This is a great question that many people struggle with! Just to add one more important detail - make sure your daughter keeps good records of the gift transaction, including the date of transfer and the fair market value on that date. The IRS may ask for documentation if they audit the return. For the dual basis situation with the first stock, it's worth noting that if she had sold between $23 and $26 per share, she would have reported no gain or loss at all. This "no man's land" between the two basis amounts is unique to gifted depreciated assets. Also, since you mentioned this is for 2025 tax filing, keep in mind that the annual gift tax exclusion amounts may change, so double-check the current limits when you're preparing your own return if the total value exceeded the threshold.

This is exactly the kind of situation that trips up so many families! One additional point to consider - if your daughter incurred any brokerage fees when selling the stocks, she can add those to her cost basis, which would reduce any taxable gain or increase any deductible loss. Also, since you mentioned this happened recently, make sure you both keep detailed records of the transfer date and stock prices. I learned the hard way that reconstructing this information months later can be a nightmare if you don't have good documentation from the start. The dual basis rule for gifted stock that has declined in value is one of those tax quirks that seems unnecessarily complicated, but it does serve a purpose in preventing people from gaming the system by transferring losses to family members in lower tax brackets.

Quick question for anyone who knows - I'm in a similar situation but with a much smaller inherited IRA (about $43k). Is there a minimum amount where the IRS doesn't care about missed RMDs? Like if the penalty would be really small, do they sometimes just ignore it? Just wondering if there's a threshold where it's not worth their time to pursue.

I went through this exact situation with my father's inherited IRA back in 2021. Missed three years of RMDs and was absolutely terrified about the penalties. Here's what worked for me: First, don't panic - the IRS really is reasonable about penalty waivers when you're proactively fixing the mistake. I calculated all my missed RMDs using the Single Life Expectancy Table (you can find it in IRS Publication 590-B), took all the distributions immediately, then filed separate Form 5329s for each missed year. The key is the reasonable cause letter. I explained that I wasn't aware of the RMD requirement due to inexperience with inherited accounts, that I discovered the error through my own research, and that I had now taken all required distributions and would comply going forward. I attached documentation showing I had taken the catch-up distributions. The IRS waived all penalties - saved me about $4,200. The whole process took about 6 months from filing to receiving the waiver approval. The hardest part was actually getting all the year-end account statements I needed for the calculations, so make sure you contact your IRA custodian for those historical balances. One tip: when you take the catch-up distributions, ask your custodian to code them properly for each tax year they relate to, not just dump them all as 2025 income. This can help with the tax impact.

Does anyone know if there's a way to amend a previous year's tax return to add a Form 3520 that I should have filed? I received a gift from my uncle in Germany in 2023 but didn't know about the reporting requirement until now.

For anyone dealing with Form 3520 for the first time, here's a quick tip that helped me: keep detailed records of the gift including the date received, amount in both foreign currency and USD (using the exchange rate on the date received), and documentation showing the relationship to the gift giver. The IRS wants to see that it's truly a gift and not income in disguise. Also, if you're close to any of the thresholds mentioned above, it's worth consulting with a tax professional who specializes in international tax issues - the penalties for getting this wrong are steep enough that professional help often pays for itself.

I went through a similar denial situation last year and want to share what worked for me. The key thing I learned is that "documentation insufficient" often means they need proof of continuous occupancy, not just ownership. What ultimately got my appeal approved was creating a timeline document that showed my occupancy from day one. I included: utility connection dates (gas, electric, water, internet), my first grocery delivery receipt to the address, photos of me moving in with timestamps, and even my employer's records showing when I updated my address for payroll. The county assessor told me later that many people just submit a driver's license and deed, but they really want to see that you were actually living there as your primary residence during the required time period. They're looking for patterns of daily life, not just legal ownership. Also, don't be afraid to be persistent with the appeal process. My first appeal was also denied, but I submitted additional evidence and got approved on the second try. The $2,200 savings you mentioned is definitely worth the effort - that's real money that stays in your pocket every year going forward.

I'm going through a homestead exemption denial right now too, and reading everyone's experiences here has been incredibly eye-opening. I had no idea that "documentation insufficient" could mean so many different things - timing issues, occupancy proof problems, missing utility bills, etc. What's frustrating is that the county offices seem to give such vague denial reasons without explaining what specific documentation they actually need. It sounds like most of us are basically playing a guessing game trying to figure out what went wrong. Based on what I'm reading here, it seems like the key is to flood them with evidence of actual occupancy rather than just proving ownership. I'm going to try the timeline approach that Rachel Clark mentioned - gathering everything from utility connections to employer address changes to show I've been living here continuously. Has anyone had success with including a cover letter that directly addresses the "documentation insufficient" reason? I'm thinking of writing something that says "In response to your finding of insufficient documentation, I am providing the following additional evidence of primary residence and continuous occupancy..." and then listing everything methodically. The stakes are real - my potential tax savings would be about $1,800 annually, so this is definitely worth fighting for. Thanks everyone for sharing your experiences and advice!

I've been dealing with this exact situation for years with two W-2 jobs, and it's incredibly frustrating from a policy perspective. What bothers me most is the lack of transparency - most people in this situation have no idea this is happening until they start digging into the details. The fact that employers can't coordinate or get refunds creates perverse incentives. My second employer always acts like they're doing me a huge favor by "paying the employer portion" of Social Security tax, but they're actually paying more than they should if there was better coordination in the system. I've calculated that over the past 5 years, my various employers have collectively overpaid about $8,000 in Social Security taxes because of this quirk. That money just disappears into the Social Security system with no accountability. While I understand the system needs funding, this feels like an unintentional tax on people who work multiple jobs rather than a deliberate policy choice. Has anyone ever seen any proposals in Congress to fix this, or is it just considered too niche of an issue to address?

As someone who's been navigating this exact situation for the past two years with multiple W-2 positions, I can confirm everything that's been shared here. The employer portion really is just "lost" money that goes to Social Security with no refund mechanism. What I've learned through trial and error is that you need to be proactive about managing this. I now adjust my W-4 at my secondary jobs to account for the fact that I'll hit the Social Security cap early in the year at my primary job. This prevents most of the overwithholding on my end, though it doesn't solve the employer portion issue. One thing I haven't seen mentioned here is that this same issue applies to Medicare tax, but only for the additional 0.9% Medicare tax on high earners. The base Medicare tax (2.9% total) has no cap, so that's not affected. For anyone dealing with this, I'd strongly recommend keeping detailed records of all your W-2s and Social Security withholding. The excess employee portion refund is straightforward to claim on your tax return, but you need to do the math yourself to make sure you're getting the full credit you're entitled to. The IRS won't automatically flag it if you miss claiming some of your overpayment. It's frustrating policy-wise, but at least understanding how it works helps you plan better financially.