This happened to my client last year! They got two separate deposits - first the original refund, then about 3 weeks later they got the additional amount from the superseding return. The IRS didn't combine them because the first one was already in process.

Great advice about the documentation! I'm also new to handling superseding returns and this whole thread has been incredibly educational. One question - when you say "keep detailed documentation," what specifically should we be documenting beyond the usual client files? Should we be saving screenshots of the software displays that show the confusing refund calculations, or is it more about documenting the timeline of when each return was filed? I want to make sure I'm covering all my bases since this seems like an area where clients might have questions later, especially if they end up receiving multiple refund deposits like some people mentioned.

This is the way. My startup sends quarterly investor updates with our current paper value. They also explain major events that affected K-1 allocations each year. If your company isn't doing this, it's a red flag about their communication practices.

This is such a helpful breakdown! I'm actually dealing with something similar and was panicking when I saw losses on my K-1 for the third year running. Your explanation about depreciation and amortization from acquisitions makes total sense - I hadn't thought about how those accounting treatments would flow through to investors. One quick question - when you mention tracking adjusted basis, what specific records should I be keeping? I have my original investment documents but I'm not sure what else I need to properly calculate this when the time comes to sell.

Thanks for bringing this up! I hadn't even thought about the self-employment tax angle. So if I deduct the $1,300 in expenses, I'd save on SE tax even though my potential 401k contribution would be lower. Do you know roughly how that math works out? Is the SE tax savings significant enough to make the lower contribution limit worthwhile?

The math typically favors taking all legitimate business deductions. On $1,300 of expenses, you'd save about $199 in self-employment tax (15.3% of $1,300) by deducting them. If you didn't deduct those expenses, you could contribute an extra $1,300 to your Solo 401k, which would save you income tax on that amount - but you'd still pay the extra $199 in SE tax. Unless you're in a very high income tax bracket, the SE tax savings plus income tax savings on the $1,300 business deduction will usually exceed the income tax savings on the additional $1,300 401k contribution.

But what about the employer contribution part? Doesn't that add more to the total you can put in? I thought solo 401ks let you contribute as both employer and employee.

You're absolutely right about the employer contribution! Solo 401k plans do allow both employee and employer contributions. The $22,500 limit Oliver mentioned is just for the employee elective deferral portion. As the employer, you can also contribute up to 25% of your net self-employment earnings (after deducting half of your self-employment tax). For someone with $8,000 in net earnings like Melina, this would add roughly another $1,600 in potential contributions using the simplified 20% calculation. So the total possible contribution would be closer to $8,000 (employee) + $1,600 (employer) = $9,600, but since you can't contribute more than 100% of your net earnings, you'd be capped at the $8,000 total in this case. Still good to understand both parts though!

This is such an important point that's often missed! I once had a situation where I had wash sales across tax years, and I had to make sure I tracked the adjusted basis into the next year. Does being a non-resident change anything about how this carry-over basis works?

You're right to ask about the cross-year implications for non-residents! The basis adjustment works the same way regardless of residency status, but there's an extra wrinkle for non-residents. If you have wash sales that create adjusted basis in replacement shares, you need to carefully track that adjusted basis even if your residency status changes in the future. The IRS systems don't always effectively track basis information across different taxpayer statuses, so keeping your own detailed records is essential. This is especially true if you might change from non-resident to resident status (or vice versa) in a future year.

This is such a crucial point that many people miss! I had no idea that wash sales could occur across different brokerages. That's really scary because you could unknowingly violate the wash sale rules and then file incorrectly. How did you even figure out that you had cross-brokerage wash sales? Do you just have to manually compare all your buy and sell transactions across every account you have? That sounds like it could be a nightmare if you're an active trader with multiple accounts.

Your accountant might have classified them as 5-year property if they're being used primarily in construction activities. Assets used in construction can sometimes qualify for 5-year treatment under asset class 15.0 for "Construction." It depends on your specific business use. If you're primarily renting them to others, they're typically 7-year property. But if they're used as part of your construction business operations, 5-year might be correct. I'd double-check with your accountant about their reasoning, but it could be completely legitimate based on your specific situation.

This is really helpful - thank you for the comprehensive breakdown! I'm curious about the delivery/setup costs you mentioned. When you say they can be added to the basis, does that include things like installation fees for electrical hookups or plumbing connections at event sites? Or are you referring more to the initial delivery when you first purchase the units? I want to make sure I'm capitalizing the right expenses versus treating them as ongoing operational costs.

Great question about the delivery/setup costs! You want to distinguish between costs that are part of getting the asset "ready for use" versus ongoing operational expenses. For the initial purchase, delivery and any setup costs to get the units operational (like initial electrical connections, testing, etc.) should be capitalized and added to the basis of the equipment. These are considered part of the cost to acquire and prepare the asset for business use. However, the ongoing delivery/pickup costs for each event rental would typically be treated as operational expenses since those are recurring costs associated with using the equipment in your business operations, not preparing it for initial use. The key test is: "Is this cost necessary to get the asset ready for its intended business use?" If yes, capitalize it. If it's a cost you'll incur repeatedly during normal operations, expense it.