One thing I'd add is to be very careful about the business purpose requirement. The IRS has been scrutinizing these arrangements more closely lately, especially when it's a single-owner S corp renting the owner's residence. Make sure your meetings have a genuine business purpose that couldn't reasonably be conducted elsewhere - like confidential strategic planning, board meetings with sensitive information, or client meetings requiring privacy. I've seen cases where the IRS challenged rentals for routine staff meetings that could have been held at the regular office. Also, spread your 14 days throughout the year rather than clustering them together, as that looks more natural and less like tax avoidance. Document everything meticulously - meeting agendas, attendee lists, business outcomes, and photos if possible.

I've been researching the Augusta Rule for my S corp as well, and one critical aspect I haven't seen mentioned yet is the impact on your homeowner's insurance. When you start using your residence for business meetings, even just 14 days a year, you may need to notify your insurance company or potentially add a business rider to your policy. Some insurers could deny claims if they discover undisclosed commercial use of the property. Also, for those tracking fair market rates, I've found it helpful to document not just the rental rate but also what specific amenities justify that rate - things like high-speed internet, presentation equipment, catering facilities, or privacy features that make your home particularly suitable for business use. This additional documentation can really strengthen your position if the IRS questions your rental rate during an audit. One more consideration: if you're planning to do this strategy long-term, consider how it might affect a future sale of your home. While the Augusta Rule income is tax-free, you'll want clean documentation showing the business use was minimal and temporary to avoid any complications with the home sale exclusion under Section 121.

Just to add another perspective - I understand the frustration of wanting to avoid tax complications for what seems like a simple withdrawal of your original investment. Unfortunately, the tax code doesn't work that way since it's based on transactions, not account balances. One thing that might help is thinking about it differently: you're not really "withdrawing your original investment" - you're selling an asset that has appreciated in value. The $1350 you put in bought you shares of Apple stock, and now those shares are worth $1375. When you sell them, you're disposing of an asset for more than you paid, which creates taxable income. If you're really concerned about the tax reporting burden, you might consider just holding onto the stock for now if you don't urgently need the money. That way you avoid the taxable event entirely until you're ready to deal with the tax implications. But if you do need the cash, just know that reporting a $25 capital gain is pretty straightforward and won't add much complexity to your tax return.

One thing I haven't seen mentioned yet is that you might want to check if your state has any additional capital gains tax requirements. While the federal side is straightforward with reporting that $25 gain, some states have their own rules or forms for investment income. Also, if this is your first time dealing with investment taxes, it's worth noting that Robinhood usually makes their tax documents available by mid-February. You don't need to estimate or calculate anything yourself - they'll provide the exact figures you need for your tax return on the 1099-B form. The silver lining is that once you go through this process once, you'll understand how it works for future trades. And honestly, for a $25 gain, we're probably talking about $3-6 in actual taxes depending on your bracket, so the financial impact is pretty minimal even if the reporting requirement feels annoying.

Quick question - does anyone know if leasing vs buying changes this calculation? My S corp is in a similar loss situation but I'm looking at leasing options instead.

I went through this exact situation with my marketing agency last year! When you're already projecting a loss, bonus depreciation is definitely the way to go over Section 179. The key difference is that Section 179 can't create or increase a business loss, so it won't provide any additional tax benefit in your friend's situation. With bonus depreciation (80% for 2023, 60% for 2024), she can still take the large first-year deduction even though the business is operating at a loss. Those excess losses will carry forward to future years when the business is hopefully profitable. For Honda vehicles, you're right to focus on the 6,000 lb GVWR threshold. The Odyssey typically doesn't qualify in any trim, but the Honda Pilot (especially Touring and Elite trims) usually exceeds 6,000 lbs. The Honda Passport also often qualifies. Just make sure to check the exact GVWR on the manufacturer's label - it's usually on the driver's side door frame. One other consideration: if she expects the business to be profitable in the near future, she might want to consider whether spreading the depreciation over several years with regular MACRS might be more beneficial to match deductions with higher-income years. But if cash flow is tight and she needs the immediate tax benefits, bonus depreciation is still the better choice over Section 179 in a loss situation.

I went through this last year and found that asking about technology was important. Some CPAs I interviewed were still doing everything on paper or using really outdated systems! Look for someone who uses secure client portals for document sharing (NOT email), electronic signatures, and has some kind of organized system to track deadlines and documents. I ended up choosing a CPA who had me upload all my docs to their secure portal and had a mobile app where I could check status, ask questions, etc. Made everything SO much easier than playing phone tag.

Great question! As someone who went through this process recently, I'd add a few more things to consider: Ask about their client-to-staff ratio and workload during tax season. Some CPAs take on too many clients and you end up getting rushed service or dealing with junior staff instead of the actual CPA you hired. Also inquire about their backup systems - what happens if they get sick or have an emergency during tax season? Do they have other qualified professionals who can step in? For your inheritance situation specifically, ask if they have experience with estate tax planning and gift/inheritance tax implications. Not all CPAs are well-versed in this area, and you want someone who can help you navigate both the immediate tax consequences and longer-term planning strategies. Finally, trust your gut during the consultation. A good CPA should make you feel confident and informed, not confused or pressured. They should be willing to explain their reasoning and help you understand your options, not just tell you what to do.

I just went through this exact same situation a few months ago and completely understand the stress! The good news is that Form 8832 really is the right solution for fixing EIN ownership structure errors. One thing I'd add to all the great advice here - when you're writing your detailed statement to accompany Form 8832, be very specific about the exact question on the EIN application that caused the confusion. In my case, I mentioned that SS-4 Question 7a asks "Name of principal officer, general partner, grantor, owner, or trustor" which led me to list individual names instead of the parent LLC. Also, since your first LLC is taxed as an S corp, make sure your written statement clarifies that you want the second LLC to be treated as a disregarded entity for tax purposes (assuming that's your intent). This will help the IRS processor understand exactly what classification you're electing. The timeline others mentioned (6-8 weeks) has been pretty accurate in my experience. I submitted in March and got my acceptance letter in early May. The key is getting everything right the first time - that detailed written statement really is crucial for avoiding rejections. Good luck with the correction! It's definitely fixable and much more common than you might think.

I'm dealing with a very similar situation right now! I made the exact same mistake when filing for my LLC's EIN - indicated individual ownership instead of having it owned by my existing business entity. Reading through all these responses has been incredibly helpful, especially the specific advice about Form 8832 and the importance of that detailed written statement. One thing I'm curious about that I haven't seen mentioned - has anyone dealt with this situation where the parent entity (LLC #1) has multiple members? In my case, the first LLC has three partners, and we want the second LLC to be owned by that first LLC. I'm wondering if this adds any complexity to the Form 8832 process or if it's still straightforward since we're just changing from individual ownership to single-member LLC ownership (with the parent LLC as the single member). Also, I appreciate everyone sharing the realistic timelines. 6-8 weeks seems to be the consensus, which helps me plan accordingly. The stress of thinking I'd completely messed up the business structure is real, so it's reassuring to see this is both fixable and more common than I initially thought!