through. One more thing - if you do decide to sell those stocks this year, consider whether you want to sell all $27k worth at once or spread some into next year depending on your expected income. Sometimes it makes sense to manage which tax brackets you're hitting, especially if the business losses push you into a lower bracket this year.

I just called my ProSeries rep about this exact issue. They said it's a known limitation in their software validation rules and they're working on fixing it for next year. The workaround they suggested was to paper file this year, but they gave me a specific diagnostic code to note in my files so I can follow up with them once they have the fix. Might be worth calling your software support to see if they have any solutions brewing.

I've been dealing with this exact same issue across multiple client returns this year. What I've found helpful is creating a detailed client letter explaining the delay and the legitimacy of the Farm Optional Method for EITC purposes. I include references to the specific IRS publications mentioned earlier (225 and 596) and explain that this is a software limitation, not a tax law issue. For managing client expectations, I've started quoting 8-10 weeks for paper filing processing times instead of the usual 6-8 weeks, since the IRS seems to be running behind on manual processing. I also make sure to explain that their refund amount is correct and won't be reduced - it's just the delivery method causing the delay. One thing that's helped reduce my stress about these returns is keeping detailed documentation of the Farm Optional Method calculation and the EITC eligibility reasoning in the client file. If the IRS does question it later, having that paper trail makes any correspondence much easier to handle.

Former DOR employee here. One thing to clarify - "net income" definitions vary slightly between states. Most want Line 21 from 1120S, but some states (like CA and NY) have their own calculation that starts with Line 21 and adds back certain items. Call your specific DOR office and ask exactly which line they use for "net income" on THEIR form. Will save you tons of headache.

Just went through this exact situation last month! The confusion is totally understandable because different agencies sometimes use "net income" differently. For most state DOR payment plans, you'll want Line 21 (ordinary business income/loss) from your Form 1120S - this shows your actual business profit after all deductible expenses. However, I'd strongly recommend calling your specific state's DOR payment plan department to confirm. Some states have their own modifications to this number. When I called, they told me exactly which line to use and even emailed me a worksheet showing the calculation. It's worth the phone call to avoid having your payment plan delayed or rejected for using the wrong figure. Also, make sure you have your most recent filed return - sounds like that would be your 2023 Form 1120S in your case. Good luck getting it sorted out!

Your documentation approach is really thorough - taking photos and using ItsDeductible puts you in a great position regardless of which route you choose. I've been dealing with similar donation decisions and wanted to share a few practical considerations. The audit risk concern is understandable, but in my experience, the IRS is more focused on unreasonable valuations than properly documented donations over $500. Your detailed spreadsheet with conservative valuations actually demonstrates good faith compliance. One factor to consider is your time value. If splitting the donations saves you several hours of Form 8283 paperwork and you're comfortable with the slightly delayed deduction timing, that might be worth it. On the other hand, if you expect to have large donations regularly, getting comfortable with the Form 8283 process now could save hassle in future years. Also worth noting - if you do go over $500, you can group similar items on the form rather than listing each piece individually. So "men's business shirts (12 items)" with a total value is acceptable, which makes the paperwork much more manageable than it initially appears. Given that you're already itemizing and in a high bracket, you'll get the same tax benefit either way. I'd lean toward whatever approach gives you more confidence and peace of mind in your record-keeping.

Great question about documentation! For grouped items on Form 8283, you can absolutely use a reasonable per-item average multiplied by quantity - you don't need to track every single item's individual valuation. However, I'd recommend keeping your detailed spreadsheet with individual valuations as backup documentation, even if you don't submit it with your return. The IRS expects "reasonable" valuations, and having the individual breakdown shows you put thought into each item rather than just assigning arbitrary round numbers. Plus, if you're already doing the detailed work for your own peace of mind, it doesn't hurt to keep those records. One practical tip: when I group items, I usually separate by type AND condition. So instead of just "men's shirts (12 items) - $120", I might do "men's dress shirts, excellent condition (5 items) - $75" and "men's casual shirts, good condition (7 items) - $45". This shows more thoughtful valuation while still keeping the form manageable. Your point about future cleanouts is spot-on. Once you get comfortable with Form 8283, it becomes much less intimidating for future donations. And honestly, the peace of mind from knowing you're fully compliant often outweighs the small amount of extra paperwork, especially when you're already being so thorough with documentation.