Has anyone mentioned the built-in gains tax implications here? If your S-Corp has C Corp history or assets that appreciated before S election, distribution of those assets could trigger built-in gains tax. Probably not relevant for a new company, but worth mentioning. Also, for next year, consider setting up an accountable plan to handle business expenses paid from personal accounts properly. It's a formal way to handle reimbursements that avoids the paid-in capital complications entirely.

I've been through a similar situation with my S-Corp and mixed personal/business expenses. One thing that hasn't been fully addressed here is the timing issue - since you're filing for last year, you need to be very careful about how you document these transactions retroactively. For the paid-in capital from personal expenses, make sure you have clear documentation showing the business purpose of each expense. Bank statements alone won't be enough if questioned - you'll want receipts, invoices, and a clear business justification for each transaction. Regarding the disproportionate distributions issue that was mentioned, this is actually more serious than it might seem. The IRS can potentially revoke your S-Corp election if distributions aren't made pro-rata to ownership. Since only one shareholder took money out, you might want to consider having the other shareholder take an equivalent distribution (even if they immediately loan it back to the company) to maintain proportionality. Also, keep in mind that the IRS has been increasingly scrutinizing S-Corps that don't pay reasonable salaries. Even though you can't retroactively set up payroll for last year, documenting a plan to address this going forward will be important. Consider consulting with a tax professional who specializes in S-Corp compliance before filing - the cost might be worth it to avoid potential penalties or losing your S election.

Benjamin, I feel your pain on this one! I went through something similar with my consulting business a few years back. The 5-year waiting period is brutal, but you do have some legitimate options beyond just waiting it out. Based on what you've described, I'd focus on the "reasonable cause" exception that others have mentioned. The fact that you revoked the S election when your business income was minimal ($40k) and you had a full-time job suggests you made a reasonable business decision at the time - not a tax avoidance scheme. Now that your circumstances have completely changed (full-time business, $180k projected income), you have a strong case for demonstrating that the original revocation wasn't primarily for tax benefits. The IRS has approved similar requests when taxpayers can show genuine business reasons. I'd recommend documenting everything: your income levels in 2023, your employment status change, projections for this year, and any advice you received that led to the original revocation. This paper trail will be crucial for your letter ruling request. The private letter ruling route isn't cheap (around $3,000-$7,000 in fees), but with your projected income level, the S corp tax savings would likely justify the cost. Just make sure you work with someone experienced in these types of requests - the formatting and arguments matter a lot. Don't give up! The IRS rejection letter is just their standard response, but exceptions do exist for situations like yours.

Benjamin, I've been following this thread and wanted to add another perspective based on my experience with S corp elections. You mentioned you've been relying on "random internet advice" - that's actually more common than you think, and it might work in your favor for the reasonable cause exception. The IRS recognizes that small business owners often make decisions based on general guidance available at the time. What matters is that you made a rational business decision given your circumstances (part-time business, minimal income, full-time employment). One thing I haven't seen mentioned yet is the timing of your quarterly estimated payments. Since you're projecting $180k this year and currently operating as an LLC, you're facing self-employment tax on the full amount. That's roughly $25k+ in SE tax alone that S corp status could help reduce significantly. Given the urgency of your tax situation, I'd actually recommend pursuing multiple approaches simultaneously: 1. File for the private letter ruling as others suggested 2. Consider the new entity approach (with proper legal structure to avoid substance-over-form issues) 3. Document everything about your 2023 decision-making process while it's still fresh The cost of professional help now is likely far less than the tax consequences of staying in LLC status for another 2+ years. Don't let the initial rejection discourage you - the IRS form letters rarely tell the whole story about available options.

You might want to check the ACH processing schedule. The Federal Reserve processes ACH transactions in windows, and many financial institutions don't process on weekends. Since your DDD falls on a Sunday, actual processing likely occurred Friday, but settlement might not complete until Monday. Netspend's policy is to release funds when they receive notification, not necessarily on the official settlement date.

I'm going through the exact same thing right now! My transcript shows the 846 code with March 3rd date, but still nothing in my Netspend account as of this afternoon. This is my first year using Netspend for my refund, so I wasn't sure what to expect timing-wise. Really helpful to see everyone's different experiences here - sounds like there's quite a bit of variation even with the same bank. I'll give it until tomorrow before I start worrying. Fingers crossed we both see our deposits soon!

Does anyone recommend any specific tax software that handles wash sales correctly? I tried using FreeTaxUSA last year and it was a nightmare trying to manually figure out all the wash sales from my trading.

I want to clarify something important that might help ease your concerns. In your hypothetical scenario, you're thinking about this backwards. If you made $130k in gains and then later had losses that brought your net position down to $15, those are separate transactions. The wash sale rule would only disallow the losses if you repurchased the same securities within 30 days. But here's the key: those disallowed losses don't just disappear forever - they get added to the cost basis of your new shares. So let's say you had $129,985 in losses that were disallowed due to wash sales. That amount gets added to the cost basis of your repurchased shares. When you eventually sell those shares (and don't repurchase within 30 days), you'll get the benefit of that higher cost basis, which will reduce your taxable gain or increase your deductible loss. The timing is what creates the cash flow problem - you might owe taxes on the $130k gain this year, but the benefit of those disallowed losses will come when you sell the replacement shares. This is why active traders need to be very careful about year-end positioning and cash flow planning. You wouldn't permanently lose $38,985 - it's more of a timing issue that affects when you can claim those losses for tax purposes.

One thing to keep in mind - make sure you're keeping VERY detailed records of your poker/sports betting activities if you're reporting them as business income and setting up a SEP-IRA. The IRS scrutinizes gambling income closely, especially when it's used to establish retirement accounts. Daily logs of play time, tournaments entered, buy-ins, cash-outs, locations, witnesses, etc. - document everything. I learned this the hard way when I got audited in 2023 for my 2022 returns.

Just want to add another perspective here - I went through this exact same situation last year when setting up my SEP-IRA with poker tournament winnings. The confusion around that gambling business question is totally understandable because the wording is misleading. What helped me was thinking about it this way: the IRS is trying to identify businesses that are in the gambling INDUSTRY (casinos, bookmakers, lottery operators) versus people who gamble professionally. You're a customer of gambling establishments, not operating one yourself. I selected "NO" on that question and had zero issues with my EIN approval or SEP-IRA setup. My CPA confirmed this was correct - the distinction is crucial for tax purposes but won't affect your ability to report poker/betting income as self-employment income on Schedule C. Just make sure you have solid documentation of your gambling activities as others have mentioned. The combination of professional gambling income + retirement account contributions does tend to get extra scrutiny, so having your records organized is essential.