Quick question for people who've done this - did you sell your LLC interest all at once or structure it as an installment sale? My partner wants to buy me out but can't pay the full amount upfront.

Great question! One thing I haven't seen mentioned yet is the importance of getting your basis calculation right before the sale. Your basis in the LLC includes your initial investment plus any additional contributions, plus your share of company profits that were reinvested (but taxed to you via K-1s), minus any distributions you've received over the years. This basis calculation is crucial because it determines your actual taxable gain. I've seen people assume their basis is just their original investment, but if you've been getting K-1s showing allocated profits that stayed in the business, your basis is likely higher than you think - which means less taxable gain on the sale. Also, since you're structured as an LLC electing S-Corp treatment, make sure there aren't any built-in gains issues if the LLC was previously a C-Corp or acquired assets from a C-Corp. Your accountant should definitely review this, but it's worth asking about specifically. One more tip: consider the timing of the sale relative to your tax year. If you're having a particularly high-income year, you might want to delay the sale to the following year, or if you're having a lower-income year, it might be advantageous to complete it before year-end to take advantage of lower tax brackets.

I went through almost the exact same situation when I moved to Berlin in 2022! The €3800 quote is definitely excessive - I ended up paying around €800 total for both countries by finding the right professionals. Here's what I learned: First, check if you're actually considered a German tax resident for 2023 since you moved mid-year. The 183-day rule could work in your favor. Second, the US-Germany tax treaty is your friend - it prevents true double taxation, but you need to understand which country has primary taxation rights for each income type. For your US employment income from Jan-June 2023, that's clearly US-sourced and will be taxed primarily by the US. Your German employment income from Nov-Dec will be taxed primarily by Germany. The rental income is where it gets tricky - since the property is in the US, the US has primary taxation rights, but Germany will want to tax it as part of your worldwide income if you're a resident. My advice: Use one of the AI tax tools mentioned above to get a baseline understanding of your situation, then find a US expat tax specialist (not a general firm) for around $400-500, and a German Steuerberater for €400-600. The key is finding people who already know the treaty well rather than paying someone to learn it on your dime. Also consider that this complexity is mainly for your 2023 transition year - future years should be more straightforward once you establish clear residency patterns.

As someone who dealt with a similar Germany-US tax situation, I'd strongly recommend getting clarity on your 2023 German tax residency status first - this could save you significant complexity and money. Since you moved to Germany in July 2023, you may not meet the 183-day requirement for German tax residency in 2023, which would mean Germany would only tax your German-sourced income (your Nov-Dec employment) rather than your worldwide income including the US rental property. For your US filing, you'll definitely need to report everything - your Jan-June US employment income and the rental income starting in August. The rental income will be taxed primarily by the US since that's where the property is located. If you do end up being a German tax resident for 2023, you'll report the rental income in Germany too, but you can claim a foreign tax credit for the US taxes paid to avoid double taxation thanks to the treaty. Before spending €3800, I'd suggest: 1) Determine your German residency status for 2023, 2) Try one of the AI tax tools mentioned above to understand your specific situation, 3) Then find specialists who already know the US-Germany treaty well rather than paying generalists to learn it. You should be able to handle both countries for under €1000 total if you find the right help. The good news is that 2024 and beyond should be much more straightforward once you're clearly established as a German resident with predictable income patterns in both countries.

Don't forget to keep copies of EVERYTHING you send them! I made the mistake of sending my only copies of some receipts, and then the IRS said they never got them. Now I make at least 2 copies of everything before sending. Also include your case number or tax ID number on EVERY page you send. Sometimes the pages get separated in their processing centers.

Just wanted to add something that helped me when I was in a similar situation - check if there's a "Notice Number" or "Letter ID" on your IRS letter (usually something like "Letter 525-C" or "Notice CP2000"). This number is crucial to include in your response and on your envelope. I also recommend writing "Response to [Notice Number]" clearly on the outside of your envelope along with your SSN or Individual Taxpayer Identification Number. This helps their mail processing center route your response to the correct department faster. And definitely agree with everyone saying to use certified mail with return receipt! I learned this lesson after my first response supposedly got "lost" in their system. The extra $6-8 for certified mail is nothing compared to the potential penalties and interest if they claim they never received your response. One last tip - respond as soon as possible but don't rush so much that you make mistakes. The IRS typically gives you 30 days to respond, but responding earlier shows good faith and gives you a buffer in case there are any issues with delivery.

Don't forget about self-employment taxes when running a farm. Schedule F profits are subject to self-employment tax (15.3%) in addition to regular income tax. It's a common oversight that hits farm owners hard at tax time.

Quick tip from someone who got audited over farm expenses: Keep detailed records of EVERYTHING. The IRS loves to question whether small farms are actual businesses or just hobbies, especially if you show losses. Document your efforts to make the operation profitable (marketing, business plan, etc). My audit was a nightmare but could've been avoided with better record-keeping.

Since I didn't see anyone mention this specifically - if your client's LLP is in California, be prepared for a completely different process than other states. CA has some unique requirements for entity conversions, and they also have that minimum $800 franchise tax for corporations that hits immediately. Also, watch out for built-in gains tax if the LLP has appreciated assets! The conversion to a corporation can be tax-free under Section 351, but if you don't structure it correctly, you could trigger unexpected tax consequences. I learned this the hard way...

Great thread! I'm seeing a lot of helpful advice here. Just wanted to add that timing is absolutely critical for the Form 2553 election. Even after you get the state-level corporation established, remember that the S-Corp election must be filed by the 15th day of the 3rd month of the tax year you want it to take effect (March 15th for calendar year taxpayers). If you miss this deadline, you'll have to wait until the following tax year OR request late election relief under Revenue Procedure 2013-30, which requires showing reasonable cause for the delay. The IRS is pretty strict about this timing requirement. Also, make sure all shareholders (including the converted LLP partners who become shareholders) sign the Form 2553. Missing signatures are another common reason for rejection that I've seen in practice.