Don't forget that proper documentation is key here! Keep your HUD-1 or closing disclosure, along with documentation of the original purchase and any major improvements you made to the property. The IRS has been looking more closely at home sales in recent years.

Just went through this exact situation last year! I had to give $8,200 in closing credits to my buyers and was completely lost on how to handle it tax-wise. What helped me was understanding that the closing credits aren't really an "expense" you deduct - they just reduce what you actually received from the sale. Think of it this way: if your contract was for $400,000 but you gave $7,500 in closing credits, you effectively only received $392,500. That's what you report as your sale price. The credits never actually went into your pocket, so they can't be your proceeds. One thing that caught me off guard - make sure you're calculating your gain correctly by using your adjusted basis (original purchase price plus qualifying improvements minus any depreciation). Since you mentioned you might qualify for the capital gains exclusion anyway, you'll want to double-check that your total gain is under the threshold before deciding whether you even need to report the sale. Keep all your closing documents - the settlement statement will clearly show the credits, which makes it easy to document if the IRS ever has questions.

Has anyone tried just setting cost basis to zero when they can't track it? I'm in a similar situation but with much smaller amounts and wondering if it's worth the headache.

I went through something very similar last year with about $120k in DeFi sales. What saved me was reconstructing my cost basis using a combination of approaches: 1) Bank statements showing my original fiat deposits to exchanges 2) Email receipts from major purchases I could find 3) Using DeFiPulse and similar sites to look up historical token prices for dates I could remember making trades 4) Cross-referencing my wallet addresses on blockchain explorers to verify transaction dates I ended up with about 80% of my trades documented with reasonable accuracy. For the remaining 20%, I used conservative estimates (higher cost basis when uncertain) and documented my methodology clearly. The key thing I learned is that the IRS cares more about good faith effort than perfect precision. As long as you can show you tried to be accurate and didn't just make up numbers, you're in much better shape than someone who reports nothing or clearly lowballs their gains. For your $160k situation, I'd definitely invest some time in reconstruction rather than just guessing. Even if you can only recover 70% of your actual records, that's still going to be much more defensible than a rough estimate.

Has anyone actually calculated their insolvency using the worksheet in Publication 4681? I'm trying to do this now and I'm confused about what counts as an asset. Do I include things like furniture and clothing? What about my laptop and phone?

Great thread! I went through this exact situation about 18 months ago with a cancelled credit card debt. One thing I'd add that really helped me was creating a detailed timeline showing when each debt was incurred versus when the cancellation happened. For your student loans, definitely contact your servicer directly - they can usually provide a "payoff statement" or balance verification letter for any specific date going back several years. I found that student loan companies are actually pretty good about providing historical documentation since they deal with tax-related requests frequently. Also, don't forget to include ALL liabilities - not just the obvious ones like loans. If you had any unpaid medical bills, credit card balances, or even money owed to family members at the time, those count toward proving insolvency. I initially missed some smaller debts and had to revise my worksheet. One last tip: when you send your response to the IRS, include a cover letter that clearly explains what you're providing and references the specific notice number. This helps ensure your documentation gets properly matched to your case. Good luck!

Something similar happened to me last year. I ended up contacting the HR department at my previous employer. Since they were the plan sponsor, they had access to all the plan documents and were able to request a duplicate 1099-R on my behalf. Might be worth giving that a try!

I work in tax compliance and see this issue frequently. Here's what I'd recommend in order of priority: 1. **Contact your old employer's HR/benefits department first** - This is often the fastest solution. As the plan sponsor, they maintain administrative access and can request duplicate tax documents even after you've left the company. 2. **Call Fidelity's dedicated tax document line at 1-800-544-4774** - When prompted for account info, immediately say "tax documents for closed account" or "representative." They're legally required to provide your 1099-R regardless of account status. 3. **Visit a Fidelity branch in person** - Bring your driver's license and be prepared to provide your SSN, previous address, and approximate account balance. This often cuts through the phone system issues. Important note: Even though this was a direct rollover, you still need to report it on your tax return (Form 1040). The 1099-R should show distribution code "G" in Box 7, which indicates it's a non-taxable direct rollover. The IRS receives a copy of this form and will expect to see it reported, even though it won't increase your tax liability. Don't panic about the timing - you have until the tax filing deadline to get this sorted out, and Fidelity is actually already late since 1099-Rs were due by January 31st.

Has anyone actually been audited over business expense deductions like these tips? I'm always worried about what might trigger an audit.

Thanks everyone for this thorough discussion! As someone new to freelancing platforms, this has been really helpful. I've been hesitant to tip contractors because I wasn't sure about the tax implications, but now I feel confident that reasonable tips are deductible business expenses. One follow-up question though - do you keep a separate log of tips paid, or just rely on the platform receipts? I'm thinking it might be good practice to maintain my own spreadsheet tracking the business justification for each tip (rush job, exceptional quality, etc.) alongside the receipts, especially for larger tips that might raise questions. Also appreciate the tips about those tools and services for getting IRS clarification - definitely bookmarking those for future reference!