Has anyone used a TIC (Tenants in Common) arrangement as part of their 1031? I'm in a similar position as OP but might not want to go all-in on another multi-family. I've heard you can exchange into a partial ownership of a larger commercial property.

Based on your numbers, you're looking at roughly $245k in capital gains ($720k sale price - $410k purchase - $65k improvements). Since you've been living in the upstairs unit, you should definitely explore the Section 121 exclusion first. The key question is whether you can document that you've used the upstairs unit as your primary residence for at least 2 of the last 5 years. If so, you could potentially exclude up to $125k of gains (50% of the $250k exclusion for the residential portion) and only need to deal with taxes on the remaining investment portion. Given that your total gain is right around $245k, the combination approach (Section 121 + partial 1031) could work really well. You'd exclude gains on your residence portion and defer the investment portion through the 1031 exchange. For your financing question - yes, a 1.25 DSCR with 20% down is definitely achievable for a 4-6 unit property in that price range, especially if you can show strong rental income history from your current duplex. One thing to consider: make sure you factor in depreciation recapture on the rental portion. Even with a 1031, you'll eventually face that when you sell the replacement property, unless you keep exchanging indefinitely or hold until death for the stepped-up basis.

I've been dealing with bond accrued interest issues for years, and the key thing to remember is that this is essentially a timing difference that corrects itself. When you bought the bond in November 2024 and paid $125 in accrued interest, you were compensating the seller for interest that had built up during their ownership period. Think of it this way: that $750 payment you'll receive in March 2025 includes interest for the entire quarter, including the period before you owned the bond. By subtracting the $125 on your 2025 Schedule B, you're only claiming the interest income for the period you actually owned the bond. The IRS wants to see this matching occur in the same tax year because it provides a clearer picture of your actual economic income from the investment. If you deducted the $125 in 2024 but didn't report any offsetting interest income until 2025, it would distort your income across both years. Make sure to keep your purchase confirmation showing the accrued interest breakdown - you'll need this documentation when preparing your 2025 return.

This thread has been incredibly helpful! I had a similar situation with municipal bonds last year and made the mistake of deducting the accrued interest in the wrong tax year. The IRS sent me a notice asking for clarification, which led to months of correspondence. What I learned from that experience is that keeping detailed records is absolutely crucial. Beyond just the purchase confirmation, I now also keep a spreadsheet tracking each bond's purchase date, accrued interest paid, and expected interest payment dates. This helps me remember which adjustments to make when preparing returns the following year. For anyone dealing with multiple bond purchases throughout the year, consider setting up a simple tracking system. It's much easier to organize this information as you go rather than trying to reconstruct everything at tax time. The matching principle makes perfect sense once you understand it, but it's easy to forget the details when you're preparing returns months later.

Beyond the technical detection methods others have mentioned, there's also the practical reality that most audits involve multiple years of returns and cross-referencing. If you claimed a $5,000 computer purchase in 2022, they might ask to see it during an audit in 2024. They could also request your business insurance records, which often list major equipment and assets. I've seen cases where people got caught because they couldn't produce the actual items they claimed to have purchased, or the items clearly weren't as old as the receipts suggested. The IRS has also been known to visit business premises during more serious audits - it becomes pretty obvious if you claimed to buy office furniture or equipment that isn't actually there. The bottom line is that maintaining accurate, legitimate records from the start is always easier than trying to reconstruct or fabricate documentation later. Keep digital copies of everything and use proper expense tracking - it'll save you headaches whether you get audited or not.

As someone who's been through an IRS audit for my freelance business, I can confirm that the process is much more thorough than people realize. The examiner didn't just look at my receipts - they wanted to see my business bank account statements, credit card records, and even asked about specific vendors I'd worked with. What really surprised me was how they cross-referenced everything. They noticed when I claimed a large office supply expense but couldn't find a corresponding withdrawal or charge in my financial records from around that time. They also questioned why I had claimed meals with "clients" but couldn't provide names or business purposes for several of them. The key thing I learned is that consistency across all your records is what they're really looking for. It's not just about having a receipt - it's about having a complete paper trail that tells a coherent story about your business expenses. They're trained to spot when things don't add up, even if individual receipts look legitimate.

Looking at your transcript, the 291 removing your original $2,365 tax assessment followed by a $0.00 290 is actually a good sign! This usually means the IRS has determined you don't owe that tax anymore after reviewing your amended return. The $0.00 on the 290 suggests they're finalizing calculations. With all your withholdings ($11,173 total) and the tax being removed, you should be looking at a decent refund once they release that 810 freeze. Keep checking your transcript for a 846 refund issued code - that's what you're waiting for next!

Based on your transcript analysis, you're actually in a really good position! The 291 code removing your $2,365 tax liability combined with the $0.00 290 typically indicates the IRS has completed their review and determined you don't owe that original tax amount. Looking at your withholdings totaling over $11,000 and the tax being removed, you should expect a substantial refund once they process everything. The 810 freeze from March is likely the only thing holding up your refund release now. Keep monitoring for an 846 code (refund issued) with a direct deposit date (DDD). Given that your 290 posted on 11/11, I'd expect movement within the next 1-3 weeks if there are no other complications. The fact that they've moved through the review process this quickly after your amended return is actually encouraging! Stay patient - you're in the final stretch! 🤞

I've seen dozens of cases like this at the VITA site where I volunteer. The verification letter system has a serious flaw - the IRS computer system marks letters as "sent" when they're queued for printing, not when they actually go out. During busy periods (especially February-April), there can be a 2-3 week gap between when the system says a letter was sent and when it actually gets printed and mailed. To make matters worse, these verification letters are often generated by automated systems that don't check if previous letters were delivered. So when you call, the representative sees the letter marked as "sent" in their system, assumes you should have received it, and triggers a new one - which enters the same backlogged printing queue. We've had taxpayers receive 4-5 identical verification letters all at once in May for returns filed in February. The system is fundamentally broken.

This is incredibly frustrating but unfortunately very common right now. I went through the exact same cycle - called three times, each time told to wait 14 more days, never received a single letter despite them claiming multiple were "sent." What finally worked for me was booking an appointment at my local Taxpayer Assistance Center through the IRS website. I was able to get an appointment within 10 days, brought two forms of ID, and they verified my identity on the spot. My refund was processed and deposited within a week after that. The phone verification system seems completely broken this year. Don't waste more time calling - go straight to the in-person appointment option. It's the only reliable way I've seen people actually resolve this verification nightmare.