Don't forget to look into state taxes too! Federal is only part of it. Some states have inheritance taxes that are separate from federal estate taxes. For example, in PA where I live, there's an inheritance tax even if the estate is below the federal threshold.

This is a complex situation that really highlights why estate planning and proper documentation are so important. Based on what you've described, it sounds like the estate should be filing Form 1041 since the mobile home was still owned by the estate at the time of sale. The arrangement where your in-laws put the property in someone else's name for the sale creates some potential complications. That person might technically be considered the seller for tax purposes, even if they're just acting as an agent. The signed contract you mentioned should specify whether they're acting on behalf of the estate or the beneficiaries. Given the $33,000 gain and the unusual sale arrangement, I'd strongly recommend consulting with a tax professional or estate attorney who can review the specific contract language and advise on the proper reporting. The IRS can be very particular about how these transactions are structured and reported, especially when there are agency relationships involved. Also, make sure the executor is aware of their filing obligations - they may need to file Form 1041 even if the estate doesn't owe any tax, depending on the gross income of the estate.

Heads up! If your LLC elected S-Corporation status at any point, you need to file Form 1120-S instead of 1065. Made this mistake my first year and got a nasty letter from the IRS. Double check your entity classification before filing.

Just to clarify something that might be confusing from the thread - while there's no IRS filing fee for Form 1065, don't forget about your state requirements! Even with zero activity, many states still require annual filings and fees. For example, if you're in California, you'll owe the $800 minimum franchise tax even with no income. Texas has a "no tax due" report that still needs to be filed. Each state is different, so check your state's Secretary of State website or Department of Revenue. Also, since you mentioned this LLC has been inactive, you might want to consider formally dissolving it if you don't plan to use it. This could save you from ongoing state fees and annual filing requirements. You'd need to file a final Form 1065 (checking the "final return" box) and handle the state dissolution process, but it might be worth it long-term.

11 Is anyone else confused about the Schedule K-1 requirements for a partnership with zero income? Our CPA wants to charge us $400 to prepare these forms even though we literally did nothing last year except form the LLC.

22 Quick tip from someone who's been there - if you're filing late for your partnership, include a letter explaining that you're first-time business owners who were unaware of the filing requirements. The IRS often waives penalties for first-time filers if you have a reasonable explanation!

5 Just wanted to add - if you use tax software like TurboTax Business or H&R Block Business, they can walk you through filing a return for an LLC that hasn't begun operations yet. I was in exactly your position last year with my consulting business. The key thing is that your initial $8k contribution is not taxable revenue - it's just capital investment. The software will have you enter this as partner contributions. Since you have no income or expenses yet, most of the forms will be zeros, but you still need to file.

25 Something nobody mentioned - make sure you check local tax requirements too! I found out the hard way that my city requires a business license and annual business tax return even if your business hasn't started operating yet. Cost me a $75 late fee because I didn't realize this applied to "pre-revenue" businesses.

Thank you all for the amazing advice! I talked to my wife and we decided to use the IRS Tax Withholding Estimator first to get a baseline. It recommended that I (higher earner) check box 2(c) and add about $55 per paycheck in section 4(c), while she should just select "Married Filing Jointly" without checking 2(c). We're going to submit these changes to our employers this week. I'm really grateful for all the detailed explanations - the W4 form is surprisingly complex for something that seems like it should be straightforward!

Great to see you got it sorted out! Just wanted to add one more tip that helped us - consider doing a "paycheck checkup" around mid-year (July/August) to see if you're on track. You can look at your year-to-date withholding on your pay stubs and compare it to what you actually owed last year (adjusted for any salary changes). If you're way off, you can always submit updated W4s to fine-tune the withholding for the rest of the year. We learned this the hard way after implementing our changes in March and realizing we were still slightly underwithholding by summer. Also, keep in mind that if either of you gets a significant raise or bonus during the year, it might throw off your calculations since bonuses are often withheld at a flat 22% rate which might not match your actual tax bracket.