Don't feel bad, I've been filing S-corp returns for 8 yrs and still get confused sometimes. Quick tip: if you're using tax software, most of them will flag percentages over 100% as errors during the review process. That's another reason to file electronically rather than paper - the software can catch simple mistakes like this before submission. Makes the whole process less stressful!

I'm glad to see this got resolved! As someone new to S-corp filing, this thread has been really educational. It's reassuring to know that even experienced business owners sometimes face confusion with tax forms. The distinction between number of shares vs. percentage ownership makes perfect sense now that everyone has explained it. I'll definitely keep this in mind when I eventually need to file my own business taxes. Thanks to everyone who contributed - this is exactly the kind of helpful discussion that makes this community valuable!

can someone explain how the 183 day rule works? ive heard this mentioned but im confused about what counts as a "day" in a state. if i sleep in one state but work during the day in another which one gets that day?? also what if ur traveling a lot between multiple states for work?

The complexity everyone's describing here is exactly why I ended up hiring a tax professional who specializes in multi-state returns. I tried to figure out my California-to-Nevada move on my own and kept getting overwhelmed by all the different rules and exceptions. One thing that really helped me understand was keeping a detailed calendar of where I spent each night during the year I moved. It sounds tedious, but when you're dealing with aggressive states like California, having documentation of your physical presence can be crucial if they ever challenge your residency status. Also, don't forget about the economic nexus test that some states use alongside the physical presence test. California looks at factors like where your income is sourced, where your professional licenses are held, and where you maintain business relationships. Just moving physically isn't always enough if you're still economically tied to the state. For your rental property in California, you'll definitely need to continue filing California non-resident returns for that income even after establishing Texas residency. Texas doesn't have state income tax, which is great, but make sure you're properly reporting that California rental income to avoid any issues down the road.

Has anyone actually been audited for fringe benefits in a small C-corp? All this theoretical advice is great but I'm wondering what happens in practice. I provide myself cell phone, internet, and occasional meals as the owner of a 3-person C-corp and deduct them as business expenses.

The key thing to remember is that C-corps don't have size restrictions for fringe benefits, but documentation becomes absolutely critical when you're a shareholder-employee. I've been through this with my own small C-corp. For meals, you need to establish that they're truly for the "convenience of the employer" - not just convenient for you personally. This means documenting business reasons like needing to work through lunch on client projects, maintaining security of confidential information, or being available for important calls during meal times. Cell phones and internet are generally easier to justify since they're clearly business tools, but you still need to document the business use percentage if there's any personal use. One practical tip: create formal corporate resolutions approving these benefit policies before you start taking them. This shows the IRS that these were deliberate business decisions, not just personal expenses run through the company. Also keep detailed records of the business purpose for each benefit. The "reasonable compensation" test is crucial too - make sure you're paying yourself a reasonable salary before taking fringe benefits, or the IRS might reclassify everything as disguised distributions.

Just wanted to add another perspective on the documentation piece - I've been managing rental properties for about 8 years and have been through two audits. One thing that really helped me was creating separate time logs for each property, especially when one is under renovation like yours. For the property being remodeled, I'd suggest categorizing your time into buckets like "Planning & Design" (researching materials, meeting with contractors), "Project Management" (coordinating work, inspections), "Financial Management" (getting quotes, paying invoices), and "Direct Labor" (any hands-on work you do yourself). This level of detail shows the IRS that you're truly engaged in material participation, not just passively investing. Also, don't forget that travel time to and from the properties counts toward your hours! If you're driving to meet contractors, inspect work, or pick up materials, log those hours too. It all adds up and strengthens your material participation case. Your situation sounds very similar to mine from a few years back, and my CPA had no issues claiming material participation for both the operating property and the one under renovation. The key is showing that consistent, substantial involvement in the business operations.

One thing that hasn't been mentioned yet is the importance of understanding how the passive activity loss rules interact with material participation. Even if you qualify for material participation on both properties, your ability to deduct losses may still be limited by your adjusted gross income (AGI). If your AGI is under $100,000, you can generally deduct up to $25,000 in rental real estate losses per year (assuming you actively participate, which is a lower standard than material participation). This allowance phases out between $100,000-$150,000 AGI and is completely eliminated above $150,000. However, if you truly qualify as a real estate professional (which requires both material participation AND more than 750 hours annually in real estate activities, with real estate being your primary business), then the passive loss limitations don't apply at all. Given that you're managing two STRs with all the activities you described, you might actually qualify as a real estate professional, which would allow you to deduct all losses against any type of income. This could be much more valuable than just claiming material participation. Definitely worth discussing with your CPA - the real estate professional status can be a game-changer for tax savings.

As someone who works in federal financial aid compliance, I want to emphasize something crucial that hasn't been mentioned yet: Make sure your school's financial aid office has properly updated your enrollment status in NSLDS (National Student Loan Data System). Sometimes the disconnect happens at the school level - they may show you as enrolled in their system but haven't transmitted that data to NSLDS, which is what the Department of Education uses for offset decisions. Call your school's financial aid office and specifically ask them to verify your enrollment reporting to NSLDS. Get them to send you a screenshot or confirmation that your current enrollment status is properly reflected. This documentation will be invaluable when you challenge the offset, as it shows the data trail and where the breakdown occurred. Also, since you're military family on PCS orders, you may want to mention the military connection when you call - some agencies have expedited processes for active duty families, especially when it involves improper government actions affecting PCS moves.

I went through this exact situation two years ago as a Navy spouse during PCS season. The offset hit us right when we needed funds for our cross-country move. Here's what I learned: First, contact your loan servicer immediately and request they place a "dispute hold" on your account while the offset is being reviewed - this prevents additional collection actions. Second, when you call the Treasury Offset Program, ask specifically about their "expedited processing for military families" - it's not well advertised but it exists. Third, submit everything via certified mail AND upload to their online portals if available - redundancy is your friend with government agencies. Most importantly, don't wait for the refund to plan your move. Contact your installation's ACS (Army Community Service) or equivalent - they often have emergency loans or grants for situations exactly like this. Military Family Fund and Operation Homefront are also great resources for PCS assistance when government errors create financial hardship. Timeline-wise, mine took 63 days total, but I had my documentation bulletproof from day one. The military connection definitely helped expedite things once I started mentioning it on calls. Hang in there - the system is broken but fixable with persistence!