Has anyone mentioned installment sales yet? When I sold my distribution business, I negotiated for 35% upfront and the rest paid over 3 years. This spread out my tax liability and actually kept me in a lower bracket each year. The buyer wasn't thrilled initially but I offered a slight discount on the total purchase price in exchange for the payment terms. Make sure to get security though - I required a lien on the business assets until full payment.

This is exactly why proper due diligence and security structures are crucial in installment sales. In my experience helping clients structure these deals, you can mitigate most of the risk through: 1. **Personal guarantees** from the buyers (especially if they're individuals or small entities) 2. **UCC liens** on all business assets until final payment 3. **Escrow arrangements** for a portion of the deferred payments 4. **Performance covenants** that require maintaining certain financial ratios 5. **Acceleration clauses** if they miss payments or breach covenants The tax benefits can be substantial - especially for someone like Mei with a $4M+ deal. Even if you discount the total price by 5-10% to get installment terms, you could still come out ahead after taxes if it keeps you in lower brackets or helps with other tax planning strategies. That said, you're absolutely right that cash upfront eliminates collection risk entirely. It really comes down to your risk tolerance, the creditworthiness of the buyers, and how much the tax savings would be worth to you. With proper legal structure though, installment sales can work well for both parties.

Another important thing about lottery timing - if you take the annuity option (payments over 30 years), you'll pay taxes on each payment as you receive it. This can sometimes be better than taking the lump sum because: 1) You might stay in lower tax brackets across multiple years 2) You protect yourself from spending it all at once 3) The total payout is actually significantly higher

Great question! I've been wondering about this too. One thing I'd add is that you should definitely consider making quarterly estimated tax payments once you claim, especially for large winnings. The IRS expects payment throughout the year, not just at filing time. If you win big and don't make estimated payments, you could face underpayment penalties even if you pay the full amount when you file your return. The standard withholding might not be enough to cover your actual tax liability, especially if the winnings push you into higher brackets. Also, don't forget about the "kiddie tax" if you're planning to gift any winnings to children - there are special rules that might apply. Definitely worth consulting a tax professional for the big wins!

The interaction between part-time business operations and business start dates is actually more straightforward than you might think. The IRS doesn't require full-time commitment to consider a business as having commenced operations - they focus on whether you're actively and regularly seeking to earn income from the activity. For your specific questions about expense classification: once the business has started (potentially when those Facebook ads ran), expenses generally fall into regular business expense categories unless they're specifically startup-related activities that occurred before operations began. So if you bought the laptop after running ads but before "officially launching," it would likely still be a regular business expense since the business had already commenced. The key documentation @d7b1bf01b6c9 should gather includes: - Facebook ad campaign details (dates, targeting, what services were promoted) - Any inquiries or responses from those ads - Timeline of when different expenses were incurred relative to the advertising - Records showing progression from "research/planning" to "seeking customers" One important consideration: even if some expenses end up classified as startup costs, remember that you can still deduct up to $5,000 immediately in your first year of operations, with the remainder amortized. Sometimes a mix of startup costs and regular business expenses can actually provide good tax planning flexibility. The part-time versus full-time distinction matters less than demonstrating you had profit motive and were actively pursuing business income, which your advertising efforts clearly show.

Absolutely agree with @9c1cbad1d199 about the documentation being crucial here! I went through a similar situation last year and learned the hard way that the IRS really does focus on when you first started actively seeking customers, not when you "officially" launched. @d7b1bf01b6c9 Since you mentioned those Facebook ads were for "testing the waters," I'd recommend pulling the exact dates they ran and what the ad copy said. If the ads promoted your services or asked people to contact you for consultations, that's likely your business start date right there - even if you were just testing response rates. One thing that worked well for me was creating a simple spreadsheet with three columns: Date, Expense Description, and Classification (Pre-Business/Post-Business Start). This made it super easy when tax time came around to show my accountant exactly what happened when. The good news is that if your business started with those Facebook ads, most of your $7,500 in expenses probably occurred after that point, which means they'd be regular business expenses rather than startup costs requiring amortization. Your laptop, software subscriptions, and later advertising would all be immediately deductible (subject to having business income to offset them against). Just make sure to keep records showing you had genuine profit motive from the beginning - the fact that you were tracking expenses and testing marketing approaches actually demonstrates this really well!

Has anyone actually had a payment get "lost" when paying before the balance shows up online? I'm in the same situation with my 4549 and worried about this.

I went through this exact situation last year and can share what worked for me. I paid immediately using IRS Direct Pay even though no balance was showing online, and it was the right call. The key is to be very specific with your payment details - I selected "Form 1040" for the tax form, chose the correct tax year, and most importantly selected "Other" as the reason and typed "Form 4549 Agreed Assessment" in the description field. Make sure to include your Letter 525-T control number somewhere in the payment notes if possible. I also kept detailed screenshots of the payment confirmation page and printed everything out for my records. The interest did continue to accrue for about 5 weeks until they officially posted the assessment, but paying early prevented any additional delays on my end. My payment was properly applied once they processed everything, and I had peace of mind knowing I'd done everything I could to minimize interest charges. One tip: if you're really concerned about the payment being applied correctly, consider making the payment and then calling the IRS a few days later to confirm they received it and that it's properly tagged to your examination case. Having that confirmation can save you stress later.

The 1098-T can definitely be confusing! You absolutely need to report it even though you didn't pay out of pocket. The form is required because it shows the IRS your educational expenses and aid received, which affects potential education credits and determines if any scholarship money is taxable income. In your case, since your scholarships ($3,748) are less than your qualified expenses ($6,725), the scholarship portion likely won't be taxable. The difference could be from loans or other non-grant aid. Just enter the numbers exactly as shown on your 1098-T - Box 1: $6,725, Box 5: $3,748 - and let your tax software calculate everything correctly. You might even qualify for education credits!

Just want to echo what others have said - definitely report it! I made the same mistake my freshman year thinking "I didn't pay anything so why report it?" Big mistake. The 1098-T is basically a paper trail for the IRS to track education expenses and financial aid. Even though your aid covered everything, those numbers help determine if you're eligible for education credits like the American Opportunity Credit (up to $2,500) or Lifetime Learning Credit. The fact that your qualified expenses ($6,725) exceed your scholarships ($3,748) is actually good news - means your scholarships likely aren't taxable and you might qualify for credits. Don't stress about the $2,977 difference, that's probably just reflecting how your school processed different types of aid. Just plug in those exact numbers and let the software work its magic!