I work as a tax preparer and see these situations frequently. Based on what you've described, your $45,000 settlement for emotional distress and mental anguish is likely taxable income since it doesn't appear to stem from physical injuries. A few important things to consider: 1. The absence of a 1099 doesn't mean it's not taxable - you're still required to report settlement income even without formal tax documents. 2. If your settlement agreement broke down the payment into different categories (lost wages, punitive damages, emotional distress, etc.), each portion may have different tax treatment. 3. You mentioned attorney fees - this creates additional complexity. If your attorney took a contingency fee, you'll need to report the gross settlement amount as income and potentially deduct the legal fees, though recent tax law changes have made this more difficult for employment-related cases. My recommendation: consult with a tax professional who can review your actual settlement agreement. The specific language matters enormously for tax treatment, and generic advice (even from well-meaning friends who are accountants) may not apply to your particular situation. Don't wait until the last minute on this - settlement taxation can be complex and you want to get it right.

I went through something very similar last year with an employment settlement. The key thing that helped me was getting a consultation with a tax attorney who specialized in settlement taxation rather than just a regular CPA. Here's what I learned: the IRS looks at the "origin of the claim" test - basically what was the underlying reason for your lawsuit? If it was purely workplace harassment/hostile work environment without any physical injury component, then yes, it's likely taxable. However, there are some nuances that matter: - If any portion was specifically for lost wages, that's definitely taxable as ordinary income - If there were punitive damages, those are also taxable - Medical expenses you paid for therapy/treatment related to the distress can potentially be deducted For reporting without a 1099, you'd typically report it as "Other Income" on Schedule 1 of Form 1040. But definitely get professional help because the attorney fee situation can get really complicated - especially with the recent changes to itemized deduction rules. Don't let this stress you out too much though. Even if it's fully taxable, you can always set up a payment plan with the IRS if you can't pay all at once. The important thing is to report it correctly and not try to hide it.

Has anyone addressed whether the grandson is involved in the business operations? If he's not materially participating, you might have passive activity loss limitations to consider. And remember that gifts of partnership interests to family members often trigger family partnership rules under Section 704(e).

This is a complex situation that requires careful documentation. Since you dissolved the original partnership and formed a new one, you'll want to make sure you have clear records showing this wasn't done to avoid gift tax obligations. The IRS will look at the substance over form. A few additional considerations: First, get a qualified appraisal for the 10% interest - family partnership transfers are heavily scrutinized and you'll want professional support for any valuation discounts. Second, consider whether the grandson meets the requirements for a bona fide partner under Section 704(e) if he's not actively involved in operations. Third, document the legitimate business reasons for the partnership restructuring beyond just the gift transfer. The gift tax return (Form 709) is definitely required regardless of the partnership restructuring. The value reported should reflect the fair market value of the 10% interest at the time of transfer, with appropriate discounts if supportable. Consider consulting with a tax professional who specializes in family partnerships to ensure all aspects are handled correctly.

One thing nobody mentioned yet - if you're using part of your apartment as a home office, don't forget to check with your landlord and review your lease! Some leases prohibit using residential space for business purposes, and some cities have zoning regulations about home-based businesses. Just a heads up so you don't run into lease issues while trying to save on taxes.

Great thread! As someone who's been freelancing for 3 years now, I want to add a few things that helped me in my early days: **Quarterly estimated taxes**: Since you're self-employed, you'll likely need to pay quarterly estimated taxes to avoid penalties. The IRS expects you to pay as you go, not just once a year. Use Form 1040ES to calculate these. **Business credit card**: If you haven't already, consider getting a separate credit card just for business expenses. This makes tracking SO much easier and creates a clear paper trail. Even if you use your personal card sometimes, having a dedicated business card for major expenses helps with organization. **Mileage tracking**: Don't forget about mileage deductions if you drive to client meetings, co-working spaces, or business errands. The standard mileage rate for 2024 is 67 cents per mile. Apps like MileIQ can automate this tracking. **Professional development**: Courses, books, conferences, and certifications related to marketing consulting are all deductible business expenses. This includes online courses and industry publications. The documentation advice from others is spot-on - keep receipts and notes about the business purpose of each expense. A simple spreadsheet or app can save you hours during tax prep!

Hey Benjamin! I totally understand your confusion - I went through the exact same thing last year with my Schwab account. The "basis not reported to IRS" checkbox with all zeros had me panicking that I was going to get audited or something. After doing a ton of research and even talking to a tax professional, I learned that this is incredibly common. Brokers are required to send you a 1099-B even if there was no taxable activity in your account. The "basis not reported" box is just their way of covering themselves legally - it doesn't mean anything suspicious happened. Your TurboTax is definitely handling this correctly. When all the dollar amounts are zero, there's literally no gain or loss to report, so no taxes owed. The software recognizes these as "placeholder" forms that don't affect your tax liability. Don't stress about tax fraud - you're doing everything right by entering the form exactly as it appears. The IRS sees millions of these zero-value 1099-B forms every year and they're completely normal. You're being a responsible taxpayer by double-checking, but you can rest easy knowing your return is accurate!

I've been following this thread and wanted to add my perspective as someone who's dealt with these confusing 1099-B forms for several years now. The consensus here is absolutely correct - when you see "basis not reported to IRS" with all $0 values, it's typically just a placeholder form that brokers are required to send. One thing I'd add is that you should keep a copy of this form with your tax records even though it doesn't affect your current return. If you have securities in that account that you eventually sell in future years, having this documentation can help establish a paper trail showing when the "basis not reported" designation first appeared for those holdings. Also, don't be surprised if you get similar forms in future years if you continue holding the same securities. Some of my older stock purchases (from before 2011 when basis reporting rules changed) generate these placeholder 1099-B forms annually even when I don't trade them. It's just part of the broker's compliance process. Your instinct to double-check was smart, but you can definitely trust TurboTax on this one. These software programs have seen millions of these exact scenarios and handle them correctly.

Maya, I completely sympathize with your AMT frustration! This is one of the most confusing areas of tax law, and even experienced practitioners get tripped up by it regularly. From what you've described, it sounds like you're running into the classic AMT NOL limitation issue. Here's the key point that often gets missed: AMT NOL carryforwards can only offset 90% of your Alternative Minimum Taxable Income (with some exceptions for losses from 2018-2020). This means even with a substantial NOL, you'll still owe AMT on at least 10% of your AMTI. But there's likely another factor at play here - when you sold assets to generate that long-term capital gain, were any of them depreciated property? If so, you might have different basis amounts for AMT purposes versus regular tax purposes. This could be creating additional AMT income that wasn't fully accounted for in your NOL calculations. I'd strongly recommend manually working through Form 6251 line by line rather than relying on tax software for this calculation. Many programs don't handle the complex interaction between AMT NOLs and capital gains correctly, especially when depreciation adjustments are involved. For your IRS response, make sure to include detailed supporting worksheets showing exactly how you calculated your AMT NOL carryforward and how you applied the 90% limitation. The clearer your documentation, the better chance you have of resolving this without extended back-and-forth correspondence. This situation is fixable once you understand all the moving parts - hang in there!

Welcome to the AMT nightmare club, Maya! I've been lurking here for a while but had to jump in because I just went through this exact same situation with my own return last month. The frustrating thing about AMT NOL carryforwards is that they operate under completely different rules than regular NOLs, and most tax software handles this terribly. Like others mentioned, you're dealing with the 90% limitation, but there's also another gotcha - if your capital gains included any Section 1250 depreciation recapture, that gets treated differently under AMT calculations. What finally helped me figure out my situation was creating a side-by-side comparison of my regular tax calculation versus AMT calculation for the capital gains. I found that my tax software was correctly tracking the NOL amounts but was applying them in the wrong sequence during the AMT calculation. Here's what I'd suggest as a newcomer who just figured this out: Before you spend hours on hold with the IRS, try recalculating Form 6251 manually with just a basic calculator. Focus specifically on lines 28-31 where the NOL gets applied. I bet you'll find the software made an error in how it applied the 90% limitation against your specific type of capital gains. The silver lining is that once you understand how this works, you can actually use it for tax planning in future years. AMT NOL carryforwards don't expire, so you can strategically time capital gains to minimize the overall tax impact. But yeah, the learning curve is brutal! Hang in there - this community has been super helpful for navigating these complex issues.