Has anyone else noticed how poorly written the IRS instructions are for these partnership audit forms? I read the same section of the website 5 times and still couldn't figure out what they were trying to say. It's like they deliberately make things confusing.

I completely agree with everyone saying the non-BBA partnership doesn't need to issue 8985/8986 forms in this situation. I dealt with this exact scenario last year and spent way too much time second-guessing myself because the IRS guidance is so confusing. What helped me was breaking it down step by step: 1) Your client is non-BBA, 2) They received favorable adjustments with no imputed underpayment, 3) Non-BBA partnerships generally don't have push-out obligations like BBA partnerships do. They just need to account for the adjustments on their own return and flow through any partner-level changes via amended K-1s if necessary. The key thing to remember is that the 8985/8986 reporting requirements were primarily designed for the BBA partnership audit regime. Since your client is outside that regime, they're not subject to those specific reporting obligations. Save yourself the stress - document your reasoning like Ryan suggested and move on!

This entire thread has been incredibly educational! I'm just getting started with selling some of my vintage sports memorabilia collection and had no idea about most of these cost basis rules. One thing I'm still unclear on - when you sell multiple items in a single eBay listing (like a lot of 10 baseball cards), how do you handle the cost basis calculation? Do you need to break down the original purchase price for each individual card, or can you use the total lot purchase price against the total sale price? I bought a collection of 50 cards for $200 a few years ago and I'm thinking about selling them in smaller lots of 5-10 cards each. Some of the individual cards I can research what they would have cost separately, but others are pretty obscure and I have no idea what their individual values were when I bought the collection. Also, this might be a dumb question, but if I use the same bubble mailer for multiple small sales to save on shipping costs, can I split that packaging cost across the different sales, or should I just absorb it as a general expense? Thanks to everyone who's shared their experiences here - this community is amazing for breaking down these complex tax situations in ways that actually make sense!

This has been such an informative discussion! I'm dealing with a similar situation selling vintage video games from my collection. Based on everything shared here, it's clear that the IRS allows you to include direct selling costs in your cost basis calculation even for hobby sales. For your Spider-Man comic example, you're absolutely right to include all those costs - the $75 purchase price, $15 packaging materials, $22 shipping, and $25 eBay fees. Your taxable gain would be $113, not $175. One thing I'd add for anyone reading this - make sure you're consistent with your record keeping across all your sales. I learned the hard way that having some transactions well-documented and others missing receipts creates problems if you ever need to explain your reporting to the IRS. Also, don't forget to save digital copies of your eBay fee statements and PayPal transaction records. These platforms sometimes purge old data after a few years, and you'll want those records if you ever get audited. The distinction between hobby sales and business sales is important too - as long as you're just clearing out your personal collection without the intent to make a regular profit, you should be fine reporting these as hobby sales with the cost basis approach everyone's described here.

I've been through a similar PTET refund situation with entity dissolution, and here's what worked for me: Don't dissolve the S-corp until after you receive the PTET refund check. This keeps everything clean from a tax perspective. The timing works like this: File your 2023 S-corp return in early 2024 as normal, deducting the full PTET amount you actually paid in 2023. When the refund comes in Q1 2024, it goes to the still-existing S-corp. Then you file a short-period final return for 2024 (January 1 to dissolution date) that reports the refund as income. This approach avoids the complexity of trying to figure out who owns post-dissolution refunds and ensures proper flow-through treatment to shareholders. The alternative of trying to handle a refund after dissolution creates unnecessary complications with state agencies and potential issues with the final K-1s. One tip: Make sure to notify the state that issued the PTET refund about your planned dissolution date so they don't delay sending the check to a dissolved entity.

Great question about the K-1 complications! In my experience, you won't need to amend the 2023 K-1s because the PTET refund is treated as separate income in 2024, not an adjustment to the 2023 amounts. The 2023 K-1s should reflect the actual PTET deduction taken in 2023, and that doesn't change when you get the refund. For the short-period 2024 return, you'll issue new K-1s that show each shareholder's pro-rata share of the refund income. Since this is a final return, you'll want to make sure all shareholders understand they're getting a final K-1 for 2024 even though the entity was only active for a few months. One thing I learned the hard way: estimate the refund amount as closely as possible when filing the 2023 return so you can give shareholders a heads up about the 2024 income. Even though you can't know the exact amount, having a ballpark figure helps them with their tax planning. The state should provide some guidance on calculating the expected refund based on your estimated payments vs. actual liability.

One thing nobody mentioned yet - you should also keep documentation that this specialist appointment was medically necessary. I got audited last year on medical expenses and they specifically wanted a letter from my primary doctor explaining why I needed to travel out of state for treatment instead of using local providers. Just save a referral letter or something similar.

Great question about airline miles for medical travel! I dealt with something similar when I had to fly to Mayo Clinic last year using Delta miles. The key is proper documentation - I recommend taking screenshots of what the same flight would have cost in cash at the time you booked it. Don't use current prices or average valuations you find online. The IRS wants to see what you specifically would have paid for that exact itinerary on that booking date. Also keep all your medical appointment confirmations, parking receipts, and any overnight stay expenses. If you have to make multiple trips like you mentioned, consider keeping a simple spreadsheet tracking each trip's purpose, dates, and documented cash equivalent values. One heads up - make sure your total itemized deductions (including these medical expenses) exceed the standard deduction for your filing status, otherwise it won't benefit you tax-wise. For 2024 taxes, that's $14,600 for single filers or $29,200 for married filing jointly.

I had a similar situation last year and want to echo what others have said about contacting the county tax assessor directly. In my case, the "denial" from what I thought was the title company was actually a miscommunication - the county had sent the denial notice to my title company's address instead of mine, and they just forwarded it along. When I called the tax assessor's office, they explained that my application was actually just marked as "incomplete" rather than denied. I was missing a simple affidavit stating that this was my only homestead exemption claim. Once I submitted that one additional form, my exemption was approved within two weeks. The key is to ask specifically what documentation they need and whether your application can be amended rather than having to start over completely. Most counties would rather work with you to get the exemption sorted out than deal with a formal appeal process. Good luck!

I work in property tax administration and can offer some insight here. The confusion about title companies "denying" homestead exemptions is very common - they're just the messenger in most cases. What likely happened is your county tax assessor's office sent the denial notice to your title company (since they often handle the initial filing), and the title company forwarded it to you. Here's what I'd recommend: Call your county tax assessor's office and ask for the homestead exemption department specifically. Have your property's parcel number ready (it should be on your property tax statement or closing documents). Ask them to look up your application status and explain exactly why it was denied. Common reasons for denial include: missing documentation proving primary residency, filing after the deadline, unclear dates on when you established residency, or sometimes just clerical errors. The good news is that most of these issues are easily fixable. Also ask about the appeals timeline - you typically have 30-90 days from the denial date, but some counties are flexible if you can show good cause for missing deadlines. Since you clearly qualify (primary residence, all your official documents show this address), this is likely just a paperwork issue that can be resolved quickly.