Just to add a small clarification that might help - there's also a separate ordering rule for Roth IRA withdrawals that determines what comes out first: 1) Regular contributions come out first (always tax and penalty free) 2) Conversion contributions come out next (might be subject to penalties if within 5 years of conversion and under 59½) 3) Earnings come out last (subject to tax and possibly penalties if you don't meet requirements) Since you're over 59½ and if your first Roth contribution was indeed in 2019, then starting in 2024, everything comes out tax and penalty free including earnings. This assumes 2019 was truly your first-ever Roth IRA.

This is a really helpful discussion! I wanted to add one more consideration that might be relevant for your planning. Even though you'll be able to withdraw everything tax and penalty-free once you meet both the age and 5-year requirements, it's worth thinking about the timing strategically. Since Roth IRAs don't have required minimum distributions (RMDs) like traditional IRAs do, you might want to consider leaving the money invested longer if you don't immediately need it. The tax-free growth can continue indefinitely, and it's one of the best tax-advantaged accounts you can pass to heirs. Also, if you're planning any large withdrawals, consider spreading them across multiple tax years to avoid bumping yourself into higher tax brackets with other income - though this is more relevant if you have traditional IRA distributions or other taxable income in the same years. The flexibility of having penalty-free access is great peace of mind, but the longer you can let that money grow tax-free, the better!

One additional consideration that might be relevant to your situation - make sure to keep detailed records of any carrying costs during the subdivision process. Things like property taxes, insurance, and utilities for the period between when you start the subdivision process and when you actually close on the sale. While these aren't typically added to your basis, they can sometimes be deducted as selling expenses, which reduces your overall gain. This is especially important if your subdivision process takes several months (which it often does), as these costs can add up. Also, don't forget about the costs of the subdivision itself - surveying fees, legal fees for the subdivision process, recording fees, and any required studies or permits. These are legitimate selling expenses that reduce your taxable gain dollar-for-dollar, which can be more valuable than adding them to basis if you're already under the capital gains exclusion threshold. Given that you're likely to qualify for the full $250K/$500K exclusion anyway, maximizing your selling expenses might be more tax-efficient than trying to increase your basis through allocations. Just make sure to categorize everything correctly and keep all receipts organized for your tax preparer.

Just wanted to add one more consideration that saved me a significant headache during my subdivision - make sure you coordinate with your homeowner's insurance company before finalizing everything. When I subdivided my property, my insurance company initially wanted to cancel my policy because the "property description" no longer matched what was in their system. The new parcel number and reduced acreage triggered an automatic review that could have left me uninsured during the sale process. I had to work with them to update the policy to reflect the new boundaries and parcel information. Some companies require a new survey or property inspection when significant changes like subdivisions occur. It's much easier to handle this proactively rather than discovering the issue right before closing. Also, if you're keeping a portion of the original property, you'll likely need to adjust your coverage amounts since you're reducing the total land area being insured. In my case, this actually reduced my premiums slightly, which was a nice unexpected benefit. Start this process early - insurance companies can sometimes take weeks to process these types of changes, and you don't want it holding up your closing.

That's actually the ideal situation - having your mom file correctly first makes it easier to resolve! Since she already claimed you as a dependent on her return, the IRS will eventually match that against your original return and would have flagged the discrepancy anyway. By filing your 1040X now, you're proactively fixing the issue before they send you a notice. When you complete your 1040X, make sure to reference in Part III that you're amending to match your status as claimed on your mother's return (you can include her name and that she filed claiming you as a dependent). This helps the IRS understand that both returns are now consistent and there's no conflict between the filings. The processing might take a few months, but you're doing exactly the right thing by correcting your return to match hers. Just be prepared to pay back any excess refund you received due to the incorrect standard deduction amount.

Just her name should be sufficient in the explanation section - you don't need to include her SSN. The IRS can match the returns using your SSN since she would have listed it when claiming you as a dependent on her return. In Part III, you could write something like: "Amending to correct dependency status. I failed to indicate on my original return that I can be claimed as a dependent. My mother, [her name], has filed her return claiming me as a dependent, which is correct. This amendment adjusts my standard deduction to reflect my status as a dependent." Keep the explanation clear and concise - the IRS just needs to understand what you're correcting and why. Including too much personal information like SSNs in the explanation section isn't necessary and could potentially create privacy concerns if the form gets mishandled.

14 Has your cousin considered filing for the Streamlined Domestic Offshore Procedures? With a foreign partner involved, there might be international reporting requirements they've missed too. When I had a similar situation with my small business that had a foreign partner, we had to deal with FBAR filings and other international information reporting requirements. The foreign partner should also check if they have any US tax filing requirements based on their interest in a US LLC, even if they've never been to the US.

This is a complex situation that requires immediate attention. Your cousin is looking at significant penalties - potentially over $25,000 just for the unfiled 1065s alone ($210 per month per partner for up to 12 months, multiplied by 10 years). Here's what I'd recommend: 1. **Get professional help immediately** - Find a tax attorney or CPA who specializes in partnership taxation and penalty abatement. The foreign partner aspect adds layers of complexity with potential withholding requirements. 2. **File all delinquent returns first** - Don't wait for penalty notices. Filing shows good faith effort to comply. 3. **Reasonable cause strategy** - For penalty abatement, your cousin will need to demonstrate reasonable cause for each unfiled year. Common arguments include: reliance on professional advice, serious illness, inability to obtain records, or other circumstances beyond their control. 4. **Consider installment agreements** - Even with abatement, there may still be substantial penalties. The IRS offers payment plans for situations like this. 5. **Foreign partner compliance** - The German partner likely has US tax obligations too and may need to file their own returns. The key is acting quickly and having a comprehensive strategy. Each day of delay potentially increases penalties. A qualified professional can help navigate the penalty abatement process and potentially save thousands in penalties.

One thing I wish someone had told me before making the S-Corp switch - make sure you set up proper payroll from day one. The IRS expects you to pay yourself a reasonable salary through actual payroll (with W-2s, quarterly payroll taxes, etc.), not just estimate it at year-end. I made the mistake of trying to handle this myself initially and ended up with penalties for late payroll tax deposits. Consider using a payroll service like Gusto or ADP - it's usually worth the monthly cost to avoid compliance headaches. They'll handle all the quarterly filings, W-2s, and tax deposits automatically. Plus having proper payroll records makes it much easier to justify your salary vs distribution split if the IRS ever questions it. Also, don't forget about state requirements - some states have additional S-Corp taxes or filing requirements beyond the federal ones. Make sure you research what your state requires before making the election.

Another important consideration for S-Corp owners is the home office deduction - it works differently than when you were a sole proprietor. As an S-Corp, you can't just take the home office deduction directly on your personal return like you did with Schedule C. Instead, you have a couple of options: 1. Have the S-Corp pay you rent for the home office space (you'd report this as rental income on your personal return, but can deduct related expenses) 2. Set up an accountable plan where the S-Corp reimburses you for home office expenses The accountable plan route is usually simpler. You calculate your home office expenses (percentage of mortgage interest, utilities, insurance, etc.), submit an expense report to your S-Corp, and the corporation reimburses you. This reimbursement isn't taxable income to you, and the S-Corp gets to deduct it as a business expense. Just make sure to document everything properly - keep records of the square footage calculation, utility bills, and formal expense reports. The IRS is pretty strict about home office deductions, especially for S-Corps, so good documentation is essential. Also consider timing your S-Corp election carefully. If you're doing this for 2025, you generally need to make the election by March 15, 2025 (2 months and 15 days after January 1st) for it to be effective for the entire tax year.