This is such a timely question! I just went through this exact situation for my 2024 taxes. I'm registered in Texas but placed winning bets while traveling for work in Nevada, Louisiana, and Arizona. After consulting with a tax professional, here's what I learned: technically, you're supposed to file nonresident returns in each state where you physically placed winning bets, regardless of where you're registered with the app. The key factor is your physical location when the bet was placed, not your registration address. However, the enforcement is still inconsistent. Some states are getting more aggressive about tracking this (especially states with higher tax rates who want their piece), while others haven't caught up yet. The apps do track your location for regulatory compliance, and this data is increasingly being shared with state tax authorities. For your situation, I'd recommend keeping those detailed records you mentioned and filing properly in each state where you had significant winnings (maybe $500+ threshold). You can then claim credits on your Ohio return for taxes paid to other states to avoid double taxation. If we're talking smaller amounts, the risk might be low, but with the trend toward more enforcement, it's probably safer to file correctly from the start. The hobby vs. professional distinction doesn't change the sourcing rules - winnings are still taxable where the activity occurred regardless of how you classify your gambling activities.

Based on my experience dealing with this exact issue, the answer is unfortunately "it depends" on several factors. The general rule is that gambling winnings are taxable in the state where you were physically located when placing the bet, not where you're registered with the app. However, there are some practical considerations: 1. **Amount matters**: For smaller winnings (under $500-1000 per state), many tax professionals suggest the enforcement risk is relatively low and you might choose to report everything on your home state return. 2. **State-specific rules**: Each state has different filing thresholds and requirements. Some require filing for any amount, others have minimum thresholds. 3. **Documentation**: Since you're already keeping detailed records showing where each bet was placed, you have the information needed to file correctly if you choose to do so. 4. **Hobby vs. Professional**: This classification doesn't change the sourcing rules for where winnings are taxable, but it does affect how losses can be deducted and reported. My recommendation would be to check the specific filing requirements for each state where you had winnings over $300-500, and consider filing nonresident returns for those states. You can then claim credits on your Ohio return for taxes paid to other states to avoid double taxation. The trend is definitely moving toward more enforcement as states get better at tracking mobile betting data, so filing correctly from the start might save you headaches later.

I had a very similar situation with my dissolved partnership and want to share what worked for me. Like you, I thought no filing was needed for a year with zero activity, but learned the hard way that the IRS still requires that final return. Here's the exact process I followed that got my penalties fully waived: 1. Filed Form 1065 for the dissolution year with all financial lines showing zeros 2. Checked the "Final Return" box prominently at the top of Form 1065 3. Prepared Schedule K-1s for each partner marked as "Final K-1" 4. Included a separate statement with the business name, EIN, and exact dissolution date For the penalty abatement, I wrote a detailed reasonable cause letter explaining that I had carefully read the Form 1065 instructions and genuinely believed no return was required when there was no income, expenses, or business activity. I emphasized that this was an honest misunderstanding of the tax code, not willful neglect. The IRS accepted my explanation and waived all penalties (which would have been over $2,000). The key is being thorough in your documentation and showing you made a good faith effort to comply based on your understanding of the rules. Don't let that IRS rep confuse you about amending 2019 - you definitely need to file the 2020 return as your final return since that's when you actually dissolved. Good luck!

I went through this exact same situation with my LLC that dissolved in 2019. The confusion about whether to file when there's zero activity is incredibly common - the IRS instructions really aren't clear on this point. You absolutely need to file a 2020 Form 1065 marked as a final return. Even though you had no income or expenses, the IRS needs this filing to officially close your business in their system. Without it, they'll keep expecting annual returns indefinitely. Here's what I learned from my experience: - File Form 1065 for 2020 with zeros in all financial fields - Check the "Final Return" box at the top - Include K-1s for both members marked as final - Attach a statement with your dissolution date and explanation For penalties, you have an excellent case for reasonable cause abatement. I successfully got mine waived by explaining that I genuinely misunderstood the filing requirements based on reading the instructions. The key is emphasizing that you made a good faith effort to understand your obligations. Ignore that IRS rep's suggestion about amending your 2019 return - that makes no sense. The final return needs to be for the year you actually dissolved (2020). I've seen other people in this forum successfully resolve similar situations, so don't stress too much about the late filing.

Im in a similar situation and my accountant told me that even if donations dont help with federal taxes with standard deduction, it's still important to TRACK THEM for state taxes. My state lets you deduct charitable contributions even when taking the standard deduction on federal!!!

Just want to add my experience here - I was in the exact same situation last year with a pile of Goodwill receipts! After doing the math, our itemized deductions (including about $800 in donations) only came to around $22,000, which was well below the standard deduction threshold. One thing I learned though is to definitely keep those receipts anyway. Even if they don't help this year, your situation might change next year - maybe you'll have higher medical expenses, buy a house with mortgage interest, or have other major deductible expenses. Plus some people's donation amounts really add up over time. Also worth noting - if you donated any single items worth over $500 (like electronics or furniture), you might need Form 8283 regardless of whether you itemize. The IRS can be picky about documentation for higher-value donations.

This thread has been incredibly informative! I'm a tax preparer dealing with a similar situation with one of my clients. Based on everything shared here, I wanted to add a few technical points that might help: 1. **Timing of Form 2553**: Make sure you're aware that if you miss the 2 months and 15 days deadline for the S-Corp election, you can still request late election relief under Rev. Proc. 2013-30, but it requires reasonable cause documentation. 2. **Built-in Gains Tax**: If the partnership has appreciated assets when converting to S-Corp status, be aware of potential built-in gains tax under Section 1374. This applies to any appreciation that existed at the time of conversion and could be triggered if those assets are sold within 5 years. 3. **State Considerations**: Don't forget that some states don't recognize S-Corp elections or have their own separate election requirements. Make sure to check your state's specific rules for both the entity conversion and the ownership transfer. The advice about using professional help really resonates - I've seen too many DIY attempts at this type of conversion create multi-year headaches. The upfront cost of proper guidance usually pays for itself in avoiding complications down the road. Great discussion everyone!

As someone who's been through this exact transition, I wanted to add a few practical tips that might save you some headaches: **Documentation is everything** - Create a comprehensive transition binder with copies of all forms, agreements, and correspondence. I can't tell you how many times I've needed to reference something from our conversion process months later. **Bank account timing** - Don't forget that you may need to open new business bank accounts for the S-Corp. Some banks require this even if you're keeping the same EIN. We had a two-week period where we had to carefully track which account payments were coming from to avoid mixing entity periods. **Payroll setup** - If you're not currently running payroll (since partnerships don't require it), you'll need to set this up immediately for the S-Corp. The "reasonable compensation" requirement kicks in right away, not at year-end. We scrambled to get this set up and ended up making some early mistakes with payroll tax deposits. **Keep detailed time records** - Start tracking time spent on business activities more carefully. With S-Corp status, the IRS scrutinizes whether salary levels match actual work performed. Having good documentation of hours and responsibilities helps justify your compensation levels. The spousal transfer advice everyone's given is spot-on. Just make sure you're thinking beyond just the tax forms to all these operational changes that come with the new entity structure!

This thread has been incredibly enlightening! I'm a small business owner who's been hesitant to do customer appreciation events partly because I wasn't sure about the tax implications of giving away prizes. Reading through everyone's experiences - especially hearing from those who have been through audits and worked with CPAs on this issue - has given me the confidence to move forward with our planned customer event. The key takeaways seem to be: 1. Gift cards as raffle/contest prizes = promotional expenses (fully deductible) 2. Gift cards given directly to specific customers = business gifts (subject to $25 limit) 3. Documentation is everything - photos, attendee lists, promotional materials, random selection evidence 4. Consistent bookkeeping categorization as marketing/advertising expenses 5. Reasonable amounts relative to business size I particularly appreciate the practical advice about using contest entry forms to capture business contact info - that's a smart way to establish promotional intent while also generating leads. And the warning about not giving to the same customers repeatedly is something I wouldn't have thought of. Thanks to everyone who shared their real-world experiences. It's so much more valuable than generic advice from random websites!

This discussion has been extremely helpful! I'm facing a similar situation with my small retail business and was getting conflicting advice from different sources about gift card deductibility. What really clarifies things for me is understanding that the IRS focuses on the PURPOSE and CONTEXT rather than just the item itself. Gift cards given as raffle prizes at a legitimate promotional event are treated as marketing expenses, while gift cards given directly to specific customers as appreciation gifts fall under the $25 business gift limit. The documentation requirements everyone has mentioned seem straightforward but crucial: event photos, promotional materials, attendee records, and clear evidence of random selection. I'm planning a spring customer appreciation event and will definitely implement these documentation practices. One question I still have - if we're a small business with only about 50 regular customers, would having most of them attend our annual event and potentially win prizes look suspicious to the IRS? Or is that just the natural result of having a smaller customer base?