I just went through this exact situation last year. Make sure the PIUs are actually structured as true profits interests and not capital interests! My company screwed up the documentation, and the IRS later determined mine were technically capital interests, which meant I should have recognized income at grant. Ended up with penalties and interest because I didn't report any income initially (thinking they were profits interests with $0 value).

For a properly structured profits interest, the key language to look for is that your units only entitle you to share in "future appreciation" or "profits and losses from the date of grant forward" - not the current liquidation value of the company. The agreement should explicitly state that if the company were liquidated immediately after your grant, you would receive nothing. Also watch out for these red flags that could make it a capital interest instead: - Any guaranteed minimum distribution amount - Rights to share in existing company value/assets - Liquidation preferences that put you ahead of other members - Language giving you rights to company book value or net worth The agreement should clearly state your units are "profits interests" under IRC Section 83 and that they have zero value at grant date assuming no appreciation from that point forward. If there's any ambiguity about whether you'd receive value in an immediate liquidation scenario, the IRS might treat it as a capital interest requiring immediate income recognition. I'd recommend having a tax attorney review the specific language before you sign, especially given what happened to @Jamal Anderson. The documentation details really matter here.

I just went through something very similar with my father's estate in Italy last year. A few additional things to keep in mind that haven't been mentioned yet: 1. **Documentation is crucial** - Make sure you keep all the foreign estate documents, appraisals, and sale records. The IRS may want to see proof of the stepped-up basis calculation, especially for foreign property. 2. **State taxes** - Don't forget to check your state's requirements too. Some states have different rules for inherited foreign property than the federal government. 3. **Timeline for reporting** - Since your wife sold in 2024, you have until the 2024 tax filing deadline to report this properly. But if you paid estimated taxes during 2024, you might want to adjust your Q4 payment if this creates a significant tax liability. 4. **Professional help** - Given the complexity with foreign property, inherited basis calculations, and potential treaty issues, this might be worth consulting with a tax professional who specializes in international tax matters. The cost of professional advice is usually much less than the penalties for getting it wrong. The $135,000 sale amount plus the $85,000 cash inheritance puts you in territory where accuracy is really important. Better to be safe than sorry with the IRS on international transactions.

One thing I haven't seen mentioned yet is the potential requirement for Form 3520 if the inheritance exceeded certain thresholds. Since your wife received both property ($135,000) and cash ($85,000) totaling $220,000 from a foreign estate, you may need to file this form to report the foreign inheritance to the IRS. Form 3520 is required when you receive more than $100,000 from a foreign estate in a single tax year. The penalties for not filing this form can be severe - up to 35% of the inheritance amount in some cases. This is separate from the capital gains reporting on Schedule D that others have mentioned. Also, double-check whether any of the estate settlement process involved foreign trusts. If the property was held in a foreign trust before distribution, there could be additional reporting requirements on Form 3520-A. The good news is that filing Form 3520 doesn't create any additional tax liability - it's purely informational reporting to the IRS. But it's one of those "gotcha" requirements that many people miss when dealing with foreign inheritances.

Anyone know if this applies to routing numbers too? Mine has a "-" dash in the middle but i'm not sure if I should include that or not when entering on my 1040.

This is such a common issue that trips people up! I had the exact same problem a few years ago with my credit union account that had letters mixed in with numbers. The IRS systems are pretty strict about only accepting numeric characters for both routing and account numbers. Your bank's advice to substitute the "x" with a "5" is spot on - that's their internal conversion for electronic transactions. Definitely use that numeric version when you file for 2024. And yes, this could absolutely explain why you missed your stimulus payment last year if you used the version with the letter. One tip: when you get your numeric account number from the bank, test it first with a small direct deposit if possible (like having your employer do a $1 test deposit) before relying on it for your tax refund. That way you know for sure the IRS system will accept it without any issues.

Been through this recently - definitely go with e-filing your 1040X! The difference is night and day. My paper amendment from 2021 took forever (like 7+ months) but when I e-filed one last year it was done in about 10 weeks. The IRS has really improved their electronic processing systems. Just make sure you have all your supporting docs ready and double-check everything before submitting since you can't easily correct an e-filed amendment like you can with regular returns.

Just went through this exact situation! E-filed my 1040X about 6 weeks ago and already got confirmation it's being processed. My friend who mailed hers in September is still waiting 😬 Definitely go electronic if your tax software supports it. One thing I learned - make sure to keep checking your transcript because the "Where's My Amended Return" tool on the IRS website is pretty much useless. Also heard good things about that taxr.ai tool others mentioned for tracking progress!

I'm dealing with a very similar situation right now! Got a Notice 54 about 8 months ago with an unexpected refund of $1,800, and like you, I never received the follow-up explanation letter they promised. What I ended up doing was creating a dedicated savings account just for this money and haven't touched a penny of it. I figure if it was legitimate, great - if not, at least I have it ready to return when they figure out their mistake. The peace of mind is worth it. One thing that helped me was pulling my original tax return and trying to reverse-engineer where the extra money might have come from. In my case, I think they may have adjusted my education credits, but I'm still not 100% sure. Have you tried going line by line through your return to see what might have been recalculated? The IRS phone situation is absolutely maddening - I've probably spent 20+ hours on hold over the past few months with nothing to show for it. Really considering some of these third-party services people are mentioning just to get some answers!

I'm in almost the exact same boat! Got a Notice 54 refund about 10 months ago for $2,400 that I definitely wasn't expecting, and still no explanation letter despite their promise that one was coming "in a few days." Like others have suggested, I immediately moved the money into a separate high-yield savings account and haven't touched it. At least if they want it back, I'll have it ready plus whatever interest I've earned in the meantime. What's been driving me crazy is not knowing WHY they sent it. I've gone through my return multiple times trying to figure out what they might have adjusted, but I can't pinpoint it. Could be anything from a credit I missed to them correcting some calculation error I made. The phone situation is absolutely hopeless - I've easily spent 30+ hours on hold over the past year with zero success. Based on what people are saying here about those third-party services, I'm seriously considering trying one of them. At this point I just want to know if this money is legitimately mine or if I'm sitting on a ticking time bomb! Has anyone here actually had the IRS come back and demand money from a Notice 54 situation, or do they usually just let it slide if it was their adjustment error?