Great thread everyone! As someone who's been through partnership restructuring twice, I want to emphasize the timing aspect that's crucial for both sections. For IRC 704(c), the clock starts ticking the moment property with built-in gain/loss is contributed. You can't retroactively fix improper allocations - if you've been ignoring 704(c) requirements, you need to address it immediately going forward. The IRS can recast transactions if they find you've been shifting built-in gain between partners. For IRC 743(b), timing is about the 754 election. You can make it in the year of the transfer OR retroactively if you meet certain criteria, but waiting too long can cost your incoming partner thousands in unnecessary taxes. One practical tip: if you're bringing in a new partner next year, model out the tax impact with AND without the 754 election before they buy in. Sometimes the election benefits the new partner but creates administrative headaches for the partnership that aren't worth it. Other times (especially with appreciated assets), it's essential for fairness. Also consider getting a formal 704(c) allocation method documented in your partnership agreement BEFORE any new contributions. Don't leave it to default rules that might not work for your situation.

As someone who recently went through a similar partnership expansion, I'd strongly recommend getting professional help with these provisions - they're more interconnected than they initially appear. One thing that caught me off guard was how 704(c) and 743(b) can actually work together when you have both contributed property AND incoming partners. For example, if your family business has appreciated assets that were contributed years ago (triggering 704(c)), and now you're bringing in a new partner who's buying in at fair market value, that new partner could be getting hit with a double tax burden without proper planning. The new partner pays a premium price that reflects the appreciated assets, but without a 754 election and 743(b) adjustment, they'll still get allocated their share of the built-in gain when those assets are eventually sold. Meanwhile, the 704(c) allocations are supposed to prevent the original contributing partner from shifting their built-in gain to others. I'd suggest mapping out your partnership's asset basis versus fair market values before bringing in the new partner. If there are significant disparities, you'll want both the 704(c) tracking properly documented AND the 754 election in place. The interaction between these provisions can either create a fair outcome for everyone or lead to some partners getting seriously overtaxed. Also, don't forget that once you make the 754 election, it applies to ALL future transfers - including if any current partners eventually sell their interests. Consider the long-term implications beyond just your immediate new partner situation.

This is such a timely post for me! I was just selected to be on The Price is Right next month and I've been wondering about the tax implications. Reading through everyone's experiences here has been incredibly eye-opening. A couple of follow-up questions based on what I've learned: 1. For those who've been on game shows, do they typically give you any tax guidance during the taping process, or do they just hand you the 1099-MISC later and leave you to figure it out? 2. I'm seeing conflicting information about estimated quarterly taxes. If I win something substantial (like a car worth $30K+), will I need to make estimated tax payments for the current year, or can I just handle it all when I file my return? 3. Has anyone had success negotiating with the show about the fair market value they assign to prizes? Some of the values mentioned here seem pretty inflated compared to what you could actually buy the same items for. Thanks for sharing all your experiences - this thread is going to save me from making some expensive mistakes!

Just to add another perspective - I won on Jeopardy! two years ago and can confirm everything said here about game show winnings being treated as ordinary income, not gambling income. One thing I'd emphasize is to start setting money aside immediately if you win big prizes. I won $45,000 in cash and some smaller prizes, and even though they withheld taxes from the cash winnings, I still owed about $8,000 more when I filed. The withholding rate they use (usually 24%) often isn't enough if the winnings push you into a higher tax bracket. Also, for anyone going on shows in the future - ask about the "5-day rule" for California. If you're a non-resident who wins on a show filmed in CA, you might be able to avoid California state taxes if you leave the state within 5 days of winning. It's worth looking into depending on your situation and the value of what you win. The whole experience was incredible though, and honestly the taxes are just part of the deal. Better to win and pay taxes than not win at all!

Has anyone mentioned 83(b) elections yet? If these are early stage ISOs and still have a low spread between grant price and FMV, filing an 83(b) election can be huge for tax savings. But you have to do it within 30 days of exercise.

I'd strongly recommend consulting with a tax professional who specializes in equity compensation before making any decisions. ISOs can get incredibly complex, especially when you factor in AMT, state taxes, and the interaction with existing capital loss carryovers. A few additional considerations for your situation: 1. **State tax implications** - Some states don't have capital gains taxes but do tax ordinary income, which could affect your exercise-and-sell vs. hold strategy. 2. **Quarterly estimated taxes** - If you do exercise and sell, make sure you're prepared for the quarterly estimated tax payments. The large ordinary income hit could create underpayment penalties if you're not careful. 3. **Consider partial exercises** - Instead of exercising all options at once, you might benefit from spreading exercises across multiple tax years to manage your tax brackets and AMT exposure. Given that you have $20K in capital loss carryovers and are in a high tax bracket, the timing and structure of these transactions could save or cost you thousands of dollars. The difference between ordinary income treatment and capital gains treatment on $4,500 per 100 shares could be significant at your income level. Don't rush into anything just because you're in an open trading window - better to get professional advice and potentially wait for the next window than make a costly mistake.

I'm dealing with this exact same situation right now! Filed my amended federal return two weeks ago and TurboTax is telling me I need to file the state amendment even though literally nothing changed. I'm in California and was hoping to avoid the hassle, but reading all these responses it sounds like I really do need to file it. The part about creating a paper trail makes sense - I'd rather spend the stamp and time now than deal with notices later. Thanks everyone for sharing your experiences, especially the tax prep professional's insight. Going to mail mine out tomorrow with a copy of my 1040X attached. One question though - should I include any kind of cover letter explaining that there are no changes, or just send the forms as-is?

I appreciate everyone sharing their experiences here! As someone who went through this same situation last year, I can confirm that filing the amended state return (even with zero changes) is definitely the right move. I was in a similar boat - amended my federal return but it didn't affect my state taxes at all. I initially thought "why file paperwork showing nothing changed?" But after reading advice similar to what's shared here, I went ahead and filed it. Sure enough, about 6 months later I got a routine notice from my state tax department acknowledging they had received and processed my amended state return. The notice specifically mentioned that it was filed "in conjunction with federal amendment" - which told me their systems definitely do track this stuff and cross-reference with IRS data. The whole process was painless - just filled out the state amended form with the same numbers as my original return, attached a copy of my federal 1040X, and mailed it certified mail. Took maybe 30 minutes total and cost me about $8 in postage and fees. Small price to pay for peace of mind and avoiding potential headaches down the road. @Tyrone Johnson - definitely go ahead and file that Virginia amended return. Better to be proactive than deal with notices later!

This is such a helpful thread! I'm in a similar situation as the original poster - mostly W-2 with some freelance income on the side. I purchased a $2,200 laptop last year that I use about 60% for my freelance graphic design work. After reading through all these responses, I'm leaning toward the de minimis safe harbor route since my laptop is under the $2,500 threshold. It sounds like the simplest approach - just deduct the business portion ($1,320) directly without dealing with Form 4562 at all. But I want to make sure I understand this correctly - if I go the de minimis route, do I still need to maintain detailed records of my business use percentage? And should I document this somewhere in case I get audited? I keep pretty good records of my freelance projects and when I use the laptop for business vs personal stuff, but I want to make sure I'm covering all my bases. Also wondering if anyone has experience with making that de minimis election statement - is it something I can write myself or should I have my tax preparer handle it?

Great discussion everyone! As someone who's been doing freelance work alongside my W-2 for several years, I wanted to add a few practical tips based on my experience with equipment deductions. First, for the original question about the $1700 laptop - you have multiple valid options, but here's what I'd consider: Since you're new to freelancing, the de minimis safe harbor route mentioned by Nathan and others is probably your simplest path. At $1700, you're well under the $2500 threshold, and you can deduct 75% ($1275) immediately without Form 4562. However, one thing to keep in mind that hasn't been mentioned much - consider your current year freelance income vs. expected future income. If your freelance income is relatively low this year but you expect it to grow significantly, you might actually benefit more from regular depreciation spread over several years to maximize the tax benefit when you're in higher brackets. Also, regardless of which method you choose, I can't stress enough how important it is to document your business use percentage. I keep a simple spreadsheet tracking hours of business vs personal use for the first few months after purchase, then extrapolate for the full year. This saved me during an audit a few years back. One last tip - if you're using the computer for both W-2 work (like working from home) AND freelance work, make sure you're only claiming the freelance portion. The W-2 work portion isn't deductible under current tax law for most employees.