This is absolutely infuriating! I'm going through the exact same thing right now. Filed on Feb 15th, selected direct deposit like I do every year, and got this ridiculous paper check with check number 100001 yesterday. My bank immediately flagged it as suspicious and put a 10-day hold on it! What really gets me is that TurboTax is acting like this is totally normal. When I called them, the rep had the audacity to tell me that "sometimes the system defaults to paper checks for security reasons" - but couldn't explain why my banking info that worked fine for the past 5 years suddenly became a "security risk." The worst part? I specifically needed that refund by this week for my daughter's college tuition payment. Now I'm stuck waiting another week and a half while TurboTax sits on their hands pretending this isn't their fault. I've already started my complaint with the CFPB and I'm definitely switching to a different tax service next year. This is completely unacceptable! Thanks for posting this - at least now I know I'm not going crazy and this is happening to tons of people. We need to keep making noise about this until they fix it!

I'm experiencing this exact same issue! Filed my return through TurboTax on February 20th with direct deposit selected, but received a paper check yesterday with that infamous 100001 check number. My local bank immediately flagged it and placed a 5-business-day hold, saying they've seen multiple checks with this same number which violates their fraud detection protocols. What's particularly frustrating is that when I called TurboTax support, they kept insisting this was an "IRS processing issue" and that they had no control over how refunds are distributed. But after reading all these comments, it's clear this is a systematic problem with TurboTax's new payment processing system, not the IRS. I've already filed a complaint with the Consumer Financial Protection Bureau (CFPB) and documented all my interactions with TurboTax customer service. For anyone else dealing with this, I recommend: 1. Deposit the check despite the hold - the funds are legitimate 2. Document everything (screenshots, call logs, emails) 3. File a CFPB complaint at consumerfinance.gov 4. Consider switching tax prep services next year This whole situation has cost me time, stress, and delayed access to MY money. TurboTax needs to take responsibility for this mess instead of deflecting blame to the IRS.

This is such a helpful discussion! I'm dealing with a similar situation but with gift cards instead of store credit. Last year my client paid me with a $200 Amazon gift card for some freelance work. I used part of it ($75) to buy business supplies. Should I report the full $200 gift card as income when I received it, and then deduct the $75 when I used it for business? Or do I only report income/expenses when I actually use the gift card? The timing seems tricky since I received payment in December 2024 but didn't make the business purchase until January 2025.

This thread has been incredibly helpful! I'm in a similar boat with my first Schedule C filing. One thing I'd add based on my research is to make sure you're consistent with how you handle these credits year over year. If you establish a pattern of deducting only out-of-pocket expenses for promotional credits, stick with that method going forward. The IRS appreciates consistency in accounting methods, and it makes your records cleaner if you ever get audited. Also, for anyone keeping manual records like I was doing, I found it helpful to add a "Credit Applied" column to my expense tracking spreadsheet. This way I can clearly see both the original price and what I actually paid, plus note the source of any credits (personal return, business return, promotional, etc.). Makes tax prep much less stressful when you have all that context documented throughout the year.

Don't forget that property tax rules can vary by state! In some places, property taxes are paid partly in advance rather than fully in arrears. And some counties have weird fiscal years that don't align with calendar years. Might be worth a quick call to your county tax assessor's office to confirm exactly how your local system works before making any decisions.

Great question! I went through the exact same confusion when I bought my first home. The key thing to remember is that for individual taxpayers, property tax deductions follow the "cash basis" rule - you can only deduct what you actually paid out of pocket to the tax authority in that tax year. Since your escrow account didn't make any property tax payments in 2023, you won't have a property tax deduction for your 2023 return. The credit you received at closing from the seller is considered a purchase price adjustment, not a tax payment by you. When you pay the 2023 property taxes in January 2024 (even though they're for the previous year), that's when you'll get the deduction - on your 2024 tax return that you'll file in 2025. Make sure to keep your closing statement and all escrow records organized, as you'll need them for future reference and when you eventually sell the home.

Great discussion here! I went through a similar S corp ownership transfer from my uncle about 18 months ago and wanted to share a few additional considerations that came up during my experience. One thing that caught me off guard was the potential impact of any outstanding business loans or debts that transferred with the ownership. If your dad had any business loans that you assumed as part of the purchase, this can affect your stock basis calculations in ways I didn't initially understand. Make sure your accountant reviews any debt assumptions as part of the transfer. Also, if the business has accumulated earnings and profits (E&P) from before it elected S corp status, or if it was previously a C corp, there could be some built-in gains tax implications down the road. This is pretty technical stuff, but worth asking about since family transfers sometimes involve businesses that have been around for decades. The reasonable salary discussion above is spot on - I ended up having to adjust mine upward after my first year because I was being too conservative. Better to err on the side of paying yourself fairly from the start rather than having to explain to the IRS later why you were trying to minimize payroll taxes. One last tip: keep detailed records of everything related to the transfer. The IRS loves documentation, especially for family business transactions where they might be more scrutinizing of the terms and pricing.

One aspect that hasn't been covered yet is the potential impact on your business insurance policies. When I took over my family's S corp, I discovered that several of our business insurance policies (general liability, professional liability, key person life insurance) needed to be updated to reflect the ownership change. The key person life insurance was particularly important - it was still naming my father as the key person, but now that I'm running the business, we needed to either transfer the policy or get new coverage. Some insurers also required notification of ownership changes within a certain timeframe to maintain coverage. Also, if you have any business contracts or agreements (vendor contracts, leases, loan agreements), review whether they have change of ownership clauses that require notification or approval. I found that our office lease required landlord approval for ownership transfers, even within family, and one of our major vendor contracts had a clause requiring notification within 30 days. These aren't tax issues per se, but they're important business compliance matters that can cause problems if overlooked during a family business transfer. Better to address them proactively while you're getting everything else sorted out with your accountant.

Just to clarify something that seems to be causing confusion in this thread - there's an important distinction between truly collectible/investment vehicles and regular cars that happen to be a bit special. For a regular car (even if it's a nice classic that you drive on weekends), you generally CANNOT deduct the loss. These are personal-use assets. For cars held EXCLUSIVELY as collectible investments, you potentially CAN deduct losses, but you need extensive documentation showing investment intent. For cars used in a BUSINESS (like a restoration business, car dealer, etc.), losses are generally deductible as business expenses. Most people fall into the first category and can't deduct losses, which is why the general advice is that car losses aren't deductible. Most folks simply can't meet the strict requirements for the exceptions.

This is such a frustrating aspect of the tax code that catches so many people off guard! I went through something similar with a vintage truck I had to sell at a loss during COVID when I needed cash fast. What really helped me understand the situation was learning about the "personal use presumption" - basically, the IRS assumes that unless you can prove otherwise with solid documentation, any vehicle you own is for personal use and enjoyment. Even if you barely drive it, even if it's rare or collectible, the default assumption is personal use. The harsh reality is that the tax code is designed this way intentionally. Personal assets like cars, boats, jewelry, etc. are expected to depreciate as part of their normal use cycle. The IRS views this depreciation as the "cost" of enjoying these items, similar to how you can't deduct the loss when your furniture gets old or your clothes wear out. What I learned from my tax advisor is that if you're serious about treating vehicles as investments going forward, you need to set up that framework BEFORE you buy, not after. This means business entities, proper documentation, storage agreements, maintenance logs, and most importantly - never using them personally. It's a pretty high bar to meet, but it is possible if you're committed to treating it as a true investment rather than a hobby that might make money.