I went through something very similar last year! Lost about $11k on crude oil futures while having $9k in gains from some Microsoft shares I'd held for 18 months. The good news is yes, your Section 1256 contract losses will definitely offset your stock gains. What really helped me understand this was learning that the IRS treats Section 1256 contracts completely separately from regular securities for tax purposes. Your $13k futures loss gets the special 60/40 treatment (60% long-term, 40% short-term) regardless of how long you held the contracts, and then it flows to Schedule D where it offsets your other capital gains. One thing that caught me off guard was how the broker reporting worked. Make sure you get your 1099-B from your futures broker - it should clearly show the Section 1256 treatment. My regular stock broker's 1099-B looked completely different from my futures broker's 1099-B, but both fed into the same Schedule D on my tax return. The silver lining is that this experience taught me a lot about tax-efficient trading strategies. Now I'm much more careful about position sizing in futures, but at least the tax code doesn't penalize you for learning expensive lessons!

I've been following this thread closely since I'm in a very similar situation - made some decent gains on dividend stocks this year but took a beating on corn futures (lesson learned about commodity volatility!). One thing I wanted to add that hasn't been mentioned is the importance of keeping detailed records of your futures trading, especially if you made multiple trades. The mark-to-market treatment means every single futures position gets treated as closed on December 31st for tax purposes, even if you're still holding it. This can create a lot of phantom transactions on your tax forms. I learned this the hard way last year when my 1099-B from my futures broker had pages and pages of what looked like trades I never made - but they were just the mark-to-market adjustments. Make sure you save all your account statements and trade confirmations because sometimes the 1099-B doesn't tell the whole story, especially if you transferred positions between tax years. Also, if you're using tax software, double-check that it's correctly importing the Section 1256 data. Some of the basic versions don't handle Form 6781 properly and might not apply the 60/40 split correctly. TurboTax Premier worked fine for me, but the basic version was missing some features for investment trading.

My tax attorney suggested a completely different approach that might be worth considering. Instead of using an LLC or trust, he recommended my father do a "qualified personal residence trust" (QPRT) for exactly this scenario. Basically, my dad put the house in a QPRT for a fixed term (3 years in our case), during which he retained the right to live in it or rent it out. After the term expired, ownership automatically transferred to us kids, but the gift value for tax purposes was significantly discounted because of the retained interest.

Another consideration that might impact your decision is depreciation recapture. Since your father will be renting the property for 1-2 years before transferring it, he'll likely claim depreciation deductions on his tax returns during that period. When the property is eventually sold (regardless of whether it's held in an LLC or trust), any depreciation your father claimed will need to be "recaptured" and taxed at up to 25%. This applies to the entire depreciation amount he claimed, not just your portion. If your brothers plan to live in the house as their primary residence for at least 2 years before any sale, they might be able to exclude some of this recapture on their portions through the primary residence exclusion, but this gets complicated with mixed-use properties. You'll want to discuss with your attorney whether it makes sense for your father to forgo depreciation deductions during the rental period to avoid this issue, or if the current tax benefits outweigh the future recapture. This consideration applies regardless of the ownership structure you choose.

As someone who works in FSA administration, I want to clarify a few things that might help everyone here. The IRS Publication 502 is pretty clear that items must be "primarily for medical care" to qualify. However, there's more flexibility than people realize when you have proper documentation. The key is getting your doctor to write a very specific prescription letter stating that the device is "medically necessary" for your diabetes management and that alternative methods are not suitable for your condition. Include language like "prescribed for the sole purpose of continuous glucose monitoring" rather than just "helpful for diabetes management." Also, keep detailed records showing the device is used exclusively for medical purposes - screenshots of only medical apps installed, receipts for medical-only accessories, etc. Some FSA administrators will approve items that clearly demonstrate exclusive medical use, even if the device technically has other capabilities. One more tip: if your initial claim gets rejected, don't give up. The appeals process often gets reviewed by different people who might interpret the guidelines more favorably, especially with strong medical documentation.

This thread has been incredibly informative! As someone who's been dealing with Type 1 diabetes for over 15 years, I've seen the technology evolve from fingerstick-only monitoring to these amazing CGM systems. One thing I'd add to the discussion: if you're considering the dedicated smartphone approach that several people mentioned, make sure to check with your insurance first. Some insurance plans will actually cover a portion of "durable medical equipment" when it's prescribed specifically for chronic disease management. While they won't cover a regular smartphone, they might cover a device that's prescribed and documented as exclusively medical. Also, don't forget that your CGM sensors, transmitters, and any prescription apps are definitely FSA/HSA eligible - so even if the phone doesn't qualify, you're still saving significantly on the ongoing supplies. Thanks to everyone who shared their experiences and especially to those who provided the professional insights. This community is exactly why I love Reddit!

I've been following this discussion and wanted to add some practical advice about dealing with international dependent situations. One thing I haven't seen mentioned yet is the importance of keeping records of ANY financial support you provide - not just monthly remittances. This includes things like paying for health insurance premiums directly to providers in the Philippines, online purchases shipped to your child (like school supplies from Amazon), or even paying tuition fees directly to schools via international wire transfers. The IRS looks at total support provided, and these direct payments can really add up over the year. I learned this when my tax preparer pointed out I was underestimating my total support contribution by not including the $800 I spent on my daughter's medical insurance and the $300 in school supplies I had shipped directly. Also, regarding the 50% support test - don't forget that "support" includes fair market value of lodging. If your child is living rent-free with a relative, you still need to include the fair rental value of their housing in the total support calculation. This can actually work in your favor since housing costs in the Philippines are typically much lower than what you might assume. One last tip: if you're unsure about your calculations, consider consulting with a tax professional who has experience with expat and international dependent situations before filing. The dependent exemption and credits can be worth several thousand dollars, so it's worth getting it right the first time.

I've been dealing with a similar situation for the past three years with my son living in the Philippines with his mother. Based on my experience, you should be able to claim your daughter as a dependent since she's a US citizen, but you need to be very careful about documentation. Here are the key things I learned: **Documentation is everything:** Keep records of ALL support - not just money transfers. This includes direct payments to schools, medical providers, insurance premiums, and even items you ship directly. I use a spreadsheet to track every expense by category and date. **The 50% support test is tricky:** You need to prove you provide more than half of her TOTAL living expenses, not just more than what her mother provides. Research actual costs in her specific area of the Philippines - housing, food, education, healthcare, etc. Numbeo.com has good cost of living data by city. **Currency conversion matters:** I use the average exchange rate for the tax year (available on IRS.gov) when converting peso expenses to USD for my calculations. **Work with the caretaker:** Ask her mother to help document major expenses with receipts when possible. This gives you real numbers instead of estimates. **SSN is critical:** Make sure you have your daughter's Social Security Number ready. Returns get rejected immediately without it. I've successfully claimed my son for three years now without any issues from the IRS. The dependent exemption and Child Tax Credit saved me about $3,500 last year, so it's definitely worth getting right. Happy to answer any specific questions about the process!

Does anyone know if tax software like TurboTax handles Section 1245 property sales correctly? I'm in a similar situation as the original poster but with about $31,000 of equipment I depreciated around $16,000 and need to sell for maybe $9,000-ish.

Just to add another perspective here - I went through this exact scenario last year with some manufacturing equipment. The key thing that helped me understand it was thinking about depreciation recapture as only applying to the "gain" portion of a sale. In your case, you have an adjusted basis of $13,500 ($27,000 original cost minus $13,500 depreciation taken). Since you're selling for $6,700, which is below your adjusted basis, there's literally no gain to recapture. The $6,800 difference ($13,500 - $6,700) becomes an ordinary business loss that you can deduct. Your buddy might be thinking of situations where people sell equipment for more than the depreciated value but less than the original purchase price. That's when you get into partial recapture scenarios. But in a straight loss situation like yours, no recapture applies. Make sure you keep all your depreciation schedules and purchase records handy when you file - you'll need them to properly complete Form 4797 for the asset sale.