This is definitely a frustrating situation, but the VIN mismatch actually works strongly in your favor. I've seen similar cases where dealers accidentally processed credit transfers for the wrong vehicles due to clerical errors in their paperwork systems. The key things to focus on when you contact the IRS: 1. Emphasize the VIN discrepancy - this proves there's a factual error in their records 2. Mention that you have text messages from the salesman confirming you could claim the credit yourself 3. Point out that your purchase agreement contains no language about credit transfer 4. Explain that you paid the full negotiated price without receiving a $7,500 credit discount Since you never signed the specific authorization form required for credit transfers (as mentioned by the dealership employee above), and the vehicle information is completely wrong, this should be correctable. The IRS generally treats these as administrative errors rather than disputes between customers and dealers when there's clear documentation like you have. I'd recommend calling the IRS sooner rather than later to get this on record and prevent any complications when you file your taxes next year. Document everything from your call including the representative's name and case number if they assign one.

Given the clear VIN mismatch and lack of proper authorization, I'd recommend going straight to the IRS rather than giving the dealership another chance to dodge your calls. You've already tried contacting them multiple times with no response - that's enough good faith effort on your part. The IRS handles reporting errors like this directly, especially when there's factual documentation showing the mistake (wrong VIN, no signed transfer form, text messages contradicting the transfer). Since this appears to be a clerical error in their system rather than a legitimate business dispute, they won't require you to resolve it with the dealer first. When you call, have everything organized: your purchase agreement, the IRS notice with the wrong VIN, screenshots of those text messages from the salesman, and your actual vehicle's VIN for comparison. Be clear that you never authorized any transfer and that the reported vehicle information is completely incorrect. The timing is important too - getting this corrected now gives you plenty of time before next tax season and establishes a paper trail with the IRS. If you wait and try to sort it out with an unresponsive dealer, you might find yourself in a last-minute scramble when it's time to file your taxes. Document your call with the IRS thoroughly and get a case number if possible. This protects you if any issues come up later when you claim the credit on your return.

Has anyone used the step transaction doctrine to challenge a conversion like this? I'm worried the IRS would say all these steps are just to avoid tax and collapse them.

Isabella, this is definitely a complex situation that requires careful planning. Before making any decisions, I'd strongly recommend getting a professional tax opinion on your specific circumstances, especially given the real estate component and potential depreciation recapture issues. One thing I haven't seen mentioned yet is the possibility of simply maintaining the S-Corp status but restructuring how you hold the property. You could potentially contribute the rental property to a new single-member LLC (disregarded entity) owned by the S-Corp, which would give you the liability protection and operational flexibility you're looking for without triggering the conversion issues. Also consider the timing - if you do proceed with any conversion strategy, the end of the tax year timing could be crucial for minimizing current year impacts. Have you calculated what your current depreciation recapture liability would be under different scenarios? That number alone might help guide your decision on which path makes the most sense financially. The suggestions about professional services are good, but make sure whoever you work with has specific experience with real estate held in S-Corps - the rules can be quite different from other business assets.

Something nobody mentioned yet - if these are REALLY valuable pieces (like over $5,000 each), you might need a qualified appraisal for tax purposes. The IRS has specific requirements for appraisals of valuable items. I learned this the hard way when I sold some gifted artwork last year and the IRS questioned my valuation because I didn't have a proper appraisal from a qualified appraiser.

Great question about FMV for gifted jewelry! I went through this exact situation last year with my grandmother's vintage jewelry collection. One thing I learned that hasn't been mentioned yet is that you should also check if your family member kept any original purchase receipts or documentation. Even old jewelry store receipts from decades ago can be incredibly helpful for establishing the donor's original basis. Also, don't overlook online auction sites like Heritage Auctions or LiveAuctioneers to research comparable sales for similar pieces - this can give you additional data points for FMV, especially for vintage or designer pieces. I found that cross-referencing multiple sources (estate jewelers, certified appraisers, and recent auction results) gave me the most confidence in my FMV determination. One last tip: document your research process thoroughly. I kept a file with all my appraisals, photos, research notes, and valuations. The IRS appreciates seeing that you made a good faith effort to determine accurate FMV, even if the exact amount might be debatable.

Hey has anyone used those special tax categories for "collectibles" for vintage clothing? I heard vintage items might qualify for different tax treatment if they're considered collectibles rather than regular inventory. Wondering if it's worth looking into for my higher-end pieces?

Great thread! As someone who's been doing vintage reselling for a few years now, I want to add a few practical tips that might help: First, definitely start treating this as a business from day one - it'll make your life so much easier come tax time. Open a separate checking account for all business transactions, even if it's just a basic free account. This makes tracking income and expenses way cleaner than mixing everything with personal finances. For inventory tracking, I learned the hard way that you need to track not just what you buy and sell, but also what doesn't sell. Unsold inventory at year-end affects your cost of goods sold calculation. I use a simple system where I photograph each item with a price tag when I acquire it, then update my spreadsheet when it sells. One thing I wish someone had told me early on: keep receipts for EVERYTHING related to the business. Gas to drive to estate sales, parking meters at flea markets, even the plastic bags and hangers you use. It all adds up and can significantly reduce your taxable income. Also, don't forget about the home office deduction if you use part of your home for storing inventory or doing business tasks like photographing items and managing listings. Even a small percentage can make a difference. The learning curve is steep but totally manageable once you get systems in place!

I'm surprised nobody mentioned this yet, but your employer's tip reporting system might actually be illegal. If they're reporting 100% of your tips as your income on your W-2 but requiring you to give 20% away, that's a problem. The IRS actually has specific rules about tip pools. Your employer should be tracking who gets what from the pool and reporting income correctly for each employee. Might be worth asking your manager if they're properly allocating tip income for tax purposes.

As someone who's dealt with similar tip pool confusion, I want to emphasize what others have said - you absolutely should NOT be paying taxes on money you never actually received. The 20% that goes to hosts is their income, not yours. Here's what I learned the hard way: keep meticulous records of every shift. I use a simple notebook where I write down my total tips, the amount I tip out, and who receives it. Date and initial each entry. This saved me during a payroll audit last year. Also, don't rely on your restaurant's reporting system. Many places incorrectly report 100% of credit card tips under your name because their POS systems aren't set up to track tip distributions properly. You have the right to report only what you actually earned on your tax return, regardless of what's on your W-2. One last tip - if your state has different minimum wage rules for tipped employees, make sure you understand those too. Some states don't allow the lower tipped minimum wage if you're required to participate in tip pools.