Just to clarify something in case your mother-in-law is confused - charitable donations ARE tax-deductible (if she itemizes deductions), but gifts to family members are NOT. It's possible she's mixing these two concepts up. Or maybe she's thinking of the $250 "gift" that used to be available as a charitable contribution without substantiation many years ago? Tax laws have changed so much over the decades.

This is such a common misconception! You're absolutely correct - gifts to family members are not deductible on income tax returns. Your mother-in-law may be thinking of charitable donations, which ARE deductible, or possibly remembering old tax rules from decades ago. The annual gift tax exclusion (currently $17,000 for 2023, going to $18,000 for 2024) simply means she won't need to file a gift tax return or use up any of her lifetime estate tax exemption when giving that amount per person. But it has nothing to do with income tax deductions. It might be worth gently suggesting she double-check with a tax professional before filing, just to make sure she doesn't accidentally claim an improper deduction. The IRS can be pretty strict about disallowed deductions, and you don't want her dealing with penalties or having to file an amended return later. You're being a good family member by looking out for her!

I've been a tax preparer for 6 years and see this ALL THE TIME. Some payroll systems just can't handle combining different pay rates/positions into one W-2, so they issue multiple ones. It's totally normal. Just enter each W-2 exactly as it appears. Don't combine them yourself. Tax software is designed to handle multiple W-2s from the same employer correctly. The IRS computers will match each W-2 they received from your employer with what you report.

Hey Zara! I totally get the panic - I had the exact same thing happen to me two years ago when I switched departments mid-year. It's actually super straightforward once you know what to do. Just to add to what everyone else has said - when you're entering the W-2s in your tax software, make sure you keep them in chronological order if possible (earliest job period first). It doesn't technically matter for the calculations, but it helps you stay organized and makes it easier to double-check your entries. Also, one thing that helped calm my nerves was printing out a summary page after entering everything to see the combined totals. Most tax software will show you a breakdown of how all your W-2s contributed to your total income and withholdings. Seeing it all laid out clearly really helped me feel confident that everything was correct. You've got this! The fact that you're being careful and asking questions means you're going to handle it just fine.

This is amazing news! I've been dreading calling about my quarterly estimated tax payments for my freelance work, but your experience gives me hope. I remember calling in 2023 about a similar issue and waiting over 90 minutes just to be told I needed to call a different department. Then I had to wait another hour to get transferred to the right person. If they've really improved their staffing and processes this much, it would be a game-changer for small business owners like me who need to contact them regularly. I'm definitely going to try calling this week - fingers crossed I have a similar experience!

Wow, this is really encouraging to hear! I've been putting off calling about a question regarding my dependent care FSA contribution limits because I was dreading the typical IRS hold time nightmare. Your 2-minute wait experience is giving me serious hope that maybe they've actually turned things around. I remember in 2022 I waited almost 3 hours about a simple address change and nearly gave up twice. If this improved service is consistent, it would be such a relief for taxpayers who need quick answers during filing season. I think I'll finally bite the bullet and call them tomorrow morning about my FSA question. Thanks for sharing this positive experience - it's exactly the motivation I needed!

Great question about 743(b) adjustments! I went through something very similar when I sold my interest in a strip mall partnership last year. The key thing to understand is that your remaining 743(b) adjustment doesn't just disappear - it becomes part of your adjusted basis in the partnership interest when you sell. So in your case, that remaining ~$203,000 would increase your basis, which means it reduces your taxable gain (or increases your loss) when you sell. Think of it this way: you originally got the 743(b) adjustment because you paid more for your partnership interest than your proportionate share of the partnership's inside basis. When you sell, that "extra" amount you paid (minus what you've already depreciated) still has value - it's just realized as part of your sale transaction rather than through ongoing annual deductions. Make sure you get detailed documentation from your partnership showing exactly how much of your original adjustment has been used through depreciation. This is crucial for calculating your correct adjusted basis. Also consider having an independent review done if the sale amount is significant - I found a small error in my partnership's calculations that would have cost me several thousand in extra taxes. The buyer won't get your old adjustment, but they may qualify for their own new 743(b) adjustment if the 754 election is still in effect at the time of sale.

Yes, you've got it exactly right! That remaining $180K would indeed increase your adjusted basis in the partnership interest, which directly reduces your taxable gain (or increases your loss) when you sell. This is why the timing and documentation are so critical. What many people don't realize is that this can actually make selling "early" more tax-efficient in some situations, especially if you're in a higher tax bracket now versus what you might be in future years when taking the annual depreciation deductions. You're essentially accelerating the tax benefit of that remaining adjustment. Just be extra careful with the calculations. In my strip mall situation, the partnership had been incorrectly allocating part of my adjustment to land (which doesn't depreciate) versus the building improvements. This error would have overstated my remaining adjustment by about $15K, leading to an incorrect basis calculation on sale. I'd strongly recommend getting those partnership records well before you're ready to sell. Some partnerships are slower than others at providing detailed breakdowns, and you don't want to delay a time-sensitive sale waiting for proper documentation of your adjusted basis.

Quick question - does anyone know if selling equipment/fixtures when closing a business is handled the same way as inventory? I'm about to close my soap making business and will be selling my equipment along with remaining inventory.

As someone who just went through closing my small consulting business last month, I wanted to add that timing can be really important here. Since you mentioned you're down to the wire with filing, make sure you don't miss any quarterly estimated tax payments that might be due if you had other income during the year. Also, when you report the $8,400 from scrapping on Schedule C, double-check that you're not forgetting any other business expenses from the year - things like storage costs for the inventory, shipping to the refiner, or any professional fees you paid for advice on closing the business. These can all be legitimate deductions that might help offset some of that inventory loss. One last thing - keep really good documentation of the scrapping transaction (receipts from the refiner, weights, metal content analysis, etc.) in case the IRS ever questions how you arrived at the $8,400 figure or the original $12,000 cost basis.